Barriers to effective implementation of strategies

Implementing strategy has always been a challenge for organizations across the industry.
Ability to implement strategy is the deciding factor between success and failure of a
companys strategy. Implementation manifests the strategic intent of a company through
various tactical and competitive actions to achieve the desired results, which otherwise
may remain as distant dreams.
How does a company gain the all important ability to put strategic plans into action? he
answer is to change ones perception of strategy formulation and implementation.
!ontrary to general belief, strategy formulation and strategy implementation are not two
discrete processes but are intertwined together. "reat strategies are not discovered over a
couple of strategic sessions. In fact great strategies evolve over time as a result of
rigorous monitoring of progress towards strategic goals, when emerging realities are
discussed thread bare, the learning of which helps in revising the strategies. In effect, it
can be said that meticulous implementation has strategy development embedded in it.
#imilarly companies need to incorporate strategy implementation in the planning phase
itself. his can be done by involving persons $ey to e%ecution during planning phase
itself. It will not only help in gaining insights in to practical aspects of strategy at an early
stage, but it also helps politically to get their whole hearted commitment to strategy
implementation. &lanning is no doubt important, but ma$ing the plan wor$ is a bigger
challenge which deals with organizational politics, culture and sometimes managing
change. All of which re'uire single minded pursuit from top and un'uestionable
commitment from managers. (rganizational politics )especially when strategy e%ecution
contradicts the e%isting power structure in the company* may hamper proper allotment of
resources, which will adversely impact strategy deployment.
Apart from intertwining strategy planning and implementation through incorporating
e%ecution into planning and evolving strategy through rigorous follow up and corrections,
there are other factors that may bridge the gap between great strategies and effective
e%ecution. +irst of these factors is communication. ,any a times we find that managers
who are supposed to be delivering performance to meet the strategic goals of the
company do not have a clear idea of what the strategy is all about. hey do not realize
what needs to be done to fulfill the strategic plan. hey are unaware of their role in the
strategic game plan. hey can not describe companys strategy in one simple sentence,
which means that the strategy is not understood by the people responsible for acting on it.
"reat strategic plans or intents are represented by a catchy tag line, which coveys the
companys intentions to all concerned, even to mar$etplace. -ac$ of proper
understanding of what is important for the strategy to be delivered, may result in having
your priorities wrong . and the pro/ected levels of returns will never be a reality.
#trategy implementation is a long drawn out process, and so in order to sustain the
interest and enthusiasm of managers and leaders ali$e it is absolutely essential that
strategic plans have short term wins built in them. hese milestones not only specify
standards of performance but help in $eeping managers focused on the results.
Strategic planning may be the prerogative of upper levels of management, but
implementation percolates down to front level managers responsible to carryout
operations efficiently, influencing the e%perience of customers, or carrying out
improvements which are important in the long run. Hence communication and role clarity
are of paramount importance.
!ommunication is very important as implementation involves many more people
wor$ing for seemingly unrelated processes but with the same end goal. #trategy
deployment is generally seen as a function of processes and structures but the fact is that
it is as much a function of voluntary involvement and spirit of the people in the
organization. It is this aspect of strategy deployment that differentiates two companies
pursuing similar strategy. #pirit of the people is something that cannot be imitated by the
competitors and is a decisive factor between success and failure of e%ecution.
(rganizational culture )information sharing, amenable to change, ownership etc.* is the
crucial factor which determines how 'uic$ly or how readily the people can adapt to the
new demands that deployment of strategy may ma$e on them. !ommitment of the people
can be ensured through clear communication of strategy and individual role in fulfillment
of the same. his is the gap which is filled by strategy maps. Aligning individual
aspiration with the strategic goals of the company through /udiciously designed reward
schemes, monitory incentives, well thought out support to individual to plan their career,
and stimulating their intellectual faculties with challenging responsibilities are some of
the things that can be done to ensure high levels of commitment from the people who
ma$e the strategy wor$. (rganizational culture of trust and empowerment are bare
necessities for effective e%ecution of the strategy through informed and 'uic$ decisions.
(pen discussions, where learning is the ob/ective rather than the blame for failures during
the progress review sessions can always help in identifying where the things went wrong,
and how the course can be corrected . fact finding rather than fault finding helps in fine
tuning strategies. It is through such close monitoring in an open environment that may
ensure a correction in e%ecution and as well as plans.
-eaders must always emphasize the importance of the strategy through out the e%ecution
phase and follow up through rigorous reviews, so that the managers $now that they are
contributing to an important tas$. (ne problem is managers ta$e pride in planning and
e%ecution is one thing that is always thought of as a lower level /ob in the hierarchy.
0%ecution is something which is ta$en for granted. ,ore so in the case of implementing
strategy, leading measures are never agreed upon in advance and hence what gets
measured and reviewed is lagging indicators, which hampers the ability of the firm to
effectively monitor the e%ecution of the strategy for corrective actions to be ta$en
proactively. B#!, strategy maps and 1&I charts are some of the means available for
companies to monitor lead indicators for the factors that drive strategy fulfillment.
In short communication along with rigorous review is the $ey to efficient e%ecution of
strategy.
#trategy 0valuation &rocess and its #ignificance
#trategy 0valuation is as significant as strategy formulation because it throws light on the
efficiency and effectiveness of the comprehensive plans in achieving the desired results.
he managers can also assess the appropriateness of the current strategy in todays
dynamic world with socio2economic, political and technological innovations. #trategic
0valuation is the final phase of strategic management.
The significance of strategy evaluation lies in its capacity to co-ordinate the task
performed by managers, groups, departments etc, through control of performance.
#trategic 0valuation is significant because of various factors such as 2 developing inputs
for new strategic planning, the urge for feedbac$, appraisal and reward, development of
the strategic management process, /udging the validity of strategic choice etc.
The process of Strategy Evaluation consists of following steps-
Fiing benchmark of performance - 3hile fi%ing the benchmar$, strategists encounter
'uestions such as 2 what benchmar$s to set, how to set them and how to e%press them. In
order to determine the benchmar$ performance to be set, it is essential to discover the
special re'uirements for performing the main tas$. he performance indicator that best
identify and e%press the special re'uirements might then be determined to be used for
evaluation. he organization can use both 'uantitative and 'ualitative criteria for
comprehensive assessment of performance. A 'uantitative criterion includes
determination of net profit, 4(I, earning per share, cost of production, rate of employee
turnover etc. Among the 5ualitative factors are sub/ective evaluation of factors such as 2
s$ills and competencies, ris$ ta$ing potential, fle%ibility etc.
!easurement of performance - he standard performance is a bench mar$ with which
the actual performance is to be compared. he reporting and communication system help
in measuring the performance. If appropriate means are available for measuring the
performance and if the standards are set in the right manner, strategy evaluation becomes
easier. But various factors such as managers contribution are difficult to measure.
#imilarly divisional performance is sometimes difficult to measure as compared to
individual performance. hus, variable ob/ectives must be created against which
measurement of performance can be done. he measurement must be done at right time
else evaluation will not meet its purpose. +or measuring the performance, financial
statements li$e 2 balance sheet, profit and loss account must be prepared on an annual
basis.
"nalyzing #ariance - 3hile measuring the actual performance and comparing it with
standard performance there may be variances which must be analyzed. he strategists
must mention the degree of tolerance limits between which the variance between actual
and standard performance may be accepted. he positive deviation indicates a better
performance but it is 'uite unusual e%ceeding the target always. he negative deviation is
an issue of concern because it indicates a shortfall in performance. hus in this case the
strategists must discover the causes of deviation and must ta$e corrective action to
overcome it.
Taking $orrective "ction - (nce the deviation in performance is identified, it is
essential to plan for a corrective action. If the performance is consistently less than the
desired performance, the strategists must carry a detailed analysis of the factors
responsible for such performance. If the strategists discover that the organizational
potential does not match with the performance re'uirements, then the standards must be
lowered. Another rare and drastic corrective action is reformulating the strategy which
re'uires going bac$ to the process of strategic management, reframing of plans according
to new resource allocation trend and conse'uent means going to the beginning point of
strategic management process
&roblems in evaluating strategies
6. problems in reporting
7. problems in strategic report
8. problems in timing
9. problems in organizational structure: culture
;. problems of evaluation techni'ues
$haracteristics of an Effective Evaluation System
Strategy evaluation must meet several basic re'uirements to be effective. +irst, strategy2
evaluation activities must be economical< too much information can be /ust as bad as too
little information and too many controls can do more harm than good. #trategy evaluation
activities also should be meaningful they should specifically relate to a firms ob/ectives.
hey should provide managers with useful information about tas$s over which they have
control and influence. Strategy-evaluation activities should provide timely information
on occasion and in some areas, managers may daily need information. +or e%ample, when
affirm has diversified by ac'uiring another firm, evaluative information may be needed
fre'uently. However, in an 4=> department, daily or even wee$ly evaluative information
could be dysfunctional. Appro%imate information that is timely is generally more
desirable as a basis for strategy evaluation than accurate information that doses not edict
the present. +re'uent measurement and rapid reporting may frustrate control rather than
give better control. he time dimension of control must coincide with the time span of the
event being measured.
Strategy evaluation should be designed to provide a true picture of what is happening.
+or e%ample, in an ever economic downturn, productivity and profitability ratios may
drop alarmingly, although employees and managers are actually wor$ing harder. #trategy
evaluations should fairly portray this type of situation. Information derived from the
strategy2evaluation process should facilitate action and should be directed to those
individuals in the organizations who need to ta$e action based on it. ,anagers commonly
ignore evaluative reports that are provided only or informational purposes< not all
managers need to receive all reports. !ontrols need to action2oriented rather than
information2oriented.
he strategy-evaluation process should not dominate decisions< it should foster mutual
understanding, trust, and common sense. ?o department should fail to cooperate with
another in evaluating strategies. #trategy evaluations should be simple, not too
cumbersome, and not too restrictive. !omple% strategy2evaluation system is its
usefulness, not its comple%ity.
-arge organizations re'uire a more elaborate and detailed strategy2evaluation system
because it is more difficult to coordinate efforts among different divisions and functional
areas. ,anagers in small companies often communicate daily with each other and their
employees and do not need e%pensive evaluative reporting systems. +amiliarity with local
environments usually ma$es gathering and evaluating information much easier for small
organizations than for large businesses. But the $ey to an effective strategy2evaluation
system may be the ability to convince participants that failure to accomplish certain
ob/ectives within a prescribed time is not necessarily a reflection of their performance.
here is no one ideal strategy2evaluation system. he uni'ue characteristics of an
organization, including fits size, management style, purpose, problems, and strengths, can
determine a strategy2evaluation and control systems final design.