STRATEGY

IMPLEMENTATION
7TH LECTURE

CHAPTER OUTLINE

INTRODUCTION
Strategy implementation is defined as the

communication, interpretation, adoption, and enactment

of strategic plans (Noble, 1999)
The translation of strategic thought into strategic action
It affects an organization from top to bottom; all
functional and divisional areas
Successful strategy formulation does not guarantee
successful strategy implementation.
It is always more difficult to do something (strategy
implementation) than to say you are going to do it
(strategy formulation).
Internal issues.

INTRODUCTION
Most companies and organizations know their

businesses, and the strategies required for success.

However many corporations - especially large ones struggle to translate the theory into action plans that will
enable the strategy to be successfully implemented and
sustained.
Strategy-formulation concepts and tools do not differ
greatly for small, large, for profit, or nonprofit
organizations.
However, strategy implementation varies substantially
among different types and sizes of organizations.

INTRODUCTION
In all but the smallest organizations, the transition from

strategy formulation to strategy implementation requires

a shift in responsibility from strategists to divisional and
functional managers.
Implementation problems can arise because of this shift
in responsibility, especially if strategy-formulation
decisions come as a surprise to middle- and lower-level
managers.
Therefore, it is essential that divisional and functional
managers be involved as much as possible in strategyformulation activities.
Of equal importance, strategists should be involved as
much as possible in strategy-implementation activities.

INTRODUCTION
Yet experienced executives know that the most creative and

well crafted visions and strategic plans are useless if they

cannot be translated into action.
Frequently the causes of breakdown in strategy
implementation relate to the capabilities, processes and
activities that are needed to bring the strategy to life.
Effective execution calls for unique, creative skills including
leadership, precision, attention to detail, breaking down
complexity into digestible tasks and activities and
communicating in clear and concise ways throughout the
organisation and to all its stakeholders.
Implementation is not merely a matter of operationalising the
strategy by exercising command over resources, employees
and their work.

INTRODUCTION
Successful organisations stay tuned to their external environments

and adapt quickly and flexibly by changing their internal processes,

systems, competencies, products and services.
They implement these changes while continuing to operate
efficiently and effectively.
Skills for strategy formulation and execution are both important
although it is unusual to find people who are able to integrate both
and become successful general managers.
Yet organisational success requires constant review and connection
between strategy formulation and execution with each component
feeding and growing off the other in an organic way
Although inextricably linked, strategy implementation is
fundamentally different from strategy formulation.

COMPARISON
Strategy formulation

Strategy implementation

positioning forces before

managing forces during

the action
focuses on effectiveness
primarily an intellectual
process
requires good intuitive
and analytical skills
requires coordination
among a few individuals

the action
focuses on efficiency
primarily an operational
process
requires special
motivation and
leadership skills
requires coordination
among many persons

THE FIVE CS AND STRATEGY IMPLEMENTATION

Coordination- objectives and functions
Communication- informations
Command- hierarchy of authority
Control- such as finance and guidelines
Conflict/consensus- disagreement (avoidance,

defusion, and confrontation) and solutions

RESOURCES AND STRATEGY NEEDED

FOR STRATEGY IMPLEMENTATION
Who are the people who will carry out the strategic

plan?
What must be done to align the organizations
operations in the new intended direction?
How is everyone going to work together to do what is
needed?

RESOURCE MANAGEMENT
Resource management involves the transformation

of inputs into outputs in accordance with political

priorities.
It includes tasks such as:

human resource management

financial management
operations management at all level in the public sector
including both the organizational level and at the institutional
level (vertical and horizontal relations between organizations)

RESOURCE MANAGEMENT
Resource allocation is a major management activity that

allows for strategy execution.

In organizations that do not use a strategic-management
approach to decision making, resource allocation is often
based on political or personal factors.
Strategic management enables resources to be allocated
according to priorities established by annual objectives.
Nothing could be more detrimental to strategic
management and to organizational success than for
resources to be allocated in ways not consistent with
priorities indicated by approved annual objectives.

RESOURCE MANAGEMENT
All organizations have at least four types of resources

that can be used to achieve desired objectives:

financial resources
physical resources
human resources
technological resources

RESOURCE MANAGEMENT
In strategic planning, a resource-allocation decision is a

plan for using available resources to achieve goals for the

future.
It is the process of allocating resources among the
various projects or business units.
The basic allocation decision is the choice of which items
to fund in the plan, and what level of funding it should
receive, and which to leave unfunded.
There is a priority ranking of items excluded from the
plan, showing which items to fund if more resources
should become available; and there is a priority ranking
of some items included in the plan, showing which items
should be sacrificed if total funding must be reduced.

HUMAN RESOURCE MANAGEMENT

The implementation of NPM has marked a shift in

public sector orientation. As a market oriented

business, the organization staffed with
entrepreneurial employees.
A range of institutional changes has characterized
the shift including privatization, ending monopoly,
sub-contracting, the marketization of service
provision greater emphasis on efficiency measures
and accountability and the introduction of
managerialism.

FINANCIAL MANAGEMENT
The financial management in public sector has moved

from rule-based administration to result-based

management and sometimes also described as a change
from public administration to public management.
Which the focus will be on accountability and value for
money.
Financial management involves taking decisions
concerning the budget planning, execution and control at
various levels of the administrative system concerning
capital investment (selection of new
investment/procurement and managing existing assets),
financing (how to finance the budget, i.e. tax or debt) and
the level of service provision.

ORGANIZATIONAL STRUCTURE
Structure is not an end, but a means to an end. The

end is successful organisational performance.

No one best structure exists.
Once in place, the new structure becomes a
characteristic of the organisation that could be as a
constraint on future strategic choices.
Administrative inefficiencies, poor service to
customers, communication problems, or employee
frustrations may indicate a strategy-structure
mismatch.

ORGANIZATIONAL STRUCTURE
Dictates how objectives and policies will be

established.
Dictates how resources will be allocated.
Changes in strategy lead to changes in organizational
structure.
Changes in strategy lead to changes in organizational
structure. Structure should be designed to facilitate
the strategic pursuit of a firm and, therefore, follow
strategy.

STRUCTURE OPTIONS
FOR STRATEGY IMPLEMENTATION

FUNCTIONAL STRUCTURE

FUNCTIONAL STRUCTURE
The most widely used structure: the simplest and

least expensive.
Organisational structure is arranged according to
major function in the organisation such as
marketing, operation, finance, and research and
development.
The structure is centralized, highly specialized, and
most appropriate when a limited product line is
offered to a particular market segment.

DIVISIONAL STRUCTURE

DIVISIONAL STRUCTURE
The structure is based on organisational geographic

area, product/service that the organisation provides,

customer or process of the organisation.
Also known as decentralized structure.
The divisional structure can be organized in one of
four ways: by geographic area, product or service,
customer, or process.
With a divisional structure, functional activities are
performed both centrally and in each separate
division.

SBU STRUCTURE

STRATEGIC BUSINESS UNIT STRUCTURE (SBU)

The SBU structure is useful in multi-product, multi-market

organisations seeking improved coordination between their wide

range of activities.
When companies become really large, they are best thought of as
being composed of a number of businesses (or SBUs).
Can be encompass an entire company, or can simply be a smaller
part of a company set up to perform a specific task.
The SBU structure groups similar divisions into strategic business
units and delegates authority and responsibility for each unit to a
senior executive who reports directly to the chief executive officer.
This change in structure can facilitate strategy implementation by
improving coordination between similar divisions and channeling
accountability to distinct business units.
This is particularly relevant and can be useful for public sector
organisations.

MATRIX STRUCTURE
A matrix structure is the most complex of all designs

because it depends upon both vertical and horizontal

flows of authority and communication (hence, the term
matrix).
A matrix structure can result in higher overhead because
it creates more management positions.
Other characteristics of a matrix structure that contribute
to overall complexity include dual lines of budget
authority (a violation of the unity-of-command
principle), dual sources of reward and punishment,
shared authority, dual reporting channels, and a need for
an extensive and effective communication system.

ORGANIZATIONAL SYSTEM
Organisational systems is the process of coordinating,

directing, activating and controlling the activities of people

within the organisation (Viljoen & Dann, 2003).
Related explanations:

Objects are the elements that populate and perform the work of the
complex system.
Tasks specify work to be done by objects.
Policy is a course of action selected in light of given conditions to guide,
modify and determine activities in the complex system.
Context is the environment, the inputs, the systems and the events that
surround the complex system.
Collaboration is an essential part of organizational work. It takes on many
forms, team formation, negotiation and straightforward collaboration.

Related to organizational structure and organizational designs

(Mintzbergs five design configurations).

ORGANIZATIONAL SYSTEM
Mintzbergs five design configurations:

The operating core: Employees who perform the basic work

related to the production of products and services
The strategic apex: Top level managers who are charged with
the overall responsibility of the organization
The middle level: Managers who connect the operating core to
the strategic apex
The technostructure: Analysts (the strategies) who have the
responsibility for effecting certain forms of standardization in
the organization
The support staff: People who fill the staff units, who provide
indirect services for the organization

ORGANIZATIONAL SYSTEM
Managerial hierarchy a clearly defined authority and responsibility

structure must be established.

Interdepartmental communication horizontal communication between
managers in different departments is crucial.
Committees There are many types of committees such as general
management, mulitiple management and special interest.
Span of management is the number of people they have to interact with.
Authority the right to direct the activities of another person.
Delegation as a process by which a manager assigns to a subordinate the
authority and responsibility for carrying out a specific task.
Motivation the need for motivated employees is crucial in implementing
any strategies.
Decision-making systems represents the end of a feasibility analysis
phase and the beginning of an implementation phase.
Reward and remuneration systems rewards for performance should be
related to the organisations strategy.

CORPORATE CULTURE
The development of a strategy-supportive culture is

vital to the successful implementation of an

organisations strategy. There are several principles
for managing corporate culture (Viljoen and Dann,
2003):

CORPORATE CULTURE
Role modelling the actions of managers symbolise

their values, and these are the values that other

employees perceive as neccessary and, thus, develop
themselves.
Style of management refers to the approach that
managers bring to their tasks such as autocratic
management, collaborative management and
participative management.
Communications an open and effective
communications network is pivotal in the process of
culture management.

LEADERSHIP IMPLEMENTATION
Generally, according to Senge (1998), Kanungo &

Mendonca (1996) and quoted by Viljoen and Dann

(2003), a leader is perceived as an inspirational,
motivational, proactive and charismatic decision maker.
A range of managers at different levels throughout the
organisation will be expected to take on leadership roles
in implementing the strategies.
To be more specific, the Chief Executive Officer (CEO)
who personifies the organisation and its culture. Hence,
he drives organisational strategic thinking and ultimately
monitor the overall process (Robert 1997) as pointed by
Viljoen and Dann (2003).

LEADERSHIP ROLES

Role model
Inspiring and motivating staff
Understanding the context
Ethics
Communicating
Interacting with staff at all levels
Establishing effective networks, internal and external
Encouraging feedback
Building a stimulating work environment
Encouraging teamwork
Making work fun
Letting people know where they stand

THE END