Strategic implementation

This module discuss about Strategic Implementation its Definition, Operationalzing Strategy, Steps in Implementation, Annual Objectives, Functional Strategy, Developing & Communicating Policies, Mc Kinsey's 7s Model, Institutionalizing Strategy, Matching Structure to Strategy, Leadership & Culture.

1. Strategic Management Strategic Implementation Prepared By Prof. Jitendra Patel Assistant Professor Prestige Institute of Management and Research. Indore. 01/04/2020 1 Jitendra Patel, Assistant Professor, PIMR, Indore

2. Module Description 1. Definition of Strategic Implementation 2.Operationalzing Strategy. 3. Steps in Implementation. 4. Annual Objectives 5. Functional Strategy. 6. Developing & Communicating Policies. 7. Mc Kinsey's 7s Model 8. Institutionalizing Strategy 9. Matching Structure to Strategy 10. Leadership & Culture. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 2

3. Definition “Strategy implementation is the process by which strategies and policies are put into action through the development of programs, budgets and procedures.” 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 3

4. The Nature of Strategy Implementation Strategy formulation is positioning forces before the action. Strategy implementation is managing forces during the action. Strategy formulation focuses on effectiveness. Strategy implementation focuses on efficiency. Strategy formulation is primarily an intellectual process. Strategy implementation is primarily an operational process. Strategy formulation requires good intuitive and analytical skills. Strategy implementation requires special motivation and leadership skills. Strategy formulation requires coordination among a few individuals. Strategy implementation requires coordination among many individuals . 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 4

5. Strategic Formulation Vs Strategic Implementation Strategy Formulation Strategy Formulation includes planning and decision-making involved in developing organization’s strategic goals and plans. In short, Strategy Formulation is placing the Forces before the action . Strategy Formulation is an Entrepreneurial Activity based on strategic decision-making. Strategy Formulation emphasizes on effectiveness . Strategy Formulation is a rational process. Strategy Formulation requires co-ordination among few individuals. Strategy Formulation requires a great deal of initiative and logical skills . Strategic Formulation precedes Strategy Implementation. Strategy Implementation Strategy Implementation involves all those means related to executing the strategic plans. In short, Strategy Implementation is managing forces during the action . Strategic Implementation is mainly an Administrative Task based on strategic and operational decisions. Strategy Implementation emphasizes on efficiency. Strategy Implementation is basically an operational process . Strategy Implementation requires co-ordination among many individuals. Strategy Implementation requires specific motivational and leadership traits . Strategy Implementation follows Strategy Formulation. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 5

6. Operationalizing Strategy Well-implemented strategic planning provides the vision, direction and goals for the organization. operational planning translates that strategy into the everyday execution tactics of the business that will ultimately produce the outcomes defined by the strategy. Most companies would receive a failing grade for their operational planning efforts. This is largely due to a lack of understanding of how such planning should be done 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 6

7. Operationalizing Strategy The biggest difference is that organization must adjust their thinking to the day-to-day business operations and consider all the constraints, inhibitors and accelerators that must be evaluated and factored into tactical planning. The discipline required is a mix of strategic planning with good old fashioned program and project management. Operational planning must be done if strategic goals are to be accomplished 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 7

8. Steps in Strategic Implementation i)Resource Allocation. ii) Organization Structure Design. iii) Planning Framework. iv) Leading and Staffing. v) Change and Communication. vi) Evaluation. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 8

9. Resource Allocation. This has vital significance in strategy implementation. In a single product firm, it may involve assessment of the resource needs of different functional departments. In a multi divisional organization, it implies assessing the resource needs of different SBUs or product divisions. Methods of resource allocation include use of: Percentage of sales or profits BCG matrix Budgeting system 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 9

10. Organization Structure Appropriate organization structure is to be designed to make strategy implementable. The relation between strategy and structure is established based on organizational life cycle, corporate development stages and international businesses. Organization design involves changes like: Job design- Making the jobs more challenging by job analysis and role redefinition. Reengineering - Reengineering is a radical redesign of business process to achieve major gains in cost, service and time. It is an effective way of implementing turn around strategy. It breaks away old rules and procedures 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 10

11. Planning Frame Work The managers involved in implementation should plan and develop programmes , budgets and procedures. They should also work for achieving synergy among the divisions and functional areas in order to maintain distinctive competence. Programme Programmes make strategy action oriented. Ex: Reliance vertical (forward) integration strategy for growth. Budgets This begins after programmes . It is a check on the feasibility of selected strategy. Budget is expression of programmes in quantitative terms. Without budgets implementation becomes impractical Procedures After programmes and budgets, studied operating procedures (SOPS) must be developed. They detail the various activities that must be carried out to complete a corporation’s programme . The change during the change process, Ex: Mc Donald’s developed very detailed procedure to ensure that policies are carried out in its fast food retail outlets. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 11

12. Leadership and Staffing Implementation involves leading people to utilize their abilities and skill efficiently and effectively to meet organizational goals. Leaders are the key organic elements, who help the organization cope with changes. Failure of leadership may result in goal incongruence, communication break down, ambiguity etc,. Leaders help in transformation in three phases Recognizing need for revitalization Creating a new vision Institutionalizing change 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 12

13. Staffing Staffing issues involve hiring new people with new skills, firing unskilled or inappropriately skilled people, or training employed to acquire new skills. Staffing requirements are likely to follow a change in human resource strategy relating to number and quality of people. Eg : GE’s aircraft engine group used training to maintain its market shone even though work force was cut from 42,000 to 33,000 between, 1991 to 1993. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 13

14. Downsizing Involves Elimination of unnecessary work Contract out those works that can be done cheaper Plan long run efficiencies Communicate the resources for downsizing Invest in remaining employees Develop value added jobs . 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 14

15. Change and Communication Change is inevitable during implementation. Rationale for strategic changes should be communicated to workers through newsletters and speeches and even in training programmes . Companies in which major cultural changes took place have the following. The CEO with strategic vision, who communicated their vision to employees at all levels and constantly compared themselves with competitors for updating. Vision , that is translated into key elements for implementation. They are widely communicated through contests, recognition, rewards etc. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 15

16. Evaluation The importance of strategic evaluation lies in its ability to coordinate the tasks performed by individual managers, and also groups, division or SBUs, through the control of performance. In the absence of coordinating and controlling mechanisms, individual managers may pursue goals, which are inconsistent with the overall objectives of the department, division, SBU or the whole organization. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 16

17. Annual Objective Establishing annual objectives is a decentralized activity that directly involves all managers in an organization. Active participation in establishing annual objectives can lead to acceptance and commitment. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 17

18. Why Annual Objective are needed (1) represent the basis for allocating resources; (2) are a primary mechanism for evaluating managers; (3) are the major instrument for monitoring progress toward achieving long-term objectives; (4) establish organizational, divisional, and departmental priorities. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 18

19. Annual Objectives Considerable time and effort should be devoted to ensuring that annual objectives are well conceived, consistent with long-term objectives, and supportive of strategies to be implemented. Approving, revising, or rejecting annual objectives is much more than a rubber-stamp activity. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 19

20. Characteristics of Annual Objective Annual objectives serve as guidelines for action, directing and channeling efforts and activities of organization members. They provide a source of legitimacy in an enterprise by justifying activities to stakeholders. They serve as standards of performance. They serve as an important source of employee motivation and identification. They give incentives for managers and employees to perform. They provide a basis for organizational design. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 20

21. Purpose of Annual Objectives Annual objectives should be Clearly stated and communicated Objectives are critical to success in all types and sizes of firms. Annual objectives, stated in terms of profitability, growth, and market share by business segment, geographic area, customer groups, and product, are common in organizations. Objectives should be consistent across hierarchical levels and form a network of supportive aims. Horizontal consistency of objectives is as important as vertical consistency of objectives. For instance, it would not be effective for manufacturing to achieve more than its annual objective of units produced if marketing could not sell the additional units. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 21

22. Essential of Annual Objectives Annual objectives should be measurable , consistent, reasonable, challenging, clear, communicated throughout the organization, characterized by an appropriate time dimension, and accompanied by commensurate rewards and sanctions. Too often, objectives are stated in generalities, with little operational usefulness. Eg : Annual objectives, such as “to improve communication” or “to improve performance,” are not clear, specific, or measurable. Objectives should state quantity, quality, cost, and time---and also be verifiable. Terms and phrases such as maximize, minimize, as soon as possible, and adequate should be avoided.  Annual objectives should be compatible with employees’ and managers’ values and should be supported by clearly stated policies. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 22

23. Developing Functional Strategies Functional experts like R&D, operations, finance, marketing and human resources devise functional strategies. The characteristics of Functional strategies are as follows. Short term They provide short-term operational details for achieving long term objectives systematically. Limited scope Functional strategy deals with a relatively restricted plan, which provides the objectives for a specific function, for the allocation of resources among different operations within that functional area and for enabling coordination between them for an optimal contribution to the achievement of the business-and corporate-level objectives 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 23

24. Developing and Communicating policies Policies are directives designed to guide the thinking, decisions, and actions of managers and their subordinates in implementing a firm’s strategy 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 24

25. 25 Creating Policies That Empower Policies establish indirect control over independent action Policies promote uniform handling of similar activities Policies ensure quicker decisions by standardizing answers to recurring questions Policies institutionalize basic aspects of organization behavior Policies reduce uncertainty in repetitive and day-to-day decision making Policies counteract resistance Policies afford managers a mechanism for avoiding hasty decisions 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore

26. 26 Advantages of Formal, Written Policies They require managers to think through the policy’s meaning, content, and intended use They reduce misunderstanding They make equitable and consistent treatment of problems more likely They ensure unalterable transmission of policies They communicate the authorization or sanction of policies more clearly They supply a convenient and authoritative reference They systematically enhance indirect control and organization wide coordination of the key purposes of policies 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore

27. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 27 Skills Strategy Style Systems Super ordinate goals Structure Staff Mckinsey 7’ S Model

28. Mckinsey 7’ S Model Structure refers to the authority relationships, the hierarchical arrangement of positions in the organization. Systems’ may be called the ‘infrastructure’ and include sub-systems relating to production planning and control, cost accounting procedures, capital budgeting, recruitment, training and development, planning and budgeting, performance evolution, etc. Rules, regulations and procedures constitute ‘systems’ in the framework, which complement the organizational structure. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 28

29. Mckinsey 7’ S Model 3. Strategy refers to the long range plan of action with a set of goals for accomplishment Structure Super ordinate goals Strategy Systems Skills Style Staff. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 29

30. Mckinsey 7’ S Model 4. Staff ’ carriers a specific meaning in the 7-S framework. It refers to the way organizations induct young recruits into the mainstream of activities and the manner in which they manage their careers as the new entrants develop into managers. 5. Skills refer to the ‘distinctive competence’ which reflects the dominant skills of an organization, and may consist of competence in terms of engineering skills, or competence in the area of new product development, customer service, quality commitment, market power, and so on. 6. Style is another variable, which may determine the effectiveness of organizational change effort. According to the 7-S framework, the style of an organization becomes evident through the patterns of actions of the top management team over a period of time, the emphasis laid on aspects of business, reporting relationships and aspects of organizational culture. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 30

31. Mckinsey 7’ S Model 7. Shared values (or super ordinate goals) in the Mckinsey model refer to the set of values and aspirations that go beyond the formal statement of corporate objectives. In other words, these are fundamental ideas around which a business is built and which constitute its main values. Typical examples are: Hewlett-Packard’s “innovative people at all levels in organization” as the dominant aspiration or value; A T & T’s “universal services” goal; “customer service” which guides IBM’s marketing drive. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 31

32. Significance of Mckinsey 7’ S Model in Strategic Planning It provides a good framework of the seven ‘s’ and align them to energies and executive strategies It is an excellent multivariate model of organizational change It provides a convenient means of checking whether an organization has the necessary conditioning for implementing strategy. Organizational capabilities (strengths and weaknesses may be evaluated along each of the seven dimensions) 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 32

33. Institutionalization Strategies Steps in Institutionalization Strategies Needs Assessment Conduct a needs assessment. 2. Teamwork Know your organization and stakeholders. Who are the leaders and policy makers on your Organization? Who are other stakeholders? How can stakeholders become involved in activities and/or in advisory capacities? 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 33

34. Steps in Institutionalization Strategies Administrative Support Garner support from Top Management , departments, and service units organization -wide; create linkages and collaborations. Professional Development for Staff and Managers: training and development of Staff for cross cultural change and continuous update upgrading and advance Change. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 34

35. Steps in Institutionalization Strategies 5.Customer Development for Students Consider ways to get Development customer and new way to reach them . 6.Promotion and Advertisement Communicate the change to market, Staff and Customers Raise the visibility 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 35

36. Steps in Institutionalization Strategies 7.Network with External Organizations / Strategic Group Develop a regional model with a set of consistent practices. Work collaboratively and individually with companies working in Same Strategic Group. 8.Evaluation Measure the impact of your Strategies. 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 36

37. Matching Structure to Strategy 01/04/2020 Jitendra Patel, Assistant Professor, PIMR, Indore 37

38. Jitendra Patel, Assistant Professor, PIMR, Indore 12 | 38 Implementing Strategy Through Organizational Design Figure 12.1 Organizational structure, control, and culture shape people’s behaviors, values, and attitudes – and determine how they will implement an organization’s business model and strategies. 01/04/2020

39. Jitendra Patel, Assistant Professor, PIMR, Indore 12 | 39 Building Blocks of Organizational Structure Grouping tasks, functions, and divisions How best to group tasks into functions – and functions into business units or divisions to create distinctive competencies and pursue a particular strategy Allocating authority and responsibility How to allocate authority and responsibility to these functions and divisions Integration and integrating mechanisms How to increase the level of coordination or integration between functions and divisions as a structure evolves and becomes more complex An organization structure assigns people to tasks and connects the activities of different people and functions: 01/04/2020

40. Jitendra Patel, Assistant Professor, PIMR, Indore 12 | 40  Group Tasks, Functions and Divisions Organizational structure – follows the range and variety of tasks that an organization pursues. Companies group people and tasks into functions and then functions into divisions. A function is a collection of people who work together and perform similar tasks or hold similar positions. A division is a way of grouping functions to allow an organization to better serve its customers. Handoffs are the work exchanges between people, functions, and subunits. Bureaucratic costs result from the inefficiencies surrounding these handoffs. Choice of structure is made on its ability to implement company’s business model and strategies successfully: 01/04/2020

41. Jitendra Patel, Assistant Professor, PIMR, Indore 12 | 41  Allocating Authority and Responsibility Organizational Structure Span of control (number of subordinates) Tall versus flat organizations  Flexibility  Communication problems  Response time  Expense  Distortion of commands Decision Making: Centralized versus Decentralized Delegating and empowering employees  R equires fewer managers  Reduces information overload  I ncreases motivation and accountability Centralized decisions  Easier coordination of activities  Decisions fit broad organizational objectives To economize on bureaucratic costs and effectively coordinate the activities, company must develop a clear and unambiguous hierarchy of authority : Principle of the Minimum Chain of Command: Choose hierarchy with the fewest levels of authority necessary to use organizational resources efficiently and effectively. 01/04/2020

42. Jitendra Patel, Assistant Professor, PIMR, Indore 12 | 42 Tall and Flat Structures Figure 12.2 01/04/2020

43. Jitendra Patel, Assistant Professor, PIMR, Indore 12 | 43  Integration and Integrating Mechanisms Direct contact Creates a context within which managers across functions or divisions can work together Liaison roles Increases coordination Gives one manager in each function or division the responsibility for coordinating with the other Teams Use when multiple functions share mutual problems Integration and integrating mechanisms: are used to increase communication and coordination among functions and divisions 01/04/2020

44. Jitendra Patel, Assistant Professor, PIMR, Indore 11– 44 Organizational Structure and Strategy Organizational structure specifies: The firm’s formal reporting relationships, procedures, controls, and authority and decision-making processes The work to be done and how to do it, given the firm’s strategy or strategies It is critical to match organizational structure to the firm’s strategy. 01/04/2020

45. Jitendra Patel, Assistant Professor, PIMR, Indore 11– 45 Benefits of Organizational Structure Effective structures provide: Stability Flexibility Structural stability provides: The capacity required to consistently and predictably manage daily work routines Structural flexibility provides for: The opportunity to explore competitive possibilities The allocation of resources to activities that shape needed competitive advantages 01/04/2020

46. Jitendra Patel, Assistant Professor, PIMR, Indore 46 Relationships between Strategy and Structure Strategy and structure have a reciprocal relationship: Structure flows from or follows the selection of the firm’s strategy but … Once in place, structure can influence current strategic actions as well as choices about future strategies. 01/04/2020

47. Jitendra Patel, Assistant Professor, PIMR, Indore 11– 47 Strategy and Structure Growth Pattern Sales Growth Coordination and Control Problems Efficient implementation of formulated strategy Simple Structure Functional Structure Sales Growth Coordination and Control Problems Multidivisional Structure Efficient implementation of formulated strategy 01/04/2020

48. Jitendra Patel, Assistant Professor, PIMR, Indore 11– 48 Strategy and Structure Growth Pattern 01/04/2020

49. What is Structure? How the firm is organized? Includes Reporting relationships How coordination is achieved Authority Degree of centralization Degree of integration Formalization Used to control, coordinate, and motivate employees and the activities they perform 01/04/2020 49 Jitendra Patel, Assistant Professor, PIMR, Indore

50. Structuring the Work Effort to Promote Successful Strategy Execution 01/04/2020 50 Jitendra Patel, Assistant Professor, PIMR, Indore

51. Implementing Strategy - Culture & Leadership Creating strategy-supportive corporate culture - what is culture? - where does it come from? - strong v. weak cultures Creating good fit between strategy & culture Building ethical values & support into culture Driving implementation through strategic leadership Leading the process of corrective adjustments 01/04/2020 51 Jitendra Patel, Assistant Professor, PIMR, Indore

52. Implementing Strategy - Culture & Leadership Culture is a set of shared values, attitudes… ‘a way of life’…. Patterns of ‘how we do things around here’, the company lore… Unique to business philosophy, principles & strategy…manifested in values, practices, standards & policies.. Can originate anywhere but usually by founders & leaders 01/04/2020 52 Jitendra Patel, Assistant Professor, PIMR, Indore

53. Implementing Strategy - Culture & Leadership Can be a very powerful tool in implementation process - system of informal values, peer pressures, standards & culturally acceptable behaviour & identification with strategy & vision. Can energise org. in strategy-supportive way Sizeable mismatch weakens management actions 01/04/2020 53 Jitendra Patel, Assistant Professor, PIMR, Indore

54. Implementing Strategy - Culture & Leadership Emergent & embedded cultures Multiple cultures & sub-cultures Strong / adaptive / entrepreneurial cultures Weak / unadaptive cultures 01/04/2020 54 Jitendra Patel, Assistant Professor, PIMR, Indore

55. Implementing Strategy - Culture & Leadership Culture reinforced through value system, reward system, co. lore, ceremonies, rites Continuity of leadership, small size, stable groups, geographic concentration & org. success all contribute to strong culture. Being overly political, hostile to change, not valuing initiative & leadership, complacency & insular thinking all contribute to weak cultures. 01/04/2020 55 Jitendra Patel, Assistant Professor, PIMR, Indore

56. References  David, F.D. ( 2011), “Strategic Management Concept And Cases”, Thirteenth Edition, Prentice Hall, South Carolina, USA . Dess , G.G., Lumpkin, G.T. and Marilyn, L. T. (2005), “Strategic Management”. 2 ed. New York: McGraw-Hill Irwin. Hitt , M. A. , Ireland, R.D., and Hoskissen , R.E. (2007), “Strategic Management Competitiveness and Globalization: Concepts and Cases”, Seventh Edition, Thomson South Western. Ihrig , M and MacMillan, I (2015) “MANAGING YOUR MISSION-CRITICAL KNOWLEDGE” Harvard Business Review, 81-87. Kazmi , A. ( 2008), “Strategic Management & Business Policy, Tata McGraw-Hill Publishing Company Limited, New Delhi. 01/04/2020 56 Jitendra Patel, Assistant Professor, PIMR, Indore

57. References Key Differences.com. (2016), “Strategic Formulation Vs Strategic Implementation”, Retrieved from https://keydifferences.com/difference-between-strategy formulation-and-strategy-implementation.html , Last Assessed on 15 September 2016. Nedelea , S. and Păun , L.A. (2009) “The Importance of the Strategic Management Process in the Knowledge-Based Economy” , Review of International Comparative Management , 10(1), 95-105. Neilson, G.L., Martin, K.L., and Powers, E. (2008), “ The Secrets to Successful Strategy Execution”, Harvard Business Review. 1-21. O. C. Ferrell, Michael Hartline (2014), Marketing Strategy, Text and Cases Sixth Edition South-Western Cengage Learning. Olsen, E (2009), “Strategic Planning Kit For Dummies”, 2nd Edition, Willey Publication. 01/04/2020 57 Jitendra Patel, Assistant Professor, PIMR, Indore

58. Thanks 01/04/2020 58 Jitendra Patel, Assistant Professor, PIMR, Indore