Essential Steps to a Successful Strategy Implementation Process
We keep hearing news stories and anecdotes about this “successful business” or that “entrepreneur who hit the big time with his business idea”. These stories often leave us in a state of wonder and awe, and we find ourselves wanting to know more. More about how the business became a success, more about what inspired a normal working guy (or girl) to think of a novel and brilliant business idea, and more about how someone can start a business, and make her dreams a reality.
We become so fixated on these stories that, all too often, we overlook the other side of that reality: that just as businesses become big and successful, there are also companies – perhaps in greater numbers – that fail.
What many often fail to realize, is that they can also learn from business ideas that tanked and business ventures that never really got off the ground. Better, they can also learn a lot from businesses that were able to get started, and then, somewhere along the way, something went wrong. They were having problems and great difficulty in maintaining their operations, until most of them declared bankruptcy or liquidated.
Businesses fail for a lot of reasons. Some had to close up shop because of economic upheavals that simply did not provide any room for new businesses to try making headway in their operations. Others blame the actions of competitors, and even the business challenges that are inherent in the market. There are also those businesses that blame the lack of resources for the failure.
However, this makes one wonder: if the economy, the competitors, the market and its challenges, and the availability of resources are at fault, how come other businesses were able to survive, and even become hugely successful? At this point, the most logical reason that comes to mind is mismanagement. More often than not, it is about how the business was unable to manage its strategies very well.
Strategic management is considered to be one of the most vital activities of any organization, since it encompasses the organization’s entire scope of strategic decision-making. Through the strategic management process, it allows the organization to formulate sets of decisions, actions and measures – collectively known as strategies – that are subsequently implemented in order to achieve organizational goals and objectives.
Strategy formulation – where the organization’s mission, objectives, and strategies are defined and set – is the first stage in strategic management. That is where it all begins, which means that, if the organization was unable to complete that stage with very good results, then the company’s strategy management is already a bust from the start. Many organizations fail during the first stage, in the sense that they are unable to come up with strategies that will potentially take the organization where it wants to be.
However, there are also a lot of businesses that are able to formulate excellent and very promising strategies. And yet, the end result is still the organization having problems and even ultimately closing down. What could have gone wrong?
Most probably, it was because of poor implementation of the strategies.
The second stage of strategic management, after strategy formulation, is “strategy implementation” or, what is more familiar to some as “strategy execution”. This is where the real action takes place in the strategic management process, since this is where the tactics in the strategic plan will be transformed into actions or actual performance.
Needless to say, it is the most rigorous and demanding part of the entire strategic management process, and the one that will require the most input of the organization’s resources. However, if done right, it will ensure the achievement of objectives, and the success of the organization.
If strategy formulation tackles the “what” and “why” of the activities of the organization, strategy implementation is all about “how” the activities will be carried out, “who” will perform them, “when” and how often will they be performed, and “where” will the activities be conducted.
And it does not refer only to the installation or application of new strategies. The company may have existing strategies that have always worked well in the past years, and are still expected to yield excellent results in the coming periods. Reinforcing these strategies is also a part of strategy implementation.
The basic activities in strategy implementation involve the following:
- Establishment of annual objectives
- Formulation of policies for execution of strategies
- Allocation of resources
- Actual performance of tasks and activities
- Leading and controlling the performance of activities or tactics in various levels of the organization
Incidentally, businesses may also find that they have to perform further planning even during the implementation stage, especially in the discovery of issues that must be addressed.
Strategy implementation is the stage that demands participation of the entire organization. Formulation of the strategies are mostly in the hands of the strategic management team, with the aid of senior management and key employees. When it comes to implementation, however, it is the workforce that will execute the strategic plan, with top or senior management taking the lead.
FACTORS THAT SUPPORT STRATEGY IMPLEMENTATION
Effective execution of strategies is supported by five key components or factors. All five must be present in order for the organization to be able to carry out the strategies as planned.
There are two questions that must be answered: “Do you have enough people to implement the strategies?” and “Do you have the right people in the organization to implement the strategies?”
The number of people in your workforce is an issue that is easier to address, because you can hire additional manpower. The tougher part of this is seeing to it that you have the right people, looking into whether they have the skills, knowledge, and competencies required in carrying out the tasks that will implement the strategy.
If it appears that the current employees lack the required skills and competencies, they should be made to undergo the necessary trainings, seminars and workshops so that they will be better equipped and ready when it’s time to put the strategic plan into action.
In addition, the commitment of the people is also something that must be secured by management. Since they are the implementers, they have to be fully involved and committed in the achievement of the organization’s objectives.
One of the basic activities in strategy implementation is the allocation of resources. These refer to both financial and non-financial resources that (a) are available to the organization and (b) are lacking but required for strategy implementation.
Of course, the first thing that comes to mind is the amount of funding that will support implementation, covering the costs and expenses that must be incurred in the execution of the strategies. Another important resource is time. Is there more than enough time to see the strategy throughout its implementation?
The organizational structure must be clear-cut, with the lines of authority and responsibility defined and underlined in the hierarchy or “chain of command”. Each member of the organization must know who he is accountable to, and who he is responsible for.
Management should also define the lines of communication throughout the organization. Employees, even those on the lowest tier of the organizational hierarchy, must be able to communicate with their supervisors and top management, and vice versa. Ensuring an open and clear communication network will facilitate the implementation process.
What systems, tools, and capabilities are in place to facilitate the implementation of the strategies? What are the specific functions of these systems? How will these systems aid in the succeeding steps of the strategic management process, after implementation?
This is the organizational culture, or the overall atmosphere within the company, particularly with respect to its members. The organization should make its employees feel important and comfortable in their respective roles by ensuring that they are involved in the strategic management process, and that they have a very important role. A culture of being responsible and accountable for one’s actions, with corresponding incentives and sanctions for good and poor performance, will also create an atmosphere where everyone will feel more motivated to contribute to the implementation of strategies.
These factors are generally in agreement with the key success factors or prerequisites for effective implementation strategy, as identified by McKinsey. These success factors are presented in the McKinsey 7s Framework, a tool made to provide answers for any question regarding organizational design.
The emphasis of the framework is “coordination over structure”, which also supports how strategy implementation is described to involve the entire organization and not just select departments or divisions.
The 7 factors are divided into two groups: the Hard S (strategy, structure and systems) and the Soft S (style, shared values, staff and skills)
The strategy – or the plan of the business to achieve competitive advantage and sustainable growth – must be long-term and clearly defined. It must indicate a direction that leads to the attainment of objectives. When you take the organization’s mission and core values, the strategy should also be in line with them.
The organizational structure must be visible to everyone, and clearly identify how the departments, divisions, units and sections are organized, with the lines of authority and accountability clearly established.
There should be a clear indication and guide on how the main activities or operations of the business are carried out. The processes, procedures, tasks, and flow of work make up the systems of the organization.
This addresses the management or leadership style in force within the organization, from top management to the team leaders and managers in the smaller units. Strategy implementation advocates participative leadership styles, and so this is really more about defining and describing the interactions among the leaders in the organization and, to some extent, how they are perceived by those that they lead or manage.
Organizations will always have to deal with matters regarding staffing. Human resources, after all, is one of the most important assets or resources of an organization. Thus, much attention is given to human resource processes, specifically hiring, recruitment, selection and training.
Employees without skills are worthless resources to the organization. In order to aid the organization on the road towards its goals, the employees must have the skills, competencies and capabilities required in the implementation of strategies.
This is at the heart of the McKinsey 7s framework, and they refer to the standards, norms and generally accepted attitudes that ultimately spur members of the organization to act or react in a certain manner. Employee behavior will be influenced by these standards and norms, and their shared values will become one of the driving forces of the organization as it moves forward.
Usually, organizations may take a look at each of these key success factors for individual analysis. However, the McKinsey approach takes a wider approach, assessing if they are well-aligned with the other factors or not. All seven prerequisites are interconnected, which means all seven must be present, and they must be effectively aligned with each other, in order to ensure effective strategy implementation, and overall organizational effectiveness.
Here is another interesting lecture from Stanford University on how to align your organization to execute strategy.
WHAT CAUSES FAILURE OF STRATEGY IMPLEMENTATION?
Going back to the earlier discussion on why some businesses failed, even with the best-laid plans and strategies, have you ever wondered what went wrong in the implementation of these strategies?
In a study conducted by Fortune Magazine, it was revealed that nine out of ten organizations are unable to fully, completely and properly implement their strategic plan, often resulting to complete business failure. We’re looking at nine out of ten organizations that just wasted their resources, opportunities, and probably even very good strategies that have been formulated in the first stage of the strategic management process.
The most common reasons why implementation of the strategies are unsuccessful are:
- The employees and managers do not fully understand the strategy, and this arises mainly from their lack of understanding of the mission and objectives of the organization. This lack of understanding may be traced to a number of reasons, such as:
- Lack of effective communication, or lack of communication, in general. It falls upon the shoulders of senior management and the strategic management team to communicate the organizational mission and goals to every member of the workforce, and also make them understand the strategy and each member’s particular role in how it will be carried out.
- Lack of ownership on the part of the “implementers”, the members of the workforce. Since the employees and maybe even the supervisors of the smaller units are unaware of the strategy, or do not understand it, there is very little motivation and sense of empowerment to make them perform well in their respective tasks and functions. There is a lack of ownership, since the employees do not feel that they have a stake in the plan, and this results to poor implementation of the strategy.
- Confusing, convoluted, and generally overwhelming plan. Some people can only assimilate several things at one time. If they are presented with a plan that seems too massive and too ambitious for them, their natural response would involve shutting down and refusing to understand. Thus, it is important that the strategy formulation be carried out properly, and the strategic plan prepared in a user-friendly manner. Also, communication is key. No matter how overwhelming the strategic plan may be, it can still be understood and accepted by the workforce if communicated properly.
- The strategy is disconnected from with crucial aspects of the business such as budgeting and employee compensation and incentives. Executing the strategies involves funding, resource allocation, financial management and other budgeting matters, and if there is no link connecting these activities to the strategies, then there is no way that they will be implemented effectively. This is largely an issue that must be addressed in the strategy formulation stage.
- The strategy is paid little attention by management. All too often, the owners, managers and supervisors become too caught up in the day-to-day operations of the business, they rarely refer to the strategic plan. Before long, they end up adopting a dismissive attitude towards the strategic plan, treating the strategies as something related to the overall management process, but still separate. They devote a token number of hours in a month to go over the plan and discuss strategies, but that’s it. After the discussion, they will put it at the back of their minds, and continue as they were.
In order to ensure the success of the strategy implementation, covering all your bases is important. The best way to go about that is by following the essential steps to executing the strategies.
STEPS IN STRATEGY IMPLEMENTATION
To ensure an effective and successful implementation of strategies, it’s a good idea to have a system to go about it. Take a look at the steps to ensure that happens.
Step #1: Evaluation and communication of the Strategic Plan
The strategic plan, which was developed during the Strategy Formulation stage, will be distributed for implementation. However, there is still a need to evaluate the plan, especially with respect to the initiatives, budgets and performance. After all, it is possible that there are still inputs that will crop up during evaluation but were missed during strategy formulation.
There are several sub-steps to be undertaken in this step.
- Align the strategies with the initiatives. First things first, check that the strategies on the plan are following the same path leading to the mission and strategic goals of the organization.
- Align budget to the annual goals and objectives. Financial assessments conducted prior will provide an insight on budgetary issues. You have to evaluate how these budgetary issues will impact the attainment of objectives, and see to it that the budget provides sufficient support for it. In the event that there are budgetary constraints or limitations, they must first be addressed before launching fully into implementation mode.
- Communicate and clarify the goals, objectives and strategies to all members of the organization. Regardless of their position in the organization’s hierarchy, everyone must know and understand the goals and objectives of the organization, and the strategies that will be employed to achieve them.
Step #2: Development of an implementation structure
The next step is to create a vision, or a structure, that will serve as a guide or framework for the implementation of strategies.
- Establish a linking or coordination mechanism between and among the various departments and their respective divisions and units. This is mainly for purposes of facilitating the delegation of authority and responsibility.
- Formulate the work plans and procedures to be followed in the implementation of the tactics in the strategies.
- Determine the key managerial tasks and responsibilities to be performed, and the qualifications required of the person who will perform them.
- Determine the key operational tasks and responsibilities to be performed, and the qualifications required of the person who will perform them.
- Assign the tasks to the appropriate departments of the organization.
- Evaluate the current staffing structure, checking if you have enough manpower, and if they have the necessary competencies to carry out the tasks. This may result to some reorganization or reshuffling of people. In some cases, it may also require additional training for current staff members, or even hiring new employees with the required skills and competencies. This is also where the organization will decide if it will outsource some activities instead.
- Communicate the details to the members of the organization. This may be in the form of models, manuals or guidebooks.
Step #3: Development of implementation-support policies and programs
Some call them “strategy-encouraging policies” while others refer to them as “constant improvement programs”. Nonetheless, these are policies and programs that will be employed in aid of implementation.
- Establish a performance tracking and monitoring system. This will be the basis of evaluating the progress of the implementation of strategies, and monitoring the rate of accomplishment of results, or if they were accomplished at all. Define the indicators for measuring the performance of every employee, of every unit or section, of every division, and of every department.
- Establish a performance management system. Quite possibly, the aspect of performance management that will encourage employee involvement is a recognition and reward structure. When creating the reward structure, make sure that it has a clear and direct link to the accomplishment of results, which will be indicated in the performance tracking and monitoring system.
- Establish an information and feedback system that will gather feedback and results data, to be used for strategy evaluation later on.
- Again, communicate these policies and programs to the members of the organization.
Step #4: Budgeting and allocation of resources
It is now time to equip the implementors with the tools and other capabilities to perform their tasks and functions.
- Allocate the resources to the various departments, depending on the results of financial assessments as to their budgetary requirements.
- Disburse the necessary resources to the departments, and make sure everything is properly and accurately documented.
- Maintain a system of checks and balances to monitor whether the departments are operating within their budgetary limits, or they have gone above and beyond their allocation.
Step #5: Discharge of functions and activities
It is time to operationalize the tactics and put the strategies into action, aided by strategic leadership, utilizing participatory management and leadership styles.
Throughout this step, the organization should also ensure the following:
- Continuous engagement of personnel by providing trainings and reorientations.
- Enforce the applicable control measures in the performance of the tasks.
- Evaluate performance at every level and identify performance gaps, if any, to enable adjusting and corrective actions. It is possible that the corrective actions may entail changes in the policies, programs and structures established and set in earlier steps. That’s all right. Make the changes when necessary.
Basically, the results or accomplishments in Step #5 will be the input in the next step, which is the third stage of Strategic Management: “strategy evaluation”.
Some argue that implementation of strategies is more important than the strategies themselves. But this is not about taking sides or weighing and making comparisons, especially considering how these two are important stages in Strategic Management. Thus, it is safe to say that formulating winning strategies is just half the battle, and the other half is their implementation.