ISL457U-STRATEGIC MANAGEMENT
Chapter 7: Strategy Implementation
Introduction
Strategic implementation means putting the strategy into action. Strategy implementation is a crucial step in the strategic management process. The strategy implementation’s success heavily depends on the pre- steps, such as strategy formulation and also the ongoing support of many efforts. Successful strategy implementation tools can be embedded in mainly defining some basic concepts as listed below:
• Objectives and policies • Resource allocation • Structure and strategy • Organizational culture • Change management
After choosing the strategic option, the implementation phase starts. It is vital to put the formulated strategies into practice as it is also called strategy into practice.
Transition from Strategy Formulation to Implementation
As strategy formulation and strategy implementation are interdependent, they have different characteristics. Strategy implementation is putting the strategy into action by processes, resourcing, practicing, improving, and organizing.
Before the implementation step, there are two steps: strategic analysis and strategy generation & selection. In the strategic analysis, organizations need to set their mission and vision statements according to their goals. In the transition from strategy generation to implementation, everything that is written and scaled on paper becomes alive. It can also be called a change. The change can be defined as a shift of managerial tools.
The deliberate strategy, which is also known as the intended form of strategy, is set after the environment analysis is combined with the mission, which is a very prescribed and evidence-based action. In contrast, in emergent strategy, the environment is uncertain, and the information is always changing, which can cause crises for organizations.
A successful implementation is a transition and change in structure, systems, culture, or even proposed strategy. Implementation requires some actions not mutually exclusive from previous strategy generation, it is just the opposite. Those actions can be operational, financial, cultural, human resources basis, business orientated, motivational, structural, technological, ethical, sustainable, and so forth.
Objectives and Policies
Establishing objectives and policies is a future-oriented activity. Organizations need to set annual objectives according to their strategy. Clearly set objectives and share in the organization can be called as a critical key factor of success. Policies support the set objectives. In
terms of achieving the strategy, objectives work with policies. With the help of policies, human resources know how to achieve the related specifically set task.
Resource Allocation
Resource allocation is the allocation of physical, financial, and human resources regarding some criteria established by objectives. Resources are evaluated in several different perspectives:
• Functional areas (Financial, R&D, HR, Operational, Marketing and Technological) • Economics factors of production (Financial, Physical, Human and Organizational) • Tangibility (Tangible, Intangible)
Resource allocation is successful when the objectives are reached. Therefore, the implementation process relies on the right resource allocation mainly. Resource allocation is done through strategic planning by acquiring valuable data and timetable; however, the aim should be serving better performance and efficiency, a more ongoing activity. Resource allocation is mainly modeling the practices within the size and scope of the desired activity. Those issues can also be defined as the antecedents of resource allocation
Structure and Strategy
A structure acts as a controlling mechanism by formally detailing lines of authority, a span of control, responsibilities and duties, the allocation of tasks, and the different levels of management within the organization. Managers generate strategies according to the current structure of the organization. The current annual strategy might affect the long-term strategy implementation and the structure of the organization. Structure fundamentally differs on the type of organization.
There are various conceptualizations of structure types. here are many definitions for types of structure, and the primary distinction is embedded in the height, width, complexity, and method of division concepts. The height refers to the layers of management. The width refers to the status of the organization on a centralization- decentralization base. The complexity refers to the level of formal hierarchy in an organization which is also related to the formalization degree. The division refers to parts of the organization divided, mostly relating to the objectives of the set strategy. The basic types of the organizational structures can be titled as; a- simple, b- functional, c- divisional (by geographical area, by product, by the customer, by the process), d- strategic business unit (SBU), e- matrix.
Simple Structure
A simple structure is a relatively small-sized organization with centralized and direct coordination with a hierarchy of less staff of operation such as primary schools, a supermarket, or stores.
Functional Structure
The functional structure is a simple and cost-friendly centralized structure where basic activities function separately. In this structure, all the services are separate in the core; however, they are the rings of the chain (organization) and need to be powerful. Therefore, coordination and controlling is an advantage as it is simple and cost-friendly.
Divisional Structure
Divisional structure is a popular structure for organizations with several products or services which may or may not be related. These structures are common in multi-national or holding type organizations.
The Strategic Business Unit (SBU)
Strategic Business Unit (SBU) is a structure that enables successful strategy implementation in a multidivisional organization in a conglomerate and in a holding according to certain characteristics, such as competing in the same industry, is located in the same area or has the same customers.
Matrix Structure
Matrix Structure is a complex but most frequently used structure where there is a need to coordinate both products and countries, a business that manufacturers and markets worldwide. A higher complexity but a smaller hierarchy depicts matrix structures. The matrix structure is appropriate when the organization has an increased number of products, customers, areas, and processes. Matrix structures are usually internalized in fast-changing sectors such as technology. And also, it is appropriate in small sophisticated service companies.
Implementation and Culture
Organizational culture is embedded in mission, management functions, behavioral activities, goals, objectives, strategy, and, eventually, success. All those functions are mutually bonded. Therefore, thinking about culture in strategy implementation cannot be separated from the strategy formulation stage or even structure.
In the strategic implementation stage, culture is mainly assessed if it is suitable or not for the strategy to be put into practice. Organizational culture can be seen as an asset possessing key resources that often determines the success of strategy implementation. For this reason, the intended strategy may not be suitable as anticipated. Also, a change in an organization’s culture can not readily be appreciated by all members of the organization. So, it would be more useful to identify some cultural typologies and analyze the suitability for an organization at first by remembering that organizational culture is unique.
After examining the culture of the organization, it is suggested to consider the typology of the organization that would be useful in strategic analysis. There are two important typology studies: Charles Handy (1993) has
suggested power, task, person, and role culture. In Miles and Snow’s (1978) typology, cultural types lead to different reactions in different strategic options:
a) Defender cultures, b) Prospectors, c) Analyzer cultures, d) Reactor cultures
The purpose of examining the organizational culture under typology lenses is to see the possible strategic courses of action. By doing, so organizations can view the status quo and the future aspects of the strategy. This helps management to realize the possible challenges in terms of implementation, which might require a change of the culture.
Change Management
The strategy itself can be defined as the change of current status to vision. Strategy implementation is the stage where the change is being managed successfully. Change is inevitable for organizations in dynamic environments.
The first step begins with undertaking the aspects of change regarding the strategy formulation and how to manage in implementation. It means that the change can be in the structure, strategy, and culture, which are all threats for the employees and managers.
Three common approaches are used to implementing strategies:
a) Force change strategy, as the name implies, it is a fast, order giving, and people enforcement strategy; but can face high resistance. b) Educative change strategy is the information given (need for the change), committing and convincing, but takes time to reach everyone, so it is slow and painful. c) Rational (self-interest) change strategy is to convince people as the change would be in their advantage that makes the implementation much more comfortable when it is successful. However, it is unclear whether the change will benefit everyone.