Often even the best strategies do not deliver the expected results, due to the way they are implemented.
Empirical research shows that managers today know how to plan and make decisions. At the same time, however, they have considerable problems in implementing plans.
The traps in strategy execution
While execution can go wrong for a variety of reasons, one of the most basic may be allowing the focus of the strategy to shift over time. This is mostly a matter of synchronization — getting the right product to the right customer at the right time. Synchronization is hard for a variety of reasons, including the fact that large companies sell multiple products to multiple customers in multiple geographies. The larger the company, the more difficult it is to synchronize the activities of various business units.
The coordination of implementation steps will usually be difficult if there are problems with internal communication in the company. Frequently, after the strategy has been accepted by the owners/ management, it seems that after a tedious process of agreeing an action plan between various teams, the implementation itself will be relatively easy. After all, goals and actions were agreed on board and management levels. In reality, the implementation is frequently much more difficult than initially thought. This is most often due to the fact that line employees were not informed about the planned changes
Strategies also fail because individuals resist the change. For example, headquarters might want more standardization in a product, but a local marketing executives disagree with the idea.
Many times, there can be sound reasons for resistance. Sometimes a strategy might make sense at the highest level, but its full impact on the whole organization has not been fully considered.
Organizational culture can also hinder execution. Companies sometimes try to apply a tried-and-true strategy without realizing that they are operating in markets that require a different approach. Even such a world-beater at execution as Wal-Mart, for instance, has sometimes made some missteps because of culture. One example: When Wal-Mart first moved in to Brazil, it tried to lay down terms with suppliers in the same way it does in the U.S., where it carries huge weight in the market. Suppliers simply refused to play, and the company was forced to reevaluate its strategy.
Resistance to change
The biggest problem in executing the strategy is when employees are not involved in changes. In this case they treat the strategy as something unrealistic, written only in corporate documents. If this is combined with a small discipline in measuring the results of implementing the strategy, it can be thrown away. Research shows that only 15% of businesses monitor the results of the new strategy. Furthermore, most of them do it only for a year and then they neglect the strategy.
How to implement it?
The first one is to rely on people. The supporters of this theory argue that it is enough to hire the right people and all matters will be solved successfully. The right employees can either be hired from outside or trained. Both ways are equally good. The first one will work in a geographically distant branch of the company, where local specialists are easier to recruit and pay properly. The second option should take place in the company's headquarters. According to the CEO of 3M, improving work by 15% would allow the company to implement successfully even the most complicated business strategy. To achieve 15% improvements, a better organization, improving knowledge and motivating employees is enough.
A second approach states that instead of the people, you should focus on improving the processes that take place in the company. The supporters of this method of strategy implementation argue that employees alone are not enough. Most of large companies, especially multinational corporations, employ the right people, train and reward them properly. Therefore, they are more or less at the same stage of development. The focus of managers' efforts needs to be on processes, i.e. everything that employees do during their work.
Development of employees and improvement of processes efficiency in the company
The third way of implementing the strategy is to combine both: taking care of the right employees and the efficiency of processes across the company. Some examples of companies such as Cisco or General Electric show that people and processes can be two sides of the same coin. Implementing a strategy is sometimes a very challenging project, but when you remember to hire and train employees and improve processes, it can go quite smoothly.
The management system should cover as many areas of the company as possible so that the strategy can be implemented by all employees. The management system may include 'milestones' in the deployment of plans resulting from the strategy. Thus, managers can continuously monitor the progress of implementation efforts.
Firms often use very general measures of business performance, such as sales volume and market share. When implementing the strategy, it is necessary, however, to build a whole system of criteria for assessing the company's operations, including aspects that are difficult to measure, such as employee motivation. Only the analysis of the whole set of indicators will give an indication whether everything is fine and a new strategy brings the expected results.
Most managers treat the implementation plan as a needless evil. On the one hand, they know it is required, but due to the workload of the operating tasks, many are often unwilling or lacking the energy to spell it out properly. Without a plan, however, it is difficult to discuss how to move forward. Also, it is impossible to control employees.
Usually the end of a quarter or a half of a year is the time to assess the results of the new strategy implementation. However, this is insufficient. Each project related to the strategy implementation should have different control periods - usually from two weeks to one month. Less frequent reviews will not allow to eliminate the occurring shortcomings. It is a good practice to engage an external advisor in the process of strategy implementation. Not being involved in the operational activities of the Company - they will be able to support the management in an effective strategy implementation.
The strategy can only be executed if there is proper communication within the company. It is essential to take care of the quality of meetings and to inform employees about what is happening in the company. Then the strategy will be pursued by everybody, and not only by the company's top management.
On the basis Three reasons, why good strategies fail’, Wharton Knowledge
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