STRATEGY IMPLEMENTATION

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MNG3702

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STRATEGY IMPLEMENTATION

MNG3702

TOPIC 1

STUDY UNIT 1.1

Chapter 10: Strategy implementation and Change Management (TB pg 260)

Introduction

Importance of Strategy Implementation

What is strategy implementation?

Strategy Implementation is defined as the process that turns the selected strategy into action to ensure that the stated goals (aligned with the vision and mission) are accomplished. From the definition is it clear that strategic implementation deals with translating the strategic plan into action.

The strategic implementation stage is considered the most difficult part of the strategic management process.It is considered better to rather have a “B” Strategy with an “A” implementation than an “A” Strategy with and “B” implementation.

For successful strategy implementation, organisations make use of various strategy implementation drivers, namely leadership, organisational culture, reward systems, organisational structure and recourse allocation.Strategy implementation is the communication, interpretation, adoption and enactment of strategic plans.Implementing the strategy also means that change in the organisation will be required.

The difference between strategic planning and strategy implementation:

 Strategy formulation is the intellectual or thinking phase, while implementation is the phase in which these thoughts are turned into operational action  Strategy formulation is mostly a market-driven activity with an external focus, whereas strategy implementation is an internal, operations-driven activity  Another difference is evident in the skills required; strategy formulation requires good intuitive and analytical skills, while implementation requires motivation and leadership skills  Strategy implementation is also not as well structured, rational and controlled as strategy formulation  Strategy formulation takes place mostly at top and senior manager levels  Strategy implementation in contrast is the responsibility of all levels of management, from supervisor level to the board of directors

Strategy implementation as a component of the strategic management process

The Strategic management process is a dynamic, interrelated process. Formulation decisions impact directly on strategy implementation, which in turn impact directly on strategic control. Decisions about implementing the strategy must be anticipated and incorporated into decisions concerning formulation. Strategy formulation and implementation are interrelated and success in both phases is necessary for superior performance.Implementing strategy requires that management must manage the change, and it must also be recognised that a new strategy inevitably implies change.

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2 Challenges of strategy implementation

Some of the problems organisations often experience when attempting to implement their chosen strategy or

strategies can be attributed directly to the following problems:

 Organisations place too much emphasis on strategic planning  It is important to remember that strategy implementation involves change  The business environment in which organisations in the 21 st century find themselves is volatile  Changes from outside the organisation may require organisations to adapt the chosen strategy or strategies before their implementation is complete

Barriers to successful strategy implementation

Some of the problems organisations often experience when attempting to implement their chosen strategy or strategies can be attributed directly to the lack of managerial competencies, problems include:

 No alignment between the organisational structure and the strategy  Information and communication systems are inadequate to report on the progress with strategy implementation  Coordination of implementation efforts was not sufficiently effective  Leadership and direction provided by top and middle managers was inadequate  Goals were not sufficiently defined and not well understood by employees  Formulators of the strategy were not involved in implementation or left before the implementation was complete  Key changes in the responsibilities of employees were not clearly defined

• out of 10 organisations fail to implement planned strategies, and as little as 10% of the strategies effectively

formulated are effectively implemented. Four barriers to strategy implementation have been identified:

 Vision Barrier: Only 5% of the workforce understands the vision and strategy of the organisation. Often Executives are not clear themselves on exactly what the vision and strategy of the organisation means.They may have risen in the organisation from functional areas and do not have experience of strategy management and thus conveying the strategic plans to the divisions are not effective. Management Barrier: 85% of Management spend less than an hour on strategy. Too often executives are focused on solving short-term problems and not enough time is spent on strategy management.

 Recourse Barrier: 60% of organisations do not link budgets to strategy.

 People barrier: Only 25% of managers have rewards linked to strategy.

Strategy implementation and corporate governance

The King II Report also states that it is the board’s responsibility to ensure that management not only implements the formulated strategy, but also monitors the implementation thereof. In order to implement strategies successfully, an organisation much achieve consensus both within the organisation and outside the organisation. If an organisation fails to take external stakeholders such as regulatory agencies, environment groups and the community into consideration, strategy implementation efforts could be seriously jeopardised if these groups have the power to block or delay key elements of the strategy

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Change: A fundamental implementation issue

The ability to manage change is fundamental to an effective organisation, with managers and all employees being supportive of, rather that resistant or hostile to the proposed change.Four key features of change management are: dissatisfaction with the present strategy, the vision of a better alternative or desired future state, a strategy for implementing the change and resistance to some of the new proposals of the strategy at some stage.

Strategic change

Strategic change includes all the efforts and actions that are taking place to move an organisation from its present state towards the desired future state to increase its competitive position and its profitability. Strategic change is the proactive change that must happen in organisations to achieve the clearly identified strategic objectives. Strategic change is concerned primarily with people and the tasks that they must perform in the organisation.

Strategic change requires a perceived need for change, an organisation with either a strategic leader or other manager who is aware of the possibilities, and equipped with the necessary resources to implement the change and lastly commitment from management and employees to support the change.

Types of strategic change

Strategic change can be analysed in terms of the nature and scope of the change. The nature of the change can be incremental or it can be revolutionary (fast, sudden and disruptive). The scope of the change refers to whether change can happen in the current organisational setting or whether a fundamental change of strategic direction is necessary

Four types of strategic change can be indentified:

Current Organisational setting Fundamental Changes Incremental Adaptation Evolution Revolutionary Reconstruction Revolution

Adaptation: Current organisational setting can facilitate the incremental change that must happen in order to achieve the desired goals.

Reconstruction: reconstruction of processes and policies is required to implement the new strategy

Evolution: the organisation must become a learning organisation to manage change over time

Revolution: the result of sudden and fast-changing conditions

Strategic issues of change Nature Scope

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