This article focuses on the complex task of strategic implementation. Turning a strategic vision into reality requires an action plan that creates consistency in the organization and takes into account potential resistance. This article will concentrate on how a firm can align the organization to help achieve strategic goals and introduce frameworks for managing change.
The process of implementing strategies is no simple task. All too often, firms do not spend enough time and effort on implementation. As a result of poor implementation, many viable strategies fail. Senior executives and consultants can get caught up in the excitement of a new strategy. The same devotion and enthusiasm should follow through to the execution phase.
Implementation is often an evolutionary process and can take significant time and management of resources. Since even the best-laid plans are not always realistic, flexibility must be maintained. A successful plan of action will also explore trade-offs and alternatives. Ample time should be spent identifying implementation risks and creating contingency plans. The timing and sequence of a strategic implementation depends on the degree of change being considered and the current state of the organization. It is often helpful to break out actions into long term and short term plans. There should always be periodic evaluations of the plan and if appropriate, modifications should be made.
The first part of this article will explore organizational alignment. An organization must move in concert to successfully reach its goals. Resources within the firm should be allocated in an optimal manner to achieve the strategic vision. We will use the 7-S Model as a tool to help build a blueprint of an aligned organization. The 7-S Model takes into account the organization as a whole. The resulting design will highlight areas that need to be changed in order to align the organization towards the common strategic goal.
Next, we will turn our attention to tactics for successfully implementing change. In many cases, strategic implementation will require significant changes in the organization. In general, most employees are wary of change and it can be a difficult time for many people in the organization. For a new strategy to be successfully executed, the leaders of the company must make sure they are conscious of all the issues and obstacles. Frameworks for instituting change can differ depending on the magnitude and timing of change. This article will introduce several approaches for managing change and address tactics for overcoming resistance.
In the early 1980s, a team of consultants from McKinsey, as well as professors from Harvard Business School and Stanford Business School, created a model for effectively organizing a company. The framework is commonly referred to as the 7-S Model. The seven S's refer to Strategy, Structure, Systems, Staffing, Skills, Style and Shared Values. Managers should take into account all of these factors in order to effectively implement strategy.
All of the seven elements are interconnected. To be successful, there needs to be a high degree of fit between the variables. Any strategic effort should address all the elements. If one variable changes, the others will be impacted as well. Below is an illustration of the 7-S model. We will describe each concept in detail and then illustrate how the model can be applied to strategic implementation.
Strategy refers to the way in which the firm creates a competitive advantage. The firm's strategy takes into account a firm's resources, competitors, customers and suppliers in order to determine an optimal position from which they can provide the greatest value. The firm may create this unique value through low-costs or differentiated product attributes.
Structure is the way in which different units of the company are divided and how authority is organized. It is vital that the company is able to constructively relate to the various parts of the organization. Firms can be structured in many different ways. The optimal structure will depend on a several factors, including the firm's strategy, its size, complexity of product and culture.
A significant challenge for organizational architecture is balancing the needs for specialization with coordination. Specialization helps a firm develop deep skills in a particular area, but when coordination is vital to firm's success more integration may be necessary. The way a firm is organized can send a very clear message about what the firm focuses on. Four common structures include functional, divisional, matrix and network.
1. Functional -- This is the simplest organizational structure. In this model, the firm is broken out into specific functions. Major areas of activity could include research and development (R&D), manufacturing, sales, marketing, finance and human resources (HR). Each of these functional areas may have a manager in charge of their particular unit, with all functional managers reporting to the president. This organizational structure works best for firms that are small and in a stable environment.
- 2. Divisional -- This organizational structure breaks the firms up into specialized divisions based on characteristics such as product lines, geography or market segment. Each division can be somewhat self-contained. Necessary functions such as R&D, Manufacturing, Sales, Marketing, Finance and HR might be duplicated in each division. A corporate function acts as the coordinating agent in this model and is responsible for setting the strategy/direction for the firm and allocating resources. This model is best suited for large firms with distinct product lines, geographical spheres or market segments. It may also be a good fit for entrepreneurial firms in fast moving environments. The weakness of this model is that integration between divisions is generally minimal. Any coordination between divisions can be costly and hard to execute. In addition, there can be additional expenses associated with duplicating functions in each division.
- 3. Matrix -- The matrix attempts to combine elements of both the functional and the divisional models. As opposed to the pyramid type structure that is inherent in the functional and divisional models, the matrix has two axes with an employee reporting to both a functional manager and a divisional manager. The benefit of this model is its ability to capture the strengths of both divisional and functional models. This model facilitates information sharing across divisions, while retaining the deep skills/knowledge from specialization. However, this model has been criticized as impractical. In some cases it can create confusion, lack of accountability and competing interests and loyalties.
- 4. Network -- This type of organization is very fluid. It can have several small, autonomous groups that join together temporarily or permanently to achieve a common goal. It can also involve groups from outside the company. Suppliers, customers or competitors can be the source of an alliance. The benefits of the structure lie in its flexibility and ability to gain access to resources and knowledge outside of the firm's normal activities. However, the absence of clear boundaries can lead to turmoil. There is also the possibility of being held up by a group outside the company.
The way a firm's procedures and processes are organized can help support the strategy. These activities can be both formal and informal. Some common systems include control practices, performance review processes, promotion/incentive systems, budgeting/resource allocation procedures, financial planning...
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