1. Strategy Implementation and Control
The final step in the strategic management process is implementation—how strategy is put into action. Some people argue that strategy implementation is the most difficult and im- portant part of strategic management.91 No matter how brilliant the formulated strategy, the organization will not benefit if it is not implemented skillfully. Today’s competitive en- vironment requires growing recognition of the need for more dynamic approaches to im- plementing strategies.92
Strategy is not a static, analytical process. It requires vision, intuition, and employee participation. Effective strategy implementation requires that all aspects of the organization be in congruence with the strategy and that every individual’s efforts be coordinated toward accomplishing strategic goals.
1.1. INFORMATION AND CONTROL SYSTEMS
Strategy implementation involves using several tools—parts of the firm that can be adjusted to put strategy into action—as illustrated in Exhibit 5.15. Once a new strategy is selected, it is implemented through changes in leadership, structure, information and control systems, and human resources.94 Implementation involves regularly making difficult decisions about doing things in a way that supports rather than undermines the organization’s chosen strategic ap- proach. The remaining chapters of this book examine in detail topics including leadership, or- ganizational structure, information and control systems, and human resource management.
The primary key to successful strategy implementation is leadership, the ability to influ- ence people to adopt the new behaviors needed for strategy implementation. An integral part of implementing strategy is to build consensus. People throughout the organization must believe in the new strategy and have a strong commitment to achieving the vision and goals. Leadership means using persuasion, motivating employees, and shaping culture and values to support the new strategy.
Managers can make speeches to employees, build coalitions of people who support the new strategic direction, and persuade middle managers to go along with their vision for the company. At IBM, for example, CEO Sam Palmisano uses leadership to align people throughout the organization with a new strategy aimed at getting IBM intimately involved in revamping and even running customers’ business operations. To implement the new approach, Palmisano dismantled the executive committee that previously presided over strategic initiatives and replaced it with committees made up of people from all over the company. He’s investing tons of money to teach managers at all levels how to lead rather than control their staffs. And he’s talking to people all over the company, appealing to their sense of pride and uniting them behind this new vision and strategy.95 With a clear sense of direction and a shared purpose, employees feel motivated, challenged, and empowered to pursue new strategic goals.
Another way in which leaders build consensus and commitment is through broad participation. When people participate in strategy formulation, implementation is easier because managers and employees already understand the reasons for the new strategy and feel more committed to it.
1.3. HUMAN RESOURCES
The organization’s human resources are its employees. The human resource function recruits, selects, trains, transfers, promotes, and lays off employees to achieve strategic goals. Train- ing employees helps them understand the purpose and importance of a new strategy or helps them develop the necessary skills and behaviors.
New strategies involve change, which naturally generates resistance. Sometimes employees have to be let go and replaced. One newspaper shifted its strategy from an evening paper to a morning paper to compete with a large newspaper from a nearby city. The new strategy required a change from working daytimes to working from 1:00 p.m. to about midnight or so. The change fostered resentment and resistance among department heads. To implement the plan, 80 percent of the department heads had to be let go because they refused to cooperate. New people were recruited and placed in those positions, and the morning newspaper strategy became a resounding success.96
At IBM, employees in administration and computer repair were let go by the thousands. They were replaced by people who are skilled in business operations as well as technology.97
2. Implementation during Turbulent Times
The challenges of implementing strategy continue to escalate with the increased complex- ity and turbulence in today’s business environment. Many managers are confident that they have found the right strategy to provide a competitive advantage, but they are less optimistic about their ability to implement it. Three issues that are particularly criti- cal for implementing strategy during turbulent times are a global mind-set, paying close attention to corporate culture, and embracing the Internet and other information technologies.
2.1. GLOBAL MIND-SET
To implement strategies on a global scale, managers have to adopt a global mind-set and be aware of various implementation issues. Flexibility and openness emerge as mandatory leadership skills. Structural issues are more complex as managers struggle to find the proper mix to achieve the desired level of global integration and local responsiveness, as discussed earlier. Information, control, and reward systems have to fit the values and incentives within the local cultures. Finally, the recruitment, training, transfer, promotion, and layoff of international human resources create an array of problems not confronted in North America. To be effective internationally, managers have to apply a global perspective to strategy implementation.
For example, one well-respected multinational firm formed a task force of U.S. employees to review and revise workforce policies in connection with a new strategy.
Employees from different levels and functional areas met for months and sent employee surveys to all U.S.-based facilities to obtain wider input. Top executives reviewed and approved the final draft. They were surprised when the streamlined workforce manual, which reduced the number of policies from 120 to 10 core policies, met with resistance and even hostility by the overseas units. Managers’ lack of a global mind-set led them to assume incorrectly that the international units would accept whatever was handed down from U.S. headquarters.
2.2. CORPORATE CULTURE
At the same time that managers need a global mind-set, they have to create and maintain a cohesive corporate culture that supports the strategy. Culture is the link between strategy and performance outcomes, and different culture styles are better suited to different strate- gic directions.98 Recall our discussion of different types of culture and the high-performance culture from Chapter 2. A study of the world’s most admired companies, as reported annually in Fortune magazine, found that managers in these organizations pay close attention to culture and to the values that contribute to strategic success.99 Managers want to develop a culture that is oriented toward performance—encouraging everyone to adopt the behaviors and attitudes needed to meet the company’s strategic goals and holding everyone responsible for success.100
An example comes from Ansys, a developer of engineering simulation products used to predict product design behavior in manufacturing operations. Ansys has more than two dozen sales offices on three continents and a network of partners in 40 countries. Serving diverse customers around the world with superior technology requires a commitment to a global mind-set as well as a culture of intense customer focus. Ansys managers built a family-like, high-performance culture that embraces customers as well as employees. Employees are committed to the vision of meeting customers’ emerging technology needs. Because people feel appreciated and cared about, they feel safe taking risks that lead to better products and better service. A key aspect is, as one executive put it, “giving people enough leeway, enough rope, but not letting them hang themselves.” Employees are empowered with decision-making authority, but the company has in place systems that prevent people from possibly taking a hard fall.101
2.3. INFORMATION TECHNOLOGY
A final concern for managers implementing strategy during turbulent times is to incorpo- rate the Internet and other information technology. For example, Dell pioneered the use of an online system to let customers configure computers to their exact specifications and submit the order over the Web, saving the cost of salespeople. Many firms now use online mass customization to decrease costs while enhancing their product mix and building their brand reputation.102
Another company that uses the Internet successfully to implement strategy is indepen- dent toy retailer Kazoo & Company. Owner Diane Nelson competes with giant retailers such as Wal-Mart by using a differentiation strategy that focuses primarily on selling edu- cational, nonviolent toys. She considered franchising as a way to grow the business but decided that expanding via a website would better enable the company to maintain its distinctiveness. Kazoo.com quickly became a go-to site for people seeking specialty toys, and Nelson negotiated deals with some vendors that will send products directly to custom- ers who order online. About 40 percent of Kazoo’s business now is online, and at least a quarter of that comes from overseas.
Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.