Study Notes for MNG 302B – Larry Mowbray
STRATEGY IMPLEMENTATION
MNG 302B
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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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 21st 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
9 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:
Scope
Current Fundamental
Organisational Changes
setting
Incremental Adaptation Evolution
Nature
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
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Strategic issues of change
Strategic change requires that important issues be taken into account. Different organisational settings will
require different emphases o be put on these issues. Some of the strategic change issues that must be
managed and taken into consideration are:
Time: how quickly is change needed, does the organisation have time to change?
Scope: is dramatic revolutionary change needed or only a moderate change?
Diversity: the level of homogeneity in the organisation supports change. A heterogeneous workforce can
hamper change.
Capacity: does the organisation have the capacity in terms of resources to change?
Readiness: are employees ready for change? This also refers to the level of resistance to change.
Capability: do the organisation’s employees and managers have the capabilities to implement change?
The causes of strategic change
In order to manage any issue, it is important to understand the causes of the particular issue. The same can be
said for strategic change, one must understand the causes of strategic change in order to help with the
management thereof. A new strategy is the result of changes in the various environments (micro, market and
macro), however the main forces driving strategic change can be summarised as follows:
Environment: Changes in the macro and market environments of the organisation lead to a demand for major
strategic change.
Technology: Technological obsolescence and improvements with may occur within the organisation or
externally can have a substantial impact on the survival of companies.
Regulatory events: Many of these change pressures will be outside the control of organisations and they have
no option but to respond.
Business relationships: New alliances, mergers and other significant developments resulting from a new
strategy may require substantial changes in the organisational structure.
The strategic awareness and skills of managers and employees: Promotion expectations require strategic
development and growth in organisations. This strategic growth requires changes. Organisational capabilities
and resources are important in this sense.
The strategic change process
Strategic change involves a process. One of the most important tasks in this process is to understand and
manage resistance to change. The issues that must form part of this process include identifying the following:
• Identifying the areas of change:
− New technology and operational tasks may be needed in new production or service delivery
processes.
− Administrative changes involve new structures, policies, budgets and reward systems
− In the people area of change, it is important to match individual and corporate values. It is
important that the areas where change is necessary to implement the new strategy must be
identified before the management of change can be successful.
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