Follow by Email

Friday, April 29, 2011

BUILDING AN ORGANIZATION CAPABLE OF GOOD STRATEGY EXECUTION



Managers who are handling the strategy implementation or execution process can be considered successful if and when the company achieves the targeted strategic and financial objectives and goals and shows good progress in making its strategic vision a reality. Strategic implementation means bringing strategy into action or bringing strategy in organizational working environment. While implementing organization’s strategy management responsible for execution of the strategy have to think about how to make sure that all the stakeholders most importantly employees within the organization understands what is meant by that strategy, how and why that is important for the organizational success and what are the end result for effective implementation of the strategy is communicated as intended by the management.  For effective execution of Strategy, managers requires  to think through the answer to what does my area have to do to implement  the strategic action plan and what should I do to get these things accomplished. All strategy is unique and demands unique way of effective execution so that intended end goals will be achieved. However, there is something in common managers have to careful and follow while implementing any kinds of strategy. Those key strategic pillars are:
*      Before execution of the strategy managers or management team should build organization’s competencies, capabilities, and resource strengths that are demanded by the strategy.
*      They have to make sure that organization has enough funds and human manpower  to marshal behind the drive for strategy execution
*       Strategic management team should develop policies and procedures to facilitate strategy execution process which lower level managers and operational level employees’ can follow.
*      They have to install information system and operating systems that enable human organization’s human resources to carry out their strategic roles proficiently and effectively.
*      Managers can tie rewards directly to the accomplishment of strategic and financial targets and to good strategic execution.
*      For best strategic execution, managers or management should install a corporate culture of change in which employees can learn to deal with the change and understands that change is always for the betterment and to achieve operating excellence as rapidly as feasible.
Strategic implementation is the hardest part of the strategic management system of the organization. For effective execution of the strategy, we may need to have unique human skills required by our strategy. We have to find those skills within our human resources in the organization. If we don’t have them then we need to hire new man powers that have such skills. Beside this, we need to have technology in hand to execute that strategy. If we don’t have any then we need to buy new one and trained our employees about how to operate such technology. Organization should develop competencies in performing strategic-critical value chain activities and updating them to match changing market conditions and customer expectations. Furthermore, top level management of the organization has to decide how much decision-making authority to push down to lower-level managers and frontline employees so that execution of the strategy will be transparent and effective.
It is obviously true that different strategies and organizational circumstances demands different mixes of background, experiences, management styles, and know-how, for the successful implementation of the strategy but still most important consideration is to fill key managerial slots with very smart people who are clear thinkers, good at figuring out what needs to be done, and skill full in making it happen. If we are able to put together a talented management team with the right mix of experience, skills, and abilities to get things done is one of the first strategy implementation steps.
Sometime we can do all our strategic functions and operations by ourselves but most of the time when our activities or business grows then we have to outsource some functions or operations from others too. However, we need to be careful while choosing which activities to perform internally and which to outsource. Because the effective and wise decision about outsourcing can lead us to several strategy-executing advantages such as lower costs, strategic focus, prompt decision making, and a better arsenal of competencies and capabilities with the among organization’s resources. While implementing or executing the strategy an organization should concentrate its full energies and resources on those value chain activities which are at the core of its strategy and from which it can create unique value. “For example, E, & J. Gallo Winery outsources 95 percent of its grape production, letting farmers take on the weather and other grape-growing risks while it concentrates its full energies on wine production and sales. A number of PC makers outsource the mundane and highly specialized tasks of PC assembly, concentrating their energies instead on product design, sales and marketing, and distribution”. (Thompson, A.A., Strickland, A.J. & J.E. Gamble)
When I read the  chapter “Building an organizational capable of good strategic execution” of our text book, I remembered one of our Nepalese government owned bank which was facing difficulties in implementation or execution of its strategy to change the manual banking system to computerized banking system. At the beginning, the Nepal Bank Limited (NBL) used to have a manual banking system. There were no computers at all to perform banking transactions. In 2007/08, management of the NBL decided to change its manual system to the computerized system. The reason they decided to change their manual system to computerized system is that computerized system is lot faster and easier than that of the manual system which is monotonous and highly time consuming. Beside this dozens of bank opened during that time with highly sophisticated computerized banking system and even all the existing bank successfully changed their manual banking system to computerized banking system. Therefore, NBL has only two choices, either to change the way it does business or go out of business. NBL decides to change it manual systems to computerized systems.
When NBL changed its manual system to computerized system, there was huge resistance to change from the employees for the change being made. The reason for such huge resistance to the change is that most of the NBL employees were computer illiterate. They fear that new system will take their job and they will unable to work with computerized system. Actually the management of the bank was unable to communicate their strategy of changing their internal operation system from a manual to computerized is one of their move to meet and beat the competition. Beside this, NBL did not communicate with their employees that NBL will train them to work with computerized system and they will unable to communicate that their job will be safe. Not only this but also NBL just changed the strategy without thinking about whether or not we have right mix of peoples with computer skills who can adopt and cope with the change and handle the new system. One of the major weaknesses NBL was facing while executing the strategy is that they are unable develop the new core competencies within themselves to execute the new strategy. They forgot that if we change the system we do business then we either need to change the entire resources (human, technology etc.) or we need to change the skills or train them to cope with the change. As a matter of fact, they did nothing and just change the strategy. Therefore, they failed to successfully execute the strategy.
When I read the case “Robin Hood”, I realized that there is huge strategic execution gap leading to the failure of whole mission. The band of Robin Hood is overstaffed in such a way that there were insufficient resources to sustain the band. Beside this, the travelers are beginning to find different alternative ways through the forest and Merrymen group are unable to reach them leading to the decline in the band’s revenues stream. As a matter of facts, Robin Hood group unable to cope with the change as they grow larger and larger. They would be successful if they had addressed the change properly structuring the band with training and development. In my opinion, the mission statement of the Robin Hood Band, “rob from the rich and give to the poor” is inconsistence with what the group really wanted to achieve in the future. In fact, they need to change their strategy as per the change in the external environment. For example, travelers are beginning to avoid the forest or they have started to find alternate routes through the forest to avoid apprehension. However, the Merryman’s strategy remains the same.  An alternative strategy that the Robin Hood can implement is that they can expand the organization into areas outside the Sherwood Forest.
 An organization-wide change includes the change in mission statement of the organization, restructuring the entire operations of the organization, rightsizing the organization, and restructuring personnel or human resources into self-managed teams, which is needed for Robin Hood band to survive.   It is true that when any changes are initiated in an organization there is generally resistance to accept those changes and there will be disagreements on new management styles and purposes. The culture of the organization develops and emerges over time and there will be resistant to change because of the persistent nature of how things have normally been done within the band. Robin Hood must consider whether to change their policy of outright confiscation of goods and institute a fixed transit tax (shift to a new business purpose) (McNamara, Basic Context for Organizational Change, 1999).   His lieutenants strongly object and do not want to change the Merrymen's famous motto, or tax the farmers and the townspeople that support their fight against the Sheriff   (Thompson, Strickland, & Gamble, 2005).  
In my opinion, execution of the strategy is complex task then forming the strategy. We are trained to formulate the different corporate level, business level and operational level strategies but we lack the execution part of the strategy. To a large extent, our end result or our business accomplishment and goal achievement depends on how we execute our strategy. To achieve our intended goals, our strategy should align with the human resources of the organization and their skills, technology, mission and objectives of the organization etc. And there should be clearly defined authority and responsibility for proper execution of the strategy. Without proper alignment of the strategy with that other key aspect of the organization, it will be difficult to implement and execute the strategy into action. Furthermore, strategic execution takes long period of time and it cannot be done overnight. When we execute new strategy many factors both anticipated and unanticipated come into play adding difficulties to the execution. For example, competitors may act unfairly to our new move (external factor) or our employees may resist the change demanded by our strategy in operation level (internal factor).  All these factors should be taken into consideration before we execute our strategy which obviously increases the difficulty of execution efforts. The principle of strategy execution is the principal of alignment where strategy is simplified to the point so that it can be effectively communicated to the people who are directly or indirectly involved with strategy implementation in such a way that they understands what is really mean to implement that specific strategy and what will be the end result of strategy implementation.




             


















Reference:
Thompson, A.A., Strickland, A.J. & J.E. Gamble (2008) Crafting and Executing Strategy: The Quest for Competitive Advantage 17th edition. New York, McGraw-Hill Irwin


No comments:

Post a Comment