Uncertain and rapidly changing business environment has required organization to look for the new ways and formulate strategies that facilitates in the achievement of organizational objectives. However, there always lies challenge for the successful execution of strategy. Managing internal operation is an important component in the execution of strategy and finally, the organizational success. The execution part of the strategy is equally important as the formulation of strategy. Despite of the fact that how well the strategy has been crafted, best strategies in the world have failed due to the inability of management to affectively organize and manage its internal operation. Basically, effective and efficient execution of strategies lies on the ability of management to organize resources, people, institute policies and procedures and adopt the best practice and systems.
The successful execution of strategy lies in the ability of organization to successfully organize its resources that is required to support the organizational units towards the facilitation of desired goals. Management should be able to determine how much fund is required for the execution of strategy and strengthening its capabilities and competencies. Sometimes, organizations need to deploy more people, new facilities and system to support the new strategies. Management should be able to consider how much fund should be raised or if the available cash flow is sufficient for the execution of new strategies. There are many cases were underfunding of project has slowed the whole process and affected the execution of strategy. Similarly, overfunding leads to waste of organizational resources and reduces financial performance. As the management formulates the new strategy, there might be requirement for more people, new equipment and systems, additional facilities and more operating cost. For e.g. If a company formulates a new strategy to enhance it customer service, the company have to invest additional resources in installing new systems, training people and hiring more people.
It requires company to effectively and efficiently allocate its resources for successful execution of the given strategy. There are tough times when management has to downsize and cut the project which doesn’t seem profitable in order to successfully execute its strategy. Current economic downturn has forced many organizations to downsize and terminate the project which aren’t profitable in order to pursue their strategy of staying competitive and profitable. Moreover, many companies has been holding their growth strategy and downsizing, as they are crafting new strategy to “wait and see” in the difficult economic conditions. With the Globalization of world economy, many companies are moving offshore in low wages countries as a part of their strategy to cut their cost and remain competitive. Such strategies are backed by enough resources, funding to build the offshore plant and downsizing or even terminating their plant in places where costs are high. Many global companies have been successful in these strategies as they are able to organize people, resources and fund in the execution of such strategies. Global companies like Nike, Adidas, Levis and etc have been successful in execution of their strategy to move their production plant in low wages countries.
Moreover, there are many projects that have been unsuccessful because of the inability of management to provide organize the required resources to execute it strategy in terms of human and capital. I would like to provide a case of Nepalese hydro electricity industry. One of the hydropower company in Nepal proposed government to set up a new company which would be able to generate a huge amount of hydroelectricity and meet the huge demand for electricity in nation. They started working for the project which was expected to be completed by 6 years. As they began working on it, they realized the amount which they allocated was insufficient for the completion of project. The company had to finally abandon the project because of their inability to allocate proper fund for the project. As the project requires huge funds, they have been looking for another potential partner to invest in their project. Similarly, we have seen the cases were companies invested in the technology aggressively to meet the current customer need but lacked the allocation of resources for technological investment that the customer will value in the future. In personal computers, Apple invested aggressively in technologies that focused on retaining customer but lacked investment in what customer will like in future. This led to waste of organizational resources and reduces financial performance ( Joseph L. Bower and Clayton M. Christensen).
Organizational policies and procedures play important role in the execution of strategy. New policies and procedures should be incorporated in a manner that facilitates execution of the strategy. Every organization displays some inertia towards change. So, changing policies and procedure such that it goes well with strategy is an important task. However, management needs to ensure that new policies counteract the tendencies of people to resist the change and channels decisions and behavior by guiding how the things are to be done by the top level and bottom levels as well. There are enormous cases where people resistance to change has led to huge failure of big time strategies. Whereas, companies instituting policy that empowers employees has drove companies in path of success. Lens Crafts is a successful retail eyeglass distributor, but Lens Crafters’ employees will tell people that “they help people see better, one hour at a time.” Actually, the company policy states that how each employees are expected to perform such that it aligns with the company strategy to offer the best services i.e., gift of better sight. Those who work for the company are taught to fulfill the objective of better customer service. (Nikos Mourkogiannis)
Identifying, understanding and adopting best practices the top companies have been following provide opportunity for organization to analyze its performance and the changes that are essential for successful growth and strategy execution. Company can benchmark its various functions, processes and activities against best in the industry or best among all the industries. Sometimes, organization can even compare the different functions of its organization and set standard for the performance of other department and functions. The organization I worked for is Moody ICL certification limited, a joint venture between the Moody international and ICL certification Limited. We were engaged in internal benchmarking from time to time. We believe adoption of the practices of top performing units within an organization can boost the performance of poor performers in the organization. Secondly, internal benchmarking is the best way to build benchmarking skills and gain information about the organizational operations.
We do benchmark our performance with the head office in India which is one of the largest, specialist staffing, outsourcing and training organizations in India. They are the best sales organization with the most responsive customer service department. So, we follow the strategy that has been adopted by the head office in India be it in terms of marketing, operation or customer service. That is the reason why we have been able to differentiate on the basis of customer service and satisfaction. Moreover, we also analyze the competitor’s processes. We usually analyze our competitors operation and strategy by reviewing trade publications and their literature. They are the cost leader in the industry, so we benchmark them such that it enables us to work on the ways to reduce our costs.
Xerox saw its declining market share as a result of Japanese competition (Japanese copiers were 10 times cheaper). Rather than seek protection or go to drastic cost reduction, Xerox benchmarked the Japanese, adapted their processes and survived and thrived in the copier business. (Grayson, C. "Taking on the World," Total Quality Management). This approach need not be restricted to the manufacturing area nor to competitors, and so started looking at the best-in-class companies to learn how they undertook different processes. Dell Computer rocked the personal computer industry when it successfully adopted mail order as a sales and distribution channel. Mail order was not a new idea in other industries, but it fundamentally transformed computer sales and set off a wave of competition in the last three years that is shaking one-time leaders to their foundations. Companies like Motorola, speeded the delivery process of its cellular phones, it paid visits to Domino's Pizza and Federal Express (Hollings, L. "Clearing up the Confusion," Total Quality Management). Moreover, Companies have been involved in different management tools like business process engineering, Six Sigma quality control and TQM for better strategy execution. Companies like Wal-Mart, GE, Motorola and Nokia have been able to facilitate their operation and quality by implementing Six Sigma implementation.
Information and operation system is essential for the successful execution of strategies. Industries are unable to achieve their objectives without installation of proper information system in the rapidly changing business environment, market needs and intensifying competition. Dell has continued to shape the industry, breaking new ground and pioneering critical developments in home, small business and enterprise computing. Dell's R&D efforts now span the globe, driven by some of the industry's foremost product designers and engineers. Dell has implemented information system that has facilitated its operation, mass customization, quick response to the market and customer’s needs. At the core of Dell's innovation approach and commitment to delivering new and better solutions that directly address customer needs has been facilitated by the successful implementation of information and operating systems that enable company personnel to carry out their strategic roles proficiently. The information system has helped Dell in the facilitation of e-commerce i.e., internet sales especially B2B sales, accompanied by customers satisfaction. Moreover, information technology has allowed Dell to maintain low level of inventory and negative working capital and hence facilitating its performance and successful execution of strategy. (http://content.dell.com/us/en/corp/d/corp-comm/cto-customer-driven-innovation.aspx)
Management has to understand what motivates its people in successful execution of the strategy. It is very important for organization to manage its reward and incentives to ensure its employees are focused on achievement of organizational goals. Most of the organization has been providing financial incentives to motivate its employees like profit sharing, 401 K plans, stock options, bonuses and etc. However, successful organizations combine the monetary and non-monetary incentive systems to facilitate intrinsic motivation in its employees. There is a growing trend for providing flexible work schedule, entertainment activities, food and housing to motivate employees. Some companies provide commission to its sales people to boost sales and performance. Companies like Google provide free food, in house game and message center and various facilities in order to facilitate employee’s creativity by intrinsic motivation and finally successful strategy execution by holding the smartest people in the world.
In overall, organizations today has to manage its internal operation in order to be market responsive, customer focused, innovative, flexible, and be able to successfully execute its strategy.
References:
Thompson,A.A., Strickland,A.J&J.E Gamble(2008). Crafting and Executing Strategy; The Quest for Competitive Advantage 17th edition. Newyork, McGraw-Hill Irwin
"Taking on the World," Total Quality Management.
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