Strategy Implementation Literature Review Muhammad Imran Siddique 1 Professor Nicola Shadbolt1
March, 2016
1
Massey University, Palmerston North
Acknowledgements Contributions from different sources are acknowledged as follows: • •
Professor Alan Renwick for reviewing the report Dr Liz Dooley for her initial efforts in compiling relevant literature
Copyright Copyright in this publication (including text, graphics, logos and icons) is owned by or licensed to DairyNZ Incorporated. No person may in any form or by any means use, adapt, reproduce, store, distribute, print, display, perform, publish or create derivative works from any part of this publication or commercialise any information, products or services obtained from any part of this publication without the written consent of DairyNZ Incorporated.
Disclaimer This report was prepared solely for DairyNZ Incorporated with funding from New Zealand dairy farmers through DairyNZ and the Ministry for Primary Industries under the Primary Growth Partnership. The information contained within this report should not be taken to represent the views of DairyNZ or the Ministry for Primary Industries. While all reasonable endeavours have been made to ensure the accuracy of the investigations and the information contained in the report, OneFarm, Centre of Excellence in Farm Business Management expressly disclaims any and all liabilities contingent or otherwise to any party other than DairyNZ Incorporated or DairyNZ Limited that may arise from the use of the information.
Date submitted to DairyNZ: March, 2016
This report has been funded by New Zealand dairy farmers through DairyNZ and the Ministry for Primary Industries through the Primary Growth Partnership.
Contents List of Tables .......................................................................................... ii List of Figures ......................................................................................... ii Executive Summary .................................................................................. iii 1.0
Introduction ................................................................................ 1
1.1
Strategy Implementation .............................................................. 1
1.2
Strategy Implementation Definitions............................................... 2
1.3
Reasons for Ignoring Strategy Implementation ................................ 2
1.4
Problems in Strategy Implementation ............................................. 2
2.0 Strategy Implementation Models / Frameworks ........................................ 3 2.1
Strategy Implementation Frameworks and Approaches ..................... 3
2.2
Summary .................................................................................. 32
3.0
Best Practices for Strategy Implementation ................................... 33
4.0
Farm Business Strategy and its Implementation ............................. 37
5.0
Strategy Implementation Tools .................................................... 40
6.0
The Balanced Scorecard – A Strategy Implementation Framework.... 41
7.0
Conclusion ................................................................................ 47
7.0 References ....................................................................................... 48 Appendix 1
Activities for Strategy Implementation .................................... 59
Appendix 2
Obstacles to Strategy Implementation..................................... 61
Appendix 3A
Strategy Implementation – Conceptual/Descriptive Frameworks ...................................................................... 62
Appendix 3B
Strategy Implementation – Empirical Frameworks ................. 71
Appendix 3C
Strategy Implementation – Harvard Business Reviews............ 81
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List of Tables Table 1.1 Table 3.1 Table 3.2
Difference between Strategy Formulation and Implementation ..... 2 Guidelines and Best Practices for Successful SI ........................ 34 Essential Foundations of World Class Strategy and their Descriptions......................................................................... 37
List of Figures Figure 2.1 Figure 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Figure 2.6 Figure 2.7 Figure 2.8 Figure Figure Figure Figure Figure Figure Figure
2.9 2.10 2.11 2.12 2.13 2.14 2.15
Figure 2.16 Figure 2.17 Figure 2.18
Figure 2.19 Figure 4.1
ii
Implementing Strategy: The Model (Stonich, 1982) .................... 4 Performance appraisal, goal-setting and critical success factors in Strategy Implementation (Reed & Buckley, 1988) ........ 7 The Elements of Effective Strategy Implementation (Hambrick & Cannella, 1989) ................................................... 8 Business Strategy Implementation Model (Skivington & Daft, 1991) ................................................................................. 10 Framework for the implementation of strategy (Schmelzer & Olsen, 1994)..................................................................... 12 A Framework for Analysing Organizations (Aaker, 1998) ........... 13 Strategy implementation framework and key variables (Okumus, 2001)................................................................... 14 Strategy implementation framework and key variables (Okumus, 2001)................................................................... 15 Intended Strategy Implementation (Thompson, 2001) .............. 16 Strategy Implementation Framework (Okumus, 2003) .............. 18 The conceptual model (Wu et al., 2004) .................................. 19 Aligned 8 ‘S’s (Higgins, 2005) ................................................ 20 5 P’s Model of Strategy Implementation (Pryor et al., 2007) ...... 22 Closed-Loop Management System (Kaplan & Norton, 2008) ....... 23 Implementing Strategy and Organizational Design (Hill & Jones, 2008) .............................................................. 24 Five key dimensions in successful implementation of strategy (Brenes et al., 2008) ............................................................ 25 A framework of strategy implementation research (Yang et al., 2009) ............................................................... 27 Conceptual model on the relationship between strategic orientation, project portfolio management, and success (Meskendahl, 2010) .............................................................. 29 Implementing Strategy and Contextual Factors (Hrebiniak, 2006) ................................................................. 31 Eight Managerial Components of Implementation (Nell & Napier, 2005) ............................................................ 39
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Executive Summary The purpose of the Dairy Farm Systems for the Future project 2 is to explore how to identify and design farming systems best suited to the changing environment and farmer circumstances. The approach adopted has been to: • • • •
Develop a better understanding by farmers, industry and researchers of possible, plausible future scenarios for dairying Design and analyse potential farm system alternatives for each of the scenarios Define a rigorous approach for evaluating farming systems. Build greater industry capability and collaboration in farm system design & analysis.
This is supported by literature reviews on scenario analysis, strategy implementation and modelling approaches for system design and analysis. The first, obviously, will inform the scenario analysis process, provide comparisons of similar studies and examples of what best to do with its outputs; the third is to ensure the most up-to-date methods are used in the modelling based on a comprehensive understanding of previous farm system modelling research. The strategy implementation review, this report, is based on the recognition that best strategy is only ever realised if implemented effectively. It is intended that the farm system design will also include the pathway of how the current system will evolve and the impact of this evolution on both the farm and the wider regional/national stakeholders. This description of the implementation of each strategy will be assisted by the frameworks and guidelines developed in this literature review. The key points when examining the scenarios that have been developed is that they are all plausible, they all represent a significant shift from the status quo, they all involve significant investment and change and that none of these is easy. There are significant strategic risks identified for each scenario so the process of designing and modelling farm systems for each of these scenarios need to take these into account. Strategy formulation of ‘dairy farm systems for the future’ for each scenario will clearly identify the options available and quantify their outcomes, therefore providing useful information for farmers and other stakeholders faced with each situation. While there is much research in both business and farm management literature on strategy formulation and many tools developed to assist in the process, the field of strategy implementation is less well researched. This literature review identifies a range of research, mostly from the business literature, in which academics have developed strategy implementation frameworks and models, 2
http://www.onefarm.ac.nz/research/current-research/dairy-farm-systems-for-the-future/ iii
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
some theoretical, some conceptual and tested empirically, others created from empirical work. A number of frameworks and recommendations have evolved since the early 1980s as documented chronologically in this report. The commercial world, for the most part, echoes these recommendations in the ‘best practice’ section of the review. The tool that is best documented both in the business and the farm management literature for strategy implementation is the balanced scorecard; this tool is explored in this review and recommended for use in the ‘dairy farm systems for the future’ design.
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1.0 Introduction 1.1
Strategy Implementation
The effectiveness of the whole process of planning diminishes if the formulated strategies are not implemented. Okumus and Roper (1999, p. 21) noted that “despite the importance of the strategy execution process, far more research has been carried out into strategy formulation than into strategy implementation”. Alexander also observed that literature is dominated by a focus on the long range planning process and strategy formulation rather than the actual implementation of strategies, on which “little is written or researched” (Alexander, 1985, p. 91). Mintzberg (1994) emphasized that more than half of the strategies formulated by organisations are never actually implemented. Despite the clear importance of this management area and the obvious problems associated with its execution, it has however, been substantially neglected by academics (Atkinson, 2006; Pellegrinelli & Bowman, 1994). Remarkably, organizations fail to implement about 70 per cent of their new strategies (Franken et al., 2009; Miller, 2002). Similarly, it was found that 40-60 per cent of the potential value of the strategic plan is never realized and captured due to insufficiencies in planning and implementation (Franken et al., 2009; Mankins & Steele, 2005). In most cases, companies’ strategies deliver only 63% of their promised financial value (Mankins & Steele, 2005). Kaplan and Norton (2005) believed that 95% of a company’s employees are unaware of or do not understand their company’s strategy. According to Johnson (2004), 66% of corporate strategy is never executed. It is believed that strategy formulation is difficult while executing or implementing it throughout the organization is even more difficult. Without effective implementation, no business strategy can succeed. Unfortunately, most managers know far more about developing strategy than they do about executing it (Epstein & Manzoni, 1998; Hrebiniak, 2006, 2013). David (2013) highlighted the following differences between strategy formulation and strategy implementation as shown in table 1.1. It is clear from the differences between strategy formulation and execution that the later requires special motivation and a quality leadership and it involves the whole organization in the process of successful strategy implementation.
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Table 1.1
Difference between Strategy Formulation and Implementation
Strategy Formulation
Strategy Implementation
Positioning of the forces before the action
Managing forces during the action
Focuses on effectiveness
Focuses on efficiency
Primarily intellectual process
Primarily an operational process
Requires good intuitive and analytical skills
Requires special motivation and leadership skills
Requires coordination among a few individuals
Requires coordination among many individuals Source: (David, 2013)
1.2
Strategy Implementation Definitions
According to Miller and Dess (1996), strategy implementation involves a broad range of efforts which focus on the transformation of strategic intentions into actions. Strategy implementation has been variously be defined as: “The communication, interpretation, adoption, and enactment of strategic plans” (Noble, 1999, p. 120). “…designing appropriate organizational structures and control systems to put the organization’s chosen strategy into action” (Hill et al., 2007, p. 5) “… the sum total of the activities and choices required for the execution of a strategic plan”. (Wheelen and Hunger,2012, p. 320)
1.3
Reasons for Ignoring Strategy Implementation
The reasons for undermining or ignoring strategy implementation phenomenon both by researchers and management have been identified by Alexander (1991), Noble (1999) and Aaltonen and Ikavalko (2002) as; the assumption about strategy implementation being a straightforward process; strategy implementation being considered to be less glamorous and important than formulation; people overlook it because of the perception that anyone can do it; lack of information on what constitutes it and where it starts and ends; and practical difficulties in research involving middle-level managers.
1.4
Problems in Strategy Implementation
The problems identified by different researchers in the process of strategy implementation include; misunderstanding of the strategy, poorly documented strategy, lack of commitment to the strategy, lack of communication, insufficient time allocation for strategy implementation, unaligned organizational systems and resources, poor coordination and sharing of responsibilities, weak 2
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management role in strategy implementation, inadequate capabilities (of both managers and employees), poor reward system, competing activities, a lack of strategic thinking and implementation skills in middle management, poor cultural and structural alignment and other uncontrollable environmental variables (Aaltonen & Ikävalko, 2002; Alexander, 1991; Beer & Eisenstat, 2000; Higgins, 2005; Pellegrinelli & Bowman, 1994). Verweire (2014) through discussion with managers found five root causes for an unsuccessful strategy implementation as follows; • • • • •
More focus on financials in strategy discussions; Functional strategies are no substitute for a business strategy; Strategy implementation is too fragmented; Manager frequently communicate about strategy but forget to translate strategy into actions; and Strategy implementation requires leadership capabilities
2.0 Strategy Implementation Models / Frameworks There are some commonly used models and frameworks available for researchers and practicing managers in the areas of strategy analysis and formulation in strategic management such as SWOT analysis, Porter’s generic strategies, portfolio models, product life-cycle theory and industry structure analysis or competitive analysis (Hambrick & Cannella, 1989; Okumus, 2003). By contrast, as argued by Okumus, (2003) and Verweire (2014), there is no agreed-upon, generally accepted and dominant framework in strategy implementation. The following section reviews the evolution of research in this area. It identifies a range of research, mostly from the business literature, in which academics have developed strategy implementation frameworks and models, some theoretical, some conceptual and tested empirically, others created from empirical work. A number of frameworks and recommendations have evolved since the early 1980s as documented chronologically in this section.
2.1
Strategy Implementation Frameworks and Approaches
Waterman et al. (1980) proposed a strategy implementation framework and argued that organization effectiveness originates from the interaction of several factors (non-linear relationships) and concluded that the interaction of the following seven factors (S’s) play a critical role: 1. Structure
2. Strategy
3. Systems
4. Style
5. Skills
6. Staff and
7. Subordinate goals 3
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They concluded that the proposed framework emphasized interactions and fit among all the seven “S’s” and for an organization to achieve its objectives all these variables must be aligned. Although Waterman et al. (1980) defined and clearly elaborated each of these factors individually; they did not give clear examples and explanations for the relationships and interactions between these factors. This model needs to be evaluated empirically to learn how the relationships among variables actually make strategy implementation happen. According to Stonich (1982), strategy formulation is an integral part of strategy implementation and for effectively implementing strategies, a constant effort is required to match and fit together the basic organizational elements. He proposed a conceptual strategy implementation framework that include five interrelated variables: strategy formulation, organization structure, human resources, management process (planning, programming, budgeting and reward system), and culture as shown in figure 2.1. Stonich (1982) believed that if any change or alteration is inevitable in any one of these variables, a periodic review of all elements and the ‘fit’ among them must be undertaken.
Organization structure
Strategic Objectives Achieved
Culture
Strategy Formulation Human Resources
Figure 2.1
Management Process
Culture
Implementing Strategy: The Model (Stonich, 1982)
Wernham (1984) conducted research in order to identify the factors influencing the implementation of strategy within BT (British Telecommunications) and assessed their relative importance. The findings of his survey (interviews) suggested that strategy formulation and implementation are part of a continuous interactive process and the process is cyclic in nature rather than a linear sequence. Wernham found a number of problems which were impeding successful strategy implementation. These problems were; lack of resources (money, men, materials, other priorities), organisational Validity,
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history/confidence, delay/time mismanagement, lack of information/support, market validity, technical validity and conflicting goals. On the other hand, Wernham also identified the factors which were helpful in making strategy implementation successful. These included; adequate provision of resources, technical validity, market validity, information and support, staff enthusiasm/confidence, and top management backing. Alexander (1985) conducted a survey in which 93 company’s presidents completed a questionnaire evaluating the implementation of one strategic decision each in their respective firms. The 10 strategy implementation problems were experienced by over 50 per cent of the sample group during implementation and included; 1. 2. 3. 4. 5. 6. 7. 8.
Implementation took more time than originally allocated Major problems surfaced that had not been identified beforehand Co-ordination of implementation activities was not effective enough Competing activities and crises distracted attention from implementation Capabilities of employees involved with implementation were not enough Training and instruction of lower level employees were not adequate Uncontrollable factors in the external environment had an adverse impact Leadership and direction given by departmental managers was not adequate 9. Key implementation tasks and activities were not defined 10.Information systems used to monitor implementation were not adequate
Alexander (1985) also conducted follow up interviews with 21 CEO’s and 25 federal and state government agency’s heads and identified five factors which help promote successful implementation. These included; communication, start with a good concept or idea, obtain employee’s commitment and involvement, provide sufficient resources and develop an implementation plan. He also concluded that both problem prevention and doing the right things were necessary for successful strategy implementation. According to Hussey (1985), training is a power weapon for implementing strategy but management in majority of cases either does not aware of this option or ignore it due to certain organizational limitations. Hussey conducted survey research based on two grounds. Firstly, the variables which are considered important for strategy implementation can be altered through training/education. Secondly, top management should review the training objectives and initiatives on regular basis because it positively affects the strategy implementation process. Hussey found that a majority of companies had faith in on the annual training appraisal for assessing training needs instead of periodic reviews. A minority of respondents explicitly related training 5
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objectives to corporate strategy. In a reply to Alexander’s (1985) ten most frequent problems of strategy implementation, Hussey suggest that six of them might be solved through proper training. Galbraith & Kazanjian (1986) presented a conceptual strategy implementation framework and highlighted that a strong ‘fit’ is required among task, people, organizational structure, information and decision process and reward systems for the successful implementation of strategies. This ‘fit’ provides the internally consistent design which also matches with the organization’s product-market strategy. Jenster (1987) proposed a strategy planning and strategic control process based on the case study of 128 manufacturing firms which was closely integrated with the firm’s information system. Jenster found that firms which had a high return on equity identified their critical success factors for the implementation of strategies. Followed by identification, these factors were used to monitor the progress in implementation of strategic change. Based on these findings, Jenster propose a nine step strategic process and information system for integrating planning and control. These nine steps include; 1. 2. 3. 4. 5. 6. 7. 8. 9.
Provide structure for the design process. Determine general elements which will influence success. Develop a strategic plan or review/modify the current plan. Identify a selected number of critical success factors (CSFs). Determine who is going to be responsible for what. Select the strategic performance indicators (SPls). Develop and enact appropriate reporting procedures. Initiate use of procedures by managerial personnel. Establish evaluation procedure.
Jenster concluded that only a small number of firms were involved in systematic monitoring of factors critical for firms strategic success and performed better than who did not pay attention to it. Reed and Buckley (1988), instead of viewing strategy implementation from a problems solving perspective, investigated it with an alternative view i.e., problem avoidance. They provided a checklist to help executives improving the chances of problem avoidance and increase the chances of implement the strategy successfully. The checklist includes; 1. Identify strategic intent by matching strategy benefits with the organization’s needs 2. Interpret strategic intent into the specific managerial actions, at all necessary organizational levels, that are needed to attain the benefits 6
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3. Collate and translate all actions into comprehensive action plans 4. Produce a framework of key activities and identify the critical success factors 5. Use goal-setting to translate the CSF (critical success factors) key activities into targets for individual managers 6. Link reward and appraisal systems to individual manager goals 7. Use an interventionist approach to communicate an environment of participant involvement aimed at problem avoidance 8. Finally, monitor the implementation process to ensure adherence to plans and/or to modify plans as situations change. Reed and Buckley (1988) suggested different but interrelated techniques to be used for the effective implementation of strategies. These techniques include; performance appraisal, goal settings and identification of critical success factors. Figure 2.2 explains interrelationships of these techniques and how they can be fit into the process of strategy implementation.
Corporate Goals and Objectives
Strategy Selection
Resource Allocation/ Structure Fitting/ Systems Design/ etc.
Strategic Intent
Benefits Risks
Performance Goal Appraisal
Settings
Critical Success Factors
Action Plans
Output Figure 2.2 Performance appraisal, goal-setting Strategy Implementation (Reed & Buckley, 1988)
and
critical
success
factors
in
Hamrick and Cannella (1989) examined the strategies of Bondall division (a chemical manufacturer) for achieving a low cost position, going global, 7
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consolidating, and others. In order to understand the common ingredients of Bondall’s own most effective business strategy implementations, Hamrick and Cannella found that the following were the patterns of behaviour for the effective strategy implementers at Bondall and the other units being studied: 1. Obtain broad-based inputs and participation at the formulation stage 2. Carefully and deliberately assess the obstacles to implementation 3. Make early, first-cut moves across the full array of implementation levers - resource commitments, subunit policies and programs, structure, people, and rewards 4. Sell, sell, sell the strategy to everyone who matters upward, downward, across, and outward 5. Steadily fine tune, adjust, and respond as events and trends arise These steps or elements of successful strategic implementation can be summed up and portrayed as shown in figure 2.3.
Broad-Based Inputs
Careful Assessment of Implementation Obstacles
Figure 2.3 1989)
New Strategy
Effective Strategy Implementation
The Elements of Effective Strategy Implementation (Hambrick & Cannella,
Through the analysis and close understanding of implementation successes, Hamrick and Cannella (1989) also found that the strategists set out with broad game plans in mind but were flexible, open-minded, and always ready to find out solutions of the problems which may arise through new strategies. These strategists were opportunists and had broad guidance systems, but were spontaneous and responsive towards change. Judson (1990) reported the results of a study conducted by Daniel Gray (1986) in order to find out the causes of the failure of strategies. The respondents included were business unit heads, corporate planning directors and chief executive officers of American multi-business corporations. The results showed that majority of the respondents (nearly 65%) identified ten critical factors in strategy formulation and implementation process. The factors 1-9 belong to 8
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strategy formulation process and only 1 factor relates to strategy implementation process. However, all these factors ultimately affect the outcome of the intended strategic objectives. These include: 1. Poor preparation of line managers 2. Faulty definition of the business 3. Faulty definition of strategic business units (SBU) 4. Excessive focus on the numbers (financial details) 5. Imbalance between external and internal considerations 6. Manager’s unrealistic assessment of the firms strengths and weaknesses 7. Insufficient action detailing 8. Insufficient effective participation across functions 9. Badly handled reviews of business unit plans 10.Inadequate linkage of strategic planning with other control systems Alexander (1991) also proposed a descriptive strategy implementation framework focusing on the key implementers rather than on the strategy formulators. Alexander believed that key implementers and the affected employees decide whether the strategy is appropriate or not. He mentioned the following key factors which influenced the perception of key implementers regarding appropriateness of strategies: 1. 2. 3. 4. 5. 6. 7. 8. 9.
The The The The The The The The The
level of financial resources provided to implement it amount of human resources provided amount of time provided complexity of what will be required extent the strategy is compatible with the firms strengths magnitude of the change that is required number of other competing activities required attention overall feasibility of the strategy, and extent to which the strategy is communicated
Roth et al. (1991) empirically examined the impact of international strategy on organizational design and the influence of the organizational design on the strategy implementation process. They proposed a theoretical international strategy implementation framework based on six factors and tested it empirically. These six factors include; 1. 2. 3. 4. 5. 6.
coordination; managerial philosophy; configuration; formalization; centralization; and Integrating mechanisms. 9
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Using survey strategy, the data were collected from the President’s or CEO’s of 82 business units competing in global industries. They argued that these six factors should be designed specifically in order to implement international or multi-domestic strategies. They also found that global and multi-domestic strategies require different implementation requirements and when there was a proper alignment between strategy, administrative mechanisms (formalization, centralization and integrating mechanisms) and organizational capabilities (coordination, managerial philosophy and configuration), it was much easier to implement the strategy and achieve the desired objectives. They, therefore, recommended that the administrative systems and capabilities of the organization should be realigned for the successful implementation of the intended strategy. In an empirical research, Skivington and Daft (1991) investigated 57 strategic decisions and examined how these were implemented in the course of putting the competitive generic strategies of low-cost and differentiation in integrated circuits, petroleum, and health care organizations. The identified several factors such as intended strategy, structure, systems, interactions, and sanctions that affected successful implementation of strategies and divided these factors into two broad groups i.e., framework and process factors. The framework proposed by Skivington and Daft (1991) in figure 2.4 defines components of organizational framework and process that may be used to implement intended organizational strategies.
MODALITIES
COMPONENTS Structure
Organizational Framework
• Resource Allocation • Evaluation • Employee’s Training
Interaction
• Information Processing • Champions
Sanctions
• Turnover • Rewards
Organizational Process
10
• Specialization • Formalization
Systems Intended Strategy
Figure 2.4
CONCEPTS
Business Strategy Implementation Model (Skivington & Daft, 1991)
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In an analysis to find out which framework and process factors need to be used when implementing differentiation or low-cost strategies, they concluded that both framework and process factors could be used in implementing either lowcost or differentiation decisions. They also found that low cost and differentiation strategy implementation employed different variables. For example, for the low cost strategy, internal systems combined with sanctions seemed especially important and for differentiation strategy, resource allocation of system variable and champions and informal communications of process variables were significant. Therefore, it was concluded that effective strategy implementation was closely related with multiple organizational framework and process elements or variables. Bryson and Bromiley (1993) conducted a quantitative cross-sectional analysis of 68 case descriptions of major projects in public companies. From a large set of variables identified during previous research, a smaller set of underlying factors was estimated by factor analysis and grouped them into three categories; namely: 1. context; 2. process; and 3. outcome. They statistically illustrated how certain context factors influenced the process factors and, subsequently, the outcome. The influences of context on process, and context and process on outcomes were estimated using regression. The results indicated that a number of contextual variables strongly influenced aspects of the project planning and implementation process, and then indirectly influenced project outcomes through the planning and implementation process. In addition, both process and contextual variables affect outcomes directly. However, the research results were not conclusive in terms of clearly illustrating the relationships between the context and process factors. Schmelzer and Olsen (1994) developed and empirically tested an implementation framework in three restaurant firms using qualitative research methods. A case study approach was chosen for the primary research and primary data was collected from upper, middle and lower level managers through interviews and the secondary data was collected from the relevant documents of participant companies. Schmelzer and Olsen identified 14 factors, grouped them into context and process factors, and further into primary and secondary factors. They then developed several propositions to explain associations between these implementation factors. These researchers referred to strategy implementation as a progression from context variables to process variables and argued that the two components work together to make strategy 11
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happen as shown in figure 2.5. They also identified a number of new factors which played critical role in strategy implementation, such as perceived environmental uncertainty, organizational culture, information systems, training, the size and geographic dispersion of the company, the life cycle of the company and the demographic background of the managers. However, the factors of environmental uncertainty, organizational culture, information systems and training were already explained in the previous researcher’s work.
Context
Size & Geographic Dispersion
Life Cycle Stage
Manager’s Demographics Corporate Strategy
Process Variables
Perceived Environmental Uncertainty
Rewards & Incentives
S Decision-Making t r u c Formalization t u r Hierarchy e
Organizational Culture
Business Strategy
Secondary variables
Figure 2.5
Information Systems
Planning & Control
Project Initiation Resource allocation Method of Training
Primary Variables
Primary Variables
Secondary variables
Framework for the implementation of strategy (Schmelzer & Olsen, 1994)
Miller (1997) investigated the implementation process of 11 strategic decisions in six private and public organizations. Miller (1997) did not specifically propose an implementation framework; however, based on in-depth interviews in the sample organizations, identified and evaluated ten factors for the successful management of implementation and categorized them into realizers and enablers. It was concluded that backing, assessability, specificity and cultural receptivity appeared to have the greatest impact on implementation process, 12
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especially if the fifth factor, propitiousness is favourable. Therefore, these were the crucial factors and were named as realizing factors whereas enabling factors were familiarity, priority, resource availability, structural facilitation and flexibility. Miller concluded that realizers are more critical in implementing strategic decisions, whereas enablers are more heterogeneous and their combined effect is not as powerful as realizers. Aaker (1998) proposed a conceptual framework for analysing organizations and considered that organizational components (structure, systems, people and culture) help businesses identifying actual and potential strategy implementation problems and suggested that these components must fit with each other as well as with the strategy as shown in figure 2.6.
Figure 2.6
A Framework for Analysing Organizations (Aaker, 1998)
Okumus (2001) used a case study approach and after critical review of literature identified ten key variables which were critical for strategy implementation. These include; strategy formulation, environmental uncertainty, organisational structure, culture, operational planning, communication, resource allocation, people, control and outcome. Previous researchers have grouped implementation variables into four categories such as ``content’’, ``context’’, ``process’’ and ``outcome’’. Based on these classifications and the review of the characteristics
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of the individual variables, Okumus (2001) proposed and empirically evaluated the following strategy implementation framework as shown in figure 2.7.
Figure 2.7
Strategy implementation framework and key variables (Okumus, 2001)
After successfully evaluation his conceptual framework with the given variables, Okumus (2001) also found three new strategy implementation variables. These include; multiple-project implementation factor which fall under ‘strategic content’, organisational learning factor which fall under ‘internal context’ and external partners factor which fall under ‘strategic process’. Based on new findings, Okumus (2001), proposed a new modified framework and categorized key implementation variables under four groups as shown in figure 2.8.
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Figure 2.8
Strategy implementation framework and key variables (Okumus, 2001)
Thompson (2001) put forward a conceptual framework for the implementation of intended strategies. According to Thompson, there are four essential components which articulate the basis of a successful strategy implementation. These include strategic leader, intended strategy (with clear objectives, milestones and targets), organization structure and strategic resources and it is the strategic leader who establishes coordination among other three important components of strategy implementation as shown in figure 2.9. The prime responsibility of the strategic leader is to ensure that all the objectives, milestones and targets under intended strategy match with the organizational structure and also to secure and allocate the relevant strategic resources (people and financial resources). Thompson (2001) also emphasized that the people inside the organization should use the other strategic resources within the organizational structure to carry out the assigned tasks. Finally, the actions of people should be carefully monitored and evaluated to check their compatibility with the set targets and objectives and the success of the intended strategy.
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Figure 2.9
Intended Strategy Implementation (Thompson, 2001)
However, this model did not explain the mechanism of monitoring and evaluation the actions of the people within the organization. The major shortcoming of this conceptual framework is the unclear role of strategic leader at the levels of monitoring and evaluation of strategy implementation. Rapert et al. (2002) concluded and confirmed that strategic consensus plays an important role in the implementation process. They also concluded that frequent communication between marketing and top management served to increase strategic consensus through the development of shared attitudes, understandings, and values and rewarded with higher levels of marketing and organizational performance. Overall, the organization benefits from increased vertical communication, shared understanding of strategies (consensus), and improved marketing performance, as evidenced by higher levels of net operating income, gross revenues, and growth in net revenues. The findings also validated the importance of examining both communication and strategic consensus in greater detail to fully understand their roles in the strategic implementation process. Such examinations of organizational dynamics would help in understanding why some strategic events fail while others succeed. Aaltonen and Ikavalko (2002) proposed a conceptual model and stressed on the importance of matching the planned and the realizing or emergent strategies in 16
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the process of strategic implementation. They conducted research to find out how strategies were communicated, interpreted and adopted in 12 service organizations and also to know what kind of an effect they had on the actions of organization members. The data were collected from a total of 298 representatives from top and middle management and operative personnel. They found out that interpretation, acceptance and adoption of a strategy were crucial factors along with sufficient communication among the implementers for the successful strategy implementation. The other barriers to strategy implementation include; a lack of understanding of strategy, conflicting activities and events and lack of time. They concluded that it is not the structure of the organization but the alignment between strategy and the organizational system which hinders the successful implementation of strategies. In an attempt to identify barriers to the successful implementation of activities as part of a planned strategy in a Norwegian ferry-cruise, Heide et al. (2002) found that communication problems was the major barrier in the strategy implementation followed by organizational factors among the seven most important factors. It was also concluded that many strategic initiatives fail to be implemented because the vertical lines of communication are insufficiently developed between the top management and the staff. Okumus (2003) identified 11 key implementation factors and grouped them into four categories: strategic content, strategic context, process and outcome. Based on this categorization Okumus (2003) proposed a conceptual framework and emphasized the interaction effect of the variables involved as shown in figure 2.10. Okumus (2003) further clarified that different implementation factors in these four categories should not be evaluated in isolation because a factor in one group can influence the other factors in the same and in other groups. This interaction effect can ultimately affect the outcome of the whole process. However, this conceptual framework needs to be tested empirically for further conclusions.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Figure 2.10
Strategy Implementation Framework (Okumus, 2003)
Wu et al. (2004) proposed a conceptual model based on the Sun Tzu’s principles of war which include situation appraisal (contains 8 variables), strategy implementation (contains 12 variables), strategic control (contains 9 variables) and key success factors - KSF (contains 17 items) as shown in figure 2.11. The data were collected from a total of 200 firms of which 100 were manufacturing and remaining 100 were services firms in Taiwan. The respondents included for the study were from the three different tiers of management i.e., high, middle and low level managers/supervisors. Using canonical analysis (a type of regression analysis), they found that there were significant interrelationships between Sun Tzu’s principles of situation appraisal and of strategy implementation, between Sun Tzu’s principles of situation appraisal and strategic control, between Sun Tzu’s principles of strategy implementation and strategic control, and finally Sun Tzu’s principles of situation appraisal, strategy implementation and strategic control had significant influences on KSFs.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Figure 2.11
The conceptual model (Wu et al., 2004)
Higgins (2005), based on the McKinsey seven S’s model, proposed a 8 S’s model of strategy implementation and replaced ‘Skills’ of McKinsey with ‘reSources’ and added a new factor ‘Strategic Performance’ in the model. Higgins believed that all the seven contextual S’s (strategy and purposes, structure, systems and processes, style, staff, resources, and shared values) must be aligned in one direction for optimal strategic performance as shown in figure 2.12. Higgins (2005) also pointed out that impact of previous executives on strategy and the strategy execution process might be the probable reason of nonalignment of these S’s. By quoting two examples of two CEO’s of Intuit and Procter & Gamble, he analysed how the alignment of these 8 S’s made Procter & Gamble a success (alignment of 8S’s) and Intuit a failure (misalignment of 8S’s).
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Figure 2.12
Aligned 8 ‘S’s (Higgins, 2005)
Olsen et al. (2005) conducted a study involving over 200 senior managers and validated that the overall firm’s performance was strongly affected by the matching of firm’s business strategy with its organizational structure and the behavioural norms of its employees. Hrebiniak (2006) summarized recent research on implementing strategy and identified the main obstacles to effective execution or implementation, and described what managers must do to overcome the obstacles and achieve strategic success. Hrebiniak used his own research and consulting work over the past two decades also undertook an empirical study of implementation issues in which data were collected from 443 managers involved in strategy execution. Hrebiniak (2006) found predominant issues that impede strategy execution which include: • • •
Managers are trained to plan but not to execute and they know more about strategic planning and formulation than implementation Top-level managers believe that they are superior to strategy implementation which is for low level employees to carry out Misconception that strategy formulation and implementation are separate and distinguishable parts of the strategic management process 20
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Implementation is a process and is not the result of a single decision or action. It is the result of a series of integrated decisions or actions over time. Managers wanting a quick solution to execution problems will surely fail in their attempts. Strategy implementation always require more people that strategy implementation
•
•
In an attempt to gain a clear understanding of challenges faced by managers as they make decisions and take actions to execute their company’s strategy to gain competitive advantage, Hrebiniak (2006) conducted two surveys (WhartonGartner survey and Wharton executive education survey) of 443 managers who were involved in strategy formulation and execution. They were asked to rank 12 items which impact on strategy execution and were the obstacles to the strategy execution process. The top five obstacles to strategy implementation that resulted from the two surveys include; 1. 2. 3. 4.
Inability to manage change effectively and overcome resistance to change Poor or vague strategy Not having guidelines or a model to guide strategy implementation efforts Poor or inadequate information sharing among individuals/units responsible for strategy execution 5. Trying to execute a strategy that conflicts with the existing power structure and unclear responsibility or accountability for implementation decisions or actions Pryor et al. (2007) proposed a conceptual framework based on the alignment and integration of widely accepted activities and functions of effective and successful strategy implementation. These activities and functions include; structures, systems, leadership behavior, human resource policies, cultures, value and management processes. Pryor et al. (2007) advocated the inevitable intertwined elements of culture, organization, people, and systems for strategy implementation and put forward a broad, process oriented interpretation of these elements in the form of “the 5P’s model of strategy implementation” as shown in figure 2.13. In this conceptual model, the common elements discussed in strategy implementation literature were aligned into an overlapping strategy implementation framework which helps in understanding the composite nature of these elements. It is also clear from this conceptual framework that in order to achieve maximum efficiency and effectiveness, all the individual components must be aligned in a cyclic way around strategy implementation.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Purpose Strategic Theories
Performance Measurement and Feedback Theories
People Behavioral Theories
Figure 2.13
Strategic Implementation
Principles Values and Culture Theories
Processes System Theories
5 P’s Model of Strategy Implementation (Pryor et al., 2007)
According to Kaplan and Norton (2008), the major cause of a company’s underperformance is the breakdown of its management system. By linking strategy and operations through a closed-loop management system can reduce the failure chances of the new strategies as shown in figure 2.14. A closed-loop management system for effectively implement strategies comprised of five stages, beginning with strategy development, which involves applying tools, processes, and concepts such as mission, vision, and value statements; SWOT analysis; shareholder value management; competitive positioning; and core competencies to formulate a strategy statement. That statement is then translated into specific objectives and initiatives (with the help of other tools and processes, including strategy maps and balanced scorecards). Strategy implementation, in turn, links strategy to operations with a third set of tools and processes, including quality and process management, reengineering, process dashboards, rolling forecasts, activity-based costing, resource capacity planning, and dynamic budgeting. As implementation progresses, managers continually review internal operational data and external data on competitors and the business environment. Finally, managers periodically assess the strategy, updating it when they learn that the assumptions underlying it are obsolete or faulty, which starts another loop around the system (Kaplan & Norton, 2008).
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
STAGE
1
DEVELOP THE STRATEGY
Define mission, vision and values Conduct Strategic analysis Formulate Strategy
STAGE
2
TRANSLATE THE STRATEGY Define strategic objectives and themes Select measures and targets Select strategic initiatives
Strategic plan Strategic map Balanced Performance scorecard metrics stratEX
TEST AND ADAPT THE STRATEGY Conduct profitability analysis Conduct strategy correlation analysis Examine emerging strategies
results STAGE
3
PLAN OPERATIONS Improve key processes Develop sales plan Plan resource capacity Prepare budgets
Operating plan Dashboard Budgets Pro forma P&Ls
MONITOR AND LEARN
Performance metrics
Hold strategy reviews Hold operational reviews
results
Execute processes and initiatives
Figure 2.14
Closed-Loop Management System (Kaplan & Norton, 2008)
According to Johnson et al. (2008), organizational configuration (structures, processes and relationships through which the organization operates), resourcing strategies (overall business strategies and strategies in separate resource areas such as people, information, finance and technology), managing strategic change, and practicing of strategy are important elements for successful implementation of strategies. According to Hill and Jones (2008), organizational design is the heart of implementing strategies effectively. Organizations motivate and coordinate its employees and members through the use of organizational structure, control systems and culture to work towards achieving the desired results by developing the competitive advantage. They also believed that organizational structure, control systems and culture directly affect the behaviour, values and attitudes of 23
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
people and also help them in implementing the organization’s business model and strategies as shown in figure 2.15. Organizational Structure
Organizational Design
Strategic Control System
Coordinate and Motivate Employees
To achieve superior: • Efficiency • Quality • Innovation • Responsiveness to customers
Organizational Culture
Figure 2.15
Implementing Strategy and Organizational Design (Hill & Jones, 2008)
Brenes et al. (2008) conducted research to learn and understand the key success factors in the implementation of business strategy for local business firms in Latin America. Using survey method, a questionnaire was mailed to 300 companies of different sizes, geographical scopes, and property schemes all over Latin America. Research participant companies included family business firms, private firms, state-owned firms, and firms with local and multinational scope. The respondents were asked about 18 variables which were identified as significantly relevant in strategic company performance. These all survey items were based on a Likert-type scale (1 through 5, going from very low, low, middle, high, and very high,) to measure the effect of the components indicated and to evaluate the perception about the degree of success in implementing business strategy. All these 18 variables were grouped into the five dimensions i.e., strategy formulation process; systematic execution; implementation control and follow-up; CEO's leadership and suitable, motivated management and employees; and corporate governance (board and shareholders) leading the change. Brenes et al. found that most successful companies reported the top three dimensions that included: corporate governance leading the change; CEO's leadership and suitable, motivated management and employees; and the strategy formulation process. A comparison of differences between the most and the less successful companies clarifies more precisely why the latter have poor performance. According to the study, the most significant differences in order of importance between most and less successful companies include CEO's leadership and suitable, motivated management and employees; systematic
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
execution; and the presence of corporate governance leading the change as shown in figure 2.16
Figure 2.16
Five key dimensions in successful implementation of strategy (Brenes et al., 2008)
Crittenden and Crittenden (2008) suggested that the majority of the company’s lower management do not understand or follow the company’s strategy. This creates a gap between strategy formulation and its implementation process. Crittenden and Crittenden (2008) also suggested eight levers of strategy implementation which would play a pivotal role in the development of the organization, as lever does by making work easier by overcoming resistance against it. They grouped these eight levers into two groups; structural levers and managerial skills levers. It is not essential that all levers are crucial; however, balance between the strong and weak levers is necessary for the effective strategy implementation. Structural levers offer an implementation toolkit that affects the formulation-implementation process and ensuring formulation-implementation-performance cycle. These include; 1. Actions: who, what, and when of cross-functional integration and company collaboration; 2. Programs: instilling organizational learning and continuous improvement practices; 3. Systems: installing strategic support systems; and 4. Policies: establishing strategy supportive policies. Managerial skills are optional in nature and vary with individual perceptions and behaviour. Skill related implementation levers in the capable organizations framework include; 1. Interacting: the exercising of strategic leadership; 2. Allocating: understanding when and where to allocate resources; 25
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
3. Monitoring: tying rewards to achievement; and 4. Organizing: the strategic shaping of corporate culture. For the successful implementation of the well-formulated strategy, the identification of the strong and weak levers are necessary which will provide organizations with an evaluative opportunity to determine which levers are working well, which levers need to be downplayed due to inherent weakness, and which levers need to be improved given marketplace conditions (Crittenden & Crittenden, 2008). Carpenter and Sanders (2009) identified the strategic leadership functions and implementation levers for the successful implementation of strategies. The functions of strategic leadership include; the utilitarian of implementation levers, resource allocation decisions and communicating the strategies to key stakeholders. According to Carpenter and Sanders the mechanisms or the implementation levers that a strategic leader employs for the successful implementation of strategy comprised of organizational structure, systems and processes, people and rewards. Yang et al. (2009) identified nine individual factors that influence strategy implementation. These include: the strategy formulation process, the strategy executors (managers, employees), the organizational structure, the communication activities, the level of commitment for the strategy, the consensus regarding the strategy, the relationships among different units/departments and different strategy levels, the employed implementation tactics, and the administrative system in place. They classify these nine factors into soft, hard, and mixed factors. Soft factors (or people-oriented factors) include the people or executors of the strategy, the communication activities as well as the closely related implementation tactics, the consensus about and commitment to the strategy, while the hard (or institutional) factors include the organizational structure and the administrative systems as shown in figure 2.17.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Hard Factors: Organizational structure Administrative systems
Soft Factors: Implementation tactics Mixed Factors: Strategy Formulation
Implementation Outcome
Consensus Commitmen
Executors
Communication
Mixed Factors: Relationships among different units /departments and different strategy levels Phases PreI mplementation: Gather viewpoints Figure 2.17
Organizing Implementation: Ensure buy-in
Managing Implementation: Foster collaboration
Sustaining _performance: Monitor results
A framework of strategy implementation research (Yang et al., 2009)
Mixed factors include strategy formulation, relationships among different units/departments and different strategy levels contain hard and soft factors alike and are thus considered a mixed factor. They concluded that strategy implementation should be considered and understood as a process during strategy formulation which in turn is affected by hard, soft and mixed factors. These factors interact with each other and in turn are influenced by four generic phases of strategy implementation. In an attempt to explore the phenomenon of strategy implementation, Cater and Pucko (2010) found 12 of the most common strategy implementation activities and classified them into four broad groups; planning, organizing, leadership and controlling. They also found that managers rely more on those activities that are part of planning and organising than on those that belong to leadership and controlling. Using multiple regression analysis, they found the most important activities for successful strategy implementation which include planning and implementing projects, allocating strict responsibility for strategy implementation, formulating and implementing development programmes and using an efficient annual planning system. They also found that an unstimulative reward system was the most relevant obstacle to effectively implementing the strategies. 27
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Cater and Pucko (2010) also found 13 of the most common obstacles to strategy implementation and classified them into five broad groups as; problems in strategy formulation, change implementation problems, organizational culture problems, problems related to organizational power structure and leadership problems. They found that poor leadership is the biggest problem for successful strategy implementation in Slovenian companies. The top seven obstacles include; 1. 2. 3. 4. 5. 6. 7.
Reward systems do not stimulate strategy implementation Strategy is not properly communicated to lower levels Managers lack leadership skills for strategy implementation Managers lack ideas how to persuade employees to execute the strategy Strategy is poorly defined Top management is not actively engaged in strategy implementation Short-range orientation dominates the company
They also found the effect of different activities for and obstacle to strategy implementation on return on equity (ROE) and found that inadequate leadership skills and employees’ reluctance to share their knowledge had a negative influence on ROE, while adapting the organisational structure to the selected strategy as an activity for strategy implementation has a positive influence on ROE. In short, company performance depends on proper organising activities, as well as a suitable leadership and organisational culture which supports knowledge sharing. A complete list of all activities for and obstacles to strategy implementation is attached in Appendix 1 and 2. In an attempt to close the gap between strategy formulation and strategy implementation, Meskendahl (2010) proposed a conceptual framework based on project portfolio management. According to Meskendahl (2010), the effect of strategic orientation on business success is mediated by portfolio structuring and project portfolio success. At the same time, a moderating effect of strategic orientation on the relationship between project portfolio structuring and project portfolio success is proposed as shown in figure 2.18. However, the proposition stated by Meskendahl (2010) requires empirical validation and needs to be tested by quantitative or empirical studies. Project Portfolio Management defined as the simultaneous management of the whole collection of projects as one large entity.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Figure 2.18
Conceptual model on the relationship between strategic orientation, project portfolio management, and success (Meskendahl, 2010)
Wheelen and Hunger (2012) emphasized that strategy is successfully implemented by modifying structure (organizing), selecting the appropriate people to carry out the strategy (staffing), and communicating clearly how the strategy can be put into action (leading). They listed a number of programs which can be used to implement new strategy effectively. These programs include organizational and job design, reengineering, Six Sigma, management by objectives - MBO, TQM, and action planning. Wheelen and Hunger emphasized that executives must manage the corporate culture and find the right mix of competent and qualified people to successfully implement the strategy. Manning (2012) identified five sets of issues associated with successful strategy implementation: strategic thinking (environment scanning to identify threats and opportunities, problem identification and analysis); leadership (who effectively communicate the overall strategic direction and develop individual with necessary skills and knowledge to implement change), task management (translating big picture to small practical details for implementation), relationships with the people and necessary resources for the change to implement. Hakonsson et al. (2012) examined how and when executive style affects strategy implementation in Danish small and medium enterprises (SME’s). After analysing data from 407 small and medium sized (SME) Danish manufacturing firms, they showed that a failure to align SME executive style and strategy leads 29
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
to a significant performance loss. In addition, they demonstrated that the alignment of executive style and strategy is especially crucial for SMEs pursuing change and innovation. They were also argued that in SME’s managers had to dealt with different tasks and across a variety of areas and this may include the areas in which they do not have interests or competencies, hence, leading to failure of implementing the strategy. According to Kohtamaki et al. (2012), participative strategic planning increases personnel understanding about company’s strategy and strategic goals and help implementing the strategy efficiently. This in turn creates a sense of shared purpose for the employees and increase personnel commitment to strategy implementation. In a study of 160 small and medium sized IT companies, using Mplus-analysis (structural equation Modelling – SEM), they found that participative strategic planning positively affected the personnel commitment to strategy implementation thus increasing the performance of the company. According to Hitt et al. (2013), effective corporate governance, organizational structure and the control, strategic leadership and strategic entrepreneurships are necessary for successful implementation of strategies. Corporate governance is a relationship among stakeholders and helps determining the direction of firms and also controls its performance. According to Hitt et al. (2013), organizational structure specifies the accomplishment of given tasks whereas organizational control provide alignment to these tasks according to the strategic intent and also suggests improvements in performance when it falls below expectations. After identifying issues and obstacles to strategy implementation process, Hrebiniak (2006) & (2013) developed a model to guide strategy implementation process comprising of key decisions and actions as shown in figure 3.19. He emphasized that strategy formulation and execution are two separate entities, yet they are highly interdependent. It is matter of fact that good planning results into successful strategy implementation and vice versa. Moreover, there is a logical flow of different execution decisions or actions as shown in figure 2.19. For example, incentives and control must come at the end of execution process and reinforce the right decisions.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Organizational power structure & Influence
Corporate Strategy Corporate Structure /Integration
Leadership
Business Strategy and short-term operating objectives
Organizational culture Business Structure /Integration
Incentives and Controls
Change Management
Execution Results
Figure 2.19
Implementing Strategy and Contextual Factors (Hrebiniak, 2006)
Finally, Hrebiniak (2013) made it clear that this whole process of implementing strategies takes place within an organizational or environmental context. The four contextual factors include; (1) the change management context, (2) the culture of the organization, (3) the organizational power structure, (4) the leadership context. According to Hrebiniak, the inability to manage change (the size of the change and the time to manage it – change management context) is the biggest obstacle to successful strategy implementation.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
2.2
Summary
The literature review on strategy implementation frameworks reveals some important similarities among different descriptive/conceptual and empirically analysed frameworks. First of all, nearly all frameworks identified and acknowledged the impact of different factors in the process of strategy implementation. Secondly, a number of frameworks grouped different individual factors into broader categories and emphasised the interaction effect of these variables. However, each framework included different number and kind of factors with less or more numbers. Based on the focus of different researchers, this literature review can be summarized as follows: 1. A number of researchers focused on the identification of facilitating/success factors in the implementation process and argued that a strong fit or alignment (linear or non-linear) is required among all these factors for successfully implementing the strategies (Aaker, 1998; Aaltonen & Ikävalko, 2002; Galbraith & Kazanjian, 1986; Hambrick & Cannella, 1989; Hill & Jones, 2008; Johnson et al., 2008; Judson, 1990; Olson et al., 2005; Reed & Buckley, 1988; Roth et al., 1991; Stonich, 1982; Waterman et al., 1980; Yang et al., 2009). . 2. In addition, some of the researches only identified the problems and barriers to strategy implementation instead of focusing on factors or group of factors (Aaltonen & Ikävalko, 2002; Alexander, 1985; Čater & Pučko, 2010; Heide et al., 2002; Hrebiniak, 2006; Judson, 1990; Manning, 2012; Skivington & Daft, 1991). 3. A number of researchers suggested a list of activities or steps to be followed for successful implementation of strategies (Allio, 2005; Bigler Jr & Williams, 2013; Čater & Pučko, 2010; Freedman, 2003; Pearce & Robinson, 2011; Raps, 2005; Thompson et al., 2005). 4. Only few studies focused on the role of strategic leader and stressed his critical role in strategy implementation process (Bigler Jr & Williams, 2013; Carpenter & Sanders, 2009; Thompson, 2001). 5. However, a number of researchers divided different factors into groups and categories and emphasized the interaction between factors (Alexander, 1991; Bryson & Bromiley, 1993; Carpenter & Sanders, 2009; Hill & Jones, 2008; Hitt et al., 2013; Hrebiniak, 2006, 2008; Johnson et al., 2008; Judson, 1990; Meskendahl, 2010; Miller, 1997; Okumus, 2001, 2003; Schmelzer & Olsen, 1994; Skivington & Daft, 1991; Thompson, 2001; Wheelen & Hunger, 2012; Wu et al., 2004; Yang et al., 2009). Among all the proposed frameworks, either descriptive or conceptual, the framework proposed by Okumus (2003) encompasses all the aspects which previous and subsequent researchers highlight separately. It includes almost all
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
the critical factors considered important for strategy implementation into appropriate groups and presents a logical relationship among all these groups. This model also includes the role of senior management or leadership as a backing and stresses their involvement on every level during strategic implementation process. Although comprehensive, this model needs to be tested empirically before its validation in the real world situations. It shows a linear relationship among different factors and groups of variables involved in the process of strategic implementation process when in reality, the process of strategic implementation is a cyclic process and different variables interact with each other linearly as well as non-linearly (cyclic). Empirical analysis of this model using different quantitative and qualitative research methods will find any relationship (cyclic or non-cyclic) among the factors or group of factors. A complete list of frameworks is attached as appendix 3A, 3B and 3C.
3.0 Best Practices for Strategy Implementation Apart from the work of researchers and academics, a number of practitioners and professionals who were either a part of strategy formulation or strategy implementation process or both also helped in explaining the process of successful strategy implementation. These professionals highlighted the obstacles and problems to successful strategy implementation and put forward recommendations through their experience and learning. Beer and Eisenstat (2000) identified six silent killers of strategy implementation and concluded that managers who tackled these killers, instead of avoiding them, successfully implemented the strategy and achieved the desired goals. The six silent killers are presented in table 3.1. De Feo and Janssen (2001) described ten such steps for corporate strategy to become an integral part of an organization’s culture: establishing a vision; agreeing on a mission; developing key strategies; developing strategic goals; establishing values; communicating company policies; providing top management leadership; deploying goals, measuring progress with key performance indicators and finally, reviewing progress.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Table 3.1
Guidelines and Best Practices for Successful SI
Beer and Eisenstat (2000) Six silent killers of strategy Implementation Freedman (2003) Five activities for successful SI
Allio (2005) List of ten practical guidelines for SI
Raps (2005) Ten critical points
Thompson et al. (2005) Eight managerial tasks
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1. 2. 3. 4. 5.
Top-down or laissez-fair senior management style, Unclear strategy and conflicting priorities, An ineffective senior management team, Poor vertical communication, Poor coordination across functions, businesses, or borders, 6. Inadequate down-the-line leadership skills and development. 1. Communicate the strategy, 2. Drive planning, 3. Align the organization, 4. Reduce complexity, 5. Install an issue resolution system 1. Keep it simple: to break down the broader strategy to be implemented into shorter-term actions, each with a defined start, middle, and end 2. Establish a common language 3. Delineate roles, responsibilities, timeframes 4. Devise straightforward quantitative and qualitative metrics 5. Balance short term with longer term 6. Be precise, use action verbs 7. Use a common format to enhance clarity and communication 8. Meet regularly, but in structured, time-limited sessions 9. Anchor implementation activities in the firm’s financial infrastructure: budget, metrics, rewards 10. Be prepared to consistently manage the implementation process 1. Commitment of top management 2. Involve middle manager’s valuable knowledge 3. Two way communication 4. Integrative point of view – consider all aspects not only the organizational structure but cultural aspects and the human resource perspective are to be considered as well 5. Clear assignment of responsibilities 6. Preventive measures against change barriers 7. Emphasize teamwork activities 8. Respect the individual’s different characters as human resources are becoming the key success factor within strategy implementation. 9. Take advantage of supportive implementation instruments – two instruments are the balanced scorecard and supportive software solutions. 10. Calculate buffer time for unexpected incidents 1. Building an organization with the competencies, capabilities, and resource strengths to execute strategy successfully 2. Shaping the work environment and corporate culture to fit the strategy 3. Allocating ample resources to strategy-critical activities Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Pearce and Robinson (2011) Five steps
Bigler and Williams (2013) Nine steps
Speculand (2014) Five recommendations
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4. Ensuring that policies and procedures facilitate rather than impede strategy execution 5. Instituting best practices and pushing for continuous improvement in how value chain activities are performed 6. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently 7. Their rewards directly to the achievement of strategic and financial targets and to good strategy execution 8. Exercising strong leadership to drive implementation forward, keep improving on how the strategy is being executed, and attain operating excellence 1. Identifying short-term objectives 2. Initiating specific functional tactics 3. Outsourcing non-essential functions 4. Communicating policies that empower people in the organization 5. Designing effective rewards 1. Select people with positive execution values and traits 2. Align the positive execution values and traits in five key areas of business operations 3. Make sure everyone is adding value for internal and external customers 4. Employ an appropriate form of an initiative management process with associated disciplines 5. Everyone develops and uses an appropriate growth and innovation roadmap 6. Develop an appropriate gain-making and gain-sharing system 7. Develop an appropriate recognition and promotion system 8. Use a one-on-one monthly personal communication process to facilitate real communication, performance reviews and learning 9. Develop an appropriate process to continually improve the leadership development process 1. Focus on both crafting and implementing strategy – pay equal attention to both. 2. Oversee and stay committed to the implementation – constantly be involved by sharing information, communicating with employees and checking the current status often. 3. Adapt and amend the strategy and implementation as required – whatever was agreed to in the boardroom rarely happens in the implementation so adjustments must be made. 4. Create the right conditions for the implementation – ensure you have set up a culture that supports the execution of the strategy. 5. Follow up – to achieve a successful implementation, follow up is the number one best practice for leaders to focus on.
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Freedman (2003) suggested that in order to build a strong foundation for successful implementation of a strategy, an organization should complete the five activities. Allio (2005) developed a short list of ten practical guidelines for successfully implementing the strategies that would help the managers get the job done and called them best practices for implementing strategy. In order to overcome and improve the difficulties in the implementation context, Raps (2005) brought ten critical points together to be addressed. Thompson et al. (2005) emphasized on the communication of the strategic intent to all members of the organization. This would ultimately help finding the ways to put the strategy into place, make it work and successfully meet the targets. They argued that although each company uses different strategy execution approaches after altering them according to the company’s situation, however, these eight managerial tasks should be performed accurately to get the desired results. According to Pearce and Robinson (2011), firms are successful in implementing their strategies when they move precisely from “planning to work” to “working their plan”. Bigler and Williams (2013) described leadership development approach in firms that relies mostly on ‘on-the-job’ training using nine step approach based on leadership development framework. They were of the opinion that in order to successfully implement and maintain an effective strategy, expansion of the leadership capabilities within an organization might be the reasonable choice. According to Bigler and Norris (2004) nearly all the firms try to attain Worldclass strategy execution skill which is very difficult to achieve. Every firm which attain this World-class strategy execution through leadership development achieve the sustainable competitive advantage which would be difficult to imitate (Bigler Jr & Williams, 2013). The four foundation pillars of World-class strategy execution skill are shown in table 3.2. According to Bigler and Williams (2013) world-class leadership can only execute world-class strategy, therefore, the nine steps should be followed through which world class ‘on-the-job’ leadership with essential leadership qualities and necessary skills can be developed.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Table 3.2
Essential Foundations of World Class Strategy and their Descriptions
Essential Foundations of World Class Strategy Speed
Internal Alignment
Innovation
Executive Behaviour
Descriptions Understanding the firm’s market rhythm, which is the tempo of the market as determined by the buying patterns of customers Aligning executive, operating, and support processes with the market rhythm, creating cyclic, recurring timing rather than calendarbased timing for all processes Maintaining a portfolio of innovation and growth initiatives with various objectives and in various stages of completion Evaluating executive efficiency (speed at which initiatives are successfully launched), productivity (rate at which initiatives achieve their targeted return), and effectiveness (growth rate of the market value of the firm) Source: (Bigler Jr & Williams, 2013)
By adopting this holistic and practical approach of leadership development through this nine step process, any firm can successfully develop leaders who can efficiently execute strategy(s) through effective communication, learning and working together (Bigler Jr & Williams, 2013). Similarly, Speculand (2014) put forward five recommendations for leaders to conduct a successful implementation. It has been clear from the above discussion that although professionals and practitioners have different recommendations and suggestions, all of them strive for the ultimate goal of successful strategy implementation. The bottom line of their recommendations and suggestions is that strategy should be simple, properly communicated, coordinated and followed up correctly.
4.0 Farm Business Strategy and its Implementation Formulation of strategy and setting strategic direction is different than implementing strategies. Strategy implementation is different than formulation of strategy or setting strategic direction. Managers, executives or top management team are the main players in key organizational activities and cover many aspects in the business and one important aspect relates to the formulation, support and implementation of corporate strategy (Miller et al., 37
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
2008). According to Miller et al. (2008) nearly half or more of the strategic initiatives fail due to factors under managerial control. Small scale organizations including family farm businesses are usually operated by owner (who also serves as a manager) with only a few numbers of employees. A majority of small firms having less than five employees fail soon after their start due to poor management, insufficient financial resources, solely managing all business operations by owner and lack of knowledge and expertise in planning and controlling business activities (Basuony, 2014; Giannopoulos et al., 2013). The lack of strategy implementation framework, particularly for small size organization including farm businesses, also aggravates the situation. According to Olsen (2004), implementation of strategies is the most difficult component of strategic management and requires a careful understanding of farm’s objectives and stakeholder’s vision. In the words of Olsen, “the farm’s strategy implementation involves designing the structure of the organization, aligning functional strategies (such as production and marketing) with the chosen strategy for the whole farm, obtaining and directing the needed resources, and adapting the plan and implementation to the change that is inevitable” (Olson, 2004, p. 61). For the successful implementation of strategy, functional areas strategies should be formulated so as to support the overall strategic intent of the farm business. Byrne et al. (2004) developed a customized balanced scorecard for Irish dairy farmers to help them in strategic decision making and called it Dairy Farmer Scorecard. Through case study research of six farmers, they concluded that the balanced scorecard helped identifying the clear purpose of farm businesses. They also found that farm business success is mutli-dimensional and the balanced scorecard being a multidimensional performance measures successfully served the purpose. According to Nell and Napier (2005), for the implementation of strategies efficiently and successfully on the farm, all eight managerial components should be in place. These eight managerial components in the form of conceptual framework are shown in figure 4.1. They believed that if all eight components are addressed properly will lead successfully towards the achievement of short term objectives, actions and ultimately the core strategy.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Building a capable farming business
Exercising strategic leadership
Shaping the culture of the farming business to fit the strategy
Figure 4.1
Allocating ample resources to strategy critical activities
Establishing supportive systems & policies
Action Agenda of Farmer/Management Team
Linking rewards and incentives to achieving key strategic targets
Instituting best practices & mechanisms for continuous improvements of Installing support systems that enable the personnel of the farming business to carry out the i l
Eight Managerial Components of Implementation (Nell & Napier, 2005)
Beijeman (2007) explored how farmer strategists identify farm business strategies and subsequently implement those identified strategies. A multiple case study method was used in this study and data were collected from respondents who were declared farmer strategists by their peers. Beijeman found that farmer strategists identified strategies through both social networks and through monitoring the external environment and through both purposeful searching and accidental discovery. He also found that farmer strategists implement a combination of intended and emergent strategies and used a series of implementation tests in order to decide the best strategy from a number of alternative intended/crafted strategies. The implementation tests include a combination of informal and formal feasibility, performance, competitive advantage and synchronization tests. However, farmer strategists, at occasion, implemented emergent strategies soon after implementing either intended or emergent strategy without any planning in advance. Hansson et al. (2010) conducted the study on Swedish sugar beet producers and investigated the relationship between the implementation success of action programs that farmers have undertaken in response to strategic problems in their businesses, to the nature of the action program, and to the farmers’ characteristics. They found that farmers who chose action programs that did not allow for incremental implementation experienced the more successful 39
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
implementation. They also found that the more experienced farmers did not achieve higher levels of implementation success, even though they should be more experienced with implementation. It was also found that a higher degree of internal locus of control increased the probability of achieving higher levels of implementation success. The farmers with other problems than caused by the sugar beet reform were less likely to be at the highest level of implementation success. Lastly the farmers who applied analytical approaches to interpreting information achieve higher levels of implementation success than those who apply only intuitive approaches. According to Betker (2013, p. 244) “setting a strategy refers to developing a plan that documents where a farmer sees his or her business in the future and what management and investment decisions have to be made to attain the vision”. Amon the three types of farm business plans; strategic plans (5 years), business plans (3-5 years) and operational plans (1 year timeline), a farmer is expected to at least have an operational plan (Betker, 2013). In fact, a number of farms do not have any formal plans yet they are successful. According to Betker (2013), change is inevitable from a farm management perspective and the important thing is how farmers deal with this change. In order to successfully manage farm business, understanding and monitoring the alignment of strategic direction, financial performance and management structure is important as a farm business continues its lifecycle. The development and implementation of a farm business management plan is required which would create a business vision keeping in view the longer term strategy with the preferred financial future. This management plan would then successfully be implemented by adding an accountability element in it which can be internal, external or both (Betker, 2013)
5.0 Strategy Implementation Tools A number of tools are considered effective and operative in implementing the business strategies. These include Mission and Vision Statements, Balanced Scorecard, Cycle Time Reduction, Strategic Planning, Scenario Planning, Strategic Alliances, Supply Chain Integration, Benchmarking, Tool Quality Management, Reengineering, Activity-Based Management and Core Competencies (Bourne et al., 2003; Frost, 2003; Pasanen, 2011; Rigby, 2001; Rigby & Bilodeau, 2015). In early 1990s, the trend from more financial or accounting based traditional performance management measures diverted towards more balanced performance measures (Bourne et al., 2003). This not only resolved many of the shortcomings present in traditional financial based systems but also provided a comprehensive framework for effectively implementing the business strategies. The balanced scorecard was one of the 40
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
non-traditional performance measures which effectively delivered in both large companies as well as in small and medium enterprises (Bourne et al., 2003; Pasanen, 2011). According to Rigby and Bilodeau (2015), the balanced scorecard was one of the six most used strategic management tools on the globe with 44% usage in Europe, Middle East and African companies. They also projected that the use of the balanced scorecard would increase to 65% in future irrespective of the company’s size. On the contrary, it was found that implementing the balanced scorecard was not a success at all times and failure rate reached to 67% of those who used the balanced scorecard to improve the implementation (Bourne et al., 2003; Frost, 2003). Among various reasons of the failure of the balanced scorecard in implementation, the improper and ineffective utilization of the approach were at the top (Bourne et al., 2003; Frost, 2003; Rigby & Bilodeau, 2015). The balanced scorecard yielded better results when it was used on large scale as a part of major effort instead of small scale and according to the nature of the business i.e., customized BSC (Byrne et al., 2004; Rigby & Bilodeau, 2015).
6.0 The Balanced Scorecard – A Strategy Implementation Framework Conventionally, financial frameworks were developed to measure the financial performance of the organizations, for example, ROI model by DuPont (Epstein & Manzoni, 1998; Kaplan & Norton, 1996). However, with the emergence of new activities within the organizations like investment in relationships, technologies and capabilities, these historical cost financial models were unable to capture the effect of these activities. In order to capture the effect of financials and nonfinancials indicators, Kaplan and Norton proposed a framework called ‘Balanced Scorecard’ with four dimensions. The Balanced Scorecard keeps focus on short term financial outcomes along with recognizing the value of building intangible assets and competitive capabilities and ultimately on strategies for long term success (Kaplan & Norton, 1996). The Balanced Scorecard (BSC) serves as the instrumentation for managers to navigate to future competitive success. It translates the organization’s strategy into a comprehensive set of performance measure that provides the framework for a strategic measurement and management system. The Balanced Scorecard not only helps achieving the financial objectives but also provides the performance drivers for these financial objectives, linked together in cause-andeffect relationships (Kaplan & Norton, 1996; Nooreklit, 2000).
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
“Balance scorecard combines both qualitative and quantitative measures, acknowledge the expectations of different stakeholders and relate an assessment of performance to choice of strategy” (Johnson et al., 2008, p. 451). Among different performance management systems (PMS), the balance scorecard or strategy scorecard is commonly used in businesses. It is the framework which can be used to evaluate the balance between the strategic (long term successes) and financial controls (short term goals) to attain the desired level of a firm’s performance (Awadallah & Allam, 2015; Carpenter & Sanders, 2009; Hitt et al., 2013; Johnson et al., 2008). A number of researchers (Carpenter & Sanders, 2009; Hitt et al., 2013; Jie & Parton, 2009) come to a conclusion that the balance scorecard is used for evaluating the business-level strategies and help in: 1. 2. 3. 4. 5.
Translating the strategy into operational expressions Aligning the organization with the strategy Making strategy everyone’s job Making strategy a continual process, and Mobilizing change through executive leadership
A number of researchers believed that for the implementation of business/farm strategies, the balanced scorecard can be successfully used for both farm (smallmedium producers, family farms, and the corporate sector) and non-farm businesses due to its flexibility and design (Byrne et al., 2004; Jie & Parton, 2009; Lissitsa, 2004, 2005; Noell & Lund, 2002; Parker, 2000; Shadbolt, 2007, 2008; Shadbolt et al., 2003). However, there is a dearth of research on the use of BSC as a tool for strategy(s) implementation in agribusinesses (Byrne et al., 2004; Lissitsa, 2005). In addition, due to the nature, size and location of every agribusiness enterprise (farming, livestock production), the balanced scorecard must be customized according to each enterprise’s own strategy and competitive advantage before its application. In order to remain competitive and achieving long-term financial viability and success in dairy farming, Parker (2000) summarized seven principles that farmers can implement to improve their business management. According to Parker, among all the seven principles, principal five (measuring performance through the right indicators) can effectively be implemented by the use of the balanced scorecard. This would help the farmers to measure the progress of his business against the strategic intent and looking into the future (lead indicators) by analysing the past decisions (lag indicators). However, care must be taken while selecting critical success factors and on the right “cause and effect” relationships between the lead and lag indicators.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
According to Noell and Lund (2002), all the four perspectives of the BSC (balanced scorecard) and the rules of strategic management are basically the same for any size and type of business and are certainly as valid for farming as for any other small business. In an exploratory study, Noell and Lund discussed the pre-requisites for the implementation of BSC concept into practical farming in Denmark. They concluded that these five major issues should be considered for the successful implementation of the balanced scorecard for farms in Denmark: 1. To shift from a more or less static strategic planning framework to a more dynamic and comprehensive strategic management practice 2. To shift the main strategic focus from “internal processes” to “customer perspective” and establishing of close links between those two perspectives 3. To develop a “stakeholder-perspective” and focussing the entire strategic management process on it 4. To start with the strategic thinking and planning, the primary focus should be (and remain) the area of resources, capabilities and other potentials of a given farm, while market and product opportunities should be chosen accordingly 5. The farm accounting practice should be adapted to the needs of strategic management and the Balanced Scorecard. The orientation of agricultural accounting towards processes, products and services should be further strengthened e.g. by the introduction of Activity Based Costing, Target Costing and profitability measurements adjusted for cost of capital (Economic Valued Added) Shadbolt et al. (2003) conducted a study to determine the significance, application and evaluation (as a management tool) of the balanced scorecard to multi-enterprise family farm businesses. Shadbolt et al. (2003) concluded that the BSC helps small scale family farm businesses (small scale organizations) improving their performance by linking internal processes with financial perspective and external factors to learning and growth perspective. However, they identified two issues which aroused during the application of the BSC on multi-enterprise family farm businesses. First, the customer perspective was inadequate to serve the purpose because farm businesses usually place equal importance on buyers (customers) and suppliers of inputs to the business. Therefore, the ‘customer perspective’ should be replaced with ‘supply chain perspective’ to enable management to include goals related to both buyers from and supplier to the business. Second, the uncertainty in deciding which perspective was more appropriate to address family expectations such as time off, family holidays and children’s education. To address this issue, Shadbolt (2003) recommended that ‘financial perspective’ required expansion to include 43
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
shareholder expectations and renamed it as ‘shareholder/financial perspective’ instead of adding a new perspective. In the very first attempt of using BSC as a strategic management tool in Ukrainian agriculture enterprise, Lissitsa (2005) discussed prerequisites for the functioning of the BSC concept into a practical agriculture using case study approach. Lissitsa found the immediate results of the implementation of the BSC approach by a BSC project team in the agricultural primary production division of Agrosoyuz. These include: a balanced and more efficient use of available resources, new monitoring and measurement system for controlling and to managing the achievement/ objectives, simplification of management and organisation systems in the enterprises and a clear understanding of every employee’s role in achieving business success. However, the major and significant understandings found through the implementation of the BSC approach in Agrosoyuz include: 1. The BSC is used to communicate strategic objectives to employees, not to order them what to do; 2. The BSC is a strategic management tool that could not be adopted one-toone in the classical form proposed by Kaplan & Norton. Rather it could be adjusted to the specific conditions in agriculture in transition countries such as Ukraine; and 3. The BSC management process is a continuous process and is based on performance metrics that are tracked continuously over time to identify trends, best and worst practices, and areas for improvement. It delivers information to managers that can help to guide their decisions It was interesting to note that six perspectives of the BSC were used by Agrosoyuz according to its specific objectives of being the most innovative agricultural enterprises in the country. These six perspectives include: financial; customer; internal business; learning and growth or human resources; innovations; and society. Atkinson (2006) critically reviewed the strategy implementation literature to identify the main obstacles to successful strategy implementation and then proceeded to critically review the balanced scorecard and evaluated the contribution it can make to strategy implementation. The primary aim of his research was to develop a deeper conceptual understanding of the potential role of the balanced scorecard with regard to effective strategy implementation. According to Atkinson (2006), new multidimensional non-financial performance measures (like balanced scorecard) are taking place of the traditional financial orientated metrics. According to Bungay and Goold (1991), these non-financial performance measures are helpful in analysing and achieving the small or short44
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
term targets which in turn leads towards the achievement of strategic goals. Atkinson (2006) found that among the key issues identified was the need for effective communication throughout the organisation that leads to a clear understanding of key roles and responsibilities of all stakeholders including middle managers (whose role is pivotal). In addition the establishment of effective strategic control systems and the way in which these interact with other management and operational control systems is important to ensure that an organisation can deliver against its strategic objectives. This in turn requires the identification of clear performance targets and measures that deliver longterm value while mediating short-term demands. It is argued that the balanced scorecard can provide a mechanism for addressing such issues by making explicit link between the strategic objectives and operational goals, by identifying clear performance targets at all levels in the organisation, and by engaging employees at all levels of the organisation in the discussion of the strategic priorities. According to Atkinson, if the balanced scorecard is implemented fully, it can engage management in an evaluation of the strategic plan and thus avoid planning errors and discourage misunderstanding. In short, the balanced scorecard cannot make strategic implementation happen by magic; however, it can provide the vehicle within which the whole organisation can move forward. In order to explore the established system of measuring performance of beef supply chain in Australia, Jie and Parton (2009) reported the application of BSC as a supply chain performance measurement tool. They concluded that the BSC would be the most appropriate strategy management tool for majority of Australian beef producers due to the following reasons; 1. BSC is used to develop business vision and goals by combining goals of finance, customers, learning and growth, and internal business processes; 2. BSC translates an organisation’s strategy into measurable and attainable goals; 3. BSC measures in a balanced way the performance criteria; 4. BSC is equally suitable for small-medium producers, family farms, and the corporate sector; 5. Implementation of BSC by small-medium producers or family farms is simpler than many other approaches and there is likely to be less inertia to change. Paustian et al. (2015) successfully implemented the balanced scorecard in order to get insights into the success factors and key performance indicators in the four BSC perspectives they consider most relevant for the operational success of arable farms. The empirical results showed that the respondents actually consider performance measures from all four BSC perspectives relevant for farm 45
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
management. However, the BSC required continuous revisions to the operational conditions of the farm and helped farm managers to coordinate current actions to future goals to achieve better farm performance. Difficulties/Implementation Issues in Using Balanced Scorecard Apart from the usefulness and advantages of the balanced scorecard, a number of shortcomings and problems have been found to be associated with it. These problems range from the development of the balanced scorecard to its application in the organization’s strategic management system. According to Epstein & Manzoni (1998), the most probable issues which may arise while using ‘Balanced Scorecard’ as an implementation tool include; 1. Lack of a clear and shared view of the firm’s strategy 2. Developing and maintaining a Balanced Scorecard can create a workload for many people 3. The Balanced Scorecard highlights trade-offs and thus brings increased transparency, which may be threatening for some managers 4. Balanced scorecard must evolve over time as the company’s (or the unit’s) environment, capabilities and/or strategy change Nooreklit (2000), through the use of analytical approach, addressed the concepts used in the balance scorecard for increasing the level of clarity and precision in them. Nooreklit concluded that BSC is not only the measurement system but also an effective control system; however, there are some problems with some of its key assumptions and relationships. These include: the existence and understanding of cause and effect relationship (instead of logical relationship) and the creditability and effectiveness of the BSC as a management solution. However, these are the critics based on theoretical perspective and need to be empirically evaluated and tested before acceptance. In a comprehensive quantitative study, Lord et al. (2005) replied to the critics on the BSC and proved that there existed the cause and the effect relationships between the BSC measures and was understood by the respondents. They also proved empirically that the BSC was the valid strategic management tool and proved its credibility and effectiveness in the industry. In addition, Lord et al. (2005) also concluded that the traditional four perspectives of the BSC proposed by Kaplan and Norton were adequate. The authors also found that organizations preferred to modify the names of the customized BSC perspectives according to the desired area of measurement, for example, “learning and growth” perspective to that of “people”.
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Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
According to Jie and Parton (2009), the two major issues related to the balanced scorecard include: unavailability of standard procedures in the use of BSC and less flexibility as compared to other performance measurement system, for example, activity based costing (ABS).
7.0 Conclusion Notwithstanding the limitation of the BSc, it is widely accepted and used by a large number of organizations (manufacturing & service industries, large & small organizations, public & private sector and multi-enterprise family farm businesses) for a number of purposes (Awadallah & Allam, 2015; Basu et al., 2009; Bontis et al., 2007; Ciuzaite, 2008; Giannopoulos et al., 2013; Martinsons et al., 1999; Murby & Gould, 2005; Nzuve & Nyaega, 2013; Paustian et al., 2015; Shadbolt et al., 2003). These include: 1. To implement a strategy 2. To measure the overall performance of an organization 3. To manage and measure the intangible nature of knowledge (management of intellectual capital) 4. To develop employee compensation/incentive system 5. To support decision making at the strategic management level 6. To manage multi-enterprise family farm businesses 7. To be used as a performance measurement and strategic management tool The common problems faced by organizations (small, medium and large) for the implementation of strategies, in general, include organizational structure, systems, processes, people (human resource), communication, coordination and control (Aaker, 1998; Aaltonen & Ikävalko, 2002; Bryson & Bromiley, 1993; Carpenter & Sanders, 2009; Čater & Pučko, 2010; Galbraith & Kazanjian, 1986; Heide et al., 2002; Hill & Jones, 2008; Hitt et al., 2013; Johnson et al., 2008; Judson, 1990; Okumus, 2001, 2003; Olson et al., 2005; Skivington & Daft, 1991; Stonich, 1982; Waterman et al., 1980; Wheelen & Hunger, 2012). The BSC addresses all these issue through its five principles: translating the strategy to operational terms; aligning organization to the strategy; making strategy everyone’s everyday job; making strategy a continual process; and mobilizing change through executive leadership (Awadallah & Allam, 2015; Basuony, 2014; Kaplan & Norton, 2001). In present day scenario, the BSC is the best available management tool which can help organizations including family farms to successfully implement their business strategy by involving all the stakeholders. The balanced scorecard, being a fully integrated management system, offers a control for all management and production activities on a farm and increase farm performance. 47
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
7.0 References Aaker, D. A. (1998). Developing business strategies (5th ed.). New York, NY: Wiley. Aaltonen, P., & Ikävalko, H. (2002). Implementing strategies successfully. Integrated Manufacturing Systems, 13(6), 415-418. Alexander, L. D. (1985). Successfully implementing strategic decisions. Long range planning, 18(3), 91-97. Alexander, L. D. (1991). Strategy implementation: nature of the problem. International Review of Strategic Management, 2(1), 73-96. Alexander, L. M. (1993). Implementing strategy through project management. Long range planning, 26(1), 76-85. Allio, M. K. (2005). A short, practical guide to implementing strategy. Journal of Business Strategy, 26(4), 12-21. Atkinson, H. (2006). Strategy implementation: a role for the balanced scorecard? Management Decision, 44(10), 1441-1460. Awadallah, E. A., & Allam, A. (2015). A Critique of the Balanced Scorecard as a Performance Measurement Tool. International Journal of Business and Social Science, 6(7), 91-99. Basu, R., Little, C., & Millard, C. (2009). Case study: A fresh approach of the Balanced Scorecard in the Heathrow Terminal 5 project. Measuring Business Excellence, 13(4), 22-33. Basuony, M. A. K. (2014). The balanced scorecard in large firms and SMEs: A critique of the nature, value and application. Accounting and Finance Research, 3(2), p14. Beer, M., & Eisenstat, R. A. (2000). The silent killers of strategy implementation and learning. Sloan Management Review, 41(4), 29-40. Beer, M., & Eisenstat, R. A. (2004). How to have an honest conversation about your business strategy. harvard business review, 82(2), 82-89. Beijeman, A. J. (2007). Strategy recognition and implementation by New Zealand pastoral farming strategists. (Honours of Applied Science), Massey University, Palmerston North, New Zealand. Betker, T. (2013). Farm Management Plans. Paper presented at the 19th International Farm Management Congress, Warsaw, Poland. 48
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Bigler Jr, W. R., & Williams, F. A. (2013). World-Class Strategy Execution Through'on The Job'leadership Development. Business Studies Journal, 5(1). Bigler, W. R., & Norris, M. (2004). The new science of strategy execution: How established firms become fast, sleek wealth creators: Greenwood Publishing Group. Bontis, N., Bart, C. K., Bose, S., & Thomas, K. (2007). Applying the balanced scorecard for better performance of intellectual capital. Journal of Intellectual Capital, 8(4), 653-665. Bourne, M., Neely, A., Mills, J., & Platts, K. (2003). Implementing performance measurement systems: a literature review. International Journal of Business Performance Management, 5(1), 1-24. Breene, R. T. S., Nunes, P. F., Shill, W. E., & Timothy, S. (2007). The chief strategy officer. harvard business review, 85(10), 84. Brenes, E. R., Mena, M., & Molina, G. E. (2008). Key success factors for strategy implementation in Latin America. Journal of Business Research, 61(6), 590598. Bryson, J. M., & Bromiley, P. (1993). Critical factors affecting the planning and implementation of major projects. Strategic Management Journal, 14(5), 319-337. Burgelman, R. A., & Siegel, R. (2008). Cutting the strategy diamond in hightechnology ventures. California Management Review. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1111770 Byrne, A., Ruane, D. J., & Kelly, T. (2004). The Development and Application of the Balanced Scorecard for the Irish Dairy Farm Manager. Paper presented at the Proceedings of the 20th Annual Conference AIAEE. Calori, R., & Atamer, T. (1990). How French managers deal with radical change. Long range planning, 23(6), 44-55. Campbell, A., & Alexander, M. (1997). What's wrong with strategy? harvard business review, 75(6), 42-51. Carpenter, M. A., & Sanders, W. G. (2009). Strategic management: a dynamic perspective: concepts and cases (2nd ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
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Čater, T., & Pučko, D. (2010). Factors of effective strategy implementation: Empirical evidence from Slovenian business practice. Journal for east european Management Studies, 207-236. Christensen, C. M. (1997). Making strategy: Learning by doing. harvard business review, 75(6), 141-156. Ciuzaite, E. (2008). Balanced scorecard development in Lithuanian companies: Cultural implications, Balanced Scorecard development process framework and discussion on interlink with employee incentive system (M.Sc.), University of Aarhus, Denmark. Crittenden, V. L., & Crittenden, W. F. (2008). Building a capable organization: The eight levers of strategy implementation. Business horizons, 51(4), 301309. David, F. R. (2013). Strategic Management: Concepts and Cases: A Competitive Advantage Approach (14th ed.). Upper Saddle River, NJ: Prentice Hall. De Feo, J. A., & Janssen, A. (2001). Implementing a strategy successfully. Measuring Business Excellence, 5(4), 4-6. Dobni, C. B., & Luffman, G. (2003). Determining the scope and impact of market orientation profiles on strategy implementation and performance. Strategic Management Journal, 24(6), 577-585. Eppler, M. J., & Platts, K. W. (2009). Visual strategizing: the systematic use of visualization in the strategic-planning process. Long range planning, 42(1), 42-74. Epstein, M., & Manzoni, J.-F. (1998). Implementing corporate strategy: From Tableaux de Bord to balanced scorecards. European Management Journal, 16(2), 190-203. Franken, A., Edwards, C., & Lambert, R. (2009). Understanding the Critical Management Elements That Lead to Success. California Management Review, 51(3). Freedman, M. (2003). The genius is in the implementation. Journal of Business Strategy, 24(2), 26-31. Frost, F. A. (2003). The use of strategic tools by small and medium‐sized enterprises: an Australasian study. Strategic change, 12(1), 49-62. Galbraith, J. R., & Kazanjian, R. K. (1986). Strategy implementation: Structure, Systems, and Process (2nd ed.): West Publishing Company New York, NY. 50
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Garvin, D. A., & Levesque, L. C. (2008). The multiunit enterprise. harvard business review, 86(6), 106-117. Garvin, D. A., & Roberto, M. A. (2005). Change through persuasion. If you read nothing else on change, read these best-selling articles., 26. Giannopoulos, G., Holt, A., Khansalar, E., & Cleanthous, S. (2013). The use of the balanced scorecard in small companies. International Journal of Business and Management, 8(14), p1. Giles, W. D. (1991). Making strategy work. Long range planning, 24(5), 75-91. Gratton, L. (1996). Implementing a strategic vision—Key factors for success. Long range planning, 29(3), 290-303. Håkonsson, D. D., Burton, R. M., Obel, B., & Lauridsen, J. T. (2012). Strategy implementation requires the right executive style: Evidence from Danish SMEs. Long range planning, 45(2), 182-208. Hambrick, D. C., & Cannella, A. A. (1989). Strategy implementation as substance and selling. The Academy of Management Executive, 3(4), 278285. Hansson, H., Oskarsson, M., & Öhlmér, B. (2010). Successful implementation of new strategies in the farm business–Facilitators and inhibitions found at Swedish sugar beet farms. Journal of International Farm Management, 5(2), 1-22. Heide, M., Grønhaug, K., & Johannessen, S. (2002). Exploring barriers to the successful implementation of a formulated strategy. Scandinavian Journal of Management, 18(2), 217-231. Higgins, J. M. (2005). The eight ‘S’s of successful strategy execution. Journal of Change Management, 5(1), 3-13. Hill, C. W. L., & Jones, G. R. (2008). Strategic Management: An Integrated Approach (8th Ed.). Boston, USA: Houghton Mifflin. Hill, C. W. L., Jones, G. R., Galvin, P., & Haidar, A. (2007). Strategic Management: An Integrated Approach (2nd ed.). Australia: John wiley & Sons. Hitt, M. A., Ireland, R. D., & Hoskinson, R. E. (2013). Strategic Management: Competitiveness and Globalization (Concepts and Cases) (10th ed.). Mason, USA: Cengage Learning.
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Hrebiniak, L. G. (2006). Obstacles to effective strategy implementation. Organizational dynamics, 35(1), 12-31. Hrebiniak, L. G. (2008). Making strategy work: Overcoming the obstacles to effective execution. Ivey Business Journal, 72(2), 1-6. Hrebiniak, L. G. (2013). Making strategy work: Leading effective execution and change. Upper Saddle River, New Jersey: Pearson Education, Inc. Hrebiniak, L. G., & Joyce, W. F. (1984). Implementing strategy: Macmillan New York, NY. Hussey, D. E. (1985). Implementing corporate strategy: using management education and training. Long range planning, 18(5), 28-37. Huy, Q. N. (2011). How middle managers' group‐focus emotions and social identities influence strategy implementation. Strategic Management Journal, 32(13), 1387-1410. Jenster, P. V. (1987). Using critical success factors in planning. Long range planning, 20(4), 102-109. Jie, F., & Parton, K. A. (2009). Balanced Scorecard for Australian cattle producers: An Application. Australasian Farm Business Management Journal, 6(1), 27-39. Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy: text and cases (8th ed.). Harlow: Prentice Hall. Johnson, L. K. (2004). Execute your strategy—without killing it. Harvard Management Update, 9(12), 3-6. Judson, A. S. (1990). Making strategy happen: transforming plans into reality: Wiley-Blackwell. Kaplan, R., & Norton, D. (2005). The office of strategy management. harvard business review, 83(10), 72-80, 157. Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. USA: Harvard Business Press. Kaplan, R. S., & Norton, D. P. (2000). Having trouble with your strategy? Then map it. Focus Your Organization on Strategy—with the Balanced Scorecard, 61.
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Kaplan, R. S., & Norton, D. P. (2001). The strategy-focused organization: How balanced scorecard companies thrive in the new business environment: Harvard Business Press. Kaplan, R. S., & Norton, D. P. (2006). How to implement a new strategy without disrupting your organization. harvard business review, 84(3), 100. Kaplan, R. S., & Norton, D. P. (2008). Mastering the management system. harvard business review, 86(1), 62. Kleinbaum, A. M., & Stuart, T. E. (2014). Inside the black box of the corporate staff: Social networks and the implementation of corporate strategy. Strategic Management Journal, 35(1), 24-47. Kohtamäki, M., Kraus, S., Mäkelä, M., & Rönkkö, M. (2012). The role of personnel commitment to strategy implementation and organisational learning within the relationship between strategic planning and company performance. International Journal of Entrepreneurial Behavior & Research, 18(2), 159-178. Leonardi, P. M. (2015). Materializing strategy: the blurry line between strategy formulation and strategy implementation. British Journal of Management, 26(S1), S17-S21. Lissitsa, A. (2004). The Balanced Scorecard as a New Strategic Management Instrument for Ukrainian Agricultural Enterprises. Ukrainian Agriculture– Crisis and Recovery, 117. Lissitsa, A. (2005). The balanced scorecard implementation in farm enterprise-a case study from Ukraine. Paper presented at the 15th Congress, Campinas SP, Brazil, August 14-19, 2005. Lorange, P. (1998). Strategy implementation: the new realities. Long range planning, 31(1), 18-29. Lord, B. R., Shanahan, Y. P., & Gage, M. J. (2005). The balanced scorecard: a New Zealand perspective. Pacific Accounting Review, 17(1), 49-78. Mankins, M. C., & Steele, R. (2005). Turning great strategy into great performance. harvard business review, 2607. Manning, T. (2012). Managing change in hard times. Industrial and Commercial Training, 44(5), 259-267.
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Martinsons, M., Davison, R., & Tse, D. (1999). The balanced scorecard: a foundation for the strategic management of information systems. Decision support systems, 25(1), 71-88. Meskendahl, S. (2010). The influence of business strategy on project portfolio management and its success—a conceptual framework. International Journal of Project Management, 28(8), 807-817. Miller, A., & Dess, G. G. (1996). Strategic Management (2nd ed.): McGraw-Hill Inc. Miller, D. (2002). Successful change leaders: What makes them? What do they do that is different? Journal of Change Management, 2(4), 359-368. Miller, S. (1997). Implementing strategic decisions: Four key success factors. Organization Studies, 18(4), 577-602. Miller, S., Hickson, D., & Wilson, D. (2008). From strategy to action: involvement and influence in top level decisions. Long range planning, 41(6), 606-628. Miller, S., Wilson, D., & Hickson, D. (2004). Beyond Planning:: Strategies for Successfully Implementing Strategic Decisions. Long range planning, 37(3), 201-218. Mintzberg, H. (1994). The fall and rise of strategic planning. harvard business review, 72(1), 107-114. Murby, L., & Gould, S. (2005). Effective Performance Management with the Balanced Scorecard: Technical Report. London: Chartered Institute of Management Accountants and INSEAD, 23. Naranjo-Gil, D., & Hartmann, F. (2006). How top management teams use management accounting systems to implement strategy. Journal of Management accounting research, 18(1), 21-53. Neilson, G. L., Martin, K. L., & Powers, E. (2008). The secrets to successful strategy execution. harvard business review, 86(6), 60. Nell, W. T., & Napier, R. J. (2005). Strategic approach to farming success. Paper presented at the 15th International Farm Management Association Congress, Campinas, Brazil. Noble, C. H. (1999). The eclectic roots of strategy implementation research. Journal of Business Research, 45(2), 119-134.
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Noell, C., & Lund, M. (2002). The Balanced Scorecard (BSC) for Danish Farms— Vague Framework or Functional Instrument? Paper presented at the Farm Management. Proceedings of NJF Seminar No. 345. Nooreklit, H. (2000). The balance score card-a critical analysis of some of its assumption. Management accounting research, 11(1), 65-88. Nzuve, S., & Nyaega, G. (2013). Application of balanced scorecard in performance measurement at Essar Telecom Kenya limited. Available at SSRN 2231330. Okumus, F. (2001). Towards a strategy implementation framework. International Journal of Contemporary Hospitality Management, 13(7), 327338. Okumus, F. (2003). A framework to implement strategies in organizations. Management Decision, 41(9), 871-882. Okumus, F., & Roper, A. (1999). A review of disparate approaches to strategy implementation in hospitality firms. Journal of Hospitality & Tourism Research, 23(1), 21-39. Olson, E. M., Slater, S. F., & Hult, G. T. M. (2005). The importance of structure and process to strategy implementation. Business horizons, 48(1), 47-54. Olson, K. D. (2004). Farm management: Principles and strategies: Iowa State Press Ames. Parker, W. J. (2000). Seven principles for improving farm business management. ASIAN AUSTRALASIAN JOURNAL OF ANIMAL SCIENCES, 13, 432-440. Parmigiani, A., & Holloway, S. S. (2011). Actions speak louder than modes: antecedents and implications of parent implementation capabilities on business unit performance. Strategic Management Journal, 32(5), 457-485. Pasanen, M. (2011). Strategic Management Tools and Techniques in Smes. Paper presented at the Society of Interdisciplinary Business Research (SIBR) 2011 Conference on Interdisciplinary Business Research. Paustian, M., Wellner, M., & Theuvsen, L. (2015). The Balanced Scorecard as a Management Tool for Arable Farming. Proceedings in Food System Dynamics, 262-275. Pearce, J. A., & Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control: Irwin/McGraw-Hill. 55
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Pellegrinelli, S., & Bowman, C. (1994). Implementing strategy through projects. Long range planning, 27(4), 125-132. Pendlebury, A. J. (1987). Creating a manufacturing strategy to suit your business. Long range planning, 20(6), 35-44. Piercy, N., & Morgan, N. (1991). Internal marketing—The missing half of the marketing programme. Long range planning, 24(2), 82-93. Pryor, M. G., Anderson, D., Toombs, L. A., & Humphreys, J. H. (2007). Strategic implementation as a core competency: The 5P's model. Journal of management Research, 7(1), 3. Raimond, P., & Eden, C. (1990). Making strategy work. Long range planning, 23(5), 97-105. Rapert, M. I., Velliquette, A., & Garretson, J. A. (2002). The strategic implementation process: evoking strategic consensus through communication. Journal of Business Research, 55(4), 301-310. Raps, A. (2005). Strategy implementation-an Handbook of business strategy, 6(1), 141-146.
insurmountable
obstacle?
Reed, R., & Buckley, M. R. (1988). Strategy in action—Techniques for implementing strategy. Long range planning, 21(3), 67-74. Rigby, D. (2001). Management tools and techniques: A survey. California Management Review, 43(2), 139. Rigby, D., & Bilodeau, B. (2015). Management Tools & Trends 2015. London, Bain & Company. Roth, K., Schweiger, D. M., & Morrison, A. J. (1991). Global Strategy implementation at unit level: Operational Capabilities and Administrative Mechanisms. Journal of International Business Studies, 22(3), 369-402. Schmelzer, C. D., & Olsen, M. D. (1994). A data based strategy implementing framework for companies in the restaurant industry. International Journal of Hospitality Management, 13(4), 347-359. Shadbolt, N. M. (2007). The Balanced Scorecard: A Strategic Management Tool for Ranchers. Rangelands, 29(2), 4-9. Shadbolt, N. M. (2008). Strategic management of farm businesses: The role of strategy tools with particular reference to the balanced scorecard. Journal of Farm Management, 13(3), 205-218.
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Shadbolt, N. M., Beeby, N., Brier, B., & Gardner, J. W. (2003). A critique of the use of the balanced scorecard in multi-enterprise family farm businesses. Paper presented at the 14th Congress, Perth, Western Australia, August 1015, 2003. Shaw, G., Brown, R., & Bromiley, P. (1998). Strategic stories: How 3M is rewriting business planning. harvard business review, 76, 41-54. Shaw, J. D., Gupta, N., & Delery, J. E. (2002). Pay dispersion and workforce performance: Moderating effects of incentives and interdependence. Strategic Management Journal, 23(6), 491-512. Skivington, J. E., & Daft, R. L. (1991). A study of organizational ‘framework’ and ‘process’ modalities for the implementation of business level strategic decisions. Journal of Management Studies, 28(1), 45-68. Slater, S. F., & Olson, E. M. (2000). Strategy type and performance: The influence of sales force management. Strategic Management Journal, 21(8), 813-829. Speculand, R. (2014). Bridging the strategy implementation skills gap. Strategic Direction, 30(1), 29-30. Stonich, P. J. (1982). Implementing strategy: Making strategy happen: Ballinger Pub Co. Sull, D., Homkes, R., & Sull, C. (2015). Why Strategy Execution Unravels—and What to Do About It. harvard business review, 93(3), 57-66. Taylor, B. (1995). The new strategic leadership—Driving change, getting results Führungskräfte und Führungserfolg (pp. 37-61): Springer. Taylor, B. (1997). The return of strategic planning—once more with feeling. Long range planning, 30(3), 334-344. Thomas, L., & Ambrosini, V. (2015). Materializing strategy: the role of comprehensiveness and management controls in strategy formation in volatile environments. British Journal of Management, 26(S1), S105-S124. Thompson, A. A., Strickland III, A. J., & Gamble, J. E. (2005). Strategy: Winning in the Marketplace; core concepts, analytical tools, cases (2nd ed.). Boston, NY: McGraw-Hill/Irwin. Thompson, J. L. (2001). Understanding corporate strategy. Oxford: Alden Press.
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Tourish, D. (2005). Critical Upward Communication:: Ten Commandments for Improving Strategy and Decision Making. Long range planning, 38(5), 485503. Verweire, K. (2014). Strategy Implementation. Nw York, NY: Routledge. Waterman, R. H., Peters, T. J., & Phillips, J. R. (1980). Structure is not organization. Business horizons, 23(3), 14-26. Wernham, R. (1984). Bridging the awful gap between strategy and action. Long range planning, 17(6), 34-42. Wheelen, T. L., & Hunger, J. D. (2012). Strategic Management and Business Policy: Toward Global Sustainability (13th ed.). Boston, USA: Pearson/Prentice Hall. Wu, W.-Y., Hsiung Chou, C., & Wu, Y.-J. (2004). A study of strategy implementation as expressed through Sun Tzu's principles of war. Industrial management & data systems, 104(5), 396-408. Yang, L., Sun, G., & Eppler, M. J. (2008). Making Strategy Work: A Literature Review on the Factors influencing Strategy Implementation. ICA Working Paper 2. Institute for Corporate Communication. Retrieved from http://www.knowledge-communication.org/pdf/making-strategy-work.pdf Yang, L., Sun, G., & Eppler, M. J. (2009). Making strategy work: A literature review on the factors influencing strategy implementation. In P. Mazzola & F. W. Kellermanns (Eds.), Handbook of research on Strategy Process (pp. 165181). UK: Edward Elgar Publishing Limited. Zabriskie, N., & Huellmantel, A. (1989). Implementing strategies for human resources. Long range planning, 22(2), 70-77.
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Appendix 1 Activity group
Activities for Strategy Implementation
Activities as operationalized in the study Formulating and implementing development programs Planning and implementing projects
Planning activities
Using an efficient annual planning system Applying action planning
Activities addressed in the literature Programming and budgeting (Pucko 2006), Developing programs, budgets and procedures (Wheelen/Hunger 2006) Translating strategy into projects (Pellegrinelli/Bowman 1994) Managing projects (Kovac 1996; Grundy 1998; Hauc/Kovac 2000; Minarro-Viseras et al. 2005; Pucko 2006) Establishing operating-level objectives (Hrebiniak/Joyce 1984) Tactical (annual) planning (Pucko 2006) Annual business planning (Birnbaum 2007) Action planning (Pucko 2006; Wheelen/Hunger 2006; Birnbaum 2007) Turning strategy into action (Farsight Leadership Organization 2007)
Organising activities
Organizing for strategy implementation
Allocating strict responsibility for strategy implementation
59
Fitting the organization to the strategy (organization design) (Lorange 1982; Kovac 1996) Designing a primary and operating organizational structures (Hrebiniak/Joyce 1984) Organizing for strategy implementation (Pucko 2006) Organizing for action (Wheelen/Hunger 2006) Developing organizational structure (Birnbaum 2007) Translating enterprise-level plans into lower- unit-level plans (Kaplan/Norton 2005) Allocating responsibility for strategy implementation (Pucko 2006) Involving people from all organisational levels (Wheelen/Hunger 2006) Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
Using leadership to direct employees
Triggering enthusiasm in employees (Nichols 1994) Directing employees (Pucko 2006) Leading by coaching people (Wheelen/Hunger 2006) Motivational leadership (Farsight Leadership Organization 2007) Leading the change (Brenes et al. 2008) Emphasizing communication between all parties (Al-Ghamdi 1998)
Leadership activities
Using formal communication
Communicating the corporate strategy (Kaplan/Norton 2005) Communicating strategy to people (Speculand 2006)
Applying MBO (management by objectives)
Applying HRM activities
Aligning employees’ goals with strategic goals (Kaplan/Norton 2005) Management by objectives (Pucko 2006; Wheelen/Hunger 2006) Executing HR activities (Fulmer 1990; Ulrich 1998) Staffing (Pucko 2006; Wheelen/Hunger 2006) Managing human resource factors (Birnbaum 2007) Creating incentives and control mechanisms (Hrebiniak/Joyce 1984)
Controlling activities
Using an efficient tactical control system
Applying the BSC (balanced scorecard)
Controlling the implementation of strategies (Pucko 2006) Monitoring and control (Birnbaum 2007) Implementing control and follow-up actions (Brenes et al. 2008) Using the balanced scorecard (Kaplan/Norton 1996, 2006) Consistently measuring progress and performance (Farsight Leadership Organization 2007)
(Čater & Pučko, 2010)
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Appendix 2 Obstacle group Strategy formulation
Obstacles to Strategy Implementation Obstacles as operationalized in the study Strategic analysis is not properly conducted Strategy is poorly defined
Change Managers lack capabilities to implement change management management
Organizational culture
Organizational power structure
Pucko/Cater 2008 Giles 1991; Hrebiniak Hrebiniak 2005, 2008
Managers do not trust information generated outside their units
Hrebiniak 2005
Employees are reluctant to share knowledge with colleagues
Hrebiniak 2005
Short-range orientation dominates the company
Alexander 1985; AlGhamdi 1998
Strategy conflicts with existing organizational power structure
Hrebiniak 2005, 2006
Managers lack ideas how to persuade employees to execute the strategy
Hrebiniak 2005; Gurkov 2009
Top management is not actively engaged in strategy implementation
Hrebiniak 2005; Brenes et al. 2008
Managers lack leadership skills for strategy implementation
Hrebiniak 2005
There are no guidelines or a model to guide strategy execution efforts
Leadership
Relevant references
Al-Ghamdi 1998; Hrebiniak 2005; Kaplan/Norton 2006
Strategy is not properly communicated to lower levels
Hambrick/Cannella 1989; Hrebiniak 2005; Kaplan/Norton 2005
Reward systems do not stimulate strategy implementation
Terborg/Ungson 1985 (Čater & Pučko, 2010)
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Appendix 3A Strategy Implementation – Conceptual/Descriptive Frameworks S.NO.
Author(s)
1
Waterman, Peters, & Phillips (1980)
Type
Journal
Year
1980
Model Conceptual framework
2
Stonich (1982)
Book
1982
Conceptual framework
3
Hrebiniak & Joyce (1984)
Book
1984
Conceptual framework
4
Galbraith & Kazanjian (1986)
Book
1986
Conceptual framework
62
Focus
Remarks
7-S factors of strategy implementation These factors are: strategy, structure, systems, style, staff, skills, and subordinate goals. Interaction among variables , (non-linear relationship) Proposed a conceptual strategy implementation framework that include five interrelated variables: strategy formulation, organization structure, human resources, management process (planning, programming, budgeting and reward system), and culture Described the implementation factors such as organizational structure, reward system, objectives and control mechanisms. It emphasize that the process of strategy implementation be built around a set of implementation factors which are significant enough to be treated separately in terms of the managerial emphasis laid on them. Described factors of implementation such as task, organizational structure, people, reward system, information and decision process, objectives and control mechanism. It recommends that the process of strategy implementation be built around a set of implementation factors.
7 Factors and Linear relationship and a Strong fit is required
Strong fit among five factors
Description of Factors
Strong fit among factors
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Reed & Buckley (1988)
5
6
Judson (1990)
Alexander (1991)
7
63
Journal
Book
Journal
1988
1990
1991
Conceptual framework
Descriptive
Descriptive
Combined the use of goal-setting and critical success factors with performance appraisal which will facilitate the strategy implementation process. Suggested different but interrelated techniques to be used for the effective implementation of strategies. These techniques include; performance appraisal, goal settings and identification of critical success factors. Identified ten critical factors in strategy formulation and implementation process. The factors 1-9 belong to strategy formulation process and only 1 factor relates to strategy implementation process. Used quite similar factors of implementation such as organizational structure, culture, people, communication, control, rewards and outcome and recommends that the process of strategy implementation is built around a set of implementation factors. Proposed a descriptive strategy implementation framework focusing on the key implementers rather than on the strategy formulators. Alexander believed that key implementers and the affected employees decide whether the strategy is appropriate or not. Factors considered by implementers include; financial resources, organizational structure, time, people, communication, control and outcome.
Problem avoidance approach Identification of critical success factors but did not talked about what are those factors Identified factors Identified problems in strategy formulation and implementation (Practitioners) Description of factors Focusing on key implementers who decided about appropriateness of strategy
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Schmelzer & Olsen (1994)
8
Miller & Dess (1996)
9
Journal
Book
1994
1996
Conceptual framework /Empirical tested– case study
Conceptual framework
10
Taylor (1997)
Journal
1997
Descriptive
11
Aaker (1998)
Book
1998
Conceptual framework
64
Developed and empirically tested an implementation framework , identified 14 factors, grouped them into context and process factors
Describe factors of implementation such as task, organizational structure, people, reward system, information and decision process, objectives and control mechanism and recommended that the process of strategy implementation be built around a set of implementation factors. Restructuring the Organization (making it leaner, fitter and simpler), Re-engineering Business Processes (simplifying and speeding up the company’s key processes such as product development, delivery, etc.), Company Culture (making the company’s mission, values and beliefs more explicit and emphasizing the need to produce value for customers, shareholders and other stakeholders), Human Resource Management (revising the contract with the employees, e.g. to allow more flexible working, to hold staff more accountable and to link rewards more directly to performance) This frameworks uses quite similar factors of implementation such as organizational structure, culture, people, and system
Identification and grouping of factors
Description of factors
Description of factors (Practitioners)
Factors and strong fit
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12
Lorange (1998)
Journal
1998
Descriptive
13
Beer and Eisenstat (2000)
Journal
2000
Descriptive
14
Thompson (2001)
Book
2001
Conceptual framework
15
De Feo & Janssen (2001)
Journal
2001
Descriptive
65
Identified obstacles to strategy implementation; Lack of a true growth culture in the organization from top to bottom, Too much organizational complexity, Strong organizational kingdom, Lack of speed and urgency, Lack of tradition-breaking, and Lack of cost competitiveness Identified six silent killers of strategy implementation and concluded that managers who tackled these killers, instead of avoiding them, successfully implemented the strategy and achieved the desired goals Similar to Hrebiniak (2013), There are four essential components which articulate the basis of a successful strategy implementation. These include strategic leader, intended strategy (with clear objectives, milestones and targets), organization structure and strategic resources and it is the strategic leader who establishes coordination among other three important components of strategy implementation Described ten such steps for corporate strategy to become an integral part of an organization’s culture: establishing a vision; agreeing on a mission; developing key strategies; developing strategic goals; establishing values; communicating company policies; providing top management leadership; deploying goals, measuring progress with key performance indicators and finally, reviewing progress
Obstacles identified (Practitioners)
Obstacles to SI (Practitioners)
Strategic leader is the key player in implementation. Different components and their alignment
10 steps of SI (Practitioners)
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16
Rapert et al. (2002)
Journal
2002
17
Freedman (2003)
Journal
2003
Conceptual framework
Conceptual framework Conceptual framework/ empirical analysis
18
Wu et al. (2004)
19
Thompson et al. (2005)
Book
2005
Descriptive
20
Allio (2005)
Journal
2005
Descriptive
Journal
2004
21
Raps (2005)
Journal
2005
Descriptive
22
Higgins (2005)
Journal
2005
Conceptual framework
66
They discussed that strategic consensus plays an important role in the implementation process and frequent communication between marketing and top management served to increase strategic consensus through the development of shared attitudes, understandings, and values and rewarded with higher levels of marketing and organizational performance.
Strategic consensus and frequent communication between marketing and top management
Five phases to the strategy process.
List of activities
Identification of different factors and grouping them
Identification of different factors and grouping them
Eight managerial tasks should be performed accurately to get the desired results. 10 guidelines to be followed for SI
List of activities (Practitioners) List of activities (Practitioners)
In order to overcome and improve the difficulties in the implementation context, Raps (2005) brought ten critical points together to be addressed Based on the McKinsey seven S’s model proposed a 8 S’s model of strategy implementation and replaced ‘Skills’ of McKinsey with ‘reSources’ and added a new factor ‘Strategic Performance’ in the model.
List of activities (Practitioners)
Factors and their alignment
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23
Pryor et al. (2007)
Journal
2007
Conceptual framework
24
Sull (2007)
Journal
2007
Conceptual framework
25
Johnson et al. (2008)
Book
2008
Descriptive
26
Hill & Jones (2008)
2008
Conceptual framework
67
Book
Based on the alignment and integration of widely accepted activities and functions of effective and successful strategy implementation. These activities and functions include; structures, systems, leadership behaviour, human resource policies, cultures, value and management processes. Strategy is a cyclic/iterative process not the linear. A strategy loop consists of four major steps: • Making sense of a situation • Making choices on what to do and what not to do • Making those things happen • Making revisions based on new information Organizational configuration (structures, processes and relationships through which the organization operates), resourcing strategies (overall business strategies and strategies in separate resource areas such as people, information, finance and technology), managing strategic change, practicing of strategy are important elements for successful implementation of strategies. Organizational design is the heart of implementing strategies effectively. Organizations motivate and coordinate its employees and members through the use of organizational structure, control systems and culture to work towards achieving the desired results by developing the competitive advantage.
Factors and their alignment
Strategy is a cyclic process / nonlinear in nature
Grouping of factors
Grouping of factors and alignment
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27
28
Crittenden & Crittenden (2008)
Carpenter & Sanders (2009)
29
Yang et al. (2008)
30
Meskendahl (2010)
68
Journal
Book
Journal
Journal
2008
2009
Descriptive
Descriptive
2009
Conceptual framework
2010
Conceptual framework
Suggested eight levers of strategy implementation which would play a pivotal role in the development of the organization, as lever does by making work easier by overcoming resistance against it. They grouped these eight levers into two groups; structural levers and managerial skills levers. They used the implementation levers, as they call them, of organizational structure, systems and processes, people and rewards, and strategic leadership that involve making lever and resource allocation decisions, and communicating the strategy to stakeholders. Identified nine individual factors that influence strategy implementation. These include: the strategy formulation process, the strategy executors (managers, employees), the organizational structure, the communication activities, the level of commitment for the strategy, the consensus regarding the strategy, the relationships among different units/departments and different strategy levels, the employed implementation tactics, and the administrative system in place. Based on project portfolio management
Grouping of factors
Grouping of factors / Strategic leader is the key player who align the group of factors
Identification and grouping of factors and interaction among factors
Interaction between different variables
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31
Pearce & Robinson (2011)
32
Wheelen & Hunger (2012)
Book
2012
Descriptive
33
Manning (2012)
Journal
2012
Descriptive
34
Bigler Jr & Williams (2013)
Journal
2013
Descriptive
35
Hitt et al. (2013)
Book
2013
Descriptive
36
69
David (2013)
Book
Book
2011
2013
Descriptive
Descriptive
The five steps which maximises the likelihood of implementing strategies successfully include; Identifying short-term objectives, Initiating specific functional tactics, Outsourcing nonessential functions, Communicating policies that empower people in the organization and Designing effective rewards Structure (organizing), selecting the appropriate people to carry out the strategy (staffing), and communicating clearly how the strategy can be put into action (leading) Five sets of issues associated with successful strategy implementation The four foundation pillars of World-class strategy execution; speed, Internal alignment, innovation, executive behavior Effective corporate governance, organizational structure and the control, strategic leadership and strategic entrepreneurships are necessary for successful implementation of strategies Translation of strategic thought into strategic action is facilitated by managers and employees understanding of the firm business, feeling themselves a part of the company and their involvement in strategy formulation activities.
Five steps (Practitioners)
Alignment of different components (Practitioners) Identified Issues/problems (Practitioners) Leadership development (Practitioners) Description of factors (Practitioners) Consensus between top management and staff
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37
Hrebiniak (2013)
38
Speculand (2014)
70
Book
Journal
2013
2014
Conceptual framework Descriptive
Interrelationship of different key decisions and actions.
Put forward five recommendations for leaders to conduct a successful implementation.
Logical flow between different components Practitioners
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Appendix 3B Strategy Implementation – Empirical Frameworks S.NO Author(s . ) 1
2
Year Analysis & Model
Wernham Journal 1984 (1984) Alexander Journal 1985 (1985)
Hussey (1985)
3
Jenster (1987)
4
5
Type
Journal 1985
Journal 1987
Survey/ Empirical Survey/ Empirical
Survey/ Empirical
Case study/ Empirical
Focus
Remarks
Identified problems of strategy Implementation, Identified factors making implementation more effective, organizational fit is required for SI.
SI is not a linear process / Identified factors
identified implementation problems, identification of factors which help promoting the strategy implementation, problem prevention and doing the right things were necessary for successful strategy implementation
Identification of problems to SI; and factors help SI
Training is a powerful weapon for implementing strategy and training objectives and initiatives should be periodically reviewed by top management.
Training for Strategists – a largely ignored area by researchers
Firms which had high return on equity identified their critical success factors for the implementation of strategies. Followed by identification, these factors were used to monitor the progress in implementation of strategic change. Based on these findings, Jenster propose a nine step strategic process and information system for integrating planning and control.
Factors identification
Developed Strategy and implementation are inseparable; conceptual implementation success depends upon the right Pendlebur Journal 1987 framework based balance between people, systems and technology y (1987) on survey/ empirical research
71
Factors identification
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6
Hambrick & Cannella Journal 1989 (1989)
7
Zabriskie & Journal 1989 Huellmant el (1989)
8
9
Raimond & Eden Journal 1990 (1990)
Calori & Atamer (1990)
72
Journal 1990
Empirical
5 steps identified from the examination of Bondall’s Identified different own most effective business strategy implementations variables and emphasized that a strong fit is required for SI
Empirical
Timely information from all the major functional specialists (marketing, production, HR, finance and other as needed) along with resource allocation is required for strategic decisions to implement successfully
Case study/ Empirical
Survey/ Empirical
Information and resource allocation – two very important factors
Factors Need a clear vision of what the company should be, select the people appropriate to that vision (involve all identification people who are essential to the implementation of the strategy in the planning stage); performance measures appropriate to vision and goal, resources allocation, information selection A good strategy (deliberate or emergent) does not turn Problem solving into reality without managerial skills and that superior approach managerial skills are useless without sound strategic thinking and orientation. Seven clusters of possible actions were found: formulating a strategic project‘, managing the development of re resources and skills, negotiating with the environment, dealing with power, improving internal communication on strategic questions, influencing norms of behaviour and developing a cluster of transformational managers
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
The identified several factors such as intended Empirical analysis/ Skivington strategy, structure, systems, interactions, and framework 10 & Daft Journal 1991 sanctions that effected successful implementation of developed based (1991) strategies and divided these factors into two broad on analysis groups of framework and process factors.
11
12
Piercy & Morgan (1991)
Roth et al. Journal 1991 (1991)
Giles (1991)
13
14
Journal 1991
Journal 1991
Bryson & Bromiley Journal 1993 (1993)
73
Factors identified and divided into two groups
Effective Communication of strategy in the internal market-place made up by top management, other functional units, and operational staff is important, use/develop an appropriate language for managers to describe the strategy
Factors identification – communication and common language
They proposed a theoretical international strategy implementation framework based on six factors and tested it empirically
6 factors and strong fit/alignment is required
Case study/ Empirical
Identified three reasons of strategy implementation failure: strategy is not strategy at all, strategy is itself not implementable, and strategy is not owned by the implementers. Implementers must be a part of strategy generation process and must be allowed to inspect and challenge the logic by which the strategy was created. SI is a continuous process surrounded by the correct sequence of people.
Strategy formulators and implementers should work together
Empirical
From a large set of variables identified during previous research, a smaller set of underlying factors was estimated by factor analysis and grouped them into three categories; namely: context, process and outcome.
Group of factors identified and relationship between factors
Case studies/Survey / Empirical
Empirical
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15
Alexander Journal 1993 (1993)
Pellegrinell i& 16 Journal 1994 Bowman (1994)
Taylor (1995)
17
18
Gratton (1996)
19
Miller (1997)
74
Journal 1995
Survey/ Empirical
Case study/ Empirical
Empirical
Journal 1996
Case study/ Empirical
Journal 1997
Case study/ Empirical
The implementation of strategy can be ensured through a series of projects, By using project management techniques Managers can control strategy implementation, Project management sets detailed targets for achieving particular goals.
Project management
Projects and project management with the help of programme approach (grouping projects) help in effectively implement the strategies or strategic change, Clear communication about strategic objectives
Project management
Strategic leadership along with Organization structure, Factors identified – culture, business processes managing people as a structure, culture strategic resource with tighter measurement of and people performance and performance related incentives/rewards Identified six top priority strategic factors; decentralized decision making, Creating horizontal team working, Facilitating communication and learning, Managing performance, Recruiting and retaining talent, Training and development. Clear fit is required between specific strategy and related people and processes.
Factors identification and a strong fit is required among them
Identified and evaluated ten factors and categorized them into realizers and enablers
Identification of factors and grouping them
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20
21
22
23
Survey / Empirical
Different strategy types require individualized profiles Sales force of sales force management practices for optimal management is the effectiveness and sales force management is important focus to the successful implementation of business strategy. Sales force management focus on five key sales management practices. These practices are representative of the three broad critical sales management issues identified by Churchill, Ford and Walker (1990) (i.e., sales plan formulation, implementation, and evaluation). The practices include: (1) selling strategy (2)internalization of selling activities (3) extent of managerial supervision (4) focus of salesperson control (5) salesperson compensation plans
Journal 2001
Case study/ Empirical
Five phases to the strategy process, proposed Identification of conceptual framework and empirically tested and again factors and proposed conceptual framework grouping them. Proposed the right alignment of the factors
Shaw et Journal 2002 al. (2002)
Case study/ Empirical
Effective strategy implementation demands a synergistic amalgam of organizational processes and systems
Slater & Olson (2000)
Okumus (2001)
Journal 2000
Aaltonen & Ikävalko Journal 2002 (2002)
75
About matching the planned and the realizing Conceptual strategies towards organizational vision. Focus on framework/ Case organizational structure and culture that is receptive to study/empirical change, elaborate building up of change management analysis systems and skills, and communication and employee
Factors identification – process and system very important Identified barriers to implementation of strategies. Factors and their alignment
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commitment to vision.
24
Heide et Journal 2002 al. (2002)
25
Okumus (2003)
26
Dobni & Luffman (2003)
Case study/ Empirical
It was concluded that many strategic initiatives fail to be implemented because the vertical lines of communication are insufficiently developed between the top management and the staff.
Empirical analysis Refined the Five phases to the strategy process Journal 2003 of own conceptual framework
Journal 2003
Survey/ Empirical
Barriers and communication between the top management and staff is the major one. SI a linear process
The key to successful strategy implementation lies in Behaviours the ability to guide and manage employees behaviours Management on a collective basis and the alignment of organization’s behaviours and actions to specific requirements Success depends on a combination of relevant Involvement of experience and firm readiness, involvement of senior senior management is essential for SI people engenders a great commitment to strategies. Managerial Implications: prioritise decisions, ensure political acceptability (What happens during implementation needs to be acceptable to the various stakeholders in the process) and don’t change organizational structures unless really necessary.
27
Miller et Journal 2004 al. (2004)
Multiple Case Study/ empirical
28
Olson et Journal 2005 al. (2005)
Empirical
Reiterates the significance of organizational structure and processes in strategy implementation
Alignment of different factors
two way communication, critical feedback and willingness of employees to implement a strategy is vital to organisational success
Communication
Empirical
Tourish (2005)
29
76
Journal 2005
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30
NaranjoGil & Journal 2006 Hartmann (2006)
31
Hrebiniak Journal 2006 (2006)
Burgelman 32 & Siegel Journal 2008 (2008)
33
Neilson et al. (2008)
34
Brenes et Journal 2008 al. (2008)
77
HBR
2008
Empirical
Relationship between top management and use of management accounting system in SI
Management accounting system
Based on empirical The inability to manage change (the size of the change Identification of work proposed and the time to manage it) is the biggest obstacle to obstacles conceptual successful strategy implementation. framework
Empirical
A venture‘s top management must make sure to Alignment between dynamically create alignments between the company‘s strategy and corporate strategy and its strategic actions. The strategic actions Strategy diamond can be used to systematically examine a venture‘s strategy execution.
Out of 17 Fundamental traits of organizational Information and effectiveness, decision rights (everyone has a food communication are idea of the decisions and actions for which he or she is very important Survey/Empirical responsible) and information flow quickly across the factors Empirical analysis organization were on the top rankings for effectively though the author implement strategies. is a practitioner Conducted research to learn and understand the key Survey/Empirical success factors in the implementation of business strategy for local business firms in Latin America
Factors identification
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35
36
37
Miller et Journal 2008 al. (2008)
Franken et Journal 2009 al. (2009)
Eppler & Platts (2009)
Čater & Pučko (2010)
38
78
Journal 2009
Journal 2010
Case study/ Empirical
Identify and develop the knowledge and capabilities Development of required to implement strategic decisions required skills and successfully; Successful implementation requires the capabilities ability both to manage the logistics of what has to be done and to create receptive organizational contexts: managers operating at the core need the diverse range of skills and abilities in order to be steer strategic decisions through to success
Survey/ Empirical
Strategic change portfolio alignment, i.e., the Strategic change identification and prioritization of an agreed collection portfolio alignment of programs that will deliver the strategy; strategic change execution, i.e., actually delivering the benefits of the strategic change through implementing the programs in the change portfolio; and change capability improvement, i.e., continually improving the ways in which change programs are identified and undertaken
Case study/ Empirical
Visualization (the graphic representation of data, information and knowledge) can improve the strategy process in terms of thinking, communicating and engaging others
Empirical
12 of the most common strategy implementation activities and classified them into four broad groups; planning, organizing, leadership and controlling. Found 13 of the most common obstacles to strategy implementation and classified them into five broad groups; problems in strategy formulation, change implementation problems, organizational culture problems, problems related to organizational power
Visualization is a useful instrument Identification of activities and obstacles to successfully implementing the strategies
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structure and leadership problems.
Huy (2011)
39
Journal 2011
Parmigiani & 40 Journal 2011 Holloway (2011) 41
Håkonsson Journal 2012 et al. (2012)
Survey/ Empirical
Case study/ Empirical
Empirical
Implementing a new strategy can be more successful if Socio-cultural top executives express their vision clearly and design aspect of organization should appropriate task systems, such as formal structures, control systems, and incentives. The structural, social- be aligned with organization cultural, and emotional dynamics of strategy settings implementation are interwoven with one another in organizational settings and need to be understood holistically. Business unit managers should welcome collocation of Communication their headquarters with their corporate parents, as this can improve both quality and growth. This collocation improves communication, which may assist in understanding and deploying the business template across the system A failure to align SME executive style and strategy leads to a significant performance loss
Alignment between strategy and executive style
Kohtamaki 42 et al. Journal 2012 (2012)
Empirical
Participative strategic planning increases personnel Participative understanding about company’s strategy and strategic approach goals and help implementing the strategy efficiently.
Kleinbaum 43 & Stuart Journal 2014 (2014)
Survey/ Empirical
Corporate staff is central to the implementation of corporate-level strategy; Social structure of the corporation influences strategy implementation success
44
Leonardi Journal 2015 (2015)
79
Case study/ Empirical
Social structure
Strategy formulation and strategy implementation are Strategy not separable but inherently intertwined; To formulation and materialize a strategy is to focus on the materiality implementation
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through which the strategy is enacted.
45
Thomas & Ambrosini Journal 2015 (2015)
80
Survey/ Empirical
two aspects of strategy formation, comprehensiveness and management controls (MCs) help how strategy materializes and positively influence middle manager’s implementation performance.
Middle Managers and MCs
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Appendix 3C Strategy Implementation – Harvard Business Reviews S.NO.
Author(s) Campbell & Alexander (1997)
1
Type
HBR
Year
1997
Model
Descriptive
2
Christensen (1997)
HBR
1997
Case study
3
(Shaw et al., 1998)
HBR
1998
Case study
4
Kaplan & Norton (2000)
HBR
2000
Case study
81
Focus
Remarks
The development of a good strategy lies in managers’ understanding of two fundamental points: having a well-articulated, stable purpose, and the importance of discovering, understanding, documenting, and exploiting insights about how to create more value than other companies do. Managers must ensure that strategy is not a reflection of the biases (and possibly ignorance) of the management team (biases that are likely to be rooted in the organization’s past successes’) and also ensure that once a company has outlined a viable strategy, it allocates resources in a way that correctly reflects the strategy. Offers manager’s tool kit: 1. Identify the driving forces in company’s competitive environment, 2. Formulate strategy that addresses the driving forces, 3. Create a plan for the projects to implement the strategy Presenting a plan in narrative instead of bullets creates a richer picture of strategy not only for the plan’s authors but also for its intended audience. Strategy maps provide a visual representation of a company’s critical objectives that drive organizational performance and also provide employees a clear line of sight into how they are linked to the overall objectives of the organization allowing them to work in a coordinated, collaborative way toward the company’s desired goal.
Academic & practitioner
Offers manager’s tool kit
Academics and practitioner
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Beer & Eisenstat (2004)
5
Garvin & Roberto (2005)
6
Mankins & Steele (2005)
7
82
HBR
HBR
HBR
2004
2005
2005
Strategic fitness model/Appl ication in real world
Framework /Application in real world
Survey / Empirical
The strategic fitness model designed to implement strategy quickly and effectively by fitting the organization to the strategy and increasing fitness, the capacity of the organization to learn and change. This process involves 5 steps: 1. A conversation about strategy needs to move back and forth between advocacy and inquiry, 2. The conversation has to be about the issues that matter most, 3. The conversation has to be collective and public, 4. The conversation has to allow employees to be honest without risking their jobs, 5. The conversation has to be structured Four phases of change through persuasion process: Phase 1: convince employees that radical change is imperative (explain new direction is right one), Phase 2: Position and frame preliminary plan, gather feedback and announce final plan, Phase 3: Manage employee mood through constant communication, Phase 4: Reinforce behavioral guidelines to avoid backsliding Through survey identified reasons of strategy-toperformance gap: companies rarely track performance against long term plans, multiyear results rarely meet projections, a lot of value is lost in translation, performance bottlenecks are frequently invisible to top management, the strategy-to-performance gap fosters a culture of underperformance. Seven rules to closing the gap between strategy-to-performance: keep it simplemake it concrete, debate assumptions not forecasts, use a rigorous framework and speak a common language, discuss resource deployment early, clearly identify
5 stage strategic fitness model
Change through Persuasion
Identified reasons of strategy-toperformance gaps, seven rules for successful Strategy execution
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8
Kaplan & Norton (2005)
9
Kaplan & Norton (2006)
10
Breene et al (2007)
11
Kaplan & Norton (2008)
Garvin & Levesque (2008)
12
83
HBR
HBR
HBR
HBR
HBR
2005
2006
2007
2008
2008
Descriptive
Case study
Descriptive
Theoretical Framework
Survey / Empirical
priorities, continuously monitor performance, reward and develop execution capabilities Proposed to create a new unit at the corporate level to oversee all strategy related activities and called it ‘Office of Strategy Management (OSM)’ with the following tasks: Create and manage the scorecard, Align the organization, Review strategy, Develop strategy, Communicate strategy, Manage strategic initiatives, Integrate strategic priorities with other support functions A strategy map and the balanced score card organized around specific strategic themes gives executives a way to communicate shared priorities and motivate people to share them in even the most complex business.
Strategy office concept
Concept of strategy map
Employ a Chief Strategy Officer (CSO) who handle the three critical strategy implementation tasks: engendering commitment to strategic plans, driving immediate change and promoting decision making that sustains change
Concept of CSO
A closed-loop management system for effectively implement strategies: The loop comprises five stages; Develop the strategy, Translate the Strategy, Plan Operations, Monitor and Learn, Test and Adapt the Strategy Principles of organizational design for successful implementation of strategies for multiunit enterprise: Allow overlapping roles and responsibilities, Use integrators at all levels, Set up information funnels and filters, Appoint translators to convert strategies into action, Share responsibility for talent development
Proposed closed-loop management system Organization can profit from the following principles of organizational design
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Neilson et al. (2008)
13
Sull et al. (2015)
14
84
HBR
HBR
2008
2015
Online Survey / Empirical
Survey / Empirical
Two levers are crucial for successful strategy execution: 1. Clarifying decision rights – specifying who ‘own’ each decision and who must provide input and encourage higher level managers to delegate operational decisions 2. Ensuring information flow where it’s needed – facilitate information flow across organizational boundaries and help field and line employees to understand how their day to day decision affect the company Exposed five of the most pernicious myths and replaced them with more accurate viewpoint: Alignment with coordination Sticking to the plan with receptiveness to adaptation Communication with understanding Performance culture should include a culture that supports execution Execution should be driven from the middle (management) but guided from the top (management) instead of driven by the top (management)
Settle decision rights and information flow first before altering organizational structure and reward system Explained the 5 most important aspects of strategy execution
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85
Centre of Excellence in Farm Business Management Strategy Implementation Literature Review
