After completing the phase of strategy formulation, the next important stage is the strategy implementation in Strategic Management in which the theoretical work is converted into practical one. In order to produce effective business performance, the strategies & plans should be converted into individual actions. Strategy implementation is the most difficult stage of the whole strategic management process and most of the organizations fail in properly motivating their employees to perform their duties well so that the overall objectives of the organizations are accomplished. Most of the organizations know that what kind of strategies & plans are beneficial for the success. But some of them have the capability to translate the formulated strategies & plans into action which means successful implementation of the strategy. There are certain potential methods of strategy implementation. An impressive foresight leadership organization has worked to provide such advanced principles.
It is specified in the Fortune Magazine study that out of 10 CEOs, 7 are failed not because of poor strategy but because of the poor strategy execution.
Similarly another useful study of Times reveals that out of 1000 companies, 80% directors declare that they possessed right kind of strategies but only 14% of them consider that they are implementing the strategies well.
1 out of 3 companies are accomplishing significant strategic success in their own assessment.
In the above examples it is clear message that the realization of the effective strategy is necessary for accomplishing strategic success. It is not guaranteed that successful strategy formulation leads to the successful strategy implementation. It is much difficult to implement a strategy than to formulate it. Although there is inextricable link but there is fundamental difference between strategy formulation & strategy implementation.
Strategy Implementation and Strategy Formulation Contrast
Following are some of the ways in which the Strategy Formulation & strategy implementation is contrasted.
- Strategy formulation is the specifying efforts before the start of an action
- Strategy implementation is the managing efforts that emerged during the continuation of the action
- Strategy formulation concentrate on effectiveness
- Strategy implementation concentrates on efficiency
- Strategy formulation is intellectual process in nature
- Strategy implementation is operational process in nature
- Strategy formulation needs good analytical & intuitive skills
- Strategy implementation needs special leadership & motivational skills
- Strategy formulation needs coordination among few people
- Strategy implementation needs coordination among many individuals
The concepts & tools of strategy formulation do not much differ according to the profit or nonprofit nature and smaller of larger size organization. On the other hand the strategy implementation differs according to the sizes & types of the organization. Following are some of the important actions that are required in the implementation strategies.
- Sales territories alteration
- Addition of new departments
- Closing facilities
- New employee hiring
- Changing the pricing strategy of an organization
- Financial budget development
- New employee benefit development
- Cost control procedure establishment
- Altering strategies of advertising
- New facilities building
- New employee training
- Transfer of managers among different divisions
- Development of effective computer information system
The above implementation activities significantly differ among service, manufacturing & governmental organizations.
The shifting of responsibility is made from strategists to divisional & functional managers when transition is made from strategy formulation to strategy implementation in all kinds of organizations but especially in the small sized. There emerge implementation problems when the shift in the responsibility is made especially in the situation where the decisions of strategy formulation become surprising to the lower & middle level managers. The self interest is better motivating force for the employees than the interest of the organization. Therefore it is recommended that the functional as well as the divisional managers should be involved in the process of strategy formulation. Similarly the strategists should be involved in the strategy implementation process.
There are certain management related issues that are based on the strategy implementation. These issues are as follow
- Establishment of annual objectives
- Devising policies
- Resource allocation
- Changing the current organizational structure
- Restructuring & re-engineering
- Revising incentive plans & rewards
- Reducing resistance to change
- Coordinating managers with strategies
- Developing strategy supportive culture
In certain situation where the strategy implementation requires the changing of the organization in quite new direction, the drastic changes in management are also required.
There should be direct involvement of every manager and employee in the strategy implementation decisions. They should be first involved in the strategy formulation process. Through involvement in strategy formation & implementation activities, the employees & managers are more committed & motivated to perform the assigned implementation tasks effectively. All the objectives & strategies should be clearly communicated throughout the organization so that everyone can understand them. Moreover there should be competitor focus developed at each level of hierarchy so that every manager & employee know the current performance levels of relating employee of the competitors and they benchmark their efforts by performing more well than the employees of the competitors. There should also be proper training programs in order to equip managers & employees with the latest skills & knowledge so that they can perform much better.