Assignment 4: Key issues in strategic execution.
Business organisations are ever changing structures and the pace at which they are changing is increasing. They can be changing for a number of different factors such as changes in technology which provide a competitor an advantage, a change in consumer’s behaviour which may require adaptation of how your strategy is executed. All these changes are becoming more fast paced and to keep up with these situations an organisation has to change, adapt and react accordingly. Businesses need to be more adaptable than ever as changing your execution of strategy is becoming more vital in today’s changing world. The biggest challenge when changing a strategy of a company is the execution of the change that has been developed.
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Olson, Slater and Hult (2005) said, ‘doing is harder than dreaming’. From my own experience and research that I have done many organisations invest a lot of time and money in planning, but very little of this planning will get executed successfully. It is in this assignment in which I will look at the key issues in regards to strategic execution. Over the last number of years a lot of research has been carried out in regards to strategic planning and in particular the execution of the strategy. Over the course of this assignment my aim is to highlight the problems and challenges that arise and slow successful strategy execution. The understanding of strategy has developed over time by many different researchers which many different approaches to how strategy is executed and what are the key issues which hinder it. My assignment will focus on three variables in regards to the issues surrounding strategy execution these are: Strategy, Organisational Structure and behaviour. I will look at how these three interlink with each other and how they are key to achieving a high standard in strategy execution. Each of these 3 categories I will discuss in detail
It is in the Planning stage where resources are allocated, the right people with the right knowledge come together to create a plan. It is at this stage that organisation is vital to having a successful plan as for it to be executed correctly proper organisation has to be in place. As an organisation grows and develops it becomes essential that the formulation of the plan is adaptable to change with the growing and changing needs of the environment around it. Slater and Olson (2001) complement that the consistency of strategy is vital, meaning that strategy throughout the company should be in line with the overall direction of the company and its goals. Another vital component to successful strategy execution is strategic consensus meaning that we have to have a number of different people from different parts of the organisation who agree on what the goal and what the interpretation of the goal of the organisation is. Consensus is very important because strategy can be interpreted by many different people in different ways. With a clear vision and consensus strategy execution is a lot more effective and meaningful. Rapert et al. (2002) see a lack of clear common understanding as a major barrier to strategy implementation. An organisation’s performance is connected to how well a company’s strategy is correlated in regards to its organised structure and also the behaviour of the organisations employees. Strategy should be in line with the structure that is already in place and is one that can be adapted to the changing structure of an ever evolving organisation
The organisational structure of a company is also very important to have an understanding of when you are highlighting the key issues in strategy execution. Structure of an organisation can be seen as the place where all actions of employees and employers take place. Alignment is one of the most important things in regards to strategy execution in an organisation. Alignment is the matching across all different areas of an organisation so that all parts in the machine that is the company work in conjunction with each other as one rather than working against each other and creating problems issues and barriers to successful strategy execution. Nobel (1999) writes that the different areas departments and functions of an organisation need to work together and work towards the same goal using the same ideals. He has stated that natural the needs of different areas create tension within an organisation and hence causes a barrier to successful strategy implementation. These tensions need to be identified, mitigated and solved by making all areas involved. It is important to note that a clear direction is needs one that above all other interests is most important. This common understanding will help execution of strategy be a success. Communication is key in regards to ensuring the successful execution of a strategy plan. It is a vital component off all the three variables that I am talking about and their sub components. Everyone in the organisation must know what its goals are and what they are doing to achieve them. Communication serves as a tool in which we first of all achieve the strategic consensus that we have touched on briefly but also is a mean by way of feedback of what is working and not working is conveyed from the top down and also the bottom up within an organisation. Rapert et al. (2002) has also said that that poor vertical communication is one of the main barriers to effective strategy execution. One of the main issues in effective strategy execution is that there is not enough dialogue between the various areas and management levels within an institution as organisations are changing shifts in strategy is needed. The New strategy needs to be conveyed clearly and effectively to all members in an organisation to enable them to implement the execution effectively and efficiently. People are the most important resource in an organisation. It is important that a company effectively uses people’s knowledge in regards to building a sustainable strategy and most importantly sustaining it and executing it successfully. One of the main challenges in the successful execution of this is how management allocates, and distributes the right people at the right times in order to be successful. It is this management in a changing environment, the communication and clarity that is required depends solely on the strategy itself and the alignment of the company’s goals. There is a need to have the right people in the right places in regards to strategy execution to allow the successful execution and development of a strategic plan. The higher levels of management also need to be involved in the communication but most importantly the supervision of the direction in which the company is going. It is up to them to make sure that the strategic goals are being executed in accordance with the plan that was formulated. One of the most important aspects of management control is the need for freedom of the employees to express themselves and convey their ideas, it is through this the process of strategy execution develops and changes in regards to becoming easier to attain and execute and knowledge from all spectrums of the organisation be obtained adapted and incorporated into the plan. There needs to be a fine balance in regards to how much freedom and how much control is administered. Too much control can create a barrier which can hinder this creativity and therefore as a consequence may also in turn a fast adaptation of strategy, it is essential that they understand the direction where the organization and the managers are heading to, how they go this way must be left to employee’s own devices. All of these components and sub components interlink with each other and rely greatly on each other in order to be successful.
The final variable I want to understand in regards to strategy execution before I outline its key issues in depth is Behaviour. This is in regards to everyone within an institution. For a strategy to be executed successfully you need everybody acting in line with what will achieve the company’s goal and carry out the strategy as a whole rather than benefitting themselves. In many organisations the commitment of a workforce is essential to ensuring a company’s strategy is adhered to and is heading in the right direction. If employees are involved from all levels there is a lot greater chance of a strategy being executed correctly. Both managers and employees should be excited to work on and carry out these plans and rewarded for the right behaviours. If they act in self-interest the plan in a way is sabotaged as the organisation is not working towards a common goals and progress is slowed. The leadership of management is also very important as it is up to them to ensure that strategy is executed in an efficient manner. Leaders often have a substantial impact on strategy execution in my opinion and I will give examples of this within my organisation when I go into the key issues later in my assignment. Leaders have to make sure that the rest of the organization is committed to the strategy in regards to its goals and execution they do this by convincing the employees that a new strategy is important and also create a meaning of strategy, so that the employees support this strategy. The goal of the leader within an organisation is to make sure that it is seen to benefit each and every member of the organisation in the longer term and make their jobs more sustainable and the company a more enjoyable place to work. They have to deal with resistance, allocate resources and create consensus. This consensus is really important, so that leaders at different levels can reinforce the strategy and the whole workforce of the organization has a direction which is appealing to all. Leadership needs to be consistent and provides support to all members of the organisation in order to avoid any issues when executing a strategy. The things which ties all this together is an organisations culture, every company has one and it is vitally important to develop one which supports the strategy being executed as it is the thing which encapsulates everything else I have stated. It is culture which influences the strategy the structure and also the behaviour of all employees from the top level executives to the lower level employees.
In the previous paragraphs I discussed the 3 variables in regards to the main areas in which a strategy is executed, I briefly explained each one and gave what ideally should be done in each one. I did this in order to analyse what I feel are the main issues in regards to strategy execution in Organisations. I have categorised each challenge which I feel is one of the key issues into the three categories as shown by table 1 above. I will analyse and give examples of each one and provide my own opinion of what needs to address these issues along with research from other sources that reinforces my opinion.
Strategy
There are a number of key issues in regards to strategy execution which fall under this heading and the sub headings as shown in table one. Strategic consensus is very important when you are trying to execute strategy. There are a number of challenges an organisation faces. One is a lack of clear common understanding shown by the staff. Every single person interprets differently so when executing a strategy naturally variances of how it should be done occur. This leads to another challenge of consistency in regards to what is required to do this is interlinked. An example of this is working in the banking industry I have seen a change of strategy in recent years to one that is more ethical, customer centric and mobile. Like every institution there has been trial and error in regards to what to digitalize how are they going to meet all needs of the customer and what the customer exactly wants from the institution. Different messages were being conveyed from all different levels from the bank such as some branches were closing down their cash services in line to meet the demands of the customers. This was not the case there was not a strategic consensus in regards to the execution of the strategy was not consulted with all areas of the bank who would have made modifications to the plan and changes that would have made the execution work a lot better and would have given the change a chance to work. When executing a strategy it has to be well planned with research and input from all levels of the organisation. In bank of Ireland the lower level staff were not consulted on the strategy change and therefore the change was hindered by lack of planning, lack of consensus by every department, lack of systems capable of implementing the change and lack of staff expertise to deal with the changes. Research is key to successful strategy execution along with the right planning. Better banking made easy systems in regards to digitalizing some of the bank processes, have better trained staff to cope with the changes, better knowledge of the local marketplace in regards to closing the cash services would have mitigate a lot of the challenges the bank faced in regards to executing the strategic change. There was a poor understanding by the staff members of why the bank was making these changes and how the changes were for the better of the customer, they were simply just told what to do and rarely told the reason why they were doing it. As I have stated trial and error are a vital part in strategic execution but the formulation and planning with the proper research, resources and consensus of all relevant parties inside and outside the organisation is key to success. A typical example of how changes should be carried out was in deutsche bank when they were looking to bringing in blockchain technology. Trial and error followed with research finding the best solution possible through consulting with all areas.
Structure
The structure of a large medium or small size institution in regards to creating issues in strategic execution is very important. When a new strategy is developed such as the digitalization of a lot of processes in Bank of Ireland for example, there tends to be little reward and more importantly no relief from normal responsibilities when implementing these changes. Staff levels were cut down to minimum numbers and the banking made easy programme rolled out. The processes that were developed were inefficient in regards to reducing the staff members work loads and what resulted was huge customer dissatisfaction as mistakes were happening on a regular basis and transactions were not being carried out in a timely manner. Tension between departments as the one team goal in terms of strategy execution was not embedded in the staff. Direct and Branch banking were constantly clashing over who does want and the best way to process the information, this lead to customers not getting what they set out to do done in a timely manner or at all. Blaming different departments and the lack of knowledge of who does what and what way to do was a common issue when executing the banks digital strategy. As I have stated before another issue the bank faced was the systems within the banking structure were not sufficient for the successful execution of the strategy. Not enough investment was placed first of all in the institutions most valuable resource the people was done in regards to putting the right people in the right places, utilising their knowledge and experience to make it successful secondly the systems such as the processes were not refined to the standard they should have been. Another key issue the Institution faces in alignment of strategy within the organisation. Organizations around the world are challenged to adapt to the changing business environment at a breakneck pace. Consequently, having team members who understand and are in alignment with the business’ principal strategy is increasingly more important. In order to stay competitive, organizations must devise viable, creative strategies for business success and growth. And in order for any strategy to do its job, an organization must maintain strategic alignment throughout every level of the business. Strategy is often thought of as something that only higher level executives can influence and have control on, and while it may be true that “top-down” strategy is most common, we should maintain that individuals throughout the organization must both understand the organization’s strategy and create an aligning strategy for themselves—a supplemental strategy that directly impacts their respective areas of responsibility and strengthens the core of the business. When carefully crafted, these supporting strategies are designed expressly to create added value within different divisions of the business while simultaneously upholding and supporting the corporate strategy driving the company forward. The main issue I feel to successful strategy execution is cooperation between departments and units of a company. Constant communication is required from both the top down and the bottom up. Employees need to be informed at all times and managers informed also. Supervision, discussion and cooperation is key to make sure that strategy is executed successfully. While managers cited in the Harvard Business Review feel that they can rely on their bosses and their direct reports more than 80% of the time to deliver on strategic goals, the number drops dramatically once they are asked if they can rely on cooperation between themselves and other units or functions of the organization. “When managers cannot rely on colleagues in other functions and units, they compensate with a host of dysfunctional behaviours that undermine execution: They duplicate effort, let promises to customers slip, delay their deliverables, or pass up attractive opportunities. The failure to coordinate also leads to conflicts between functions and units, and these are handled badly two times out of three—resolved after a significant delay (38% of the time), resolved quickly but poorly (14%), or simply left to fester (12%).
Even though, as we’ve seen, managers typically equate execution with alignment, they do recognize the importance of coordination when questioned about it directly. When asked to identify the single greatest challenge to executing their company’s strategy, 30% cite failure to coordinate across units, making that a close second to failure to align (40%). Managers also say they are three times more likely to miss performance commitments because of insufficient support from other units than because of their own teams’ failure to deliver.” (Harvard business review) This highlights the importance of communication between the different departments, if they are all working together to achieve one goal and are in constant communication, tension between departments are eroded, clarity and a purpose are instilled in the execution of the strategy. A balance between the executives and having creativity and self-responsibility is another issue, at what point do you stiffer creativity in your organisation but asserting too much control it has become a problem in some companies that there is a lack of honest conversations about underlying causes and barriers to successful communication. This is caused by a number of different issues in regards to communication within the organisations structure. Employees may not be given a platform to convey their opinions with higher members of the organisation, they may feel that their opinion doesn’t matter and are afraid to voice any concerns or ideas. An open form of communication needs to exist within a company that every opinion or idea is taken on board. This can be seen in Bank of Ireland where they are holding sessions with all members of the organisations where we can express of what the organisation is doing right and wrong and what we need to do more of and less of. It is in these sessions that employees feel valued, important and motivated to execute the company’s strategy to be successful as they believe it is for the benefit of everyone.
Behaviour
As I have stated earlier in the assignment the attitude of an employee within an organisation is a big issue when it comes to strategy execution. If the workforce is not motivated and involved with an interest into making the strategy work it is extremely difficult to overcome this obstacle. A typical example that I had stated earlier was the digital strategy adopted by Bank of Ireland, they felt that by digitalizing a lot of our processes and reducing the hours they do cash services they could cut costs and reduce staff numbers. Communication was not shown as not enough consultation within the organisation on how they could achieve their goal, they did not align the strategy with all the different departments, creating tension within the Retail network and other departments. They did not invest enough resources into making sure that the staff were educated and saw the benefit in the new plan. Many staff were of the opinion that the bank was trying to eliminate their jobs. This had a profound impact on the moral of the staff and their motivation to successfully execute their plan. There was a resistance to adapt towards the change in strategy and hence created a huge barrier in terms of progression within the institution. This was caused by a lack of leadership; the ideal leadership structure is one that has a combination of technical skills, interpersonal skills and one that has sensitivity to the needs of other areas within the institution. Through the lack of research and consideration for certain areas within the bank large problems were created. An issue in regards to successful strategy execution as consistent leadership is needed one that is clear decisive and not over controlling, you have authority but also provide the freedom to let an organisation to grow and develop the right characteristics evolving and growing in a progressive direction. Lack of leadership, lack of communication, lack of alignment within departments creates a bad culture within an institution. It is the banks culture in Bank of Ireland which is now the focus of much attention. The Bank has identified the banks culture as the driving mechanism which ensures that successful implementation of the bank’s strategy. In recent years banks that have developed a bad culture have impeded the successful execution of strategy such as the case study on Goldman sach we talked about during our in class discussions. You need strong higher level executive leadership for support of strategy champions. It is a slow process and takes a lot of patience from strategy champions, sponsors, senior leadership and the operations. Consistent, clear communication between all stakeholders is the key. It is rather essential to note that strategy is everyone’s responsibility and, therefore, a clear communication to all levels of an organization is indeed a tool that may guarantee successful execution and achieve desired results. It is, however, advisable for any organization to adapt step by step process to manage strategy and build internal capability with it. The process needs periodical reviews to test if the process is understood by all and that produces expected outcomes. The best way is to detail it as much as possible for all tranches to be executed as part of the strategy. The major factor has been the resistance of people and change management process is to be handled very carefully and proper training are conducted at the right time. An example of how change can be done in the right way is DBS bank in Asia one of our case studies. The bank did the research in all parts of the business, it had clear defined goals, it mapped out the systems and processes it needed, it created a shift in culture that spurred change but the bank also recognised that more needed to be done the CEO Nah explained “It is critical to build mind share and a core group of evangelists and though leaders on the ground to drive the digital agenda. But scalability and sustainability is the question. Post hackathon support efforts, resourcing and measuring business impact is another”
There are many different key issues in Strategy Execution and many different opinions on how to best deal with them, one thing that everyone agrees on is that it is an extremely complex process to enable the execution to be successful. Execution is a process that is every changing and it is one which needs to be adaptable. Organisations have become more aware of the issues that they face when implementing strategies and are learning from their mistakes, imitating best practices. They are evolving these practices to adapt them to their changing strategy and the changing needs of the world around them. Each of the issues underpin each other and there is no easy fix. Organisations have had a fundamental shift in culture in regards to the importance of being self-aware of the direction it is heading and becoming more aware of the importance of communication internal and external along with having its core values aligned. Organisations are now become more robust and adaptable in regards to their strategy execution and are placing more emphasis on doing research and evolving their plan in line with the changing environment. They have become aware that a strategy being executed now may be irrelevant in a very short space of time and will have to have the right leadership, systems, staff, processes and culture in place that will enable them to do so.
References:
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