Learning objective Show The Nature of Strategy Implementation It is possible to turn strategies and plans into individual actions, necessary to produce a great business performance. But it's not easy. Many companies repeatedly fail to truly motivate their people to work with enthusiasm, all together, towards the corporate aims. Most companies and organizations know their businesses, and the strategies required for success. However many corporations - especially large ones - struggle to translate the theory into action plans that will enable the strategy to be successfully implemented and sustained. Here are some leading edge methods for effective strategic corporate implementation. These advanced principles of strategy realization are provided by the very impressive Foresight Leadership organization, and this contribution is gratefully acknowledged. Most companies have strategies, but according to recent studies, between 70% and 90% of organizations that have formulated strategies fail to execute them. A Fortune Magazine study has shown that 7 out of 10 CEOs, who fail, do so not because of bad strategy, but because of bad execution. In another study of Times 1000 companies, 80% of directors said they had the right strategies but only 14% thought they were implementing them well. Only 1 in 3 companies, in their own assessment, were achieving significant strategic success. Management Perspectives In all but the smallest organizations, the transition from strategy formulation to strategy implementation requires a shift in responsibility from strategists to divisional and functional managers. Implementation problems can arise because of this shift in responsibility, especially if strategy-formulation decisions come as a surprise to middle- and lower-level managers. Managers and employees are motivated more by 113 Annual Objectives Objectives set out what the business is trying to achieve. Objectives can be set at two levels: (1) Corporate level These are objectives that concern the business or organization as a whole Examples of “corporate objectives might include: • We aim for a return on investment of at least 15% • We aim to achieve an operating profit of over �10 million on sales of at least �100 million • We aim to increase earnings per share by at least 10% every year for the foreseeable future (2) Functional level E.g. specific objectives for marketing activities Examples of functional marketing objectives” might include: • We aim to build customer database of at least 250,000 households within the next 12 months • We aim to achieve a market share of 10% • We aim to achieve 75% customer awareness of our brand in our target markets Both corporate and functional objectives need to conform to the commonly used SMART criteria. The SMART criteria Measurable - an objective should be capable of measurement – so that it is possible to determine whether(or how far) it has been achieved Achievable - the objective should be realistic given the circumstances in which it is set and the resourcesavailable to the business. Relevant - objectives should be relevant to the people responsible for achieving themTime Bound - objectives should be set with a time-frame in mind. These deadlines also need to berealistic. 114 Policies Changes in a firm's strategic direction do not occur automatically. On a day-to-day basis, policies are needed to make a strategy work. Policies facilitate solving recurring problems and guide the implementation of strategy. Broadly defined, policy refers to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals. Policies are instruments for strategy implementation. Policies set boundaries, constraints, and limits on the kinds of administrative actions that can be taken to reward and sanction behavior; they clarify what can and cannot be done in pursuit of an organization's objectives. For example, Carnival's new Paradise ship has a no-smoking policy anywhere, anytime aboard ship. It is the first cruise ship to comprehensively ban smoking. Another example of corporate policy relates to surfing the Web while at work. About 40 percent of companies today do not have a formal policy preventing employees from surfing the Internet, but software is being marketed now that allows firms to monitor how, when, where, and how long various employees use the Internet at work. Policies let both employees and managers know what is expected of them, thereby increasing the likelihood that strategies will be implemented successfully. They provide a basis for management control, allow coordination across organizational units, and reduce the amount of time managers spend making decisions. Policies also clarify what work is to be done by whom. They promote delegation of decision making to appropriate managerial levels where various problems usually arise. Many organizations have a policy manual that serves to guide and direct behavior. Policies can apply to all divisions and departments (for example, "We are an equal opportunity employer"). What is the role of policies in strategy implementation?Policies refer to specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals. Changes in a firm's strategic direction do not occur automatically. On a day-to-day basis, policies are needed to make a strategy work.
How do policies and procedures implement strategy?Policies and procedures help enforce strategy implementation in several ways: Policy institutionalizes strategy-supportive practices and operating procedures throughout the organization. Policy reduces uncertainty in repetitive and day-to-day activities in the direction of efficient strategy execution.
What are important practices that help in effective implementation of the strategy?7 Key Steps in the Implementation Process. Set Clear Goals and Define Key Variables. ... . Determine Roles, Responsibilities, and Relationships. ... . Delegate the Work. ... . Execute the Plan, Monitor Progress and Performance, and Provide Continued Support. ... . Take Corrective Action (Adjust or Revise, as Necessary). Why do annual objectives are essential for strategy implementation?Annual objectives are essential for strategy implementation for five primary reasons: They represent the basis for allocating resources. They are a primary mechanism for evaluating managers. They enable effective monitoring of progress toward achieving long-term objectives.
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