interviews was conducted in twelve service organizations. ... (Alexander 1991, Giles 1991, Galpin 1998, Lares-Mankki 1994, Beer & Eisen- stat 2000). In strategy ...
Implementing Strategies Successfully Petri Aaltonen Helsinki University of Technology Industrial Engineering and Management P.O. Box 9500 FIN-02015 HUT FINLAND Heini Ikävalko Helsinki University of Technology Industrial Engineering and Management P.O. Box 9500 FIN-02015 HUT FINLAND
Abstract The paper presents the key findings of a study on strategy implementation. A qualitative study of 298 interviews was conducted in twelve service organizations. In the paper, the key findings are introduced, and the challenges of strategic communication and action, the identification of and support for strategic actors, and structure and systems aligned with strategy, are discussed.
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Introduction Implementing strategies successfully is vital for any organization, either public or private. Without implementation, even the most superior strategy is useless. The notion of strategy implementation might at first seem quite straightforward: the strategy is formulated and then it is implemented. Implementing would thus be perceived as being about allocating resources and changing organizational structure. However, transforming strategies into action is a far more complex and difficult task. This paper presents the findings of a study of strategy implementation in 12 service organizations. The findings will be discussed in the light of previous literature.
What is Strategy Implementation? Strategy implementation has attracted much less attention in strategic and organizational research than strategy formulation or strategic planning. Alexander (1991) suggests several reasons for this: strategy implementation is less glamorous than strategy formulation, people overlook it because of a belief that anyone can do it, people are not exactly sure what it includes and where it begins and ends. Furthermore, there are only a limited number of conceptual models of strategy implementation. Organizations seem to have difficulties in implementing their strategies, however. Researchers have revealed a number of problems in strategy implementation: e.g. weak management roles in implementation, a lack of communication, a lacking commitment to the strategy, unawareness or misunderstanding of the strategy, unaligned organizational systems and resources, poor coordination and sharing of responsibilities, inadequate capabilities, competing activities, and uncontrollable environmental factors. (Alexander 1991, Giles 1991, Galpin 1998, Lares-Mankki 1994, Beer & Eisenstat 2000). In strategy textbooks, implementation has usually been regarded as distinct from strategy formulation and as a matter of adjustment of organizational structures and systems (e.g. Galbraith 1980, Hrebiniak & Joyce 1984, Higgins 1985, Thompson &
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Strickland 1987, Pearce & Robinson 1994). It seems that this approach is limited, and a number of new perspectives to this problematic phenomenon has emerged. Pettigrew’s (1987) framework for strategic change also sheds some light to the analysis of strategy implementation. Pettigrew distinguishes the content of the strategy, the outer and inner contexts of an organization, and the process in which strategic change is carried out. Pettigrew contends that the content, the context and the process are intertwined and affect each other. This has an important impact on strategy implementation research. In order to understand implementation, which is close to the process in Pettigrew’s model, also the content of strategy and the context in which it takes place must be understood. Another issue influencing the study of strategy implementation is the perspective one has on strategy. Is strategy first formulated and then implemented, or vice versa? If one believes that strategies are explicit (Mintzberg 1978), implementation means carrying out the pre-determined strategic plans. If one, on the other hand, holds an emergent view on strategy, she does not believe that strategy is first created and then implemented, but that strategy emerges and evolves without interventions by the strategic planners, or despite them (ibid.). We believe that in reality some strategies are planned and some strategies just emerge from the actions and decisions of organizational members. We suggest that planned strategy and realizing, or emergent, strategy evolve hand in hand and affect each other in the process of strategy implementation, where strategies are communicated, interpreted, adopted and enacted (cf. Noble 1999) (figure 1).
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vision
planned strategy
Strategy implementation: communication interpretation and adoption actions
realizing strategy
Figure 1. Strategy implementation as a link between planned and realizing strategy
In our model, implementing strategies successfully is about matching the planned and the realizing strategies, which together aim at reaching the organizational vision. The components of strategy implementation – communication, interpretation, adoption and action – are not necessarily successive and they cannot be detached from each other. From this perspective it is interesting to study how the planned strategies and the reality interact with each other through communication, interpretation, adoption and action. If this interaction is successful, the organizational vision may be achieved. When doing research from this view, the scope needs to be broad to grasp both the planning of the strategies and also the real work practices through which the strategies come true.
Methodology and data The research was focused on how the strategies were communicated, interpreted and adopted, and what kind of an effect they had on the actions of organizational members. In each of the twelve organizations in which the research was conducted, the implementation of a distinct type of strategy was studied: financial issues, internal process issues, customer issues and learning were among these types. All the strategies were intent on influencing the daily work practices of the organizational members. In each 4
organization, questionnaires and interview outlines were tailored to fit the strategy in question. The research data were gathered from 12 service organizations by interviewing a total of 298 representatives from top management, middle management and operative personnel. Table 1 presents some characteristics of the data. Table 1. Some characteristics of research data Organization size < 500 persons 500 – 10000 persons < 10000 persons Duration of employment < 2 years 2 - 10 years
number of persons 39 89
> 10 years N.A.
165 5
Organizational level
number of persons 39 81 178
Top management Middle management Personnel
Organization type
number of persons 99 102 97
Public service Telecommunications Insurance Financing Retail
Education No professional education Vocational education University N.A.
number of persons 97 75 50 49 27
number of persons 33 120 139 6
The interviews were tape recorded and transcribed word-to-word. The data, being mainly qualitative in nature, was analyzed with content analysis methods.
Findings The findings of this study suggest that there is still much to be done on the field of communicating strategies. A considerable number of interviewees linked the problems of strategy implementation with communication. A common concern was the creation of shared understanding of strategy among the organizational members. The amount of strategic communication in most of the organizations was large: both written and oral communication was used, mostly in forms of top-down communication. Howev-
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er, a great amount of information does not guarantee understanding, which was the concern of many interviewees. The middle managers’ role in communicating strategies was emphasized in the findings. The middle managers were often responsible for the continuation of the flow of strategic information and also for ensuring the understanding of the strategy. In this process of communication the informal communication between superiors and subordinates was considered more important than the formal communication of strategy. Sufficient communication does not guarantee successful implementation, however. Interpretation, acceptance and adoption among implementers are crucial. A lack of understanding of strategy was one of the obstacles of strategy implementation observed in this study. Surprisingly many organizational members typically recognized strategic issues as important and also understood their content in generic terms. Problems in understanding arose, when the strategic issues had to be applied in everyday decision-making. Goals and objectives set for organizational groups and units is an important aspect of implementing strategy. In this research the linking of strategy to goals and objectives was found to be insufficient. Transforming the strategy into concrete objectives was generally perceived as challenging. This problem gets tougher the lower one gets in the organization (e.g. team level objectives). One of the most significant problems reported by the top and middle managers were conflicting activities and events that diverted attention from strategy implementation. Daily routines and the lack of time were mentioned as preventing the organizational members from thinking and acting strategically. The structure of the organization rarely hindered strategy implementation. Instead, a lack of alignment between strategy and the organizational compensation system was perceived as a major problem for implementation.
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Discussion In the following chapter, we will discuss the findings of our study in association with three elements of successful strategy implementation: strategic communication and acting; identification of and support for strategic actors; and structures and systems aligned with strategy. Strategic communication and acting The findings on communication from this research are well aligned with previous studies (cf. Alexander 1985). The importance of two-way communication with all employees, which has been suggested earlier (Alexander 1985) as improving strategy implementation, is also emphasized in our findings. According to our data, the communication of strategy was mostly linear, top-down communication. Understanding of the strategy, however, requires a possibility to comment, query or question it. This can be achieved by continuous two-way communication with feedback and reacting to bottom-up messages. For strategic change to happen, it must be defined what kind of change is desired. It should be clear whether the members of the organization are expected to simply follow a set of rules or think strategically in different situations (cf. Mintzberg 1994). This should be comprehensibly communicated in the organization, so that each individual member of the organization will understand why she should act differently and what should be done differently. Strategic actors A central question for discussion is: Who are the strategists? The traditional viewpoint suggests that those who do strategic planning are the key actors. But what if strategy is something that is not planned but emerges in the organization? From this viewpoint, the strategists can be found on other levels of the organization as well. Our results highlight the role of middle managers in strategic communication. Middle management has a pivotal role in strategy communication, for instance in filtering
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strategic messages. Middle managers require adequate communicational skills and also motivation in order to succeed in their communicative role. For strategic actors to succeed in their roles, they must first become conscious of their role. Therefore, managers need to encourage different actors to consider their role in strategy implementation. Furthermore, roles that have been regarded as minor, e.g. bottom-up strategic communication must be recognized. By encouraging personnel to develop their abilities to participate in the strategy process, strategic capabilities can be developed. Structures and systems aligned with strategy Organizational structure was regarded only slightly problematic in both Alexander’s (1985) and our research. It seems that the lessons of traditional writings on strategy and structure (e.g. Porter 1980, Galbraith 1980) have been learned, and the contemporary challenges for implementation lie in communication and cultural aspects of organizations. Linking organizational goal-setting systems to strategy is essential. Moreover, identification of those work-related objectives that the personnel members have created for themselves is called for. These objectives are often the ones that really influence the decisions made in every-day work. An interesting finding of this study was the perceived importance of compensation systems. Alexander (1985) found that compensation systems were not hindering strategy implementation, while in our study they were perceived among the most problematic issues. What also supports strategy implementation is an explicit, well-known representation of the strategy process, which in many organizations takes the shape of an annual planning process. This process should be described in an informative and comprehensive style: Where does the process start, where does it end? Is there a customer for the process? Which are the main phases in the process? Who participates in the process and in what kind of a role? What is the product of the process? What is the schedule of the process?
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Strategic routines, such as the planning process should also be linked with the goalsetting practices of the organization, e.g. goal-setting discussions. Strategic action can be cultivated by linking individual goals to strategic goals in goal-setting discussions between superiors and subordinates.
References 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). Beer, M. & Eisenstat, R. (2000) The Silent Killers of Strategy Implementation and Learning. Sloan Management Review 41 (4) 29-40. Galbraith, J. R. (1980) Strategy Implementation: the role of structure and process. St. Paul: MN West. Giles, W. D. (1991) Making Strategy Work. Long Range Planning, 24 (5) 75-91. Galpin, T. J. (1998) When leaders really walk the talk: Making strategy work through people. Human Resource Planning 21 (3) 38-45. Higgins, J. M. (1985) Strategy: formulation, implementation, and control. Chicago: Dryden Press. Hrebiniak, L. G. & Joyce (1984) Implementing strategy. New York: Macmillan. Lares-Mankki, L. (1994) Strategy Implementation Bottlenecks: Identification, Analysis and Removal. Lappeenranta: Lappeenranta University of Technology. Mintzberg, H. (1978) Patterns of strategy formation. Management Science 24 (9) 934948. Mintzberg, H. (1994) The Fall and Rise of Strategic Planning. Harvard Business Review 72 (1) 107-114.
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Noble, C. H. (1999) The Eclectic Roots of Strategy Implementation Research. Journal of Business Research 45 (2) 119-134. Pearce, J. A. & Robinson, R. B. (1994) Strategic management: formulation, implementation, and control. Burr Ridge: Irwin. Pettigrew, A. M. (1987) Context and Action in the Transformation of the Firm. Journal of Management Studies 24 (6) 649-670. Porter, M. (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press. Thompson, A. A. & Strickland, A. J. (1987) Strategic Management: Concepts and Cases. Plano: Business Publications.
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