Implementing Strategy & Creating a Corporate Culture at the GCC Interconnection Authority Hassan K. Al-Asaad, B.Sc., MBA
Abstract – Successful organizations use strategic planning to achieve their ambitions by setting realistic goals, creating plans to achieve them, and continuously monitor them for results. There is an aspect that often gets missed out and that is the effect on culture, and using strategic planning as a tool to influence corporate culture. In January 2012, the GCC Interconnection Authority (GCCIA) embarked on a strategy planning process that was participatory and based on international best practices for strategy development. The strategy articulation process involved internal and external stakeholders, and multiple workshops to incorporate various points of view. This paper describes the steps taken by GCCIA on how they formulated, translated, and most importantly implemented the strategy. In this exercise there was a conscious choice to align corporate culture and corporate strategy; and realizing the true potential of the symbiotic relationship between the two. Index Terms – SWOT Analysis, PESTEL Analysis, Mission, Vision, Core Values, Strategic Themes, Strategic Issues, Strategic Planning, Corporate Culture, Strategic Objectives, Strategy Map, Strategic Initiatives, Balanced Scorecard (BSC), Gulf Cooperation Council (GCC), Key Performance Indicator (KPI), targets, action plan, timeframe, Corporate Culture, formulation, Strategy implementation, Strategic Alignment, Gulf Cooperative Council Interconnection Authority (GCCIA), Strategy Implementation Office (SIO).
I. BACKGROUND On December 31, 2001, the GCC countries agreed to establish the GCC Interconnection Authority to link the electrical power networks in the six GCC States by providing the necessary investments for the exchange of electrical power to face the power generation failures in emergency situations; to reduce the electrical generation reserve of each of the member states; to improve the economic efficiency of the electricity power systems in the member states; and to provide the basis for the exchange of electrical power among the member states in such a way as to serve the economic aspects and reinforce the reliability of the power supplies. As a result, a Royal decree no. M/21 dated July 28, 2001 established the Authority with its official domicile in Dammam, Kingdom of Saudi Arabia. In 2002, the Authority marked itself in history by initiating its business through the employment of staff, undergoing pre-qualification exercise, and the hiring of a consultant to conduct the tendering of the project. In 2005, 14 contracts were awarded totaling more than 1.7 billion dollars. Project execution began in November 2005 and ended in early 2009, when operations commenced. The project was divided into three phases: the first phase interconnected Kuwait, Saudi Arabia, Bahrain, and Qatar; the second phase involved the internal integration of the UAE and Oman power systems; and the third phase connected phase one with phase two.
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Hassan Al-Asaad, Strategist & Business Developer, GCC Interconnection Authority (GCCIA), Dammam, Kingdom of Saudi Arabia. Email address:
[email protected]
Ever since its inception, the Authority has gained much experience in its core area of business and other related activities. In order to ensure that the assets were having the maximum impact and generating the most value for its stakeholders GCCIA needed a coherent strategy. Consequently, in 2012 the Authority decided to embark on a task of 1
identifying its future goals and objectives and determining how to achieve them. The main components of this plan included the formulation of a mission, vision, core values, strategic themes, objectives, measures, targets and initiatives. Together these components have successfully ensured that GCCIA translated its ambitions into reality, by engaging management, employees, and stakeholders in a structured manner to achieve desired results. A Balanced Scorecard approach was used throughout the project to focus the priorities of the organization across all crucial aspects of running business and thereby developing a strategy that was more pragmatic. Currently, the structure of GCCIA is composed of several business lines: systems operations, maintenance & asset planning, and support services headed by a Chief Executive Officer, who reports to the Chairman and Board of Directors. In 2012, a Strategy & Business Development function was introduced into the structure to formulate, implement, follow-up and develop strategy at GCCIA.
II. THE IMPORTANCE OF STRATEGIC PLANNING Strategic implementation is critical to an organization’s success, addressing the ‘who, where, when, and how’ of reaching the desired goals and objectives. It is the sum total of the activities and choices required for the execution of a strategic plan. While it focuses on the entire organization, it is the process by which strategies and policies are put into action through the development of programs, budgets, and procedures. Implementation occurs after environmental scans, SWOT analyses, and identifying strategic issues and goals. It is a fundamental step in turning a company’s vision of a project into reality. Through a series of action-based phases and tasks, the implementation process maps out the life cycle of a project. According to Morris Chang, CEO of TSMC (World's biggest contract semiconductor maker)
"Without strategy, execution is aimless, and without execution, strategy is useless”. Without strategic implementation, a project would not be able to get off the ground, since strategic implementation functions as a project’s blueprint. The implementation process identifies what tasks need to be completed, and when. Strategic implementation is action-based and uses a variety of tools to keep the project team on track.
III. WHY USE BALANCED SCORECARDS? The Balanced Scorecard (BSC) is a Strategy performance management tool, which is a semistandard structured report, supported by design methods and automation tools that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. The phrase 'Balanced scorecard' is commonly used in two broad forms: 1. As individual scorecards that contain measures to manage performance, those scorecards may be operational or have a more strategic intent; and 2. As a Strategic Management System, as originally defined by Kaplan & Norton. Based on the latter the characteristics that define a balanced scorecard is illustrated well by the four steps in Kaplan & Norton's writing on the subject in the late 1990s: 1. Translating the vision into operational goals; 2. Communicating the vision and linking it to individual performance; 3. Business planning; index setting; and 4. Feedback and learning, and adjusting the strategy accordingly. Balanced Scorecards (BSC) have been proposed as a way of identifying a useful, but varied, set of key measures. They combine both qualitative and quantitative measures, acknowledge the expectations of different stakeholders and relate an assessment of performance to choice of strategy.
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IV. CASCADING THE STRATEGY Cascading strategy is defined as the process of vertical and horizontal deployment and alignment of an organizational strategy; it also incorporates the process of “bringing the strategy to life”. In this regard, strategy cascading is not a solely Strategy Implementation Office (SIO) task; nor is it limited to operations; it is a holistic issue. It describes how the “vertical and horizontal of an organization coordinate during the strategy implementation process. It ensures that the balance between topdown and bottom-up cascading process within a given organization is being covered. Although the final decision on important strategic initiatives is one made by top management. Strategic initiatives are distributed across many players and may, originate at various hierarchical levels as a function of where expertise is concentrated. It emphasizes the importance of interactions between the vertical and horizontal dimension of strategy implementation (i.e., coordination) and of consistency in implementation. The influence and involvement of the top management is not sufficient in the strategy process and its effect on an organization’s performance. Consensus among middle level managers and practically all staff at different levels, and their involvement and commitment in the strategic process is essential. In order to realize its benefits, top management must define and clearly communicate the strategic context. Only then, can the entire organization become involved and thereby generate benefits for the firm. Involvement across all hierarchies is crucial for successful knowledge management. Implementing such a strategy requires both top-down and bottom-up action and communication, even as the information exchange process is itself relatively informal. For an organization that seeks to become a knowledge-led enterprise, it is vital that all categories of knowledge are managed within, across, and between functions. Therefore, relevant training is needed to achieve the goals of sharing
and retaining knowledge. One practical approach to strategy cascading is a combined bottom-up/topdown planning style featuring decision loops that iterate until all participants ‘buy-in’ to the formulated goals and implementation schemes. This approach relies heavily on the sharing of information and knowledge. Another crucial factor for successful cascading is that top management must recognize and guide the resulting “entrepreneurial” activities rather than planning or micromanaging the strategy, and that strategic management activities of top management should be limited to maintaining a balance, over time, between diversity and order while facilitating an environment conducive to collaboration and entrepreneurial activities among organizational participants. First, top managers of “consistently successful organizations” concern themselves with the content of strategy and employ both induced and autonomous strategic processes. Second, such organizations carry out those processes simultaneously. Third, any successful restructuring of an organization is likely a result of internal experimentation and selection (i.e., autonomous) processes. Far more effective would be initiatives to clarify decision processes and improve the flow of information both up the chain of command and across the organization. Executives should incorporate all five of the building blocks essential to effective strategy execution, which are: • Clarifying decision processes; • Designing information flows; • Aligning motivators; • Aligning the structure; and • Tying rewards to the strategy After some deliberation between all employees, our suggestion was to focus less on printed matter and more on personal interactions. The idea was to stimulate everyone’s thinking on the implementation.
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V. EFFECT ON CORPORATE CULTURE Corporate culture, otherwise referred to as organizational culture refers to culture in any type of organization whether it be a school, government, or business entity became widely known in the business world in the late 1980s and early 1990s, and it is said to exist where staff respond to stimulus because of their alignment to organizational values. In such environments, strong cultures help firms operate like well-oiled machines, engaging in outstanding execution with only minor adjustments to existing procedures as needed. Conversely, there is weak culture where there is little alignment with organizational values, and control must be exercised through extensive procedures and bureaucracy. Organizations that foster strong cultures have clear values that give employees a reason to embrace the culture. A "strong" culture may be especially beneficial to firms operating in the service sector since members of these organizations are responsible for delivering the service and for evaluations, important constituents make about firms. Organizations may derive the following benefits from developing strong and productive cultures: • • •
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Better aligning the company towards achieving its vision, mission, and goals; High employee motivation and loyalty; Increased team cohesiveness among the company's various departments and divisions; Promoting consistency and encouraging coordination and control within the company; Shaping employee behavior at work, enabling the organization to be more efficient;
Corporate culture is particularly enabled as a strategic asset when there is consistency across the organization in values, policies, practices, and strategies. The two prevalent forces shaping corporate activity and results are strategy and culture. According to Torben Rick, the strategy path defines what needs to be done; and the culture
path emphasizes how things are normally done: “What we say is strategy – What we do is culture”. Diagram 1 depicts the critical relationship between the two paths: Diagram 1
Torben Rick (2013)
Employee Behavior is one of the leading indicators of strategy execution. It aims to align its employees’ behavior with its corporate strategy. For an organization, of any kind, to succeed its strategy cannot just ‘live on paper’ rather, it must be a part of employees’ every day actions and decisions. Employee behavior is heavily influenced by the assumptions that they carry about how to succeed in the organization, and can be influenced to align it closely to the strategy. As an organization moves ahead, its entirety will need to be aligned to one common culture for the employees to feel cohesive and the organization to be even more productive.
VI. SUCESSS FACTORS IN A TYPICAL STRATEGIC PLANNING EXERCISE Unlike many organizations that have failed to implement their strategy, this of course can be a result of many factors, such as lack of commitment from management, start-up delays or failure, lack of organization-wide commitment, especially from management, lack of focus on initial strategic intent from employees, failure to understand the purpose
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and process, lack of rewards for progress, and most importantly ineffective communication. Strategic alignment provides focus, eliminates redundancy, and eliminates conflicting work and competencies, which provide competitive advantage to the organization. The following three points we think would be helpful: Active communication between top and middle management: Strategy sessions between the management and the departmental heads where ‘brainstorming’ sessions were held to discuss implementation means and issues. Internal communication to departments: A kick-off session was conducted for the departmental heads and their employees to discuss the roll out of the strategy, and let them ask questions and concerns. Transparency: By going forward, it is imperative for everyone to understand how the strategy is implemented, and how the KPI’s will be measured and collected. By creating an internal webpage where the important pieces of information are emphasized, such as: a. Communications schedule with details on strategy training events and awareness meetings; b. Key contacts and a list of those trained in scorecard development, measurement and monitoring: i. Assigning a strategy implementation champion for each department, someone who understands and takes the lead in the implementation, and represents the dept. in the strategy meetings. c. Departmental action plans and milestones; and d. KPI measurement schedule and guidelines for measurement.
Strategy is an inclusive event, and it is essential that everyone understands its purpose and execution, in order for it to be a success.
VII. THE STEPS THAT GCCIA TOOK Based on a well-structured approach, GCCIA applied the following steps: Held kick off session: A kickoff session between the departmental heads and employees held discussed the roll out of the strategy, and provided employees a chance to ask questions and express concerns. Its aim was to ensure everyone understood the strategy and its purpose. Regular strategy meetings: Planned regular strategy meetings between management and departmental heads / champions, where updates on the progress with the strategy, issues with implementation, and problem solving were discussed. Assigned Strategy ‘Champions: Focal points of contact, or ‘Champions’ for each department were assigned the following tasks: • Understand the strategy and be familiar with the departments’ objectives, KPIs and activities, and be able to relay it to all employees in their departments; • Ensure department members know their responsibilities; • Discuss problems with the SIO (Strategy Implementation Office); and • Represent the department in strategy meetings. Sharing information and being transparent: We made the process as transparent as possible. Everyone in the organization was involved in how the strategy was implemented, and how KPIs measured and collected. Arranged meetings with all functions separately to develop the annual functional plans. Annual Functional Plans: by conducting these separate meetings, GCCIA was successful in aligning
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all employees by closely engaging them in developing their departments’ annual plans during which, the following were relayed down to everyone: • Relation between the corporate and department-level plans; • Creation of KPIs on the departmental level and their linkage to the corporate; • Departmental action plans and milestones chart; and • KPI measurement reporting schedule and guidelines; Strategy Implementation Office (SIO): Created under the guidance of top management to be the overall leader in the implementation of the strategy, and act as the Strategy Implementation Office. To ensure a successful implementation and subsequent annual follow-up the SIO was assigned with the following key activities: • Centralized program coordination • Run scheduled strategy meetings with department champions; • Track planned progress versus milestones; • Increase understanding of strategy development among all employees; • Identify potential problems & risks with ‘Champions’ and mitigate them when and where required; • Provide support to departments when required throughout the year; and • Conduct one-on-one informative session to newly hired employees on strategy, as part of their orientation program. Effective Communication: Considered the most critical component that led to GCCIA’s success. Frequently, the SIO with the full support of management communicated closely with each department to ensure the strategy has been clearly rolled-out and understood. Joint and individual meetings were conducted, as well as other communication means were used (i.e.) e-Mail, posters, and pamphlets to ensure all departments and their employees are in par with the strategy.
VIII. OBSERVED EFFECT ON GCCIA’s CULTURE There is no doubt that with a corporate culture based on an effective reward system that support the overall corporate strategy. Organizations as varied as financial services companies, government ministries and hospitals are increasingly paying attention to the effectiveness of their performance management and development systems to drive accountability for results. A profound culture change is often involved. This requires coaching and implementation support as people become accustomed to a different way of managing, working and communicating. In-spite of all the efforts made in ensuring a successful implementation, it was not until 2015 when management had begun linking performance with rewards that has caused all employees to become highly conscious of performance. In effect, the culture at GCCIA became increasingly conformed to performance causing them to think about it and in order to achieve full rewards, thus creating a strategically aligned corporate culture. By applying an ‘Open-Communication’ policy we were able to empower our strategy work teams, especially the team leaders, or commonly referred to as ‘Strategy Champions’, which gave them the freedom to decide, act and most importantly feel like owners. Establishing clear, strong and meaningful core values and ensuring they are widely shared within the organization, and building a sense of one community. As a result, employees at GCCIA we were able to cultivate a feeling of cooperation and support between there departments and most importantly themselves, thus creating an ‘all for all’ mentality.
IX. CONCLUSION Ask most organizational leaders about their areas of focus and you will hear that strategy is among their highest priorities. Unfortunately, much of the attention, energy and resources are deeply focused
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into formulating strategy and less time on how to implement it. In his article titled ’The Three C’s of Implementing Strategy’, Scott Edinger had revealed that strategies are frequently created by a small group of people who have been well fed and cared for in the process. Those strategies are typically beautiful, and display particularly well in PowerPoint. Unfortunately, most leaders fail—not in the formulation of strategy, but in its implementation. To successfully execute an organization’s strategy, it must be the focus of every person in that organization. S. Edinger elaborated about successful implementation of strategy by applying the ‘three C’s approach: Clarifying, Communicating, and Cascading. Since the implementation of our strategy three years ago, it has been a continuous learning process at GCCIA for people at all levels, by providing impetus in transforming the GCC Interconnection Authority (GCCIA) to a strategically focused corporate culture based organization.
[7]. T. Rick, “Why most Change management Initiatives Fail”. Change management, May 2013. [8]. J. Kim, S.C. Bang, “What are the Top Cultural Characteristics that appear in High-Performing Organizations across multiple industries”. Cornell University ILR School, spring 2013. [9]. S. Edinger, “’The Three C’s of Implementing Strategy”. Forbes, August 2012.
XI. BIOGRAPHY Hassan Al-Asaad graduated in 1994 with a bachelor’s degree from the University of Manitoba, Canada, and had attained a Masters of Business Administration in 2000 from Sheffield Hallam University, United Kingdom. Previously, he had worked as a business consultant for Arthur Andersen & Co. in the GCC region for over four years during which, he had engaged in providing a range of consultancy services from organization restructuring to I.T systems implementation. In 2002, he joined the GCC Interconnection Authority working in various functions until 2012 where he has been holding the position of strategist & business developer. He has spoken and actively participated at several conferences and round-table workshops, and represents GCCIA as a member of the KPI Institute.
X. REFERENCES [1]. G. Johnson, K. Scholes, “Exploring Corporate Strategy”. Prentice Hall, 1997. [2]. J. Hunger, T. Wheelen, “Essentials of Strategic Management”. Addison Wesley Longman, Inc., 1997. [3]. H. Rohm, “Using the Balanced Scorecard to align your organization”. Balanced Scorecard Institute, January 2008. [4]. M. Schlickel, “Strategy Deployment in Business Units, Contributions to Management Science”. DOI 10.1007/978-3642-33621-82, Springer-Verlag Berlin Heidelberg, 2013. [5]. P. Niven, “Balanced Scorecard Evolution”. Wiley Corporate F&A, January 2014. [6]. J. Kerr, J. Slocum, “Managing Corporate Culture through Reward Systems”. Academy of Management Executive, May 1987, Vol. 1 No. 2, pp. 99-108.
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