2. Literature survey
2.2. Strategy execution for effectiveness
2.2.6. Models for executing strategy
The need for models in strategy execution has been emphasised by researchers. The importance of strategy execution models is in that it prevents the mismanagement of the strategy execution process (Galpin, 2018). He furthermore emphasises that
“companies need a repeatable process that provides an integrated and actionable approach to inform the effective execution of the strategy”. It is therefore appreciated why researchers have created value in developing models to support managers in their efforts to implement corporate strategies. The focus of corporate performance reports covers financial and non-financial performance based on the reports provided by management to executives. Executives provide performance reporting on progress made against strategic initiatives through these reports. However, it is the experience of the author that the focus of the performance report is on strategy execution and very little if any is reported on the effectiveness of strategy execution. Srivastava (2013) states that effective strategy execution is about the measurement and management of strategic focussed performance measures. There is a lack of strategic performance factors and their role in effective strategy execution, which turns out to be a barrier to
Chapter 2: Literature survey
the successful execution of strategy (Srivastava, 2013). It is the aim of this study to contribute to this area.
The challenge with effective strategy execution could be due to the lack of appreciation and due consideration for measures that will indicate whether the enterprise is creating value. It is reported in literature that strategy execution is a complex and dynamic process and Safdari Ranjbar, Akbarpour Shirazi & Lashkar Blooki (2014) say that management should realise that managing strategy implementation requires well- orchestrated management processes that need to go beyond the routine course of business processes to realise the strategy. It is important that business leaders need to understand the difference between strategy execution and effective strategy execution. It is when the business leaders are able to translate corporate performance into value for stakeholders that they would not only understand the capability of the organisation but have a clear understanding of what the key drivers of strategy realisation are. Okumus (2003) reports that organisations fail to implement more than seventy (70) percent of their new strategic initiatives, hence the shift in focus from strategy formulation to its implementation. He provides shortcomings on three groupings of strategy implementation frameworks based on his review of literature:
Group 1: “Frameworks in the first grouping developed by Hambrick and Cannella (1989), Hrebinaik and Joyce (1984) and Waterman, Peters, and Phillips (1980) tend to simply list and describe the implementation factors”.
Group 2: “Frameworks in the second grouping by Vasconcellos e Sa (1990) and (De Feo and Jansen (2001) suggest rational step-by-step implementation models that are often difficult to follow in complex situations of implementation”.
Group 3: “Frameworks developed by Pettigrew (1987), (Pettigrew and Whipp (1991) and Dawson (1997) emphasise the importance of context and process but do not provide detailed explanations and discussions about which implementation factions are important, what their specific roles are and their impact on the implementation process”.
In lieu of the gaps identified above, Okumus (2003) proposes a strategy implementation framework depicted in Figure 2.4 that emphasizes the importance of content, context, processes and outcomes as well as explains the potential role and importance of each factor in the process. It is the objective of this study to expand on the proposed framework to include other key elements for effective strategy execution to realise value that have been identified from the review of the literature.
Chapter 2: Literature survey
Figure 2:3: The strategy implementation framework (Okumus, 2003)
Chapter 2: Literature survey
The strategy implementation framework presented above does not suggest an implementation model that is linear and prescriptive, nor does it view strategy formulation and implementation as different phases (Okumus, 2003). He says that this is because strategy implementation is far too complex to be explained by prescriptive linear models but provides a holistic approach to viewing the formulation and implementation of strategy including the interaction of implementation factors as well as their impact on the process. He further asserts that the proposed framework allows managers to view strategy formulation and implementation together.
Some of the models developed by researchers have been well received in the market and were thus adopted. This has enabled the models to be improved and to enhance their benefits to industry. One such model is the balanced scorecard, which has been aligned to the McKinsey’s 7-S model as noted by Kaplan (2005) to improve its effectiveness. Kaplan (2005) conducted a study of the McKinsey 7-S framework and the Balanced Scorecard (BSC), alignment model and learned that they share many features. The Business Scorecard enables the organisation to define in a balanced way four perspectives which are customers, financial, internal business processes, including learning and growth. The McKinsey 7-S framework enable an organisation to articulate its strategy, structure, systems, style, skills, staff and shared values.
The frameworks that have been presented so far needs to be integrated somehow so that the aspects that are common are streamlined and new elements are embedded to create a single enhanced model which management could use to direct their efforts.
The survey of the literature revealed that Kazmi (2008) conducted research to expand on earlier frameworks of the popular McKinsey’s 7-S model by (Waterman, Peters and Phillips (1980) and the work done by Okumus (2003) and starts by clarifying the different components that make up the framework proposed by Okumus (2003) which articulates:
“Strategic context that refers to why and how strategy is initiated”.
“External context that refers to the degree of uncertainty and changes in the task and general environments of the organisation”.
“Internal context which refers to the configuration of organisational structure, culture and leadership”.
“Organisational process which refers to the configuration of operational planning, resource allocation, people, communication, control and feedback as well as outcome”.
In retrospect, Okumus (2003) strategy implementation framework is comprehensive as it attempts to take into account an array of variables and binds them into a compact model, however, as always there could still be scope for improvement (Kazmi, 2008).
He expands that using comprehensive framework proposed by (Carpenter and Sanders (2007) in the context of strategic management, one needs to look at implementation levers since strategic leadership involves making lever and resource allocation decision that allow communicating the strategy to stakeholders. He further
Chapter 2: Literature survey
proposes three main suggestions to overcome the barriers to strategy execution, which are:
Adopting a clear model of implementation: “often implementation activities take place according to the abilities and initiatives of managers involved in them, and those that are important enough to be done. What is required is a clear model of strategy implementation process that can provide unambiguous guidelines to the managers implementing the strategy”.
Effective management of change in complex situations: “implementation usually creates the need to manage change in complex organisational context.
Many of these areas of change are behavioural in nature and are therefore multifaceted and messy, no wonder managers fail to manage these complex organisational issues satisfactorily creating conditions for sub-optimal implementation of strategies”.
Setting down clear measures of effectiveness: “many of the failures in implementation of strategies can be attributed to the lacunae in setting down clear measures of effectiveness. If there are clear measures of effectiveness, the likelihood of implementation succeeding is enhanced”.
Progress has been made in the integration of practices used to direct the effective execution of company strategy. Figure 2.5 presents a model of strategy implementation that attempts to capture the major themes in strategy execution and the activities that make up each theme (Kazmi, 2008).
Figure 2:4: The strategy implementation model (Kazmi, 2008)
To aid in the understanding of the model depicted above, Kazmi (2008) explains that the forward linkage from strategic plan guides the implementation process and connects it to the preceding phase of strategy formulation. He adds that the feedback flowing in reverse from the following of strategy evaluation and control moves through
Chapter 2: Literature survey
the implementation phase and goes back to strategy formulation, establishing the backward linkage.
In lieu of the understanding of the strategic management process and its iterative nature, the question that comes to mind is how could the process be managed in order to effectively achieve the desired objectives? Kazmi (2008) indicates that project management is of utmost importance in strategy implementation, a fact that has been curiously neglected in most of existing frameworks. He cites work that was done by Morris and Jamieson (2005) that suggest this neglect may be corrected. They further highlight the danger of strategy implementation models that have an underpinning of an exclusive top management point of view which assumes the executive management to be passive implementers of strategic direction. They also add that the proposed model gives due recognition to the interrelatedness of the different issues in strategy implementation, with effective results emanating from the continual interaction of implementation taking place at the functional and operational levels.
The evaluation of frameworks for effective strategy execution has focused largely on the technical and “hard” side of strategic management. It is important to realise that strategy execution focuses on bringing about the changes that would create value. Part of the process involves people and their aspirations. Sheehan (2006) warns that many brilliant strategies fail due to poor execution and advises that to be successful, managers need to provide guidance so that employees can make decisions leading to implementation. He provides four strategy execution levers which improve a firm’s strategic implementation capabilities when used in concert, and these are:
1. “Diagnostic controls – by adding targets and rewarding their achievement, diagnostic controls become a powerful tool to communicate strategy as well as motivate and hold employees accountable for their actions”.
2. “Boundary controls – clearly delineate which employee actions are not allowed”.
3. “Belief controls – getting employees to buy into what the organisation is trying to accomplish is a powerful, positive control tool”.
4. “Interactive controls – if companies are to win in the long term, they need to monitor and proactively respond to threats and opportunities”.
The review of the literature found a framework by Meskendahl (2010) that encapsulates strategy execution through project portfolios. The advantage of the study conducted by Meskendahl (2010) is that he proposed a linkage between business strategy, project portfolio management, and business success to close the gap between strategy formulation and implementation. It is therefore important that one understands the factors and elements that make up the strategic management process and how they contribute to the effective execution of strategy. Furthermore, there are enabling processes such as project portfolio management, value management, change management and performance management that need to be integrated effectively into the strategic management process in order to enable the realisation of strategic objectives of the organisation.
Chapter 2: Literature survey
Meskendahl (2010) conducted a review of the literature where he discovered a poor connection between strategy execution and the management of projects to achieve business success. He realised that there is little guidance about how strategy gets translated into projects during execution. He proposed a conceptual model that links the strategy of the organisation to value which is presented in Figure 1.1. He emphasised that “business strategy thereby describes the way in which a firm decides to compete in the industry in comparison to its competitors”. He had a concern that he could not find a framework that covers the entire cycle from strategic planning through project portfolio management to business success.
It was noted by the author that the model proposed by Meskendahl (2010) focuses on strategic orientation which is a large component of an enterprise business risk and change management processes. The concern is that the strategic orientation links to a small aspect of the company’s strategic intent thus limiting the strategy formulation view. It is critical that strategic orientation considers the full elements of strategy formulation so that strategy execution is well informed by the strategic objectives of the organisation.
The review of the literature yielded a number of models that were developed and published over time in the quest to support management with their efforts to implement and manage the realisation of corporate strategies. These models and frameworks have also been refined to add different components which management should consider as they lead their organisations. Others such as the Balanced Scorecard have received prominence while the use of others may have not been received equal level of publication. It was also noted that these models have found application in different levels of the organisation in which they are either targeted at the strategic, tactical or operational level of the enterprise. There is therefore a need for the different components of enterprise management through the strategic management process to be linked, streamlined, aligned and integrated into a unit that could be used to create value. It is therefore the intent of this research to incorporate this missing component.