Effective Execution of Strategy

19 Oct Effective Execution of Strategy

Minimum of 250 words in the body Minimum of 2 sources from the literature in addition to course texts

Content must include:

 Summary of the author’s Main Thread – no less than 125 words  What you agreed with, did not agree with and why – no less than 125 words

 

The purpose of this paper is to explore the strategic process of the effective execution of strategy, which is “an operations-driven activity primarily involving the management of people and business processes” (Gamble, Peteraf, & Thompson, 2019, p. 200).  Process exploration is followed by a discussion of strategically thinking about the power of design versus the power of focus.  Finally, the discussion turns to key decision traps to avoid when making strategic decisions for effective execution of strategy.

Process: Effective Execution of Strategy

Strategic planning is important, but confronting the future with decisions that cut off possibilities and options that could wreck a career is daunting and the natural response is to spend weeks and months preparing a plan supported with spreadsheets and revenue that fells less intimidating (Martin, 2014).  However uncomfortable, making hard choices that increase the odds of success by thinking through what it takes to achieve what is desired and assessing the reality of achievement is true strategy (Martin, 2014).  Unfortunately, the execution of strategy has tended to fall by the wayside possibly because many strategies do not achieve the desired performance due to poor execution (Making Strategy Execution Successful, 2018).  The criticalness of strategic execution is the reason the following eight managerial tasks framework of Gamble et al. (2019) is offered.

Organizational capability.  The first of eight managerial tasks to execute strategy is building an organization capable of good strategy execution through staffing, acquiring, developing, and strengthening strategy-supporting resources, and structuring the organization and work effort (Gamble, Peteraf, & Thompson, 2019).  Staffing is accomplished by filling key managerial positions with results-oriented individuals and recruiting knowledgeable and engaged employees (Gamble et al., 2019).  Strategy supporting resources can be developed internally through incremental and evolutionary problem solving, acquiring capabilities through mergers and acquisitions, or accessing capabilities through collaborative partnerships such as outsourcing, alliances, or joint ventures (Gamble et al., 2019).  Structuring the organization can be accomplished through the type of organizational structure such as functional, multidivisional, or matrix; decentralized or centralized decision-making authority; and network structure linking independent organizations in cooperative arrangements (Gamble et al., 2019).

Resource allocation.  Executing new strategies, strengthening value-creating processes, and solidifying capabilities and competencies require funding determinations by senior management (Gamble et al., 2019).  The ability to execute on any of these aspirations depend on acquiring funding, which has a major impact on ability to execute (Gamble et al., 2019).

Strategy-supportive policies.  Policies and procedures can either facilitate or hinder strategy execution (Gamble et al., 2019).  Policies and procedures facilitate execution by enforcing consistency, providing top-down guidance, and promoting a climate of good strategy execution (Gamble et al., 2019).  Gamble et al. (2019) suggests disciplined policies with the empowerment to act within the discipline with common sense.

Continuous improvement.  Strategy execution is significantly advanced by organization wide continuous improvement practice (Gamble et al., 2019).  Three management tools assisting in implementing a continuous improvement strategy execution are business process reengineering, total quality management, and Six Sigma (Gamble et al., 2019).  Business process reengineering unifies strategy-critical activities of different departments to work as a cross-functional group (Gamble et al., 2019).  Total Quality Management emphasizes improvement of all operations, no such thing as good enough in task performance, involved and empowered employees, teamwork, benchmarking, and total customer satisfaction (Gamble et al., 2019).  Six Sigma is a statistics-driven program focused on fewer than 3.4 defects per million and an improvement system of define, measure, analyze, improve, and control (DMAIC) (Gamble et al., 2019).

Information and operating system.  Internal operating systems are a necessity for strategy and value-creation processes and need to cover customer data, operations data, employee data, supplier/partner data, and financial performance data in real time when possible (Gamble et al., 2019).

Rewards and incentives.  Rewards and incentives for motivating employees to sustain energetic commitment in accomplishing results related to creating value can be monetary or nonmonetary (Gamble et al., 2019).  Monetary rewards should be a major part of compensation, extend to all managers and employees, be objective and fair, link directly to strategy execution, have achievable outcomes, and frequently rewarded (Gamble et al., 2019).  Nonmonetary rewards provide attractive perks and fringe benefits, adopt promotion from within, act on employee suggestions, create a genuine and caring atmosphere, freely share information, and have attractive workspace (Gamble et al., 2019).

Corporate culture.  Corporate culture is the core values, beliefs, behaviors and attitudes, and business principles that influence organizational action and decision (Gamble et al., 2019).  Some cultures are high-performance results-oriented requiring high loyalty and dedication, others have adaptive cultures supportive of useful change, risk-taking, innovative and ally of strategy execution, and others have the strategy hindering politicized, change-resistant, insular, unethical, and incompatible toxic culture that must be changed (Gamble et al., 2019).

Leading.  Senior executives must take the lead in strategy execution for successful implementation (Gamble et al., 2019).  Senior executives need to closely monitor progress by managing by walking around (MBWA).  They must also put results-oriented constructive pressure on organization units while treating all with respect, encouraging initiative and creativity, stretching objectives, continually improving, motivating and compensating, and celebrating (Gamble et al., 2019).  Finally, senior executives must decide when to make adjustments and what adjustments are needed as unforeseen events arise or corrective action is needed (Gamble et al., 2019).

Strategic Thinking: The Power of Design versus The Power of Focus

The power of design and the power of focus appear to be complimentary in nature.  The core of strategy is bringing more value to a market segment with a particular business system than competitors (Rumelt, 2011).  Focus seems to be what the firm desires to do, be, or appeal to and design through coordinated action is the how, considering a firm’s target, its resources, and capabilities (Rumelt, 2011).  Of course, there are trade offs between resources and tight coordination because few resources mean tight coordination is necessary, and conversely, abundant resources mean less necessity for integration (Rumelt, 2011).

Focus can drive and help settle the argument of one of three aspects of strategy called pre-meditation and based on the debate over the level of prior guidance and impromptu adaptation to strategy because “winging it is not a strategy” (Rumelt, 2011, p. 128).  Anticipation is another of the aspects of strategy that must not only consider what it takes to make the customer smile, but also must consider the offerings, strategies, effectiveness, and differentiation of rivals (Rumelt, 2011).  In response to resource and capability assessment, pre-meditated focus, and anticipation of the customer and rival, focus coordinates the guiding policies intended to implement the strategic design with application towards its intended targets (Rumelt, 2011).

Decision Model

Because bad decisions can do irreparable damage to a business or individual, it is imperative that executives be aware of and avoid decision traps, which makes decision making the toughest and riskiest job (Hammond, Keeney, & Raiffu, 1998).  One decision trap to avoid is the anchoring trap in which the most weight is given to the first information received and anchors subsequent thoughts and judgements (Hammond et al., 1998).  Krogerus and Tschappeler (2017) call this a systematic error of judgement, or cognitive bias, that assumes we have considered all factors before deciding and provides the solution of resisting trust of first impressions.

Another trap to avoid is the confirming-evidence that affects not only where we go to collect evidence, but also how the evidence received is interpreted, which leads to giving too much weight to evidence supporting our bias and discounting conflicting information (Hammond et al., 1998).  Krogerus and Tschappeler (2017) describe this cognitive bias as the confirmation error in which we interpret information to affirm an existing assumption or block information that contradicts our opinion, which is overcome by assuming we are wrong because we assumed we had objectively assessed the situation before the decision was made.

Summary

The effectiveness of the strategic execution process is dependent on the ability of management to competently allocate resources, acquire, build, and strengthen capabilities, implement and enforce strategy-supportive policies, continuous process improvement, motivating and rewarding people, creating a culture that supports strategy, and at least achieving if not surpassing key performance indicators (Gamble et al., 2019).  The power of design is that it is what good strategy is made of that fits various pieces together into a coherent whole and the power of focus is at the core of successful strategy because most organizations are not focused, and design and focus compliment each other (Rumelt, 2011).  Finally, two critical decision traps to avoid are anchoring and confirming-evidence because looking only at the outward appearance of first impressions and failing to have many advisors is foolishness (Hammond et al., 1998; Proverbs 15:22, NIV; 1 Samuel 16:7).

References

Gamble, J., Peteraf, M., & Thompson, A. (2019), Essentials of Strategic Management, (6th edition). New York, NY: McGraw – Hill Higher Education

Hammond, J. S., Keeney, R. L., & Raiffa, H. (1998). The hidden traps in decision making. Harvard Business Review. Retrieved from https://hbr.org/1998/09/the-hidden-traps-in-decision-making-2Krogerus, M., & Tschäppeler, R. (2018), The decision book: 50 models for strategic thinking, (Revised edition.). New York, NY: W. Norton & Company, Inc.

Making strategy execution successful: The key issue of alignment. (2018). Strategic Direction, 34(2), 10-12. doi:10.1108/SD-11-2017-0170

Martin, R. L. (2014). The big lie of strategic planning. Harvard Business Review. Retrieved from https://hbr.org/2014/01/the-big-lie-of-strategic-planning

Rumelt, R. (2011), Good strategy/bad strategy: The difference and why it matters., New York, NY: Crown Business

Annotated Bibliography of Effective Execution of Strategy

Rickey McCreless

BUSI770

Dr. Philebaum

June 2, 2019

Hammond, J. S., Keeney, R. L., & Raiffa, H. (1998). The hidden traps in decision making. Harvard Business Review. Retrieved from https://hbr.org/1998/09/the-hidden-traps-in-decision-making-2

Bad decisions are often traced back to the way the decisions were made, but sometimes the bad decisions are because of the mind of the decision maker because of how the human brain works.  Eight psychological traps can affect the way we make decisions.  The anchoring trap gives disproportionate weight to the first information received.  The status quo trap biases one toward maintaining the current situation.  The confirming-evidence trap leads one to seek out information to support existing opinions.  The sunk cost trap perpetuates past mistakes.  The framing trap undermines the decision process with a misstated question.  The overconfidence trap overestimates the accuracy of predictions.  The prudence trap leads to over caution in estimating events.  The recallability traps overweighs recent and dramatic events.  Awareness is the best defense.

The quality of the article is evidenced by its presence in the Harvard Business Review that is a scholarly and peer reviewed publication.  The article was also a recommended reference of the professor of this course.

John S. Hammond is a consultant on decision making and a former professor at the Harvard Business School in Boston, Massachusetts. Ralph L. Keeney is a professor at the Marshall School of Business and the School of Engineering at the University of Southern California in Los Angeles. Howard Raiffa is the Frank Plumpton Ramsey Professor of Managerial Economics Emeritus at the Harvard Business School. Their book, Smart Choices: A Practical Guide to Making Better Decisions, is published by the Harvard Business School Press.

The article contributes to the discussion by making readers aware of detrimental decision traps that one may succumb to and offers advice for avoiding them.

Making strategy execution successful: The key issue of alignment. (2018). Strategic Direction, 34(2), 10-12. doi:10.1108/SD-11-2017-0170

The review is based on Alignment: the foundation of effective strategy execution by Amit Kumar Srivastava and Sushil, published in the International Journal of Productivity and Performance Management. Strategy failure remains high and much of it is attributable to poor execution. Firms can improve the success rate by focusing on ensuring that key factors are aligned with strategy and identifying the hierarchical relationship between them.

The quality of the publication is indicated by its publishing within the last 10 years and it passed the filter for scholarly and peer review in the JF Library.  Emerald Insight, the publisher, is a global publisher linking research and practice to the benefit of society.  Emerald Insight is COUNTER 4 and TRANSFER compliant and a partner on the Committee on Publication Ethics.

The author is unknown; therefore, the quality of the author is unknown.  However, the author at least met the publishing guidelines set by Emerald Insight.

The article fits into the discussion by emphasizing that poor execution is a primary reason of strategic failure and the topic of the discussion is on strategic execution.  The author offers his or her own advice on key factor alignment and hierarchal strategy to improve strategic implementation.

Martin, R. L. (2014). The big lie of strategic planning. Harvard Business Review. Retrieved from https://hbr.org/2014/01/the-big-lie-of-strategic-planning

Strategy forces confrontation of the future and executives attempt to make the task less daunting by preparing a comprehensive plan for how the company can achieve its goal.  Strategy is not endless research and modeling, but is the result of a simple process of thinking through how to hit a target and whether its realistic to try.  If its entirely comfortable, one is probably stuck in one of the following traps: strategic planning, cost based thinking, or self-referential strategy frameworks.  These can be avoided by focusing on customers, recognizing strategy is about bets, and articulating the logic behind strategic choices.

The quality of the article is evidenced by its presence in the Harvard Business Review that is a scholarly and peer reviewed publication.  The article was also a recommended reference of the professor of this course.

Roger L. Martin is the director of the Martin Prosperity Institute and a former dean of the Rotman School of Management at the University of Toronto. He is a coauthor of Creating Great Choices: A Leader’s Guide to Integrative Thinking (Harvard Business Review Press, 2017).

The article fits into the discussion of strategy planning and execution by warning of traps that strategists are susceptible to and ways of thinking to avoid them.