Business Policy & Strategic Management 05 PDF

Business Policy & Strategic Management 119
Unit-VI : Implementing & Evaluating Strategy-Strategic

Notes
Leadership, Organizational Structure and Control
Structure
6.1 Definition of Strategy Execution
6.2 The Middle Manager’s View
6.3 Strategic Leadership- Definition & Qualities of a Strategic Leader
6.4 Strategic Leadership Skills
6.4.1 Interpersonal Skills
6.4.2 Conceptual Skills
6.4.3 Technical Skills
6.5 Strategic Decision Making
6.5.1 Reducing Complexity
6.5.2 System Understanding
6.5.3 Understanding Indirect Effects
6.5.4 Future Focus & Vision
6.5.5 Proactive Reasoning
6.6 Role of Organizational Structure & Design in Strategy Implementation
6.7 Different Types of Organizational Structures
6.7.1 Traditional Structures
6.7.2 Divisional Structure
6.7.3 Matrix Structure
6.7.4 Some Other Kinds of Organizational Structure
6.8 The Evaluation & Control of Organizational Strategy
6.8.1 Types of Controls for Performance Evaluation
6.8.2 Strategic Surveillance
6.8.3 Special Alert Control
6.8.4 Operational Control
6.9 Evaluation Techniques for Operational Control
6.10 Managing Strategic Change Strategy, Culture & Action
6.11 Leading & Managing Strategic Change Successfully
6.12 Role of Change Process
Objectives
• To gain an insight into strategy execution.
• To understand strategic leadership - definition and qualities of a strategic
leader
• To decipher role of organizational structure and design in strategy
implementation
• To analyze different types of organizational structures.
• To understand evaluation and control of organizational strategy
• To gain an insight into managing strategic change strategy, culture and action.
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120 Business Policy & Strategic Management
“Strategy execution is the practice of translating, communicating, coordinating,

Notes adapting and allocating resources to a chosen strategy; while managing the process of
strategy implementation”
“Leaders rush into implementation before they have adequately identified and
created the upstream conditions for success or before they have adequately completed
their desired state designs and tested them for feasibility”
- Anderson & Anderson (2001)
Introduction
Strategy execution is difficult in practice for many reasons, but a key impediment
to success is that many leaders don’t know what strategy execution is or how they
should approach it. The architecture of the strategy execution process is often a
rather neglected and ignored part of the strategy process. The strategy typically goes
right from formulation to implementation, without truly considering the structure of
the process. The two most important elements of the strategy execution process
architecture are; translation of the strategy into manageable actions and steps and
continuous adaptation of the strategy to the corporate context.
Organizations need three things to successfully bridge the gap between strategy
formulation and strategy execution:
• A structure for the strategy execution process,
• Constant focus on avoiding the lock-in effects that damage strategy execution
and
• A method to institutionalize the strategy execution process.
When looked up in Collins Cobuild Dictionary (2001), the word “execution” means
to carry something out. Likewise the word “implementation” means to ensure that what
has been planned gets done. The distinction here is rather unclear.
When looked up at the McGraw-Hill Online Learning Center: “Strategy execution

deals with the managerial exercise of supervising the ongoing pursuit of strategy,
making it work, improving the competence with which it is executed, and showing
measurable progress in achieving the targeted results”. Furthermore: “Strategy
implementation concerns the managerial exercise of putting a freshly chosen strategy
into place”. These definitions provide a much more distinctive reflection to the two
concepts. However, they are still not sufficient, since they can easily be substituted. The
definition here on “Strategy Implementation” still very much resembles the dictionary
explanation.
According to Wikipedia, strategy implementation involves: Allocation of sufficient

resources, establishing a chain of command, assigning responsibility of specific tasks or
processes to specific individuals or groups and managing the process.
This includes monitoring results, comparing to benchmarks and best practices,

evaluating the efficacy and efficiency of the process, controlling for variances, and
making adjustments to the process as necessary.
Though it seems that “strategy execution” and “strategy implementation” are two
rather intertwining concepts, it is possible to make a somewhat clear distinction on the
basis of the aforementioned definitions. While strategy implementation is very much

concerned with the actual conduct of carrying out a chosen plan or strategy, strategy
execution seems more concerned with the conduct of coordination, translation, Notes
communication and resource allocation, yet strategy execution is also concerned with
carrying out the strategy.
The clearest distinction may be that strategy execution is primarily anchored in the
tactical level of the organization, while strategy implementation is primarily anchored
in the operational level. Therefore strategy execution works as a medium between
strategy formulation and strategy implementation.
6.1 Definition of Strategy Execution

Strategy execution is an ongoing process that monitors and makes adjustments to
the strategy implementation process. The strategy execution process therefore is the
process of making the organization ready for implementation. It is in this stage the
strategy is translated into workable plans and metrics that can be controlled.
It is where the strategy gets communicated to the organization, so that everyone

involved knows the “what”, “why” and “how” of the strategy It is where the people,
departments, budgets and resources involved are allocated and coordinated in a
cooperating symbiosis. Strategy execution is also the medium through which the
actual implementation is monitored, managed and adjusted to the experiences and
consequences that the organization encounter, as a result of implementing the strategy
- when the ideas and aspirations actually hit the real world.
6.2 The Middle Managers’ View

The mid-levels are responsible for setting near- and mid-term goals and directions,
and for developing the plans, procedures and processes used by the lower levels.
(Plans, procedures, and processes are major tools for coordinating effort, particularly in
large-scale organizations with many interdependent parts that must act in a coordinated
way.) The mid-levels are also responsible for prioritizing missions and allocating major
resources to tailor capability at the lower levels. This includes formulating intermediate-
range resources allocation plans that implement concepts developed at higher levels,
as in the Planning, Programming, Budgeting and Execution System (PPBES).
Some middle managers think that implementation is just “doing things” or “turning
strategy into action”. However, variety of issues is identified by classifying the definitions
into Five categories which are: Management, communication, planning, control, and
daily actions.
• The middle managers who had the Management view talked about different
actions, means, methods, and tools, top-down process and organization.
• Communicational view on implementation was mainly about communicating the

strategy and enhancing the motivation and commitment of personnel.
• Planning view included different plans (e.g. annual plans), goal/objective setting
and recognition.
• Control view dealt with instructions, rules, policies, monitoring and measurement.
• Strategy implementation as Daily Actions means that strategy is taken into account
in every day work and it shows as changes in working practices and priorities.

Noble (1999) has made a large review of research carried out in the dispersed
Notes field of strategy implementation. Noble himself combines the perspectives and,
having a focus on the process of implementation, defines strategy implementation as
communication, interpretation, adoption and enactment of strategic plans.
6.3 Strategic Leadership - Definition and Qualities of a Strategic

Leader
Strategic leadership refers to a manager’s potential to express a strategic vision for
the organization, or a part of the organization, and to motivate and persuade others
to acquire that vision. Strategic leadership can also be defined as utilizing strategy in
the management of employees. It is the potential to influence organizational members
and to execute organizational change. Strategic leaders create organizational structure,
allocate resources and express strategic vision. Strategic leaders work in an ambiguous
environment on very difficult issues that influence and are influenced by occasions and
organizations external to their own.
Strategic leadership refers to a manager’s potential to express a strategic vision for

the organization, or a part of the organization, and to motivate and persuade others to
acquire that vision. Strategic leadership can also be defined as utilizing strategy in the
management of employees. It is the potential to influence organizational members and
to execute organizational change.
The main objective of strategic leadership is strategic productivity. Another aim

of strategic leadership is to develop an environment in which employees forecast
the organization’s needs in context of their own job. Strategic leaders encourage the
employees in an organization to follow their own ideas. Strategic leaders make greater
use of reward and incentive system for encouraging productive and quality employees
to show much better performance for their organization. Functional strategic leadership
is about inventiveness, perception, and planning to assist an individual in realizing his
objectives and goals.
Strategic leadership requires the potential to foresee and comprehend the work
environment. It requires objectivity and potential to look at the broader picture. A few
main traits / characteristics / features / qualities of effective strategic leaders that do
lead to superior performance are as follows:
• Loyalty- Powerful and effective leaders demonstrate their loyalty to their vision by
their words and actions.
• Keeping them updated- Efficient and effective leaders keep themselves updated
about what is happening within their organization. They have various formal and
informal sources of information in the organization.
• Judicious use of power- Strategic leaders makes a very wise use of their power.
They must play the power game skillfully and try to develop consent for their ideas
rather than forcing their ideas upon others. They must push their ideas gradually.
• Have wider perspective/outlook- Strategic leaders just don’t have skills in their
narrow specialty but they have a little knowledge about a lot of things.
• Motivation- Strategic leaders must have a zeal for work that goes beyond money
and power and also they should have an inclination to achieve goals with energy
and determination.

• Compassion- Strategic leaders must understand the views and feelings of their
subordinates, and make decisions after considering them. Notes
• Self-control- Strategic leaders must have the potential to control distracting/
disturbing moods and desires, i.e., they must think before acting.
• Social skills- Strategic leaders must be friendly and social.
• Self-awareness- Strategic leaders must have the potential to understand their own
moods and emotions, as well as their impact on others.
• Readiness to delegate and authorize- Effective leaders are proficient at

delegation. They are well aware of the fact that delegation will avoid overloading
of responsibilities on the leaders. They also recognize the fact that authorizing the
subordinates to make decisions will motivate them a lot.
• Articulacy- Strong leaders are articulate enough to communicate the vision (vision
of where the organization should head) to the organizational members in terms that
boost those members.
• Constancy/ Reliability- Strategic leaders constantly convey their vision until it

becomes a component of organizational culture.
Strategic leaders can create vision, express vision, passionately possess vision and
persistently drive it to accomplishment.
Strategic leaders have a role to play in each of the above-mentioned strategic

leadership actions. In turn, each of these strategic leadership actions positively
contributes to effective strategy implementation.
In the light of the importance of strategy implementation as a component of the

strategic management process, the high failure rate of change initiatives due to poor
implementation of new strategies and the fact that a lack of strategic leadership has
been identified as one of the major barriers to effective strategy implementation.
Strategic leadership requires significantly different techniques in both scope and skill
from direct and organizational leadership. In an environment of extreme uncertainty,
complexity, ambiguity, and volatility, strategic leaders think in multiple time domains and
operate flexibly to manage change. Moreover, strategic leaders often interact with other
leaders over whom they have minimal authority.
6.4 Strategic Leadership Skills

Strategic leaders understand, embody, and execute values-based leadership. The
political and long-term nature of their decisions doesn’t release strategic leaders from
the current demands of training, readiness, and unforeseen crises; they are responsible
to continue to work toward the ultimate goals. Values provide the constant reference for
actions in the stressful environment of strategic leaders. Strategic leaders understand,
embody, and execute leadership based on values.
6.4.1 Interpersonal Skills

Strategic leaders continue to use interpersonal skills developed as direct and
organizational leaders, but the scope, responsibilities, and authority of strategic
positions require leaders with unusually sophisticated interpersonal skills.

Communication is the key interpersonal skill at the strategic level which is further
Notes complicated by the wide array of staff, functional, and operational components
interacting with each other and with external agencies. These complex relationships
require strategic leaders to employ comprehensive communications skills as they
represent their organizations.
One of the most prominent differences between strategic leaders and leaders
at other levels is the greater importance of symbolic communication. The example
strategic leaders set, their decisions, and their actions have meaning beyond
their immediate consequences to a much greater extent than those of direct and
organizational leaders.
6.4.2 Conceptual Skills

Strategic leaders have the further responsibility of defining for their diverse
organizations what counts as success in achieving the vision. They monitor their
progress by drawing on personal observations, review and analysis, strategic
management plans.
Strategic leaders, more than direct and organizational leaders, draw on their
conceptual skills to comprehend national, national security, and theater strategies,
operate in the strategic and theater contexts, and improve their vast, complex
organizations. The variety and scope of their concerns demand the application of more
sophisticated concepts.
Strategic leaders need wisdom-and wisdom isn’t just knowledge. They routinely deal
with diversity, complexity, ambiguity, change, uncertainty, and conflicting policies. They
are responsible for developing well-reasoned positions and providing their views and
advice.
6.4.3 Technical Skills

Technical skills are required at all levels. However, at the lower levels, technical
skills consist of using or operating a system; at upper levels, technical skills are more
about employing systems within systems in order to create synergy. For example, at the
lower levels, automation-technical skills might consist of what is required to install and
maintain a network of computer systems. At the strategic level, they might be what is
required to achieve the integration of an extensive automation system.
At the direct level, technical focus is on solving well-defined problems, and

performing specific tasks and missions. At the strategic level, the focus is on solving
ill-defined problems-dealing with intangibles and indirect effects that can impact on the
organization. Many of the technical decisions facing these senior leaders require the
assessment of organizational capabilities and an understanding of the intricacies of
resourcing the total organization.
Structuring and re-structuring includes responsibility to develop new kinds of

systems and organizations to provide future operational capability. These strategic
decisions require major resource commitments that cannot easily be reversed (e.g.,
the decision to build an aircraft carrier). They also require calculation of the tradeoffs
between opportunity and risk, with the knowledge that if decisions are wrong, the
defense posture may be weakened.
6.5 Strategic Decision Making

In most Strategic decision making situations, where options are consequential,
situations may not have clear cause-and-effect outcomes. Also, plausible courses of

action may not yet have been developed or identified. In such cases, decision makers
must isolate and identify key issues, visualize and predict potential problems, and Notes
formulate least-risk solutions. Additionally, at the strategic level, some problems may be
so poorly structured that even one clearly workable course of action is not apparent.
The complexity may be too great, and the consequences of possible courses of action
too uncertain. For these complex and ill-structured problems, most organizations make
use of an executive team, composed of the leader and his/her advisors. The assembled
wisdom of the team members enables a broader scope to be considered, and permits a
more careful analysis of the information relevant to the issue.
6.5.1 Reducing Complexity. The complexity and uncertainty of the strategic

environment exceeds that which can be tolerated at the lower levels. Decision
makers at these levels- nominally the mid-levels-develop concrete plans
for allocating resources to operations. The strategic role is to comprehend
the complexity and uncertainty in the strategic environment, and then to set
understandable azimuths for the mid-levels of the organization that can be used as
a rational basis for resource allocation to operational units.
6.5.2 Systems Understanding. This is a capacity to visualize the interactive dynamics

of large systems, including interdependencies, so that decisions taken in one
area will not have adverse impact in another. Strategic decisions must balance
conflicting expectations, requirements and values, over time. Systems-by virtue
of strategic leadership-must deal with current requirements, conceive future
requirements, and balance these requirements with current and future resources.
6.5.3 Understanding Indirect Effects. A strategic leader’s frame of reference and

vision must be broad enough to predict the indirect-second-, third-, and fourth-order
effects of decisions. Without this capacity, changes in policy, regulation, or action
may produce effects neither anticipated nor desired.
6.5.4 Future Focus and Vision. Strategic leaders must not only be future oriented,
but must have a “sense of time” to envision long-term system-wide programs and
schedules for their implementation. Time horizons from 12 years (for the Extended
Planning Annex) to 20 years (for programs requiring major capital resources,
such as the force modernization programs of the various services) are common in
peacetime. The importance of vision at this level is that it provides the umbrella for
defining specific and detailed programs at the organizational.
6.5.5 Proactive Reasoning. Although strategic leaders must react to immediate, near-
term events, they reduce the surprise factor by maintaining a “proactive stance.”
Being proactive is more than just seeing the future relevance of present-day events.
In this proactive process, strategic leaders use their frames of reference as a tool
to:
• Assess current position.
• Envision desired future capabilities.
• Determine the difference and define steps to close the difference.
• Initiate the future program.
• Monitor progress.
New organizations may be developed in response to changing threat capabilities,

technological enhancements, or resource changes.

Integrating the levels of leadership

Notes Function Strategic leadership Organizational Direct leadership
leadership
Vision Create the vision Create the plans Execute the plans
Teamwork Integrate structure/ Design Forge teamwork
purpose Inter-dependencies
Values Articulate Set Model and reinforce
Cultural Command Values
Imperatives and values Climate
Information Establish concept base Engineer information Generate/
for information systems systems Apply Information
Exhibit 6.1 – Integrating levels of Leadership
6.6 Role of Organizational Structure and Design in Strategy

Implementation
Organizational structure refers to the network of relationships among individuals and
positions in an organization. It can be defined as established pattern of relationships
among components of the organization. It is the formal system of task and reporting
relationships that controls, coordinates and motivates employees. It helps in
associating them and working together to achieve organization’s goals. Organization
structure is like the framework of an organization. Organizational structures imply
formal relationships with well defined duties and responsibilities. It also implies to the
hierarchical relationships between superior and subordinates within the organization. It
helps in coordinating various tasks and activities that are assigned to different persons
and departments. Organizational structure helps in having set of policies, procedures,
standards and methods of evaluation of employee’s performance. It should be
developed as per needs of the people in the organization.
Organizational structure plays significant role in effective and efficient functioning of

organization. There are many significance of organizational structure and they are as
follows:
1. Clear cut authority relationships: Organizational structure helps in delivering

authority and responsibility among employees in an organization. It signifies the
duties and responsibilities concerned with particular post to concerned persons.
It helps in recognizing roles for each employee and his accountability to the
organization. It also correlates relationships of one organizational member to the
other members.
2. Pattern of communication: It provides the patterns of communication and

coordination in an organization. Organizational structure helps in grouping activities
and people and so it facilitates communication between people centered as their
job activities. The sharing of information helps person in solving their joint problems.
3. Location of Decision Centers: It determines the location of centers of decision

making in the organization.
4. Proper Balancing: It helps in creating proper balance and lays emphasizes on

coordination of group activities in the organization.
5. Stimulating creativity: An efficient and sound organization structure provides well

defined patterns of authority that stimulates creative thinking and initiative among

members of the organization. Every organizational member understands his power
and utilizes it to perfection to get appreciation in the organization. Notes
6. Encouraging growth: It provides the framework within which an enterprise functions.
If the structure of organization is flexible then it will help in meeting challenges
and creating opportunity for growth. It helps in facility growth of the enterprise by
increasing its capacity so that increased level of activity can be handled.
7. Making Use of Technical Improvements: Adaptability to the change in a sound

organizational structure and in making maximum use of latest technology. It
modifies the existing pattern of authority responsibility relationship in respect to the
technological improvements in the organization
6.7 Different Types of Organizational Structures

6.7.1 Traditional Structures
These are the structures that are based on functional division and departments.
These are the kind of structures that follow the organization’s rules and procedures
to the T. They are characterized by having precise authority lines for all levels in the
management. Various types of structures under traditional structures are:
• Line Structure- This is the kind of structure that has a very specific line of
command. The approvals and orders in this kind of structure come from top to
bottom in a line, hence the name line structure. This kind of structure is suitable
for smaller organizations like small accounting firms and law offices. This is the
sort of structure that allows for easy decision-making and is also very informal in
nature. They have fewer departments, which makes the entire organization a very
decentralized one.
• Line and Staff Structure- Though line structure is suitable for most organizations,
especially small ones, it is not effective for larger companies. This is where the line
and staff organizational structure comes into play. Line and structure combines
the line structure where information and approvals come from top to bottom, with
staff departments for support and specialization. Line and staff organizational
structures are more centralized. Managers of line and staff have authority over
their subordinates, but staff managers have no authority over line managers and
their subordinates. The decision-making process becomes slower in this type of
organizational structure because of the layers and guidelines that are typical to it.
Also, let’s not forget the formality involved.
• Functional Structure- This kind of organizational structure classifies people

according to the function they perform in their professional life or according to
the functions performed by them in the organization. The organization chart for a
functional organization consists of Vice President, Sales department, Customer
Service Department, Engineering or production department, accounting department
and Administrative department.
6.7.2 Divisional Structures

These are the kinds of structures that are based upon the different divisions in the
organization. These structures can be further divided into:
• Product Structure - A product structure is based on organizing employees and

work on the basis of the different types of products. If the company produces
three different types of products, they will have three different divisions for these
products.

Notes • Market Structure - Market structure is used to group employees on the basis of
specific market the company sells in. A company could have 3 different markets
they use and according to this structure, each would be a separate division in the
structure.
• Geographic Structure - Large organizations have offices at different place,

for example there could be a north zone, south zone, west and east zone. The
organizational structure would then follow a zonal structure.
6.7.3 Matrix Structure

This is a structure which is a combination of function and product structures. This
combines the best of both worlds to make an efficient organizational structure. This
structure is the most complex organizational structure.
6.7.4 Some Other Kinds of Organizational Structures

• Bureaucratic Structure- This kind of structure can be seen in tall organizations
where tasks, processes and procedures are all standardized and this type of
structure is suitable for huge enterprises that involve complex operations and
require smooth administration of the same.
• Pre-Bureaucratic Structure - This structural form is best exemplified in flat

organizations where administration and control are centralized and there is very
little, if any, standardization of tasks.
• Network Structure - In this kind of structure, the organization managers are

required to maintain and coordinate business/professional relations with third
parties such as clients, vendors and associates in order to achieve a collective
goal of profitability and growth. Most of the time, these relations are maintained and
tasks are coordinated via telecommunications and electronic media and, hence, this
type of structure is also known as Virtual Structure.
• Team Structure - Organizations with team structures can have both vertical as well
as horizontal process flows. The most distinct feature of such an organizational
structure is that different tasks and processes are allotted to specialized teams of
personnel in such a way as a harmonious coordination is struck among the various
task-teams.
It is important to find an organizational structure that works best for the organization
as the wrong set up could hamper proper functioning in the organization.
6.8 The Evaluation and Control of Organizational Strategy

The basic premise of strategic management is that the chosen strategy will achieve
the organization’s mission and objectives.
A firm’s successive strategies are greatly affected by its past history and often take
shape through experimentation and ad hoc refinement of current plans, a process
James Quinn has termed “logical incrementalism”. Therefore, the re-examination of
past assumptions, the comparison of actual results with earlier hypotheses has become
common feature of strategic management.
6.8.1 Types of Controls for Performance Evaluation
a. Strategic Control

Strategic control focuses on the dual questions of whether: (1) the strategy is Notes
being implemented as planned; and (2) the results produced by the strategy are those
intended.” Strategic control is “the critical evaluation of plans, activities, and results,
thereby providing information for the future action”. There are four types of strategic
control: premise control, implementation control, strategic surveillance and special alert
control
b. Premise Control:
Planning premises/assumptions are established early on in the strategic planning

process and act as a basis for formulating strategies. Premise control has been
designed to check systematically and continuously whether or not the premises
set during the planning and implementation processes are still valid. It involves the
checking of environmental conditions. Premises are primarily concerned with two types
of factors:
Environmental factors (for example, inflation, technology, interest rates, regulation,

and demographic/social changes).
Industry factors (for example, competitors, suppliers, substitutes, and barriers to

entry).
All premises may not require the same amount of control. Therefore, managers must
select those premises and variables that (a) are likely to change and (b) would a major
impact on the company and its strategy if they did.
c. Implementation Control:
Strategic implantation control provides an additional source of feed forward

information. “Implementation control is designed to assess whether the overall strategy
should be changed in light of unfolding events and results associated with incremental
steps and actions that implement the overall strategy.” The two basis types of
implementation control are:
1. Monitoring strategic thrusts (new or key strategic programs). Two approaches

are useful in enacting implementation controls focused on monitoring strategic
thrusts: (1) one way is to agree early in the planning process on which thrusts
are critical factors in the success of the strategy or of that thrust; (2) the second
approach is to use stop/go assessments linked to a series of meaningful thresholds
(time, costs, research and development, success, etc.) associated with particular
thrusts.
2. Milestone Reviews. Milestones are significant points in the development of a

programme, such as points where large commitments of resources must be made.
A milestone review usually involves a full-scale reassessment of the strategy and
the advisability of continuing or refocusing the direction of the company. In order to
control the current strategy, must be provided in strategic plans.
6.8.2 Strategic Surveillance:

It is designed to monitor a broad range of events inside and outside the company
that are likely to threaten the course of the firm’s strategy. The basic idea behind
strategic surveillance is that some form of general monitoring of multiple information
sources should be encouraged, with the specific intent being the opportunity to
uncover important yet unanticipated information. Strategic surveillance appears to be

similar in some way to “environmental scanning.” The rationale, however, is different.

Notes Environmental, scanning usually is seen as part of the chronological planning cycle
devoted to generating information for the new plan. By way of contrast, strategic
surveillance is designed to safeguard the established strategy on a continuous basis.
6.8.3 Special Alert Control:

Special alert controls are the need to thoroughly, and often rapidly, reconsider the
firm’s basis strategy based on a sudden, unexpected event. (i.e., natural disasters,
chemical spills, plane crashes, product defects, hostile takeovers etc.). Special alert
controls should be conducted throughout the entire strategic management process.
6.8.4 Operational Control

Operational control systems are designed to ensure that day-to-day actions are
consistent with established plans and objectives. It focuses on events in a recent
period. Operational control systems are derived from the requirements of the
management control system. Corrective action is taken where performance does not
meet standards. This action may involve training, motivation, leadership, discipline, or
termination.
6.9 Evaluation Techniques for Operational Control:

• Value chain analysis: Firms employ value chain analysis to identify and evaluate
the competitive potential of resources and capabilities. By studying their skills
relative to those associated with primary and support activities, firms are able to
understand their cost structure, and identify their activities through which they can
create value.
• Quantitative performance measurements: Most firms prepare formal reports

of quantitative performance measurements (such as sales growth, profit growth,
economic value added, ratio analysis etc.) that manager’s review at regular
intervals. These measurements are generally linked to the standards set in the first
step of the control process. For example if sales growth is a target, the firm should
have a means of gathering and exporting sales data. If the firm has identified
appropriate measurements, regular review of these reports helps managers stay
aware of whether the firm is doing what it should do. In addition to there, certain
qualitative bases based on intuition, judgment, opinions, or surveys could be used
to judge whether the firm’s performance is on the right track or not.
• Benchmarking: It is a process of learning how other firms do exceptionally high-

quality things. Some approaches to bench marking are simple and straightforward.
For example Xerox Corporation routinely buys copiers made by other firms and
takes them apart to see how they work. This helps the firms to stay abreast of its
competitors’ improvements and changes.
A measurement of the quality of an organization’s policies, products, programs,

strategies, etc. and their comparison with standard measurements, or similar
measurements of its peers.
The objectives of benchmarking are
(1) To determine what and where improvements are called for,
(2) To analyze how other organizations achieve their high performance levels, and
(3) To use this information to improve performance

• Key Factor Rating: It is based on a close examination of key factors affecting
performance (financial, marketing, operations and human resource capabilities) and Notes
assessing overall organizational capability based on the collected information.
Key Factor Analysis, in actual, A technique for predicting fluctuations in population

size based on identifying the relative contributions made to it by the key factors of
births, deaths, immigration, and emigration.
6.10 Managing Strategic Change Strategy, Culture and Action

Strategic change is the movement of a business away from its present state towards
some desired future state to improve its current circumstances. It enables the execution
of the strategy.
Strategic Change is described as “a structured approach to transitioning individuals,

teams and organizations from a current state to a desired future state”. HRmagazine
suggests it is: “The systematic approach and application of knowledge, tools and
resources to leverage the benefits of change. Change management means defining
and adopting corporate strategies, structures, procedures and technologies to deal
with change stemming from internal and external conditions.”It is “The process, tools
and techniques to manage the people-side of business change to achieve the required
business outcome and to realize that business change effectively within the social
infrastructure of the workplace.”
The first step in the process is to recognize that there is a gap between desired
business performance and actual performance. This gap may be recognized by the one
or more of the following:
• Inability to meet or influence business outputs and outcomes.
• Changes in the external environment impacting performance.
• A dysfunctional team.
• Requirement for greater efficiency and effectiveness.
• A decline in profitability or return on investment.
• Business improvement required.
• Requirement to solve a complex problem.
Organizations go through long periods when strategies develop incrementally; that

is, decisions build one upon another, so that past decisions mould future strategy.
There may occur more fundamental shifts in strategy as major readjustment of the
strategic direction of the firm takes place but this is infrequent. Some writers, have
argued that such incremental development in organizations is consciously and logically
managed by executives as a means of coping with the complexity and uncertainty of
strategy development. Managers are aware that it is not possible to ‘know’ about all
the influences that could conceivably affect the future of the organization. They arc also
aware that the organization is a political entity in which trade-offs between the interests
of different groups are inevitable: it is therefore not possible to arrive at an optimal goal
or an optimal strategy; strategies must be compromises which allow the organization to
go forward.

To cope with this uncertainty and such compromise, strategies must be developed
Notes gradually so that new ideas and experiments can be tested and commitment within the
organization can be achieved whilst maintaining continual, if low scale change. This is
what has become known as ‘logical incrementalism’.
It is a view of the management of strategy which is often espoused by managers

themselves, although of course they may not use the same terminology.
It is suggested that change can fall into the following broad categories:
• Strategic change – Comes about when, alterations are made to an

organization’s functional parts, for example, through mergers, acquisitions or
consolidations;
• Leadership change – Relates to reconfiguring the organization’s leadership.

This can be through any number of reasons including retirement, ill-health or
death, sacking, a leadership coup, or plain old natural transition
• Cultural change – Relating to the human aspects such as the relationship

between managers and employees, or staff and customers. This can be the
trickiest and most unpredictable area of all;
• Cost-cutting – When certain activities and operations are eliminated; and
• Process change – This focuses on how things get done and how they can be
improved.
6.11 Leading and managing strategic change successfully

• Change needs clarity and commitment of direction.
• Change invokes conflict and resistance so it needs experienced leadership and

management.
• Change is time consuming and can be expensive.
• Change needs to be managed and requires continuity of lead resources to ensure it

stays focused.
• Change needs to provide coherence meaning that there needs to be continuity of

services while changing.
• Change is not a prescribed set of activities and is specific for the organisational
context.
• Change needs constant communication.
• Change needs to create or enhance value.
• Change needs to achieve the desired results.
• Change needs to provide a contribution to business outcomes.
Much of today’s change management theory can be seen as a hybrid of the

mechanical approach – with its strategies, processes and systems – and the people
approach, focusing on employees and their culture, behaviors and capacity to change.

“Observers of business changes in real life have realized that the extreme application
of either of these two approaches, in isolation, will be unsuccessful,” according to Hiatt Notes
and Creasey.
Exhibit 6.2 – Cycle of Change
6.12 Role of Change Process

The process of change is not only strategic-leader business but also a strategic
manager’s business. For that matter, it is the business of the individuals who make up
the organization. Although one can view an organizational chart and view the structure
of a large organization, in reality there are no large organizations, only groups of small
organizations where people work day in and day out to fulfill both organizational and
personal goals.
What does this mean for creating organizational change? The answer is that to
create the desired change to maintain the health of an organization, leaders and
managers need to recognize that real change begins and ends various and sundry
workforce areas. Lead if one has the ability to do so, but as a minimum, manage the
organization with the insights and knowledge needed to create an organizational
reality that will serve both the external community but also workers who make up the
organization. Only then can the organization make the journey toward its vision a fruitful
one.
The implementation of any new strategy will usually require some or all partners to
change their behavior and this need to happen one partner at a time. “Your firm will only
travel as far and as fast as each partner and then all partners collectively are prepared
to change their individual behaviors – their appetite for change!” The success of change
depends on how effectively each partner can be coached and helped to see not only
the need for change, but also the need to take action and the need to follow through.
Even when organizations recognize the importance of human behavior in successful

change, they can fall at various hurdles along the way.
Summary
• Strategy execution is the practice of translating, communicating, coordinating,
adapting and allocating resources to a chosen strategy; while managing the
process of strategy implementation.

• Strategic leadership refers to a manager’s potential to express a strategic vision for

Notes the organization, or a part of the organization, and to motivate and persuade others
to acquire that vision. Strategic leadership can also be defined as utilizing strategy
in the management of employees. It is the potential to influence organizational
members and to execute organizational change.
• The main objective of strategic leadership is strategic productivity. Another aim of

strategic leadership is to develop an environment in which employees forecast the
organization’s needs in context of their own job.
• Organizational structure refers to the network of relationships among individuals

and positions in an organization. It can be defined as established pattern of
relationships among components of the organization. It is the formal system of task
and reporting relationships that controls, coordinates and motivates employees
• Strategic change is the movement of a business away from its present state
towards some desired future state to improve its current circumstances. It enables
the execution of the strategy. Strategic Change is described as “a structured
approach to transitioning individuals, teams and organizations from a current state
to a desired future state
Check your progress:

1. What does the GE Matrix show?
a) The relationship between profitability and business position.
b) The current status of products in terms of market position.
c) The relationship between market attractiveness and business position.
d) None of the above
2. What are the three criteria for the robustness of strategic capability?
a) Core competences, unique resources and dynamic capabilities.
b) Complexity, causal ambiguity and value to customers.
c) Complexity, causal ambiguity and rarity.
d) Complexity, causal ambiguity and culture/history.
3. Industry/sector benchmarking compares--
a) Organisational performance between firms/public sector organisations in

different industries or sectors.
b) Organisational performance between firms/public sector organisations in the

same industry or sector.
c) Organizational performance between firms/public sector organisations in

different countries.
d) Organisational performance between different divisions of the firm.

4. Best in Class Benchmarking seeks to assess Organisational performance
against-- Notes
a) The nearest geographical competitor.
b) The competitor who is ‘best in class’ wherever that may be.
c) The competitor who is the best in the industry.
d) The nearest principal competitor.
5. Robustness of strategic capabilities is more likely when--
a) Linkages in the value network are exploited.
b) Core competences are complex, ambiguous and dependent on culture/history.
c) Competences lie with specific individuals.
d) Core competences lie in separate parts of the organization’s value chain.
6. In the resource-based view of strategy, what type of strategic capabilities are the
sources of sustainable competitive advantage?
a) Unique resources and core competences.
b) Dynamic capabilities.
c) Operational excellence.
d) Strategic capabilities which are valuable to buyers, rare, robust and non-
substitutable.
7. Which types of organizational knowledge is a source of competitive

advantage?
a) Explicit knowledge which is classified and formalized in a planned and

systematic way.
b) Personal knowledge which is hard to communicate and formalize.
c) Customer databases, market research reports, management reports.
d) Collective and shared experience accumulated through systems, routines and

activities of sharing across the organisation.
8. Which one of the following is not an integral part of the managerial process of
crafting and executing strategy?
a) Developing a strategic vision
b) Developing a proven business model
c) Setting objectives and crafting a strategy to achieve them

d) Monitoring developments, evaluating performance, and initiating corrective

Notes adjustments in the company’s long-term direction, objectives, strategy, or
execution
e) Implementing and executing the chosen strategy efficiently and effectively
9. A strategic vision for a company--
a) Involves how fast to pursue the chosen strategy and reach the targeted levels
of performance.
b) Consists of thinking through what it will take to make the chosen strategy work
as planned.
c) Is a road map that delineates management’s view of the company’s future-

”where we are going and why.”
d) Spells out how the company is going to get from where it is now to where it
want to go and when it is expected to arrive.
e) Concerns management’s view of how to transition the company’s business

model from where it is now to where it needs to be.
10. The difference between a company’s mission statement and the concept of a
strategic vision is that--
a) The mission statement lays out the desire to make a profit, whereas the
strategic vision addresses what strategy the company will employ in trying to
make a profit.
b) A mission statement deals with “where we are headed “ whereas a strategic

vision provides the critical answer to “how will we get there?”
c) A mission deals with what a company is trying to do and a vision concerns what
a company ought to do.
d) A mission statement typically identifies what the company’s products or

services are (what we do) and the customers and markets it serves (why we
are here), whereas the focus of a strategic vision is on “where we are going and
why.”
e) A mission is about what to accomplish for shareholders whereas a strategic

vision concerns what to accomplish for customers.
11. Which one of the following is not a characteristic of an effectively-worded strategic

vision statement?
a) Directional (says something about the company’s journey and destination and
the kinds of business and strategic changes that will be forthcoming)
b) Inspirational (is worded in a motivational and stirring way that will garner
enthusiastic and energetic support from company personnel and shareholders)
c) Graphic (paints a clear picture)
d) Easy to communicate (ideally, explainable in 10 minutes)

e) Focused and flexible (has specifics but stops short of a once-and-for-all-time
pronouncement because the strategic path may need to be changed as events Notes
unfold)
Questions& Exercises
1. Explain GE matrix with an example.
2. Explain the differences between a strategic vision and a mission.
3. Explain strategy execution process
4. Explain the role of change process
5. What is strategic leadership? Explain in detail
6. How the levels of directional strategy in an organization can be integrated? Explain
For Further Readings

1. Exploring Corporate Strategy: Gerry Jhonson, Kevan Scholes
2. Pearce John A & Robinson R B, 1977, Strategic Management : Strategy

Formulation and Implementation, 3rd Ed., A.I.T.B.S. Publishers & Distributors.
3. Aaker David Strategic Market Management, 5th Ed., John Wiley and sons
4. Regular reading of all latest Business Journals : HBR, Strategist, Busienss World,
Business India, Business Today.
5. Porter Michael, Competitive Advantage: Creating and sustaining superior

performance, Free press.
6. Thomson & Strickla d, Business policy and Strategic management, 12th Ed., PHI.
7. Munjal, A. Cases and readings in Strategic Management, ABS Handbook
Case in point:
Strategy execution of UGM: A Case Study
Meeting the specific needs of clients means that UGM embarks on a wide array
of assignments. Our Case Studies represent a small cross-section of our portfolio of
experience, providing brief insights into how we have helped many clients. Contact us
to learn about the numerous other projects we’ve worked on over 30 years in business.
Turning strategy into action - involving the implementation teams

Having worked with the Senior Leadership Team of an international services
business, UGM was asked to help a larger group convert the high-level strategies
into a set of action plans. One of the most significant challenges was encouraging the
enthusiastic teams to focus on a few core priorities only, rather than wanting to embark
on dozens of projects. We used UGM’s customized strategy implementation tools
to help each department determine its own priorities, which were also closely aligned
with the strategic priorities of the business overall. Teams then analyzed their current
and future state, and what steps were needed to bridge the gap. The process also
included identifying and mitigating risks and ensuring that sufficient resourcing would
be available to execute the plans. Our timeline process was used to good effect, to
demonstrate that some of the intentions would need either additional resourcing or
need to be re-prioritized. At the end of the process, there was widespread buy-in from

the implementation teams since they had played a key part in developing the detailed
Notes plans that they were auctioning.
Review of strategic project implementation to analyse lack of progress

Prior to engaging us, our large corporate client had embarked on the implementation
of a technology change project. Despite very detailed project plans, and the investment
of inordinate amounts of people’s time, the project had experienced significant delays.
The UGM team conducted a strategic review of all aspects of the project, largely
through interviews with a variety of stakeholders and the application of our customized
suite of tools. We found that although there had been some small benefits, key project
deliverables had not been achieved, largely due to a lack of common purpose
. Essentially, because the crucial buy-in phase had not been successfully negotiated
up-front, subsequent buy-in and support had only been superficial. This would likely
plague the project going forward and, additionally, people were change fatigued. Since
the project had dragged on for over two years, it was unlikely that it would achieve its
objectives without a substantial rework and additional investment. As a result of our
review the project was terminated in its present form, a key strategic decision that
would prevent any further resources being wasted. This also allowed the organisation to
focus on conerns of a higher priority.
Clarifying & aligning drivers of value to boost strategy implementation

Our client, a business unit within a high-impact not for profit, wished to align
strategic activities for greater impact. They had a measurement system in place that
was helpful but needed some tightening. Essentially, they wanted to be sure that people
were focusing scarce resources on projects and activities that made a difference. UGM
undertook a review of the performance measures in place to identify the key drivers of
value for the business unit. Our evidence-based approach meant that we determined
which factors “moved the strategic needle” via internal consultation and scanning
the most relevant, current academic literature. This was also key to buy-in, since the
measurement system previously hadn’t always enjoyed full support. UGM helped the
organisation craft a range of performance measures that were more clearly defined and
most closely aligned with driving strategic value.
Instead of wasting time measuring and reporting on elements that had relatively little
impact on desired outcomes, management and staff were able to focus more on those
critical few elements that really made a difference to strategic performance. In addition
to being able to monitor performance indicators that would have the biggest impact,
staff were also made aware of how they might prioritise their time. When faced with
a choice between tasks, staff were able to choose actitivities known to generate the
greatest value. Benefits of the project included measuring elements that were tightly
linked with performance and direction and providing a shared focus on those activities
to be prioritised for optimal use of available resources.

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Business Policy & Strategic Management 119

Unit-VI : Implementing & Evaluating Strategy-Strategic

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“Strategy execution is the practice of translating, communicating, coordinating,

- Anderson & Anderson (2001)

• A structure for the strategy execution process,

• A method to institutionalize the strategy execution process.

When looked up at the McGraw-Hill Online Learning Center: “Strategy execution

According to Wikipedia, strategy implementation involves: Allocation of sufficient

This includes monitoring results, comparing to benchmarks and best practices,

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6.1 Definition of Strategy Execution

It is where the strategy gets communicated to the organization, so that everyone

6.2 The Middle Managers’ View

• Communicational view on implementation was mainly about communicating the

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6.3 Strategic Leadership - Definition and Qualities of a Strategic

Strategic leadership refers to a manager’s potential to express a strategic vision for

The main objective of strategic leadership is strategic productivity. Another aim

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• Social skills- Strategic leaders must be friendly and social.

• Readiness to delegate and authorize- Effective leaders are proficient at

• Constancy/ Reliability- Strategic leaders constantly convey their vision until it

Strategic leaders have a role to play in each of the above-mentioned strategic

In the light of the importance of strategy implementation as a component of the

6.4 Strategic Leadership Skills

6.4.1 Interpersonal Skills

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6.4.2 Conceptual Skills

6.4.3 Technical Skills

At the direct level, technical focus is on solving well-defined problems, and

Structuring and re-structuring includes responsibility to develop new kinds of

6.5 Strategic Decision Making

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6.5.1 Reducing Complexity. The complexity and uncertainty of the strategic

6.5.2 Systems Understanding. This is a capacity to visualize the interactive dynamics

6.5.3 Understanding Indirect Effects. A strategic leader’s frame of reference and

New organizations may be developed in response to changing threat capabilities,

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Integrating the levels of leadership

6.6 Role of Organizational Structure and Design in Strategy

Organizational structure plays significant role in effective and efficient functioning of

1. Clear cut authority relationships: Organizational structure helps in delivering

2. Pattern of communication: It provides the patterns of communication and

3. Location of Decision Centers: It determines the location of centers of decision

4. Proper Balancing: It helps in creating proper balance and lays emphasizes on

5. Stimulating creativity: An efficient and sound organization structure provides well

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7. Making Use of Technical Improvements: Adaptability to the change in a sound

6.7 Different Types of Organizational Structures

• Functional Structure- This kind of organizational structure classifies people

6.7.2 Divisional Structures

• Product Structure - A product structure is based on organizing employees and

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• Geographic Structure - Large organizations have offices at different place,

6.7.3 Matrix Structure

6.7.4 Some Other Kinds of Organizational Structures

• Pre-Bureaucratic Structure - This structural form is best exemplified in flat

• Network Structure - In this kind of structure, the organization managers are

6.8 The Evaluation and Control of Organizational Strategy

6.8.1 Types of Controls for Performance Evaluation

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Planning premises/assumptions are established early on in the strategic planning