MNG3702/201/1/2016

Tutorial Letter 201/1/2016

Strategy Implementation and Control

MNG3702

Semester 1

Department of Business Management

IMPORTANT INFORMATION:
This tutorial letter contains feedback on Assignment 01.

Open Rubric
CONTENTS

1 INTRODUCTION .......................................................................................................................... 3
2 FEEDBACK ON ASSIGNMENT 01 .............................................................................................. 3
3 IN CLOSING ................................................................................................................................. 8

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1 INTRODUCTION

Dear Student

This tutorial letter provides feedback on Assignment 01. You need to review the contents of this tutorial letter
carefully, as it will offer you valuable insight into your studies and guide you in your learning experience.
Assignment 01 introduced you to how organisational culture is used to enhance and support strategy
implementation. It also dealt with the importance of core competencies, resources and capabilities in strategy
implementation, and the preconditions for effective strategic change.

You will receive your marked assignment together with the marker's comments and the assignment evaluation
sheet (rubric) in the post. The assignment evaluation sheet is a useful tool that shows how marks have been
allocated, and it helps you identify areas that need improvement.

2 FEEDBACK ON ASSIGNMENT 01
Assignment 01 was an essay-type assignment. Tutorial Letter 101 provided you with guidelines for answering
essay-type questions. If you did not adhere to these guidelines, you would have been penalised. In addition, merely
copying facts from prescribed books, without supporting your answers where necessary, would not have been
sufficient. You needed to demonstrate that you could balance strategy implementation theory and the application of
strategy concepts to a case study. I cannot provide detailed model answers for case studies where application to a
case study or chosen organisation was required. Each student's answer differed and was assessed individually.
Marks were allocated based on the strength of your arguments and practical application. I have given some
guidelines below.

Remember that you need to number your pages and include a table of contents as the first page of the assignment.
An essay assignment starts with an introduction. The introduction should clearly state the topic of the essay and
explain what the aim of the essay is. It should also introduce the reader to the company on which the assignment is
based – in this case Unilever.

The following is an example of an introduction to the assignment:

1 INTRODUCTION

The discussion that follows is based on the case studies of Unilever. More specifically the sections below will deal
with how organisational culture is used to instil and support strategy implementation, the strategic importance of
core competencies, resources and capabilities in strategy implementation and preconditions for effective strategic
change.

Now you can start answering the assignment questions, using headings and subheadings that correspond with the
questions.

2 HOW ORGANISATIONAL CULTURE IS USED TO INSTILL AND SUPPORT STRATEGY

IMPLEMENTATION

Critically evaluate how organisational culture is used at Unilever to enhance and support strategy implementation.
Make use of examples from the case study to support any arguments made.

Note that this question did not ask for an explanation of what organisational culture entails. You were
required to demonstrate you understood HOW organisational culture is used to enhance and support the
chosen strategy (Compass strategy) of Unilever.

Leaders play an invaluable role in shaping and instilling culture in an organisation. Drawing on the work of Edgar
Schein (1992), we see leadership as the main source of the organisation’s beliefs and values. The most central
issue for leaders is to understand the deeper levels of organisational culture and to deal with the anxiety that
sprouts from assumptions being challenged, for example during change programmes. In terms of Unilever strategic
change programme the focus was on making sustainable living an integral part of how it does business. To execute
this strategy successfully it needed to establish, share and reinforce a set of relatively consistent values and
methods of doing business. More specifically, Unilever focused on creating an adaptive and inclusive culture that
promotes performance/winning (winning with brands and innovation, winning in the market place, winning trough
continuous improvement and winning with people).
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Cultures springs from three sources. The values, beliefs and assumptions of the founders of the organisation are
often seen as the most important source of organisational culture. The other sources of organisational culture are
the learning and experience of group members, and new beliefs introduced by new leaders or other members of
the organisation. In terms of Unilever, the CEO Paul Polman is the most important source of the belief that a more
volatile, uncertain complex and ambiguous (VUCA) world makes it more difficult for Unilever to navigate, but this
VUCA trend is also an opportunity if well managed.

In practice, how do leaders transmit and shape an organisational culture that supports its chosen strategy?
Leaders transmit and shape organisational culture by way of embedding mechanisms, structural mechanisms,
symbolic and substantive actions that leaders take, and the use of planned change programmes (See LU 4,
section 4.5.1, pp 56–57.).

In terms of examples from the Unilever case studies of embedding mechanism, these include what the leader
measures, how people are rewarded, how resources are allocated and how Unilever recruits and promotes. More
specifically Unilever measures its size and environmental impact. Unilever also focuses on reinforcing values of
integrity, responsibility and respect. Moreover Unilever rewards on the basis of a performance based structure that
recognises employees who deliver results and have the right values.

In addition to these embedding mechanisms, structural mechanism such as organisational structures and system,
procedures, rituals, stories and statements can be used to shape or instil an organisational culture. In terms of the
Unilever case, Unilever focuses on fewer projects that enhanced margins, actively seeks superior products that
consumer prefer, actively recruits talented people (the “right” people that fit a winning culture) and encourages
employees to grow to their full potential. Furthermore new employees are also likely to adopt these values very
quickly, due to structural mechanism already being in place, which would positively affect goal alignment,
motivation and performance/winning.

In term of substantive actions and statements, the leader also used reporting in Annual Reports, to show progress
made in the strategic plan, and that sustainable ways of doing business have become firmly embedded in all
aspects of the business.

In this section, the main learning point is in an organisational context, collective behaviour is more important than
individual behaviour. Moreover if leadership understands how to transmit and shape an organisations culture that
supports its chosen strategy, it will most likely result in good strategy implementation.

3 THE STRATEGIC IMPORTANCE OF CORE COMPETENCIES, RESOURCES AND CAPABILITIES IN

STARTEGY IMPLEMENTATION

Explain the strategic importance of core competencies, resources and capabilities in strategy implementation. Give
one example of an organisational capability important in strategy implementation.

Sets of competencies, resources and capabilities determine how effectively and efficiently an organisation performs
(Resource Based View). More specifically, an organisational capability is seen as a complex mix of skills,
processes and routines that an organisation has developed to exploit/use resources (capabilities are based on
routinized behaviour). Hence an organisation is more likely to succeed if it has the best resources that are
appropriate for its strategy and more importantly possess the competencies and capabilities to use/exploit the
resource that it possesses or to explore and develop new capabilities or do both.

In practice an organisation may have a large resources base, and individual resources that are superior to other
organisations. However a smaller organisation may still out compete the larger organisation, because the “smaller”
organisation possesses the capability to make its resources work together to confer a competitive advantage.
Individual resources do not confer a competitive advantage. Capability is the essence of superior performance
(Grant, 2010:116).

In terms of types of capabilities, one can identify capabilities as either functional activities or as activities that are
part of the value chain. In terms of the learner guide, dynamic capabilities have been introduced as well. In the
simplest possible terms, a dynamic capability is a capability to create a new capability (organisational learning and
absorptive capacity are examples of dynamic capabilities introduced in the learner guide).

In terms of this module, as a whole, the capability to implement/execute planned strategy is regarded as the most
important capability in strategy implementation. Organisations often lack the necessary mix of skills, processes and
routines (capability) to implement strategic plans (the learning guide introduces the concept of strategy deployment,
which advocates a project management approach to implementing strategy). Hence the capability to implement
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strategy can serve as a source of competitive advantage, specifically if a strategy is unique and difficult to
implement.

4 PRECONDITIONS FOR EFFECTIVE STRATEGIC CHANGE

Evaluate Unilever’s strategic change process. In your evaluation, make specific reference to the preconditions for
effective strategic change (organisational change capacity).

Organizational capacity for change (OCC) is the overall capability of an organisation to either effectively prepare for
or respond to an increasingly unpredictable and volatile environmental context. This overall capability is
multidimensional, and it comprises three ingredients: (a) human skill sets and resources, (b) formal systems and
procedures, and (c) organizational culture, values, and norms. As such, OCC is a dynamic, multidimensional
capability that enables an organization to upgrade or revise existing organisational competencies, while cultivating
new competencies that enable the organisation to survive and prosper (Judge, 2016). More specifically
organisational capacity for change comprises of eight dimensions:

Dimension 1: Trustworthy Leadership. The first essential dimension for OCC is the extent to which an
organization is perceived to be led by trustworthy leaders. A trustworthy leader is someone who is not only
perceived to be competent in leading the organization but also perceived as someone who has the best interests of
the organization as their priority. As such, a proven record of trustworthiness on the part of the leaders is essential
to bring about experimentation with a new order of things

However, a strategic leader or leaders behaving in a trustworthy fashion are not enough; the followers within the
organization must be favorably disposed to trusting their organization. In essence, you also need trusting followers
to be change capable.

With regards to the Unilever case study (Unilever sustainable living plan), the CEO gives the sense that he is
capable and can be trusted to lead Unilever in a direction that is the interest of a much broader set of stakeholders
(the other 99%).

Dimension 2: Trusting Followers. The second key dimension of organizational capacity for change is the overall
level of trust held by the employees of the organization. Trusted leaders are only half of the equation when it comes
to organizational change; the other half is the followers. When an organization is filled with a critical mass of
individuals who are hopeful, optimistic, and trusting, it will be well positioned to experiment with new ways of
operating. When an organization is dominated with a critical mass of individuals who are cynical, pessimistic, and
not trusting, it will not be well positioned to engage with organizational change initiatives.

In terms of the case study a great deal of time is spent on explaining to stakeholders what is being done in terms of
the long term strategy. Unilever actively seeks stakeholders that aligns themselves with the long terms strategy (a
critical mass), as opposed to having a critical mass of speculators that hold a short-term myopic view (short term
view) of why Unilever needs to make profits.

Dimension 3: Capable Champions. Change champions are those individuals within the senior executive group,
the middle management ranks, or both who drive the change initiatives within an organization. These individuals
are often mavericks and they don’t normally fit in well in bureaucratic structures. However, their misfit nature is
exactly what is needed in order to drive change successfully. Within small organizations, these champions are
often the same as the head of the organization. Within medium and larger organizations, these champions are
often drawn from the ranks of middle management. These change champions are often “sponsored” by top
management to spearhead change initiatives.

With regards to the case study, the CEO Pau Polman is the person that is driving/championing the change
initiatives at Unilever. The announcement of the USLP plan is evidence of strategic change, as opposed to mere
incremental change (business as usual). The CEO is not just responding or trying to predict the future, but rather is
focusing on creating a better envisaged future.

Dimension 4: Involved middle management. In many organizations, middle management has been hollowed
out, downsized, and replaced by computers. The remaining middle management group is often uninvolved with the
strategy formation design initiatives. This is a mistake. Middle managers are pivotal figures in shaping the
organization’s response to potential change initiatives, so their involvement is crucial to organisational capacity for
change. When an organization comprises of capable champions and involved middle management, then you have
an opportunity for lateral leadership and effective influence without authority—a key ingredient for making your
organization more agile.

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With regards to the case study, there is no mentioned of the level of middle management, and championing of
change efforts. However to the embed sustainable living plan in all aspects of how Unilever does business, it would
require capable and involved middle management.

Dimension 5: Systems Thinking. Organizations are complex living systems that are not properly understood by
linear thinking and analysis focuses on systems thinking within the organization. Systems thinking, according to
Senge (2006) focuses on how the individual being studied interacts with the other constituents of the system.
Rather than focusing on the individual’s or organizational units within an organization, it prefers to look at a larger
number of interactions within the organization and in between organizations as a whole. In sum, an organizational
infrastructure that promotes systems thinking is another key dimension of organizational change capacity.

With regards to the case study systems thinking is clearly embraced by Paul Polman. The CEO grasps that
organisational systems are open systems and embedded in larger social and environmental systems. Often
organisations are viewed as exploitative of social and environmental systems. However Paul Polman recognises
returns (value captured) are not a trade-off between financial and social or environmental interests. It is rather a
proposition composed of both financial and social interests.

Dimension 6: Communication Systems. When an organization combines systems thinking with high-functioning
communication systems, systemic knowledge is created and dispersed throughout the organization.
Communication systems, is a second infrastructure dimension and one that complements the systems thinking
dimension. This dimension involves such things as e-mail networks, face-to-face meetings, telephone calls, and
corporate announcements all being focused on the conveyance of the value for and the means for implementing a
proposed organisational change. Organisational change requires reflection and action. Too often, there is a gap
between thinking and doing. Consequently, many observers of failed and successful organisational change
initiatives emphasize the importance of communication in order to convert knowledge into action.

There is little evidence of a thinking-doing gap. It is rather the opposite. Several well defined initiatives are
undertaken by Unilever. Results are shown, and Paul Polman reports in his annual report steady progress is made
in implement the Unilever Sustainable Living Plan.

Dimension 7: Accountable Culture. Another term for an “accountable” culture is a “results-based” culture.
Accountable cultures do not focus on how the work is done, but they do help to carefully monitor the outcomes of
results produced. As a result, accountable cultures track whether a deadline was reached or whether the activities
were executed under budget or not, and seek to discern what teams and individuals hindered or facilitated
successful change. Of course, change is inherently unpredictable so there must be some executive judgment
involved with the evaluation of results. However, fostering innovation and change does not mean that innovators
and change agents are given a blank check with no deadlines. In sum, organizational capacity for change is also
dependent on effective reward and control systems.

There is evidence in the case that an accountable and “results-based” culture has been instilled. These include
having outcomes that can be measured, such as reducing material waste and improving margins. Moreover results
are focused on the long term, and a compensation system (an embedding mechanism) has been created that
focuses on the long term. By using these mechanism a results based (winning) culture is transmitted and
reinforced.

Dimension 8: Innovative Culture.

The culture of an organization defines appropriate behavior, and motivates individuals and offers solutions where
there is ambiguity. It governs the way a company processes information, its internal relations, and its values. Some
organizational cultures value innovation and change, while many others value stability and equilibrium. In sum, an
organizational culture that emphasizes the importance of organizational change and innovation is a third
infrastructure dimension that is critical to organizational change capacity. I sum, the culture dimensions of
accountability and innovativeness, help to ensure that the organization efficiently marshals scarce resources while
creatively looking to the future.

There is amble evidence in the case study that Unilever’s culture is adaptive and innovative. Furthermore
implementing the USLP has contributed to growth at Unilever, and new insights were gained that were used to
update the USLP and develop new focus areas. Hence being disruptive to existing ways of doing business, and
innovate new ways of doing business, is seen as necessary to create growth and a better future.

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5 CONCLUSION

Now you can conclude your assignment with a brief overview of the main discussion points. The following is an
example of a conclusion to the assignment:

This assignment considered how organisational culture is used to instil and support strategy implementation, the
strategic importance of core competencies, resources and capabilities in strategy implementation and
preconditions for effective strategic change. Both case studies highlighted that well aligned implementation
components, such as an adaptive strategy-supportive culture and capabilities to implement strategy can lead to
superior performance.

REFERENCES

You should have used the Harvard style of referencing; if you failed to do so you may have been penalised for
using an incorrect referencing format.

Grant, R.M., 2015.Contemporary Strategy Analysis. Eighth edition. John Wiley & Sons.

Judge, W. Q., 2016. Focusing on Organisational Change. Saylor.org/books. Available:

http://open.umn.edu/opentextbooks/BookDetail.aspx?bookId=128

Senge, P.M., 2006.The fifth discipline: The art and practice of the learning organization. Broadway Business.

Schein, E., 1992. Organizational culture and leadership: a dynamic view. San Francisco, CA: Jossey-Bass.

Venter, P (ed.), Jansen van Rensburg, M, Davis, A, Nieuwenhuizen, C, Van Zyl, J, Meyer, J, Singh, C & Brevis, T.
2014. Practising strategy: a Southern African context. Cape Town: Juta.

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3 IN CLOSING

We would like to encourage you to refer to the learning outcomes in the learning units and ensure that you can
achieve them. You are advised to pay special attention to the outcomes you have not yet mastered.

We wish you the best of luck with your MNG3702 studies!

Kind regards

Your lecturer for MNG3702

DEPARTMENT OF BUSINESS MANAGEMENT
Unisa