Organizations successful at strategy implementation

effectively manage
six key supporting factors:
1. Action Planning
2. Organization Structure
3. Human Resources
4. The Annual Business Plan
5. Monitoring and Control
6. Linkage.

Action Planning
First, organizations successful at implementing strategy
develop detailed action plans... chronological lists of action
steps (tactics) which add the necessary detail to their
strategies. And assign responsibility to a specific individual
for accomplishing each of those action steps. Also, they
set a due date and estimate the resources required to
accomplish each of their action steps. Thus they translate
their broad strategy statement into a number of specific
work assignments.
Organizational Structure
Next, those successful at implementing strategy give
thought to their organizational structure. They ask if their
intended strategy fits their current structure. And they ask
a deeper question as well... "Is the organization's current
structure appropriate to the intended strategy?"
We're reminded here of a client we worked with some
years ago. The company was experiencing problems
implementing its strategy calling for the development of
two new products.
The reason the firm had been unable to develop those
products was simple... they had never organized to do so.
Lacking the necessary commitment for new product
development, management didn't establish an R&D group.
Rather, it assigned its manufacturing engineering group
the job of new product development... and hired two junior
engineers for the task. Since the primary function of the
manufacturing engineering group was to keep the factory
humming, those engineers kept getting pulled off their
"new product" projects and into the role of the
manufacturing support. Result – no new products.

Human Resource Factors(STRATEGIC LEADERSHIP)

Organizations successful at strategy implementation
consider the human resource factor in making strategies
happen. Further, they realize that the human resource
issue is really a two part story. First, consideration of
human resources requires that management think about
the organization's communication needs. That they
articulate the strategies so that those charged with
developing the corresponding action steps (tactics) fully
understand the strategy they're to implement.
Second, managers successful at implementation are
aware of the effects each new strategy will have on their
human resource needs. They ask themselves the
questions... "How much change does this strategy call
for?" And, "How quickly must we provide for that change?"
And, "What are the human resource implications of our
answers to those two questions?"
In answering these questions, they'll decide whether to
allow time for employees to grow through experience, to
introduce training, or to hire new employees.
The Annual Business Plan

Organizations successful at implementation are

aware of their need to fund their intended
strategies. And they begin to think about that
necessary financial commitment early in the
planning process. First, they "ballpark" the
financial requirements when they first develop
their strategy. Later when developing their
action plans, they "firm up" that commitment. As
a client of ours explains, they "dollarize" their
strategy. That way, they link their strategic plan
to their annual business plan (and their budget).
And they eliminate the "surprises" they might
otherwise receive at budgeting time.
Monitoring & Control
Monitoring and controlling the plan includes a
periodic look to see if you're on course. It also
includes consideration of options to get a
strategy once derailed back on track. Those
options (listed in order of increasing
seriousness) include changing the schedule,
changing the action steps (tactics), changing
the strategy or (as a last resort) changing the
objective. (For more on this point, see
"Monitoring Implementation of Your Strategic
Plan.")

Linkage - The Foundation for Everything

Else
Many organizations successfully establish the
above five supporting factors. They develop
action plans, consider organizational structure,
take a close look at their human resource
needs, fund their strategies through their annual
business plan, and develop a plan to monitor
and control their strategies and tactics. And yet
they still fail to successfully implement those
strategies and tactics. The reason, most often,
is they lack linkage. Linkage is simply the tying
together of all the activities of the
organization...to make sure that all of the
organizational resources are "rowing in the
same direction."
It isn't enough to manage one, two or a few
strategy supporting factors. To successfully
implement your strategies, you've go to manage
them all. And make sure you link them together.
Strategies require "linkage" both vertically and
horizontally. Vertical linkages establish
coordination and support between corporate,
divisional and departmental plans. For example,
a divisional strategy calling for development of
a new product should be driven by a corporate
objective – calling for growth, perhaps –- and
on a knowledge of available resources –-
capital resources available from corporate as
well as human and technological resources in
the R&D department.
Linkages which are horizontal –- across
departments, across regional offices, across
manufacturing plants or divisions – require
coordination and cooperation to get the
organizational units "all playing in harmony."
For example, a strategy calling for introduction
of a new product requires the combined efforts
of – and thus coordination and cooperation
among – the R&D, the marketing, and the
manufacturing departments. For more on the
subject of linkage, please see

Culture and Strategy:

Operationalizing Strategy
March 25, 2009

in Human Resource Management

Culture and Strategy:

Operationalising strategy
Nowhere is this concept more important than in
institutionalizing strategy. When an
organization’s culture is consistent with its
strategy, the implementation of strategy is eased
considerably. Kotter and Hesketh’s concept of
“adaptable cultures” is an attempt to build
organizational culture on a foundation of paying
attention to key stakeholders such as employees,
customers, and stockholders, thus ensuring that
the culture can change when the organization’s
strategy must change. It is impossible to
successfully implement a strategy that
contradicts the organization’s culture.
Thus, AT&Ts traditional belief in the
importance of universal telephone service,
which dates from the days of its monopoly, has
been a major stumbling block in the
implementation of its new market oriented
strategy that distinguishes between customers
who need different services. It is only recently,
with the explicit culture change program
introduced by Robert Allen, that AT&T has
began to be more responsive to its customers
and to act quickly when necessary. That AT&T
managers are acquiring the ability to move
quickly was evident in their decision to acquire
McCaw Cellular, a large, nationwide provider of
cellular telephone service.
If strategies set the general goal and course of
action for organizations, operational plans
provide the details needed to incorporate
strategic plans into the organization’s day to day
operations. Operational plans fall into two
general classes. Single use plans are designed to
be dissolved once they have achieved specific,
nonrecurring goals. Standing plans, in contrast,
are standardized approaches to handling
recurrent and predictable situations.
Single Use plans:
Single use plans are detailed courses of action
that probably will not be repeated in the same
form in the future. For example, a rapidly
expanding firm, such as Fresh Fields natural
grocery stores, that is planning to set up a new
warehouse will need a specific single use plan
for that project. Even though the company may
have established a number of warehouses in the
past, the new warehouse presents unique
requirements of location, construction costs,
labor availability, zoning restrictions, and so
forth.
A program is a single use plan that covers a
relatively large set of activities. It outlines (1)
the major steps required to reach an objective,
(2) the organization unit or member responsible
for each step, and (3) the order and timing of
each step. Projects are smaller, separate portions
of programs; they are limited in scope and
contain distinct directives concerning
assignments and time. If the program is to
transfer inventory from one warehouse to
another, one related project might be to evaluate
floor space at the proposed installation. Budgets
are statements of financial resources set aside
for specific activities in a given period of time;
they are primarily devices to control an
organization’s activities, and thus are important
components of programs and projects.
Standing Plans:
Whenever organizational activities occur
repeatedly, a standing plan – a pre-established
single decision or set of decisions can
effectively guide those activities. Once
established such standing plans help managers
conserve time because similar situations are
handled in a pre-determined, consistent manner.
Standing plans consist of policies, rules, and
more detailed procedures.
A policy is a general guideline for decision
making. It sets up boundaries around decisions,
telling managers which decisions can be made
and which cannot. In this way it channels the
thinking of organization members so that it is
consistent with organizational objectives. Your
university has a number of policies, such as
those that dictate the relative importance of
athletics and extracurricular activities vis-à-vis
academic learning and performance. Sega
recently adopted a policy to label the content of
its video games, to warn parents of materials
that may be inappropriate for some audiences.
Some policies have rules built into them –
statements of specific actions to be taken in a
given situation. For instance, it may be a rule
that an athlete with a grade point average below
2.0 cannot be a member of a varsity team. Most
policies are accompanied by detailed
procedures, called standard operating
procedures or standard methods, which are just
a de tailed set of instructions for performing a
sequence of actions that occurs often or
regularly.
Most organizations have some form of policies,
rules, and procedures that help in implementing
strategy in cases where routine action is
required. At the Limited, a specialty clothing
store, standard procedure ensures that customers
get an offer of assistance within the first few
seconds of entering the store. At Wal-Mart, a
discount merchandiser, store procedure requires
that one person greet all customers and smile at
them.
what is your operational strategy and what is it doing
for your company? Is it simply making you a better
competitor? Or is it positioning you for commanding
market leadership? In a volatile environment in which
operations have become a make or break proposition,
more and more leaders are asking these questions.
Today’s Operational CEOs realize that even brilliant
business strategies are destined to fail without the right
operational business strategies to back them up. Our
experience points to five essential ingredients of
operational strategy:
1. Transform Market Forces into Operational
Advantage

Examine the external macro and micro global market

forces shaping the operational context in your business
strategy, including macroeconomic, demographic,
regulatory, technology, competitor, and customer shifts.
Which are putting you on the defensive? How can they be
turned to your advantage? What new arbitrage
opportunities do they introduce? This is the kind of
insight that Black & Decker used to turn a regulatory
requirement for double insulated power tools into a new
modular product platform that redefined cost and
performance in category after category. The same type of
insight helped Progressive Insurance transform
automobile claims from an unproductive part of its cost
structure into a far more economical and valued source of
competitive advantage.
2. Do One Thing Extraordinarily Well

Companies that deliver disproportionate shareholder

value identify the one thing above all others that they do
extraordinarily well, and then execute relentlessly.
Consider the case of Apple iTunes. Its 73 percent share of
the digital music player market is fueled by Apple’s
relentless pursuit of ease of use as a competitive
advantage. Isolate your company’s singular basis of
competition. Some companies focus on product
leadership, and are consistently first to market with the
right new products. Some companies like Wal-Mart are
all about cost leadership, attaining the lowest end to end
operational cost and the highest productivity. Others are
focused on winning based on customer intimacy,
delivering an exceptional total product and service
customer experience. Wherever you choose to play, the
key is to have the discipline of focus in operations
management.
3. Think End-to-End, Continuous, Real-Time, and
Horizontally

Every organization has a set of core operational domains

that make up its operational model. For most, these
comprise some combination of the development chain,
the supply chain, and the customer chain. Operational
business strategies configure these operational domains to
deliver against business strategy, and create a competitive
advantage in their own right.
4. Drive Innovation in Your Operations and Business
Model

Peter Drucker defined innovation as change that creates a

new dimension of performance. He also stated that a key
accountability of the CEO is innovation. Too often
innovation management is perceived to be a technical or
product-oriented activity. The reality is that operations
management innovation is creating the commanding
leaders today. Will you settle for operational
improvement, will you target operational excellence, or
will you set your sights on operational innovation? CEOs
that don’t challenge their organizations to break
operational rules and reward them for succeeding will
ultimately have to settle for less.
5. Execute Relentlessly

A complete operations management strategy requires a

commitment to execution, identifying the critical
programs to integrate efforts and making the necessary
changes in 1) organization and management systems 2)
talent, culture, and leadership, 3) business technology
systems, and 4) process architecture. Our research shows
that companies with commanding leads in their markets
execute relentlessly across all four of these dimensions of
execution, informed by their global marketplace insight,
aligned to a singular competitive focus, emboldened by a
clear innovation intent, and guided by a sound operational
model aligned with business strategy and business
economics.
In the 21st century, companies that make all aspects of
their operations management a source of strategic
innovation will dominate their markets, delivering
unparalleled revenue growth, EBITDA performance, and
shareholder return.

Institutionalizing Strategy
To emphasize systems, style, staff, skills, and super-
ordinate goals, we need to look at how strategy is
institutionalized. An institution is a collection of values,
norms, roles and groups that develops to accomplish a
certain goal. The institution of education, for example,
developed to prepare children to be productive members
of society. To institutionalize a business strategy, business
leaders must also develop a system of values, norms, roles
and groups that will support the accomplishment of
strategic goals. So, strategy is institutionalized if it is
connected to the culture, the quality system, and the
other driving forces in the organization.
We have seen that the drive toward TQM can be
institutionalized. Another aspect of organizational life that
is also undergoing increasing institutionalized is an
emphasis on ethics development. Both shift
organizational attention from detection and control to
coordination and strategic impact. The ultimate outcome
of this shift in focus is an enhanced quality of work
environment for employees and increased quality of
products and services for customers.
The role of the CEO: CASE STUDY
Because chief executive officers (CEOs) spend most of
their time developing and guiding strategy, their personal
goals and values inevitably shape organizational strategy.
For examples, Walt Disney valued family entertainment
and conceived the idea of a “magical little park” that
would amuse and educate both children and their parents.
His vision resulted in Disneyland, which opened in 1955.
Although Disney died in 1966, his values and vision have
continued to shape his company, as evidenced by the
completion of his plans for Disney World (opened in
1971) and Epcot Center (opened in 1982). Usually how
ever a change in CEO is associated with a change in
strategy. Although current Disney CEO Michael Eisner
has continued to develop the theme parks, he has moved
away from Walt Disney’s strategy of offering mainly
G-rated films for children to create Touchstone
Pictures, which offers PG and PG-13 films that appeal to
wider audiences.
Their role in strategy formulation makes CEOs especially
important to strategy implementation. First, they interpret
strategy, acting as final judges when managers disagree
on implementation. Second, CEOs enact through their
words and actions the seriousness of an organization’s
commitment to a strategy. Third, CEOs motivate,
providing intangible incentives beyond pay or bonuses.
By appealing to members’ values, beliefs, and loyalties,
CEOs can mobilize support for a strategy.
Jim Henson and the Magic of the Muppets:
Because the head of an organization can be central to its
direction and culture, an unexpected death such as that of
Muppet-creator Jim Henson can challenge the survival of
an organization. In August 1989, Walt Disney Co. had
announced plans to buy the licensing and publishing
businesses of Jim Henson Productions and give Muppet
creator Jim Henson an exclusive 15 year production
arrangement. While affectionate speculations abounded
concerning a possible love triangle between Mickey
Mouse, the amorous Miss Piggy, and an ever elusive
Kermit, negotiations continued with Disney offering a
reported $150 million to $200 million.
Less than six weeks later, Brain Henson, Jim’s son, was
named president of Jim Henson Productions, and Cheryl
Henson, Jim daughter, was named vice president for
creative affairs. My father had wonderful goals and
wonderful dreams, Brain noted. And that was seen in
virtually everyone in the company. So in some ways he is
still there in everyone. We have lost our focus
temporarily, but we will get that back right away, He is
still there.
Brain recognized the important role his father played as
the provider of the company’s creative inspiration. He
therefore endeavored to protect his father’s vision, while
at the same time, building the company. It is not one
man’s vision, asserted Brain they are a company with a
creative team at the top and his father built a company
around him; He is spreading that.
The greatest challenge for Jim Henson Productions lay in
figuring out how to be creative without Jim Henson.
According to screenwriter Jerry Juhl this translated into
“getting back to center”. You could deal with it
corporately figure out offices and things like that.
But Jim Henson Productions was able to get back on
track. Although the deal with Disney fell through, several
joint projects continued, including a 3-D Muppet film and
live stage show for the Disney theme parks, and Disney’s
video arm introduced the Jim Henson Video label of
Muppet programs on video cassette. In addition, in
December 1992, the company released The Muppet
Christmas Carol, its first feature film project.
Future plans for Jim Henson productions
remain uncertain. This does not indicate
failure. They still do not know where they are
going to be three years from now. But that
was always how it was operated, said Brian.
He constantly wanted to see what felt fresh
what new ideas came along. And then he
would have the courage to try and see if the
new idea worked. In this way, Brian has
carried on the tradition of his father.

Embedding Resource Mobilization

within Core Organizational Strategy
- the MITRA experience
June 2006…
Shalabh Sahai and Rahul Nainwal were reviewing the progress
that MITRA had made in the past couple of years.
MITRA had grown quickly in terms of operations as well as
team strength. As founders, Rahul and Shalabh had managed to
mobilise the funds needed to fuel the organizational growth until
this point, but it was pretty much dependent upon its relationship
with just a handful of benefactors. This growth
could not be sustained if a serious ‘Resource Mobilization
Strategy’ was not formulated for MITRA.
MITRA’s journey…
MITRA (a Hindi word meaning ‘friend’) had evolved
dramatically since its conception in 2000, from an organization
focusing on using information and communication technologies
(ICTs) to bring about change in the social sector to the
present, using people, their skills andexpertise, to make a
significant difference in meeting India’s social and rural
development needs.
. Indian cultural traditions embraced community
volunteering, however, the recent economic boom was leading
to a prospering urban middle class that was dissociated from
volunteering.
So while MITRA began, with the support of a private bank, by
launching an online volunteer matching program with Non-
Government Organizations (NGOs) through an internet portal;
by 2003, it had to switch to a strategy of promoting and
facilitating volunteering through personal counselling.
Tracking Resource Mobilization…
MITRA started with initial funding support from a large private sector
bank in India. The commitment of its founders and the early successes
ensured that the bank’s confidence sustained in MITRA
Writing an objective strategy…
And, people’s skills and expertise when utilized in the right kind of
organizations can make a significant difference in meeting India’s social
and rural development needs.
While MITRA was clear on its future strategy,
It made sense for MITRA to factor in a ‘fee’ for its services.
However, the organization recognized the need for committing to
provide its services to all its constituencies, irrespective of their ability
to bear
the costs. the organization would need to ‘seed’ volunteering at its own
cost, to achieve desirable results. Given the circumstances, it was
realized that a sound
financial strategy, which would draw on all these considerations was
required to be put in
place for MITRA.
Earned Revenues: MITRA would aim to earn 35% of its annual
budget through
revenues from services. This would ensure that services are perceived as
valuable to
the customers – individuals, NGOs and institutions, while operations are
efficient
enough to be competitive. The scope of growth would also not be
limited by
availability of funds from other sources.
Program Grants: MITRA would conduct programs such as
fellowships and
workshops to invest in creating capacity within the civil society to adopt
volunteering
as a formally organized process. Such programs would look for external
funding
support and would comprise 35% of the budget.
• Corpus Funds: MITRA should be able to continue its core volunteer
placement
services independently. The organization believes in testing potential
and innovative
projects. Therefore, to provide for these, it would create a corpus fund
through
endowments. Income from investment of corpus funds would contribute
another 30%
of the annual budget dedicated to these services.
Institutionalizing the strategy…
As thoughts progressed, certain things became clear to Shalabh and
Rahul. The financial
model would need to be embedded into the veins of MITRA. And the
veins were its people and culture.
MITRA had attracted people from a variety of backgrounds into its
fold. There were people with post-graduate degrees in social work
from premier institutes in India and there were others from corporate,
management and software industries. For long, however, the program
teams had been oblivious to the organization’s finances. Moreover, the
feeling in the organization was that MITRA was a charitable entity
giving out ‘free services’ to the target constituency. But if the likes of
revenue services were to be rolled successfully, the entire
team would need to take burden. Thankfully, the team was young,
vibrant and passionate about their work and MITRA. There was an
opportunity to create team involvement in the resource
mobilization strategy and this began in right earnest after June 2006.

The process unfolded as detailed below, in moving from a founder

driven thinking / fund-raising mode to an organizational way of
thinking and working.
Building team stakes
Between July 2006 and July 2007 MITRA conducted two internal
workshops for its employees with an objective to involve the core team
in Resource Mobilization, reflecting the changed organizational
strategy.
The workshops reviewed past performance sharing it with
the entire team. Each member addressed the group laying out the
program / centre specific achievements along with the challenges. The
senior management laid down, thread bare, the funding sources along
with the program specific utilization of allocated funds, broken down
into major heads. This brought the team to a common understanding
of the resources available and utilized in the past.
An early voice of protest from employees, “We want better
salaries”; actually turned out to be an echo of support, “Let us
contribute to the organizations’ income so that it is able to pay us
better”. It’s a great relief to RAHUL and his friend!
The senior management introduced to the team the vision ahead and
laid down the broad goals for the year ahead. The entire team felt very
close to the innermost working of the organization and were able to
relate to the objectives and the challenges better.
New structure, fresh outlook
With people on its side, the next step was to achieve operational
efficiency. Owing to quick organizational growth, staff in each
program reported directly to either Shalabh or Rahul.
Further, both of them shared the responsibility for fundraising for all
the programs together.
Attempts had been made to structure the team into regional units
based upon location. Each region comprised of staff that worked on
different programs (though sometimes a single staff member may be
handling more than one program in her/ his location).
The idea was to create a matrix structure with regional managers
alongside program managers. However, the results
were not that encouraging. It seemed that hierarchies were being
added without much operational benefits.
For a small organization of 16-18 people, it was also a complex
structure.
To make things simple and more efficient, a new structure comprising
program units was developed in place of the existing structure. The
‘National Volunteering’ unit was created,
comprising of existing staff from iVolunteer Service Centres in Delhi,
Mumbai, Bangalore and Chennai. The unit was made responsible for
facilitating local volunteering and employee volunteering in their
respective regions and was headed nationally by a Program Manager.
The ‘Fellowship’ unit was made responsible for the iVolunteer India
Fellow and iVolunteer
India Fellow Professional programs and any other initiatives
launched on similar lines. The kij; unit was headed by a Program
Manager – Fellowships. The iVolunteer Overseas program
was already functioning as a separate team. A new position was
created called ‘Manager – International Volunteers’ to give a push to
the program that had a ready market and potential for high revenues.
An analysis of potential sources of funds for its different programs
revealed that the corporates were seen as potential funders as well as
clients for several programs and services.
It made sense to have a single interface for all corporate relations.
Further, the organization needed to revamp its image and aggressively
market some of its programs and services. To address these needs, a
new position of ‘Manager – Corporate Relations & Marketing’ was
added.

Goal Orientation
Once the organization was structured into distinct program units, it
became easy to allocate costs to each of the programs as a cost centre.
Transparency of costs led the managers to adopt financial goals along
with the operational goals.
For example, the corporate relations
Manager was now familiar with the costing structures of the national
volunteering team. servicing the clients. At the same time, the national
volunteering team was able to understand the perceived value of their
services and was driven to improve operational efficiencies.
Performance linked incentives were introduced for the entire team.
People liked their job.
Monetary incentives enhanced their motivations. People were also able
to see a growth path
for themselves in the new organizational structure. Efforts were also
undertaken to assess and address the training needs of the teams.
would ensure long-term sustainability of the program.
MITRA was now rolling out recruitment services to provide full-time
staff for its partner
NGOs (based upon a long pending demand). Thus, two new verticals –
www.JobsForGood.com and www.MicrofinanceJobs.com – launched in
2007, began
targeting the social sector and the micro-finance sector job markets
respectively. The
organization was clear that the new initiatives would have to earn their
own money. In the
long term, it also envisaged investing profits from recruitment services
to fund its core
volunteering services. By November 2007, the recruitment initiatives
were able to cover their
costs, earning about Rs. 250,000; equivalent to approximately US$
8000, in revenues.
The founders worked with their long-term corporate benefactor to secure
a one-time corpus
endowment. They impressed upon this partner that the new financial
model that would
sustain the organization in future. A corpus endowment would fund
some of the core
organizational activities and also act as a ‘show of faith’ in its mission,
they reasoned. Efforts
yielded in a seed endowment for the corpus funds of MITRA.
Learning and Challenges
In October 2007, Shalabh discussed with Rahul the progress that
MITRA had made since
their conversation at Rahul’s home more than a year ago. Progress had
been encouraging.
They had learnt that an organization like theirs could attain sustainability
only by embedding
resource mobilization as an important element in the organization’s
operational strategy and
vision.
The key challenge had been to convince the key stakeholders in the
organization, employees
and clients (volunteers, corporates and non-profits) that, the revenues
linked to the services
are key to the sustainability of the services themselves.
More so, building revenues into its operational model simply changed
the organization’s thinking process. It now evaluated each new and
existing service not only in terms of the value it added to India’s social
development but also in terms of identifying who was willing
to recognize the value and pay for it. The team was now driven by
MITRA’s mission of “enabling people to bring skills and expertise to the
social development sector in India” and also understood that
sustainability was an important yardstick in the organization’s efforts in
doing so. Promising team members were elevated to managerial
positions in the new unit-based structure. This had multiple effects. The
promoted members felt recognized and soon
exhibited their professionalism in the way they took charge of their
units. The new positions
and responsibilities showed the entire team that the management
believed in sharing responsibilities and growth of the MITRA team. For
the management, it was simply creating a second line of leadership.
The team realized that if it was difficult to convince more people
(funders and paying clients) about their services, then the services
themselves needed a re-think – were they actually serving a purpose or
was it just the MITRA management that thought so. It realized that
building revenue streams allowed the organization a certain degree of
independence to pursue the programs it really believed in, independent
of the funders.
MITRA also learnt that the grant support from the corporate sector was
not a steady stream. Moreover, matching the program objectives and the
methodology was not always possible
with most corporates. At the same time, the corporate focus on finances
often helped the organization think through their programs for financial
sustainability. Shalabh and Rahul agreed that these were still early days
for a young organization and a process that had just begun. They were
happy that MITRA’s board continually guided them.
This time they had met across the conference table in MITRA’s head
office. Though, in the evening, they rode Rahul’s Royal Enfield to a city
café to discuss some more.