Overcoming Obstacles to High-Level Strategy Implementation
Having a well-defined strategy is essential for
organizational success. Even so, undertaking the effort to develop a high-level
organizational strategy is meaningless if the company is unable to successfully
implement the strategy in a meaningful way. This blog post addresses potential
obstacles that prevent the successful implementation of high-level strategy in
an organization, followed by the presentation of methods and solutions that can
be used to circumvent these obstacles, and implement the strategy successfully.
Obstacles to Strategy Implementation
A
study named “Factors Affecting Poor Strategy Implementation” by Muh. Darmin
Ahmad, Ujang, Arief, and Kirbrandoko (2013) outlined seven major areas that had
the potential to interfere with the successful implementation of corporate
strategy in an organization, which include the corporate scorecard, key
performance indicators, information technology, competence, performance
appraisal, strategy management office, and financial capability. The corporate
scorecard, key performance indicators, and performance appraisal are considered
factors that have the capacity to interfere with the actual implementation of a
corporate strategy, while information technology, competence, strategy management
office, and financial capability are considered organizational capabilities
that, if underutilized or utilized improperly in strategy implementation, can
reduce the potential for strategy implementation success (Muh. Darmin Ahmad,
Ujang, Arief, & Kirbrandoko, 2013).
Strategy Implementation Missteps
A
corporate scorecard is a created by a company board of directors to assist in
measuring company progress toward achieving its mission statement (Muh. Darmin
Ahmad et al., 2013). A potential difficulty in creating an effective corporate
scorecard in the first place occurs when board members do not have the
expertise or relationships with upper management to sufficiently contribute to
long-term corporate strategy (Bordean, Borza, & Maier, 2011). Even if the corporate
scorecard is well-designed, it will still be unhelpful if the strategy
achievement requirements are not successfully communicated to the rest of the
employees in the organization through the form of key performance indicators,
which are targets that guide individual employees toward contributing to the
high-level corporate strategy through their day-to-day activities (Muh. Darmin
Ahmad et al., 2013). In addition, when key performance indicators are not
translated into employee performance objectives, or these performance
objectives do not correspond with individual compensation, successful strategy
implementation is negatively affected (Muh. Darmin Ahmad et al., 2013).
Strategy Implementation Support Missteps
First,
the lack of a sufficient information technology (IT) system creates obstacles
to the successful implementation of corporate strategy, due to the integral
role IT plays in streamlining business processes (Muh. Darmin Ahmad et al.,
2013). Second, a lack of competence by employees, specifically a lack of
training and education in how to successfully implement strategy, also plays a
large role in high-level strategy implementation issues (Muh. Darmin Ahmad et
al., 2013). Third, the absence of a strategy management office can cause
strategy implementation to fail, due to insufficient oversight by this business
unit tasked specifically with tracking organizational progress toward achieving
the corporate strategy (Muh. Darmin Ahmad et al., 2013). Finally, a lack of
financial support for business activities related to the implementation of
high-level organizational strategy will reduce the chances of strategy
implementation success (Muh. Darmin Ahmad et al., 2013).
Overcoming Strategy Implementation Obstacles
Before
attempting to implement a high-level organizational strategy, a company needs
to overcome the strategy implementation obstacles mentioned above. A first step
is to identify and resolve potential shortcomings in the business strategy
support infrastructure. A company with out-of-date IT systems must allocate
sufficient financial capital to the IT budget for needed upgrades that automate
manual business processes, therefore eliminating IT as an obstacle to
successful strategy implementation (Muh. Darmin Ahmad et al., 2013). In
addition, an organization must designate a specific business unit or group as
the strategy management office, and provide this group with the financial
resources, personnel, and influence to be able to track and aid in company
progress toward the high-level strategy. Employee competence regarding
corporate strategy implementation must also be considered, and financial
support for employee training regarding how to implement corporate strategy
must be undertaken.
Once
these major organizational support obstacles have been overcome, the company
can focus on successfully implementing its high-level strategy. The top
management team of a company, along with the company board of directors, must
create a corporate scorecard that aligns the achievement of company goals to
progress toward achieving the corporate strategy. The top management team must
then cascade these goals down their management chains into key performance
indicators that, when achieved, contribute toward the achievement of the
high-level corporate strategy. Finally, it is essential that these key
performance indicators are established at an individual employee level, and are
tied to employee performance appraisal to create sufficient motivation for
employees to contribute toward the fulfillment of the high-level organizational
strategy. Increased compensation of high-performing employees compared to that
of low-performing employees has been shown to increase employee commitment
toward achieving corporate strategy, meaning that companies should embrace
performance-based compensation.
By addressing potential obstacles that prevent the
successful implementation of high-level strategy in an organization, as well as
by implementing methods and solutions that can be used to circumvent these
obstacles, companies will significantly improve their ability to successfully
implement high-level corporate strategies.
References
Bordean, O.,
Borza, A., & Maier, V. (2011). The involvement of boards in strategy implementation. Review
of International Comparative Management / Revista De Management Comparat
International, 12(5), 986-992.
Muh. Darmin
Ahmad, P., Ujang, S., Arief, D., & Kirbrandoko. (2013). Factors affecting
poor strategy implementation. Gadjah Mada International Journal of
Business, 15(2), 183-204.
