What is Strategy Implementation and How To Implement it?

What is Strategy Implementation?

Strategy implementation is the sum total of activities required for the successful execution of the strategy. It is the working of the outlined plans.

Strategy implementation is the process by which objectives, strategies, and policies are put into action through developing programs, budgets, and procedures. – Wheelen and Hunger

Strategy implementation is nothing but the turning of the strategy into action. It involves the translation of strategic thoughts into strategic action.

The translation requires managers and employees to understand the business, feel like a part of the company, and involve in strategy formulation. All these serve as the foundation of the successful implementation of strategies that affect the whole organization.

How To Implement Strategy? The 9 Step Process

The success of a company lies in how it executes its outlined plans and strategies. The following are the essential steps for victorious strategy implementation.

Strategy Operationalization

The first step in process of strategy implementation is the operationalization of strategy throughout the organization. Operationalization links the everyday works of the organization to the strategy.

For strategy operationalization, you can have a number of tools such as annual objectives, functional planning, policies, development of programs, budgets, guidelines, policies, and communication.

Development of Programs, Budget, and Procedures

Programs – The program makes a strategy action-oriented. It should be developed to match the new strategies. The new strategy involves a sequence of new programs and activities. The new programs should not conflict with each other.

Budget – A budget is the quantitative expression of a plan. After programs have been developed, the budgeting process begins. A budget ensures the feasibility of the strategy. It provides the detailed costs of programs.

Procedures – The implementation of a new strategy may demand changes in current procedures. After the programs and budgets are approved, procedures must be developed. They detail the various activities that must be carried out to complete programs.

Manage Conflicts

Conflict is the disagreement between two or more parties on a certain issue. Establishing an annual objective can lead to conflict.

For example, the finance department’s objective of reducing bad debts by 50% in a given year may conflict with the sales department’s objective to increase sales by 30%.

Conflict is unavoidable in organizations, it has both negative and positive aspects. And, negative aspects should be avoided or resolved and vice versa.

Match Strategy with Structure

When a firm changes its strategy, the existing organizational structure may become ineffective. Changes in strategy often require changes in organizational structure. The structure should be designed to facilitate the strategic pursuit of the firm.

Restructuring and Reengineering

Restructuring involves reducing the size of the firm in terms of the number of employees, units, and hierarchies. It is primarily concerned with shareholder well-being rather than employee well-being.

Reengineering is concerned more with employee and customer well-being. It does not affect the structure of the organization. It changes the way of the work process.

Linking Performance and Pay to Strategies

Victorious implementation of strategy demands linking performance and pay to strategies. Salary increases, promotions, merit pay, and bonuses should be closely aligned to support the long-term objectives of the company.

A dual bonus system based on both annual objectives and long-term objectives is becoming common in this regard. Performance-based approaches, not seniority based are followed to cut costs and increase productivity.

Manage Resistance To Change

Resistance to change can be considered the single greatest threat to successful strategy execution. People often resist strategy implementation because they do not understand why the changes are taking place.

A strategy’s successful implementation hinges upon a manager’s ability to develop an organizational climate conducive to change.

Create A Strategy Supportive Culture

New strategies may demand different cultures. Aspects of an existing culture that are incompatible with a proposed strategy should be identified and changed.

Changing a firm’s culture to fit a new strategy is usually more effective than changing a strategy to fit the existing culture.

Evaluation and Control

This involves monitoring organizational performance to ensure that the direction of strategy execution is in the right way. The assumptions about the internal and external environment in which the current strategy is based should be reviewed and the actual performance is measured. Eventually, corrective actions are taken if necessary.

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