Significant Problems Encountered in Implementing a New Strategy in a Business
”Strategy is defined as the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out those goals” Chandler(1962)
Strategy is a process and could be considered in fewer than three stages. These are: strategic analysis; this is the stage where through analysis the strategist identifies the opportunities threats, strengths and weaknesses in the environment; the strategic formulation stage, where a choice is made and the strategy implementation stage is the stage where the strategy is translated into action.
Implementing a strategy or strategy implementation is defined as “the translation of strategy into organisational action through organisational structure and design, resource planning and the management of strategic change”.
Analysing the definition, it becomes obvious that strategy implementation is somewhat complex. Therefore, the successful implementation of a strategy would be how well the various components in carrying it out are successfully integrated and interact.
To identify significant problems encountered in implementing a new strategy in a business, a critical look at the components to be applied in implementing the strategy would be a good pointer. These are considered below: Organisational structure and design; and strategy implementation; translating the strategy into organisational action by using the structure of the organization will also be dependent on the type of structure in use in the organization. This is so because the needs of a multinational organization are different from those of a small business . It is also possible that the extent of devolution or centralisation can influence strategy implementation.
For example using a matrix structure which often takes the forms of product and geographical divisions or functional and divisional structures operating in tandem; the time taken for decisions to be made may be much longer than in more conventional structures. The organisational structure and design aspect of the strategy implementation deals with how the human resources in the organization are mobilised and organised to bring about the corporate strategy. The main significant problems encountered through the usage of organisational aspect in strategy implementation is the fact that most of the employees can leave the firm if they feel that they are being ‘used’ in actual fact if they are not motivated. This is particularly so where the CEO or senior management imposes the strategy on the employees.
Another problem encountered here is the way and manner information is passed down or up the ranks. If there is a blockage which impedes the flow of information processes it means that decisions would be made based on outdated or obsolete information. This can be solved by devolving the central command for easy flow of information among all rank and files especially in implementing a new strategy in a business. Recognition must be given to organisational structure and design’s set up where operational and strategic decisions are made, there should be compromise if implementing a new strategy will succeed in any business.
The next aspect in strategy implementation – resource planning sets out resources and competences need to be created. It deals with the identification of resources needed and how those resources will be deployed and controlled to create the competences needed to implement the strategies successfully. This resource configuration is dependent on: protecting unique resources i.e. where a strategy depends on the uniqueness of a particular resource such as patent; and it must be protected; by legal means; fitting resources together, (mix resources to create competence) business process re-engineering (to create a dynamic improvement in performance) and exploiting experience by learning and improving continuously to improve competence.
One of the major problems of strategy implementation as a result of resource planning is a failure to translate statements of strategic purpose, such as gaining market share into critical factors that will make the purpose achievable and ultimately achieved. This a critical success factor analysis can be pursue as a start in resource planning. For example a definite timetable might be needed for an organization trying to introduce, say a new product for Christmas. A detailed examination of the timing has to be done if production and its marketing would be a success; as well as the allocation of funds for this undertaking. The problem here is that due to the non-uniformity in the times needed for the various activities, it is difficult to know where to start.
Scholes et Johnson (1999) writes that the circularity of the problem is quite usual in developing a plan of action, and raises the question of where to start – with a market forecast, an available level of funds, a production-level constraint, or what? The answer is that it may not matter too much where the starting point is, since the plan will have to be reworked and readjusted several times. A useful guideline is to enter the problem through what appears to be the major change area. An organization planning new strategies of growth may well start with an assessment of market opportunity. Someone starting a new business may will begin with a realistic assessment of how much capital they might have available.
Critical path analysis is recommended for strategies which have detailed planning of implementation. Another problem envisaged is the conflict arising among departments on the allocation of funds especially where money is involved in the implementation of the new strategy.
The next component in the implementation stage of the strategy is the management of strategic change. It is widely accepted that strategic change builds on four underlying premises:
1.There is a clear view within an organization of the strategy to be followed.
2.Change will not occur unless there is a commitment to change
3.The approach to managing strategic change is likely to be context dependent.
4.Change must address the powerful influence of the paradigm and cultural web on, the strategy being followed by the organization.
There are two types of change – incremental change-which merely builds on the skills, routines and beliefs of those in the organization, so that change is efficient and likely to win their commitment, and transformational change – which requires the organization to change its paradigm over time. It could be a change in routine (”the way of doing things around here”. It could also be a change in strategy that will necessitate the change. Although the implementation of strategy concerns the changing aspect of organization structure, control systems and resource planning which does affect the day-to-day operations of members of the organization; people’s behaviours and perceptions may not have changed.
To effect a successful strategy implementation, management must also adopt appropriate styles to manage the change processes. For example, it there is a problem in managing change based on misinformation, or lack of information, education and communication style will be used. This involves the explanation of the reasons for and means of strategic change. Collaboration or participation involving those who will be affected by strategic change in the identification of strategic issues; intervention, direction and coercion styles.
Associated with management of strategic change is the problem of change management. It becomes absolutely difficult to manage the change which comes about as a result of the implementation. For example some managers will lose their position as a result of the change (delayering) others might be made redundant as a result of do upsizing others might still lose their job titles or position which they cherished most as a result of business process re-engineering. This will demotivate the staff and the organization may lose some competent staff. Others may have to be retrained to take up new positions or demoted if they are to remain in the organization. This kind of problem can be avoided if management adopts a participatory style of leadership and get the staff involve from the formulation to the implementation stages of the strategy.
In conclusion, it could be expedient to point out that just as there are numerous definitions of strategy, its implementation style might differ and so might its attendant problems and solutions. Nevertheless, since implementation involves the controlling of others behaviours and sometimes perceptions and culture, most problems would be human-related and probably possible solutions would be dependent on management style and behaviour of the leadership in terms of structure and availability and allocation of resources.
What strategy have you put in place in your business to overcome recession and what challenges are you facing in implementing them? Please share your comments below.