THE STRATEGY CONCATENATION

INDIAN INSTITUTE OF MANAGEMENT RAIPUR

-INTEGRATING FORMULATION WITH IMPLEMENTATION

Group 6 - Lokesh H (11PGP021) - Malla Santosh Kumar (11PGP022)

- Mayank Raizada (11PGP023)

- Mehul Bardia (11PGP024)

9/21/2012

The Problem
2

Strategy Formulation

Strategy Implementation and Control

Water-tight

compartmentalization

between

strategy formulation and strategy implementation.

Formulation is never the problem so far as

strategy is concerned, implementation is.
INDIAN INSTITUTE OF MANAGEMENT RAIPUR 9/21/2012

The Theory of Business

3

According to Drucker, every firm has a theory of business a set of

assumptions about the external environment, the specific mission and the
core competencies.

The difference between successful and unsuccessful companies is the difference between valid and not so valid theories of businesses.

Valid theories of business must pass the following tests: 1. They must fit reality 2. They must fit one another 3. They must be communicated throughout the organization, and 4. They must be tested constantly.
INDIAN INSTITUTE OF MANAGEMENT RAIPUR 9/21/2012

The Framework
t=1 C1 C2 C3 C4 t=0 C1 O2 C2 O3 C3 O4 C4 O5 C5 O5 O4 O3 O2 t=0 O1 t=1 O1

O6
O7 IMPLEMENTATION GAP FORMULATION GAP

The Framework
5

Opportunities may be unlimited, but competencies are likely to be limited

(Prahalad).

There need not be a strict one-is-to-one correspondence between competencies and opportunities (3M and Sony).

Between the two, the opportunity vector is likely to change first. Competencies tend to be more sticky to the stable states (Rent Seeking Behavior).

Once the Opportunity vector changes, there will have to be changes in the competence vector, which will involve either dropping of competencies or creating new competencies (Strategic alliances; Joint ventures; Mergers and acquisitions).
INDIAN INSTITUTE OF MANAGEMENT RAIPUR 9/21/2012

The Formulation Gap

6

Mintzberg identifies three fallacies that lead to inappropriate formulation: The fallacy of prediction:

not recognizing environmental changes acting on the wrong uncertainty level assumption of the core competencies do not fit reality, the typical, it can never happen to us reaction this is our business, let us stick to it assumption that numbers are sacrosanct wrong assumptions of specific mission
INDIAN INSTITUTE OF MANAGEMENT RAIPUR 9/21/2012

The fallacy of detachment:

The fallacy of formalization:

The Implementation Gap

7

Implementation gap is a result of inconsistence between the following three components :

Competency-mission gap Competency-environment gap Mission-environment gap 1. Organization structure and relationships 2. Organizational processes and behavior 3. Role of leadership

Barriers to Implementation

Strategy Stoppers

1. 2. 3. 4. 5.

Structure Systems Culture Ethics Leadership

9/21/2012

INDIAN INSTITUTE OF MANAGEMENT RAIPUR

Strategy Stoppers
8

Structure:

It becomes a strategy stopper primarily as structure introduces rigidity.

Since any change process involves stretching the organization, the rigid structure introduces a counter force to the change process. Organization Structure also has a role to play in the formulation of strategy It represents the internal processes in an organization. Systems can be of two types, formal and informal. The formal systems do not pose too much of a threat to the implementation process: they are well recognized. The tendency of informal systems to create parallel organizational structure becomes an important constraint in the implementation process as sometimes they act as invisible walls.
INDIAN INSTITUTE OF MANAGEMENT RAIPUR 9/21/2012

Systems:

Strategy Stoppers
9

Culture:

These are the systems and values that are embedded in the fabric of the organization and are not easily amenable to change.
The three levels of culture (universal, collective and individual) can have different implications so far as the implementation of strategy is concerned, and can raise different level of resistance.

Ethics:

It is the practice of moral principles, and these moral principles depend on values. It is important to realize that these values are a vector: they have direction and intensity.

Ethical constraints encompass all organizations, especially as ethics are not defined at the organizational level, and then to be more individual specific.

INDIAN INSTITUTE OF MANAGEMENT RAIPUR

9/21/2012

Strategy Stoppers
10

Leadership:

Appropriate leadership is critical to the success of the implementation process.

There are four components of the role of leadership that have a bearing on the success of the implementation process. Envisioning: every leader needs to have a vision: a dream; a central idea that takes the organization on a defined path Strategizing: it is not enough to dream, every dream has be converted into reality. Thus visions need to be broken down into objectives and goals, and the way we map the present situation into the future is by the process of strategizing.

1.

2.

3.

Communication: Visions and strategies need to be communicated. The communication must result in a two-way negotiation..
Empowering: Every leader needs to stress that the organizations bigger than him. Thus succession planning becomes an important function for any leaders.
INDIAN INSTITUTE OF MANAGEMENT RAIPUR 9/21/2012

4.

The Integration
11

For strategy to success there has to be both successful formulation and successful implementation. To minimize the risk of formulation failure: Organization needs to minimize the gap between the assumption and reality To minimize the risk of implementation failure: Organization needs to minimize the gap between the different components of environment, specific mission, and core competency

INDIAN INSTITUTE OF MANAGEMENT RAIPUR

9/21/2012