Wednesday, April 20, 2011

Challenges in Measuring Strategy Implementation (Week 6, blog 5)

One article in this week’s readings "From Strategy to Implementation-Seeking Alignment" 6 major elements for successful implementation: People, incentives, supportive activities, organizational structure, culture and leadership.

With all his arguments about how those 6 elements aligned with the strategic goals and to each other making perfect sense, I start to wonder, how can we know if the implementation is good or not? What makes the implementation a success?

We can find all kinds of arguments talking about ways to ensure a better strategy implementation process. Some suggested tying the result with some rewards. Some others mentioned the adept leadership to communicate and convince all employees about the benefits of the new strategy. Overall, the main idea can be summarize into “include the whole organization into the implementation process”.

Even with the right people who have right skill sets, enough incentives for them to implement the strategy, effective supporting activities within the company, communicational-friendly organizational structure, supportive culture and powerful leadership, is it still possible for the organization to fail in the implementation? Or furthermore, how can we define a good implementation? Does a good implementation means stick to the original strategies? What if the strategy itself is flawed? Should the people who are responsible for the implementation keep on doing their job without questioning the strategy? Does a good strategy means a good execution? For example, our strategy is to increase the revenue by implement this new IT system. But in the end, how can we determine how much of the increased revenue is attributable to this IT system?

Fortune Magazine stated that “Less than 10% of strategies effectively formulated are effectively executed.”, and according to R. Kaplan and D. Norton, “90% of well-formulated strategies fail due to poor execution[1]”. Why is strategy execution so hard? The answer, according to Edward M. Gurowitz, “lies in the way the nature of business has changed in the past 30 years[2].” And referring to the shift from value based in tangible assets to value based in intangible assets, he points out that back in 1980s, most of the market value of companies could be attributed to tangible assets, and as time went by, more and more knowledge-based economy and services-oriented companies appears and changed the ratio to a further shift that most of the market value can be attributed to intangible assets. And such moves make the whole” measuring the performance” part even more difficult, and therefore, so is the management within the implementation process of the overall strategy.

With those been said, here comes my question, how can we measure the strategy implementation? What are some criteria?

[1]R. Kaplan and D. Norton, Harvard Business School Press, The Strategy-Focused Organization, 2001

[2] Edward M. Gurowitz, The Challenge of Strategy Implementation,

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