Lecture 21-22 Strategy Implementation.pptx - Strategy Implementation The McKinsey 7S Framework The Nature of Strategy Implementation The greatest

Strategy Implementation The McKinsey 7S Framework

The greatest strategy is doomed if it’s implemented badly. Successful strategy formulation does not guarantee successful strategy implementation . Less than 10% of strategies formulated are successfully implemented! The Nature of Strategy Implementation • Implementation may fail due to: – Paying too much for a new acquisition – Not recognizing benefit of computers in managing information

Formulation vs. Implementation • Formulation focuses on effectiveness • Implementation focuses on efficiency • Formulation is primarily an intellectual process • Implementation is primarily an operational process • Formulation requires good intuitive & analytical skills • Implementation requires special motivational & leadership skills • Formulation requires coordination among a few individuals • Implementation requires coordination among many individuals • Formulation focuses on effectiveness (doing the right thing) • Implementation focuses on efficiency (doing the thing right)

• Altering sales territories • Adding new departments • Closing facilities • Hiring new employees • Cost-control procedures • Modifying advertising strategies • Building new facilities Nature of Strategy Implementation Implementation Activities • Varies among different types & sizes of organizations

• Shift in responsibility Nature of Strategy Implementation Management Perspectives Division or Functional Managers Strategists

Management Issues Management Issues Resources Organizational structure Restructuring Annual Objectives Resistance to Change Production/Operations

Management Issues Purpose of Annual Objectives --  Basis for resource allocation  Mechanism for management (e.g. IT management) evaluation  Metric for gauging progress on long-term objectives  Establish priorities (organizational, division, & departmental) Resources Org structure Restructuring Resist. to Change Prod/Ops Annual Objectives Resources Organizational structure Restructuring Annual Objectives Resistance to Change Production/Operations

Management Issues Requirements of Annual Objectives  Measurable  Consistent  Reasonable  Challenging  Clear  Understood  Timely Resources Org structure Restructuring Resist. to Change Prod/Ops Annual Objectives

Management Issues Annual Objectives Should State  Quantity  Quality  Cost  Time  Be Verifiable Resources Org structure Restructuring Resist. to Change Prod/Ops Annual Objectives

Management Issues Resource Allocation enables resources to be allocated according to priorities established by annual objectives. However it may cause conflict. Is this good or bad?