From Plans To Actions Introduction - Strategic Management

The aim of this chapter is to show that strategic decisions result from a mix of analytical and behavioural drivers (the best results come form a blend of both). The chapter is supported by recent research findings on why strategic plans so often are not converted to action.

Figure looks at the planning process in a different way from the models used so far. What it shows is that there are two aspects to strategic management: analytical and behavioural. So far we have looked deeply into the analytical, although with occasional forays into the behavioural. However, it is clear that when we begin to think about turning plans into action, we have to give attention to both.

two-dimensions of strategic decisions

Although there has been considerable research into the success and failure of planning systems, much less attention has been given to the implementation of strategy. Bomona suggests that when a company finds that its strategy has not produced the right outcome, it is as likely to assume that the strategy is wrong as it is to recognise that the problem may have been a failure to implement. This often leads to a change in a perfectly appropriate strategy, which is hardly the way to effective strategic management. When considering the implementation of strategy, we should remember that we are really looking at an aspect of something that may be much broader: the implementation of strategic change.
Alexander researched the problems which American companies found when implementing strategy, and later extended this to public agencies. The ranking of the factors in each study is shown in Table. However, the important fact is not only the problems themselves but the fact that more of them related to issues of culture, structure and human behaviour than to analysis and formal system. Kaplan found that many organisations have a ‘fundamental disconnect between the development and formulation of their strategy and the implementation of that strategy into useful action’. Four major barriers to effective implementation were identified:

  • Vision that could not be actioned, because it was not translated into operational terms
  • Strategy is not linked to departmental and individual goals (incentives are tied to annual financial performance instead of to long-range strategy: only 21 per cent of executive management and 6 per cent of middle management have objectives that are tied to the strategy)
  • Resource allocation is based on short-term budgets and not the strategy (only just over a third of organisations have a direct link between the strategy and the budgeting process)
  • Control is directed at short-term performance and rarely evaluates progress on long-term objectives.

Strategy-implementation

The wise planner will incorporate a number of steps into the planning system. These will be intelligent steps, which allow for the consideration of deviations from the plan which should be made in the best interests of the company. No manager should be expected to slavishly follow a plan to the letter, when events or further analysis shows that the action is no longer appropriate. The plan should be the slave of the manager: horrific results may occur when the opposite is true. Some of the particular steps recommended are ‘planning’. Others are very much ‘control’. Conceptually it is possible to distinguish between the two. In this instance, as the object is to show how a total approach may be used to bring about theimplementation of plans, an overall view is taken of a complete system. The steps may be divided into seven essential and one optional, which may be used as an alternative to one of the essential steps. They are:

  1. Conversion of long-range plans into short-range tactical plans
  2. Assignment of tasks to individuals (standards of performance)
  3. Budgetary control
  4. Monitoring performance against plan
  5. Monitoring assumptions
  6. Updating and reconsideration of plans as required
  7. Yearly report on planning activity

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Strategic Management Topics