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The challenges of implementing strategy

 

Advances in Project Management Series

SERIES ARTICLE

By Kurt Verweire, PhD

Belgium

 



Strategy implementation is a hot topic today. Managers spend billions of dollars on consulting and training in the hope to create brilliant strategies. But all too often brilliant strategies do not translate into brilliant performance. Strategy implementation ranks high on top managers’ agendas but is a topic that has not received sufficient attention in the academic world. It seems like academics assume that if a firm has a strategy, it gets implemented automatically. But talk with managers and most will admit that their organization is experiencing significant problems with translating their strategy into concrete activities and results.

Why do so many companies struggle with strategy implementation? And what can be done about it? In this article, I first present five root causes why strategy implementation is so hard. Some of these root causes deal with the quality of the strategy itself, the others deal with the topic of implementation. Then, I present a new model that tackles many of these issues. This model consists of three building blocks and is called the Strategy-Alignment-Commitment model. The article zooms in on each of the three building blocks and provides useful suggestions how to increase the success rate of your strategy implementation programs.

WHY DO STRATEGY IMPLEMENTATION INITIATIVES FAIL?

In my discussions with managers who struggle with strategy implementation, I have discovered that there are five root causes for an unsuccessful strategy implementation:

Too much focus on financials in strategy discussions. Strategy implementation only succeeds if a company has a well-formulated strategy in the first place. In reality, however, few companies have a genuine strategy. According to Michael Porter – one of the most influential writers in the field – managers often rely on a flawed definition of strategy.[1] For example, managers confuse strategy with aspiration. How many times have we heard or read: “Our strategy is to be #1 or #2 in that particular industry,” or “Our strategy is to grow shareholder value by 30% in the next three years.” But those statements are not strategies – they’re goals or aspirations. These statements say what the company wants to be or achieve, not how it will get there. Goals are important, but they do not substitute for strategy. Great strategies provide guidance and coherence to the organization, financial goals, unfortunately, do not!

Functional strategies are no substitute for a business strategy. One of the major reasons why it’s difficult to reach consensus on a clear business strategy is that the focus in many organizations is on the development of functional strategies. Companies have a strategy for operations, for sales, for marketing, for HR, and so on. But the more you break strategy up into various functional strategies, the less likely you will have a winning business strategy. There is a great risk for sub-optimization and conflicts among departments over resources and conflicting goals.

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Editor’s note: The Advances in Project Management series includes articles by authors of program and project management books previously published by Gower in UK and now by Routledge worldwide. Information about Routledge project management books can be found here.

How to cite this article:
Verweire, K. (2018). The challenges of implementing strategy, PM World Journal, Volume VII, Issue 5, May 2018. https://pmworldjournal.net/wp-content/uploads/2018/05/pmwj70-May2018-Verweire-challenges-of-implementing-strategy-series-article.pdf



About the Author


Kurt Verweire, PhD

Belgium




Professor Kurt Verweire
obtained his PhD at Erasmus University Rotterdam in 1999. He is Associate Professor Strategic Management and Partner at Vlerick Business School. He is also Programme Director of the MBA-FSI programme, a general management programme that is entirely focused on the financial services industry. His research interests include formulating and implementing winning business strategies, performance management and change management, and corporate strategy. Current research projects address how firms have to position themselves in the market, and how to create alignment and commitment within the organisation. Many of his research projects deal with financial services organisations.

Prof Verweire is the author of the book Strategy Implementation published by Routledge in 2014.

 

[1] [email protected] (2006) “Michael Porter Asks, and Answers: Why Good Managers Set Bad Strategies,” November 1, http://knowledge.wharton.upenn.edu/article.cfm?articleid=1594.