The Strategy
Challenge
Communication in organizations
I. INTRODUCTION
TO THE CHALLENGE OF STRATEGIC DECISION-MAKING
A. The Concept of Strategy
Getting
from A to B
The idea of strategy,
reduced to its basic elements, refers to the ends and means chosen by decision-makers to
get from point A to point B.
The starting point A
could be a physical location, a stage in the life of a organization, a set of difficult market
conditions or an opportunity. The ending point
B is the desired end state, the goals that they want to achieve, the reaching of an
important milestone. While such a depiction
seems very simplistic, it is in studying simple ideas that fundamental concepts and
principles that guide actions really lie. Let
us look for example at the assumptions we often and readily make about getting from A to
B.
Some Working
Assumptions
§
A is a fixed starting
point.
§
B is a known and a
valued place or state to be.
§
There is no alternative
C.
§
The path of the arrow
is known and direct.
§
We are capable of doing
what is required to get down that path.
§
The decision-makers
are rational.
§
A is in the present, B
is in the future.
§
B is better than A.
§
B stays the same while
we are on the path.
§
We do not change while
on the path.
§
Nothing will block the
path or get to B first and prevent our arrival.
Now suppose you begin
to alter these assumptions and create a dynamic situation where all of the conditions of
the A-to-B problem begin to change. Suddenly
with change, there is uncertainty. With
uncertainty comes risk in taking actions. Risks mean potential losses, costs or pain. There are at the same time no guarantees that the
effort down the path will get you to B. With
these new uncertainties, there is resistance to change or movement with more careful
consideration. We decide to take more time
before we move to the next step. We might also
lower our expectations regarding the desirability of B.
We might take smaller steps and even a few steps backwards. We might start looking to others for help. And we start to doubt our leaders whose idea it was
to go down that path in the first place! This
is the case of a organization, for example, that has been in a protected market or is a
monopoly and finds that its project/programme purpose environment is suddenly and radically changed by a
new technological innovation, a changed political economy or a now contested marketplace. When this happens, all that they knew about getting
from A to B is in doubt and a new way of getting from A to B has to be figured out. In short, they see that going from A to B is no
longer such an easy thing to do.
Theory and Action
Theory and action are
fundamentals in the A-to-B problem. The point
here is that for action to be taken, for a strategy to be figured out and realized, the
decision-maker needs to have a theory of the situation.
No leader takes action without a theory and no one theory serves all
action decisions. Yet a problem for strategy
often lies in the fact that decision-makers may not have good theories, or they have
incomplete theories, or have a good theory that they cannot explain or communicate well,
or maybe they believe that action comes first and explanation comes later! Whatever the situation, theory comes first and the
development of a strategy theory is based on good thinking and working knowledge of the
A-to-B problem. Thus a strategic leader must
clarify and make critical assumptions, must create a model for the decision situation,
develop a flexible plan for action, must have control over critical resources and people,
must know how to execute that plan and should know when the plan has been achieved.
The Five
Elements of Strategy
Strategy has five
fundamental elements. All strategic planning
models, normative and actual, implicitly follow these five elements. They are seen in the figure below:
Figure 2: The Five Elements of Strategy
Ideas are the
starting point of strategy. Someone has a
thought, a dream or a notion about how to do something in the real world - create a
product, add a new service, build a new project/programme purpose, expand operations. The idea is the beginning of a theory of strategy
action. It is about taking something in the
head and making it happen in the real world.
Analysis is an
activity of investigation. For an idea to
become reality, the decision-maker must understand the nature of opportunities that might
help it come to fruition. He/She must also
know what the barriers to success are and what conditions or situations may serve as
threats to success. Analysis also involves
looking at the decision-makers themselves in terms of capabilities and competencies they
possess. These represent strengths and are an
indicator of probabilities of success. Likewise
the decision-makers possess liabilities and problems and may have records of failures, all
of which represent weaknesses that can influence the probabilities of success in a
negative direction. Thus analysis represents a
stage of getting a fuller understanding of the decision situation.
Analysis is assisted
by various forms of quantitative and qualitative techniques that help to spell out the
relative importance of key variables in the decision theory.
These techniques allow the decision-maker to model a decision situation, to
perform value tradeoffs, to rank and rate options, and to create comparative valuations of
different opportunities. With computers, much
of this analysis is semi-automated and is often part of regular internal studies and
performance reports.
Options represent
possible paths that an idea can take to becoming a reality.
More than one option is necessary in order to compare the relative merits of
ideas and create a healthy competition between them. Options
can be presented as simple choices or as complex scenarios that detail the issues
involved. Options also force the
decision-maker to be conscious of the logic of the arguments they make. For in presenting options, the better argument
tends to get the resource and authority-support needed to have an idea win the day.
Choice is the
judgement made between options. Choices
represent not only what is chosen but also, by de facto, what was not chosen. In a sense, there are winners and losers once
choices are made. Choice represents a
selection of a strategic path. It usually
requires that a rationale be clearly developed and communicated, which takes into
consideration all of the major contingencies (e.g. costs, personnel, time frame,
technology) and makes a clear choice between the various configurations of strategic ideas
offered in the options. Choice represents
commitment, and strategic commitments tend to be long term, involve large investments,
require complex management strategies and they are not easily changed.
Realization is the
final stage where the idea finally becomes reality.
In strategy, the process of strategic implementation represents the
final stage of idea realization. Realization
focuses on the design of organizational structure, the identification and creation of
organizational processes (e.g. communications, control), the allocation of resources, the
specification of domains of authority and the giving of mandates to accomplish the
organization’s important goals and objectives.
Summary
The challenge of
strategy then is the challenge of leading people, be they in a organization, a project/programme purpose unit or
a functional department - from where they are presently in project/programme purpose time and space to some
other better place or situation. And leading
them with no guarantees that they will reach B, reach it safely and will still be
satisfied with B once they get there. It is
the intelligent taking of chances that represent the “best” reading of the
strategic situation combined with sensible action. All
strategy is about making judgements under less-than-optimal conditions. It is about purposeful sense-making of complex
situations. For the strategic decision-maker,
information is never complete, conditions are constantly changing, competition is every
day more clever as it learns what works best and there is never enough time or resources
to do what the decision-maker thinks is best to do. Yet
the organization must go on and must be led or it dies.
Strategy has its heroic sides of success and its sad tails of failure. In any and all cases, decisions must be made and
the sum of those decisions hopefully adds up to the best strategy for the moment and the
conditions faced.
B. Modes of Strategic Development
The rational
normative approach of strategic development suggests that an organization’s
strategies are the result of top management planning, that the strategic planning process
is rational and highly structured. Conceptually,
an organization should devise strategies that take advantage of its strengths and external
opportunities and overcome its weaknesses and external threats. In other words, strategy is deliberate and to a
large extent determined by the external environment.
An alternative view
of strategy development questions this traditional planning-centric view, and focuses upon
the unpredictability of the real world and the role that lower-level managers can play in
the strategic management process. An
organization is not necessarily constrained by the environment and can create or modify
its environment through activities such as marketing to create a demand and political
lobbying to avoid a threat.
Deliberate/Intended
Strategy: planned strategic
course following a rational process of situation analysis
Emergent Strategy:
unplanned responses to unforeseen circumstances; managers learn what will work through a
process of trial and error
In practice, strategy
is an evolving process and the strategies of most organizations are a combination of both the
intended and the emergent. Henry Mintzberg
inorganizationals the ideas of deliberate and emergent strategies into a model of strategic
development as illustrated in the diagram below.
Figure 3: Deliberate and Emergent Strategies
II. THE
STRATEGIC MANAGEMENT PROCESS OVERVIEW
The strategic
management process can be conceptualized six major steps as shown in Figure 4. These main components include: (1) defining the
organizational mission and major goals; (2) analyzing the organization’s external
competitive environment to identify opportunities and threats; (3) analyzing the
organization’s internal operating environment to identify the organization’s
strengths and weaknesses; (4) creating strategic options and choice at different levels of
the organization based on the SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis;
(5) realizing the strategies through appropriate organizational design and change; and (6)
continuous improvement through the feedback loop.
Figure 4: The Main Components of the Strategic Management
Process
A. Mission and
Major Goals
The
mission and major goals of an organization provide the context within which strategies are
formulated. An organization’s mission
sets out why the organization exists and identifies the scope of the organization’s
operations in terms of the products and services offered and markets served. Major goals specify broadly what the organization
wishes to accomplish in the medium to long term, such as in the areas of financial
performance, contributions to employees and to society at large.
B. External
Analysis
The
objective of external analysis is to evaluate the broad external environment to identify
key trends, opportunities and threats. The
external environment consists of domestic and global environment forces such as
sociocultural, technological, political, legal, and economic trends which form the context
within which the organization and its task environment exist.
The task environment consists of major external stakeholders including
competitors, beneficiaries, suppliers, regulatory bodies, financial institutions, and many
others. These environments should be examined
at the local (sector of activity) level, the national level, and the wider macro (global) level.
C. Internal
Analysis
Internal
analysis aims to identify the strengths and weaknesses of the organization by evaluating
its resources and capabilities. In order to
build and maintain a competitive advantage, a organization has to identify its distinctive
competencies and achieve superior efficiency, quality, or innovation, which are all
durable and difficult to imitate.
D. SWOT and
Creating Strategic Options and Choice
After
analyzing the organization’s internal strengths and weaknesses and its external
opportunities and threats (SWOT), the next step is to generate a series of strategic
options. This involves evaluating how the
organization has been doing relative to its goals, its past performance, sector of activity standards,
and its key competitors. The organization then must
seek to understand why the organization is performing at the present level and conduct a
discrepancy analysis between what is intended and what is actually achieved so that
appropriate actions can be taken.
Strategic
choice is a process of selecting among the strategic options generated. The central
objective is to identify strategies that best align or match a organization’s resources
and capabilities to the demands of its operating environment. Strategic choice is made at all levels of an
organization and strategies are formulated at the organizational-level, project/programme purpose-level, and
functional-level accordingly.
organizational-Level
Strategy:
setting the direction of the entire organization, selecting project/programme purposees and markets in
which to compete so as to maximize the long-run profitability of the organization,
managing organizational resources and capabilities. Examples
of organizational strategy include concentration within one or few industries to take advantage
of economies of scale and scope, vertical integration within an sector of activity assuring more
control over the value chain, and diversification into a portfolio of industries that
allows the spread of risk, synergetic gains and the optimization of the operation’s
efficiencies.
project/programme purpose-Level
Strategy:
defining the overall competitive theme in which a organization positions itself within the
chosen sector of activity and markets, acquiring resources and developing competencies. According to Michael Porter, there are three
generic project/programme purpose strategies: cost leadership which emphasizes production and
marketing efficiencies to allow flexibility in pricing; differentiation which
allows a organization to distinguish itself from other competitors in a marketplace; and niche
strategies which focus on special market segments into which competition cannot enter
easily.
Functional-Level
Strategy:
making day-to-day operating decisions to achieve organizational and project/programme purpose unit objectives
and improving the effectiveness of functional operations within a organization in areas such as
manufacturing, marketing, information systems, finance, and human resources.
E. Strategy
Realization
Strategy
realization consists of three main components: (1) designing organizational structures;
(2) designing the 5C’s systems (control, communications, coordination, conflict
management, and organization culture); and (3) managing strategic change.
Designing
Organizational Structure:
a organization’s organizational structure identifies roles, responsibilities, resources
and rewards for different managers and units along with reporting relationships. Key design issues include the need to formalize
activities, standardization of tasks and functions, balancing the gains derived from
specialization, and differentiation with the need to integrate operations so they work
together effectively and efficiently. Committees, policy and procedure manuals, task
forces, budgets/reports and electronic meeting rooms are some of the mechanisms used to
achieve a particular organization’s design purposes.
Designing
5C’s Systems:
an organization must design appropriate systems for control, communications, coordination,
conflict management, and creating a cohesive organization culture so that strategies can be
implemented successfully. Key issues include
establishing accountability, promoting cooperation, avoiding redundancy, and increasing
efficiency.
Managing
Strategic Change:
a organization must be able to adapt its strategy and structure to the changing competitive
environments in order to succeed in the long run. Key
issues include determining the need for and drivers of change, identifying the obstacles
and resistors to change, then identifying a change strategy, creating a plan for
initiating and managing change, and finally a
method for evaluating change and making adjustments to the change plan.
F. The Feedback
The feedback loop indicates that strategic
management is an ongoing and never-ending process. Once
a strategy has been realized, its execution is monitored to determine the extent to which
planned strategic objectives are achieved. This information is reviewed and fed back into
every step of the strategic development process for continuous improvement of the
strategy. The feedback feature is a key steering device to keep a strategy on track and
allow for monitoring of achievements.
III. THE STARTING POINT –
The
organizational mission statement defines the purpose of the organization’s existence and provides
an important vehicle for communicating its philosophy and ideals as well as a sense of
direction to both internal and external stakeholders.
A well-conceived mission statement is able to set the organization apart from other
organizations by identifying the organization’s fundamental and unique purpose.
Most
mission statements are built around three elements: (1) project/programme purpose definition; (2) key
philosophical values and ideals to which managers are committed that guide their
decision-making; and (3) the articulation of key goals that are consistent with the
identity and values of the organization as expressed by its owners, boards of directors and top
management team.
The
notion of strategic intent requires the setting of an overarching ambitious goal that
stretches a organization so as to communicate a sense of direction and purpose, to drive
decision-making and resource allocation, and to guide project/programme purpose managers to strive for
significant improvements.
A. project/programme purpose
Definition
A
clear project/programme purpose definition is a very important starting point of strategic planning and
management. The formulation of the project/programme purpose
definition answers the question “What is our project/programme purpose?” This includes defining the markets and beneficiaries
that the organization serves, the range of products and services provided to the
beneficiaries, the resources and capabilities that the organization utilizes, and the scope of its
activities.
B. Philosophy,
Ideals, and Values
The
philosophy and ideals of a organization represents how management intends to do project/programme purpose and
conduct itself. Values can be used to
articulate a organization’s distinctive outlook on project/programme purpose and communicate to stakeholders
what kind of organization the management wants to build.
In recent years, values are increasingly seen as a driving force of a
organization’s organizational culture and competitive advantage.
C. Goals
Goals
capture the desired future state that a organization attempts to realize and provide guidelines
for the organization to attain its mission. Goals
are usually very broad and general at the organizational strategic level such as the setting of
broad financial goals in terms of sector of activity position or market shares. To be useful, goals should become increasingly
specific at the project/programme purpose and functional levels. Besides,
these goals should be precise and measurable, should address important issues, be
challenging but realistic, and specify a certain timeframe.
IV. STRATEGIC LEADERSHIP
A. Hierarchy and Managerial Levels
It
is not only the top management who is involved in the strategic management process;
managers at different levels in the organization all play different roles. Broadly, a multi-project/programme purpose organization has three levels
of management: (1) the organizational level; (2) the project/programme purpose level – general management;
and (3) the functional level – middle management and the technical core.
Figure 5: Levels of Strategic Management
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organizational-Level Managers:
the organizational level of management consists of the CEO, other senior executives, the board
of directors, and organizational staff. The
strategic role of the CEO is to oversee the development of strategies for the total
organization. This role includes defining the
mission and goals of the organization, resource allocation among the project/programme purposees,
formulation and implementation of strategies, managing external relations, taking symbolic
actions, and providing leadership for the organization.
project/programme purpose-Level Managers:
the main strategic leaders at the project/programme purpose level are the heads of the divisions. Their strategic roles include communicating and
providing interpretation of general statements of direction and intent from the organizational
level into concrete strategies for individual project/programme purposees, taking information from the
bottom level and let the top management know what is going on, protecting the technical
core from uncertainty by standardization, formalization and uncertainty reduction,
designing organizational structure and processes, and monitoring the 5C’s.
Functional-Level Managers:
functional managers bear responsibility for specific project/programme purpose functions and their
strategic role is to develop functional strategies to help fulfill the strategic
objectives set by organizational and project/programme purpose-level general managers.
Organizations that have high and strong
hierarchies tend to have more layers of management and limited spans of control for each
management layer. These organizations tend to have higher degrees of decision
formalization and less informal contacts between groups. They may use more standardized
processes that fit mass production tasks, may take more time in decisions because of the
need to get agreement and support from higher levels in the organization. These kinds of
organizations evolve and survive in stable environments with standard technologies,
limited competition and lower risks. Thus
paper box manufacturing, wood products and government agencies may be examples of these
kinds of organizations.
Organizations
that are “flatter” have fewer levels of management, wider spans of control and
responsibility, less formalization and looser controls to allow for more flexible
responses to change. Of course the evolution of electronic means of communication and
coordination has had significant impacts on the design of structures and organizational
processes and allow for more creative, extended and flexible structures.
B. Key Management Functions
Four
of the key classic management functions are planning, organizing and staffing, motivating,
and controlling. These are basic to all managerial work. As people move up the
organization from functional to organizational levels, the way these functions are done, the
content of their effort and the time frame of execution tend to become more complex and
subtle.
Planning:
preparing for the future, forecasting, establishing objectives, devising strategies,
developing policies, and setting goals.
Organizing
and Staffing:
designing organizational structure, making decisions on span of control, coordination, and
job design and recruiting and preparing the people to do the work.
Motivating:
shaping human behavior, providing leadership, delegating authority, rewarding
accomplishment, increasing employees’ job satisfaction and morale, driving
organizational change
Controlling:
assuring that actual results are consistent with planned results, managing and allocating
resources, managing conflicts, monitoring expenses, inventory, sales and financial
performance.
C. Leader Key Success Factors
Strategic leadership refers to the ability
to articulate a strategic vision for the organization and to motivate others to buy into that
vision. Some of the key success factors of
project/programme purpose leaders are provided in Table 1.
Table 1:
Key Success Factors of project/programme purpose Leaders
Key Success Factors |
Descriptions |
Vision |
Give
the organization a sense of direction |
Commitment |
Demonstrate
personal commitment to the organization’s mission and vision; ability to get others
committed |
Emotional
Intelligence |
Self-awareness,
self-regulation, motivation, empathy, and social skills |
Problem
Solving Skills |
Strong
analytical skills and project/programme purpose acumen |
Willingness
to Delegate |
Delegate
decisions to lower-level employees as a motivational tool |
Cross-Cultural
Effectiveness |
Ability
to manage culture diversity and international projects |
V. STRATEGIC REALIZATION
Strategy realization refers to the
activities that a organization carries out to implement its strategies. Strategy is realized through the designing of the
organizational structure and internal managerial processes to get optimal performance from
the organization’s assets. The 5C’s (control, communications, coordination, conflict
management, and creation of organization culture) represent the basic managerial tasks that
need to be done well. Successful
implementation of strategies is key for a organization to create its competitive advantage by
fitting best with its environment. To sustain
this competitive advantage, continuous monitoring and strategic change is necessary to
adapt to environmental and internal changes.
A. Designing
Organizational Structure
Role
of Organizational Structure
The
primary role of organizational structure is to facilitate the collaborative efforts needed
to enhance a organization’s competitive capabilities.
The organizational structure should match with the strategies of a organization
so that the activities of all employees can be best coordinated for effective strategy
implementation.
The kind of organization structure
chosen depends on the strategies chosen. The strategies in turn are determined by the
challenges that project/programme purpose environments presented to the management and what that
management’s strategic goals and intent are for any time period. Structure is the
means to realize the strategy. It is not only the design of tasks and jobs and their
interconnections. It is also about the internal management processes used to get work
done. Thus a simple general formula for
organization design and strategy realization might be:
strategy + structure + process
>>>>environmental fit>>>> strategic performance.
The better the design of the
organization, the better the fit with its environment and therefore the better the
performance.
However all decisions about design
involve tradeoffs. To get better coordination, you often have to give up autonomy of
operations. To get more creative work processes, you often have to give concessions on
authority and control goals. Thus there is no perfect organizational form. Form is
contingent on all of the above factors and is thus a judgement issue. However some forms
are better than others and the strategic manager needs to know how a particular
configuration of managerial design tools will allow them to achieve their strategic
intentions.
Building
Blocks of Organizational Structure
Differentiation
and integration are the basic building blocks of organizational structure. Differentiation is the way in which a organization
allocates people and resources to organizational tasks in order to create value. It is
based on the simple idea that specialization of tasks leads to gains of efficiency and
creates a learning curve advantage through repetition of task. This leads to more
effective use of scarce resources. In this process, the differentiation can be vertical or
horizontal in nature.
Vertical
Differentiation
Vertical
differentiation specifies the reporting relationships that link people, tasks, and
functions at various levels of a organization. The
management has to decide the appropriate number of hierarchical levels and the correct
span of control. The organizational hierarchy
establishes the authority structure from the top to the bottom of the organization. The span of control is the number of subordinates a
manager directly manages. The basic choice is
whether to adopt (1) a flat structure, with few hierarchical levels and a relatively wide
span of control; or (2) a tall structure, with many levels and a relatively narrow span of
control.
Centralization
or Decentralization
Authority
can be centralized or decentralized in an organization.
By centralization, we mean that decision authority is retained by top
managers on the more important issues. The decision styles of the managers, organizational
culture, and the contingent challenges of the decision situation determine the
effectiveness of centralized decisions. In contrast, when decision authority is
decentralized, it is delegated to divisions, functions, and managers and workers at lower
levels in the organization. There are three
direct advantages to decentralization: (1) reduced information overload of top managers;
(2) increased motivation and accountability of lower level managers; and (3) fewer
managers are needed to oversee lower-level employees’ activities. In addition, it
also allows for better knowledge of the issues as people closer to the problems with
better information are brought into the process. This reduces the filtering bias effects
of middle managers who often re-interpret and change the message to a more favorable but
potentially inaccurate communication.
Horizontal
Differentiation
Horizontal
differentiation refers to the division and grouping of organizational tasks to meet the
objectives of the project/programme purpose. Some basic types
of structure that organizations adopt include: (1) simple structure; (2) functional structure;
(3) multidivisional structure; (4) matrix structure; (5) product-team structure; and (6)
geographic structure.
Simple Structure:
normally used by small, managerial organizations, one person at the top of the
organization takes on most of the managerial tasks, few formal arrangements regarding
organization design and generally employees perform multiple duties.
Functional
Structure: employees with common expertise and experience, who use the same resources
and perform the same tasks, are grouped together. People
can learn from each other and become more specialized and productive at what they do. This structure gives managers greater control of
organizational activities since employees can monitor each other’s work and avoid
shirking. Potential disadvantages include
communications problems as the number of functional groups proliferates, as well as
strategic problems when management is preoccupied with solving coordination problems.
Multidivisional
Structure: each product line
or project/programme purpose unit is placed in self-contained division with all support functions. The head office monitors divisional activities and
exercises financial control over each division. This
structure allows organization to grow and diversify and yet overcome problems that stem from
loss of control.
Matrix
Structure:
activities are grouped by function, superimposed with another differentiation by product
or project. Employees have two bosses, a
functional boss and a product/project boss. This
structure requires minimum direct hierarchical control by supervisors. Increased autonomy
usually increases motivation of the employees. More
time is also freed up for top management to concentrate on strategic issues. However
having two bosses creates problems of getting agreements on key issues like resources,
time schedules, work review and priority setting.
Product-Team
Structure: employees are organized into permanent cross-functional teams, and tasks
are divided along product or project lines. As
a result, bureaucratic costs are reduced and management’s ability to monitor and
control the manufacturing process is increased.
Geographic
Structure: the grouping of organizational activities is based on geographic regions. This allows the organization to be responsive to the
needs of regional beneficiaries and reduces transportation costs.
Integration and Integrating Mechanisms
In contrast to the gains of specialization
in differentiating tasks and functions, the organization is able to achieve its larger
goals only if all of the different specialized parts are able to work together. If they do
not, organizational activities can become wasteful, confused, conflicting and more prone
to failure. Integration is the means by which
a organization coordinates people and functions to accomplish organizational tasks. After
choosing the appropriate form of differentiation, the next step is to decide on the level
of integration necessary to coordinate the organizational activities and make them
interdependent. In general, the higher the
level of differentiation, the higher the level of integration is needed. Again the
5C’s management (see below) is critical to the success of the integration challenge.
There are various integrating mechanisms a
organization can use to achieve its desired level of integration, and some of them will be
introduced in this section.
Direct Contact: putting managers
from different functions or divisions in direct contact with one another allows them to
work together to solve mutual problems. This
mechanism is useful for organizations with functional structure
Interdepartmental Liaison Roles:
giving one manager in each division or function the responsibility for coordinating with
one another, the development of relationship often eases strains between departments. It is effective when the volume of contacts between
the departments or functions is high
Temporary Task Forces: assigning
one member of each function or division to a task force created to solve a specific
problem. This is appropriate when the
functions or divisions share common problems that are of a temporary nature
Permanent Teams: sometimes members
from different functions are put together to form permanent teams. This integrating mechanism is effective when the
issues addressed by a task force recur
Integrating Roles: an expert
independent of the involved divisions is assigned to prompt integration among divisions. This person generally has expertise in
communications and coordination processes and can be used in a variety of situations. An
experienced senior manager can often take this role to ensure that the gains of
cooperation get added to the gains of healthful competition and rivalry among organization
units.
Integrating Departments:
established at organizational headquarters when there is a large number of integrating roles. Usually, this only occurs in large, diversified
organizations
B. Designing the 5C’s Systems
The
5C’s of strategy implementation refer to (1) control, (2) communications, (3)
coordination, (4) conflict management, and (5) organization culture. Figure 6 shows the relative emphases of each of the
5C’s at different hierarchical levels in an organization.
Figure 6:
Conceptualization of the 5C’s Systems
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In
contemporary work organizations, electronic means of communications such as emails, fax,
and mobile phones are becoming increasingly prominent.
It should be noted that although the use of electronic media changes the
physical boundary and timeframe of work, and greatly increases the levels of
communications, control and coordination, it does not alter the fundamental nature of the
managerial tasks of implementing the 5C’s as described below.
Control
Strategic
control is the process by which managers monitor the ongoing activities of an organization
and its members. The purpose of implementing
control systems is to evaluate whether activities are performed efficiently and
effectively and to identify corrective action if objectives are not met. Strategic control helps managers to ensure and
maintain an organization’s competitive advantage.
The
design of an effective strategic control system involves four steps: (1) establishing the
standards against which performance is to be evaluated; (2) creating the measuring and
monitoring systems; (3) comparing actual performance against the established standards;
and (4) initiating corrective action when the standards are not met.
Communications
Communications
is a key to successful strategic management and realization. Good two-way communication is
vital for gaining support for departmental and divisional objectives and policies. Top-down communication encourages bottom-up
communication. The strategic management
process becomes much easier when subordinates are encouraged to discuss their concerns,
reveal their problems, provide recommendations, and give suggestions.
The
way people communicate in an organization is dependent of the decision style of the
managers, the organizational culture which can encourage or discourage information flows and
the means/technology available to communicate. We
know that one outcome of involvement in communication is an increase in commitment to
supporting the decisions. Therefore, if
commitment is important, employees at all organizational levels should be fully informed
about the project/programme purpose objectives, the direction of the project/programme purpose, and the progress towards
achieving objectives. Finally, good decisions
depend on good information and good information comes in part from having excellent
communications within the organization.
Coordination
Coordination is
essential for the successful transfer of distinctive competencies and the achievement of
economies of scope within a organization. If not
managed properly, bureaucratic mechanisms needed for this coordination will give rise to
bureaucratic costs.
An important task of
coordination is to sort out accountability of individual divisions and employees. If this is not performed properly, management will
face with problems including information overload, poor resource allocation decisions,
high level of organizational slack, and an inability to encourage and reward desirable
profit-seeking behaviors.
Conflict Management
Conflict can be defined
as a disagreement between two or more parties on some issues. Interdependency of objectives and competition for
limited resources often leads to conflict within organization. Since conflict is unavoidable, it is important that
conflict be managed and resolved before dysfunctional consequences affect organizational
performance. However, conflict is not always
bad; conflict can serve to energize opposing groups into action and may help managers to
identify organizational problems.
Generally, there are
three approaches for managing conflict: (1) avoidance, (2) defusion, and (3)
confrontation. Avoidance includes ignoring the
problem in hopes that the conflict will resolve itself or physically separating the
conflicting individuals or groups. Defusion
includes playing down differences between conflicting parties and emphasizing similarities
and common interests, compromising, and appealing to higher authority. Confrontation may involve presenting conflicting
views and working through the differences, or even exchanging members of conflicting
parties so that each can gain an appreciation of the other’s point of view.
organization Culture
Organizational
culture can be defined as the pattern of behaviors developed by an organization as it
learns to cope with its problem of external adaptation and internal integration. It is a
learned pattern that has worked well enough to be considered valid and to be taught to new
members as the correct way to perceive, think, and feel.
Organizational culture captures the subtle and largely unconscious forces
that shape a workplace. Since culture is
highly resistant to change, it can represent a major strength or weakness of a organization.
Management should strive to emphasize and
build upon aspects of the existing organizational culture that support proposed new
strategies, and identify and change aspects of the existing culture that are antagonistic
to the proposed strategies. As strategies are
often market driven and dictated by competitive forces, changing a organization’s culture to
fit a new strategy is usually more effective than changing a strategy to fit an exiting
culture.
C. Managing Strategic Change
Strategic change is the
movement of a organization away from its present state toward some desired future state to
increase its competitive advantage, such as by strengthening the organization’s existing
core competencies and building new ones to compete more effectively. Changing an ongoing
organization however is quite difficult. For that reason, change strategies must be
planned.
In general change comes
about because the organization must deal with the A to B problem mentioned at the
beginning of this chapter. Organizations find that they are not arriving at B, their
intended destination. The drivers for change can be external from the environment and are
often identified in a SWOT analysis. This is in the case where changes in government
regulation, the development of new technologies, and the discovery of new market segments
may drive a change. Internal analysis as well that discovers large gaps between goals and
intended performance with actual performance can be a driver depending on which
stakeholders are hurting and how badly!
A
simple way to conceptualize change is that managers have to decide on three modes of
action: (1) what we must stop doing, (2) what we must start doing, and (3) what we are
doing that must be modified. By answering
these questions, the manager can quickly get a feel for the options that are preferred and
workable.
There is a general
saying that goes, “You can change the person or
you can change the person!” This essentially says, that since organizations are
all about people, you get change either by changing the way a person is working in the
organization, or you get rid of that person and get another to substitute for them. Getting people to change the way they do things
involves strategies of process change- change organizational processes, training and new
learning, improving integrating mechanisms and the culture. These strategies take longer
and often involve outside expertise to help. However, if the people are key and the
organization needs to retain their expertise and skills, then process change is a
strategy.
Structural change is
the more radical approach and often involves the elimination of organizational structures
and processes without full regard for the concerns of the people involved. These changes
are usually the result of bringing in outside experts, usually consultants, to analyze
organizational processes and then recommend changes. In other cases, such as mergers and
acquisitions, executives and experts from the dominant organization may introduce major
changes by firing the top executive teams, selling off division, eliminating whole product
lines or breaking with major traditions. The
results of these kinds of changes are rather immediate, but often costly.
Recent Trends of
Major Strategic Change
In recent years, organizations
have been pursuing three major kinds of strategic change: reengineering,
restructuring/downsizing, and innovation.
Reengineering
Reengineering refers to
the fundamental rethinking and radical redesign of project/programme purpose processes. A project/programme purpose process is any activity in an
organization that is vital to delivering goods and services to beneficiaries quickly or that
promotes high quality or low costs. project/programme purpose
processes are usually not the responsibility of any one function but cut across multiple
functions. The purpose of reengineering is to achieve dramatic improvements in critical,
contemporary measures of performance such as cost, quality, service, and speed. An
organization that reengineers must adopt a different approach to organizing its
activities.
Restructuring/
Downsizing
There are two basic
steps to restructuring: an organization (1) reduces its level of differentiation and
integration by eliminating divisions, departments, or levels in the hierarchy; and (2)
downsizes by reducing the number of its employees to reduce operating costs. Changes in the relationships between divisions or
functions are common in restructuring programs.
Restructuring may
become necessary when unforeseen dramatic changes occur in an organization’s
environment. Sometimes an organization has
excess capacity or the operating costs have become much too high with too many levels of
hierarchies. Or sometimes organizations simply
have not adequately monitored the way they operate their basic project/programme purpose processes and
adjusted to changing conditions.
Innovation
Innovation is the
process by which organizations change to better respond to the needs of their beneficiaries by
using their skills and resources to create new technologies or goods and services. It should be noted that innovation is usually
associated with a high level of risk since the outcomes of research and development
activities are often uncertain.
For innovations to
succeed, an organization has to facilitate and support the efforts by encouraging
creativity among its employees. In addition,
various project/programme purpose functions need to coordinate their activities and work closely together.
Managing Change
Generally, a organization
can take two main approaches to managing change: top-down change or bottom-up change. Each has its relative advantages and disadvantages.
Top-down Change
A strong CEO or a top
management team analyzes how to alter strategy and structure, recommends a course of
action, and then moves quickly to restructure and implement change in the organization. The emphasis is on speed of response and management
of problems as they occur.
Bottom-up Change
Top management consults
with managers at all levels in the organization. Then,
over time, it develops a detailed plan for change, with a timetable of events and stages
that the organization will go through. The emphasis
is on participation and on keeping people informed about the situation, so that
uncertainty is minimized. The advantage of
bottom-up change is that it removes some of the obstacles to change by including them in
the strategic plan. The disadvantage is its
slowness.
Evaluating Change
The last step in the
change process is to evaluate the effects of the changes in strategy and structure on
organizational performance. A organization must
compare the way it operates after implementing change with the way it operated before. The results of the evaluation will be channeled to
different steps in the strategic development process through the feedback loop.
