Reasons why strategy implementation falls short

Failure to translate the strategy

Strategic ambitionwhile understood tacitly by senior
leadershipis poorly translated into design principles and
downstream implementation choices
The translation: Is not clear, specific, or concrete
Disaggregates the ambition so that elements of the
strategy, when built, no longer fit
Defaults to best (or average) practice rather than call for
next practice

Failure to adapt the strategy

Real-world conditions change at an accelerated
pace. e.g..
External: Macro-economic volatility; rapid shifts in
the competitive landscape
Internal: Key talent is mobile; pivot toward
emerging markets
Implementation efforts insufficiently account
for changing conditions:
Implementers are expected and incentivized to
stay on plan
Key elements of the change (for example,
organizational structures, new processes and
programs, technology architecture) are locked in
before key learning's can occur

Failure to sustain the

strategy

Implementation efforts run out of

steam or do not take off at all:
Initiative fatigue
Organizational resistance
Lack of ownership or clear
accountability
Change fails to take root after
implementation:
People revert to old ways
Organizations do not build the
capabilities to sustain the new way of
working

Strategy execution collapse

The execution syndromes
Like diseases, they slowly consume almost any chance of
successful strategy execution, leaving the organization paralyzed
and unable to leverage more than only incremental results.
The Resistance Syndrome, Employees are always resistant to
change.
Motivation Syndrome, When employees dont have ownership
in the strategy, they are not motivated to execute it
Development Hell Syndrome, Inability, lack of consensus
among key managers and risk aversion or error avoidance keeps
the strategy in a permanent planning process.
Groupthink Syndrome Overemphasis on speed in decision
making and overconfidence in the companys success leads to
hasty decision making, which blinds the organization and leads to
poor decision outcomes.
the Underperformance Syndrome, Continuous failure to
execute strategy and an emphasis on avoiding error fosters a
culture of underperformance

Execution

Vs

Implementation

Translation The process of converting the ideas, visions and aspirations

of the
strategy into workable plans and metrics.
Communication Ensuring that all key employees are aware of and
understand the what, why, how, when and who of the strategy.
Coordination Passing on both responsibility and accountability to key
personnel for a specific action or goal in the process.
Adaptation Monitoring the process of strategy implementation and
making
adjustments to the strategy, in order to create a better fit to the real
world.
Resource Allocation Linking the strategy to the resources required to
execute it.
Implementation The actual process of carrying out the specific actions

RelationshipsShackles, Dell and

Sothwest airlines

Frames- Blinders
XEROX in 1970

ResourcesMillstones
Processes- Routines
McDonald in 1990
and emergence of
Burger King and
Taco Bell

Values-Dogmas,
Royal Dutch/Shell in
1930s & Henri
Deterding

TWO WAYS
TO LOOK
AT
STRATEGY
FAILURE

Executio
n of a
chosen
strategy
from
beginnin
g

In
operational
configuratio
n

In
between
correction
s when
strategy is
implemente
d

In
transformatio
nal

configuratio

The cost of power generation was bought down

by 15%
Has world record for replacing steam generator:
25 days.
Has entered in Generation-related design,
engineering, operational, and maintenance
business.
Focus on supplying (through generation or
trading) to avoid missing out retail opportunities
in future.

Both at a point generated topquartile share holders returns

Enron:
Skilled
in
risk
management, deal making &
Finance
Duke: Ability to build and run
power plants efficiently

THREE LEADERSHIP REGIMES

Bill Lee (1989), 50-50 p/s with Fluor Daniel
(Largest construction co. in US.
Bill Grigg (1995PanEnergy merger (gas
pipe
line
business)
securing
imp.
Complementary capabilities.
Rick Priory (1997) Buying and developing
generating developing generating plants in
US.
Started as gas pipe line company
Anticipated, strategized and enjoyed benefits of deregulation
in wholesale gas trading markets and deregulated electrictrading market (1990)
1998 envisioned unmet need for water and sewer systems in
developing world acquired Wessex Water PLC, a British water
and water treatment company.

Enablers for its visionary, first-mover strategies

Poaching talents from Investment banks, commercial
banks, consulting firms and top-tier B Schools.
Developed innovative concept of Gas-Bank, This

PFIZER

Continued with traditional

industry business model

Its discovery teams need less

than one-third the industry
average of 190 person-years of
work to advance a compound
from conception to clinical
trials
Doubled the sales team in 6
years and this capability, won
the
company
co-marketing
rights for several major drugs

Dominant business model was the Block-Buster

model.
Managed health care and pharmacy benefitsmanagement companies threatened the business
model

Pfizer: Traditional strength in R&D and

Sales.
Eli Lilly: Purchased large pharmacy benefit
managers.

produced by other companies.

Eli Lilly
Portfolio reconfiguration decisions

Divested Non core businesses like Animal health, Cosmetics and

medical devices
Acquired 13.5% stake in somatogen (alliance to develop and
market a blood substitute product; 100% ownership of
Sphinx and 18% stake in Millennium Therapeutics.
Acquired PCS health systems, a major pharmacy benefits

By the case of
HP
I am
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Strategic objectives are

divided into Breakthrough
(radical innovation) and
Business fundamental
objectives (incremental
innovation). Focus always is
on few objectives and those

Any worthwhile vision should

be able to answer questions
like
why
does
this
organization exist, what
genuine value do we/could
we provide and what
substantial ambitions are we
aspiring to achieve in the
future?
Its generally in this stage that
Selecting
breakthrough
execution happens successfully or
objectives focused on a 3 5
it fails. Well run reviews will
year
period
Ruthless
identify any areas that are off
prioritization will lead to the best
track early so that remedial
results.
These
breakthrough
action can be taken. Some will
objectives are called Hoshins.
argue that a monthly review is
Typically, no more than 3 or 4
too infrequent. At this stage,
Hoshinswill be chosen. Once
activity to support the goals is
these are in place, were ready to
competing with employees daily
move to step 3.
duties and getting the balance
right is crucial.
Key activities in this stage include
deciding on the key initiatives and
projects required to support the
breakthroughs as well as clearly
communicating the annual goals to
the organization.This process is a
central part of Hoshin and one of the
reasons that Hoshin is so credible.

As one of the biggest problems faced

in executing on strategy is time and
focus, care should be taken to avoid
overloading employees with too
many objectives and expectations
given that they all have day to day
activities to complete successfully as
well.

define and prioritize market segments on the basis of demand;

Identify segments which are financially attractive;
Determine the probability of achieving a dominant position in the
segments identified.
After Evaluation of step c and D it moves to Step A

What users need segments

will be served?
What is the HewlettPackards value proposition?
What is the basis for
sustainable competitive
advantage?
financial, customer
satisfaction and internal
objectives such as employee
satisfaction.
Define the benefits rather
than the finalized products.
Step E relates to the
benefits and usage. Step F
addresses the way in which
uses specified in step E can
be realized.
organizational capabilities
and requirements
in the area of tech. dev.,
mktg.
and distribution, operations
Financial
implications
and resource
planning.for
achieving objectives as
mentioned in B, also it
quantifies risks.
Identifying key
interrelationships by
itemizing key
interdependencies and
critical linkages