Meaning of strategy implementation
Strategy implementation is the process that turns strategies and plans into actions to achieve both a vision of the future and associated financial and nonfinancial goals (like customer satisfaction). Implementation of strategy is the process through which a chosen strategy is put into action. It involves the design and management of systems to achieve the best integration of people, structure, processes and resources in achieving.
Importance of Strategy Implementation
Strategy implementation is one of the most important functions of strategic management. It is a procedure that puts plans and strategies into action to reach desired goals. It is important for a number of reasons. These reasons are as follows:
Achievement of objectives: Strategy implementation is important for the achievement of organizational objectives. Mere crafting a strategy is not sufficient for achieving organizational objectives; it needs to be implemented properly.
Utilization of money and effort: For the formulation of strategies, a significant amount of money and efforts are invested. With the implementation functions, this investment is justified.
Evaluation of the strategy: Whether the formulated strategy is appropriate or not, can be judged only by its implementation. It the objectives are achieved properly then it can be said that the strategy formulation task has been done
Identification of loopholes: It helps identify the loopholes in strategy formulation.
Only the proper implementation of strategy can ensure correct identification of mistakes and lapses.
Taking corrective measures: Implementation of strategy guides the strategic manager to initiate corrective measures.
Measuring manager’s efficiency: Good strategy and good strategy implementation and execution are the most trustworthy signs of good
management. So, strategy implementation helps measure management‘s
efficiency of an organization.
Increasing competitive capabilities: Good strategy plays an important role in
increasing the competitive capabilities of an organization. This can be ensured
only by the effective implementation of a strategy.
Model of strategy implementation
McKinsey 7s model
Definition: It is a tool that analyzes firm‘s organizational design by looking at 7 key internal elements: strategy, structure, systems, shared values, style, staff and skills, in order to identify if they are effectively aligned and allow organization to achieve its objectives.
The goal of the model was to show how 7 elements of the company: Structure, Strategy, Skills, Staff, Style, Systems, and Shared values, can be aligned together to achieve effectiveness in a company. The key point of the model is that all the
seven areas are interconnected and a change in one area requires change in the rest of a firm for it to function effectively.
Below you can find the McKinsey model, which represents the connections between seven areas and divides them into ‗Soft Ss‘ and ‗Hard Ss‘. The shape of the model emphasizes interconnectedness of the elements.
The model can be applied to many situations and is a valuable tool when organizational design is at question. The most common uses of the framework are:
To facilitate organizational change.
To help implement new strategy.
To identify how each area may change in a future.
To facilitate the merger of organizations.
In McKinsey model, the seven areas of organization are divided into the ‗soft‘ and ‗hard‘ areas. Strategy, structure and systems are hard elements that are much easier to identify and manage when compared to soft elements. On the other hand, soft areas, although harder to manage, are the foundation of the organization and are more likely to create the sustained competitive advantage.
Strategy is a plan developed by a firm to achieve sustained competitive advantage and successfully compete in the market.
Structure represents the way business divisions and units are organized and include the information of who is accountable to whom. In other words, structure is the organizational chart of the firm. It is also one of the most visible and easy to change elements of the framework. Systems are the processes and procedures of the company, which reveal business‘ daily activities and how decisions are made. Systems are the area of the firm that determines how business is done and it should be the main focus for managers during organizational change. Skills are the abilities that firm‘s employees perform very well. They also include capabilities and competences. During organizational change, the question often arises of what skills the company will really need to reinforce its new
strategy or new structure. Staff element is concerned with what type and how many employees an organization will need and how they will be recruited, trained, motivated and rewarded. Style represents the way the company is managed by top-level managers, how they interact, what actions do they take and their symbolic value. In other words, it is the management style of company‘s leaders.
Shared Values are at the core of McKinsey 7s model. They are the norms and standards that guide employee behavior and company actions and thus, are the foundation of every organization