Strategy Implementation in the Built Environment

1. Business Management in the Built Environment LESSON 7 : The strategy process - implementation ADAPTED FROM Dr. Scott Fernie ‘S SLIDES AND LESSON BMBE/L7/2017

2. Organisation Structure affects Strategy and governance … Forms of governance : a)Market orientation b)Hierarchy orientation c) Network structure Business Management in the Built Environment BMBE/L7/2017

3. Business Management in the Built Environment Organisational Forms of Governance Hierarchies Markets make buy Forward / backward integration The price mechanism BMBE/L7/2017

4. Business Management in the Built Environment Organisational Forms of Governance Markets or Hierarchies? * For Markets if: * For Hierarchies if: * Commodity Products * Economies of scale * Market Mechanism * Temper Opportunism * Profit Maximisation * Thin markets * High Management Cost * Complex Situations * Routine Situations * Intellectual Capital BMBE/L7/2017

5. Business Management in the Built Environment Neither a Market nor a Hierarchy: Hierarchies Networks Markets coalition JV alliances make buy collaborate Forward / backward integration Economic & social equilibrium The price mechanism BMBE/L7/2017

6. Business Management in the Built Environment Networks and Competition • Traditionally, collaboration by firms has been frowned upon by economists as the basis for monopolies and cartels. However the fashion for alliances and network collaborations seems to be generating sophisticated new ways to compete and additional sources of advantage over traditional firms BMBE/L7/2017

7. Business Management in the Built Environment Networks and Competition • Flexible capabilities: equipped to assemble diverse / unique, set of capabilities. • Specialisation: networks can benefit from a division of specialisation • Learning: New alliances – new learning capabilities • Increased options: Networks can be a rich source of strategic options BMBE/L7/2017

8. Question for discussion Critically explore the various types of complexity that a manager will undoubtedly encounter in developing strategy within a construction company BMBE/L7/2017

9. Business Management in the Built Environment the strategy process BMBE/L7/2017

10. Business Management in the Built Environment Answer the following.... • “Organisations fail to implement more than 70 percent of their new strategic initiatives” (Miller 2002) • What are the obstacles? • Can you describe a theoretical model? • What are the connections between schools of thought and implementation BMBE/L7/2017

11. Business Management in the Built Environment Implementation “ It can be much easier to think of a good strategy than it is to implement it” (Woolridge and Floyd 1990) “Without successful implementation, a strategy is but a fantasy” (Kast and Rosenzweig 1985) This is the same as our new year resolutions! BMBE/L7/2017

12. Business Management in the Built Environment Implementation – what could be easier! • “Organisations fail to implement more than 70 percent of their new strategic initiatives” (Miller 2002) • What are the obstacles? • Take 10 minutes to make a list of reasons • You could think about why you fail to implement your own plans and relate these to construction organisations BMBE/L7/2017

13. Business Management in the Built Environment Main contributors to the problem 1.Focus on formulation rather than implementation – Do you ever spend time planning and forget about implementing study plans? 2. The models of implementation are too complex (Okumus 2003) BMBE/L7/2017

14. VISION Emergent strategy Planned strategy Implementing strategy Business Management in the Built Environment MAIN contributors to the problem • Implementation is frequently viewed separately (Aaltonen and Ivävalko 2002) • Planning perspective supports separation • Emergent perspective fails to see any distance between them • Others argue that planned and emergent strategies occur together • Those that formulate are frequently different to those that implement BMBE/L7/2017

15. Business Management in the Built Environment MAIN contributors to the problem • Ultimately change involves people and thus it is NOT a simple linear, predictable process • It simply IS NOT easy to control people • Strategy does not resonate with practitioners • We are challengers and questioners of change • We represent barriers and resistance to change • We also provide opportunities to change • ‘All progress is made through the unreasonable man!’ • We are also the implementers of change • Change may also be implemented by unreasonable man BMBE/L7/2017

16. Business Management in the Built Environment OTHER Common reasons for problems OR FAILURE OF EFFECTIVE IMPLEMENTATION • Weak management roles in implementation • A lack of communication • Lacking commitment to the strategy • Unaware or lack of understanding of strategy • Unaligned organisational systems and resources • Poor coordination and sharing of responsibilities • Inadequate capabilities and training provided • Competing activities diverted attention away from implementation Taken from Aaltonen and Ivävalko (2002) and Al-Ghamdi (1998) BMBE/L7/2017

17. Business Management in the Built Environment OTHER Common reasons for problems OR FAILURE OF EFFECTIVE IMPLEMENTATION • Uncontrollable environmental factors • Formulators walk away from implementation!! • Formulators and/or implementers left the company • Leadership necessary was absent during implementation • Underestimation of resources required to carry through implementation • Control and monitoring systems inadequate • Lack of definition of key tasks and activities Taken from Aaltonen and Ivävalko (2002) and Al-Ghamdi (1998) BMBE/L7/2017

18. Business Management in the Built Environment The real challenge for implementation • To identify what requires to be changed • To consider what is required to make change happen • To monitor what actually changes • To consider the context within which change will occur • To formulate and execute a plan/process for change • To monitor and react to implementation (Pettigrew 1987) BMBE/L7/2017

19. Business Management in the Built Environment The real challenge for implementation BMBE/L7/2017

20. Strategic Management Overlapping Concerns Operational Management Business Management in the Built Environment HIERARCHY OF STRATEGY : BMBE/L7/2017

21. Concerned with Closely linked to communication in a change management social system Diffusion Conventionally percievedto be the resolution of a socio-technical problem Business Management in the Built Environment Strategy as innovation- FOR TOP MANAGEMENT Formulation is all about invention: the invention of strategy. implementation is invention + diffusion Diffusion may capture all the theoretical influences and difficulties discussed previously. BMBE/L7/2017

22. Business Management in the Built Environment DIFFUSION : seven s’ s model) to guide Implementation(unit 7 : 1-7) Mckinsey 7-s model BMBE/L7/2017

23. Level of change What needs to change Business Management in the Built Environment Diffusion: The seven S’s model • Superordinate goals • impetus for change or act as a binding force • one or more guiding themes of the organisation • represent the shared values crucial to success • may be a binding force during strategic change • can be a catalyst for strategic change and a source of motivation for individuals. BMBE/L7/2017

24. Business Management in the Built Environment Diffusion: The seven S’s model • Strategy • outlines where the company or business unit should concentrate its forces and compete • sets out the basis on which the company will compete, the direction in which it will develop and the method it will use. Level of change What needs to change BMBE/L7/2017

25. Business Management in the Built Environment Diffusion: The seven S’s model • Skills • Gap between current and desired • What capabilities do we require to achieve to achieve our strategic objectives Level of change What needs to change BMBE/L7/2017

26. Business Management in the Built Environment Levels of change • Three primary “S’s” determine level of change • Continuation. Additional resources, new skills and unfamiliar tasks are not required • Routine. A small refinement on continuation. Additional resources may be required in the short term • Limited Change. Additional resources required, but it does not require any major organisational change. • Radical change. Involves major change within the organisation. Numerous changes in the organisation’s structure, systems, staff and management styles. • Organisational redirection. Major changes in terms of the industry in which the organisation operates. What levels are there? BMBE/L7/2017

27. Business Management in the Built Environment Diffusion: The seven S’s model • Structure • We (re)organise to deliver the plan • The way in which the people are organised • Each structure has its merits and demerits • Small firms - simple structures • The machine bureaucracy structure • Divisionalised structure • Professional bureaucracy • Adhocracy Level of change What needs to change BMBE/L7/2017

28. Business Management in the Built Environment Diffusion: The seven S’s model • Systems • routines or processes which exist in an organisation for the purpose of identifying important issues, getting things done or making decisions • have a very strong influence on what happens in an organisation • Reward systems • Financial systems • Information systems Level of change What needs to change BMBE/L7/2017

29. Business Management in the Built Environment Diffusion: The seven S’s model • Staff • concerned with the human resources of the organisation in relation to the implementation of the strategy • what resources will a strategy require • do these new resources build on or are they a change from existing • can the new resources be integrated Level of change What needs to change BMBE/L7/2017

30. Business Management in the Built Environment Diffusion: The seven S’s model • Style • Style is concerned with the management of change • not concerned with the personal styles of managers on a day-to-day basis but in the way in which they implement the changes Level of change What needs to change BMBE/L7/2017

31. Business Management in the Built Environment Successfully managing change • Is strategic change coherent? • Relevant to objectives? • Consistent with context? • Is it feasible • Does it make sense? • Ongoing sensitivity to the environment. • Not every aspect of strategy is planned. • The way that change is led must depend on the context in which it must occur • Manage resistance • Integrate human resource management policies with their strategic management and its change process • Emphasises the importance of translating strategic change into operational language and action BMBE/L7/2017

32. Business Management in the Built Environment Question for thought: In the context of a built environment organisation, critically examine and discuss typical problems encountered when implementing a strategy and how these could be addressed. BMBE/L7/2017

33. Business Management in the Built Environment References • Cole, G.A. (1997) Strategic Management, Continuum, London • Woolridge, B., Floyd, S.W. (1990) Bridging the gap between strategy and operations: the implications of middle management involvement in strategy, The Annual International Conference of the Strategic Management Society Proceedings, Stockholm. • Al-Ghamdi, S.M. (1998) Obstacles to successful implementation of strategic decisions: the British experience, European Business Review, 98(6) 322-327 • Aaltonen, P., Ivävalko, H. (2002) Implementing strategies successfully, Integrated Manufacturing Systems, 13(6), 415-418 • Pettigrew, A. M. (1987). "Context and action in the transformation of the firm." Journal of Management Studies, 24, 649-670. BMBE/L7/2017