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Implementing Strategy. Dr Ahmed Fahmy Galal By Gamal Sedky. Implementing Strategy.
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Implementing Strategy Dr Ahmed FahmyGalal By GamalSedky
Implementing Strategy A 1999 Fortune magazine story suggested that 70 percent of chief executive officer (CEO) failures came not as a result of poor strategy, but of poor execution. Why is strategy so difficult for even the best organizations to effectively implement? Research in the area has suggested a number of barriers to strategy execution The Vision Barrier The vast majority of employees do not understand the organization’s strategy. However, in the information or knowledge age in which we currently exist, value is created from the intangible assets—the know-how, relationships, and cultures existing within the organization.
The People BarrierWhen the focus is on achieving short-term financial targets, clever employees will do whatever it takes to ensure those results are achieved.This often comes at the expense of creating long-term value for the firm.The Resource BarrierSixty percent of organizations don’t link budgets to strategy. Most organizations have separate processes for budgeting and strategic planning. One group is working to forge the strategy that will lead the firm heroically into the future, while independently another group is crafting the operating and capital budgets for the coming year.
The Management BarrierA focus on strategy demands that executives spend their time together moving beyond the analysis of defects to a deeper understanding of the underlying value creating or destroying mechanisms in the firm. THE BALANCED SCORECARDThe study companies, along with Kaplan and Norton, were convinced that a reliance on financial measures of performance was affecting their ability to create value. The group discussed a number of possible alternatives but settled on the idea of a Scorecard featuring performance measures capturing activities from throughout the organization—customer issues, internal business processes, employee activities, and of course shareholder concerns.
What Is a Balanced Scorecard?It’s a carefully selected set of measures derived from an organization’s strategy. it is also considered measurement system, strategic management system, and communication tool The vision and strategy are at the center of the Balanced Scorecardsystem, not financial controls as in many organizations.Customer PerspectiveWhen choosing measures for the Customer perspective of the Scorecard, organizations must answer two critical questions: Who are our target customers? and What is our value proposition in serving them.
Many will choose one of three “disciplines” articulated by Treacy and Wiersema in The Discipline of Market Leaders • Operational Excellence Wal-Mart provides a great representation of an operationally excellent company.• Product Leadership Nike is an example of a product leader in the field of athletic footwear.• Customer Intimacy. Nordstrom epitomizes the customer intimate organization. Internal Process PerspectiveTo satisfy customer and shareholder expectations, you may have to identify entirely new internal processes rather than focusing your efforts on the incremental improvement of existing activities. Product development, production, manufacturing, delivery, and post sale service may be represented in this perspective.
Learning and Growth PerspectiveOnce you identify measures and related initiatives in your Customer and Internal Process perspectives, you can be certain of discovering some gaps between your current organizational infrastructure of employee skills and information systems, and the level necessary to achieve your results. The measures you design in this perspective will help you close that gap and ensure sustainable performance for the future.Financial MeasuresClassic lagging indicators are normally encountered in the Financial perspective. Typical examples include profitability, revenue growth, and economic value added.
