ORGANIZATION CULTURE AND STRATEGY IMPLEMENTATION

ORGANIZATION CULTURE AND STRATEGY IMPLEMENTATION

Organizational culture is the collective behavior of humans who are part of an organization and the meanings that the people attach to their actions. Culture includes the organization values, visions, norms, working language, systems, symbols, beliefs and habits. It is also the pattern of such collective behaviors and assumptions that are taught to new organizational members as a way of perceiving, and even thinking and feeling. Organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders.

Organizational culture includes an organization's expectations, experiences, philosophy, and values that hold it together, and is expressed in its self-image, inner workings, interactions with the outside world, and future expectations. It is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed over time and are considered valid. Also called corporate culture, it's shown in
(1) the ways the organization conducts its business, treats its employees, customers, and the wider community,
(2) the extent to which freedom is allowed in decision making, developing new ideas, and personal expression,
(3) how power and information flow through its hierarchy, and
(4) how committed employees are towards collective objectives.

Challenges in Strategy Implementation

Insufficient partner buy-in: In conducting strategic planning, firm leaders and partners involved in the process develop a strong understanding of the business imperative behind the chosen strategy and the need for change in order to achieve partner goals. However, partners removed from the process may struggle to identify with the goals and strategies outlined by firm leaders. These partners may not see a need for change, and without understanding the background and rationale for the chosen strategy, these partners may never buy-in to strategic plan and, as a result, will passively or actively interfere with the implementation process.

Insufficient leadership attention: Too often, leaders view the strategy development process as a linear or finite initiative. After undergoing a resource intensive strategic planning process, the leaders may find themselves jumping back into work or, mistakenly believing that writing the plan was the majority of the work involved.  Within weeks of finalizing the plan, strategies start to collect dust, partners lose interest, and eventually, months pass with little or no reference to the plan or real action from firm leaders to move forward with implementation. 

Ineffective leadership: Strategy implementation frequently fails due to weak leadership, evidenced by firm leaders unable or unwilling to carry out the difficult decisions agreed upon in the plan. To compound the problem, partners within the firm often fail to hold leaders accountable for driving implementation, which ultimately leads to a loss of both the firm's investment in the strategy development process as well as the opportunities associated with establishing differentiation in the market and gaining a competitive advantage.

Weak or inappropriate strategy: During the course of strategic planning, the lack of a realistic and honest assessment of the firm will lead to the development of a weak, inappropriate or potentially unachievable strategy. Without a viable strategy, firms struggle to take actions to effectively implement the plan identified. 

Resistance to change:  The difficulty of driving significant change in an industry rooted in autonomy and individual lawyer behaviors is not to be underestimated. More often than not, executing on strategy requires adopting a change in approach and new ways of doing things. In the context of law firms, this translates to convincing members of the firm, and in particular partners, that change is needed and that the chosen approach is the right one.

Tools for Success in Strategy Implementation

As a first step in ensuring the successful implementation of the firm's strategy, firm leaders must take early and aggressive action to institutionalize the strategy within the firm. To facilitate more effective execution, leaders should take the following critical actions:

Implementation Support Structure: To support effective implementation, firm leaders should ask the question: does the firm have the right leadership, governance and operational structure required to support effective implementation? Are the right people serving in the right places? Very often, firm leaders demonstrate the behavior of dynamic and influential visionaries.  However, such leaders may lack an attention to detail and the organizational skills required to effectively drive day to day action.

Implementation Planning: A fundamental and critical step in moving forward with strategy execution involves planning. Implementation planning entails developing a detailed outline of the specific actions and sub-actions, responsibilities, deadlines, measurement tools, and follow-up required to achieve each of the firm's identified strategies.  Implementation plans often take the form of detailed charts which map the course of action for firm leaders over a 24-36 month time period. Achieving a level of detail in these plans provides for a tangible and measurable guide by which both the firm and its leaders can asses progress in implementation over time.

Alignment of Management Processes: Successful implementation of a  firm's strategy also requires alignment of the firm's partner compensation system, performance management approach, and other related practice group and client team management structures and processes with the firm's chosen strategy. Failure to align management processes and structures with a newly adopted strategy frequently results in a stall out of implementation efforts, as members of the firm direct individual behaviors to align with the firm's historic rewards system, and not the newly stated strategy.

Measurement, Follow up and Accountability: A key component of success in implementation involves holding firm leaders and partners accountable for actively driving and supporting execution. By following up and assessing progress in implementation at regular intervals, firms can more effectively determine whether current implementation activities and assignments are working, or whether a different approach is needed.

Incorporating Organizational Learning: As an evolving and recurring process, effective strategy creation and implementation necessitates ongoing review of the firm's chosen direction.  The strategic planning process entails periodically evaluating the firm's strategy in light of internal and external changes and incorporating lessons learned into the implementation plan. This key component of strategy implementation ensures that the firm's strategy remains dynamic and drives ongoing competitiveness in the market.

Selecting An Implementation Approach

1. The Commander Approach

The strategic leader concentrates on formulating the strategy, applying rigorous logic and analysis. The leader either develops the strategy himself or supervises a team of planners charged with determining the optimal course of action for the organization. He typically employs such tools as experience curves, growth/share matrices and industry and competitive analysis.

This approach addresses the traditional strategic management question of "How can I, as a general manager, develop a strategy for my business which will guide day-today decisions in support of my longer-term objectives?" Once the"best" strategy is determined, the leader passes it along to subordinates who are instructed to executive the strategy.

The leader does not take an active role in implementing the strategy. The strategic leader is primarily a thinker/planner rather than a doer. The Commander Approach helps the executive make difficult day-to-day decision from a strategic perspective.  However, three conditions must exist for the approach to succeed:

• The leader must wield enough power to command implementation; or, the strategy must pose little threat to the current management, otherwise implementation will be resisted.
• Accurate and timely information must be available and the environment must be reasonably stable to allow it to be assimilated.
• The strategist (if he is not the leader) should be insulated from personal biases and political influences that might affect the content of the plan.

A drawback of this approach is that it can reduce employee motivation. If the leader creates the belief that the only acceptable strategies are those developed at the top, he may find himself an extremely unmotivated, un-innovative group of employees.

2. The Organizational Change Approach

This approach starts where the Commander Approach ends: with implementation. The organizational Change Approach addresses the question "I Have a strategy -now how do I get my organization to implement it?" The strategic leader again decides major changes of strategy and the considers the appropriate changes in structure, personnel, and information and reward systems if the strategy is to be implemented effectively.  The most obvious tool for strategy implementation is to reorganize or to shift personnel in order to lead the firm in the desired direction. The role of the strategic leader is that of an architect, designing administrative systems for effective strategy implementation.

The Change Approach is often more effective than the Commander Approach and can be used to implement more difficult strategies because of used the several behavioral science techniques. This techniques for introducing change in an organization include such fundamentals as: using demonstrations rather than words to communicate the desired new activities; focusing early efforts on the needs that are already recognized as important by most of the organization; and having solutions presented by persons who have high credibility in the organization.

However, the Change Approach doesn't help managers stay abreast of rapid changes in the environment. It can backfire in uncertain or rapidly changing conditions. Finally, this approach calls for imposing the strategy in "topdown" fashion, it is subject to the same motivational problems as the Commander Approach.

3. The Collaborative Approach

This approach extends strategic decision-making to the organization's top management team in answer to the question "How can I get my top management team to help develop and commit to a good set of golas and strategies?"  The strategic leader and his senior manager (divisional heads, business unit general managers or senior functional managers) meet for lengthy discussion with a view to formulating proposed strategic changes. In this approach, the leader employs group dynamics and "brainstorming" techniques to get managers with differing points of view to contribute to the strategic planning process.

The Collaborative Approach overcomes two key limitations inherent in the previous two. By capturing information contributed by managers closer to operations, and by offering a forum for the expression of managers closer to operations, and by offering a forum for the expression of many viewpoints, it can increase the quality and timeliness of the information incorporated in the strategy. And to the degree than participation enhances commitment to the strategy, it improves the chances of efficient implementation.

However, the Collaborative Approach may gain more commitment that the foregoing approaches, it may also result in a poorer strategy. The negotiated aspect of the process brings with several risks -that the strategy will be more conservative and less visionary than one developed by a single person or staff team. And the negotiation process can take so much time that an organization misses opportunities and fails to react enough to changing environments.

4. The Cultural Approach

This approach extends the Collaborative Approach to lower levels in the organization as an answer to the strategic management question "How can I get my whole organization commited to our golas and strategies?" The strategic leader concentrates on establishing and communicating a clear mission and purpose for the organization and the allowing employees to design their own work activities with this mission. He plays the role of coach in giving general direction, but encourages individual decision-making to determine the operating details of executive the plan.

The implementation tools used in building a strong corporate culture range from such simple notions as publishing a company creed and singing a company song to much complex techniques. These techniques involve implementing strategy by employing the concept of "third-order control." First-order control is direct supervision; second - order control involves using rules, procedures, and organizational structure to guide behavior. Third - order control is more subtle - and potentially more powerful. It consists of influencing behavior through shaping the norms, values, symbols, and beliefs that managers and employees use in making day-to-day decisions.

This approach begins to break down the barriers between "thinkers" and "doers."  The Cultural Approach has a number of advantages which establish an organization-wide unity of purpose. It appears that the cultural approach works best where the organization has sufficient resources to absorb the cost of building and maintaining the value system.

However, this approach also has several limitations. First, it only works with informed and intelligent people. Second, it consumes enormous amounts of time to install. Third, it can foster such a strong sense of organizational identity among employees that it becomes a handicap; for example, bringing outsider in a top management levels can be difficult because they aren't accepted by other executives.

A General Framework For Strategy Implementation

The first step in implementation is identifying the activities, decisions, and relationships critical to accomplishing the activities. There are six principal administrative tasks that shape a manager's action agenda for implementing strategy. In general, every unit of an organization has to ask, "What is required for us to implement our part of the overall strategic plan and how can we bets get it done?".

The specific components of each of the six strategy-implementation tasks:

1. Building an organization capable of executing the strategy. The organization must have the structure necessary to turn the strategy into reality. Furthermore, the firm's personnel must possess the skill needed to execute the strategy successfully. Related to this is the need to assign the responsibility for accomplish key implementation tasks to the right individuals or groups.
2. Establishing a strategy-supportive budget. If the firm is to accomplish strategic objectives, top management must provide the people, equipment, facilities, and other resources to carry out its part of the strategic plan. Further, once the strategy has been decided on, the key tasks to performed and kinds of decision required must be identified, formal plans must also be developed. The tasks should be arranged in a sequence comprising a plan of action within targets to be achieved at specific dates.
3. Installing internal administrative support systems. Internal systems are policies and procedures to establish desired types of behavior, information systems to provide strategy-critical information on a timely basis, and whatever inventory, materials management, customer service, cost accounting, and other administrative systems are needed to give the organization important strategy-executing capability. These internal systems must support the management process, the way the managers in an organization work together, as well as monitor strategic progress.
4. Devising rewards and incentives that are tightly linked to objectives and strategy. People and departments of the firm must be influenced, through incentives, constraints, control, standards, and rewards, to accomplish the strategy.
5. Shaping the corporate culture to fit the strategy. A strategy-supportive corporate culture causes the organization to work hard (and intelligently) toward the accomplishment of the strategy.
6. Exercising strategic leadership. Strategic leadership consists of obtaining commitment to the strategy and its accomplishment. It also involves the constructive use of power and politics, and politics in building a consensus to support the strategy.

The Concept Fit

This approach assumes that each organizational dimension, such as structure, reward systems, and resources allocation process, must constitute an internally consistent organizational form.  Moreover, organization strategy cannot be effectively implemented unless there is consistency between the strategy and each organizational dimension. Harold J. Leavitt was one of the first to discuss the degree to which task, structure, people, and processes from an integrated whole. The major developer and empirical investigator of the fit concept has been Jay Lorsch.  According to his findings, those organizations that were not high performers were experiencing a situation in which either structure or process did not fit with the degree of task uncertainty.

Other research see fit as "a process as well as a state -a dynamic search that seeks to align the organization with its environment and to arrange resources internally in support of that alignment. In practical terms, the basic alignment mechanism is strategy, and the internal arrangements are organizational structure and management processes".

Hambrick and Cannella described five steps for effective strategy implementation:

1. Input from a wide range of sources is required in the strategy formulation stage (i.e., the mission, environment, resources, and strategic options component).
2. The obstacles to implementation, both those internal and external to the organization, should be carefully assessed.
3. Strategists should be use implementation levers or management tasks to initiate this component of the strategic management process. Such levers may come from the way resources are committed, the approach used to structure the organization, the selection of managers, and the method of rewarding employees.
4. The next step is to sell the implementation. Selling upward entails convincing boards of directors and seniors management of the merits and viability of the strategy. Selling downward involves convincing lower level management and employees of the appropriateness of the strategy. Selling across involves coordinating implementation across the various units of an organization, while selling outward entails communicating the strategy to external stakeholders.
5. The process is on-going and a continuous fine tuning, adjusting, and responding is needed as circumstance change.

While Hambrick and Cannella stress the importance of coordinating managerial tasks of functions in an organization's activities in the implementation of a strategy, the McKinsey 7-S Framework highlights the integration of implementation with other strategic management components.

The 7-s's Framework

McKinsey and Company have developed a model know as, "the seven elements of strategic fit," or the "7-S's."

1. strategy (the coherent set of actions selected as a course of action);
2. structure (the division of tasks as shown on the organization chart);
3. systems (the processes and flows that show how an organization gets things done);
4. style (how management behaves);
5. staff (the people in the organization);
6. shared-values (values shared by all in the organization); and
7. skills (capabilities possessed by the organization).

The underlying concept of the model is that all seven of these variables must "fit" with one another in order for strategy to be successfully implemented. 

Compiled by Ms Florence Kathambi