EFFECTIVE IMPLEMENTATION OF STRATEGIES
Strategic planning, to be effective, must go beyond the allocation of resources to achieve organizational objectives. It must be accompanied by strategic thinking that also includes designing an appropriate organization structure, an effective management information system, a budgeting system to facilitate the accomplishments of strategic objectives, and a reward system that supports the strategy.
Strategic Planning Failures and Some Recommendations
Let us look first at some of the reasons why strategic planning may fail and then consider what can be done to improve such planning.
A recent study attributed strategic planning failures to the following factors.
1. Managers are inadequately prepared for strategic planning.
2. The information for preparing the plans is insufficient for planning for action.
3. The goals of the organization are too vague to be of value.
4. The business units are not clearly identified.
5. The reviews of the strategic plans of the business units are not done effectively.
6. The link between strategic planning and control is insufficient.
Strategic planning is the job of line managers, who, especially in large companies, may be assisted by staff planners. But in order to do an effective job, line managers must be coached in strategic planning.
The overall strategic plan needs to be supplemented by specific action plans. This, in general, requires the contributions of line managers from different functional departments, such as research and development, engineering, production, marketing, financing and personnel, to plan for the people required to carry out the plan.
But integrating the various functional groups is not easy. Thus, companies have set up a task force, with heavy presentation of middle managers, to cut across the functional barriers.
When organizations become too large, they are frequently broken down into strategic business units (SBU). These units are expected to operate as if they were relatively independent businesses. But it is important that the boundaries of the different SBU are correctly drawn. Otherwise strategic planning may be di0fficult.
Consider, for example, a large organization with many SBU, each having its own strategic plan, each competing with the others for scarce resources, each making overly optimistic projections for its own strategic plan. Conflicts are bound to arise at the corporate level. It is indeed an art of the top executive to integrate these strategic plans into a meaningful whole that serves that interest of the total organization..
Plans are the basis for control. Without plans no control is possible. Too often strategic plans and budgets are in conflict. Too often budgets are based on last yearâ€™s budgets rather than on the strategic plan. Too often budgets are prepared without a specific action plan to implement the strategy. Strategic plan can also be thwarted by a compensation system that rewards short-term results at the expense of the long-term health of the organization.
From this discussion it is clear that strategic planning needs to be integrated with the total managerial process, such as the organization structure; the appraisal, reward, and motivational system; and the controls used to measure performance against objectives. This is just another illustration that effective management requires a systems approach that recognizes the interdependence of the managerial activities.