There are several reasons why a strategy may not produce desired results. The external factors may not be in tune with the strategy. Competitors may also spring surprises occasionally with unexpected moves that may create major gaps in the strategy. Having spent time, effort and money while formulating strategies, it is, therefore, not advisable to leave the implementation of strategy to chance. Managers need to constantly monitor everything, introduce checks and balances and carry out mid-course corrections at an early stage while implementing the strategies. SEC helps an organization in several ways.
Feedback: SEC offers valuable feedback on how well things are moving ahead. It also throws light on the relevance and validity of strategic choice made previously. More importantly, SEC tries to closely monitor performance and offer feedback by answering certain critical questions such as:
Are we moving in the proper direction? Are key things falling into place? Are our assumptions about major trends and changes correct? Are we doing the critical things that need to be done? Should we adjust or abort the strategy?
How are we performing? Are objectives and schedules being met? Are costs, revenues and cash flows matching projections? Do we need to make operational changes?
SEC helps in identifying rewarding behaviours that are in tune with formulated strategies. It helps in pinpointing responsibility for failures as well. Where people find it difficult to stick to a planned course of action due to circumstances beyond their control, managers can take note of such things and initiate suitable rectification steps immediately.
Future planning: SEC offers a considerable amount of information and experience to decision makers that can be quite valuable in the formulation of new improved strategic plans.
There are three types of barriers in evaluation; the limits of control, difficulties in measurement, and motivational problems.
The limits of control: It is not easy for strategists to decide the limits of control. Too much control prevents managers from taking initiative, experiment with their creative ideas and gain through calculated risk taking. On the other hand, when there is very little control people tend to go off the hook, waste resources without any fear of punishment and work to cross purposes putting a big question mark on the very survival of the firm.
Difficulties in measurement: It is not easy to find measurement techniques that are valid and reliable. Validity is the extent to which an instrument measures what it intends, to measure (for example measuring the speed and accuracy of a typist in a typing test). Reliability is the confidence that an indicator will measure the same thing every time. A yardstick that measures me 60 inches tall every time I use it is reliable. In the absence of reliability and validity the control system gets distorted. It may fail to measure results uniformly or measure attributes that are not required to be measured. When people are not confident about the measures used for judgment, they resist the whole process strongly.
Having taken a position while formulating and implementing the strategy, strategists are often reluctant to admit their mistakes when things go off the track. Instead of setting their own house in order, they tend to shift the blame on others. This may also prevent them from hiving off unprofitable divisions, reversing wrong decisions and go in search of more viable alterations quickly.
These barriers, of course, can be avoided if people at all levels begin to look at evaluation in a positive manner. To establish truth, several qualitative and quantitative criteria should be used. Once the criterias are known to everyone, it becomes easy to find gaps, pinpoint responsibility and initiate mid-course connections quickly.
Practical benefits of evaluation:
An elaborate strategic evaluation can head off surprises and insomnia. It can flag potential problems while they can be successfully handled before they become real problems.
Strategic evaluation allows the manager to anticipate responses to expected problems. The continuous evaluation of the results of an implemented (alternative) strategy creates opportunity to constantly refine and improve the strategic.
Management may not like to move away from its stated position. But, at times it may have to reject pressures from various corners and reach successfully. The task is never easy. Strategic success comes from creating a situation where your organization has an advantage over its competitors and then acting to exploit that advantage to achieve your objectives.