Operationalizing Strategy

Culture and Strategy:

Nowhere is this concept more important than in institutionalizing strategy. When an organization’s culture is consistent with its strategy, the implementation of strategy is eased considerably. Kotter and Hesketh’s concept of “adaptable cultures” is an attempt to build organizational culture on a foundation of paying attention to key stakeholders such as employees, customers, and stockholders, thus ensuring that the culture can change when the organization’s strategy must change.

It is impossible to successfully implement a strategy that contradicts the organization’s culture. Thus, AT&Ts traditional belief in the importance of universal telephone service, which dates from the days of its monopoly, has been a major stumbling block in the implementation of its new market oriented strategy that distinguishes between customers who need different services. It is only recently, with the explicit culture change program introduced by Robert Allen, that AT&T has began to be more responsive to its customers and to act quickly when necessary. That AT&T managers are acquiring the ability to move quickly was evident in their decision to acquire McCaw Cellular, a large, nationwide provider of cellular telephone service.

If strategies set the general goal and course of action for organizations, operational plans provide the details needed to incorporate strategic plans into the organization’s day to day operations. Operational plans fall into two general classes. Single use plans are designed to be dissolved once they have achieved specific, nonrecurring goals. Standing plans, in contrast, are standardized approaches to handling recurrent and predictable situations.

Single Use plans:

Single use plans are detailed courses of action that probably will not be repeated in the same form in the future. For example, a rapidly expanding firm, such as Fresh Fields natural grocery stores, that is planning to set up a new warehouse will need a specific single use plan for that project. Even though the company may have established a number of warehouses in the past, the new warehouse presents unique requirements of location, construction costs, labor availability, zoning restrictions, and so forth.

A program is a single use plan that covers a relatively large set of activities. It outlines (1) the major steps required to reach an objective, (2) the organization unit or member responsible for each step, and (3) the order and timing of each step. Projects are smaller, separate portions of programs; they are limited in scope and contain distinct directives concerning assignments and time. If the program is to transfer inventory from one warehouse to another, one related project might be to evaluate floor space at the proposed installation. Budgets are statements of financial resources set aside for specific activities in a given period of time; they are primarily devices to control an organization’s activities, and thus are important components of programs and projects.

Standing Plans:

Whenever organizational activities occur repeatedly, a standing plan – a pre-established single decision or set of decisions can effectively guide those activities. Once established such standing plans help managers conserve time because similar situations are handled in a pre-determined, consistent manner. Standing plans consist of policies, rules, and more detailed procedures.

A policy is a general guideline for decision making. It sets up boundaries around decisions, telling managers which decisions can be made and which cannot. In this way it channels the thinking of organization members so that it is consistent with organizational objectives. Your university has a number of policies, such as those that dictate the relative importance of athletics and extracurricular activities vis-à-vis academic learning and performance. Sega recently adopted a policy to label the content of its video games, to warn parents of materials that may be inappropriate for some audiences. Some policies have rules built into them – statements of specific actions to be taken in a given situation. For instance, it may be a rule that an athlete with a grade point average below 2.0 cannot be a member of a varsity team. Most policies are accompanied by detailed procedures, called standard operating procedures or standard methods, which are just a de tailed set of instructions for performing a sequence of actions that occurs often or regularly.

Most organizations have some form of policies, rules, and procedures that help in implementing strategy in cases where routine action is required. At the Limited, a specialty clothing store, standard procedure ensures that customers get an offer of assistance within the first few seconds of entering the store. At Wal-Mart, a discount merchandiser, store procedure requires that one person greet all customers and smile at them.