PROGRAM FORMULATION AND IMPLEMENTATION
Once the business unit has developed its principal strategies, it must work out detailed support programs. A great marketing strategy can be sabotaged by poor implementation. If the unit has decided to attain technological leadership, it must plan programs to strengthen its R&D department, gather technological intelligence, develop leading-edge products, train the technical sales force, and develop ads to communicate its technological leadership.
Once the marketing programs are formulated, the marketing people must estimate their costs. Question arises: Is participating in a particular trade show worth it? Will a specific sales contest pay for itself? Will hiring another salesperson contribute to the bottom lines? Activity-based cost (ABC) accounting should be applied to each marketing programs to determine whether it is likely to produce sufficient results to justify the cost.
In implementing strategy, companies also must not lose sight of their multiple stakeholders and their needs. Traditionally, most businesses focused on stockholders. Todayâ€™s businesses are increasingly recognizing that unless they nurture other stake holders, customers, employees, suppliers, distributors. The business may never earn sufficient profits for the stockholders. A company can aim to deliver satisfaction levels above the minimum for different stakeholders. For example, it might aim to delight its customers, perform well for its employees, and deliver a threshold level of satisfaction to its suppliers. In setting these levels, a company must be careful not to violate the various stakeholders groupsâ€™ sense of fairness about the relative treatment they are receiving.
There is a dynamic relationship connecting the stakeholders groups. A smart company creates a high level of employee satisfaction, which leads to higher effort, higher-quality products and services, which create higher customer satisfaction, which leads to more repeat business, higher growth and profits, high stockholder satisfaction, more investment, and so on. This is the virtuous circle that spells profits and growth.
Marketing insight: Marketingâ€™s Contribution to Shareholder valueâ€? highlights the increasing importance of the proper bottom-line view to marketing expenditures.
According to McKinsey & Company strategy is only one of seven elements in successful business practice. The first three elementsâ€”strategy, structure and systemâ€”are considered the â€œhardwareâ€? of success. The next fourâ€”style skills, staff, and shared valuesâ€”are the â€œsoftwareâ€?.
The first â€œsoftâ€? element, style, means that company employees share a common way of thinking and behaving. McDonaldâ€™s employees smile at the customer, and IBM employees are very professional in their customer dealings. The second, skills, means that the employees have the skills needed to carry out the companyâ€™s strategy. The third, staffing means that the company has hired able people, trained them well, and assigned them to the right jobs. The fourth, shared values mean that the employees share the same guiding values. When these elements are present, companies are usually more successful at strategy implementation.
Another study of management practices found that superior performance over time depended on flawless execution, a company culture based on aiming high, a structure that is flexible and responsive, and a strategy that is clear and focused.
Feedback and Control
As it implements its strategy, a firm needs to track the results and monitor new developments. Some environments are fairly stable from year to year. Other environments evolve slowly in a fairly predictable way. Still other environments changes rapidly in major and unpredictable ways. Nonetheless, a company can count on one thing: The marketplace will change; and when it does, the company will need to review and revise its implementation, programs, strategies, or even objectives.
A companyâ€™s strategic fit with the environment will inevitably erode because the market environment changes faster than the companyâ€™s 7 Ss. Thus, a company might remain efficient while it loses effectiveness. Peter Drucker pointed out that it is more important to â€œdo the right thingâ€? (effectiveness) than â€œto do things rightâ€? (efficiency). The most successful companies excel at both.
Once an organization fails to respond to a changed environment, it becomes increasingly hard to recapture its lost position. Consider what happened to Lotus Development Corporation. It Lotus 1-2-3 software was once the worldâ€™s leading software program, and now its market share in desktop software has slipped so low that analysts do not even bother to track it.