Feasibility – the ability to successfully implement a formulated strategy – is the missing link which many organisations do not factor into their strategy formulation and implantation plans.
Creating a grand strategy, putting it into a “big thick book” and steadfastly sticking to it is unlikely to work, said George Shinkle, an Associate Professor of Strategic Management at the UNSW Business School.
“It’s about learning and modifying along the pathway, rather than carving (strategy) into granite stone,” he said.
Shinkle, Jingyi Wang, a PhD candidate in strategic management at the UNSW Business School, and Chris Jackson, a Professor of Business Psychology in the School of Management at UNSW Business School, recently co-authored a new research paper, Formu-mentation: Formulating an Implementable Strategy.
They state that only one-third of strategy implementations achieve their objectives “because they do not meet the criteria of viability, desirability and feasibility – that is, financial benefit, customer acceptance and ability to accomplish, respectively”.
In their paper, they propose that businesses pursue ‘formu-mentation’, which integrates strategy formulation and strategy implementation that results in the alignment of strategy implementation risk and organisational risk readiness.
“It’s basically trying to make the CEO’s life more straightforward,” Shinkle said.
The importance of employee motivation in achieving long-term outcomes is also often neglected.
While people who join a relatively new, ambitious company such as electric vehicle manufacturer Tesla often inherently favour the company’s mission, those in established businesses that are undergoing radical change need to be motivated to properly manage the implementation process.
“You need to figure out how to bring your organisation along with you because those people did not self-select into the new strategy,” Shinkle said.
Jackson added that, too often, there is a disconnect between those who formulate strategies and those who implement them – and they may even work on different floors within an organisation.
“What we’re saying is that the senior people who usually think of the strategies need to listen to people are going to be implementing strategies,” he said.
“There has to be more communication.”
In their paper, Shinkle, Wang and Jackson observe that overly risky strategies can expose companies to harm because they frequently reduce employees’ motivation and effort, create incentives that can lead to unethical behaviour, and cause disengagement and long-term loss of performance.
Organisational ‘risk readiness’ is an important factor for managers to consider, according to Shinkle, who said this can be shaped over time.
Leaders should communicate with employees about changing rules and policies, especially around failure.
“It’s about being more amenable to acknowledging if there is risk there and that it’s okay if you don’t necessarily achieve everything, every time,” he said.
While a strict framework can potentially reduce the ambition of a strategy, it can also minimise strategy implementation risk, or increase organisational risk readiness, thereby helping companies achieve lofty visions and “big hairy audacious goals”.
In communicating feasible goals and strategies, Wang noted that middle managers take on a crucial role.
“They are the connectors between the higher-management team and their employees on the ground who will implement the strategy,” she said.
Shinkle, Wang and Jackson are confident their framework gives managers a means of improving the probability of achieving success, and suggest that once-famous brands such as Kodak and Blockbuster may have survived if they had better managed the ongoing feasibility of their strategies.
“Do not fall in love with your strategy,” said Shinkle.
“You need to be able to change it as you learn and adapt.”
The full article on the missing link in strategy formulation and implementation is available on BusinessThink, which shares the latest UNSW Business School research stories, analysis, evidence-based opinion and insights.