Translating Strategy into Operational Objectives

Leaders need to ensure that the organisation’s strategy is implemented once developed. It is important to bear in mind that strategy formulation and implementation often overlap in practice. Organisations experience high levels of uncertainty, turbulence and rapid change and strategies can be obsolete by the time it has been implemented. This phenomenon once again emphasises the importance of staying on top of things, to stay informed and to adapt quickly to changes in the external and internal environment (refer back to learning unit 2).

Strategy implementation is the communication, interpretation, adoption and enactment of strategic plans. Apart from the organisational culture, reward systems, organisational structure and resource allocation, leadership is one of the main drivers of strategy implementation. Strategic leaders have a vision of an ideal state and are willing to guide the organisation to the achievement of this vision through successful strategy implementation.

Why do strategies fail? Or, why do organisations fail to successfully implement strategy? According to the Balanced Scorecard Collaborative (BSC), nine out of ten organisations fail to implement strategies and only 10 percent of effectively formulated strategies are effectively implemented (Business Day, 30 September 1999:37). Four barriers to successful strategy implementation have been identified by BSC:

Vision barrier: A staggering 95% of the workforce does not understand the vision and strategy.

Resource barrier: 60% of organisations do not link budgets to strategy.

People barrier: Only 25% of managers have rewards linked to strategy.

Management barrier: 85% of top management teams spend less than an hour on strategy.

The challenge strategy implementation imposes on leaders is that of inciting commitment among internal as well as external stakeholders to implement strategies and embrace change. Effective communication is key in making this a reality and to keep the strategy alive!

Strategic leaders are typically responsible for the following activities:

• Developing an appropriate vision or strategic direction for the organisation in which as many stakeholders as possible have participated.
• Communicating the vision and strategic direction to all employees and other stakeholders of the organisation translating it according to their frame of reference.
• Inspiring and motivating the employees to achieve the strategic objectives of the organisation.
• Developing functional operational plans – directly aligned to the strategic plan to ensure the operationalisation of the strategic plan in all divisions.

Cascading the strategic plan is a process which filters down from the highest ranks to the lowest ranks in an organisation. This means that the organisations strategic plan (long term) forms the basis of the business plan (short term). This, in turn, provides the basis for team and individual performance. An integrated performance management system should therefore be developed to ensure that each level of performance feeds into the next level efficiently.

Take the strategic drivers/objectives and convert it into a set of goals and objectives that will drive your division over the next 12 months. This process of formulating strategic objectives is often relatively simple. The process can be summarised as follows:

• Key external issues and trends (opportunities and threats) – involves answering the question: ‘What do we intend to do about challenges that face us in the external environment?’
• Internal skills and resources – involve asking the question: ‘We now know what our strengths and weaknesses are. What do we intend to do about it in order to meet the challenges posed by the changing external environment?’
• Analysis of the constraints – requires asking the question: ‘What constraints do stakeholders impose on our future operations?’ ‘What restrictions - physical, human and financial- will we have to operate under?’
• Management must ensure that the strategic objectives conform to the following appropriate attributes:
  • Are they measurable (to allow the evaluation of performance in the future)?
  • Are they acceptable to those in the organisation who have to implement them?
  • Are they flexible enough to allow for deviations from the original plan?
  • Are they motivating?
  • Are they consistent with each other?