All businesses have their own strategies which may base on cost leadership, differentiation or focus. However, implementing a strategy is not always successful because there are some obstacles during its operation. Poor internal communication, pressure from short-term results and uncertainty of external factors are among the top obstacles that hinder the implementation of high level strategy.
Poor internal communication is the number one obstacle to the successful implementation. If the communication in an organization is not effective, various ways of understanding the strategy, poor collaboration and varnished feedbacks will restrain or even damage the implementation of the strategy. For example, if a company’s strategy is speed-based, unnecessarily strict accounting processes imposed by accounting department will lower the speed of supply purchases and thus increase time for the product to be distributed.
Another obstacle is the pressure from short-term results. Because high-level strategy often needs to be executed in a long term to help the organization achieved its long-term objectives, it usually requires some tradeoffs in a short term. Therefore, the emphasis on short-term will easily result in the failure of the strategy. For instance, if a company wants to cut costs to improve sales to keep up with its competitors in the current year while its strategy is differentiation-based, this tactics will damage the strategy.
A strategy is often developed upon analyses on internal and external factors. In addition, an organization is always more or less dependent on external factors that it does not have full control. As a result, the uncertainty of external factors is noteworthy obstacle to the implementation of its strategy. For example, the increase of gasoline price and the growth of environmental concerns have barred Chrysler from its differentiation based on powerful minivan.
Amongst the obstacles, the uncertainty of external factors is almost uncontrollable. However, by clearly understanding of the real reasons that cause the poor communication and pressure from short-term results, companies will be able to resolving them, limit the uncertainty of external factors and implement their strategy effectively.
Poor communication may be caused by some reasons. Problems in empowerment system, too many levels in organizational structure and the presence of conservativeness are the top causes of poor communication. An inappropriate empowerment system may make some individuals or subunits more powerful than others. Thus, less powerful peoples or subunits will not be able to communicate openly with the more powerful ones. Poor collaboration and poor quality of feedbacks will follow. Too many levels in the organization also cause poor communication by distorting the message from one level to another. Meanwhile, the experienced people and powerful ones will become conservative, protect their position, reject criticisms and deform feedbacks. As such, to establish effective communication, the organization must develop an optimum empower system, get the structure flatter and employ continued training to minimize the conservativeness. Effective communication also improves the responsiveness of the company to the changes of external factors.
Companies sometimes stray from its strategy to pursue its short-term results which pressure different departments in various forms. Sales department always pressured by sales volume. Financial department is pressured by profit and related measures such as EPS, ROI…. Marketing department is pushed by brand awareness and customer satisfaction. If one department is over-pressured by its short-term performance measures, the focus on these measures will harm the company’s strategy. To deal with this obstacle, the management must institutionalize the corporate strategy and puts all tactic maneuvers in line with it. Especially, the compensation and reward systems of the company must be aligned to support the strategy instead of evaluating individuals and departments based on their short-term performance measures.
Undoubtedly, though planning a strategy is tough enough, implementing it is much tougher because many obstacles will present. By identifying the root causes that the obstacles derive from and employing appropriate resolutions to eliminate them, companies will be able to implement their strategies effectively.
No comments:
Post a Comment