MODULE 6

STRATEGY
IMPLEMENTATION
LEARNING OBJECTIVES

After completing this module, you should be able to:

6.1 explain the key concepts, components and frameworks applicable to implementation of strategy
6.2 evaluate factors that impact successful implementation of strategy and change management
6.3 evaluate the implementation of strategy and its performance in the context of emerging and changing
circumstances
6.4 appraise how the roles of management and leadership drive the implementation of the strategy.

ASSUMED KNOWLEDGE

It is assumed that, before commencing your study in this module, you are able to:
• explain strategic management
• explain the principles of governance and ethics
• describe the key tasks of financial accounting
• describe the strategic process up to the implementation stage.
PREVIEW
In modules 2 and 3, we considered the strategic analysis of both the internal and external environments.
This provided the foundation for developing strategic options in module 4. In module 5, we considered how
to translate those options into strategic themes and initiatives, ensuring they align with the organisation’s
vision, mission and values. This module focuses on implementation — the fourth and final stage of the
strategy process (see figure 6.1).

FIGURE 6.1 The strategy process: strategy implementation

Global strategy and leadership

(Module 1)

Strategic analysis:
external environment
(Module 2)
Exploring Developing Implementation
options strategy and monitoring
(Module 4) (Module 5) (Module 6)
Strategic analysis:
internal environment
(Module 3)

Emerging business models

(Module 7)

How do we implement the strategy?

• Design and develop the implementation plan.
• Determine how to align the organisation to the plan.
• Manage change.
• Manage projects.
• Monitor implementation and performance.

Source: CPA Australia 2020.

This module considers the key aspects of implementing strategy. We will start with developing the
organisation’s implementation plan using the McKinsey 7-S implementation framework to ensure all key
areas of implementation are addressed, using examples to highlight where this works well as well as
when the 7-S framework is not used to its full planning potential and implementation is not always as
desired. Next we will turn our attention to change management and how to navigate the changes required
to implement strategy successfully including identifying and overcoming resistance to change. Lastly,
we consider the more practical aspects of implementation by looking at managing projects, monitoring
implementation, performance and risk with appropriate contingency planning and alternative strategies in
place as required.
Implementation is a process that consists of a range of practical tasks that are concerned taking strategic
options from idea to embedding into the business-as-usual environment to deliver on the organisation’s
strategy and enable a competitive advantage. In rational terms, strategy implementation is ‘a process
by which strategies and policies are put into action through the development of programs, budgets, and
procedures’ (Wheelen & Hunger 2008, p. 16).
Strategies lead to organisations being changed in some substantial way. It is extremely difficult to
implement a strategy successfully unless the organisational change implications are considered and
actioned. Hence, an integrated approach to strategy implementation and change management is required —
how the technical, political and cultural systems have to be changed to support the strategy must be included
in the strategy implementation plan.

362 Global Strategy and Leadership

 Effective organisational change requires effective change leadership, including managers and change
agents who can apply ‘behavioural science knowledge to the planned development and reinforcement of
organisational strategies, structures and processes for improving an organisation’s effectiveness’ (Waddell
2016, pp. 5, 19). It requires an appreciation that the strategy process is a fluid process of continual learning.
This is because no matter how well developed a strategy is, it often requires adjustments as more is
learned about the organisation’s external and internal environments. Indeed, this is the reason strategy
implementation should never be considered in simply an operational manner. It requires input from across
the organisation and sound leadership to ensure the right resourcing, people and measurement decisions
are made at every point in the implementation process (Hitt, Jackson, Carmona, Bierman, Shalley &
Wright 2017).
Leaders have a special role to play in creating a culture receptive to change, in particular, by effectively
communicating what is required, by being supportive, including paying attention to people’s concerns, and
involving everyone. Effective leaders make change happen because they are able to elicit more positive
responses to change than negative responses (Oreg & Berson 2019).
A strategy is also more likely to be successfully implemented if sound project management practices
are used. Project management is a ‘framework of methodologies, tools and techniques’ that enable the
‘efficient delivery of outputs (on time, on costs and according to specification)’ (Zwikael & Smyrk 2019a,
p. 13; Zwikael & Smyrk 2019b).
This module describes the strategy implementation process in detail and concludes with a discussion of
the implications for leaders and managers, including how they need to prepare for future challenges.

6.1 DESIGNING AND DEVELOPING

IMPLEMENTATION PLANS
Our model of the strategy process (explained in module 1 and used throughout the study guide) identifies
strategy implementation as the final stage of the strategy process. It is the stage at which the decisions
that the organisation’s leaders and managers have made are translated into specific plans that align the
organisation’s strategy and its structure, systems, style, skills, staff and shared values. These considerations
are described by the 7-S framework, which is a useful framework to design and develop implementation
plans and also to ensure they are implemented effectively. The next section of the module describes this
framework in detail.
Implementing a strategy requires the organisation to change. An organisation’s leaders should create
an organisational culture that is receptive of change and able to adapt. Achieving this will help specific
change management measures that need to be taken as part of strategy implementation. The change
management process associated with strategy implementation is described in detail in section 6.3.
A culture that successfully deals with change also helps the refinements and revisions of the strategy that
inevitably arise as new issues or information emerges during its development and implementation. This is
truer than ever when we consider the hypercompetitive and digitally connected nature of the contemporary
business environment. In practice, therefore, implementation is a vital and ongoing process that managers
and leaders must orchestrate and direct for the future competitive success of their organisation.
Strategy ceases to be thinking and becomes reality when it is embedded in business activities. This
is achieved when managers align detailed plans, actions and initiatives, and individual key performance
indicators (KPIs) with the higher-level strategy. These are all part of the implementation plan and set the
criteria for making day-to-day decisions during the implementation stage. Although a portion of a strategy
is likely to be implemented as part of normal operations, it is more usual that a strategy will be implemented
using project methods and best practice systems of governance, especially at large organisations, and it
represents a considerable investment of time and money. Many of the changes required to implement a
strategy are therefore achieved through projects. Related projects are often grouped together into programs
to ensure interdependent changes are effectively and efficiently coordinated. Building specific activities,
programs and projects into long-term and short-term plans helps to ensure that the strategy is visible,
change is delivered and employees are held accountable for results. Section 6.4 of the module explains
how project management methods are used to ensure the projects associated with strategy implementation
are effective.
As with all important aspects of an organisation, it is important to monitor and manage both the
implementation of the strategy and the performance of the strategy in achieving its intended outcomes. Both
require establishing valid measures and putting in place systems that effectively respond to any issues that

MODULE 6 Strategy Implementation 363

arise. As mentioned above, the dynamic business environment means an organisation’s strategy evolves
over time in response to emerging information, changes in the organisation’s external environment and
monitoring of how well the strategy is performing in terms of achieving the organisation’s objectives. It
becomes clear that the strategy process is an iterative one and that the seemingly discrete stages in the
process are in fact revisited as necessary to ensure the strategy responds to emergent issues. Section 6.5 of
the module looks at monitoring implementation and performance — and thus at the information leaders
and managers use to guide the strategy during the implementation phase.
Organisations that implement strategy faster than their competitors are likely to provide higher levels
of value for customers. O’Reilly and Caldwell et al. (2010) showed that the progress of strategy
implementation is greatest in organisations in which the various levels of management adopt a greater
number of implementation strategies. Strategy implementation is therefore integral to every manager’s job
and thoughtful and prescient implementation leadership is integral to implementation success.
Inevitably various challenges can occur in aligning the organisation’s strategy and its structure, systems,
style, skills, staff and shared values. Indeed, many organisations experience an inability to execute on
strategy. Instead they become stuck in a loop of analysis or unable to make decisions in the context of
uncertainty. The organisation may lack also lack specific implementation capabilities or the knowledge
to translate the options identified into strategic themes and goals. That is, they lack the ability to
operationalise the strategy (Zubac 2016). Implementation can also be derailed by resistance to change,
politics and power games within the organisation. Section 6.6 examines some of these issues and how the
organisation’s leaders and managers can firstly avoid them and secondly, as necessary, resolve them.
As mentioned above, the business environment is changing at an unprecedented pace. Fortunately, the
information available to organisations and the means by which that information can be analysed to inform
decisions are also advancing rapidly. This is both an advantage and a challenge. We will examine the role
of technology where appropriate throughout the module before concluding with a general examination
of the future challenges and opportunities facing the leaders and managers tasked with formulating and
successfully implementing their organisations’ strategies.
The key points covered in section 6.1 of this module, and the learning objective they align to, are
as follows.

KEY POINTS

6.1 Explain the key concepts, components and frameworks applicable to implementation of
strategy.
• Implementation is the last stage of the strategy process.
• Implementation plans assign responsibilities, budgets and resources.
• Implementation plans are dynamic — it must respond to changes in the organisation’s environment
and circumstances.
6.2 Evaluate factors that impact successful implementation of strategy and change management.
• Implementation failures often relate to the inability of an organisation to operationalise its strategy
— through an inability to manage projects, initiate change or align strategy with the organisation’s
vision and mission.
6.3 Evaluate the implementation of strategy and its performance in the context of emerging and
changing circumstances.
• Implementation plans are dynamic — they must respond to changes in the organisation’s environ-
ment and circumstances.
6.4 Appraise how the roles of management and leadership drive the implementation of the
strategy.
• Management seeks to align plans, actions, initiatives, KPIs and reward systems with the organisa-
tion’s strategy in order to embed the strategy across all business activities.
• Management must ensure the strategy is visible, that the necessary changes occur in the
organisation and that employees are held accountable for outcomes.

6.2 THE 7-S FRAMEWORK

The 7-S framework, developed by McKinsey & Company in the 1980s, presents implementation as
interconnected and complex. It shows that, for the implementation process to unfold as planned, a number

364 Global Strategy and Leadership

of issues and activities have to be engaged with simultaneously. It also serves as a useful framework to
design the implementation plan to achieve this.
The 7-S framework makes it easier for leaders and managers to understand what they should be
concentrating their attention on when implementing a strategy (Watson 1983). It is often said that managers
are most effective when given operational tasks to complete while leaders thrive when they are put in a
position where they can positively contribute to the organisation’s culture. Implementation responsibilities
can also be divided along ‘hard’ and ‘soft’ lines. The ‘hard’ elements are strategy, structure and systems.
If a manager gets these three elements right, the organisation should be effective from an operational
standpoint. The ‘soft’ elements are style, skills, staff and shared values. Compared to managers, it is leaders
who have the most capacity to impact how these four elements interact to change the organisation. Leaders
tend to possess means for impacting these elements. Of course, this delineation between responsibilities is
not clearly defined or rigid in practice and leaders and managers will share responsibility for most aspects,
with the balance dependent on the individual organisation.
Figure 6.2 presents the framework graphically, illustrating the connected activities of strategy, structure,
systems, style (of leadership), staff and skills. In the middle of the framework are shared values, denoting
the centrality of organisational culture to the process of implementation and change.

FIGURE 6.2 The McKinsey 7-S framework

Structure Strategy

Shared
Systems Style
values

Skills Staff

Source: Adapted from RH Waterman Jr, 1982, ‘The seven elements of strategic fit’, Journal of Business Strategy, vol. 2, no. 3, p. 70.

The framework illustrates a useful way of thinking about the organisation, using different perspectives
to ensure that a particular strategy or plan is properly integrated. The 7-S framework can be used to assess
many types of strategic change initiatives. It is useful to create an action plan that captures progress by
documenting an organisation’s current situation and where it aims to be against each of the 7-S factors, as
shown in table 6.1.

TABLE 6.1 Application for the McKinsey 7-S tool

Shared
Strategy Structure Systems Style Staff values Skills

Before

After

Source: MindTools.com, 2014, ‘The McKinsey 7-S Framework’, www.mindtools.com/pages/article/newSTR_91.htm, © Mind Tools
Ltd 1996–2015. All rights reserved. Reproduced with permission.

MODULE 6 Strategy Implementation 365

 All seven components are described in the following sections.

Strategy
The approach the organisation takes to setting direction and competing in the marketplace.

• What is our strategy?

• How do we intend to achieve our objectives?
• How do we deal with competitive pressure?
• How are changes in customer demands dealt with?
• How is strategy adjusted for environmental issues?

Structure
The hierarchy of positions, levels of management, delegation of authority and financial responsibility, and
arrangement of workflow.

• How is the company/team divided?

• What is the hierarchy?
• How do the various departments coordinate activities?
• How do the team members organise and align themselves?
• Is decision making and controlling centralised or decentralised? Is this as it should be, given what we’re doing?
• Where are the lines of communication? Explicit and/or implicit?

Systems
The different systems and processes of activity, including the flow of information and physical resources
through the organisation.

• What are the main systems that run the organisation? Consider financial and HR systems as well as communi-
cations and document storage.
• Where are the controls and how are they monitored and evaluated?
• What internal rules and processes does the team use to keep on track?

Style
The way in which managers focus their attention and how they approach particular tasks and activities.
Style is closely linked to values and behaviour, and observing management behaviour and responses helps
with understanding how an organisation will approach future issues.

• How participative is the management/leadership style?

• How effective is that leadership?
• Do employees/team members tend to be competitive or cooperative?
• Are there real teams functioning within the organisation or are they just nominal groups?

Staff
The employees and subcontractors of the organisation.

• What positions or specialisations are represented within the team?

• What positions need to be filled?
• Are there gaps in required competencies?

Shared Values
The things that most people within an organisation hold as being important (i.e. how customers are treated,
types of products the organisation wants to create, desired levels of quality).

366 Global Strategy and Leadership

 • What are the core values?
• What is the corporate/team culture?
• How strong are the values?
• What are the fundamental values that the company/team was built on?

Skills
The capabilities of the organisation as a whole, derived from the combined abilities and knowledge of
individuals within the organisation.

• What are the strongest skills represented within the company/team?

• Are there any skills gaps?
• What is the company/team known for doing well?
• Do the current employees/team members have the ability to do the job?
• How are skills monitored and assessed?

Source: Boxed text adapted from MindTools.com, 2014, ‘The McKinsey 7-S Framework’, www.mindtools.com/pages/article/
newSTR_91.htm. © Mind Tools Ltd 1996–2015. All rights reserved. Reproduced with permission.

Example 6.1 uses the 7-S framework to analyse how Google and its parent company Alphabet have
aligned the organisations and their strategies.

EXAMPLE 6.1

Alphabet: G is for Google

Google is one of the best-known corporate brands in the world. Its share price has enjoyed remarkable
growth, achieving a 23.4% compound annual growth rate from 2004 to the end of 2016.
When Google CEO Larry Page hired new CFO Ruth Porat — known as ‘the most powerful woman
on Wall Street’ and a veteran of IPOs with technology start-ups including Amazon and eBay — he
said ‘We’re tremendously fortunate to have found such a creative, experienced, and operationally strong
executive … I look forward to learning from Ruth as we continue to innovate in our core — from search
and ads, to Android, Chrome, and YouTube — as well as invest in a thoughtful, disciplined way in our next
generation of big bets.’
Google had become two businesses: a revenue- and profit-producing search business and a set of
revenue- and profit-consuming businesses, including projects such as a self-driving car and wearable
‘Google glasses’ that would allow users a unique internet experience. Google executives hoped that Porat
could help the company balance the need for fiscal discipline in the core while investing prudently in new
product categories.
Under Porat’s watch, Google restructured, unveiling a new corporate parent, Alphabet, that would act
as an umbrella for all of Google’s varied businesses, from Android to the X lab, home of many ‘moonshot’
products. Each unit of Alphabet would report its own financial performance, which pleased investors
hungry for more transparency in the company’s investment strategy. Investors drove up Google’s shares
another 4% on the day of the announcement.
Alphabet aimed to improve performance in another way: by separating business units that had different
strategic imperatives, Alphabet hoped to create strategic ambidexterity across business units. Mature
businesses, such as Search and YouTube, would need to focus on current business performance and had
to be managed by a different set of rules than the ‘big bets’ about which Page spoke. Revenues and costs
mattered in the core, but the logic of potential and investment would determine which of the big bets paid
off in future growth.
In the six months following the restructure, Google (Alphabet) shares appreciated 44%, even though
the company introduced no new products of note, nor make any significant acquisitions. The company
created shareholder value by acquiring the human capital it needed to manage in the rapidly changing
world of technology, and because it aligned its organisation and processes with the emerging demands
of its strategy. Put simply, Google’s executive team focused on strategy implementation, which proved to
be just as valuable as strategy formulation.
Ruth Porat came to Google with a clear objective for change: help Google, now Alphabet, control costs
in a world where search became a mature business and to provide greater transparency to investors. The
way she executed on those goals, at least in the early stages, centred around the firm’s accounting and
financial reporting systems — the essence of measurable performance in any organisation. With clear
budget targets and rules for managing the different business units that make up Alphabet, Porat and

MODULE 6 Strategy Implementation 367

 other executives could hold individual managers accountable for business performance. Finally, Google
had always rewarded high performers, and Porat’s own compensation package proved that Alphabet
would continue to reward those who executed well.
Strategy: Google’s original strategy focused on creating software to facilitate internet searches, and
moved into related applications such as Google Maps and Gmail. Google’s strategy shifted over time to
include hardware as well as software with investments in activities and products such as a self-driving
vehicle.
Structure: With the formation of Alphabet, a holding company, Google moved from a functional structure
to one that created separate business units that were focused on particular technologies or product
markets. The restructuring offered better transparency about operating performance, but it also increased
focus on the demands of each market.
Systems: Part of Google’s logic in bringing Ruth Porat in from Morgan Stanley lay in her knowledge
about how to create and implement sophisticated financial control systems.
Staffing: Ruth Porat represented a very high-profile outside hire for Google. She lacked knowledge in
the technology sector, but she brought a unique set of valuable skills that Google needed to continue to
grow profitably.
Skills: Google considers itself primarily a software company, and if you want to get hired you’d better
have outstanding software engineering skills. In fact, Google screens 20 000 software engineers each year
through a software-programming tournament called Google Code Jam. Software engineers compete with
each other in a timed software-coding tournament, and the top 50 get job offers at Google.
Style: Founder Larry Page is on record as saying that he looked forward to learning from a direct
report, demonstrating a responsive style to staff and encouraging change. Page also speaks of ‘big bets’,
demonstrating an innovative mindset.
Shared values: With the two distinct types of business units Google operates, it became necessary
to create separate business units so as to be able to maintain shared values within each unit and avoid
conflict between revenue-producing established units and ambitious speculative technology units.
Source: Adapted from JH Dyer, P Godfrey, R Jensen & D Bryce, 2017, Strategic Management: Concepts and Cases, 2nd
edition, John Wiley and Sons Inc.

QUESTION 6.1

Earlier modules have analysed Wesfarmers’ strategy to take its Bunnings hardware and homeware
business into the UK market by acquiring the established Homebase business in the UK. As
earlier modules have outlined, the strategy appeared sound, but the strategy implementation was
a failure.
Re-read appendix B at the end of the study guide, then using the case facts to support your
response, use the 7-S framework to analyse why Wesfarmers were unsuccessful in entering the
UK market.

The following sections provide greater detail about three of the 7-S elements that need to be aligned to
the strategy if an organisation is to achieve strategy implementation success. These three elements that are
those most associated with allowing the organisation to become operationally effective: structure, systems
and staff.

STRUCTURE
Organisational structure, also known as organisational design, is critical for effective strategy implemen-
tation. It is a broad concept that considers what it means to organise. It explains the relationships and
configurations of these which allow the organisation to operate, that is, create value for customers and as
a result create value for the organisation’s owners and other stakeholders. It is also the means by which a
balance can be achieved between stability and the need for change.
Organisational design aims to create an organisational structure that supports the strategic goals that
have already been developed. The structure comprises the methods that an organisation uses to divide
and coordinate its labour into distinct tasks and positions, setting out levels and roles, responsibilities and
reporting lines.
Organisational processes and relationships connect and coordinate managers and employees both within
and across units or functional areas. Organisational design should be appropriate to the challenges and

368 Global Strategy and Leadership

operational requirements confronting the organisation. As a means of regulating behaviour to achieve a
common purpose, an appropriate organisational design is critical for effective strategy implementation.
In short, organisational design provides the means by which strategy is orchestrated and delivered
throughout the organisation.
The following subsections explain the basic components of organisational structure and how various
drivers may influence organisational design choices.

Components of Structure
The three main components of organisational structures are as follows.
1. Complexity — the degree of differentiation, horizontally and vertically between jobs and units.
Horizontal differentiation relates to how much variation there is between units and between employees
at the same level of the organisation. High degrees of horizontal differentiation are often associated
with relatively flat hierarchies in organisations, in which managers are responsible for larger numbers
of employees undertaking a wide variety of tasks and hence employees often have a degree of autonomy
in their work. Vertical differentiation relates to how many levels there are in the organisational hierarchy
and thus relates to how communication and control occurs between levels.
2. Formalisation — the degree to which jobs in an organisation are standardised and specified through
the use of written job descriptions, policies and procedures. The more formalised an organisation is
generally the more consistent and predictable behaviour will be across the organisation. Formalisation,
however, comes at the expense of flexibility and may deter innovation. Over-dependence on rules
and procedures can decrease employee engagement and also hinder their ability to respond to unique
customer needs.
3. Centralisation — the degree to which authority to make decisions is concentrated in one or a few roles
or positions in head office or one country as opposed to when it is decentralised and local managers
have the authority to make decisions about their part of the organisation, including how it should operate
strategically. A decentralised structure can also empower employees to make decisions quickly and
while closely involved in the problem that needs to be solved. Centralisation on the other hand can
improve coordination and consistency throughout the organisation. The extent of centralisation versus
decentralisation is a balancing act between coordination, control and consistency and speed, flexibility
and responsiveness.
In practice, organisations usually adapt a hybrid mix of these structural components to suit their
particular circumstances, as determined by the particular products and services they offer and the
characteristics of their industry and environment.

Drivers of Structure
Organisational structure should be considered one of the tools for the implementation of strategy. In simple
terms, an organisation should establish a structure that enables operational tasks to be performed in the
simplest fashion, without creating undue problems and complexity. The primary driver in choosing a
structure should be an organisation’s purpose or mission. Some examples include the following.
• Strategy — if an organisation wants to respond to the local markets in which it operates, it may adopt a
decentralised structure to achieve greater flexibility.
• Environment — a stable environment accommodates a more rigid and routine structure, while a changing
and uncertain environment requires a more flexible and adaptable structure.
• Technology — mass production technologies generally call for taller and more centralised structures
while digital technologies often result in flatter structures.
• Size — when an organisation reaches a certain size it is forced to decentralise, as exercising control from
the top becomes too difficult.
• People and culture — highly skilled and independent professionals usually demand a decentralised
structure and autonomy.
In summary, the choice of structure, how the organisation is designed, must reflect the strategic
challenges that an organisation faces in relation to the degree of change and uncertainty in its environment,
the optimal degree of control, and the organisation’s knowledge requirements. For instance, in response to
globalisation and developments in technology, organisations may restructure and downsize. They may aim
to break down functional and middle management bureaucracies and create flatter, decentralised structures.
These strategic changes are designed to create new organisational forms that are lean, flat, responsive
and innovative.
Example 6.2 describes why The Big Issue social venture has adopted a centralised structure.

MODULE 6 Strategy Implementation 369

 EXAMPLE 6.2

The Big Issue

The Big Issue was first published in the United Kingdom in 1991. The street magazine, based on a similar
social enterprise — Street News — operating in New York, is intended to provide people who are homeless,
at risk of becoming homeless or otherwise marginalised with an opportunity to earn an income by selling
copies of the magazine, and thus improve their confidence, self-reliance and socioeconomic situation.
The success of the magazine — and its principle of ‘a hand up, not a hand out’ — in the UK led to its
expansion into multiple international markets, including Australia in 1996. The magazine industry at the
time was stable (and growth was possible by moving into niche markets) and The Big Issue would have
no direct competitors. Fittingly for a magazine that would be sold on the streets, the first Australian edition
was launched from the steps of Melbourne’s Flinders Street Station.
Vendors buy copies of the magazine for AU$4.50 and sell them for AU$9. They keep the AU$4.50
profit. In 24 years of operation in Australia, circulation has increased from 7000 copies to 31 000 copies
per edition and total sales of the magazine have exceeded 12 million copies, generating a total of AU$30
million for its vendors. Its most successful vendors make an amount close to the minimum wage.
However, things weren’t always so bright. In 2004, less than 10 years after its Australian launch, The Big
Issue found itself technically insolvent, owing more than AU$250 000 to a business owned by its previous
chair and unable to pay its staff.
The organisation appointed ANZ Bank senior executive Sonya Clancy in 2004 to try to rescue The Big
Issue. Clancy set about addressing the problems quickly to ensure the enterprise’s future. Not only did she
succeed, but she went on to lead the organisation to add five further social enterprises to its operation:
The Women’s Subscription Enterprise, The Big Issue Classroom, the Community Street Soccer Program,
the Homes for Homes affordable and social housing program and The Big Idea.
Clancy’s first steps were to negotiate a grace period with creditors and appoint a new CEO to restructure
the enterprise. Clancy introduced fiscal discipline and required executives to prepare reports for the board,
and board members to actually read them ahead of meetings, as part of formalising and centralising
decision making.
In addition to the restructure, new CEO Steven Persson established a code of conduct and a compulsory
training program for vendors. This was intended to combat occasional instances of poor behaviour that
threatened the general goodwill the public held towards The Big Issue.
To improve the appeal of the magazine, Clancy and Persson appointed award-winning journalist Alan
Attwood as editor. Attwood spent the next 10 years focused on content quality. In 2016, former New
Idea deputy editor Amy Hetherington took over as editor, expanding the content scope and updating the
magazine’s design. The magazine is also now sold in digital format online — for the same AU$9 as the
print copy.
The Big Issue has stable annual turnover of around AU$5.5 million and The Big Issue magazine is
believed to generate a social return of AU$5.50 for every AU$1 invested, with most of the benefit arising
from vendors’ reduced demand for health, social and justice services.
Consider why Sonya Clancy would adopt a centralised structure.
• Strategy. Sonya Clancy needed to apply tight fiscal restraint to stem financial losses which required a
centralised structure of decision making to keep a close monitoring of expenses.
• Environment. The Big Issue is in a stable environment as there were no direct competitors, the magazine
industry is relatively stable and operates in a niche market
• Technology. The Big Issue magazine requires mass production and sophisticated technology due to
printing 31 000 magazines every fortnight and effectively distributing to 7000 vendors. Technology also
increases economies of scale.
• Size. The number of vendors could dictate a more decentralised structure; however, due to the nature of
the vendors (regulation of behaviour, low-skilled) and the type of product means that a more centralised
structure would be appropriate.
• People and culture. The vendors are homeless and most would be unskilled in the production and
distribution of magazines so they would require more management, training and direction.
Source: Information from K Walker, 2020, ‘How NFP The Big Issue restored financial sustainability’, Company
Director Magazine, https://aicd.company directors.com.au/membership/company-director-magazine/2020-back-
editions/february/how-nfp-the-big-issue-restored-financial-sustainability; J Gerrard, 2017, ‘This is what the lives of Big
Issue sellers tell us about working and being homeless’, 22 September, The Conversation, https://theconversation.com/this-
is-what-the-lives-of-big-issue-sellers-tell-us-about-working-and-being-homeless-83965; The Big Issue, 2020, ‘About The
Big Issue’, www.thebigissue.org.au/about-the-big-issue/about/; The Big Issue Australia Facebook page.

370 Global Strategy and Leadership

QUESTION 6.2

In the mid-1990s, most of the world’s large oil companies were structured around a corporate head
office that coordinated and controlled a few major divisions. This divisional structure typically
comprised: upstream (exploration and production), downstream (refining and marketing), and
petrochemicals. BP announced its intention to transition from this traditional structure to one
inspired by the technology companies of Silicon Valley. Instead of looking at the other oil majors
as its competitors it looked at the return on average capital employed of companies like Microsoft
and adopted that as a benchmark.
BP dismantled its divisions and created about 150 business units each headed by a business unit
leader who reported directly to the corporate centre. The 150 business units were organised into
15 ‘peer groups’ — networks of similar businesses that could share knowledge, cooperate on
matters of common interest, and challenge one another. Processes were adopted that foster
learning and tie people’s jobs to creating value and fostered the creation of an abundance of teams
and informal networks or communities in which people eagerly share knowledge.
In this new structure, business unit heads were made responsible for operational perfor-
mance and senior management were made responsible for strategic direction and managing
external relations — especially with governments.
The approach to structuring BP was based on the following principles.
• Individual business unit leaders (such as refinery plant managers) are given broad latitude for
running the business and direct responsibility for delivering performance.
• The corporate organisation provides support and assistance to the business units (such as
individual refineries) through a variety of functions, networks, and peer groups.
• BP relies upon individual performance contracts to motivate people.
Ten years later, a new BP CEO announced a major restructure to achieve a radical change in
culture to address a lack of consistency and a problem with over-complexity that had led to a failure
to successfully implement the company’s strategy. The restructure would include streamlining the
business into two main units: exploration and production (upstream), and refining and marketing
(downstream). An alternative energy division was also created to focus on low-carbon growth
options and other strategies for BP’s future. One analyst described the change as ‘copying Exxon’
and said it would keep things simple, and ensure unit managers have both responsibility and
accountability. Some centralised functions were to be shifted to the main business units. The CEO
said managers would consult more with frontline staff and that all staff and managers would be
held accountable for aspects of the business under their control.
In early 2020, a new BP CEO announced a restructure that would combine the upstream and
downstream units. He said the old structure had served the company well, but that the business
needed to become more integrated and focused to meet changing stakeholder expectations,
including the transition to a low-carbon economy. Teams were put in place that were structured
around its production: exploration, production, distribution, and functional branches were placed in
head office to support each team. The restructure announcement was accompanied by a statement
committing to achieving net zero emissions by 2050.
With reference to the relevant components of organisational structure and using the table below
as a framework, evaluate the suitability of each structural change given BP’s strategic goals at the
time of the change.

Component of organisational
Strategic goals at the time structure Suitability of the change

Increase return on average Complexity: complex

capital employed Formalisation: not formal
Centralisation: decentralised
Focus on new energies and Complexity: not complex
future strategies Formalisation: formal
Centralisation: decentralised
Focus on meeting changing Complexity: complex
stakeholder expectations Formalisation: formal
Centralisation: centralised

Source: Adapted from R Grant, 2019, Contemporary Strategy Analysis, 10th edition, John Wiley & Sons,
Chichester, United Kingdom.; T Macalister, 2007, ‘Hayward outlines restructuring to BP staff’, The Guardian,
www.theguardian.com/business/2007/oct/11/2; M Farmer, 2020, ‘BP sets out new purpose and 2050 net-zero emissions
plan’, 12 February, Offshore Technology, www.offshore-technology.com/news/bp-net-zero-plan.

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Principles of Organisational Designs
Two key requirements in shaping the design of an organisation are to determine the optimal level of
centralisation or decentralisation and the degree to which an organisation is mechanistic or organic
(discussed later in this section) in its design. Organisations will not be purely one or the other
(i.e. completely centralised and mechanistic or completely decentralised and organic) but in practice
will contain elements of both dimensions. From a strategy implementation perspective, it is important
to understand which of these design principles is more prevalent, how appropriate the design is for the
organisation’s environment, and the implications of the design for the achievement of strategy.
Centralisation Versus Decentralisation
A centralised organisation has many levels of management, vests decision-making authority at the top, has
narrow spans of control and is consequently hierarchical. A decentralised organisation, on the other hand,
has fewer levels of management, devolves decision-making authority to junior and middle levels, has wide
spans of control and, therefore, takes on a flatter shape.
Strategic leaders must determine the degree to which they should centralise or decentralise their
organisation’s structure. In recent years, organisations have shifted towards greater decentralisation and
more employee empowerment, and away from authoritarian and centralised structures. This shift is based
on the view that authority should be pushed down to where decisions are made, making the organisation
more responsive to its marketplace by empowering and motivating its employees.
Trends towards centralisation or decentralisation are cyclical and may change with economic cycles.
For example, if a business is in a phase of decline, organisations often centralise control to manage costs
and supervise employees more closely.
In recent years, many organisations have increasingly outsourced certain activities. This is consistent
with the decentralisation concept. The core motivation for outsourcing is that the outside contractor can
perform services better or more cost-effectively than the organisation. A recent development in this process
is the development of cloud services that allow organisations to outsource IT infrastructure and related
services to specialist providers. Outsourcing thus allows the organisation to concentrate its energies and
resources on its key value chain activities where it needs strategic control to build capabilities and achieve
competitive advantage. Critics contend that extensive outsourcing involves considerable risks. It can hollow
out a company, leaving it at the mercy of outside suppliers in relation to quality and control issues, and
depriving it of the skills and capabilities needed to shape its own destiny.
Advocates contend that outsourcing decreases internal bureaucracies and renders the organisational
flatter, less hierarchy and gives it more flexibility to respond to customers’ changing demands. The athletic
apparel company, Nike, is a case study in outsourcing. Nike keeps its design, marketing and distribution
in-house while outsourcing virtually all production of its shoes and sporting apparel. Another example is
the automobile company, Toyota, which uses a network of approximately 200 different suppliers of parts
and expertise. The flexibility that comes from outsourcing also allows organisations to access higher levels
of knowledge and expertise.
Although outsourcing presents opportunities, it also presents potential sources of significant risk that
need to be carefully managed. For example, Nike experienced a PR disaster in the 1990s when its then use
of sweatshop labour in its supply chain became headline news around the world.
Mechanistic Versus Organic Systems
An organisation’s strategy, design, structure and context must match. The organisation’s environment is a
major determinant of its design. Research in this area (Mintzberg & Quinn 1996) identifies two contrasting
organisational patterns: mechanistic and organic.
In mechanistic systems:
• people are viewed as a resource to be managed as parts of a machine
• there are many rules and regulations
• motivation techniques tend to be extrinsic (e.g. related to pay)
• the management style is authoritarian
• there is high centralisation and formalisation
• power is exercised through formal authority and influence.
In organic systems, on the other hand:
• people are viewed as unique and the most important resource
• an organisation’s culture is highly valued and is supported with the use of guidelines and symbols (rather
than rules and regulations)

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• motivation techniques tend to be intrinsic (related to the nature of the work itself)
• the management style is more participative
• the structure is decentralised
• there is greater proactivity and tolerance of ambiguity
• power is exercised through expertise.
The underlying organising principle is different for each pattern. Mechanistic systems emphasise
hierarchical control while organic systems focus on adaptive self-regulation.
This research has been revisited by Kessler and Nixon et al. (2016). These authors note that the employee
experience is more important than previously suggested and should more heavily impact organisational
design decisions.
Successful firms in stable environments generally use mechanistic designs. Successful firms in changing
environments tend to have more organic characteristics. Banks, for example, tend to have more mechanistic
structures in order to follow rules and regulations. By contrast, advertising agencies tend to feature organic
structures that facilitate creativity and innovation — key requirements for success in the advertising
industry.
Technology insight 6.1 examines how digital platform companies exhibit aspects of centralisation and
extreme decentralisation in the way they are structured and operate.

TECHNOLOGY INSIGHT 6.1

Organisational Design in Digital Platform Companies

Every business needs to make and implement decisions about the extent of centralisation and decen-
tralisation of the organisation and to adapt the balance over time as circumstances change. Digital
platform businesses, such as eBay, Uber and Airbnb, which provide a platform that connects suppliers
and customers who then transact via the platform, present an interesting combination of centralisation
versus decentralisation.
Platform businesses can only succeed if they engender trust between their users and a key way to do
this is to create a set of strict standards governing how all parties must act. Rideshare platform Uber,
for example, has standardised service levels across its markets and will only allow drivers who adhere to
these standards. Other than whether to accept a fare or not, Uber drivers have very little input into how the
service is provided. Uber’s app collects data on service performance and uses this as a way to monitor
and enforce consistency. In this way Uber achieves extreme levels of decentralisation in a physical sense
while exercising tight control often associated with a centralised model. Uber’s system in relation to its
rideshare providers is highly mechanistic.
Accommodation share platform Airbnb, by contrast, allows its providers reasonable freedom to
establish their own quality of service and pricing. It uses a review system whereby providers and customers
review each other, thus the system self regulates the quality of service. To encourage higher quality, Airbnb
promotes those providers who offer higher quality, thus providing an incentive to all to lift the quality of
their offering.

QUESTION 6.3

LJ Hooker is one of the foremost names in the Australian real estate industry with a high level of
market recognition. Founded in 1928, the company expanded steadily to become Australia’s largest
agency in the 1950s and a truly national network of agents by the 1960s. Over time the company
expanded into related areas, including commercial and residential development. In the 2000s, the
company moved into mortgage brokerage under the business name ‘LJ Hooker Home Loans’ using
a network of mobile brokers.
A few years ago, LJ Hooker sold the home loans business. It is now controlled by RAMS Home
Loans founder John Kinghorn and former RAMS executive Paul O’Regan, who have embarked on
a new ‘LJ Hooker Home Loans’ strategy. Part of the strategy is to expand sufficiently to become a
major player in the home loan market. It is pursuing this through a franchise model that parallels
the structure of the LJ Hooker real estate business.The group aims to eventually have up to 65

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 franchisees across the country, each operating one or more LJ Hooker Home Loans stores that
will service specific geographic markets. Each franchisee will be expected to recruit multiple loan
writers.The franchise network will be a mix of new franchisees and existing brokers who are
required to transition to the new business model.
O’Regan differentiates the LJ Hooker Home Loans model from traditional mortgage broking.
Traditional mortgage brokers connect borrowers with a suitable lender drawn from a large pool
of banks, building societies and other loan providers in return for an upfront and/or trailing
commission, whereas LJ Hooker has formed strategic partnerships with Macquarie, Advantedge
and Pepper Money to fund all of the loans. To maximise leverage of the popular and respected LJ
Hooker brand, all loans will be offered as ‘LJ Hooker Home Loans’.
The business is also seeking to benefit from the LJ Hooker real estate agency network’s potential
to provide a strong flow of customer leads. LJ Hooker real estate agents and the LJ Hooker real
estate website direct customers seeking home loans to the LJ Hooker Home Loans business. The
company has also formed a strategic partnership with real estate data and analytics specialist
CoreLogic to generate further leads from outside the agency network. This ‘digital lead generation’
translates industry data into specific leads that loan writers can choose to investigate.
The company is seeking entrepreneurial franchisees who are motivated to aggressively grow the
business. To ensure franchise owners and loan writers are focused purely on pursuing leads and
converting them to loans, all back office processing has been outsourced offshore.
O’Regan said ‘we’ve got a good formula… ensuring the LJ Hooker Home Loans side of the
business is a “like-for-like” model with the realestate franchise business.’Each franchisee’s loan
book is ‘equivalent to a real estate business’ property management book in terms ofrecurring
income and asset value,’ he said.
Using case facts, evaluate whether the structure of LJ Hooker Home Loans is an organic or a
mechanistic system.

Case fact Mechanistic or organic Evaluation

Franchise offering

Branded LJ Hooker Home Loan

stores

Only three funders

Each franchisee having multiple

loan writers

Entrepreneurs to grow the

business

Processing all of its business

offshore

Strategic partnership with

CoreLogic

Using digital lead generation

Source: J Mitchell, 2016, ‘Kinghorn returns to mortgages with franchise model’, The Adviser, 6 December,
www.theadviser.com.au/breaking-news/35471-kinghorn-returns-to-mortgages-with-franchise-model; LJ Hooker Home
Loans, www.ljhookerhomeloans.com.au; LJ Hooker, www.ljhooker.com.au; LJ Hooker Home Loans 2016, Exclusive
dealing notification, 8 July, www.accc.gov.au/public-registers/authorisations-and-notifications-registers/exclusive-dealing-
notifications-register/lj-hooker-home-loans-pty-ltd-notification-n99186; MPA 2016, ‘LJ Hooker Home Loans’ new business
model’, 19 December, Mortgage Professional Australia, www.mpamagazine.com.au/sections/business-strategy/lj-hooker-
home-loans-new-business-model-228754.aspx.

SYSTEMS
The second 7-S component that we will discuss in detail concerns the key considerations for managing
systems and processes, particularly the flow of information through the organisation.
The management of information and knowledge provides an important foundation for both securing
and maintaining strategic capability. Companies that improve their IT systems will be able to increase
their competitive advantage and therefore their profit. Most large companies now see it as mandatory to

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use big data — the vast data sets generated by internet-connected devices — to analyse customers and
build market knowledge. Areas where companies can use big data include:
• leveraging customer information from all points of customer interaction
• reducing loyalty program drop-out rates
• increasing customer acquisition through improved targeted marketing communications
• adjusting prices dynamically based on supply and demand for certain products and services
• enhancing post-purchase services.
In addition to enhancing customer experiences and increasing sales, companies can use their technology
systems and business analytics to achieve:
• real-time inventory management control
• predictive maintenance optimisation of machinery and equipment
• increased service reliability, speed and quality
• improved advertising and marketing information in online media
• automated purchasing processes
• improved post-purchase services.
Information and knowledge management helps to provide distinctive or superior service and achieve
competitive advantage, whether for a service or product provider. The importance of information systems
at FedEx is illustrated in this extract:
Our networks reach more than 220 countries and territories, linking more than 99 per cent of the world’s
GDP. Connecting people with goods, services, ideas and technologies creates opportunities that fuel
innovation, energize businesses and lift communities to higher standards of living.
FedEx is a global leader in express distribution. FedEx provides real-time package tracking for each
shipment using one of the world’s largest computer and telecommunications networks. FedEx is continually
developing innovative technologies such as blockchain, computerised tracking systems and satellite
operations systems that allow delivery in any weather conditions. FedEx deals with huge amounts of data,
and employs sophisticated technology to allow for its efficient management. (FedEx 2020)

To effectively monitor strategy implementation, managers need timely feedback on implementation

initiatives so they can steer these initiatives to a successful conclusion. Without this timely feedback, there
is a danger that early initiatives will fail to produce the expected results, or that the implementation process
will start to drift. Such feedback allows managers to detect problems early and adjust either the strategy
or its method of implementation.
Timely feedback through an organisation’s management systems helps an organisation’s management to
understand whether their strategies are having the desired result and plan for contingencies if needed. An
organisation that knows immediately how customers view its new product or service can quickly address
issues and modify the product or service to increase sell-through opportunities. It is not enough just to
store the large amounts of structured and unstructured data. Organisations need to manage the speed of
data collection, variety of data formats and variability of data points before they can accurately monitor
project implementations and confidently make timely decisions about their strategies.
Technology insight 6.2 describes the consequences for supermarket chain Woolworths when it failed to
align and adequately prepare systems issues ahead of implementation of a project.

TECHNOLOGY INSIGHT 6.2

Systems Breakdown
Woolworths is one of Australia’s leading supermarket chains. It had long relied on a computerised system
to record individual store data and generate a weekly profit-and-loss report for each individual store
manager, along with providing numerous other reports and data. As the technology was 30 years old,
the company sought to transition to SAP merchandising systems — which would provide much greater
capabilities, flexibility and position the company for its future information needs.
Unfortunately the transition became a case study in failed implementation.
Many of Woolworths’ business processes were not formally documented. This meant there was no
source of information to consult about what the new system needed to do. Because the system was
30 years old, many who had worked on the system had left the company. This problem was exacerbated
by the six-year process that ended up being required to make the transition — many more people left
during that time, leading to even more loss of organisational knowledge.

MODULE 6 Strategy Implementation 375

 The cost of the deficiencies in the organisation’s ability to capture organisational knowledge and
assemble the necessary information to support the new technology implementation took two forms:
AU$200 million in transition costs, and an 18-month period during which individual store managers were
unable to access their weekly profit-and-loss reports. It is impossible to know how the loss of access to
the information in those reports affected other aspects of performance downstream as managers worked
without basic information.
The principles that can be taken from Woolworths’ experience include that systems, staff and skills are
all interrelated, and that implementation cannot be successful if it begins without the necessary planning,
information and resources in place to support it.

Example 6.3 examines Zara’s use of information systems.

EXAMPLE 6.3

Zara’s Systems and Implementation Prowess

Fashion label Zara’s success can be attributed to its ability to collect timely information about fashion
trends, customers’ buying preferences and inventory through its management information system.
Zara’s use of systems to achieve their strategy of sustainable provider of fast fashion across international
markets can be analysed with reference to appendix A in table 6.2 as follows.

TABLE 6.2 Zara systems analysis

Case fact Justification with rationale

Making new designs available to the stores where Increasing opportunities for customers to visit the
the demand for them exists in no longer than store and keeps merchandise turning over; also
15 days creates a desired effect of want

Unique ability to manage its extensive network of Reduces costs and therefore keeps the organisation
designers and global supply chain profitable

Collect customer insights on daily basis through This provides customer insights on product
the use of instore scanning technologies preferences and therefore can produce fashion that
customers want at the price they want.

Analyse trends Provides information to designers which enables

merchandise to be produced that customers want

Keep track of inventory Avoid build-up or demand lags which then creates
shelf space for more designs to come in and creates
more opportunities for customers to visit

Collation of information Ability to collect and report the information back

in a timely manner enables designers to capitalise
on trends

QUESTION 6.4

Using case facts to support your response, examine how Zara has used their systems to:
(a) provide superior customer service
(b) achieve competitive advantage.

Example 6.3 highlights the importance of information systems. There are two key considerations relating
to IT systems. First, improved systems can lead to efficiencies and other quantitative benefits to increase
competitive advantage and profit. Second, systems also provide feedback on how well strategy initiatives
are being achieved. Big data and business analytics provide important information to managers. This can
help them track strategy implementation and guide strategic decision making, as noted in the discussion
of data analytics and big data in earlier modules.

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STAFF
The third 7-S component to be discussed in detail concerns the key considerations for managing teams
during change. Change management is an important part of leadership responsibilities, especially in how
it relates to organisational culture, but specific initiatives to achieve change are often implemented at
management level. Below we will talk about the staff aspect of the 7-S framework, including culture,
but we will talk in more detail about the role of culture in change management in section 6.3.
Managing Teams
In recent times, increasing competition and complexity in the business environment have led to a greater
use of self-organising teams in organisations. Factors such as the rapid pace of change and innovation
in the business environment, and the increasing application of technology, have made decision making
more complex. Teams are formed to better manage and cope with these conditions, and to provide a more
supportive and social environment for individuals.
The ability to work and cooperate in teams is an important managerial competency. Organisations need
individuals who can manage teams and help others to develop to their full potential during the process of
implementing strategy. As workers become more highly skilled and self-directed, managers must become
more participative in their approach. This means managers need to involve others in decision making
and issues that affect them, encouraging and empowering the team, providing recognition for effective
performance, building team spirit and morale, and creating a common vision and purpose. Taken together,
these skills can help team members to develop a sense of responsibility for the team’s work and respect
for the diversity of team members.
Managing Culture
Culture is generally described as the norms that evolve in working groups, the dominant values espoused
by an organisation (e.g. product quality and customer service) or the philosophy that guides everyday
decision making.
Culture can be viewed as a property of a given set of people who have common experiences which has
led to a shared view. This shared view is eventually taken for granted. Culture in this sense is a learnt
product of group experience. Schein (1985, p. 9) defines culture as:
a pattern of shared basic assumptions that was learned by the group as it solved its problems of external
adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to
be taught to new members as the correct way to perceive, think and feel in relation to those problems.

In changing environments, the capacity to implement new strategies and operating practices is necessary
for an organisation to achieve superior performance and a sustainable competitive advantage. This requires
a culture that is adaptive to both organisational and environmental change and supportive of organisational
strategy. Culture is a pervasive and implicit property of organisations, and manifests in the taken-for-
granted beliefs and ways of doing things, and in the values, attitudes and language of managers and
employees. A culture of loyalty, trust and respect will certainly enable a previously inflexible workforce to
adapt and change more readily. It will be much more difficult to make significant strategic changes when
there is an entrenched culture that is resistant to change.
An organisation’s strategic capability is embedded in its culture. That is, an organisation’s robust and
inimitable strategic capabilities are driven by shared values and ways of operating that have become routine
and therefore part of an organisation’s culture. This will affect its ability to develop new ways of thinking
and doing things. Managers may be trapped in their existing culture, unable to respond to major changes
in the business environment that require ways of thinking and operating that differ from the current norms
and routines. As a result, the established culture becomes a source of resistance that only allows gradual
change and leads to strategic drift or inertia.
Developing a Strategy-Supportive Culture
As highlighted in the 7-S framework, having a good fit between an organisation’s strategy and its culture
is a prerequisite to strategy implementation. Employee values and attitudes produce the behaviour and
performance required to carry out an organisation’s strategy. It is important to diagnose the parts of the
present culture that either support the strategy or are detrimental to it. Those responsible for implementing
the strategy must change those aspects of the culture that hinder or prevent effective execution.
It is more difficult to change the ‘deeper elements of culture (values and basic assumptions)’ than its
surface elements ‘such as norms and artefacts’ (Waddell et al. 2016, p. 342). Managers need to convince

MODULE 6 Strategy Implementation 377

employees that the implementation is not cosmetic or superficial. In this respect, inclusive communication
is important as a means of gaining employee involvement and buy-in to the implementation process.
Managers should strive for a results-oriented culture that inspires people to do their best and is conducive
to superior strategy execution.
Two hallmarks or indicators of an effective culture are:
1. managers who are committed to enduring business principles and stakeholders rather than to specific
operating practices
2. employees who are receptive to a level of risk-taking, innovation and change that is appropriate to the
organisation and its industry.
An example of efforts to alter organisational culture is Pfizer, the global pharmaceutical company, in
its 2011 annual review. Pfizer’s review focused on efforts to alter organisational culture to support the
implementation of a new company strategy. Pfizer called employees ‘co-workers’ and described colleagues
as ‘owners of the business’, a cultural alteration that allowed management to ‘advocate for and drive long-
term, well-aligned strategies that advanced Pfizer’s mission’ (Pfizer 2011).
Because culture can constrain strategy implementation, managers must analyse the organisation’s
culture, manage within its boundaries, and be appreciative and realistic about the extent to which the
culture can be changed. Managing the following people and cultural issues are important ways of building
a strategy-supportive culture as part of the strategy implementation process.
• Manage inter-group conflicts within the organisation. Conflicts between groups can prevent the
development of a shared understanding, which is important for facilitating the implementation process.
• Ensure effective communication. Everyone within the organisation needs to understand the strategy and
how it will benefit the organisation.
• Achieve consensus on change. An organisation needs a common language and shared assumptions about
how it will operate to succeed in implementing its strategy.
• Achieve consensus on criteria for measuring results. If members hold divergent views about how to
evaluate performance, they cannot implement strategy in a coordinated manner. Metrics should be
established as part of the implementation plan and should be clearly linked to strategic goals.
• Undertake culture maintenance. An organisation’s culture, once established, needs to be maintained
and at times changed. Organisational culture can integrate people so that they work together in the
implementation process. Cultural change may be targeted as part of preparing to implement strategy,
but it is not a once-only task. Managers must ensure cultural changes become embedded, but also that
further change takes place as necessary.
Additional steps for aligning culture with strategy include role modelling and coaching. Managers must
realise that their visible behaviour is an important mechanism for communicating to employees the new
assumptions, values and practices that are required.
Selecting people for key positions is another important step in the management of culture. Implementers
of strategy must determine the kind of core management team they need to execute the strategy successfully
and then find the right people to fill each role. Cultural change can be accelerated if managers recruit
and select new members according to the criteria that fit the organisation’s strategic direction and
new culture.
Fostering a strategy-supportive culture requires the encouragement of a culture of innovation and
performance that employees can thrive in. A high-performance culture can make champions out of people
who excel.
Waddell et al. (2016) provide the following advice if attempting to change a culture in a real-life practice
setting in support of the strategy.
1. Formulate a clear strategic vision.
2. Display top management commitment.
3. Model change culture at the highest levels of the organisation through executives’ own actions.
4. Modify the organisation’s structure, human resource systems, information and control and management
styles to support organisational cultural change.
5. Select and socialise new employees and terminate deviate employees.
6. Encourage ethical and legal behaviours and sensitivities.
Organisations must develop the capacity to implement new strategies and organisational practices
in a changing and complex environment. Example 6.4 shows the importance of a positive alignment
between culture and strategy at the Bendigo and Adelaide Bank Group. Its focus on making banking easy
for customers is supported by leadership, empowering staff, mutual support and teamwork that shares
knowledge, values diversity and emphasises openness to change.

378 Global Strategy and Leadership

EXAMPLE 6.4

Culture and Strategy Aligned — Bendigo and Adelaide Bank Group

The Bendigo and Adelaide Bank Group was formed by the combination of more than 80 organisations,
some of them dating back to the 1850s. Bringing together so many organisations under a single brand
and implementing a consistent culture represents a major challenge, but it is one the Group has met well.
Today, the Group is Australia’s fifth largest retail bank, with more than 7000 staff working to meet the needs
of more than 1.7 million customers.
The Group’s vision is to be ‘Australia’s bank of choice’. Its strategy involves reducing complexity to
make it easier for customers to do business with the bank, investing in capabilities to future-proof the
business and telling the Group’s story to engage with more Australians.
Addressing the Group’s 2019 annual general meeting, CEO Marnie Baker said she believes the bank’s
culture is what sets it apart. She highlighted what she described as a ‘deep sense of purpose and a
strong set of values’. These values include teamwork, integrity, performance, engagement, leadership
and passion.
In terms of teamwork, for example, the Group says, ‘We work together, encourage diversity and respect
the unique contribution of each individual’. Key teamwork commitments include sharing information,
collaborating and being open to change. In terms of leadership, the Group encourages all to show initiative,
be accountable and empower others. Leaders are expected to encourage two-way communication and
support and guide each other.
Baker subscribes to the idea that everyone should benefit from a financial transaction — the investor,
the borrower, the shareholders and society itself.
Bendigo and Adelaide Bank Group consistently rank among Australia’s most trusted brands and as the
top-rated company for customer experience.
Bendigo Bank evidently has a strategy-supportive culture.
• Staff work together. This increases work skills, cooperation and increases in employee morale.
• Encourage diversity. This creates open-mindedness and opportunities to learn and engage with
each other.
• Respect the unique contribution of each individual. This improves employee relationships and helps
engage people with the organisation.
• Key teamwork commitments. This includes sharing information.
• Being open to change. This demonstrates an encouragement of innovation which creates organisational
growth opportunities.
• Leaders are expected to encourage two-way communication and support and guide each other. This
encourages staff to be involved. This also demonstrates inclusive communication that makes staff feel
supported and hence more satisfied.
Source: Adapted from Bendigo and Adelaide Bank, 2020, ‘About us’, www.bendigoadelaide.com.au/about_us; C Pedler,
2019, ‘Bendigo Bank stays confident in its strategy after challenging year for banks’, Bendigo Advertiser, 29 October, www.
bendigoadvertiser.com.au/story/6464297/bendigo-bank-stays-confident-in-its-strategy-after-challenging-year-for-banks.

QUESTION 6.5

Australia has long been a powerful force in international competitive swimming, with Olympic
Games medal tallies regularly exceeding expectations. Australia commits substantial funding to
its swim program and its highest potential swimmers. The team’s disappointing 2012 London
Olympics performance was met with heavy criticism and a review was put in place to analyse what
went wrong.
The review found the team exhibited a toxic culture that involved numerous actions at odds
with competitive success — bullying, an obsession with social media, abusing prescription drugs,
ignoring curfews and misusing alcohol. While no one incident was seen as ‘truly grave’, added
together they constituted a substantial problem. During the Games, swimmers focused on their
own goals and objectives, unable to recognise the synergies that could ensue by working well with
each other as part of a team.
The report pointed to a lack of leadership as a big part of the problem. The issues were seen as so
obvious that they should have been met with a strong, unified response from coaches, staff and the
senior competing athletes. Instead, team cohesion and discipline were absent and individualism
prevailed. The review said, ‘the team dynamic became like a schoolyard clamour for attention
and influence’.
The review recommended steps be taken to ensure leaders saw leadership as a personal matter,
not just a functional one. In time, there was a clear-out of many of the members of the old
administration. Swimming Australia was advised to create an ethical framework to make clear what

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 values the organisation and its members should adopt and exhibit. Other specific steps included
tighter regulations on swimmers’ behaviour, including restrictions on social media use.
At the 2016 Rio Olympics, the Australian swim team again fell well short of expectations. There
were reports the team had isolated itself from the rest of the Australian contingent at the Games,
but swimmers Mack Horton and Kyle Chalmers both said it was strictly a performance issue, not a
team culture one.
Analyse why the ‘toxic culture’ of Swimming Australia impacted the team’s performance, using
case facts to support your analysis.
Source: Adapted from S Lane & S Spits, 2013, ‘Review slams “toxic” culture in swimming’, Sydney Morning
Herald, 19 February, www.smh.com.au/sport/swimming/review-slams-toxic-culture-in-swimming-20130219-2eoee.html;
W Smith, 2013, ‘Review slams Australian swimming’s toxic culture’, The Australian, 19 February, www.theaustralian.
com.au/sport/review-slams-australian-swimmings-toxic-culture/news-story/967f45d22641509afcb3760aedb626dd.

Managing Across Cultures

For international organisations, the task of managing culture to support strategy becomes more complex,
because a variety of national cultural contexts must be understood. Stakeholders from different parts of
the world have different attitudes, expectations and standards towards work, authority, equality, the way
business is conducted and how relationships are formed. International organisations must be sensitive to
the values and attitudes that prevail in the countries and societies where they operate. For this reason,
it is important to identify and understand the national and regional cultures in which an international
organisation operates.
The key points covered in section 6.2 of this module, and the learning objective they align to, are as
follows.

KEY POINTS

6.1 Explain the key concepts, components and frameworks applicable to implementation of
strategy.
• The 7-S framework is a model for understanding what is required for successful implementation of
strategy.
• The 7-S framework examines systems, structure, strategy, style, staff, skills and shared values. It
emphasises the importance of organisational culture in the implementation of strategy and change.
6.2 Evaluate factors that impact successful implementation of strategy and change management.
• The 7-S framework can be used to align systems, structure, strategy, style, staff, skills and
shared values in order to maximise the prospects of successful organisational change and strategy
implementation.
6.4 Appraise how the roles of management and leadership drive the implementation of the
strategy.
• Managers and leaders share responsibility for aligning the aspects of the 7-S framework to achieve
successful strategy implementation.
• The leaders and managers of an organisation can use the 7-S framework to guide an action plan
— the ‘before’ and ‘after’ states of each of the factors can be described.
• It is crucial to create a strategy-supportive culture.

6.3 CHANGE MANAGEMENT

Module 1 introduced how leaders and managers need to create an environment in which the organisation
is able to change as necessary to suit its strategy. This section examines how change management theory
can be used to achieve successful strategy implementation outcomes.
Change management is designed to ensure that an organisation and its people transition effectively
from the current state to future states, and in so doing support the realisation of business benefits as
articulated in the strategy. In the context of strategy, change management is about effectively leading
and managing individuals, teams and the organisation to successfully adopt the changes needed to achieve
required or desired business results.
Strategic initiatives, programs and projects are the most common vehicles for change, assisting an
organisation to move from its current state to its desired future position. These programs and projects may

380 Global Strategy and Leadership

last for several years, working through phases of change to achieve the strategic goals. An organisation
may be on a ‘change journey’ for an extended period of time, adding to the challenges and reinforcing the
need for a formal change management approach.
Organisational change management may be required for different levels and stages of the strategy
process. For example, stakeholder engagement and communication are key at the vision-setting stage.
They help to build momentum within the organisation and guide thinking and decision making.
Organisational change activities occur parallel to, and are integrated with, the broader activities of the
project, program or initiative. These change activities cannot be performed independently or in isolation —
coordination is critical for success.

KEY COMPONENTS OF CHANGE MANAGEMENT

This section describes key components of implementing change (as shown in figure 6.3), which are
additional to the need for an adaptive culture discussed earlier. To achieve strategic goals requires the
successful implementation of the changes identified as necessary to reach those goals. The following
sections outline the general components of change and then examine some specific change management
models.

FIGURE 6.3 Key components of change

Communication

Business impact Change readiness Stakeholder

Change strategy
assessment assessment management

Source: CPA Australia 2020.

Change Strategy
A change strategy sets the tone and context for the whole change initiative. It involves up-front thinking
and analysis to ensure a consistent response throughout a project or program. A change strategy defines
the scope and nature of the change, develops a change vision or the case for change, and creates a plan
that identifies which organisational activities will be performed, when, and by which members of the team
or organisation.

Business Impact Assessment

The business impact assessment analyses the impact of the change on the organisation to determine where
the impact will be the heaviest. It informs the:
• next iteration of the change strategy and plan
• communication strategy and plan
• stakeholder management plan
• business case (if it has not already been signed off).
This assessment phase is very valuable because it often provides managers with new information that
had not been considered earlier.

Change Readiness Assessment

Change readiness assessments determine how prepared the organisation is to adopt the new ways of
working, in terms of processes, policies, structures and provision of new services. These assessments
inform risk assessments and project and launch plans, and also influence where managers need to spend
more or less of their time in order to make the strategy successful. Change readiness assessments identify
training requirements and assist with business transition planning.

Stakeholder Management
When using an organisational change management approach, stakeholder management is not an activity
that organically occurs during normal business activity. It is focused and planned, and its goal is to
identify affected stakeholders then make sure they understand the change, are aligned with the future
state and participate appropriately during the strategy implementation. In module 3, you developed a plan
for identifying and evaluating the organisation’s various stakeholders. You should now review this plan

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because you have come to understand the impact of the strategy in more detail, building on your earlier
work identifying and evaluating strategy’s effect on stakeholders.

Communication
Communication in a change context is the ongoing exchange of information that helps everyone in the
organisation understand the change and prepare themselves for the new ‘to-be’ strategic model. To be
effective, communication should be proactively planned.
A strategic communication plan for developing the communications infrastructure that will support
communications throughout a change initiative. A communications strategy provides a clear statement of
the approach to be used for the development and execution of all communication activity and defines the
parameters for delivering key messages to stakeholders. A communications strategy typically includes:
• communication goals
• communication audiences
• key messages
• communication methods and tactical communication planning
• communication measurement and evaluation.
A strategic communication plan makes it possible to schedule specific communication pieces, including
who (will communicate), to whom, when and what. The plan can then be tracked and analysed throughout
the organisational change process to help ensure that employee and senior leadership expectations of a
project remain in line with reality. In addition, the plan establishes which communication channels and
vehicles are to be used and from whom the messages, and how to reinforce those messages once they
are sent.
Communicating an organisation’s strategy to all managers and employees who are affected by the
implementation, and who have a role to play in its execution, is a challenging task, particularly in trying
to gain both understanding and commitment from key people. Another communication issue relates to the
lack of buy-in and ownership of the strategy from key managers and employees. The communications are
less likely to be understood and accepted if only a small group of people were involved in the development
of the strategy.
Example 6.5 describes the potential to use technology for communication and describes how very
different communication approaches or styles can be adopted by senior leaders.

EXAMPLE 6.5

Leveraging Technology for Communication

Technology, particularly the internet and its related technologies, has transformed communication within
organisations over the past 30 years. While technology facilitates many communications related to the
day-to-day operations of the organisation, it also has transformed the way organisations’ top leaders
communicate with the people in the organisation.
One example is to the use of webinar technology to conduct regular (say, monthly) Q&A sessions with
groups within the organisation. These can be targeted at specific groups, such as the leaders’ direct
reports, at business units or departments or even the entire organisation, if well managed. A Q&A webinar
enables leaders to speak directly to staff and for staff to speak directly to leaders. Two-way communication
is more effective than one-way communication so offers a way for leaders to better ensure everyone is on
the same page in relation to strategy implementation.
Another example is the online equivalent of a ‘fireside chat’ where a leader speaks more informally
with the organisation’s people, using storytelling and other methods to help create and promote a culture
aligned to the organisation’s mission and values. CEO blogs are an example of this and Virgin chief Richard
Branson’s blog — www.virgin.com/richard-branson — is one of the best known. His blog topics (open
to all in the organisation and to anyone else interested) talks about a range of business and personal
issues, from how he met his wife, the books he reads and his holiday activities through to advice on
how to delegate and the social contribution business can make to communities. Engagement with an
organisation’s leaders on this more informal basis can be a powerful influencer over the way culture and
the values embedded in culture form and permeate an organisation.
Technology-based communication platforms can also be used as mere distribution mechanisms. For
example, the managing partner of an international commercial law firm distributes its annual report to its
stakeholders including 14 000 employees in 78 offices across 46 countries electronically via its website
and social media. Its key partners receive a hard copy.

382 Global Strategy and Leadership

 QUESTION 6.6

Compare and contrast Virgin chief Richard Branson’s communication method and message with
the managing partner of the international commercial law firm.

QUESTION 6.7

The Emerald Aged Care Facility had an exemplary reputation for providing its older residents with
high-quality service and care. However, the management team discovered that some of its patients
were very unhappy about being woken so early by the nursing staff in order to take their tablets
and shower.
Management investigated the problem and discovered that the nursing staff found that in order
for everyone to have breakfast around 8 a.m., they had to give some residents their tablets and help
them to shower earlier than residents would like.
After an extensive consultation process with residents, their families and staff, the management
team decided it was important to develop teams who would help residents get ready for breakfast
when they wanted to and at a pace that suited them. To achieve this, they decided the organisation
needed to be restructured to align the structure better with Emerald Aged Care’s existing ‘The
Happiest Residents’ Strategy. Management recognised that, despite consulting with all staff across
the organisation about what the restructure involved and what it was intended to achieve, the old
process of moving up and down the corridor, from room-to-room had been in place for a long time
and it would be all too easy for staff to revert back to old practices.
It was essential, therefore, to put the right communications in place. The project team’s com-
munications manager developed a three month implementation plan. Permanent staff were given
newsletters and regular emails, and casual staff received SMS messages about how the process
would change and the specific reason why it needed to change. Posters were also put up in staff
kitchens and staff work stations. Regular updates were given to team leaders about what was
working and what was not when the new process was put in place, which was discussed in their
smaller team meetings. Positive feedback then followed about how the new process was leading
to healthier and happier residents which was also communicated back to residents’ families and
senior management.
The project initiative was considered a success. Residents who enjoyed sleeping in could and
staff did not have to race up and down the corridor anymore to ensure residents had their breakfast
on time.
Using case facts, analyse why Emerald Aged Care’s communication strategy was successful with
reference to:
• communication goals
• communication audiences
• key messages
• communication methods
• tactical communication planning
• communication measurement and evaluation.

A STRUCTURED APPROACH TO MANAGING CHANGE

A structured approach to managing change will help to ensure a successful outcome, with the end
vision achieved. Figure 6.4 provides a model to use when thinking about change. Have all of the key
considerations been covered? If the program or initiative is experiencing any of the symptoms described
in the ‘Successful change’ column, what is missing?
Figure 6.4 prompts the following key questions when assessing a change program.
• Has a compelling case been clearly articulated? If this element is missing, there may be inertia. If it is
not clear why change is required, people will move slowly or make little effort to change.
• Is there a clear vision? If this element is missing, there may be confusion about the change. People will
be unsure about the merits of the change if it is not clear what is changing.
• Is there a well-defined strategy? If this element is missing, there may be diffusion of effort. Without a
clear road map for achieving the vision, people will focus on tasks that may not deliver on the desired
end state.

MODULE 6 Strategy Implementation 383

• Are there adequate resources? If this element is missing, there may be frustration because people will
be discouraged if there is not the budget or means to achieve the vision.
• Is there organisational/physical capability? If this element is missing, there may be fatigue because the
organisation does not have the necessary skills to lead the change.
• Is there sufficient motivation? If this element is missing, there may be crawl. If people are not enthusiastic
about the change, they will move slowly and change will take longer than anticipated.
• Are there robust communication mechanisms? If this element is missing, there may be doubt. Without
adequate communication about the change and its progress, people will be uncertain about the likelihood
of success.

FIGURE 6.4 Key elements for successful change

Organisational/ Robust
Compelling Clear physical Sufficient communication Successful
+ + Well-defined + Adequate + + +
case vision strategy resources capability motivation mechanisms = change

+ + + + + = Inertia

+ + + + + = Confusion

+ + + + + = Diffusion

+ + + + + = Frustration

+ + + + + = Fatigue

+ + + + + = Crawl

+ + + + + + = Doubt

Source: CPA Australia 2020.

Each of these elements is critical to successfully implementing strategy and achieving lasting change in
the organisation.
Example 6.6 describes how Nike implemented a change program to create transparency and ethical
conducts in its supply chain following revelations of abusive labour practices within its suppliers.

EXAMPLE 6.6

Nike’s Shift Towards a Sustainable Supply Chain

In April 2005, Nike surprised the business community by releasing its global database of nearly 750
factories worldwide. No laws required the company to disclose the identity of its factories or suppliers.
Yet, between the early 1990s and 2005, Nike went from denying responsibility for inhumane conditions
in its factories to leading other companies in disclosure. This response to a supply chain crisis was a
strategic shift. This shift illustrates how a firm can use transparency to mitigate risk and add value to their
business.
In the early 1990s Nike executives began to see reports of abusive labour conditions in their supplier
factories as a risk to their brand image. Nike’s traditional line denying responsibility for conditions in
these factories no longer satisfied a growing number of customers. On top of that, media images of
children sewing Nike soccer balls and running shoes sent social activists, academics and journalists
into a costly anti-Nike campaign. Nike leaders realised they were facing a supply chain crisis. They
needed a new strategy to deflect the growing criticism and improve their suppliers’ performance. Starting
with the creation of a new labour practices department, Nike introduced a series of changes to enable
better monitoring of sources of risk associated with suppliers’ labour practices. These changes included
the following.

384 Global Strategy and Leadership

 • Conduct a basic audit. Nike introduced the SHAPE internal monitoring system to provide it with an initial
assessment of whether a proposed new factory was near satisfying the code of conduct. Factories
flagged as high risk would also undergo a more comprehensive ‘M-audit.’
• Create a corporate responsibility and compliance division. Senior management created a new division
to facilitate the integration of corporate responsibility issues throughout the business. This brought
together sustainability and compliance employees working across product groups.
• Assign field managers. Nike assigned field managers to the various regions. They were responsible for
monitoring day-to-day compliance with labour laws and the Nike code.
• Establish a global database. Head office developed a comprehensive database to help track the global
supply chain and access audits conducted in the field.
• Initiate external expert review. In 2004, Nike invited a panel of external experts to review a draft of
its 2004 corporate responsibility report. The committee concluded that Nike would not receive the
credit it craved from the NGO community unless it released the names and addresses of its entire
factory database.
These monitoring and enforcement systems created confidence internally, which was necessary before
releasing the list externally in 2005. Nike turned this unprecedented response to its supply chain crisis into
a lucrative marketing opportunity that outweighed competitive risks associated with factory disclosure.
It advertised its new transparency as evidence of its new commitment to labour practices. In fact, the
company turned its full disclosure into a badge of honour among the apparel industry.
Source: Adapted from B Tobah, 2012, ‘Just Do It: How Nike turned a supply chain crisis into opportunity’, Net-
work for Business Sustainability, 23 January, www.nbs.net/articles/just-do-it-how-nike-turned-a-supply-chain-crisis-into-
opportunity.

QUESTION 6.8

Using figure 6.4 as a framework for your response, justify why Nike’s shift to a more sustainable
supply chain strategy would be considered a lasting change, supporting your response with
case facts.

Kotter’s Eight-Step Process for Change

One of the most popular frameworks for ensuring successful change outcomes is Kotter’s (1995) process
for leading successful change. Kotter’s change model emphasises the need of management to make change
happen and identifies eight steps that every organisation must go through to achieve its strategic objectives.
Kotter suggests that poor performance in any one of these areas will lead to failure when trying to
transform an organisation.
The first step of Kotter’s model is to establish a sense of urgency when the strategy is to be implemented.
This will require effective communication of the gaps in the present strategy by the senior executive team,
as they are models for the rest of the organisation.
The second step is to create a guiding coalition to build urgency and momentum for the change. It is
crucial to identify key people from different areas of the organisation who are willing and able to manage
the change and work as a team early in the process.
The third step is to develop a vision and strategy. A clear picture of the future helps the organisation to
align, concentrate and coordinate everyone’s efforts towards a final goal. The vision should be inspiring
enough to motivate everyone to take the proper actions in the right direction, and needs to be tangible
enough to implement. People need to know what they are aiming for and what the ‘to-be’ state looks like.
The fourth step is communicating the change vision. Communication should be embedded in all actions
of the change. Managers can emphasise the vision in daily decisions and through everyday communication
channels. They should also demonstrate appropriate behaviours that reinforce the vision.
The fifth step is empowering broad-based action, which enables others to implement the change. The
organisation should empower the change managers to change structure and processes so that they align
with the change vision, facilitating the readiness for change, and removing any obstacles.
The sixth step is to generate short-term wins. It is important to celebrate small achievements to let
everyone know that the effort is paying off and to motivate the team. The change team should design
several short-term targets which can be achieved quickly and reward people who made the wins possible.
Wins make it more difficult for negative people to resist the change or encourage dissent.

MODULE 6 Strategy Implementation 385

 The seventh step is ‘consolidating gains and producing more change’ (Kotter 1995). Kotter strongly rec-
ommends avoiding declaring victory too early. Instead, he suggests analysing the change implementation
and improving it where appropriate through continuous improvement and new programs. Irrational and
political resistance to change takes time to dissipate. It is all too easy for the changes to be reversed by
resisters (Kotter 1996).
The last step is to ‘anchor new approaches in the culture’ (Kotter 1995). It is fundamental to make
sure the change has been implemented and embedded clearly in behaviours, shared values and the daily
operations of the organisation.
These eight steps are summarised in figure 6.5.

FIGURE 6.5 Eight steps to transform an organisation

The 1. Establish a 2. Form a

3. Create a 4. Communicate
organisation sense of powerful
vision the vision
now urgency guiding coalition

7. Consolidate 5. Empower
The 6. Plan for and
8. Institutionalise improvements others to act;
transformed create short-term
new approaches and produce still eliminate
organisation wins
more change obstacles

Source: Adapted from JP Kotter, 1995, ‘Leading change: Why transformation efforts fail’, Harvard Business Review, vol. 73,
no. 2, March–April, p. 61.

Example 6.7 describes the steps Uber took to transform a dysfunctional culture that threatened to derail
the company’s future.

EXAMPLE 6.7

Uber: A Cultural Transformation

The sharing economy — those businesses that provide a digital platform to connect suppliers and
buyers — is sometimes known as ‘the Uber economy’, such has been Uber’s profile and pervasiveness.
Starting as a rideshare platform before diversifying into food delivery and labour supply, Uber’s business
model has proven one of the most disruptive of recent times.
All of this, including at the time a market valuation of about US$70 billion, had been achieved
despite a company culture that had been identified as creating a ‘hostile’ work environment. An internal
investigation generated 47 recommendations for change, including making managers more accountable
for employee morale, creating a more diverse workforce, including valuing and respecting that diversity,
increasing transparency of performance reviews, introducing a zero-tolerance harassment policy, and
prohibiting intimate relationships between supervisors and subordinates. It also recommended Uber
abandon some cultural values that had supported poor behaviour, including ‘Always be hustling’ and
‘principled confrontation’.
As the report came out, CEO Travis Kalanick began an indefinite leave of absence, leaving the company
in the hands of a leadership structure consisting of 14 separate roles, some of which were currently vacant,
including Chief Financial Officer and chief operating officer.
One analyst noted: ‘You can change your company’s policies, but without new leadership your culture
won’t change because the policies and the people won’t be aligned’.
Eventually Kalanick, widely considered to personify the dysfunctional culture are Uber, was forced
out. When replacement CEO Dara Khosrowshahi joined Uber, it was with the objective of bringing
about fundamental cultural change. His approach makes an interesting study in how to transform
an organisation.
Khosrowshahi quickly moved to fire more than 20 employees who had been involved in public scandals
and brought in new people to head up operations and marketing: Chief Operating Officer Barney Harford
and Chief Marketing Officer Rebecca Messina. Harford was charged with change management. Harvard
Business School professor Frances Frei had joined two weeks before Khosrowshahi with the task of
clarifying the mission that all Uber employees should be working towards, ensuring consistent, planned

386 Global Strategy and Leadership

 and targeted communications internally and externally and achieving consistency of culture across the
entire organisation. Khosrowshahi thus quickly established urgency and formed a powerful coalition at
the top of the company to lead the cultural change.
The vision established was to improve Uber’s reputation among employees and customers, to act with
honesty and integrity and to provide a safe workplace for all employees.
Frei said one of the surprising things was that the vast majority of employees actively wanted to improve
and so one of the biggest obstacles was figuring out how to roll out training to so many people quickly. This
was accomplished by establishing a corporate education program to teach Harvard-designed courses in
leadership and strategy. To overcome the need for employees or tutors to travel, Uber implemented a
system whereby the lecture is delivered live to video camera, with each student also beamed back to a
wall of screens surrounding the lecturer, creating a virtual lecture theatre. Some 40% of Uber’s employees
signed up in the first two months.
Source: Adapted from G Bradt, 2019, ‘How the Uber change agent survives his own change’, Forbes, 8 June, www.
forbes.com/sites/georgebradt/2019/06/08/how-the-uber-change-agent-survives-his-own-change/#26392c5f6539; M della
Cava, 2017, ‘Can Uber really change?’, USA Today, 16 June, www.usatoday.com/story/tech/news/2017/06/16/uber-travis-
kalanick-holder-report/102889068; N Zipkin, 2017, ‘Uber needs to recreate its company culture. Here’s what you can learn
from its mistakes’, Entrepreneur.com, 15 June, www.entrepreneur.com/article/295844; B Carson, 2018, ‘Inside Uber’s effort
to fix its culture through a Harvard-inspired “university”’, Forbes, 3 February, www.forbes.com/sites/bizcarson/2018/02/03/
inside-ubers-effort-to-fix-its-culture-through-a-harvard-inspired-university/#166260b21695.

Example 6.8 discusses how Pat Regan set QBE on the road to recovery following a series of writedowns
related to acquisitions.

EXAMPLE 6.8

QBE’s Turnaround
QBE Insurance is one of Australia’s largest insurance companies and provides services to markets in
Australia, the Asia–Pacific, Europe and North America.
CEO Pat Regan describes himself as a ‘good communicator’. He based his approach to creating
change at QBE on a core set of skills and approaches: visibility, communication — and a necessary
degree of ruthlessness.
QBE was established in the 1880s and was listed on the ASX in 1973. It has achieved considerable
growth through a high-profile acquisitions strategy, particularly in the first decade of this century. However,
those acquisitions became a source of problems for QBE, with the acquired businesses leading to a series
of profit downgrades, peaking with the announcement of AU$1 billion in impairments, shocking investors
and leading to a AU$4 billion drop in the company’s market value in the course of one day.
In response, Regan’s change challenge at QBE when he took over as CEO in 2018 aimed to establish
a culture of accountability and ensure that accountability was evident in everything QBE did. Regan says
despite the company’s growth and long history its leaders had ‘never really created a sense of what QBE
was’ and he wanted to reverse this to be leaders in insurance industry in customer satisfaction.
Prior to Regan’s appointment QBE’s businesses were run autonomously by local management teams
on the basis that this was necessary and justified by the local managers’ expertise and experience in their
home markets. There was little contact, coordination or knowledge sharing between the leadership and
management teams that were spread across about 45 different countries.
Since Regan took over, there have been no more profit downgrades and there are signs investors
are regaining confidence, with QBE’s share price rising well above market benchmarks. One analyst
attributed the turnaround to QBE’s ‘Brilliant Basics’ program which sets and enforces standards related
to underwriting, pricing, claims management and other core operations. Regan says that his senior
management team provided leadership on instilling the importance of improving the small details that
adds up to ongoing improvement throughout all levels of QBE.
Individual business units still have individual management, but they are required to comply with the
core standards, which apply to all QBE’s businesses around the world. The business units have been
given new resources to help them comply and there is now some sense of consistency across operations
around the world. Regan says there was no resistance — and in fact enthusiasm — for this move as it had
made obvious sense to stakeholders when he explained the plan to them. A senior executive was given
responsibility for rolling out the Brilliant Basics plan. Regan has made himself relatable and accessible for
employees through a range of measures, including a video chat that he makes available each week. The
chairman describes him as an inspirational leader.

MODULE 6 Strategy Implementation 387

 Regan’s changes at QBE can be seen then to have involved systems, processes, policies and culture.
He has sought to establish the values of customer centricity, diversity, accountability, teamwork, speed
and technical expertise. These are obvious values a company may talk about, but it is actually putting
them into action that has made a difference at QBE.
This change approach was accompanied by some divestment decisions, with QBE selling its Latin
American and Thailand businesses and exiting some segments of the US market. It also pulled reduced
exposure to high-risk insurance for Australian hotels and clubs. These decisions were driven partly by
profit considerations, but also by the awareness that these businesses were not well aligned to QBE’s
strategic capabilities or risk appetite. Nevertheless, a significant part of the remaining business delivers
underwriting losses and costs in some divisions are seen as excessive.
Questions remain, however, over whether the improvements will be sustained in the long term. Analyst
Brett Le Mesurier suggests it is typical when a new CEO is appointed that the CEO highlights past
problems, sets out a plan to address them and builds enthusiasm and goodwill about the changes. Le
Mesurier notes that then is often when things take a turn for the worse.
In an expected environment of price increases from the insurance sector generally, and with other
companies needing to reposition their portfolios, QBE has an opportunity for growth. Regan said the
company was open to acquisition opportunities if they made clear sense, but analysts suggest investors
will be very wary given QBE’s past disastrous performance on acquisitions.
Source: Adapted from J Thompson, 2019, ‘How Pat Regan set QBE on the road to redemption’, Australian Financial Review,
6 December, www.afr.com/work-and-careers/leaders/how-pat-regan-set-qbe-on-the-road-to-redemption-20191114-p53asg.

QUESTION 6.9

With reference to case facts and applying Kotter’s eight-step process for change model, identify
one key initiative for each step in the model and analyse how Regan used it to achieve change
at QBE.

IMPACT OF CHANGE ON AN ORGANISATION

The purpose of proactively managing a change is to minimise the productivity dip that occurs at the point
of implementation. For the strategy to be successful, an organisation must mitigate this productivity dip
as much as possible. Once a change initiative has been implemented, the effort focuses on monitoring the
change. This is an important phase because it includes benefits-realisation tracking that determines whether
the initiative has been successful. The results then feed into the performance management activities
undertaken by th organisation.
The final aspect to consider during monitoring is the sustainability of the change. There is little point in
an organisation embarking on change if the change cannot be sustained after the initial effort. Implementing
strategy is all about long-term change and, to achieve this, the changes brought about must be sustainable
over time. Some examples of how one can be assured the changes stick are:
• identifying whether the new processes and practices are being used or whether the organisation and its
people have reverted to what was used previously
• determining whether employees are working a similar number of hours to those worked before the
change, or are performing many hours of overtime
• determining whether the demonstrated behaviours in the workplace are consistent with the desired
culture and values.

QUESTION 6.10

Discuss the relationship between the strategy implementation process and the practice of change
management.

The key points covered in section 6.3 of this module, and the learning objective they align to, are as
follows.

388 Global Strategy and Leadership

 KEY POINTS

6.1 Explain the key concepts, components and frameworks applicable to implementation of
strategy.
• Change management refers to the processes taken to ensure the organisation changes as required
to align with the organisation’s strategy. It is often a function of leadership.
• Kotter’s eight-step process provides a framework for leaders and managers to drive change in
the organisation.
6.2 Evaluate factors that impact successful implementation of strategy and change management.
• Change management requires successful communication and stakeholder management.
• A communications strategy is a key part of successful change management.
• The changes associated with strategy implementation can result in a dip in productivity. Effective
implementation involves minimising this dip.
6.4 Appraise how the roles of management and leadership drive the implementation of the strategy.
• Strategy implementation usually requires aspects of the organisation or the organisation as a whole
to change. Often this involves a cultural change and as such leaders are often responsible for driving
this change.
• Change management involves dealing with the change strategy, business impact assessment,
change readiness assessment and stakeholder assessment.

6.4 USING PROJECTS TO MANAGE

STRATEGIC INITIATIVES
Implementation needs to involve consideration and coordination of specific actions, timing and account-
abilities. Forming programs and projects can facilitate implementation. This section focuses on effective
project and program management.

PROJECT AND PROGRAM MANAGEMENT

Turning strategic ideas and goals into tangible and practical projects and outcomes is a difficult but essential
part of the strategic process. This process is now considered in detail.
Best Management Practice (BMP) is an organisation that produces best practice methodologies and
publications in relation to management. It is widely renowned for its PRINCE2 certificate, an accredited
project management training credential that provides the following definitions of projects and programs.
• A project is a temporary organisation structure that is created for the purpose of delivering one or more
business outputs according to a specific business case.
• A program is a temporary flexible organisation structure created to coordinate, direct and oversee the
implementation of a set of related projects and activities in order to deliver outcomes and benefits related
to an organisation’s strategic objectives. A program is likely to have a life that spans several years (BMP
2011, p. 286).
Thus, project management is the management of a temporary endeavour — having a definite beginning
and a definite end — undertaken to create a unique product or service. Program management is the
management of a group of projects sharing common strategic goals, managed in a coordinated way so as
to realise benefits otherwise not available by managing projects as separate entities.
The more complex the strategy, the more likely a large number of projects will be required. These are
easier to manage and monitor if projects with similar objectives are organised within a program structure.
When a strategy involves achieving a number of strategic themes, each program for organising projects
will represent a theme.
Program management tends to be more a feature of large organisation than small ones. This is because
large organisations can justify the use of programs. Rather than having many projects running at once
with no underlying structure, it is normal practice at large organisations to ensure related projects are
placed under the domain of a program designed to achieve a strategic theme. Programs make it easier to
implement the different strategic themes inherent in the strategy. It is easier to understand how the different
projects designed to achieve a theme are related and complement each other if they are organised within a
program structure.

MODULE 6 Strategy Implementation 389

 An initiative’s size and scope will affect the implementation time. Generally, programs consist of several
related and/or interdependent goals that must be met and which take longer than a project. A project is a
discrete piece of work with one specific objective or goal and can be achieved in a shorter time. However,
as indicated, individual projects may be organised into an overarching program.
The Museum of Sports Memorabilia (MOSM) example from module 5 shows how individual projects
can be linked together into a broader program. For example, MOSM identified three strategic options that
can be linked to growing revenues and customer visits:
1. decrease the admission discount given to school groups
2. conduct promotional initiatives to attract adult visitors at full admission prices
3. offer event services to take advantage of the prime location and facilities at MOSM.
Individual projects will be required to implement each of these strategic options. However, they can all
be grouped together into an overarching program that is focused on revenue and customer growth. This
program would be overseen by a single person, the Program Manager, who supervises the activities of
people on the individual projects, including individual project managers, ensuring they are all in alignment
and working together well.
Specific steps in project scheduling and budgeting are described in the Strategic Management Accounting
subject. These include the use of program evaluation and review technique (PERT) diagrams for project
scheduling and using earned value to calculate project performance against budget.
Formal initiatives or projects are more likely to be successful because they have resources and effort
dedicated to them and they create a defined piece of work that can be monitored and reported on. Projects
with lower priorities might be left unattended, not be given enough resources or progress slowly.
Table 6.3 summarises some key differences between a project and a program.

TABLE 6.3 Key distinctions between projects and programs

Project Program

A discrete objective or goal Multiple related objectives or goals

One project manager Multiple project managers and one Program Manager

Multiple work streams Multiple related projects

One overall change strategy, and one plan to One overall change strategy, but multiple plans to
accomplish this change (many project plans within accomplish the change (each plan is a project)
one program)

Shorter duration Longer duration

Delivery is not necessarily directly linked to strategy, Likely to be linked directly to strategic goals
but will be aligned to business plans

Source: CPA Australia 2020.

As noted in module 5, strategy development identifies a series of projects that need to be scoped and
resourced. Project and program management considers the dependencies of each project, the resources,
related milestones and financial impacts. In addition to performing the technical project management
tasks, there are also cultural benefits attached to having employees working in teams on strategic projects.
Forming project teams can lead to improved employee participation and advocacy for initiatives, which
builds momentum for change.
A useful program and project management tool is a report card that assesses the progress of project and
program initiatives. A report card helps the Program Manager to maintain oversight of current projects.
It visually depicts which projects are on track and which are at risk of failure. Responsibility is clearly
allocated to a particular person or team, and an outlook of the project implementation dates is displayed.
Figure 6.6 shows how the report card has been used by MOSM, from the module 5 case study, to implement
and track its projects. The report card’s goals are featured at the top as a reminder of what a project is trying
to achieve. Report cards can be tailored to the individual requirements of the organisation and the program
of work.

390 Global Strategy and Leadership

 FIGURE 6.6 MOSM report card

Goals

Financials Internal process Learning and growth Customer

Goal 2018 2019 2020 2021 Goal 2018 2019 2020 2021 Goal 2018 2019 2020 2021 Goal 2018 2019 2020 2021

Revenue $8m $8.5m $9.0m $9.5m On time 85% 100% 100% 100% Increase 300 320 350 375 Increase 78% 83% 90% 90%
delivery of number of customer
projects volunteers satisfaction

Cost $2.6m $2.3m $2m $1.8m Collection Yearly Quarterly Quarterly Quarterly Increase 2 p/a 4 p/a 4 p/a 4 p/a Increase 150% 180% 200% 200%
care number of visitor
training numbers
days
Museum No Yes Yes Yes Retain 80% 90% 90% 90% Increase % 12% 18% 25% 30%
accreditation high of repeat
performers visitors

Year 1 Year 2 Year 3

Strategic Review
Projects Owner Feb—May Jun—Sept Oct—Dec Jan—Mar Apr—Jun Jul—Sept Oct—Dec Jan—Mar Apr—Jun Jul—Sept Oct—Dec Milestones Comments
theme status

1 Position 1.1 Update MOSM Marketing Plan with clear actions FO

Green
the brand to support MOSM strategy
1.2 Develop an online marketing strategy for MOSM, SF Red
with particular focus on social media
1.3 Develop and implement an engagement FO Green
strategy for members of sponsors' organisations
2 Retain a
2.1 Develop an acquisitions strategy for MOSM PM Orange
relevant
collection
2.2 Catalogue and digitise photo and print library DA Green
across all collections

2.3 Conduct significance assessment across all collections DA Green

3 Optimise
3.1 Review admission prices with a view to increasing prices AT Orange
the
revenue
mix 3.2 Grow museum sponsorship JH Green

3.3 Grow merchandise sales through revised product mix CS Green

3.4 Offer gift vouchers online and through alternative SW

Red
channels to broaden the reach; target adult customers
3.5 Implement events service for sporting teams to JH
Green
hold functions at MOSM after opening hours
4 Support 4.1 Develop and implement training course for all full- LT Green
growth time employees on current collection and sporting history
4.2 Review organisational structure (e.g. option of part- RW Green
time employment) and implement changes as required
4.3 Work with the finance team to better understand GST BS Orange
implications on MOSM and not-for-profit (NFP) status

MODULE 6 Strategy Implementation 391

4.4 Simplify and streamline operational environment RW Green

Review status legend Green Initiative is progressing as specified and approved Orange Initiative is in risk of becoming a Red Red Initiative is outside of acceptable tolerances
and requires immediate attention
 Effective project governance processes are required at every stage, including at the front-end of the
project (Zwikael & Meredith 2019) and when an individual project is completed and closed-out (Zwikael
& Smyrk 2019b). It is especially important to allocate responsibilities and accountabilities when a project
is closed-out to ensure the project’s benefits are realised. Even if a project has achieved all of its goals,
to budget and on time, it may not have achieved the desired benefit — what it was required to achieve to
implement the strategy. To avoid this problem, it is now considered best practice to give this responsibility
and accountability to the project owner (Zwikael, Meredith & Smyrk 2019). Senior managers with
technical expertise, such as the Chief Financial Officer, may be required to become project owners.
Project risk also has to be managed at all stages of a project. However, risk management in projects
may differ significantly depending on the size or complexity of the organisation or where it is situated in
the world. Research has shown that mature organisations with a history of managing complexity and high
levels of risk, tend to be more effective at managing their risks than is the case at smaller or less mature
organisations. Risk management is more likely to be managed in an ad hoc manner or poorly in smaller
and less mature organisations. In countries characterised by high levels of risk or uncertainty avoidance,
risk management tended to less effectively undertaken than in countries where risk was associated with
opportunity. Similar principles apply to industries where it is not a technical requirement to manage risk,
such as in a non-engineering organisation (Zwikael & Ahn 2011).
Virtual Teams
Virtual teams are established when it is necessary or desirable for people to work in teams across distances and
even different time zones. They are especially useful when it is necessary to have the input of specialists who
are working cross-functionally on interdependent tasks, for instance, people who are involved in developing
an innovative new product or improving a process. Virtual teams can work across an organisation, even in
the same building. They are more commonly associated with projects which are cross-regional or cross-
country. Effective leadership is required to ensure a virtual team is able to achieve their project’s objectives.
This includes identifying effective methods for: maintaining trust through communication technology,
ensuring diversity is understood and appreciated, managing the work life cycle through productive
meetings, managing team progress through technology, enhancing virtual team member visibility and
ensuring team members benefit from team membership (Malhotra, Majchrzak & Rosen 2007).
Compared to teams who are not remote and see each other in person regularly throughout their project,
it is much more important to think about the nature of the physical, operational and human interaction
aspects of working together. The challenge here is to find ways to make sure people can talk to each other
freely and confidently when they need to. When this is the case, it is usually a good idea to communicate
through conference calls rather than rely heavily on emails or voice calls. The same applies to ensuring
communications are meaningful. Just because there are physical or time constraints does not mean that
communications have to be briefer than they would otherwise be. Important information could be lost if
this is assumed. By the same token, in an effort to establish trust, people are less inclined to pay attention
to their messages if they are bombarded with communications. It is for these reasons that it is essential
to establish norms for responding, for instance, ways to make clear how quickly a message needs to be
answered. Some organisations will use at the end of a message an acronym to indicate when a response is
required, such as ‘4HR’ for four hours. Everyone has to be in agreement what platform for communication
is best, such as Zoom or Google docs for sharing documents. If those leading virtual teams get these things
right then the problems associated with communicating across different time zones, without body language
and when people are different can be overcome (Dhawan & Chamorro-Premuzic 2018).
Critically, in addition to ensuring people can work together in a collegiate manner even in a virtual team,
when technology is used as an enabler, it is essential to match the technology to the task. These range from
email to chat platforms, web and video conferencing, and online collaboration database and cloud-based
tools (Hill & Bartol 2018).
Technology insight 6.3 looks further at technology tools that have application in project management.

TECHNOLOGY INSIGHT 6.3

Collaboration Tools, Cloud Technologies and Best Practice

Software Enablers
Whether the members of a team work in close proximity to each other or not, a large number of tools and
technologies are now readily available to be used in organisations to make sure people can collaborate in
real-time, sharing communications and information as is necessary.

392 Global Strategy and Leadership

 Some of the tools and technologies that are being used across organisations to help teams collaborate
are software developer tools, continually accessible databases, cloud storage technologies, specialist
collaboration tools for such things as online product development, online data and big data mining tools,
knowledge management tools, and business intelligence and agile project tools (Anon 2018/2019).
Previously, collaboration across the organisation or geographies was only possible if the organisation
was networked. However, cloud computing has made collaboration much easier and accessible. Cloud
computing technology allows teams to lever the internet to share information systematically and securely.
Cloud computing is enabled through the delivery of hosted services by a range of providers. Two of the
largest cloud service providers are Google and Microsoft. These organisations can deliver services to
networked organisations all the way through to people’s smart phones, making it very accessible. Thus,
the ability to collaborate and work in teams is now something even small and medium-sized organisations
can possess. However, cloud computing is not without its problems and anyone leading a project that uses
cloud computing to link team members should consider how best to mitigate them. While the benefits
include reduced communication and collaboration costs, greater potential to integrate knowledge and
systems, increased flexibility, greater reliability, improved competitiveness and a reduced carbon footprint,
the problems include extra or different investment in resources such as training in cloud-based systems
management, time required to implement, cost of the service, and the potential for more security and data
control problems to occur (Attaran & Woods 2018).
In addition to the development of best practice methods for managing projects through the complete
life cycle of the project, specialist software-based tools have been developed to help project leaders
manage their projects within the required parameters, such as when required to use agile project methods.
This method though originating in software development is now widely used to help organise and execute
projects into discrete and regularly reviewed phases, making it possible to achieve iterative continual
improvement outcomes (Stettina & Hörz 2014).

A relatively new approach to projects is known as ‘agile’ — this refers to a project management and
software development approach in which teams deliver projects or outputs in regular increments. They
achieve this through intensive efforts known as ‘sprints’. Each sprint gives an output that is usable, but is
only part of the bigger picture. This approach allows for regular progress, but more importantly it allows for
fast evaluation of outputs and responsiveness to changes. This contrasts to traditional approaches, known
as ‘waterfall’ where progress is made over time towards a single outcome.
There are a number of key considerations when implementing a strategy through projects.
• Strategies should always be supported by sound processes of governance and decision making. To
avoid important strategic activities getting lost in the myriad of business operations and other projects,
strategic initiatives should be separated from ‘wish list’ initiatives and given a high priority. This ensures
that strategic initiatives are sufficiently resourced and supported by all stakeholders. When there are
several strategic initiatives competing for the same resources and funding, prioritisation models, project
planning and strategic reviews should be used. As discussed in module 5, prioritisation is an important
element in developing strategy.
• Project initiatives are supported by time-phased and adequately resourced tactical actions. Managers
should define the physical tasks and activities that are assigned resources and deadlines. This activity can
ensure that momentum towards the strategic goals is maintained and incremental benefits are realised
as tasks are completed.
• Strategic project initiatives are realistic and achievable. Strategic initiatives should be defined and
scoped to mitigate weaknesses, threats and business risks. They should also be tested to ensure that
the opportunities or targets they identify are realistic, given emerging external and market forces.
• Initiatives are clearly defined. All initiatives should be clearly defined, stand alone and not be
components of other broader initiatives. When strategic initiatives are absorbed into broader or larger
initiatives, there is a high risk that the strategic end goal and vision will be compromised or changed by
being part of a larger initiative. This can result in the strategy not being achieved as planned.
• All initiatives are managed as a central program. Related strategic initiatives should be grouped into
programs of work, use defined project management processes and involve the development of change
management strategies. Managing programs of related initiatives involves defining regular project
reporting requirements, approving KPIs for each initiative, and initiating strong governance processes.
For example, a formal change request process for variations to initiatives should be defined and followed.
For smaller organisations, the central program could include a senior manager, specific individuals or a
specialised team.

MODULE 6 Strategy Implementation 393

• Input is received from staff. Wherever possible, strategic initiatives should be transparent and incorporate
involvement of and feedback from employees at all levels of the organisation. This helps to align the
initiative with the realities of business operations, and also improves employee engagement with the
overall strategy and strategic direction.

QUESTION 6.11

The senior management team of an industry association determined, in consultation with its staff at
all levels, that the organisation needed to be more innovative. To better help its members use digital
technologies to engage their customers, the association established a program called ‘Always One
Step Ahead of the Competition’. The General Manager of Membership Education was put in charge
and shortly thereafter appointed a Program Manager to manage the program. The two met and
the General Manager confirmed the program had a total budget of $600 000. At this first meeting,
they determined that the program would consist of three projects: (1) Business Intelligence,
(2) New Products for Members, and (3) Coursework of the Future. Each would be managed by
project managers. After discussing resourcing requirements, they decided that each project should
be given a $200 000 budget and a 12-month deadline to complete.
Subsequently, three qualified project managers from outside the organisation were appointed.
They were asked by the Program Manager to spend the next week developing detailed project
plans. Since the projects would utilise the special expertise of key staff and it could be perceived
this project work was in addition to what staff were required to do as part of their day-to-day work
in operations, the General Manager of Membership Education and the Program Manager asked
the three project managers to consider the change management implications of their respective
projects, especially how to make sure seconded staff asked to work in the projects cooperated and
did all they could to support the strategy.
• At the end of 12 months, the Business Intelligence project was over budget by $20 000. This was
attributed to the fact that senior management team approved the purchase of software designed
to report on competitors on a daily basis. This was given to the project manager to implement.
• The New Products for Members project was unable to develop even one project during the
12-month period. This was attributed to the fact that staff did not prioritise the work from the
project work as it made it difficult for them to satisfactorily complete their regular work.
• The New Coursework for the Future project needed a six-month extension. This was attributed
to the fact the project manager kept on missing milestones and this was only noticed at the end
of the project’s 12 months.
Analyse why the three projects undertaken failed, using case facts to support your analysis of
possible reasons why each project failed.

Project Reason Analysis

Business Intelligence project Initiative wasn’t managed as a

central program

New Products for Members project No input from staff

New Coursework for the Future Strategic project initiatives

project weren’t realistic and achievable

Example 6.9 describes steps that can be taken to improve the management of a project.

EXAMPLE 6.9

Improving Project Management Performance

Joe Carter was promoted to Chief Financial Officer at Friendly’s Market, a supermarket company that
operates its supermarkets as a franchise model. Joe was given an internal report on a program developed
to improve areas of declining sales and he determined that there was a decrease instore traffic when
certain unprofitable lines were cut. Joe was asked by the Managing Director to lead a project that
developed a system that would allow them to track what happened when an unprofitable line was removed
from the shelf. The purpose of the system would be to allow management to determine:
• how many customers stopped shopping at stores after lines were cut

394 Global Strategy and Leadership

 • the amount of add on sales lost due to those customers not buying other products, like milk, bread.
Joe would work in the project for two days a week. The rest of the week he would work in his CFO role.
Six key considerations Joe should incorporate into his project management are described below.
1. Strategies should always be supported by sound processes of governance and decision making —
ensure that Managing Director has allocated sufficient financial and people resources for this to
be successful.
2. Project initiatives are supported by time-phased and adequately resourced tactical actions — develop
a project plan to identify the amount of people, time and budget required for objectives to be achieved.
3. Strategic project initiatives are realistic and achievable — activities in the project plan are scoped
to identify and mitigate any weakness or potential business risks, such as inability for the system to
integrate into existing systems.
4. Initiatives are clearly defined — Joe needs to identify all initiatives to make sure they are aligned with
the overall goal and vision that way he stays on task to achieve the objectives of the project.
5. All initiatives are managed as a central program — the project was aligned to the program to improve
areas of declining sales and so there needed to be reporting from the project into the central program
to ensure initiatives are aligned.
6. Input is received from staff — Joe needs to communicate with staff to ensure alignment with business
operations and to increase employee engagement and implementation success.

QUESTION 6.12

Using the MOSM report card from figure 6.6:

(a) for those projects that have a red status, provide two recommendations to improve their status
(b) for those projects that have an orange status, provide two recommendations to ensure they
don’t turn red.

The key points covered in section 6.4 of this module, and the learning objective they align to, are as
follows.

KEY POINTS

6.1 Explain the key concepts, components and frameworks applicable to implementation of
strategy.
• Projects are a key approach to strategy implementation.
• A set of related projects is often managed as a single program to ensure effective coordination.
• Project management refers to a well-developed set of methodologies and tools that managers (or
project managers) can use to effectively manage projects on budget and schedule to deliver the
required outcomes.
6.4 Appraise how the roles of management and leadership drive the implementation of the strategy.
• Strategy implementation often relies on a program or programs of projects to achieve specific
changes and outcomes. Managers (or project managers) can use the project management method-
ology to ensure projects are effective.
• Strategy implementation usually requires aspects of the organisation or the organisation as a whole
to change. Leaders are responsible for driving this change.

6.5 MONITORING IMPLEMENTATION,

PERFORMANCE AND THE EXTERNAL ENVIRONMENT
Implementation requires the ongoing monitoring and adaptation of strategy and initiatives. This monitoring
allows managers to attend to emerging and changing circumstances, promote flexibility and learning, and
avoid the pitfalls of adhering to plans that become outdated. Technology insight 6.4 discusses a model that
can be used by management to examine numerous aspects of the organisation and experiment with various
changes to see how the organisation’s performance will respond.

MODULE 6 Strategy Implementation 395

 TECHNOLOGY INSIGHT 6.4

Digital Twin
Digital Twin is a technology developed by PwC. Digital Twin refers to a virtual model of the organisation
that can help leaders and managers identify aspects of the organisation that facilitate or work against
the implementation of strategy. This naturally leads to ways to solve the problems or further capitalise
on enablers.
PwC’s Digital Twin technology examines the organisation in terms of:
• how efficiently and effectively the organisation coordinates its resources to implement strategy
• how supportive the culture is of the strategy
• how effectively staff are supported, developed and managed to succeed
• how costs align with priorities and benchmarks.
Because it acts as a digital representation of the business, the Digital Twin can also be used to
experiment; for example, different strategies or different ways to implement a strategy can be fed into
the Digital Twin system and users can then interact with a live simulation. The artificial intelligence built
into the system supports decisions and, perhaps more importantly, stimulates consideration of potential
issues that may not have been discovered.
Involving stakeholders in the simulation enables a well-developed understanding of how different parts
of the organisation are affected and how changes in one aspect will flow through to everyone else. As
a management approach, this can help build cooperation and buy-in for the strategy implementation.
Leaders themselves are able to consider more aspects of the strategy and explore creative and innovative
ways to implement it.
Source: Adapted from M Siegal & C Greenwood, 2019, ‘Organizational effectiveness goes digital’, Strategy+Business,
29 May, www.strategy-business.com/article/Organizational-effectiveness-goes-digital.

This section of the module examines performance measurement, ongoing monitoring of the external
environment and the use of reward systems to support the key strategies.

PERFORMANCE MEASUREMENT
By continually monitoring how well the strategy is being implemented across the organisation, it becomes
possible to identify when intervention is required to adjust the strategy, the implementation plan or the
change management approach.
As discussed in earlier modules, performance management is a critical component of strategy implemen-
tation. Goals, strategic initiatives and measurement systems are needed to execute and control the strategy
process. Key performance measures and indicators must be created, selected, combined into reports and
acted upon so that strategy implementation can have tangible outcomes. First, there needs to be a clear
cause-and-effect relationship between the indicators and strategic outcomes. Second, KPIs need to be
carefully chosen because they will influence the behaviour of people within the organisation (discussed
further in the ‘Reward systems’ section later in this module).
Effective performance management requires the managers in an organisation to:
• know what strategic goals they want to achieve and what strategic options have been selected
• express these goals in practical and measurable terms
• understand their current position in relation to these goals
• appreciate the resource implications of achieving these goals
• ensure that the goals and required action plans are well-communicated and that key employees are
accountable for their achievement.
The foundation of performance management is planning and control, wherein the effective implementation
of strategy requires commitment among subordinates … effective marshalling of resources and capabilities
and quick responses to changes in the competitive environment (Grant 2010, p. 11).

One approach to establishing performance measures against goals is the balanced scorecard, introduced
in module 3.

The Balanced Scorecard

The balanced scorecard (BSC) was discussed in module 3 as an effective tool to assess current performance.
We noted there that to construct a balanced scorecard required setting objectives and KPIs. Setting these is

396 Global Strategy and Leadership

undertaken as part of the strategy development and implementation stages of the strategy process.
Example 6.10 lists the key financial and non-financial metrics used by Qantas in its balanced scorecard
figure 6.7 provides a short report that shows its progress.

EXAMPLE 6.10

Qantas BSC Metrics

The QANTAS BSC includes:
• return on invested capital at a group and segment level
• EBIT compound annual growth rate for loyalty
• gross annual benefits from transformation
• employee engagement
• net promoter score
• progress on innovation across product, service and operations.

FIGURE 6.7 Qantas FY19 progress against BSC

Delivering today — performing against strategy

Target

Metrics Timeframe Progress to date

FY19 ROIC > WACC for all

ROIC > WACC FY18–FY20
Segment operating segments
performance Qantas Loyalty targeting On track for $500-600m
FY22
Achieving our targets

EBIT CAGR1 7-10% EBIT target by 2022

Transformation Annual $400m gross benefits FY18–FY20 $452m in gross annual benefits for FY19

Continued improvement in employee Revised engagement survey methodology

People FY18–FY20
engagement to be deployed in FY20.
Continued improvement in
Customer FY18–FY20 Maintaining NPS premium to competitor2
Net Promoter Score
Identify and develop new products, services and Qantas Frequent Flyer Redemption reset,
Innovation FY18–FY20
processes that drive revenue and efficiency Qantas Distribution Platform developed

Group return on invested capital exceeds 10%, sustainable returns to shareholders

1. Compound average growth rate in underlying ebit.

2. Competitor refers to Virgin Australia.

Source: Qantas, 2020, ‘Performance against our strategic pillars’, www.qantas.com/au/en/qantas-group/delivering-today/

performance-against-our-strategic-pillars.html.

The BSC then serves as an effective evaluation and communication tool for ensuring managers and
employees across an organisation understand the strategy and are implementing it well.
The BSC maps the strategy to specific actions that will need to be undertaken to achieve specific
goals and details how achievement of these goals will be measured. This clarifies which managers and
which parts of the organisation are responsible for each actions needed to implement the strategy. The
BSC can also break down information siloes (a lack of knowledge sharing between different parts of the
organisation) and stop new siloes from forming. It can also reduce debates among business units, functional
and geographic regions about resource allocations (Kaplan & Norton 2006).
Figure 6.8 demonstrates a BSC with objectives, measures, targets and initiatives. Measures must be
linked to the organisation’s strategy. Even if the strategy is adjusted over time or changes significantly,
the benefit of the BSC is that it provides a basis for understanding what went wrong and how to remedy
the problem.
Some researchers have suggested the balanced scorecard should be expanded to include measures
that highlight how well the organisation is performing in regard to such things as its environmental
objectives. This is because organisational stakeholders are now demanding strategies reflect their concerns;
for example, their concerns about climate change and the need for organisations to reduce their carbon
emissions. By incorporating the ‘environment’ and ‘social’ into the scorecard, it should be possible for

MODULE 6 Strategy Implementation 397

managers to better measure how initiatives to deliver on these aspects of a strategy are being implemented
(Hubbard 2009).

FIGURE 6.8 The BSC as a tool for performance measurement against strategic goals

Financial
Objectives Measures Targets Initiatives
‘To succeed
financially,
how
should we
appear to our
shareholders?’

Customer Internal business process

‘To satisfy
Objectives Measures Targets Initiatives our Objectives Measures Targets Initiatives
‘To achieve
shareholders
our vision,
Vision and and customers,
how should
strategy what business
we appear
processes
to our
must
customers?’
we excel at?’

Learning and growth

‘To achieve Objectives Measures Targets Initiatives
our vision,
how will
we sustain
our ability to
change and
improve?’

Source: CPA Australia 2020.

Performance measurement systems designed to support the strategy implementation process, such as the
BSC are most effective when they are realised as a dashboard of performance. This technology is discussed
in technology insight 6.5.

TECHNOLOGY INSIGHT 6.5

Dashboards
Dashboards are digital displays that draw data from the organisation’s datasets and display it in a user-
friendly way to provide leaders and managers with relevant information. Modern dashboards can be
customised to display the data of interest and as such have application at all stages of the strategy
process. In relation to the implementation stage, dashboards can display project and program status such
as budgets, milestones, resources allocated and dependencies. In the monitoring stage, a dashboard
can reflect the KPIs and metrics established in the detailed implementation plan, thus providing real-time
insights into the performance of the implementation plan and the strategy itself.
As their name suggest, interactive dashboards allow the user to modify how the data is displayed in
real-time; for example, users can determine which variables to include on a comparative graph and zoom
in or out to particular time periods of interest.
In the context of strategy implementation, digital dashboards can serve multiple purposes.
A program dashboard draw together information about all the projects that form part of an imple-
mentation program, including budgets, schedules and contingencies. This provides an effective way of
assessing overall progress and identifying any emerging problems. An interactive program dashboard
will also allow the user — generally the Program Manager — to zoom into similar details about any
specific project.
A project dashboard enables project managers to see many aspects of the individual project(s) for
which they are responsible, including milestones, budgets, schedules, risks and any issues that have
been alerted.
At a higher level, dashboards can be used more broadly to monitor strategy. This type of dashboard
may combine internal and external data to display the organisation’s performance against external
benchmarks. This is one way the organisation can be aware of and hence responsive to changes in
its external environment that may have implications for the organisation’s overall strategy. Strategic
dashboards also enable top management to identify where the strategic implementation may be varying
from plan and to initiative corrective measures.

398 Global Strategy and Leadership

 While dashboards take time and effort to set up and depend on the quality of the organisation’s
information systems, an effective dashboard allows managers to drill down and understand what
specifically has led to a given overall result. The dashboard highlights areas of underperformance and
overperformance very clearly, using methods such as a traffic light system (red for a problem, amber for
a potential issue, and green for all on track).
CPAs may be involved in the underlying design of dashboards used across the organisation in terms of
ensuring measures presented draw from reliable data and measure what they are intended to measure.
CPAs may also use dashboards as part of their own work (Bremser & Wagner 2013).
Because dashboards all draw from a single source of data, they are an effective way of sharing
information and ensuring anyone involved at any level of management is seeing the same information.
Because they can be customised to each user’s needs, they reflect an application of ‘multiple versions
of the truth’, as described in module 4. Many performance measurement systems designed to support
the strategy implementation process, such as the balanced scorecard, are most effective when they are
realised as a dashboard.

ONGOING MONITORING OF THE ENVIRONMENT

As part of the implementation process, it is essential to continually monitor the external environment,
including the macro environment and the industry environment. This is because in addition to the strategy
process being a complex process involving many factors, strategies need to continually be evolved. As new
facts about the outside world requiring action are discovered, the strategy and how it is to be implemented
must be changed in a corresponding fashion. The organisation’s must develop its information systems to be
sensitive to these changes. The organisation must have the analytical systems in place that make it easy for
managers to make sense of data and turn their analysis into ways to lever opportunities while addressing
threats (Zubac 2016).
As noted in modules 1, 2 and 3, complexity arises from many causes, including digital disruption,
globalisation and supply chains that cross the world, the rise of internet-based organisations, and economic
turmoil. The strategy process is often not well equipped to deal with these environments because
preparation does not necessarily lead to the accurate prediction of future environmental changes. Brown
and Harris et al. (2010) noted that environmental uncertainty is linked to ‘wicked problems’ — those issues
created by society that are difficult or impossible to solve because they have no simple definition or clear
solutions for managing them.
Implementation must be an ongoing and adaptive process that copes with uncertainty and change.
Business operations need to react to external changes and adapt by finding new ways to achieve the
strategy. Unless there is a major change in the external environment (e.g. a legislative change impeding
the organisation’s ability to continue under the current strategy), the strategy itself does not change, but
the way in which it is achieved changes.
For example, the uncertainty that the US–China trade war has created has made it more difficult for
equity traders around the world because global equity markets fall significantly or become more volatile.
in addition, this could impact trade talks between the governments of countries with China. Likewise, since
the threat of recession is real, it is becoming difficult for managers to know how to invest to better position
their organisations, particularly if part of their revenue comes from trade with China.
Unforeseen changes such as these put pressure on managers to revise and adapt their implementation
plans. As Slater and Hult et al. (2010, p. 551) highlight, ‘dynamic capabilities enable managers to adapt,
integrate, and deploy physical, human, or organizational capital to achieve alignment with the changing
business environment’. During the long timeframe usually required to implement strategy, competitor
actions or changes in resources or key personnel within the organisation can undermine or distract from
the implementation project.

QUESTION 6.13

At a conference in Australia on managing the transition risks that climate change brings, the CEO
of one’s of the world’s leading producers of petrol, hybrid and electric vehicles stood in front of the
audience and said:

We had every intention of introducing a fully electric vehicle to Australia this year but with
the Australian Government’s reluctance to provide support for the roll-out of charging stations

MODULE 6 Strategy Implementation 399

 across the country combined with the customer’s unwillingness to buy electric cars due to
reluctance to change, we have had no choice but to delay the introduction. Instead, we are
focusing on rolling out new models of hybrid cars. Research has shown that customers see
this as a way they can do their bit to reduce carbon emissions without limiting their ability to
drive the distances they want to, when they want to.

As a result, we will be manufacturing and bringing to Australia 10 000 hybrid versions of our
most popular model in the next year. We also plan to reconfigure our manufacturing plants in
South East Asia to phase out fully petrol cars so we can focus on hybrids for the Australian
market. We know there is demand in Europe for electric cars so we will be establishing markets
for our electric cars in Europe in the next year. Our design teams in Japan will stay focused
on the design and manufacturing of innovative electric cars in anticipation of a future that will
eventually see only electric cars on the road in Australia and elsewhere.

Examine three external factors that have impacted this car company’s implementation plans.

External factor Examination

Australian Government’s reluctance to provide

support for the roll-out of charging stations

Customer’s unwillingness to buy electric cars

Demand in Europe for electric cars

REWARD SYSTEMS
It is important to establish links between the strategic initiatives, key performance measures and individual
performance through goal setting, including identifying KPIs and establishing reward systems. KPIs are
an effective way to focus the activities performed and decisions made to ensure they align with the
broader strategy.
Creating a tight fit between an organisation’s strategy and its reward structure entails reaching an
agreement on strategic performance goals, scheduling the responsibility and deadlines for achieving them,
and recognising their achievement through pay and incentives for performance. Employees and managers
must be held accountable for carrying out their assigned parts of the strategy. Research suggests that it is
important that extrinsic motivators, such as pay increases, are ‘clearly and strongly related to performance
behaviour’ (Lawler & Benson et al. 2012, p. 1). This link needs to be visible to encourage managers and
employees to support strategic progress.
The organisation’s managers need to motivate and reward people who perform well in implementing
strategy. Motivational techniques and rewards should be used creatively and linked tightly to the factors
and targets necessary for the execution of the strategy. Managers need to get employees to buy into the
strategy and commit to making it work.
An organisation’s reward and appraisal system should reflect its desired values and beliefs. Changing
the link between employee performance and reward can be effective in encouraging the new values and
behaviours required in strategy implementation. According to Sohail and Al-Ghamdi (2012, p. 1463),
‘there are clear linkages between a reward system and the efficacy of strategy [implementation]’. They
further explain that a reward system should aim to motivate employee performance consistent with current
organisational strategy (Sohail & Al-Ghamdi 2012, p. 1464).
As an example, since the 1990s many banks in the Asia–Pacific region have based their incentives
and pay performance systems on increased sales (i.e. new accounts opened and bank products sold) and
measures of customer satisfaction. These reward systems are designed to implement a strategy of growing
market share by building customer relations and service levels to achieve a competitive advantage over
rivals. In an increasingly competitive and homogenised industry (i.e. one in which organisations offer very
similar products), a strategy of differentiation in customer service and focus is a key to success.
In the past, reward systems were mostly about establishing and maintaining controls so that good
behaviours can be rewarded and bad behaviours punished. The problem with this is that it ignored or stifled
many behaviours that which were productive. As a result, concerted efforts are now being made to develop
and use the organisation’s reward systems to stimulate creativity and innovation (Davila & Ditillo 2017)

400 Global Strategy and Leadership

and make working in teams a productive and rewarding process (Thorne & Smith 2000). The challenge
for the accountant is to ensure appropriate measures are identified which are consistent with these goals.
As mentioned in the previous section, the correct choice of KPIs is critical for strategy implementation,
because KPIs encourage certain behaviours when they are linked to reward systems. Poorly chosen
measures may lead to employees choosing questionable or inappropriate methods to achieve the ‘right’
outcome and gain their rewards. KPIs should focus on both the outcomes and the ways those outcomes
are pursued.
Example 6.11 details a proposal by Australia’s finance-sector regulator to impose strong requirements
relating to remuneration to ensure the conduct of the company’s executives and staff is better aligned with
the interests of stakeholders.

EXAMPLE 6.11

APRA Proposes Stronger Requirements on Remuneration to Enhance

Conduct, Risk Management and Accountability
The Australian Prudential Regulation Authority (APRA) has released a draft prudential standard aimed at
clarifying and strengthening remuneration requirements in APRA-regulated entities.
In a discussion paper released today for consultation, APRA has proposed creating a new prudential
standard to better align remuneration frameworks with the long-term interests of entities and their
stakeholders, including customers and shareholders.
Draft prudential standard CPS 511 Remuneration introduces heightened requirements on entities’
remuneration and accountability arrangements in response to evidence that existing arrangements have
been a factor driving poor consumer outcomes.
Among the key reforms, APRA is proposing:
• to elevate the importance of managing non-financial risks, financial performance measures must not
comprise more than 50% of performance criteria for variable remuneration outcomes
• minimum deferral periods for variable remuneration of up to seven years will be introduced for senior
executives in larger, more complex entities. boards will also have scope to recover remuneration for up
to four years after it has vested
• boards must approve and actively oversee remuneration policies for all employees, and regularly confirm
they are being applied in practice to ensure individual and collective accountability.
APRA flagged its intention to strengthen prudential requirements on remuneration in April 2018 following
its Review of Remuneration Practices at Large Financial Institutions. The need for a strengthened approach
was further underlined by the findings of 2018 Prudential Inquiry into the Commonwealth Bank of Australia,
as well as the recent industry self-assessments examining issues on governance, accountability and
culture.
APRA Deputy Chair John Lonsdale said it was clear that existing remuneration arrangements in many
entities were not incentivising the right behaviours.
‘Remuneration and accountability frameworks play an important role in driving employee behaviour.
Where policies are poorly designed, or not followed in practice, companies may incentivise conduct that
is contrary to the long-term interests of the company and its customers.’
‘In the financial sector, APRA has observed an over-emphasis on short-term financial performance and
a lack of accountability when failures occur, especially among senior management. This has contributed
to a series of damaging incidents that have undermined trust in both individual institutions and the
financial industry more broadly. Crucially from APRA’s perspective, these incidents have damaged not
only institutions’ reputations, but also their financial positions,’ Mr Lonsdale said.
Mr Lonsdale said CPS 511 would complement the Banking Executive Accountability Regime to lift
industry standards of accountability and reduce the likelihood of misconduct.
‘Limiting the influence of financial performance metrics in determining variable remuneration will
encourage executives to put greater focus on non-financial risks, such as culture and governance. As our
recent response to the industry self-assessments made clear, this remains a weak spot in many financial
institutions.’
Source: APRA, 2019, 23 July, www.apra.gov.au/news-and-publications/apra-proposes-stronger-requirements-on-
remuneration-to-enhance-conduct-risk.

QUESTION 6.14

Recommend (with justification) three non-financial KPIs that can be used to incentivise and reward
executives.

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 The key points covered in section 6.5 of this module, and the learning objective they align to, are as
follows.

KEY POINTS

6.1 Explain the key concepts, components and frameworks applicable to implementation of
strategy.
• Performance measurement is the process that establishes key performance indicators (KPIs) and
measures and then assesses progress against them as a way of ensuring strategy implementation
proceeds according to plan.
• Reward systems are an important tool to align people’s efforts with what is required to successfully
implement the strategy.
6.2 Evaluate factors that impact successful implementation of strategy and change management.
• Strategy implementation requires ongoing monitoring and adaptation of strategy and initiatives to
respond to emerging and changing circumstances.
6.3 Evaluate the implementation of strategy and its performance in the context of emerging and
changing circumstances.
• The balanced scorecard is an effective tool for evaluating strategy implementation and outcomes
from financial, customer, business process and learning and growth perspectives.
• The contemporary business environment is one of constant change and thus implementation must
occur in a dynamic and responsive way.
6.4 Appraise how the roles of management and leadership drive the implementation of the strategy.
• Management is responsible for establishing KPIs and related measures that clearly link activities to
outcomes and that, along with an appropriate system of incentives and rewards, align the efforts
of people with the actions necessary to implement the strategy.
• Leaders and managers establish reward systems that encourage people to act in ways the support
the implementation of the strategy and that foster innovation and creativity.

6.6 FURTHER IMPLICATIONS FOR LEADERSHIP

AND MANAGEMENT
Implementation takes place in complex and changing organisational, competitive and industry environ-
ments. It requires a supportive environment in which leaders, managers and employees accept and engage
in the implementation process.
Mitch Evans (2013) wrote ‘Winning strategies: 10 reasons for business plan failure’, drawing attention
to some of the challenges faced during implementation. His 10 reasons for failure are outlined in table 6.4.
Most of these reflect shortcomings of management and leadership, but they can be easily avoided.

TABLE 6.4 Reasons implementation can fail

Reason Explanation

Missing purpose Managers and employees throughout the organisation often focus on accomplishment
of their daily tasks, meaning little thought is given to the overall purpose of what they are
doing in the context of the organisation’s strategy.

No road map Implementation of a strategy requires each person in the organisation to understand
their role. Often implementation plans are not shared with all staff or not prepared in a
way that makes them meaningful to all staff so that each staff member and manager can
translate the plan into their specific role.

Lack of prioritisation In any complex undertaking, tasks need to be performed in a certain sequence and to a
certain timeline. A failure to establish these results in a failure to clearly communicate the
priority of different tasks. This leads to a lack of coordination and focus.

No sense of urgency A high-level implementation plan will include deadlines for the completion of various
initiatives. This can only be accomplished, however, if those deadlines are included
in the more detailed plans that managers and staff work from. A failure to clearly
communicate deadlines all the way through the organisation will result in a lack
of urgency.

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 No follow-through Implementation plans are intended to guide the actions of everyone throughout an
organisation, but they must be backed up by ongoing follow up to ensure progress is
being made at all levels of the organisation. This simply involves management checking
in with progress and taking corrective action where necessary.

Missing the how-to When people are unclear on how to perform a new task or make a change, they tend to
put off dealing with it. Management and leaders need to ensure those responsible for
any aspect of strategy implementation have the resources and information to proceed.

Weak accountability Implementation plans involve KPIs and metrics. These should be used on an ongoing
basis to monitor performance and ensure accountability.

Lack of celebration Many organisations fail to celebrate or recognise achievements or milestones. This often
occurs because attention immediately moves to the next priority. However, celebrating
achievements helps keep people engaged and motivated.

Missing rewards Related to celebration, recognition with a formal reward (financial or otherwise)
reinforces behaviours that contribute to the successful implementation of strategy.

Poor communication Communication cannot be a one-off effort. Successfully communicating strategy

involves ensuring everyone understands and commits to the strategy, and that this
commitment is reflected in their work. Often this will require ongoing communications
that establish and reinforce the requirements. Leaders and managers should also
encourage two-way communication so they are aware of any problems or suggestions
identified by those actively implementing strategic initiatives.

Source: Adapted from M Evans, 2013, ‘Winning strategies: 10 reasons for business plan failure’, Printing News, 1 January,
www.printingnews.com/article/10830854/winning-strategies-10-reasons-for-business-plan-failure.

COMMON PITFALLS IN STRATEGY IMPLEMENTATION

The themes identified by Evans (2013) are consistently represented in this module. They support and
confirm the rationale for the approaches defined for successful strategy implementation. For managers,
being aware of common errors and reasons for failure provides an opportunity to plan to avoid issues and
proactively mitigate risks, and if implementation does begin to fail, then to recognise it early and take
corrective actions.

Transforming Strategic Thinking into Action

Strategy is best achieved when those in charge of implementation are involved from the outset in the
strategic analysis and formulation process. While these tasks can be separated, and often are, they should
be understood and analysed concurrently. Many strategies are conceived without sufficient regard for the
context and circumstances in which they will be implemented. In this respect, many strategies are divorced
from the reality that must be engaged with for their roll-out, and therefore are less likely to be achieved.
Numerous people will be involved throughout the strategy process, as aspects of that process require quite
different skills and will take place in and across different areas of the organisation. It is crucial therefore
that managers ensure that everyone involved understands the context of their work in the strategy process
and conversely that managers understand the different perspectives and priorities that may influence the
people involved.
A related problem is that, traditionally, the strategy process runs over the course of a year, with
intermittent performance reviews and budget allocations, but implementation is an ongoing process that
needs immediate action and constant adaptation as organisational and market conditions change.
Another challenge for managers is to stay focused on the strategy and not allow day-to-day operational
matters or short-term priorities to interfere.
One reason why strategy implementation fails is that the overwhelming majority of employees are not
aware of or do not fully comprehend their organisation’s strategy. As Cadwallader and Jarvis et al. (2010,
p. 220) argue:
While successful translation from strategy to results depends on a range of organizational, managerial,
environmental, and competitive factors, often it is highly dependent on the actions of frontline employees.

To maximise the prospects of successful implementation, managers should therefore ensure all employ-
ees understand the organisation’s strategy, the benefits for the organisation of successful implementation
and how the employee themselves will contribute to and benefit from the strategy.

MODULE 6 Strategy Implementation 403

 A pervasive — some might say endemic — reason for poor implementation is the lack of coordination
across an organisation’s functional units, processes and systems. An interesting case study conducted by
Trkman (2010) has shown that, in order to supply the infrastructure required to support the implementation
of new strategy, structural changes are needed within an organisation. Without infrastructure, there is a
risk of misalignment between organisational process and the new strategy to be implemented. The 7-S
framework outlined in section 6.2 is a useful tool for managers to understand how the current organisation
relates to the strategy, identify what needs to change and to plan how to make those changes.
Another common lack of coordination or misalignment often occurs in the relationship between an
organisation’s strategy and its information systems. Strategy development is the result of the ‘deliberate,
rational analysis’ (Grant 2010, p. 21) of organisational performance by management, and a means to
adapt the organisation to changing daily circumstances. Many organisations do not focus enough on
information and decision-making processes that are critical to strategy implementation and instead make
structural changes.

Paralysis by Analysis
The failure to implement strategy arises in part from focusing too much on analysis and formulation and
not enough on the ways in which resources are allocated and operational decisions are made. One of the
more general issues and obstacles to strategy implementation that Hrebiniak (2006) identified was that
managers are trained to formulate but not implement strategy. This problem is acerbated by the fact that
the majority of strategy courses, including most MBA programs, focus primarily on techniques for analysis
and formulation rather than implementation.
While some argue that implementation can only be learnt on the job, there is a clear benefit in teaching
managers robust models of strategy execution that help to make sense of, and inform, the activities
of implementation.
The tendency to focus on analysis over implementation may be blamed in part on the ceremony and
process of strategy — the routine and sequential process of developing strategy. Use of the formal
strategy process has come under some criticism, largely from those studying the more informal and
incremental approaches to strategy as is often observed in practice. The formal strategy process can be
problematic because of its emphasis on analysis over implementation. For example, planning is often
treated as a substitute for implementation. As we have noted, there is a danger that in working through
the strategy process, managers think they are implementing strategy. However, strategy is a series of
decisions and actions that determine the long-term direction of an organisation rather than a documented
strategic plan. For example, from a CPA’s perspective, it is particularly important not to combine financial
and budgetary processes with strategic intent and direction, to avoid underlying strategic issues being
overlooked. Budgetary processes should be understood as a measure and outcome of strategy, rather than
the strategy itself. Another issue is the risk that a focus on the process of strategy will stifle creativity and
innovation. Overly formal and rigid strategy processes are unlikely to generate fresh or novel ideas for new
products, services or markets, and may in fact repress an organisation’s innovative capacity.
‘Paralysis by analysis’ is also one of the warnings often sounded when an organisation decides to
implement data analytics, particularly when drawing on big data. The earlier modules have explored how
data analytics can be used to understand the external environment, the organisation’s internal environment
and how it interacts with stakeholders and to help inform the development of strategic options. During
the implementation phase, the organisation’s analytics will continue, providing the organisation with new
information and insights. It is crucial that decision makers can focus on information and changes that have
genuine implications for the strategy implementation or strategy itself. They need to avoid trying to refine
the strategy in response to inconsequential information. They need to avoid delaying implementation or
making ill-considered changes to the implementation plan in response to the ongoing changes that may
arise from the organisation’s analytics program.

Resistance
A range of factors can lead to resistance to strategy implementation efforts, at both the organisational and
individual levels. These are illustrated in figure 6.9.
At the organisational level, resistance typically stems from the following factors.
• Strategic inertia. Organisations develop processes to ensure stability and protect the status quo. These
processes may result in managers not understanding or reacting to changes in the environment. Today’s
strategic capability, based on established processes and ways of operating, may result in a rigid
adherence to norms and routines that lose touch with the changing competitive landscape.

404 Global Strategy and Leadership

• Limited implementation focus. For a strategy to be successful, it must be implemented throughout the
organisation. Often, the implementation process falls down when it is inadequately executed in one
subsystem or part of the organisation. For example, if management is attempting to shift the culture
to a more sales- and customer-focused style, failing to change the performance management system to
reward such behaviour will impede the transition.
• Group inertia. Group dynamics, such as norms and roles, are a major influence on the behaviour of
individuals. Groups can resist the shift in behaviour required by the implementation effort, particularly
if they have a subculture at odds with the overall organisational culture.
• Power relationships. Rearrangements of resource allocations and budgets as part of the implementation
process may be met with individual and group resistance, especially from those who have a vested
interest in the status quo. The implementation effort may be perceived as a threat to the expertise and
power base that the existing organisational structure supports.
At an individual level, resistance typically stems from the following factors.
• Habit and security. People are creatures of habit. We establish routines and preferences that reduce
the choices we have to make and the complexity of life. When confronted with the challenges that an
implementation program often presents, we may feel threatened and insecure and tend to cling to our
established ways.
• Economic factors. Individuals may be concerned that the implementation program will undermine their
position at work, potentially making their skills and experience redundant.
• Selective information processing. We interpret and shape our world through our perceptions. Once we
have constructed our individual world, we have a tendency to filter out conflicting information, selec-
tively processing information to reaffirm our world. Therefore, information about an implementation
program that threatens this world has a tendency to be filtered out.

FIGURE 6.9 Factors influencing resistance to change

Strategic
inertia

Selective
Limited
information
focus
processing

Resistance

Economic Group
factors inertia

Habit and Power

security relationships

Source: CPA Australia 2020.

A number of techniques can reduce resistance to change. In general, resistance will be handled best when
managers and leaders recognise and act upon it constructively and early in the implementation process.
This requires an accurate diagnosis of the organisation’s people, structure and technology that identifies
potential areas of resistance to the implementation effort.

Managing the Politics of Strategy Implementation

The politics of strategy implementation includes people’s behaviours or actions carried out to advance their
own status, position or power within an organisation. This may involve attempts to win promotions, gain

MODULE 6 Strategy Implementation 405

more money in the budget, or acquire greater decision-making authority. It may also include attempts to
damage the reputation of rivals within the organisation (e.g. through gossip or other means).
When strategies are being implemented, changes may lead to negative outcomes for individuals
(e.g. loss of power or position), who may therefore fight hard to avoid the change.
Organisations are, by definition, arenas of political activity because they are a collection of individuals
and groups with diverse and sometimes conflicting interests and goals who must find ways to create order
and direction among themselves.
Organisational power and politics are key influences on the strategy process and often present challenges
to strategy implementation. Managers must understand and manage these dynamics within their organi-
sation in order to successfully implement strategy. Organisational politics pervades the whole process of
implementation, and managers need to be sensitive to the power structure and political dynamics within
the organisation.
Written implementation plans are only a partial summary of the many aspects of a business and its
future. An ‘invisible’ plan may include a full and frank assessment of forecast results, potential changes,
implementation details, costs and risks, a realistic picture of the business position and a contingency plan
for dealing with potential failure.
There may be gaps between explicit plans and business reality. Most managers accept that the political
nature of the planning process is a reality of managerial life.
Politics and Power Defined
The term ‘politics’ reflects the notion that, where interests diverge, society should provide a way for
individuals to reconcile their differences and conflicts through consultation and negotiation. Power is the
medium through which differences and conflicts are ultimately resolved. In an organisation, the distribution
and dynamics of power determine the behaviour and decisions related to the strategy process. Power can
be understood as a property or characteristic of the organisation at rest, whereas politics is the study of
power in action.
Politics is a fact of life in organisations. Politics and conflict arise whenever interests collide. Conflict
may be interpersonal or between rival groups or coalitions. People and groups collaborate in implementing
strategy, yet they often compete for limited resources, status and career advancement. Power will
influence who gets what, when and how. In recent years, leaders, managers and researchers have become
increasingly aware of the need to recognise the importance of power and politics in the process of
strategy implementation.
As with leadership, power has a number of definitions. Perrow (1986, p. 259) states that:
power is the ability of persons or groups to extract for themselves valued outputs from a system in which
other persons seek the same outputs for themselves or would prefer to expend their effort toward other
outputs.

Examining organisations from a power perspective enables an understanding of the dynamics of

negotiation and decision making among an organisation’s members — dynamics that are inherent in the
strategy implementation process. As Whittle and Mueller (2010, p. 626) note, ‘strategy is influenced
by social, political and institutional forces as opposed to being based on a rational assessment of core
competencies or market opportunities’.
The Role of Managers in Dealing With Politics
Managers need to work hard at building consensus in strategy implementation. During the overall
implementation process, managers should be sensitive to the power structure and political dynamics
inherent in the organisation. As stated earlier, strategy implementation combines the intended strategy and
the series of unplanned actions that form the emergent strategy. However, planning can be more about the
interplay of political forces than the formulation of explicit strategies. In this sense, the planning process
should act as a form of control and conflict resolution, a resource-bidding process and a communication
process.
In order to manage the political influences in the planning and process of strategy implementation,
managers should recognise the political nature of the planning process, and the influence that their personal
values may have on the process. Managers’ commitment to the implementation process provides an
important role model for employees. It is the responsibility of management to clarify and influence the need
for the implementation, to allocate sufficient resources, to facilitate the program and to make key people
accountable. Managers must develop and empower key people such that they can effectively manage
the implementation.

406 Global Strategy and Leadership

 Organisational politics can be both positive and negative. A certain level of organisational politics
is healthy and productive, if the expression of divergent views is encouraged to gain a more complete
understanding of the strategy implementation process. However, too much political tension can lead to
anxiety and impede the implementation process.
The following tactics for managing interpersonal politics and conflict are drawn from the work
of Eisenhardt and Kahwajy et al. (1997).
• Work with more information and debate matters on the basis of facts. More objective and relevant data
encourages people to focus on issues rather than personalities.
• Develop a range of alternatives to strengthen the debate. Different viewpoints should be encouraged
rather than suppressed, paradoxically as a way of minimising conflict by bringing out and dealing with
the diversity of perspectives in an open atmosphere.
• Maintain a balanced power structure. In doing so, a sense of fairness is created and members of a team
have meaningful input in their areas of expertise.
• Resolve issues without forcing consensus. This is a two-step process in which managers discuss an issue
and try to achieve consensus.
These tactics are consistently used in effective management teams. Successful implementations are more
likely to be achieved by teams that promote active and broad conflict over issues without sacrificing speed.
Managing interpersonal conflict is vital in this process.

Environmental Uncertainty
As discussed in section 6.5, an important part of the implementation process is to monitor the external
environment for changes that could affect the strategy or interfere with its successful implementation.
The business environment is increasingly volatile. This is partly due to the rapid pace of change brought
about by technology and the complex interactions between the components of the highly connected
and interdependent global market. Strategy, by the very nature of the strategy process, is formulated
and implemented over time periods that will almost certainly involve changes in the organisation’s
environment. Some of these can be identified and managed through risk-management processes, but
other changes are unpredictable and can significantly impact on the appropriateness of an organisation’s
strategy. Consider, for example, the bushfire crisis in the Australian summer of 2019–20. Tourism operators
may have contingency plans in place for natural disasters, but the strategy of most would not have
allowed for the scale of fires that meant many tourism destinations were closed for extended periods.
Following the fires, many faced elevated rebuilding costs to meet contemporary building standards and
insurers also increased premiums dramatically if they assessed the future risk substantially higher than in
the past.
Such dramatic changes may require the organisation to change its strategy. Usually, however, changes
in the business environment will not lead to changes in the strategy, but rather to changes in how it is
implemented. The strategy itself may change in the next cycle of the strategy process if the environmental
change is permanent.
Regulatory conditions are another example of environmental uncertainty. In 2019, the United States
significantly changed its trade terms with various major trading partners. The introduction of carbon pricing
— a market-based approach to encourage organisations to reduce greenhouse gas emissions — in various
markets has also been unpredictable.
Management needs to be alert to environmental changes, as discussed in section 6.5, and adjust the
implementation plan accordingly.
Example 6.12 examines how a failure to invest in integrating a new acquisition into the main organisation
led to eventual divestment of the acquisition.

EXAMPLE 6.12

Wealth Management Implementation a Failure for NAB

Kicking off the Melbourne leg of the final round of hearings at the Royal Commission into Misconduct
in the Banking, Superannuation and Financial Services Industry, counsel assisting Michael Hodge asked
NAB’s chief executive Andrew Thorburn whether he considered the shift of the wider banking market into
wealth to be a failure.
After pausing to think, Thorburn said: ‘If you looked at the raw evidence, you’d probably agree that it
has been. It didn’t need to be, but it has been.’

MODULE 6 Strategy Implementation 407

 Thorburn explained how NAB reasoned at the time of its MLC acquisition, saying that customers wanted
the bank to offer a broad range of products. While financial advice traditionally sat ‘just outside of the
banking circle’, people were beginning to see banks offer those services.
In early May 2018, former NAB chief customer officer for consumer banking and wealth, Andrew Hagger,
announced that the bank would sell the lion’s share of its wealth business. At the time, Hagger told
Professional Planner that the divestment of MLC — which had been purchased from Lend Lease in 2000
for AU$4.56 billion — was about the bank becoming ‘far less complex and far more simple’.
Thorburn was much more candid today about the bank’s decision, saying that, ‘We thought it would
be successful, but that didn’t happen.’ While there was more regulation and compliance than the bank
anticipated, he admitted that NAB also failed to wield enough control over the advice side of the
business.
‘We didn’t integrate MLC into the bank, it was like a separate unit,’ he said. ‘We didn’t invest enough in
it, to be honest. It is a completely different business. And MLC didn’t quite recover from the GFC.’
Thorburn said it wasn’t a matter of capability the bank had ‘good expertise’ with ‘wealth experts at the
top level’, but failed to ‘integrate and upgrade’ advice systems, instead investing in ‘other areas that took
away from MLC’.
Source: Adapted from T Sharpe, 2018, ‘Bank execs admit wealth experiment’s failure’, Investment Magazine, 26 November,
www.investmentmagazine.com.au/2018/11/bank-execs-admit-wealth-experiments-failure.

QUESTION 6.15

Examine why NAB’s implementation of wealth management failed, using the following two common
pitfalls of strategy of implementation:
(a) transforming strategic thinking into action
(b) environmental uncertainty.

THE ROLE OF CPAs IN STRATEGY IMPLEMENTATION

There is an increasing expectation that strategy should reside in the daily routines and activities of
employees and processes, in which the role of the finance professional is central. As discussed in previous
modules, the CPA and their role in business intelligence and data analytics (BIDA) is essential to
informed decision making. Hence, in recent times there has been a shift in the role of CPAs to the centre,
becoming more active and dynamic in shaping and enabling both the formulation and the implementation
of strategy. Finance professionals are taking up a more central role in value chain analysis and shaping the
future direction of strategy for organisations. CPAs are more involved in activities traditionally undertaken
by other functional roles, such as marketing. Examples of these activities include financial advice for
strategic implementation, for budget control and in designing strategies of cost leadership. CPAs are
also becoming proficient in using data and analytics and business intelligence to inform corporate- and
functional-level strategy development in the monitoring and measurement of strategy success. This section
focuses on this developing role and the relationship between CPAs and strategy.

CPAs and Strategy

As a finance professional, one of the most important skills that a CPA should develop is the ability to
think analytically and critically. Accounting tasks that form part of the strategy process extend beyond the
well-established functions of decision influencing and decision facilitation (Cuganesan & Dunford et al.
2012).
CPAs play a central role in both shaping and enabling the implementation of strategy. CPAs can play a
key role in collecting business intelligence and using this data analysis to manage and monitor the strategy
process, particularly in terms of resource and budget allocation as well as in setting relevant financial goals
and targets.
Changes to the strategy process have been reported in the context of the global financial crisis (GFC).
According to research into the implementation of risk-management strategies that can withstand the
negative effects of disruptions such as the GFC, an ‘optimal risk management strategy that remains
unchanged regardless of whether it is used before, during or after a significant financial crisis’ should
be adopted (McAleer & Jimenez-Martin et al. 2010, p. 4). The implementation of such a strategy requires
a greater emphasis on BIDA and the role of the finance professional.

408 Global Strategy and Leadership

 CPAs are also playing a more central role in the approval and monitoring of implementation projects,
and are therefore becoming more involved in strategy implementation. This centrality is evident in resource
and budget allocations, feasibility studies, determining the financial and accounting requirements of
an implementation, forecasting sales and revenue metrics, and setting milestones for the measurement
and control of the implementation project. More active inclusion in project management for the CPA
offers alternative roles within the organisation and broadens the application of the traditional view of
accounting. A recent study found that ‘a whole array of accounting devices can play an active part in
realising a successful strategy’ (Skaerbaek & Tryggestad 2010, p. 108). CPAs are strategic actors not only
in ‘promoting the efficient implementation of a strategy, but also in contributing to its structuring and
(re)formulation’ (Skaerbaek & Tryggestad 2010, p. 108).
CPAs are also increasingly working within project environments where they can actively assist as
subject matter experts, project managers, steering committee members or as project owners, taking ultimate
responsibility for the performance of the project. Likewise, since organisations can benefit from the
support a dedicated cross-functional team, accounting specialists who have the ability to create and
manage performance scorecard systems, identify how to align business units, support functions and
external partners with the organisation’s strategy, monitor progress, help further develop the strategy
and communicate the strategy’s merits could play an invaluable role at the organisation (Kaplan &
Norton 2005).
Organisational units or departments need sufficient resources to carry out their parts of the implemen-
tation plan. CPAs can use their financial skills to ensure that budget allocations are linked to strategy
implementation. Mobilising the necessary resources and funding are among the first requirements of
an implementation project. The CPA’s role is to develop a strategy-enabling budget that drives strategic
initiatives and builds the required capabilities.
Insufficient funding can impede the implementation process, but excessive funding represents a waste of
resources. Strategy implementation may require shifts in resources, downsizing some units while upsizing
others with more people and equipment and increased operating budgets. CPAs must make sure that
strategy drives the allocation of funds, and strategy-critical areas and activities are well-resourced to
facilitate successful execution.
Within an organisation, CPAs might be in a single team within a finance or accounting department, or
dispersed across a range of organisational departments or units. Setting and monitoring financial goals
and measures provide key instruments for checking and controlling the performance of the strategy
implementation program. In this respect, the CPA’s role is critical in ensuring that financial goals are
aligned with the strategic targets set by managers. The cases of Target and Lorna Jane suggest that the
financial goals require embedded functional strategies from all units of the firm and require the finance
professional to be a major player in the execution of this. Target aims to achieve a ‘long-term goal of
generating [USD] 100 billion in sales and [USD] 8 in per-share profit by 2017’ (Cheng 2012). Lorna Jane
aims to double its profit over three years, 2015–18 (Fitzsimmons 2015).
CPAs should set short-term and long-term financial goals. Short-term goals are concerned with the need
for immediate finance to meet day-to-day budgetary requirements. Each of the goals for Lorna Jane and
Target needs day-to-day and cycle-to-cycle objectives to ensure the firm stays on track, and these must be
supported by all strategic units of the firm. Long-term goals have a strategic emphasis in terms of making
financial decisions that will position the organisation for competitive advantage in the future.

CPAs and Leadership

There are a number of practical steps that CPAs in leadership positions should take to ensure a strategy
is implemented successfully. In addition to achieving a balance between the ’hard’ and ’soft’ elements of
implement, balancing the 7-S’s of strategy implementation, it is imperative they are strategically agile. This
means they need to be good at anticipating problems, experimenting, gaining perspective, abstracting and
reframing. They also have to create an environment conducive to leadership unity. This means they need
to be good at starting new dialogues, revealing their motives, integrating organisational agendas, aligning
interests and allow people to make mistakes if this leads to learning. Lastly, they need to be committed to
resource fluidity. This refers to be able to organise to better delivery customer value, allow the organisation
to become more modular, establish exemplary resource allocation and sharing processes, identify and act
on the fact that the business model must change and transform the organisation when necessary (Doz &
Kosonen 2010).
The more critical it is for an organisation to be transformed, the more critical it is to ensure the
organisation is able to achieve its strategic objectives. However, considering how complex problems can be

MODULE 6 Strategy Implementation 409

and the difficulties leaders can have diagnosing exactly what is wrong at the organisation or what it lacks for
the future. This means leaders need to be clear about why a transformation is necessary, exactly what needs
to be achieved and the leadership capabilities required. For instance, if the organisation is transforming a
global presence, systems, networks, capabilities, knowledge bases, etc. need to be changed. The impact
on the culture must also be considered. Likewise, if the object of the transformation is to become more
customer focused, the workforce needs to understand this. Relationships with vendors and suppliers need
to be redefined. Processes for learning about customers and how to better to deliver value to them need to
be put in place (Anand & Barsoux 2017).

CPAs and Managing the Performance of the Organisation

CPAs also play a key role in the performance of the organisation, working with other senior managers to
link strategy to business operations through financial and non-financial measures and goals. According to
Calvert and Kurji (2012), accounting graduates should develop core competencies in critical thinking and
reasoning so they can contribute to strategy formation and progress. The ability to effectively communicate
through both written and oral mediums, as well as work in a team are also noted as essential skills
of an accountant. Creativity and knowledge, and judging when and how to use that knowledge are
also important.
Taking a more central role in the performance of the organisation is one way that CPAs can assume
a greater managing role and be more involved in strategic decision making. CPAs can provide greater
analysis and interpretation of performance systems and measures, offering a practical and integrated
view of the relationship between operational and strategic goals and measures. According to Kranacher
(2010), CEOs are now looking for soft skills including critical thinking and professional judgement,
competent technical skills, an understanding of technology, in particular BIDA, and management qualities.
These are all core skills for developing and implementing strategy. There are many benefits associ-
ated with becoming a trusted leader, such as being one of the first people consulted about data or
potential performance related issues and improving communications across the organisation as a result
(Elrod, 2012).
Strategic implementation depends on the efficient allocation of resources. Managers need to supervise
the key relationship between strategy and resource allocation to ensure effective implementation. The
success of strategic visions and missions is largely contingent on the extent to which they are aligned with
resource allocation and decision-making processes. CPAs play a key role in resource allocation through
activities such as costing, revenue measurement and forecasting, and in setting budgets. However, the
broader aspects of resource allocation, capital and the organisation’s overall capacity include collecting and
collating business intelligence and analysing it, interacting with people to capture data and information,
and using softer skills which are beyond the traditional focus on financial skills.
The strategy process must be designed and implemented to achieve coordination horizontally and
vertically through the various levels and functional areas of an organisation. In this respect, the strategy
process should involve those managers who have an influence on strategy implementation. The approach
to strategy needs also to be adaptable and flexible, rather than rigid and fixed, particularly in unstable
environments. Organisations need to be more responsive and flexible in relation to change indicators in
their operating environments.
The strategy implementation process is dynamic, and therefore plans must be monitored and revised
as new situations and demands arise. There is something of a paradox in this respect, as strategy must
be both precise and specific in its formulation but also build in flexibility and adaptability, particularly in
its implementation.
Some key questions finance professionals should be able to answer by referring to the concepts,
models and approaches described in module 6 include those listed in table 6.5.

410 Global Strategy and Leadership

 Key questions for finance professionals to consider and answer regarding strategy
TABLE 6.5 implementation

Concepts/models/approaches that can be used to

Key questions answer the key questions

How is strategy implemented? • Strategic implementation steps — McKinsey’s 7-S

framework
• Program and project management

How does an organisation successfully lead change • Key elements for successful change
management? • Key steps of change
• Kotter’s eight-step process for leading successful
change

Why does strategy implementation fail? • Why change is hard

• The challenges of implementing strategy

Source: CPA Australia 2020.

Note: Some of the models and concepts provide input into answering more than one question.

A FINAL POINT
London Business School professor of strategy Freek Vermuelen (2017) wrote:

Many strategy execution processes fail because the firm does not have something worth executing. The
strategy consultants come in, do their work, and document the new strategy in a PowerPoint presentation and
a weighty report. Town hall meetings are organized, employees are told to change their behavior, balanced
scorecards are reformulated, and budgets are set aside to support initiatives that fit the new strategy. And
then nothing happens.
One major reason for the lack of action is that ‘new strategies’ are often not strategies at all.

The point Vermuelen is making is that strategies that fail during implementation or that are not
implemented at all commonly arise from a failure to identify and choose clear and consistent actions
to achieve the goals. Instead some organisations fall into the trap of thinking the goals are the strategy.
When that happens, the organisation is left without clear initiatives to implement. By following the rational
approach to strategy detailed in this study guide, leaders and managers — and everyone else involved in
the strategy process — can ensure the strategy:
• is based on high-quality information and analysis
• has considered all realistic options
• is achievable with the resources and capabilities the organisation possesses or can acquire
• has evaluated the relative risks and merits of the various options
• has methodically chosen a cohesive set of options
• has a detailed implementation plan
• is supported by the necessary changes to align the organisation and everything within it to the
strategy.
The key points covered in section 6.6 of this module, and the learning objective they align to, are as
follows.

MODULE 6 Strategy Implementation 411

 KEY POINTS

6.2 Evaluate factors that impact successful implementation of strategy and change management.
• Common factors in failed strategy implementation include:
– missing purpose
– no road map
– everything is a priority
– no sense of urgency
– no follow-through
– missing the how-to
– weak accountability
– lack of celebration
– missing rewards
– poor communication.
• Environmental uncertainty, paralysis by analysis, politics and power, and resistance to change can
all undermine strategy implementation and must be overcome by managers.
6.4 Appraise how the roles of management and leadership drive the implementation of the
strategy.
• Organisational power and politics are key components of organisations and must be managed so
they do not interfere with strategic implementation.
• Managers can respond to conflict and politics in the organisation by ensuring disagreements are
resolved with reference to facts, allowing multiple perspectives, maintaining balance so fairness is
preserved, and resolving issues without forcing consensus.

412 Global Strategy and Leadership

REVIEW
Strategy implementation is the final stage in the model of the strategy process introduced in module 1 and
described in modules 2 to 6. It is the stage in which strategic options are translated into specific initiatives
with defined goals, outcomes and metrics.
The module discussed how McKinsey’s 7-S framework can be used to understand the alignment of
the organisation with the strategy. It can then be used to map the changes required to the organisation’s
structure, systems, style, skills, staff and shared values in order fully align them with the strategy and thus
support implementation.
Adopting a new strategy necessarily involves change. The organisation’s leaders and managers need to
undertake a campaign of change management to ensure the organisation changes in order to align with
the strategy. Change management should be based on development of a change strategy, a business impact
assessment, a change readiness assessment and stakeholder management. Clear communication throughout
the entire process is essential in order to achieve commitment throughout the organisation.
The specific actions required to implement the strategy are often planned and actioned using projects.
These are managed using project management methodologies to ensure different parts of the organisation
and different activities are coordinated.
As implementation is a complex process involving change throughout the organisation, it is crucial
managers engage in continuous monitoring of performance and remain alert to changes in the external
environment that may affect implementation. Effective performance measurement requires a clear strategy
linked to clear options and goals, and the translation of options into specific actions with specific
measurable outcomes. The balanced scorecard can also be useful in monitoring implementation against
the goals and specific metrics. Changes in the external environment can affect how the strategy needs to
be implemented. In extreme cases, changes may affect the appropriateness of the strategy itself.
The implementation phase is when the analysis and development is translated to outcomes. Managers
and leaders in the organisation need to be involved throughout the strategy process and need to ensure
every aspect of the organisation is aware of and committed to the strategy. This can be achieved through
communication and by aligning individuals’ own interests with the organisation’s interests. During
implementation, managers often need to confront various challenges, including environmental uncertainty,
paralysis by analysis, resistance, politics and power plays.
Module 6 focused on transforming a strategy into action by highlighting the dynamics of implementation
and change management. It examined how to implement strategy, the challenges of implementing strategy
and using change management to implement strategy.
Module 7 will explore emerging challenges for strategic managers, in particular how the rapidly
changing business environment is giving rise to new business models. These new business models have
significant implications for organisational strategy and in some cases for the strategy process itself. The
understanding of the strategy process built in the first six modules will serve as a foundation to understand
and successfully manage organisations in the contemporary business environment.

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OPTIONAL READING
Johnson G, Scholes, K & Whittington, R, 2008, Exploring Corporate Strategy: Text and Cases, 8th edn, Pearson Education, Essex.
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Van Veen-Dirks, P & Wijn, M, 2002, ‘Strategic control: Meshing critical success factors with the Balanced Scorecard’, Long
Range Planning, vol. 35, pp. 407–27.

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