MANAGEMENT DECISION 33,10
Analysis of strategy formulation and implementation at Hewlett-Packard Rainer Feurer, Kazem Chaharbaghi and John Wargin Presents a number of approaches to strategy formulation and implementation which represent some of Hewlett-Packard’s best practices
There is a general recognition that competitive environments are changing at an accelerating rate culminating in a high level of uncertainty. As a result, the critical success factors are constantly being challenged. This calls for a constant change in competitive strategies[1-3]. Subsequently, organizations can no longer afford to adopt a unidirectional or step-by-step approach to strategy development which entails several stages including data collection, development of strategic options, evaluation, selection and implementation. In the face of a high level of uncertainty and change there is a need for a dynamic approach in which strategy formulation and implementation are carried out simultaneously. This represents an ongoing process of analysing the competitive environments and developing strategic options together with their evaluation. This process should take into account the required implementation time-frame and the span of the strategic gap. The need for moving towards a dynamic approach to strategy formulation and implementation is illustrated in Figure 1. Dynamic strategy formulation and implementation are realized when they are no longer regarded as centrally performed processes but as part of a continuous learning process such that the overall operations and supporting strategies are constantly aligned. The fact that organizations worldwide are abandoning their central planning departments and dispersing the ownership of strategy formulation throughout their organizations is a clear indication of the significance of the dynamic approach. While the transfer of strategy ownership throughout the organization speeds up the formulation and Management Decision, Vol. 33 No. 10, 1995, pp. 4-16 © MCB University Press Limited, 0025-1747
implementation process there is also the danger of organizations losing their focus and engaging in a wide range of activities which may result in the dilution of competitive advantages and a sub-optimal usage of the organization’s capabilities and resources. It is therefore necessary to find the right balance between establishing an overall strategic direction for the whole organization and maintaining flexibility to ensure swift reaction to changes in the competitive environment. This can only be achieved through a high level of communication and coordination within the organization and the availability of common tools for strategy formulation and implementation. Furthermore, it requires the existence of a structure and culture in which constant change is regarded as necessary rather than being an exception. A large number of methodologies have been developed over the years on different facets of strategy formulation and implementation. However, only a few organizations succeed in translating these methodologies into measurable performance results. It is therefore necessary to question why some organizations are able to achieve outstanding results in financial terms as well as nonfinancial performance, such as customer and employee satisfaction in competitive environments where both the speed of change and competitive pressures are enormous. For this purpose the computer industry provides a good platform, as it is characterized by an almost unparalleled speed of change concerning key success factors, product development, customer expectations and shifting distribution channels. In the face of intense competition some organizations in the computer industry are demonstrating three-digit growth rates while others, which have been market leaders for years, are forced to cut costs by half in order to survive. This article focuses on one of the success stories of the computer industry,...