The Processes of Strategy Development and Implementation

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  • Topic: Resource allocation, Management, Strategy dynamics
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  • Published : December 23, 2011
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THE PROCESS OF STRATEGY DEVELOPMENT AND IMPLEMENTATION

Clayton M. Christensen and Tara Donovan

The Processes of Strategy Development and Implementation

The Processes of Strategy Development and Implementation
When described with the historical perspective of logically written business school case studies, companies’ strategies often seem to be the product of an organized and rigorous planning process. The way that most companies’ strategies actually come to be defined, however, is often quite different. Organizations whose strategies have propelled them to the tops of their industries not infrequently arrived at those strategies through trial, error and unanticipated success. Rarely was the winning strategy clear to the combatants at the outset. As organizations dive deeper into the undefined waters of the new economy and as traditional business models are being turned inside out, it is crucial that leaders of established and start-up companies alike understand the processes by which strategies are shaped, in order to guide their companies effectively. The purpose of this paper is to describe a simple model of the processes by which strategy comes to be defined and is implemented. Understanding the key dimensions of this process can help executives keep their hands more precisely on those levers that control how strategy gets defined and implemented, and to adjust the workings of that process as the competitive environment changes. Two Processes of Strategy Formulation In every company there are two independent and simultaneous processes through which strategy comes to be defined. The first strategy-making process is conscious and analytical, involving assessments of market structure, competitive strengths and weaknesses, the nature of customer needs, and the drivers of market growth. Strategy in this process typically is formulated in a project with a discrete beginning and end. Top-tier management consultants often manage these projects. The result of this process is an intended or deliberate strategy. 1 Intended strategies can be implemented as they have been envisioned if three conditions are met. First, those in the organization must understand each important detail in management’s intended strategy. Second, if the organization is to take collective action, the strategy needs to make as much sense to each of the members in the organization as they view the world from their own context, as it does to top management. Finally, the collective intentions must be realized with little unanticipated influence from outside political, technological or market forces. Since it is difficult to find a situation where all three of these conditions apply, it is rare that an intended strategy can be implemented without significant alteration.2 The second strategy-making process has been termed emergent strategy. It is the cumulative effect of day-to-day prioritization decisions made by middle managers, engineers, salespeople and financial staff – decisions that are made “despite, or in the absence of, intentions.”3 In fact, managers typically do not frame these decisions as strategic at all, at the time they are being made; they have a decidedly tactical character. For example, Intel’s decision to accept an order from Busicom, a second-tier Japanese calculator company, started the company on the path to microprocessors. Sam Walton’s decision to build his second store in another small town near his first one in Bentonville, Arkansas rather than in a large city, led to Wal-Mart‘s discovery of the attractive economics of building pre-emptively large stores in small towns. Emergent strategies result from managers’ daily response to problems or opportunities that were unforeseen by those engaged in the deliberate strategy-making process, at the time they were doing their analysis and planning.

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The Processes of Strategy Development and Implementation

The Resource Allocation Filter Factors that affect and ultimately...
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