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Driven off course

The greatest marketing strategy ideas cannot impact on sales if they are let down by poor implementation

A burnt out car in a fieldIt is perhaps the final frontier in strategic management. For all the libraries full of books about how to make strategy, very little is written on how to implement it. There is a good reason for this - academics usually like neat, well-defined problems and implementation is quite the opposite, it's messy, multifactorial and hard to pin down.

However it is also very important and for this reason it is the subject of a new research project at Europe's largest business school at the Open University. The research is in its early phase, but already some useful findings are emerging.

DEFINE YOUR TERMS
Voltaire's famous quote - If you wish to converse with me, first define your terms - is especially important in the study of strategy implementation, since both halves of the term are open to misinterpretation. Strategy is simply a set of resource allocation decisions that are executed or not. Most management decisions are not implemented exactly as decided but there are two distinct forms of non-implementation.

The first is when the strategists knowingly change their minds in the face of new information. This results in 'incrementalism', which has its pros and cons but at least the strategists know where the resources are being spent.

More interesting is the second form, which we have labelled 'inadvertent non-implementation' or INI. This is when the strategists are blissfully ignorant that their finely-honed decisions have been fudged, ignored or subverted by the implementers. INI is very common and has a big impact on a firm's results.

MEASURING EVERY ACTION
The extent and importance of INI has led to a measurement fad among senior managers. This school of thought tries to improve implementation by measuring every action that flows from the strategy and correcting any inaction. If executed rigorously, this approach works to an extent but it is laborious and has its limits. To understand these, we need a small diversion into occupational psychology.

Strategists are blissfully ignorant that their finely-honed decisions have been fudged, ignored or subverted by the implementers

Modern work involves, broadly, two kinds of tasks - discretionary and non-discretionary. The latter can be observed and measured, so an employee has little choice in executing them. Discretionary tasks, by contrast, are intangible and their execution depends on the employee's commitment. Think for example of executing a sales plan. The basic task is non­discretionary and will be judged in terms of calls, details etc. Many of the component tasks, however, are discretionary. No system can measure an employee's attitude or pre-call preparation - at least not infallibly.

Measurement systems are useful but they don't cope well with discretionary tasks that tend to be critical - especially in knowledge-based industries like pharma and in 'soft' disciplines such as marketing. In short, when it comes to implementation, people can usually outsmart measurement systems. THE

ROOTS OF THE PROBLEM
The challenge is to reduce INI of discretionary tasks and the first step is to ask managers what is going on when implementation fails. Research here suggested that INI has three root causes: Communication, Culture and Motivation. INI is almost always caused by some combination of these underlying factors, so our research team decided to explore each area further.

Often, it seems managers try to communicate complex strategies through inadequate channels and the message gets scrambled

COMMUNICATION
Communication is the most straightforward issue. We have known for a long time that communication involves encoding and decoding a message and that both noise and channel effectiveness are critical issues. Often, it seems managers try to communicate complex strategies through inadequate channels and the message gets scrambled. Thirty minutes at a sales conference and an unread handout just isn't enough, and emails can seem positively counterproductive in comm­­un­icating strategy.

CULTURE
Culture is more complex. We talk of company culture, but the reality is a hotch-potch of departmental subcultures, each with different values and assumptions. One cause of INI is where a strategy, developed in one culture, dictates actions that the implementing culture rejects. Consider the different ways that people in strategy, marketing, sales and regulatory departments view the world and it is amazing that complex ideas such as brand positioning are ever implemented at all. Factor in the differences in culture between nationalities and the variations in ethos between departments and the problem becomes even more acute.

MOTIVATION
Motivation is perhaps the most insidious component of INI. The theory is complex, but in essence we all act according to our own self-interest. If the strategy seems to go against that, implementers are at best demotivated and at worst actively sabotage the strategy. The complicating factor is that motivation is not just about money but is made up of many factors such as status and social fulfilment. If, as we observed, a new strategy means directing effort at non-prescribers, it can mean loss of autonomy and reduced social rewards as well as potentially lower short-term earnings. For strategies that depend on the implementers' commitment, this is a critical issue.

NO SIMPLE SOLUTIONS
What this, albeit simplified, review of the research tells us is that INI has multiple causes - every one of which is the sort of messy problem that does not yield to simple solutions. Communication is not improved much by just doing more of it, just as shouting in our own language doesn't help when speaking to a foreigner. We need to understand encoding and decoding and the role of channels and noise. We need to understand cultural differences better - they cannot be overcome by cross-functional meetings or re-arranging the desks. Neither is motivation improved by financial incentives alone. We need to untangle how the strategy impacts on implementers' self-interest. Having established that the problem of strategy implementation doesn't have a quick-fix answer, the next phase of this research explored what happens when it goes right.

DIAGNOSIS THEN THERAPY
The common factor that divides those that have cured INI and those that have not is diagnosis. When asked how they solved the problem, successful companies begin with, Well, the root of the problem was... whereas other firms mumble a list of detailed excuses that have no explanatory power. So the first step for any company wishing to improve strategy implementation is to diagnose which of the three causes contribute most to their particular INI problem. In most cases, one of the three is dominant and the others secondary. Sometimes, the mixture of causes is obvious but often it is hard for managers to see the wood for the trees.

Curing INI requires a different therapy depending on whether culture, motivation or communication is the primary cause

To elucidate the problem we had to develop a tool - the 'Tritheory Audit' - that analyses the mixture of factors and directs the company to where their corrective efforts would produce the biggest, fastest results.

Once understood, curing INI requires a different therapy depending on whether culture, motivation or communication is the primary cause. In effective companies, curing INI is analogous to medicine versus quackery; it is based on understanding the underlying theory that explains how organisations work. If the problem is that the implementers did not understand, then the answer lies in communication theory. If they simply did not agree, the answer lies in culture theory. If they understood and agreed but it didn't suit them - we have to look to motivation theory.

GETTING THE MESSAGE ACROSS
Communication theory is like an endoscopy camera that patients swallow so that doctors can examine the gastrointestinal tract. It is possible to analyse every stage of the journey of the strategy message from sender to receiver. We can look at how it is encoded, how it travels and how it is decoded. In between, we can understand the problems caused by any 'semantic noise', which can change the message's meaning along its journey. In practical terms, this tells us how to change our communication to make it work. One firm we studied, for example, found that the 'marketing-speak' they used was a big part of the problem.

Applying a cultural analysis identifies the cross-functional cultural differences that are hindering implementation

KEY LESSONS ABOUT STRATEGY IMPLEMENTATION

Non-implementation of strategy can be deliberate or inadvertent

Strategy implementation involves discretionary and non-discretionary actions
Inadvertent non-implementation (INI) mostly affects discretionary actions

INI is complex and has its roots in communication, culture and motivation

The first step to good implementation is diagnosing the causes of failure

Once diagnosed, practical cures for each cause are possible

VALUES AND ASSUMPTIONS
Cultural theory is like an X-ray or MRI scan. It allows us to see beneath the surface 'cultural artefacts' of behaviour, systems and processes, revealing the values and assumptions that lie beneath. This is important because culture is persistent and pervasive. No amount of tinkering will create lasting change.

In practical terms, applying a cultural analysis identifies the cross-functional cultural differences that are hindering implementation. These can then be addressed in a meaningful, non-superficial way. For example, one company we worked with changed its annual awards and planning system and created powerful symbols to communicate their values.

The two pillars of good implementation seem to be diagnosis and evidence-based therapy, concepts familiar to us all

DRIVERS OF BEHAVIOUR
Motivation theory is akin to psychoanalysis. It digs beneath superficial explanations of why we do things and reveals the more powerful underlying drivers of behaviour. This is especially important where the strategic change is dependent on the commitment of the implementers. Despite the complexity of motivation theory, it is remarkably practical and produces fast and useful outcomes. This can include better modelling of incentives, but also often involves 'reframing' the strategy for the implementers to help them see it in terms of their self-interest.

Despite differences of detail between individual companies, the two pillars of good implementation seem to be diagnosis and evidence-based therapy - concepts familiar to us all.

A COMPLEX ISSUE
There is little doubt that improving implementation would be near the top of most senior managers' wish-lists. It is important and yet still neglected by most text-books. Our research at the Open University Business School is beginning to address this and even these early stages have revealed the key lessons summarised in the box above. The difficulties can be summed up in one observation - strategy implementation is much more complex than most other management issues. This is why it is still 'unsolved' in most companies. The corollary of this complexity is that it will not yield to simplistic formulae and check-list processes. If you want to implement well, you can't play at it. 

The Author
Dr Brian D Smith

15th February 2008

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