Rethinking strategy implementation – key challenges and the solution

Originally published in Finnish March 3, 2024

The implementation of an organisational strategy is an important part of a company management, and various implementation models have become a routine in almost all organisations. However, I am not certain if our way of implementing goals is the best possible. Contemporary models have focused on correcting certain deficiencies and problems, but still I wonder if we are on the right track, especially in larger companies. Smaller organisations may handle things more organically. In the following, I’ll delve into my thoughts, their backgrounds, and logic.

An organisational strategy designed to achieve goals (i.e. means and actions) is usually implemented as a so-called waterfall, vertically. Larger or more generic goals of an organisation’s are concretised into more detailed objectives and actions as the process progresses, allowing each part of the organisation to define how they will participate in creating the goals. Company goals are often allocated all the way down to employees’ personal goals and development plans. Sometimes the objectives of the functions and individuals come from a higher ‘level’, sometimes employees’ define their roles themselves. Eventually, everyone working in the organisation knows their role, the actions expected , and where they fit into the whole. These are, usually, the key objectives and outcomes of most contemporary implementation models.

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Contemporary strategy implementation practices have, however, aspects that raise concerns:

1. Strategy implementation requires a lot of time and resources

The implementation process ‘sweeps over’ the organisation usually on an annual basis and requires a significant amount of work and efforts. Additionally, execution takes a lot of time. While it is important regularly to discuss with each employee about the expectations, goals, and development plans, the current strategy implementation practice is quite burdensome.

2. Organisational goals diverge in the process

In a vertical strategy implementation model, goals inevitably break down into more detailed, disconnected objectives. This occurs both between organisational functions and at the employee level. The implementation models rely on the belief that vertically defined detailed actions will combine into a synergistic whole as the process progresses, ultimately achieving the overall goals set for the organisation. Logically and rationally speaking, this aspiration is challenging: it is not at all obvious that breaking down overarching goals into smaller sub-goals and actions will lead to those sub-goals aligning towards the same organisational-level outcome, i.e. creating the original overarching goal. Unfortunately, organisations do not have many means to ensure the mutual compatibility and harmony of goals defined at different levels.

3. Goals (and the strategy designed to achieve them) do not genuinely engage all organisational functions and individuals

Some of the company’s goals require the synergetic efforts of most organisational parts and their employees, but it is not uncommon for goals to primarily affect some groups more than others. Typically, strategies focus on those outcomes that differ from the established operations – such as new market expansions, growth, or innovations. Simultaneously, organisation’s established operations are expected to maintain their performance level without specific strategic goals. From a top management perspective, this is well justified and understandable. But as the implementation progresses vertically, the setup may lead to situations where certain parts of the organisation lack an organic, strategy-driven goals or rationale.

4. Actions become a routine

Strategy implementation models need to be sufficiently simple for a easy adoption and to help manage this multi-layered and intricate process. Many organisations also customise the models to better suit their operations and management. In the initial phase, studying the model, its adoption, and customisation keep the work engaging, and discussions yield significant insights. However, at some point, the actions become more of a routine. Process is learned, and the significance and content of the steps are understood throughout the organisation. Routines are, of course, good in themselves; they save time and energy. However, from a strategy implementation perspective, routines may be a risk: earlier plans may ‘simply’ be updated, and there is no longer the desire or ambitions  to start afresh. Process gradually begins to follow its established paths.

Many contemporary strategy implementation models have addressed the challenges identified, for example, by encouraging more horisontal interaction. However, I still believe the fundamental idea behind these models is flawed, and the effectiveness and drawbacks of strategy implementation cannot be solved by new or updated models. We need a new way to approach the matter. To reach it, we should first go back to the basics.

So, let’s start over.

First, it would be beneficial to clear our ‘cache’ of all the ‘cookies’ related to goals and strategy and start afresh with the concepts. Particularly, the original meaning of the word strategy has blurred over the decades, and the ‘creative’ usage of the word has unnecessarily confused both our thinking and actions. As we know, nowadays organisations have numerous strategies, and the term ‘strategic’ is often used as a synonym for important or significant. If I had a choice, I would begin by ordering that an organisation could only have one strategy. All the other existing strategies would be operational plans – or even more simply, plans. Thus, there would be no ‘logistics strategy’, ‘marketing strategy”, human resources strategy’, or ‘network strategy’; instead, these should be the plans of different functions within the organisation to implement the one organisational strategy. With only one strategy for the organisation, the hierarchy of plans would be much clearer, and it would be unequivocal for all what is aimed for and how all plans relate to it. Further, I would completely ban the use of the word ‘strategic’ except of few exceptions.

Another confusing bias in the current strategy implementation practices is the hierarchy between the goals and the strategy. As a common expression, the terms are often mentioned in the order of ‘strategy and goals,’ when in reality, the hierarchy is the opposite. Goals are defined first, followed by the means and actions (i.e. strategy) to achieve them. So, the strategy describes how the organisation intends to move from the current to the desired future state. Strategy implementation, then, is the means to bridge the gap between the current state and the future by practical actions and behavior of the organisation and its employees.

What are we actually implementing?

So, if the goals come first, and the strategy outlines our means to achieve them, then there is a significant inconsistency in the current practice. And a logical consistency is the fundamental requirement for achieving any goals. So, what are we ‘implementing’ when we say we are implementing the strategy? The reality is that we are mainly cascading goals vertically (top-down and/or bottom-up) and only to some extent the strategy, that is, the means to achieve the goals. On the other hand, you may ask, what’s the real difference or what it should be? This scrutiny may seem quite a nitpicking: after all, in practise, we do know what we are implementing and succeed in it. Organisations achieve their goals, and the success of implementation is regularly monitored. Shouldn’t we just forget about this hair-splitting? I fully understand if you feel like this, but please, allow me to explain further.

We are now approaching a certain turning point. So, the term ‘strategy implementation’ is incorrect, at least when compared to our current way of approaching it. In reality, we are ‘implementing’ goals, not strategy. So how does all of this relate to the four challenges listed above?

The organisation. What about it?

Just before we return to our four challenges, let’s finalise ’emptying the cache’. Perhaps the biggest problem and misunderstanding are related to the concept of the organisation. Organisation was the main focus of the management even in the 1990s, but since then, it has taken a backseat both in the practical management as well as in the academic research. Spontaneously asked, the organisation is now mainly perceived as ‘box play,’ depicting the organisation chart with functions, responsibilities, power delineation, and boundaries. In the recent decades, the organisation may even been seen as limiting individual freedom and power. Organisation is considered to bee too rigid, hierarchical, and imposing to promote a new corporate culture, appreciation of knowledge workers, and employer image. Organisational management has been minimised, and is mainly expressed in budgeting, follow-up of goals, allocating resources, and when change negotiations are required.

To minimize these downsides of the ‘evil’ organisation, both in companies and research, the emphasis has been on the people and on the idea that the organisation consists of people; that people are the organisation. However, this idea is limited and also misleading. It evidently leads to various problems, which I may write more about later, but let’s now return to the basics.

For a moment, let’s consider the organisation from a completely different perspective: what happens or remains if we don’t have the organisation?

Without an organisation, we wouldn’t have a company or its operations. According to the original, neutral definition, an organisation is the structures, processes, and other resources (organised as a functional whole) that help the company pursue its goals and respond to external pressures. Employees are one of the organisation’s important resources, but the organisation must be independent of individuals. It must be able to function just as effectively, reliably, and productively regardless of whether person A or B is the CFO, or whether person C or D is in customer service. Individuals bring their efforts, expertise, and personal capabilities in the organisation, but the organisation’s competitiveness and competitive advantage (value-added) are system-level operations. Without a well-planned and well-built organisation, these will not be executed in an optimal way.

In addition to this original definition, the organisation has one feature that cannot be expected from its employees – but yet is demanded in the current strategy implementation practices. As said, organisation is a holistic entity that integrates the work and expertise of its parts (functions, divisions and employees) to produce the desired outcomes. Therefore, organisational goals are always the collaborative result of the organisation as a whole; and they are never the results of individual work or expertise. Thus, an individual employee can never preceive the entire system clearly enough, nor can it be expected of them, but only that part of the whole where he/she performs. Therefore, the uncomfortable question arises, how could an employee recognize and define in the strategy implementation process how he/she will be contributing to the organisation’s goals?

So, in the current strategy implementation practices, there is a critical flaw: it completely overlooks the fact that strategy is always the result of the organisation’s (horizontal-level) operations, and it assumes that cascading goals downward in the organisation will, in turn, achieve the organisation’s goals. The organisation is the functional entity that should, first and foremost, be able to meet the operational demands of the goals and operate effectively and efficiently. As a summary: the organisation is the first, and actually, the only means of strategy implementation. Goals are implemented by ensuring that the company is well-structured and operates effectively according to its defined structures.

Provocative statements?

Maybe? But because the strategy ultimately materialises at the organisational level, the focus should be on ensuring that all resources of the company are arranged sensibly, that organisational-level operations (also in knowledge-intensive organisations) are purposeful and promote internal synergy, and that activities across the organisation align with the desired future. Without placing the organisational level at the forefront, the divergence of goals created by the current models cannot be tackled.

If the focus of strategy implementation were primarily shifted to the organisation and structuring it according to the goals of the whole, subsequent levels would naturally have framework, roles, and objectives for their work. For example, if customer service processes, structures, and operations were organised according to the function’s role (‘place’) in the systemic entity, employees in the customer service would already have a place and purpose for their work. Similarly, if the role of the finance unit in the organisation’s value addition was recognised, it would clarify the employees’ roles and expectations for their outcomes. If then the employees of the unit felt  that, at some point, their work and operations were not optimal concerning their role, and should be developed to better fit the unit’s role in the overall operation, the need for changes would be evaluated next by a higher level or even from the organisational level – that is, from the systemic perspective.

However, organisational planning and management are not an easy task for many reasons. Firstly, to do so, one must be able to understand systems, i.e., how the organisation should operate to achieve the desired outcomes. It’s akin to the work of an architect envisioning the necessary parts, their roles and characteristics in the organisation, and most importantly, the interconnections and impacts on each other and the end result. Secondly, it requires the ability and willingness to monitor the operation of the whole, much like conducting an orchestra. One must ensure that the organisation is playing the same piece at the operational level, in the same tempo, and without discordant notes. Thirdly, it requires the ability and courage to shape the organisation as needed but without needlessly disrupting its operations. Lastly, and the most importantly, the only entity capable of this is the top management of the organisation and its units. Perhaps all these demands together are one reason why organisational planning has received so little attention.

Finally, the four challenges

How does this approach then address the challenges presented earlier and the weaknesses of current models? If companies actively began managing operations by focusing on the organisation, the goals would primarily be implemented through structures. This would solve all challenges previously mentioned.

Strategy would be implemented through structures (systemic entity), and changes to it would only be made if necessary to achieve the overall goals. Thus, for example, when the organisation’s operating environment changes significantly, and the current organisation no longer fits it. This would make the organisation more stable and no annual strategy implementation processes would be needed. The organisation would operate in a more synergistic way, and as mentioned earlier, there would be diverging goals since the operations would be managed from a more holistic perspective. Every part of the organisation would have its ‘place’ in the value creation, even at the most operational level. Thus, no function would be considered either a core or a support function, but each would be an essential piece of the whole fulfilling its role. Finally, implementation would not become routine in the organisation; it would be a daily part of unit and employee tasks and role execution.

How would the employees then know what is expected of them if the strategy were defined only at organisational level? Firstly, as mentioned earlier: every function would know what is expected of it and its role in the whole. Organising the work of the units could then happen internally, among the employees. However, it’s crucial to understand that this can only be successful within the organisational-level structure.

All this may seem daydreaming, but I feel we have been seduced by attractive but oversimplified promises of strategy implementation models. We have forgotten – or even deliberately abandoned – certain fundaments of business management, and have started following more tempting management trends. The primary task of management, however, should always be to ensure the organisation’s well-being and its ability to achieve its goals efficiently and effectively, as that is the only way to also create meaningful, successful and stable jobs for our employees. Old management theories may not be very glamorous, but perhaps, they contain some wisdom to be considered.

The author is an organisation and management consultant, and a doctoral researcher.