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Challenges for Strategy and Execution
A well-executed strategy is the ideal, but the ideal is often far from the reality. A number of potential problems occur that can derail a good plan, much less a plan that has flaws attached to it from the outset (e.g., Colgate and Danaher, 2000). Further, strategy experts themselves admit that few executives are satisfied with the state of strategy knowledge and capabilities currently available (Campbell and Alexander, 1997). As much as 70 percent of business strategies fail to get implemented (Corboy and O’Corrbui, 1999). Beer and Eisenstat (2000) coined the phrase the “silent killers of strategy implementation and learning” and note:
. . . senior managers get lulled into believing that a well-conceived strategy communicated to the organization equals implementation . . . [T]hey approach change in a narrow, nonsystemic and programmatic manner that does not address root causes. (2000, 29)
In this section, some well-documented reasons for strategy failure are cited, including the two central problems mentioned by Beer and Eisenstat—lack of implementation capabilities and failure to address root causes. The TOC body of knowledge directly addresses these and other problems associated with successful strategy implementation. Some of the contributions made by TOC that address these problems are noted in the following sections.
Inadequate Planning
Strategic planning can be a tedious process, particularly annoying to those types of managers who prefer a more intuitive style of managing, those found, for example, in the design and entrepreneurial schools of strategy. In addition, a formalized process of planning often holds little allure for more action-oriented managers, such as may be found in manufacturing, or people-oriented individuals, such as salespeople. Certainly, good planning demands time, attention to detail, and good communication as well as a willingness on the part of all employees to identify and solve impediments to implementation, negative effects from possible actions, and current practices that block a successful strategy.
However, research indicates that planning does tend to lead to superior performance (Armstrong, 1982; 1991). Because of extensive research on successful strategic planning, Armstrong (2005) identified a five-step program for corporate planning: (1) determining the firm’s long-range objectives, (2) generating alternative strategies, (3) evaluating alternative strategies, (4) monitoring implementation and outcomes, and (5) gaining commitment from those who will be affected by the plan. However, a significant difficulty for companies is not only how to complete these rather obvious steps but how to do so using tools that lead to actionable and realistic outcomes. For more information, see Chapters 18 and 19 in this Handbook.
Although planning does not rule out the need for flexibility and creativity, some may view the planning process as stifling to innovation. However, planning is an important and useful aspect of strategic management, and has been developed to a very high level by practitioners of TOC. Embedded in the Thinking Processes (Scheinkopf 1999) resides a detailed roadmap for strategic planning. These processes include a set of logic tools that address the critical questions “What to Change?”, “To What to Change?”, and “How to Cause the Change?” (Originally presented in Goldratt 1990; See TOCICO Dictionary (Sullivan et al., 2007) for the change sequence and each question. (© TOCICO 2007, used by permission, all rights reserved.)
Inability to Analyze the System
The system of interest might be a supply chain, members of an industry, or an entire economy. In fact, the system could even be the global economy. However, for the sake of simplicity, one may assume that a system is a company made of up subsystems, such as functional areas. Because of multiple interdependencies between resources within functional areas and between functional areas as well