Strategy evaluation is a crucial activity for success of strategies and need to be done during and after completion of the strategy implementation. Evaluation during the implementation phase is for ensuring that the direction of the implementation established by the strategy is followed, checking the validity of strategic choices, detecting early deviations from promised results, controlling adverse impacts and making immediate improvements. Evaluation after completion of strategy implementation is done for assessing efficiency and effectiveness of the strategy regarding achieving the desired results and developing inputs for future strategic plans, appraisals and rewards.
It is very important to think carefully about the results that need monitoring or evaluation. In some scenarios, strategy evaluation is merely an informal assessment of how well the organisation performs after the strategy implemented. Does the organisation make better profit? Has it grown or won new clients? Positive answers to these questions often lead to the affirmative belief that the strategy is successful. Even though the importance of these results is irrefutable, focusing merely on them misses the whole point of the strategy. There are other critical factors in determining success of the strategy, and they are often intangible or not simply measured. In a strategy evaluation, the manager needs to look beyond the simple facts of the organisational results and look instead at the results related to the objectives set by the strategy and the impact on efficiency and effectiveness of the whole organisation and its operations. Measuring results related to the strategic objectives and impact on efficiency and effectiveness of the organisation helps management decide if corrective actions are needed. For example, if results are not heading in the right direction, the manager might review what is happening and make changes accordingly. We always advise managers that strategy is only a guideline, and not a strict roadmap that must be followed. It’s okay to deviate from the strategy, but they need to do this carefully after understanding the reasons for these deviations and updates.
Fig. 1 above, shows the correlation between organisational performance and strategy implementation. If we implement the right strategy correctly, an organisation’s performance will certainly improve. In case that the strategy is not appropriate, it would not lead to desired results. In some cases, the strategy can be appropriate, but there is a lack of required resources and improper implementation and, therefore, a failure to achieve the required performance.
As shown on Fig.1, the organisation before implementing the strategy is somehow performing but not at the desired level; that’s why it adopts a new strategy to take the organisation to new heights. When implementation of the new strategy starts from scratch, the promised performance starts from zero, and as the implementation progresses, the promised performance rises gradually. For some time at the beginning, promised performance is less than the actual performance, which causes the organisation to become vulnerable, and this means that the organisation achieves 40% or more of the performance but without having the enduring improvement practice implemented at the same level. The initial stages of the strategy implementation may cause performance to become unstable, as shown in Fig. 1, this is caused by some influencing factors such as by the degree of management consensus regarding the strategy, how the change is communicated, the strategy executors, commitment of management and staff to strategy implementation, the implementation tactics, the organisational structure, and the administrative system in place. The influence of these factors in performance of the oragnisation during this early stage of strategy implementation may lead managers or decision makers to mistakenly stop implementation of the whole strategy or parts of it, thinking that the strategy is flawed or not working, however they need to understand that this unstable performance is expected at this early stage of the strategy implementation, and their focus should be on making continual progress on strategy implementation and on putting controls in place to limit the effect of such influencing factors on performance.
When the level of promised performance exceeds 50% and exceeds actual performance of the organisation, the opportunity starts to rise for improving organisational performance, and the gap between the potential and actual performance is the potential improvement in performance, as this is what the strategy promise to the organisation, meaning that more of the improvement practices have been implemented, but the organisation has yet to enjoy the performance benefits at the same level. In some cases, it takes a long to see desirable results, or performance of some areas get improved while other areas remain same, i.e., unimproved. This is caused by influencing factors that are mainly related to the acceptance, commitment and adaptability of people to the new practices and changes implemented and the administrative system in place. When strategic results take long to see, a manager who lacks experience might hastily judge that the strategy is not working.
I have developed a mathematical model as a tool for predicting results and impacts based on this hypothetical correlation of actual and promised performance results. The model is still under validation and testing in real industrial applications.
By monitoring progress of strategic results, as a manager involved in strategy implementation, you need to ask yourself these questions:
Is the strategy on the right track to achieve strategic goals?
Is there a course of action needed to get the strategy on track to achieve the strategic goals?
Are strategic goals and objectives still realistic?
Does the organisation have enough and adequate resources to achieve its strategic goals?
Should priorities be changed as a result of changes in an organisation’s surrounding environment?
How well is the strategy or initiative aligned with changing company needs?
How have risks affected strategy implementation and results?
Have our leaders been capable of implementing the strategy and achieving the strategic goals?
Managers can learn a great deal about their organisational strategies and how to increase their success rate, by using such an approach to evaluate and monitor implementation of strategic plans. This approach can also be applied to monitor performance and evaluate results of organisational change, business transformation, people transition, new system implementation and all other organisational initiatives.
Reference:
- The Implementation Mission Framework, Certeglobal website. Accessed at: http://certe.com/index.php?main_page=page&id=70
- New book planned for publication on 2018: The Implementation Mission, by Dr. Nasreddin Dhafr .
