Business Management in the Built Environment LESSON 7
Business Management in the Built Environment LESSON 7 : The strategy process implementation 1 ADAPTED FROM Dr. Scott Fernie ‘S SLIDES AND LESSON BMBE/L 7/2016
Business Management in the Built Environment Organisation Structure affects Strategy and governance … Forms of governance : a)Market orientation b)Hierarchy orientation c) Network structure 2 BMBE/L 7/2016
Business Management in the Built Environment Organisational Forms of Governance Markets buy 3 The price Bm MBe Ec /Lh 7/2 16 ism a 0 n Hierarchies make Forward / backward integration
Business Management in the Built Environment Organisational Forms of Governance Markets or Hierarchies? * For Markets if: * Commodity Products * For Hierarchies if: * Economies of scale * Market Mechanism * Temper Opportunism * Profit Maximisation * Thin markets * High Management Cost * Complex Situations * Routine Situations 4 BMBE/L 7/2016 * Intellectual Capital
Business Management in the Built Environment Neither a Market nor a Hierarchy: Markets alliances buy The price mechanism 5 BMBE/L 7/2016 Hierarchies Networks JV coalition collaborate Economic & social equilibrium make Forward / backward integration
Business Management in the Built Environment Networks and Competition Traditionally, collaboration by firms has been frowned upon by economists as the basis for monopolies and cartels. However the fashion for alliances and network collaborations seems to be generating sophisticated new ways to compete and additional traditional firms 6 BMBE/L 7/2016 sources of advantage over
Business Management in the Built Environment Networks and Competition Flexible capabilities: equipped to assemble diverse / unique, set of capabilities. Specialisation: networks can benefit from a division of specialisation Learning: New alliances – new learning capabilities Increased options: Networks can be a rich source of strategic options 7 BMBE/L 7/2016
Question for discussion Critically explore the various types of complexity that a manager will undoubtedly encounter in developing strategy within a construction company 8 BMBE/L 7/2016
Business Management in the Built Environment THE STRATEGY PROCESS 9 BMBE/L 7/2016
Business Management in the Built Environment Answe the following. . r � “Organisations fail to implement more than 70 percent of their new strategic initiatives” (Miller 2002) � What are the obstacles? � Can you describe a theoretical model? � What are the connections between schools of thought and implementation 10 BMBE/L 7/2016
Business Management in the Built Environment Impleme ntation “ It can be much easier to think of a good strategy than it is to implement it” (Woolridge and Floyd 1990) “Without successful implementation, a strategy is but a fantasy” (Kast and Rosenzweig 1985) 11 BMBE/L 7/2016 This is the same as our new year resolutions!
Business Management in the Built Environment Implementation – what could be easier! � “Organisations fail to implement more than 70 percent of their new strategic initiatives” (Miller 2002) � What are the obstacles? � Take 10 minutes to make a list of reasons � You could think about why you fail to implement your own plans and relate these to construction organisations 12 BMBE/L 7/2016
Business Management in the Built Environment Main contributors to the problem 1. Focus on formulation rather than implementation – Do you ever spend time planning and forget about implementing study plans? 2. The models of implementation are too complex (Okumus 2003) 13 BMBE/L 7/2016
Business Management in the Built Environment MAIN contributors to the problem � Implementation is frequently viewed BMBE/L 7/2016 Implementing strategy Planned strategy 14 VISION Emergent strategy separately (Aaltonen and Ivävalko 2002) �Planning perspective supports separation �Emergent perspective fails to see any distance between them �Others argue that planned and emergent strategies occur together � Those that formulate are frequently different to those that implement
Business Management in the Built Environment MAIN contributors to the problem � Ultimately change involves people and thus it is NOT a simple linear, predictable process �It simply IS NOT easy to control people �Strategy does not resonate with practitioners �We are challengers and questioners of change �We represent barriers and resistance to change �We also provide opportunities to change �‘All progress is made through the unreasonable man!’ �We are also the implementers of change �Change may also be implemented by unreasonable man 15 BMBE/L 7/2016
Business Management in the Built Environment OTHER COMMON REASONS FOR PROBLEMS OR FAILURE OF EFFECTIVE IMPLEMENTATION • Weak management roles in implementation • A lack of communication • Lacking commitment to the strategy • Unaware or lack of understanding of strategy • Unaligned organisational systems and resources • Poor coordination and sharing of responsibilities • Inadequate capabilities and training provided • Competing activities diverted attention away from implementation Taken from Aaltonen and Ivävalko (2002) and Al-Ghamdi (1998) 16 BMBE/L 7/2016
Business Management in the Built Environment OTHER COMMON REASONS FOR PROBLEMS OR FAILURE OF EFFECTIVE IMPLEMENTATION • Uncontrollable environmental factors • Formulators walk away from implementation!! • Formulators and/or implementers left the company • Leadership necessary was absent during im plementation • Underestimation of resources required to carry through implementation • Control and monitoring systems inadequate • Lack of definition of key tasks and activities Taken from Aaltonen and Ivävalko (2002) and Al-Ghamdi (1998) 17 BMBE/L 7/2016
Business Management in the Built Environment The real challenge for implementation • To identify what requires to be changed • To consider what is required to make • • change happen To monitor what actually changes To consider the context within which change will occur To formulate and execute a plan/process for change To monitor and react to implementation (Pettigrew 1987) 18 BMBE/L 7/2016
Business Management in the Built Environment The real challenge for implementation 19 BMBE/L 7/2016
Business Management in the Built Environment Strategic Management HIERARCHY OF STRATEGY : Overlapping Concerns Operational Management 20 BMBE/L 7/2016
Business Management in the Built Environment Strategy as innovation- FOR TOP MANAGEMENT Concerned with communication in a social system Bottom up Competition Closely linked to change management Top down Diffusion Vision Plann ing T Scenario Analysis SWO Resources Conventionally percieved to be the resolution of a socio-technical problem Decis ion Maki ng Formulation is all about invention: the invention of strategy. implementation is invention + diffusion Implemen tation Evalua Diffusion may capture all theoretical influences and tion difficulties discussed previously. BMBE/L 7/2016 21
Business Management in the Built Environment Mckinsey 7 -s model DIFFUSION : seven S’s model) to guide Implementation (unit 7 : 1 -7) 22 BMBE/L 7/2016
Business Management in the Built Environment Diffusion: The seven S’s model Level of change Superordin ate goals Skills Strategy Structure Style 23 Systems Staff What needs to change BMBE/L 7/2016 • Superordinate goals – impetus for change or act as a binding force – one or more guiding themes of the organisation – represent the shared values crucial to success – may be a binding force during strategic change – can be a catalyst for strategic change and a source of motivation for individuals.
Business Management in the Built Environment Diffusion: The seven S’s m model Level of change Superordin ate goals Skills Strategy Structure Style 24 Systems Staff What needs to change BMBE/L 7/2016 • Strategy – outlines where the company or business unit should concentrate its forces and compete – sets out the basis on which the company will compete, the direction in which it will develop and the method it will use.
Business Management in the Built Environment Diffusion: The seven S’s m model • Skills – Gap between current and desired Level of change Superordin ate goals Skills Structure Style 25 Strateg y Systems Staff What needs to change BMBE/L 7/2016 – What capabilities do we require to achieve our strategic objectives
Business Management in the Built Environment Levels of change What levels are there? � Three primary “S’s” determine level of change �Continuation. Additional resources, new skills and 26 unfamiliar tasks are not required �Routine. A small refinement on continuation. Additional �resources may be required in the short term Limited Change. Additional resources required, �but it does not require any major organisational change. �Radical change. Involves major change within the organisation. Numerous changes in the organisation’s
Business Management in the Built Environment S’s model Diffusion: The seven S’s • Structure Level of change Superordin ate goals Skills Structure Style 27 Strateg y Systems Staff What needs to change BMBE/L 7/2016 – We (re)organise to deliver the plan – The way in which the people are organised – Each structure has its merits and demerits • Small firms - simple structures • The machine bureaucracy structure • Divisionalised structure • Professional bureaucracy • Adhocracy
Management in in the Built Environment Business Management Diffusion: The seven S’s model • Systems Level of change Superordin ate goals Skills Structure Style 28 Strateg y Systems Staff What needs to change BMBE/L 7/2016 – routines or processes which exist in an organisation for the purpose of identifying important issues, getting things done or making decisions – have a very strong influence on what happens in an organisation • Reward systems • Financial systems • Information systems
Business Management in the Built Environment Diffusion: The seven S’s model • Staff – concerned with the human resources of the organisation in relation to the implementation of the strategy Level of change Superordin ate goals Skills Strategy Structure Style 29 Systems Staff What needs to change BMBE/L 7/2016 • what resources will a strategy require • do these new resources build on or are they a change from existing • can the new resources be integrated
Business Management in the Built Environment Diffusion: The seven S’s model • Style Level of change – Style is concerned with the management of Superordin change ate goals – not concerned with the personal styles of Skills Strateg y managers on a day-today basis but in the way in which they implement Structure Systems Staff Style the changes 30 What needs to change BMBE/L 7/2016
Business Management in the Built Environment Successfully managing change 1. Is strategic change coherent? 1. Ongoing sensitivity to the environment. Not every aspect of strategy is planned. 2. 1. Relevant to objectives? 2. Consistent with context? 3. Is it feasible 4. Does it make sense? 1. The way that change is led must depend on the context in which it must occur 2. Manage resistance 1. Emphasises the importance of translating strategic change into operational language and action Coherence Environmental En asses 1. Integrate human resource management policies with their strategic management and its change process 31 BMBE/L 7/2016 human Strategic resource management Leading sment change strategic Linking and operational change
Business Management in the Built Environment Question for thought: In the context of a built environment organisation, critically examine and discuss typical problems encountered when implementing a strategy and how these could be addressed. 32 BMBE/L 7/2016
Business Management in the Built Environment 1. 2. 3. 4. 5. 33 Reference s Cole, G. A. (1997) Strategic Management, Continuum, London Woolridge, B. , Floyd, S. W. (1990) Bridging the gap between strategy and operations: the implications of middle management involvement in strategy, The Annual International Conference of the Strategic Management Society Proceedings, Stockholm. Al-Ghamdi, S. M. (1998) Obstacles to successful implementation of strategic decisions: the British experience, European Business Review, 98(6) 322 -327 Aaltonen, P. , Ivävalko, H. (2002) Implementing strategies successfully, Integrated Manufacturing Systems, 13(6), 415 -418 Pettigrew, A. M. (1987). "Context and action in the transformation of the firm. " Journal of Management
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