Sunday, 9 January 2011

Strategy: Quality Vs Execution


The importance for an organization of a clear, broadly shared strategy can be taken as axiomatic, insofar as some management measurement models have identified strategy as a valid factor on the basis of which measure and report human capital management effectiveness. The framework developed by the European Foundation for Quality Management (EFQM), called “Excellence Model”®, for instance, lists amongst its nine criterion, which are divided into five enablers and four results, the way organizations develop, review and execute strategy.
 


This model considers processes as the best means employers can have recourse to in order to enhance the performance of their talents and enable these to yield tangible, impressive results. More in particular, the Excellence Model®, which is essentially based on the TQM philosophy, measures strategy effectiveness on the basis of the processes and procedures involved in formulating and implementing an organization’s intended strategy. “Policy and strategy”, which are regarded in the model as “enablers” and are expected by extension to produce “results”, are based on five sub-criteria:

1. Should be developed according to the present and future needs and expectations of stakeholders;

2. Have to be based on the information gathered from performance measurement, research and learning- and creativity-related activities;

3. Once developed have to be constantly reviewed and updated;

4. Must be deployed through a framework of key processes;

5. Have to be properly communicated and implemented.


 
The unique aim of this model, which can be actually used as a real tool, is to help its users, that is to say those who follow the processes and procedures it suggests, to manage successfully and obtain excellent results. The model is not indeed intended to enable organizations to formulate quality strategy, but rather to put its users in a position to formulate a strategy likely to produce positive, measurable results. The procedure, by means of the proposed sub-criteria, enables business leaders to use a thorough and effective process to formulate or review strategy and subsequently, by means of a score system, to assess the results produced by this.



Whether quality would imply production of positive results, this model might have been considered helpful to develop strategies of good quality, but the attainment of results is a concept much more likely to match the idea of effectiveness, rather than that of quality. Inasmuch as effectiveness is not antonym of quality, effective results are not necessarily achieved by means of quality or excellent strategies; these may in fact also be the effect of good execution. Sometimes appreciable results can be attained thanks to mediocre means, whereas quality of its own accord is not invariably a guarantee of results.

 

Low and Siesfield (1998), notwithstanding, explicitly mention “the quality of corporate strategy” as one of the ten non-financial variables deemed of pivotal importance to effectively measure human capital management. They hence attach a certain degree of importance to the quality of strategy and acknowledge thus the circumstance which this may be objectively assessed and measured, which is clearly a daunting feat to perform in practice.

 
 
In general and under some circumstances, it is essentially possible that a relatively “easy” and “simple” strategy may reveal to be effective and productive, but albeit this would denote the good capabilities and skills of the business leaders who have formulated it, it could be hardly argued that this necessarily is a matter of quality. It would be indeed extremely tricky to provide evidence of the existence of a causal effect between the quality of strategy and the positive outcome this yields. Strategy can hardly be exclusively considered as a matter of quality; it definitely is in fact also a matter of consistency, effectiveness and execution. Gratton (2000) clearly is an advocate of this idea: “There is no great strategy, only great execution.” Similarly, Kling and Kosminsky (2006), with an original similitude, claim that “strategy without execution is like a sports car without horsepower. It looks great in the driveway, but impresses no one out on the road.”



In terms of strategy, the significance of quality taken in isolation might indeed prove to be limited. Inasmuch as we intend by strategy the direction and scope identified by an organization over the long-term (Johnson and Scholes, 1993), it is unthinkable that an employer might be unable to identify the direction this desires to go in as well as it would be rather problematic trying and questioning the reasons behind its decision.

 

Having recourse to a systematic process to formulate strategy is clearly of paramount importance as well as is assessing and measuring by means of a structured process the consistency, effectiveness and worth of the results produced by this. The use of a structured approach definitely helps employers to clearly state their strategy’s intended objectives and helps these to ensure that all of the relevant and necessary steps have been duly taken into account. Such systematic procedure of its own, nonetheless, cannot be regarded as a guarantee of quality.

 

According to Bratton (2007), there are two important activities which need to be performed before formulating a strategy at corporate level:

- Define mission and goals – which is about the organization management philosophy;

- Carry out an environmental analysis – which implies a thorough internal and external analysis.

 
 
First and foremost, business leaders need hence to assess their position in relation to the current business mission and clarify the organization direction in the light of its values and aspiration. These need therefore to make it clear what short-term measurable objectives the business intends to achieve. The environmental analysis is particularly important in that it enables to assess the organization’s weaknesses and strengths (endogenous environment) and the opportunities offered and the threats potentially posed by the exogenous environment.



This knowledge and awareness will prove to be particularly beneficial to the business executives helping and enabling them, when required, to promptly take the necessary steps to change and adapt the business strategy to the environmental changes (emergent strategy). The most suitable tools to effectively and properly conduct this type of investigation are represented by the SWOT (endogenous environment) and PESTLE (exogenous environment) analysis models.

 
 
The findings of the studies and investigations conducted thus far show that, in all of those cases in which organizations have not achieved good results, the reasons for failure are invariably directly explained by bad execution and not by poor quality. It is, in general, very unlikely that an organization’s business leaders, who have properly carried out a thorough and careful analysis, may come up with a “poor quality”, or rather, a wrong strategy. Moreover, it is not necessarily true that the quality of strategy may be a priori objectively assessed and evaluated: what might be deemed to be of poor quality by a reviewer might possibly be judged of good quality by other analysts. What really matters is the value of the results a strategy will be able to practically enable employers to achieve and yield in practice. It is hence once again a matter of results and not of quality.


Strategy execution is considered, by common consent, of paramount importance for the pursuance of an employer intended strategy; both of the above-mentioned management effectiveness models actually stress this aspect. Yet, as suggested by Kinnie (2005), the outcome expected from a strategy is never produced by just putting it in writing in that employees are not influenced by the way strategies and policies are written, but rather by the way strategies and practices are implemented. Of the same opinion seem to be Kling and Kosminsky (2006) who contend that CEO’s are rarely concerned about the “design of strategy”, whereas they are normally rather worried about the capability of their organization to obtain the expected results.

 
 
The execution of strategy unquestionably assumes a greater importance; notwithstanding, taking heed of the increasingly harsh competition nowadays characterizing all the markets, employers should take due care with the identification and development of the most effective strategy, too. Quality, or rather, appropriateness and effectiveness of strategy and execution are not in fact mutually exclusive, but should be seen as synergic contributors to the attainment of the organizational objectives.



Longo, R., (2011), Strategy: Quality Vs Execution; HR Professionals, [online].