16.3. STRATEGY FORMULATION AND IMPLEMENTATION

There is no one way to formulate and implement strategy—the approach depends on the organization, the situation, and individuals involved. A rich variety of concepts and tools have been developed that can facilitate the process.

Strategy formulation may be viewed as a well-thought-out and disciplined effort to establish a mission, define long-term goals, and develop an action plan for achieving those goals. A strategy process can serve many useful purposes. It can:

• Help provide a unity of direction and a cohesive framework for action

• Assist in coordinating disparate organizational goals and resources from a total organizational vantage point

• Provide an assessment of both the internal and external organizational context

• Provide a mechanism for focusing on future needs and staying in tune with fundamental organizational priorities

• Engage, orient, and energize members of a group

At its most fundamental level, strategy is formulated by identifying threats and opportunities in an organization's environment, analyzing the organization's internal strengths and weaknesses, and then creating a strategic direction (objectives, policies, and programs) that leverages, builds on, or bolsters these strengths and weaknesses. The SWOT analysis has become a mainstay of strategy formulation. It entails surfacing the strengths and weaknesses internal to an organization, and the opportunities and threats in an organization's environment. A subtle but important shift in this analysis, however, is recommended. If internal strengths and weaknesses are identified prior to external trends, an organization is encouraged to define its environment in terms of its current abilities and deficiencies; thus seemingly unrelated but in fact important trends may be neglected. Therefore, in practice, the environmental analysis should precede the internal analysis (i.e., SWOT becomes OTSW).

Defining core competencies is central to strategy formulation. These are a set of corporate skills and knowledge sets, which create unique and long-term value for the customer (Quinn and Hilmer, 1994). These competencies should be ones in which the organization can dominate, are adaptable and thus durable, and are embedded in the value and managerial systems. Core competencies lead to maximized return on internal resources by focusing on what the company does best, fortifying barriers against present and future competition, and attracting the best people. The combination of Apple's design flair, user-friendly interface, and dazzling marketing approaches are exemplary of core competencies, though the company's apparent overreliance on one person, CEO Steve Jobs, calls into question how well the competency is embedded in the organization's wider value and managerial systems.

Implementation is the Achilles heel of strategy. A well-formulated strategy is empty if it cannot be executed. Zagotta and Robinson (2002) have developed a comprehensive list of actions that can increase the probability of successful execution.

• Quantify the vision: derive measurable goals and interim milestones.

• Communicate through mantras—simple but meaningful phrases.

• Express interim goals specifically, with a time frame, and assign responsibility; review and understand progress toward achieving the goals.

• Plan what not to do, avoid taking on too much.

• Open strategy to the organization—align day-to-day activities throughout the organization with the bigger picture; communicate and measure what is important.

• Automate status and progress management: focus meetings on decision making versus reviewing information.

• Create a virtuous circle of execution and strategy, an ongoing process for reviewing and maintaining strategic progress.

Note that many of these actions can be integrated into strategy formulation, so that successful implementation is essentially built in. Quantifying long-term and interim goals, planning what not to do, opening strategy to the organization by communicating with and involving people: all of these can be employed as strategy is devised as well as implemented.