Strategic Management: Formulation and Implementation

The Concept Fit

This approach assumes that each organizational dimension, such as structure, reward systems, and resources allocation process, must constitute an internally consistent organizational form.

Moreover, organization strategy cannot be effectively implemented unless there is consistency between the strategy and each organizational dimension. Harold J. Leavitt was one of the first to discuss the degree to which task, structure, people, and processes from an integrated whole. The major developer and empirical investigator of the fit concept has been Jay Lorsch. He is the primary investigator to examine the fit concept.

According to his findings, those organizations that were not high performers were experiencing a situation in which either structure or process dit not fit with the degree of task uncertainty.

Other research also supports the concept of fit (for example: Scott 1971; Child 1977, Galbraith 1977, Dundas and Richardson). Miles and Snow (1984) see fit as "a process as well as a state -a dynamic search that seeks to align the organization with its environment and to arrange resources internally in support of that alignment. In practical terms, the basic alignment mechanism is strategy, and the internal arrangements are organizational structure and management processes".

Galbraith suggests that several major internal aspects of the organization may need to be synchronized to put a chosen strategy into action. Major factors are technology, human resources, reward systems, decision process and structure. This factors tend to be interconnected, so a change in one may necessitate change in one or more others.

Hambrick and Cannella described five steps for effective strategy implementation:

  1. Input from a wide range of sources is required in the strategy formulation stage (i.e., the mission, environment, resources, and strategic options component).
  2. The obstacles to implementation, both those internal and external to the organization, should be carefully assessed.
  3. Strategists should be use implementation levers or management tasks to initiate this component of the strategic management process. Such levers may come from the way resources are committed, the approach used to structure the organization, the selection of managers, and the method of rewarding employees.
  4. The next step is to sell the implementation. Selling upward entails convincing boards of directors and seniors management of the merits and viability of the strategy. Selling downward involves convincing lower level management and employees of the appropriateness of the strategy. Selling across involves coordinating implementation across the various units of an organization, while selling outward entails communicating the strategy to external stakeholders.
  5. The process is on-going and a continuous fine tuning, adjusting, and responding is needed as circumstance change.

While Hambrick and Cannella stress the importance of coordinating managerial tasks of functions in an organization's activities in the implementation of a strategy, the McKinsey 7-S Framework highlights the integration of implementation with other strategic management components.