Good strategy execution requires that top management be deeply involved in directing the proper kinds and amounts of resources to the enterprise’s various organization units and value chain activities. Plainly, organizational units must have the operating budgets and resources for executing their respective pieces of the strategy effectively and efficiently.
Too little funding (stemming either from constrained financial resources or from sluggish management action to marshal the full force of the organization’s resources behind the drive for good strategy execution) slows progress and impedes the efforts of organizational units to competently execute their assigned strategy elements. Too much funding of particular organizational units and value chain activities wastes organizational resources and reduces financial performance
1) To drive continuous improvement in how internal operations are conducted.
2) Tools to promote better strategy execution and operating excellence.
3) Provide useful yardsticks for judging the effectiveness and efficiency of internal operations and setting performance standards for organisation units to meet or beat.
4) Because they are able to monitor and review the goals and objectives that have been set to improve the work process/performance.
Policies and operating procedures facilitate strategy execution in three ways:
By providing top-down guidance regarding how certain things need to be done. Managerial actions to establish and enforce policies and operating practices place boundaries on individual behavior to avoid ineffective or unwanted actions and, instead, steer individuals and work groups to adopt work practices and operating approaches that are conducive to good strategy execution. Policies and procedures, thus, provide company personnel with prescribed guidelines and routines for performing certain tasks, conducting various aspects of company operations, and handling recurring issues and tasks. These prescriptions and guidelines clarify uncertainty about how to proceed, and they represent management’s best judgment about how to do things in ways that create strong alignment between the actions and behavior of company personnel and the kinds of actions/conduct that are conducive to successful strategy execution. When existing ways of doing things pose a barrier to executing strategic initiatives, these ways have to be changed. Instituting and enforcing new policies and procedures is often an effective means of overcoming the natural tendencies of some people to resist change. People generally refrain from violating company policy or going against recommended practices and procedures without gaining clearance or having strong justification.
By helping enforce needed consistency in how execution-critical activities are performed in geographically scattered operating units. Policies and procedures serve to standardize the way activities are performed. Requiring geographically scattered organizational units to conform to the prescribed policies, procedures, and standardized ways of doing things is normally a highly desirable component of good strategy execution. Eliminating significant differences in the operating practices of different plants, sales regions, customer-service centers, or the individual outlets in a chain operation helps a company deliver consistent product quality and service to customers. Good strategy execution nearly always entails an ability to replicate product quality and the caliber of customer service at every location where the company does business anything less impairs good execution, blurs the company’s image, and breeds customer dissatisfaction.
By promoting the creation of a work climate that facilitates good strategy execution. A company’s policies and procedures help set the tone for its work climate and promote a common understanding of “how we do things around here.” Because abandoning old policies and procedures in favor of new ones invariably alters the internal work climate, managers can use the policy-changing process as a powerful lever for changing the corporate culture in ways that better support new strategic initiatives and/or new efforts to improve strategy execution. The trick here, obviously, is to come up with new policies or procedures that catch the immediate attention of company personnel and prompt them to quickly shift their actions and behaviors in the desired ways