Pharmaceutical Executive Europe - May 2008 - (Page 15) Pharmaceutical Executive Europe May 2008 Corporate Strategy 15 simplifications, important subtleties are lost. For instance, strategic goals such as targeting specific, needs-based segments or shifting brand attributes, are often lost in this process simply because they can’t be measured easily by the existing management information system. The result is a set of subordinate goals that, whilst arithmetically correct, are not aligned to higher strategic vision of the company’s leaders. Worse still, the goals of separate functions that arise from this process are not aligned. In one company we observed, sales team goals (volume related) and marketing goals (profit related) were not only in conflict but were also out of alignment with the goals of product development functions such as regulatory affairs and R&D. To quote an executive in that company, the goals were broken. Good practice in goal decomposition avoids this trap by trying to capture both the qualitative and quantitative aspects of the company’s strategy. So, for example, sales volume targets are set by needs-based segment and not just product. The motivational drivers of those segments are used to construct the brand attribute targets of the marketers and the product profile goals of product development. With this approach, the underlying aims of goal decomposition are not just arithmetic correctness but also strategic alignment. The downside of this goal-alignment approach lies in measurement. Firms that work this way often need to review their management information systems, which may be designed for accountants rather than strategists. Also, they sometimes have to accept indirect measurement of outcomes, something some cultures find very difficult. But these are acceptable prices to pay in order to avoid what might be called broken-goal syndrome. to be a feature of human nature that hard goals, so long as they seem possible, motivate more than easy goals. By contrast, participative decision making, taken as a given in many companies, has little real effect on commitment to strategy. The only significant positive effect of participative decision making is that it coincidentally communicates the goal too. Managing Implementation So closing the implementation gap needs aligned goals and committed implementers. In practice, however, even those two factors are insufficient because implementation takes place in a real world of complex, poorly communicated tasks, competing interests and less than totally competent people. How firms manage these realities is determines implementation effectiveness. Complex tasks, for example, are more prone to non-implementation than simple ones, so good practice usually involves breaking tasks down into simpler ones. So long as this isn’t done simplistically, it improves implementation. Communication is another important influence on implementation and so continual, accurate feedback is an essential tool in making strategy happen. Conflicting interests also hinders implementation and the most common way of resolving this is to structure around goals, rather than roles. Finally, implementers are often set goals for which they don’t have the requisite skills so careful recruitment, retention and coaching is important to successful implementation. If all this seems obvious to the reader, it is apparently less perceptible to many firms. Strategy implementation, our research is finding, depends on many things that command and control processes can’t deliver, especially in knowledge-based firms. To make the important but discretionary parts of a strategy come to life, goals must be aligned, implementers must be motivated and the context managed. Our findings makes it seem less surprising that so few firms implement well, but offer hope for firms that seek to do so. Commitment mirage Even the best-aligned goals can still leave an implementation gap if the implementers are neither committed to those goals nor motivated to achieve them. This is an especially insidious problem as, understandably, implementers rarely espouse anything but total commitment to their set goals. In practice, weak commitment is common and influences how hard people work, the intelligence they apply to difficult tasks and their persistence in the face of difficulties. Weak practice allows this “elephant to dance around the room” as one executive put it, with everyone politely ignoring the fact that some or all key implementers feel no commitment to their goals. Stronger practice recognises and manages the factors that drive personal motivation, which are less straightforward than one might think. For example, incentives do improve motivation but their effect depends strongly on whether the individual thinks the goal is achievable. Arguably more important is who sets the goal. Supportive and respected leaders create commitment, especially when their followers see the goal as a symbol of their own personal integrity. Commitment to a goal is also increased if those responsible for achieving it see it as important and difficult. It seems About the Author Dr Brian D. Smith is a visiting research fellow at the Open University. He has authored over 100 books and articles on competitive strategy and runs PragMedic, a specialist consultancy. If you would like to know more about his research or take part in it, please contact him on brian.smith@pragmedic.com
Table of Contents Feed for the Digital Edition of Pharmaceutical Executive Europe - May 2008 Pharmaceutical Executive Europe - May 2008 Contents From the Editor News and Analysis Calendar Rising in the East Use Your Strategic Discretion A Blueprint for Success Market Access and the Patient Activating Effective Product Differentiation What Doctors Want IC Success in Four Steps Pharmaceutical Executive Europe - May 2008 Pharmaceutical Executive Europe - May 2008 - (Page Bellyband1) Pharmaceutical Executive Europe - May 2008 - (Page Bellyband2) Pharmaceutical Executive Europe - May 2008 - Pharmaceutical Executive Europe - May 2008 (Page Cover1) Pharmaceutical Executive Europe - May 2008 - Pharmaceutical Executive Europe - May 2008 (Page Cover2) Pharmaceutical Executive Europe - May 2008 - Contents (Page 3) Pharmaceutical Executive Europe - May 2008 - From the Editor (Page 4) Pharmaceutical Executive Europe - May 2008 - From the Editor (Page 5) Pharmaceutical Executive Europe - May 2008 - News and Analysis (Page 6) Pharmaceutical Executive Europe - May 2008 - News and Analysis (Page 7) Pharmaceutical Executive Europe - May 2008 - Calendar (Page 8) Pharmaceutical Executive Europe - May 2008 - Calendar (Page 9) Pharmaceutical Executive Europe - May 2008 - Calendar (Page 10) Pharmaceutical Executive Europe - May 2008 - Calendar (Page 11) Pharmaceutical Executive Europe - May 2008 - Rising in the East (Page 12) Pharmaceutical Executive Europe - May 2008 - Rising in the East (Page 13) Pharmaceutical Executive Europe - May 2008 - Use Your Strategic Discretion (Page 14) Pharmaceutical Executive Europe - May 2008 - Use Your Strategic Discretion (Page 15) Pharmaceutical Executive Europe - May 2008 - A Blueprint for Success (Page 16) Pharmaceutical Executive Europe - May 2008 - A Blueprint for Success (Page 17) Pharmaceutical Executive Europe - May 2008 - Market Access and the Patient (Page 18) Pharmaceutical Executive Europe - May 2008 - Market Access and the Patient (Page 19) Pharmaceutical Executive Europe - May 2008 - Market Access and the Patient (Page 20) Pharmaceutical Executive Europe - May 2008 - Market Access and the Patient (Page 21) Pharmaceutical Executive Europe - May 2008 - Activating Effective Product Differentiation (Page 22) Pharmaceutical Executive Europe - May 2008 - Activating Effective Product Differentiation (Page 23) Pharmaceutical Executive Europe - May 2008 - Activating Effective Product Differentiation (Page 24) Pharmaceutical Executive Europe - May 2008 - What Doctors Want (Page 25) Pharmaceutical Executive Europe - May 2008 - What Doctors Want (Page 26) Pharmaceutical Executive Europe - May 2008 - What Doctors Want (Page 27) Pharmaceutical Executive Europe - May 2008 - IC Success in Four Steps (Page 28) Pharmaceutical Executive Europe - May 2008 - IC Success in Four Steps (Page 29) Pharmaceutical Executive Europe - May 2008 - IC Success in Four Steps (Page 30)
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