Exploring factors contributing to the strategy-to-performance gap : the case of a South African electronics organisation

Abstract

"Can you define 'plan' as 'a loose sequence of manifestly inadequate observations and conjectures, held together by panic, indecision, and ignorance'? If so, it was a very good plan."

Jonathan Stroud, The Ring of Solomon Jonathan Stroud knew that a plan cannot stand alone and needs more. Every business needs a strategy. Academics in the field of strategic management have bewailed the field's disparate, ambiguous nature. The question arises: how can these concerns be compliant with the substantial success that strategic management experienced in the past? The weaknesses of strategic management seem to be its strengths. In their study, Nag, Hambrick and Chen (2007) suggest that strategic management acts as an intellectual dealer entity, which thrives by enabling the simultaneous pursuit of multiple research orientations by a variety of disciplinary and philosophical regimes. The Bain and Company Management Tools and Trends, (Rigby & Bilodeau 2011) indicated the importance of management tools and how these tools can enhance an organisation's ability to strategise for the future. Mankins and Steele (2005) identified factors resulting in a strategy-to-performance gap and made recommendations on how an organisation can minimise such gaps. Tait and Nienaber (2010) came to the conclusion that the use of management tools could reduce challenges of formulation, implementation and evaluation resulting in closing or minimising the strategy-to-performance gap. In view of the findings of these three above-mentioned studies, this study of SAEO aimed to explore (identify, describe and understand) what factors top, middle and frontline managers perceived to hinder strategy implementation at SAEO during the 2009/10-2010/11 financial years, resulting in a strategy-to-performance gap and to determine how these factors affect the organisation. This study was conducted as a qualitative case study that used empirical evidence from real people in a real-life organisation. Data was collected from a South African electronics organisation (henceforth referred to as SAEO) involving 14 managers at three different hierarchical levels (top, middle and frontline managers). They were required to answer semi-structured questions on to how these strategy-formulation-implementation-evaluation phases affect their working environment. The interviews were conducted at the premises of the organisation and permission was sought from the CEO who granted permission for the researcher to request the managers to participate. Information was used from previous authors and a replication study was conducted using the Mankins and Steele (2005) and Tait and Nienaber (2010) studies. The purpose of this study was to identify, describe and understand "what factors, if any, hinder strategy implementation" (Ehlers & Lazenby, 2004; Mankins & Steele, 2005; Tait & Nienaber, 2010). Ehlers and Lazenby (2004:117) and Mankins and Steele (2005:66) have indicated that strategy implementation is the most difficult part of the strategic management process. In the Mankins and Steele (2005) and Tait and Nienaber (2010) studies, although the order differed, the most prevalent performance factors contributing to the strategy-to-performance gap were identified as a lack of focus/conflicting priorities and no resources, inadequate skills and capabilities, unclear accountabilities for execution, insufficient rewards and consequences and poorly communicated strategies. The results of this SAEO study confirmed that ineffective communication, followed by inadequate monitoring; insufficient leadership and no approved strategy were the main reasons for the strategy-to-performance gap. It seemed as if SAEO had a bigger challenge in communicating its strategy to employees than was the case in the Mankins and Steele (2005) and the Tait and Nienaber (2010) studies. Although the biggest challenge at the four South African Life Insurers (Tait & Nienaber, 2010) was inadequate or unavailable resources, the challenge at SAEO was ineffective communication and it was evident that it should be addressed to close the strategy-to-performance gap. Both challenges are part of the strategy implementation phase although communication could be related to formulation, implementation and evaluation of strategy. Although the results (ranking of factors indicated to contribute to the strategy-to-performance phenomenon) of this study did not entirely concur with the studies of Mankins and Steele (2005) and Tait and Nienaber (2010), the important fact remains that without a formulated strategy on how to ensure survival and growth of an organisation, challenges such as ineffective communication and/or inadequate or unavailable resources which were found in the three studies (Mankins & Steele, 2005; Tait & Nienaber, 2010; and the SAEO study) will have a negative effect on an organisation's future growth and prosperity. It became evident from this (SAEO) study that every member of an organisation will be affected should a strategy-to-performance gap exist. Therefore it is crucial that each organisation timeously identify possible factors that can result in a strategy-to-performance gap and determine what can be done to close or narrow those performance gaps. Lear (2012) contends that even if an organisation has the most outstanding strategy, the strategy will mean nothing if it is not understood at all levels within the organisation. That includes all processes to be aligned to achieve the organisation's objectives.