Introduction
Strategy Evaluation is as significant as strategy formulation because it throws light on the efficiency and effectiveness of the comprehensive plans in achieving the desired results. The managers can also assess the appropriateness of the current strategy in today‘s dynamic world with socio-economic, political and technological innovations. Strategic Evaluation is the final phase of strategic management.
The significance of strategy evaluation lies in its capacity to co-ordinate the task performed by managers, groups, departments etc, through control of performance. Strategic Evaluation is significant because of various factors such as - developing inputs for new strategic planning, the urge for feedback, appraisal and reward, development of the strategic management process, judging the validity of strategic choice etc.
The 7-S framework of McKinsey
McKinsey 7S Framework is a strategic planning tool designed to help an organization understand if is it set-up in a way that allows it to achieve its objectives.
Before the advent of the 7S Model, when managers thought about organizational design, they tended to focus on structure and strategy. They thought about who is responsible for what, who reports to whom, how many layers of management there should be, and how to beat the competition.
However, as organizations got larger and more complex, coordination became just as important, if not more important, than structure.
Why Use the 7S Framework?
The model is most widely used to assist with:
- Organizational change.
- Mergers and acquisitions.
- Implementation of a new strategy.
- Understanding the weaknesses (blind spots) of an organization.
Understanding the diagram
There are many things to note from this diagram:
All the areas are interconnected. This means that a change to one area will have implications for all other areas.
There is no hierarchy and all areas are the same size. This indicates that all areas are considered to be equally important.
The areas are divided into hard and soft areas. Hard areas are easy for management to influence and change. Soft areas are more woolly and influenced by the culture of the organization.
Positioning Shared Values in the center of the 7Ss indicates that the organization’s values are central to all elements.
1. Strategy
The organization’s plan to win in the marketplace. How will it gain a comparative advantage over the competition?
2. Structure
How the organization structures its resources (people, machinery, money etc) into teams and groups.
3. Systems
The processes and daily activities that are undertaken by the people who work in the organization, and the tools they use to help them with those processes.
4. Style
This is the way the organization does things. You can think of this area as being the culture of the organization. The informal rules of the organization.
5. Staff
The employees of the organization and how they are grown and developed.
6. Skills
The skills of employees and the skills of the organization. What is the core competency of the organization and what should be outsourced?
7. Shared Values
The core values of the organization that permeates all areas and aspects of the organization. In the original version of the 7S Framework, this was called Superordinate Goals. These values need to reinforce what the organization is trying to achieve.
The McKinsey 7S Framework can help an organization understand how to get from where it is now to where it wants to be.
It is particularly good at helping organizations take into consideration how a change to one area can have a wider impact on the organization.
LEADERSHIP STYLE
Leadership has a very broad scope.
They are all very different in the sense that there is a wide variety of these styles ever since leadership was incepted.
There are over ten different leadership styles, and one style just doesn’t suit a specific organization.
Leadership in that sense is complex. Sometimes “leaders” don’t know that they are leading within the capacity of any responsible role.
The truth is that each leadership style has its place in a leader's toolkit. The wise leader knows to flex from one style to another as the situation demands.
The following are the common leadership styles examples that you will eventually bear witness to. Keep in mind that if you ever find yourself in the shoes of a leader, don’t forget to improvise. People like a person who is servant, assertive and caring.
1. Autocratic Style
The phrase most illustrative of an autocratic leadership style is "Do as I say." Generally, an autocratic leader believes that he or she is the smartest person at the table and knows more than others. They make all the decisions with little input from team members.
This command-and-control approach is typical of leadership styles of the past, but it doesn't hold much water with today's talent.
That's not to say that the style may not be appropriate in certain situations. For example, you can dip into an autocratic leadership style when crucial decisions need to be made on the spot, and you have the most knowledge about the situation, or when you're dealing with inexperienced and new team members and there's no time to wait for team members to gain familiarity with their role.
2. Authoritative Style
The phrase most indicative of this style of leadership (also known as "visionary") is "Follow me." The authoritative leadership style is the mark of confident leaders who map the way and set expectations, while engaging and energizing followers along the way.
They help people see where the company is going and what's going to happen when they get there.
Unlike autocratic leaders, authoritative leaders take the time to explain their thinking: They don't just issue orders. Most of all, they allow people choice and latitude on how to achieve common goals.
3. Pacesetting Style
"Do as I do!" is the phrase most indicative of leaders who utilize the pacesetting style. This style describes a very driven leader who sets the pace as in racing. Pacesetters set the bar high and push their team members to run hard and fast to the finish line.
While the pacesetter style of leadership is effective in getting things done and driving for results, it's a style that can hurt team members. For one thing, even the most driven employees may become stressed working under this style of leadership in the long run.
If you're an energetic entrepreneur working with a like-minded team on developing and announcing a new product or service, this style may serve you well. However, this is not a style that can be kept up for the long term. A pacesetting leader needs to let the air out of the tires once in a while to avoid causing team burnout.
4. Democratic Style
Democratic leaders are more likely to ask "What do you think?" They share information with employees about anything that affects their work responsibilities.
They also seek employees' opinions before approving a final decision.
There are numerous benefits to this participative leadership style. It can engender trust and promote team spirit and cooperation from employees.
It allows for creativity and helps employees grow and develop.
A democratic leadership style gets people to do what you want to be done but in a way that they want to do it.
5. Coaching Style
When you having a coaching leadership style, you tend to have a "Consider this" approach.
A leader who coaches views people as a reservoir of talent to be developed.
The leader who uses a coach approach seeks to unlock people's potential.
Leaders who use a coaching style open their hearts and doors for people.
They believe that everyone has power within themselves.
6. Affiliative Style
Of all the leadership styles, the affiliative leadership approach is one where the leader gets up close and personal with people.
A leader practicing this style pays attention to and supports the emotional needs of team members.
The leader strives to open up a pipeline that connects him or her to the team.
Ultimately, this style is all about encouraging harmony and forming collaborative relationships within teams.
It's particularly useful, for example, in smoothing conflicts among team members or reassuring people during times of stress.
7. Laissez-Faire Style
The laissez-faire leadership style is at the opposite end of the autocratic style.
You could say that the autocratic style leader stands as firm as a rock on issues, while the laissez-faire leader lets people swim with the current.
On the surface, a laissez-faire leader may appear to trust people to know what to do, but taken to the extreme, an uninvolved leader may end up appearing aloof.
While it's beneficial to give people opportunities to spread their wings, with a total lack of direction, people may unwittingly drift in the wrong direction—away from the critical goals of the organization.
This style can work if you're leading highly skilled, experienced employees who are self-starters and motivated. To be most effective with this style, monitor team performance and provide regular feedback.
STRATEGY REVIEW AND EVALUATION
The best formulated and best implemented strategies become obsolete as a firm’s external and internal environments change. Therefore, it is essential for strategists to systematically review, evaluate, and control the execution of strategies.
Strategy Evaluation is vital to an organization’s well being. Timely evaluations can alert management to potential or actual problems before a situation becomes critical.
Strategy Evaluation includes three basic activities:
(1) Examining the underlying bases of a firm’s strategy.
(2) Comparing expected results to actual results.
(3) Taking corrective actions to ensure that performance conforms to plans.
Strategy Review, Evaluation, and Control
Strategy Evaluation
Adequate and timely feedback is the cornerstone of effective Strategy Evaluation.
Strategy Evaluation is important because organizations face dynamic environments in which key external and internal factors can change quickly and dramatically.
Strategy Evaluation is essential to ensure that the stated objectives of an organization are being achieved.
Strategy evaluation is essential to ensure that stated objectives are being achieved. In many organizations, evaluation is an appraisal of performance –
- Have assets increased?
- Increase in profitability?
- Increase in sales?
- Increase in productivity?
- Profit margins, ROI and EPS ratios increased?
Rumelt’s criteria for Evaluating Strategies:
It is impossible to demonstrate conclusively that a particular strategy is optimal, but it can be evaluated for critical flaws. Here are four criteria to use in evaluating a strategy:
a. Consistency: A strategy should not present inconsistent goals and policies. Are the external strategies consistent with (supported by) the various internal aspects of the organization?
Organizational conflict and interdepartmental bickering are often symptoms of managerial disorder, and may be a sign of inconsistency. You must examine all the various functional and internal management strategies employed by the organization and compare them with the external business strategy.
b. Consonance: Consonance refers to the need for strategists to examine set of trends in evaluating strategies.
c. Feasibility: Strategy is reasonable in terms of org’s resources initiate managerial questioning of expectations and assumptions on a continuous basis rather than periodic basis should continually be aware of progress being made . Monitor the following.
Is the strategy reasonable in terms of the organization's resources?
- Physical resource
- Human resource
- Financial resource
d. Advantage: Does the strategy create and/or maintain a competitive advantage?
Resource
Skill
Strategic evaluation is becoming increasingly difficult with the passage of time.
These trends make strategy evaluation difficult:
dramatic increase in environmental complexity
difficult in predicting future
increasing number of variables
rapid rate of obsolescence
increase in the number of world events affecting organization
decreasing time spans for planning.
The process of Evaluating Strategies
Strategy evaluation is necessary for all sizes and kinds of organizations.
Strategy evaluation should initiate managerial questioning of expectations and assumptions, trigger a review of objectives and values, and stimulate creativity in generating alternatives and formulating criteria of evaluation.
Evaluating strategies on a continuous rather than a periodic basis allows benchmarks of progress to be established and more effectively monitored.
Managers and employees of the firm should continually be aware of progress being made toward achieving the firm’s objectives.
As critical success factors change, organizational members should be involved in determining appropriate corrective actions.
The process of Evaluating Strategies
A. Reviewing Bases of Strategy By developing a revised EFE Matrix and IFE Matrix
A revised IFE Matrix should focus on changes in the organization’s management, marketing, finance/ accounting, production/operations, R&D, and MIS strengths and weaknesses.
A revised EFE Matrix should indicate how effectively a firm’s strategies have been in response to key opportunities and threats.
B. Measuring Organizational Performance
Another important strategy-evaluation activity is measuring organizational performance.
This activity includes;
- comparing expected results to actual results,
- investigating deviations from plans,
- evaluating individual performance, and
- examining progress being made towards meeting
- stated objectives.
C. Taking Corrective Action
The final strategy-evaluation activity, taking corrective action, requires making changes to reposition a firm competitively for the future.
Examples of changes that may be needed:
- altering an organization’s structure,
- replacing one or more key individuals,
- selling a division
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