 Strategic Management: Strategic Managment Gregory G. Dess,
University of Texas at Dallas
G.T. Lumpkin,
University of Illinois--Chicago
Implementing Strategy: Achieving Effective Strategic Control
Chapter Overview| For firms to be successful, they must implement their strategies by means of effective strategic controls. Without such controls, the firm will not be able to achieve competitive advantages and outperform rivals in the marketplace.
We began the chapter with the key role of informational control. We contrasted two types of control systems: what we termed "traditional" and "contemporary" information control systems. Whereas traditional control systems may have their place in placid, simple competitive environments, there are fewer of those in today’s economy. Instead, we advocated the contemporary approach wherein the internal and external environment is constantly monitored and, when surprises emerge, the firm must modify its strategies, goals, and objectives.
Behavioral controls are also a vital part of effective control systems. We argued that firms must develop the proper balance between culture, rewards and incentives, and boundaries and constraints. Additionally, where there are strong and positive cultures and rewards, employees tend to internalize the organization’s strategies and objectives. This permits a firm to spend fewer resources on monitoring behavior and the firm is assured that the efforts and initiatives of employees are more consistent with the overall objectives of the organization.
In the final section of the chapter, we took a contingency approach to the subject of control systems—that is, we argued that there is no one best way to design a strategic control system; rather, it is dependent on a variety of factors. The two that we discussed were the firm’s business- and corporate-level strategies. We argued that with overall cost leadership strategies it is appropriate to rely on cultures and reward systems that emphasize the production outcomes of the organization because it is rather easy to quantify such indicators. On the other hand, with differentiation strategies, there must be culture and incentive systems that encourage and reward creativity initiatives as well as cooperation among professionals in many different functional areas. Here it becomes more difficult to measure accurately each individual’s contribution and more subjective indicators become necessary.
With regard to corporate-level strategies, we discussed the need for firms following related diversification strategies to develop cultures and incentives that reward information and resource sharing as well as overall goals of the corporation. However, in the case of unrelated strategies wherein there is limited need or opportunity for resource sharing and collaboration, cultures and incentives that are highly based on a manager’s individual business-unit performance will suffice.
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2002 A McGraw-Hill Online Learning Centre