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Special Issue on Strategy Implementation and Assessment Research
INTRODUCTION
Special Issue on Strategy Implementation and Assessment Research: Research on Implementation Deserves as Much Attention as Strategy Formulation Jean-Charles Chebat E´COLE DES HAUTES E´TUDES COMMERCIALES–MONTREAL
T
he second seminar on Strategy Implementation and Assessment Research was held in Montreal on October 17–19, 1996. Eight papers were selected from the 34 papers submitted. Two papers were selected for special distinction: Lukas received the Woldenberg best paper award, and Clift and Vandenbosch received the Omer DeSerres best paper award. The attendance was deliberately limited to about 20 researchers, which made the discussion livelier. The seminar started with a conference by Jorge Niosi, author of a number of books on R&D strategies. He proposed that firms are abandoning the linear models of innovation, which are based on a sequence of technological findings, manufacturing, marketing, and then finally financial functions. Instead, they tend to develop new routines based on flexibility, the goal of which is to reduce the costs in time and investments. The routines are feedback mechanisms, ensuring complementary technical and nontechnical knowledge both from within the company and from outside. Strategy implementation and assessment research has been facing a number of challenges for a long period of time. Whereas classical studies on strategy (e.g., Ackoff, 1970; Ansoff, 1965; Cyert and March, 1963) were normative and oriented toward the logical and normative dimensions of strategy making, the measurement tools were often too complex to be operationalized (such as the original constructs proposed by Miles and Snow, 1978). Second, as pointed out by Noble, researchers interested in strategy implementation still face the challenge of the lack of a significant body of extant literature. Consequently, strategy researchers were often caught in the
Address correspondence to Dr. Jean-Charles Chebat, Omer-Deserres Chair of Marketing, E´cole des Hautes E´tudes Commerciales, 3000, chemin de la Coˆte Sainte-Catherine, Montreal H3T 2A7, Canada. Journal of Business Research 45, 107–109 (1999) 1999 Elsevier Science Inc. All rights reserved 655 Avenue of the Americas, New York, NY 10010
following dilemma: either use elaborate theoretical schemata that cannot be verified through empirical data or observe the managers without validated measurement tools. This special issue of JBR shows that research has progressed substantially. New concepts and new measurements have been designed (and applied) to show how strategic types impact on organizational performance through a more or less skillful implementation. Woodside, Trappey, and Sullivan propose a clear and powerful conceptualization of the impact of strategic types (i.e., prospectors, analyzers, defenders, and reactors as proposed by Miles and Snow (1978) and operationalized by Conant et al (1990) on organizational performance, where this impact is moderated by the distinctive marketing competencies (DMCs). One of the key findings of this empirical study is the mainly univocal relationship between DMCs and the types of performance (for instance “knowledge of customers and competitors” affects “customer satisfaction”). The authors use several deductive approaches developed by Day (1993) for instance to explain their own inductive results. Day (1993) suggests that firms have three basic DMCs related to three types of processes: outside-in processes (e.g., market sensing, customer linking), spanning processes (e.g., customer order fulfillment, pricing), and inside-out processes (cost control, financial management, integrated logistics). The authors stress that few dimensions of DMC are really related to overall performance. Each of the DMCs has an impact of a limited scope of performance (e.g., good execution of financial resources affects ROI much more significantly than customer satisfaction). However, marketing planning and allocating/controlling marketing resources DMC prove to be a basic requirement to achieve superior performance. Lukas who uses also the Snow and Miles topology finds that strategic types are systematically associated with a specific ISSN 0148-2963/99/$–see front matter PII S0148-2963(97)00229-4
108
J Busn Res 1999:45:107–109
degree of market orientation; moreover, this relationship happens to be consistent across various levels of environmental turbulence. How strategists think is at least as important as what they think. Hall’s paper focuses on the outside-in process: how information from the outside is modeled into cognitive maps developed by managers. The so-called “black box” of strategy making is rendered a lot clearer by Hall. He uses a brainbody analogy to develop his artificial intelligence model. The brain-body relationship is a metaphor for the policy-making system-organization relationship. An elaborate procedure (based on cognitive maps) allows the author to pinpoint the causal relations between the efforts made by the firm (advertising expenditures, selling expenditures) and the outcomes it gets (profits, number of customers). Such causal relations may be more or less complex in order to reflect the real environment. The fascinating paradox Hall points out is that better cognitive maps are more likely to bring about more internal conflicts. Involving the managers in the cognitive map building is at least as important as its content. Another fascinating result by Hall is related to feedback loops in causal relations that trigger some side effects, which are unwanted by the managers and “buried” in a sort of collective unconscious of the company. Strategies need be not only well designed and formulated but also well implemented. However implementation does not attract interest as much as formulation; implementation seems to be viewed as mechanistic, not romantic, plain nuts and bolts as Noble points out. He, however, makes a superb review of the literature on implementation research. He stresses two main aspects of implementation: the structural aspects (i.e., organizational structure and control mechanisms) and the interpersonal precesses (strategic consensus-autonomous strategic behaviors). This part of his paper should be related to Hall’s conclusions that getting managers involved in the strategic process is as important as the causal strategic links they elaborate. Parsa’s article contributes to the scarce literature on implementation. He analyzes franchise systems interdependent organizations that negotiate and exchange and ultimately make a product available to their customers. He empirically shows that “strategy content is not necessarily the only deciding factor in determining organization performance.” Strategy implementation is equally important, because it affects financial performance. One of the major contributions of Parsa’s paper is that he shows the match of performance objectives (profits vs. sales) and the choice of the implementation model: the so-called change model generates higher profits, whereas the collaborative model generates higher sales. One key factor of successful implementation is time: Clift and Vandenbosch empirically show that there is a match between the strategy to reduce product development cycle time and the very complexity of the project. Whereas complex proj-
J.-C. Chebat
ects demand more particpative management, more involvement of prospective customers and external suppliers, simple projects rely on autocratic styles and less customers involvement. In terms of DMCs, the complexity of the outside-in processes is obviously related to the complexity of the project itself. The way firms relate with their customers is definitely an element of strategic success: the growing literature on relationship marketing is illustrated here with the paper by Ricard and Perrien. Their research is centered on banks—that is a cultural milieu where the processing of accounts has traditionally been more valued than marketing strategies. Their results are a clear demonstration of the strategic weight of the outside-in processes: knowledge of customers is strongly related to the confidence developed between bankers and their clients. Relationship marketing is a long-term strategy that impacts on the quantity and quality of information received from the market, the very mission of the firm and its culture. The success of such strategies demand the implementation of certain mechanisms, such as those related to control of performance: in other words, to use Day’s typology, the choice of outside-in processes impact on the choice of inside-out processes. Bergadaa and Thie´tart propose a practical model, called Prodin, which links strategy and implementation. The turbulent environment has made this model all the more indispensable. Firms tend to lose sight of their objectives and the way they may reach them. Prodin is related to at least two of the three processes proposed by Day—i.e., outside-in processes and spanning processes—it assesses the market opportunities and constraints and helps formulate strategic objectives and implement quick substantial changes. Brand proliferation is an element of market turbulence: it creates confusion in the way customers process the information and, consequently, renders the strategies more complex and jeopardizes the stability of financial results. The article by Laroche and Toffoli tackles the complex and innovative question of the link between brand categorization and pricing. Even within similar products (e.g., fast foods), the price elasticity varies significantly across brand categories. Consumers appear to establish price-quality relations different for each of the brand categories: for instance, low-end brands require a higher quality/price ratio to be considered in the evoked sets. Consequently pricing strategies should take into account the category to which the product is associated. Whereas a number of services firms stress the importance of quality as a strategic objective, the study by Lapierre, Filiatrault, and Chebat offers some apparently paradoxical results: quality does not enhance satisfaction in the case of professional services firms. It is rather the value of the service that contributes to satisfaction; customers tend to consider quality as granted because all professional services are supposed to offer high quality. What does vary is the sacrifice (time and money) related to the purchase of the service. If these results should be interpreted in terms of Day’s concepts and Woodside et
Introduction
al.’s results, one can say that the DMCs that really matter in the case of professional services are those related to the spanning processes (i.e., managing funds and allocating skills).
References Ackoff, Russell: A Concept of Corporate Planning, John Wiley and Sons, New York. 1970.
J Busn Res 1999:45:107–109
109
Ansoff, Igor H.: Corporate Strategy: An Analytical Approach to Business Policy for Growth and Expansion, McGraw Hill, New York. 1965. Cyert, R. M., and March J. G.: A Behavioral Theory of the Firm, Prentice-Hall, Englewood Cliffs, NJ. 1963. Day, George: The Capabilities of Market-Driven Organizations, Report 93-123. Marketing Science Institute, Cambridge, MA. 1993. Miles, R. E., and Snow, Charles S.: Organizational Strategy, Structure and Process, McGraw Hill, New York. 1978.
Special Issue on Strategy Implementation and Assessment Research: Research on Implementation Deserves as Much Attention as Strategy Formulation Jean-Charles Chebat E´COLE DES HAUTES E´TUDES COMMERCIALES–MONTREAL
T
he second seminar on Strategy Implementation and Assessment Research was held in Montreal on October 17–19, 1996. Eight papers were selected from the 34 papers submitted. Two papers were selected for special distinction: Lukas received the Woldenberg best paper award, and Clift and Vandenbosch received the Omer DeSerres best paper award. The attendance was deliberately limited to about 20 researchers, which made the discussion livelier. The seminar started with a conference by Jorge Niosi, author of a number of books on R&D strategies. He proposed that firms are abandoning the linear models of innovation, which are based on a sequence of technological findings, manufacturing, marketing, and then finally financial functions. Instead, they tend to develop new routines based on flexibility, the goal of which is to reduce the costs in time and investments. The routines are feedback mechanisms, ensuring complementary technical and nontechnical knowledge both from within the company and from outside. Strategy implementation and assessment research has been facing a number of challenges for a long period of time. Whereas classical studies on strategy (e.g., Ackoff, 1970; Ansoff, 1965; Cyert and March, 1963) were normative and oriented toward the logical and normative dimensions of strategy making, the measurement tools were often too complex to be operationalized (such as the original constructs proposed by Miles and Snow, 1978). Second, as pointed out by Noble, researchers interested in strategy implementation still face the challenge of the lack of a significant body of extant literature. Consequently, strategy researchers were often caught in the
Address correspondence to Dr. Jean-Charles Chebat, Omer-Deserres Chair of Marketing, E´cole des Hautes E´tudes Commerciales, 3000, chemin de la Coˆte Sainte-Catherine, Montreal H3T 2A7, Canada. Journal of Business Research 45, 107–109 (1999) 1999 Elsevier Science Inc. All rights reserved 655 Avenue of the Americas, New York, NY 10010
following dilemma: either use elaborate theoretical schemata that cannot be verified through empirical data or observe the managers without validated measurement tools. This special issue of JBR shows that research has progressed substantially. New concepts and new measurements have been designed (and applied) to show how strategic types impact on organizational performance through a more or less skillful implementation. Woodside, Trappey, and Sullivan propose a clear and powerful conceptualization of the impact of strategic types (i.e., prospectors, analyzers, defenders, and reactors as proposed by Miles and Snow (1978) and operationalized by Conant et al (1990) on organizational performance, where this impact is moderated by the distinctive marketing competencies (DMCs). One of the key findings of this empirical study is the mainly univocal relationship between DMCs and the types of performance (for instance “knowledge of customers and competitors” affects “customer satisfaction”). The authors use several deductive approaches developed by Day (1993) for instance to explain their own inductive results. Day (1993) suggests that firms have three basic DMCs related to three types of processes: outside-in processes (e.g., market sensing, customer linking), spanning processes (e.g., customer order fulfillment, pricing), and inside-out processes (cost control, financial management, integrated logistics). The authors stress that few dimensions of DMC are really related to overall performance. Each of the DMCs has an impact of a limited scope of performance (e.g., good execution of financial resources affects ROI much more significantly than customer satisfaction). However, marketing planning and allocating/controlling marketing resources DMC prove to be a basic requirement to achieve superior performance. Lukas who uses also the Snow and Miles topology finds that strategic types are systematically associated with a specific ISSN 0148-2963/99/$–see front matter PII S0148-2963(97)00229-4
108
J Busn Res 1999:45:107–109
degree of market orientation; moreover, this relationship happens to be consistent across various levels of environmental turbulence. How strategists think is at least as important as what they think. Hall’s paper focuses on the outside-in process: how information from the outside is modeled into cognitive maps developed by managers. The so-called “black box” of strategy making is rendered a lot clearer by Hall. He uses a brainbody analogy to develop his artificial intelligence model. The brain-body relationship is a metaphor for the policy-making system-organization relationship. An elaborate procedure (based on cognitive maps) allows the author to pinpoint the causal relations between the efforts made by the firm (advertising expenditures, selling expenditures) and the outcomes it gets (profits, number of customers). Such causal relations may be more or less complex in order to reflect the real environment. The fascinating paradox Hall points out is that better cognitive maps are more likely to bring about more internal conflicts. Involving the managers in the cognitive map building is at least as important as its content. Another fascinating result by Hall is related to feedback loops in causal relations that trigger some side effects, which are unwanted by the managers and “buried” in a sort of collective unconscious of the company. Strategies need be not only well designed and formulated but also well implemented. However implementation does not attract interest as much as formulation; implementation seems to be viewed as mechanistic, not romantic, plain nuts and bolts as Noble points out. He, however, makes a superb review of the literature on implementation research. He stresses two main aspects of implementation: the structural aspects (i.e., organizational structure and control mechanisms) and the interpersonal precesses (strategic consensus-autonomous strategic behaviors). This part of his paper should be related to Hall’s conclusions that getting managers involved in the strategic process is as important as the causal strategic links they elaborate. Parsa’s article contributes to the scarce literature on implementation. He analyzes franchise systems interdependent organizations that negotiate and exchange and ultimately make a product available to their customers. He empirically shows that “strategy content is not necessarily the only deciding factor in determining organization performance.” Strategy implementation is equally important, because it affects financial performance. One of the major contributions of Parsa’s paper is that he shows the match of performance objectives (profits vs. sales) and the choice of the implementation model: the so-called change model generates higher profits, whereas the collaborative model generates higher sales. One key factor of successful implementation is time: Clift and Vandenbosch empirically show that there is a match between the strategy to reduce product development cycle time and the very complexity of the project. Whereas complex proj-
J.-C. Chebat
ects demand more particpative management, more involvement of prospective customers and external suppliers, simple projects rely on autocratic styles and less customers involvement. In terms of DMCs, the complexity of the outside-in processes is obviously related to the complexity of the project itself. The way firms relate with their customers is definitely an element of strategic success: the growing literature on relationship marketing is illustrated here with the paper by Ricard and Perrien. Their research is centered on banks—that is a cultural milieu where the processing of accounts has traditionally been more valued than marketing strategies. Their results are a clear demonstration of the strategic weight of the outside-in processes: knowledge of customers is strongly related to the confidence developed between bankers and their clients. Relationship marketing is a long-term strategy that impacts on the quantity and quality of information received from the market, the very mission of the firm and its culture. The success of such strategies demand the implementation of certain mechanisms, such as those related to control of performance: in other words, to use Day’s typology, the choice of outside-in processes impact on the choice of inside-out processes. Bergadaa and Thie´tart propose a practical model, called Prodin, which links strategy and implementation. The turbulent environment has made this model all the more indispensable. Firms tend to lose sight of their objectives and the way they may reach them. Prodin is related to at least two of the three processes proposed by Day—i.e., outside-in processes and spanning processes—it assesses the market opportunities and constraints and helps formulate strategic objectives and implement quick substantial changes. Brand proliferation is an element of market turbulence: it creates confusion in the way customers process the information and, consequently, renders the strategies more complex and jeopardizes the stability of financial results. The article by Laroche and Toffoli tackles the complex and innovative question of the link between brand categorization and pricing. Even within similar products (e.g., fast foods), the price elasticity varies significantly across brand categories. Consumers appear to establish price-quality relations different for each of the brand categories: for instance, low-end brands require a higher quality/price ratio to be considered in the evoked sets. Consequently pricing strategies should take into account the category to which the product is associated. Whereas a number of services firms stress the importance of quality as a strategic objective, the study by Lapierre, Filiatrault, and Chebat offers some apparently paradoxical results: quality does not enhance satisfaction in the case of professional services firms. It is rather the value of the service that contributes to satisfaction; customers tend to consider quality as granted because all professional services are supposed to offer high quality. What does vary is the sacrifice (time and money) related to the purchase of the service. If these results should be interpreted in terms of Day’s concepts and Woodside et
Introduction
al.’s results, one can say that the DMCs that really matter in the case of professional services are those related to the spanning processes (i.e., managing funds and allocating skills).
References Ackoff, Russell: A Concept of Corporate Planning, John Wiley and Sons, New York. 1970.
J Busn Res 1999:45:107–109
109
Ansoff, Igor H.: Corporate Strategy: An Analytical Approach to Business Policy for Growth and Expansion, McGraw Hill, New York. 1965. Cyert, R. M., and March J. G.: A Behavioral Theory of the Firm, Prentice-Hall, Englewood Cliffs, NJ. 1963. Day, George: The Capabilities of Market-Driven Organizations, Report 93-123. Marketing Science Institute, Cambridge, MA. 1993. Miles, R. E., and Snow, Charles S.: Organizational Strategy, Structure and Process, McGraw Hill, New York. 1978.