The strategy implementation process as perceived by different hierarchical levels: The experience of large Croatian enterprises.

• Author: Ivancic, Valentino

INTRODUCTION

Managers spend billions of dollars on consulting and training in the hope of creating successful strategies. But all too often, successful strategies do not translate into successful performance. Strategy implementation ranks high on top managers' agendas, but it is a topic that has not received sufficient attention in academia. It seems like academics have assumed that if an enterprise has a strategy, it gets implemented automatically. But when talking with managers, it is obvious that the process of implementation does not go smoothly. Most managers admit that their organization is experiencing significant problems with translating their strategies into concrete activities and results (Verweire, 2018).

Research on The Times 1000 conducted in 2001 points out that 80% of the interviewed managers confirm they have an appropriate strategy, but only 14% think that the strategy is implemented appropriately (Cobbold & Lawrie, 2001). Only four years later, the journal The Economist published results, according to which 57% of the enterprises were not successful in implementing strategy (Allio, 2005). Furthermore, the research of Marakon Associates and The Economist Intelligence Unit consultancies on a sample of 197 members of top management shows that, due to problems in implementation, only 63% of enterprises accomplished their planned goals (Mankins, 2005). McKinsey, one of the world's leaders in implementation consultancy, notes that even 70% of change programs fail to achieve their goals, largely due to employee resistance and lack of management support (Ewenstein, Smith, & Sologar, 2015).

As part of the strategic management field, the research on strategy implementation has moved away from practice and does not have a need to serve managers (Whittington, 1996). Strategy implementation is happening in practice and that is where we need to seek new efficient solutions (Tovstiga, 2010). The analysis of strategy implementation should start with people, their perspective, their character, and their drive (Zafar, Butt, & Afzal, 2014). They are critical for successful strategy implementation and they are the starting point when things go wrong. The research focus should be on their thoughts, experience, and capabilities (Asmuss, 2018).

Strategy implementation assumes implementing a strategic plan according to the predefined elements and scheduled timeframe. Those elements are the essence of implementation and, during the process, should be carefully monitored. The research (Beer & Eisenstat, 2000; Rados, 2006; Pucko & Cater, 2008; Brinkschroder, 2014; Harrison, 2017) showed that the lack of systemic control over these elements is the most common mistake in strategy implementation.

The additional thing that makes strategy implementation more complex is the necessity of coordinating a large number of people on different hierarchical levels and with varying functions of business (Candido & Santos, 2019). Strategy is no longer positioned within a limited group consisting of the top management team, instead it can potentially involve any internal and external organizational actor whose actions can be identified to be of relevance for strategic outcomes (Asmuss, 2018). An enterprise can be seen as interconnected sets of processes--and processes are a collection of tasks and activities that together transform inputs into outputs (Verweire, 2018).

Traditional studies on strategy implementation and strategic management processes, in general, focus mainly on the top managers' perspective (Simons, 2013), omitting the key role of middle managers and operatives (Floyd & Lane, 2000; Gronroos, 1995; Schaap, 2006; Kalali et al., 2011; Anchor et al., 2012; Kownatzki et al., 2013). Although the top management perspective is critical because it emphasizes strategic thinking and endeavor, it is mostly the lower-level employees who participate in the implementation process. In order to ensure efficient use of resources and maintain the planned dynamics of strategy implementation, it is vital that employees, at all hierarchical levels, understand what is expected of them, what is the objective of the implementation, what is the expected dynamics of tasks and what are the key factors that need special attention (Noble, 1999a). A failure to understand or approve of some of the key implementation factors may prolong and/or increase the cost of strategy execution (Noble, 1999). Without the integration of knowledge, information and experience brought in by all hierarchical levels, the process of strategy implementation cannot be successful (Hrebiniak, 2006; Mantere, 2008; Shimizu, 2017).

Exploring the opinions of lower hierarchical levels, i.e. those participating in the implementation process on a daily basis, would enable practitioners and strategists to get a complete picture of the implementation obstacles and needs arising within the implementation process when it comes to resolving disagreements, reaching an operatives' consensus, identifying required skills and creating training programs (Floyd & Wooldridge, 1992; Rapert, 1996; Noble, 1999a; Dooley et al., 2000; Heracleous, 2003).

So, the first identified research gap is the lack of a systematic consideration of key implementation factors. We addressed this by gathering feedback on the level of satisfaction with implementing each of the implementation factors. The list of key implementation factors is based on Okumus (2003) theoretical research, who stressed the systematic approach of looking at all crucial implementation factors. Key implementation factors defined in his model are: 1) People, 2) Resources allocation, 3) Communication, 4) Operational planning, 5) Control.

According to the second identified gap, i.e. the lack of strategy practitioners' perspective research, we decided to develop our research with a special focus on all employees involved in the implementation process. When implementing strategy, top, middle, frontline management and operatives are involved, and we decided to ask all of them about the implementation factors. In each enterprise, we had four respondents, one from each hierarchical level.

The aim of the paper is to examine how employees from different hierarchical levels evaluate the adequacy of key implementation factors, respectively evaluating how each of the respondents from different hierarchical levels is satisfied with the specific implementation factors. We believe that viewing the implementation process through different hierarchical levels and the interrelation among the different influencing factors is the starting point for a comprehensive analysis of the implementation process. This approach enables one to integrate and compare the perspectives of different actors within the implementation process, link the strategic and operational perspective, look for potential sources of problems and determine the assumptions on which new strategy implementation model has to be developed.

The research was conducted in large enterprises in the Republic of Croatia. Large enterprises in Croatia represent 0.3% of the total number of enterprises, employ 30.5% of the work force, create 41.5% of value added, and 97.5% of net profit (Ministry of Economy of the Republic of Croatia, 2016).

By including all industries in the sample, it provided 396 large enterprises in the Republic of Croatia.

The paper is organized into five sections. After the introductory section, the second section provides a literature overview and develops the research model, research questions, and hypothesis. Section 3 describes the research methodology and presents the sample, the research instrument, and the research results. In the fourth section, we discuss the empirical findings and their implications. The paper concludes with a conclusion, which analyzes research gaps and proposes guidelines for future research.

LITERATURE REVIEW

Strategy implementation is the process that involves the execution of the necessary tasks or activities to obtain a result over what has been planned (Ramadan, 2015). David Garvin says, successfully implementing and executing strategy involves delivering what is planned or promised on time, on budget, at quality, and with minimum variability--even in the face of unexpected events and contingencies (Miller, 2020).

While it is agreed that strategy formulation is relevant for business success, to date, little attention has been paid to its actual implementation, i.e. to the concrete steps needed to translate sustainability strategy into practice (Klettner et al., 2014; Engert & Baumgartner, 2016). A high percentage of failure in implementing strategy in practice urges research to move the focus from strategy formulation to strategy implementation (Blahova & Knapkova, 2011; Hassan, 2016). Tawse et al. (2019) posit that one reason for the ineffective transition from strategy formulation to strategy implementation is that planning is associated with a different set of thought processes and emotional experiences than is required for strategy implementation.

As employees implement strategy from different hierarchical levels, we think there is a gap in the literature that includes not only the attitudes of the top management team (Heracleous, 2003; Kalali, 2011) but also the attitudes of frontline managers and operatives. In the last couple of years, there has been a slight tendency to include middle-level managers in the research on strategy implementation (Salih & Doll, 2013; Darkow, 2015; Chowdhury, 2016; Johansson & Svensson, 2017), yet lacking ones including front line management and operatives.

Gibson et al. (2019), who introduced the notion of the hierarchical erosion effect, emphasize that employees within the same enterprise usually have heterogeneous interests and perceptions. Their study argues that individual perceptions about specific practices can differ according to his/her position in the hierarchical structure. That means an...