Abstract:

Strategies often fail not because they are poorly designed but because they are poorly implemented. Empirical research has identified and described numerous obstacles to successful strategy implementation, however little work has been done regarding normative analysis of such problems and how they relate to and impact strategy implementation processes.

This article builds upon a previous analysis of middle management’s role in strategy implementation by extending the analytical model presented in that study in terms of transformational input-output relationship as well as in terms of how values are assigned to certain project results.

The authors show that the owner of a strategy should set incentives such that a strategy implementation manager puts forward sufficient effort to push the project beyond a minimal implementation level, otherwise the strategy owner runs the risk of realizing a negative return. As a consequence he may have to take on a higher share of cost associated with implementation risk than in non-strategic projects. The authors further discuss alternative compensation approaches in order to overcome some of the issues inherent in classic incentive schemes.