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Assessment of the Annual Planning Process - Executing Strategy

Veer, J.P.A. van der (2009) Assessment of the Annual Planning Process - Executing Strategy.

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Abstract:This research provides the management with recommendations for the improvement of the annual planning process. The background of the problem is researched, and gaps where identified by searching for discrepancies between the current situation and theory. Benchmark analysis focusing on the gaps revealed how other companies cope with these gaps. In the preliminary research, agreement is achieved about the problems that are focus of this research: the Annual Planning Process not deployed as it should be and there is no sound coupling between the Strategic Plan and the Profit Plan. This is the core problem: Strategy Execution. Literature regarding strategy execution indicated that the most important drivers of strategy execution are effective information flows and clarified decision rights. Literature research resulted in items explaining effective information flow and a clarified decision making process. These items where used in a survey which measured the current situation. The survey, short interviews and the all employee survey indicated that information flow about strategy related issues is insufficient and the decision making process for strategy related issues are not present. The survey indicates that communication and information flow are better when employees know there is a communication- and information sharing protocol present. Also the known presence of a formal decision making protocol leads to a more rational perceived decision making process. Therefore, the two drivers for strategy execution identified in the first part of the research can be indicated as a gap. The identified gaps are researched at three benchmark companies. These companies have similarities regarding structure and are all in business to business. The companies aligning their businesses with their strategy perceive low strategic drift. This because of short lines, central strategy making and execution and the cooperation in strategy making. Related to the gaps, they have more effective information flows and more clear decision rights. In order to make the organisation more mature in the process of strategy deployment and subsequently gain maturity in the operational excellence, five recommendations are proposed that focus on improving the gaps identified. The first and most important recommendation is to appoint a dedicated strategy manager. If there is a dedicated strategy manager, the strategy execution process will be more controlled and centralized, leading to a more inclusive and aligned process. This strategy manager should then focus on the following recommendations; to get higher involvement of the Leadership Team, to set up a formalized decision making process, to introduce scenario planning and to adopt a closed loop in the management system. In earlier discussions, Roadmapping in the APP was questioned. Initially, the problem was that only R&D used it, while it was thought that it must be used company wide. Roadmapping is just an intermediary form of strategy making and strategy execution, and thus the recommendation was: discard the Roadmapping Process in the APP. This part of the process was removed before the end of this research. Executing strategy is a very important core competence for creating a more resilient company. When following these recommendations the execution capabilities become more mature and increased alignment will follow. It will establish priorities for the future, forces to make choices and focuses the organisation around one plan.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/60091
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