Strategy Evaluation

strategy evaluation includes three basic activities
Examining the underlying basis of a firm’s strategy
 Comparing expected results with actual results
Taking corrective action


step 1. Measuring actual performance , how to measure?, what to measure?, what we measure will influence behavior, what type of behavior do we want to drive?,

how to measure?
personal observations
statistical reports
oral reports
written reports
and i would say we want to have a mix of this even though i always push data and facts we might think that statistical reports are the only thing we need but no we need to understand where are the numbers coming from we need to understand why the numbers look like they do and that we can do with personal observation, managing by walking around, talk to people talk to customers, this is not so much to do with strategy but i think it's quite interesting that also coming back to my lean background but this kind of personal observation is quite powerful a lot of  when you reach a certain position in the organisation becoming a manager a lot of information intake come from statistics reports, alot from people making presentations or oral reports to you in meetings and so on, but not so much from personal observation cause quite often the management is stuck in conferences and office rooms, one thing that toyota makes quite good that when they train management is using lean thinking and they take the manager for the office down to the shoop flor and then they draw a circle on the floor and then they say to the manager and say stay there for a shift, perhaps 5-7 hrs, and stand in the circle and observe and see what are people doing, quite often we have managers just standing in a circle on the shop floor to realise what they are doing around them,  TLDR, see it with your own eyes.


the role of communication:
adequate and timely feedback is the cornerstone of effective strategy evaluation.


What to measure?



Taking managerial action
Do nothing
Correct actual performances - but what to do?
immediate corrective action (e.g. lowering heineken price by 10%)
basic corrective action (e.g. increase advertising budget of heineken)
      - Revise the standard
- If there is a variance, almost everyone first attacks the standards but are they really unrealistic?


Short Term effects = hopefully increase in sales, on the other one , not so much. revise the standard is often a slower process
long term effects = revise the standard, might fix things slowly in the future



Evaluation is a sensitive issue
Too much pressure from higher managers will result in lower managers handing in information they think will be satisfactory
too much emphasis on evaluation can be counterproductive and expensive


Four criteria for evaluatiing strategies
Consistency
how consistent is it with the rest of the organisation
Consonance
How do we evaluate all the trends are they really in line with what is happening in the outside world, in a high level and in a small more local level, how are the strategies with the environment around us?.
feasibility
 how easy is it to execute?
advantage
Competitive advantage our strategies create utilizing the strategies will we gain an advantage on the market in terms of position, resources, skills, et.c.
1,2 = internal focus
3,4 = External focus


strategies should be evaluated continuously rather than periodically, and the changes needs to be done immediately and not at the end of the year.
Characteristics of an effective evaluation system:
Strategy evaluation must be economical
should be meaningful, to give something that makes sense, value.
should provide useful information about things that can be controlled and influenced, what to measure, how to measure?
should provide timely information, sometimes daily.
should provide a true picture of what is happening
should facilitate action and be directed to those who need to take action
should not dominate decisions

when strategies do not go as planned then we need a contingency plan, what do we do if things do not go as planned. what plans do we have to put in place as quick as possible?. one way to find contingency plan is to go back to the strategy development phase. unexpected opportunities can be capitalized by contingency plans as well.