Strategy Evaluation and Control
Strategy Evaluation and Control
This unit deals with the last phase of strategic management. The formulation of strategy lays down the strategic intent and the strategy required to achieve them. The end result is adjustment of strategies reformulation of objectives or adoption of plans. Strategic evaluation and control is the process of determining the effectiveness of a given strategy in achieving the organizational objectives and taking corrective action wherever required ‘Evaluation of strategy is that phase of the strategic management process in which the top managers determine whether their strategic choice as implemented is meeting the objectives of the enterprise.’ -GLUECK &JAUCH Strategic evaluation is to monitor and evaluate progress towards organizations objectives and to guide or correct the process or change the strategic plan to better accord with current condition and purposes.
Strategic controls take into account the changing assumptions that determine a strategy, continually evaluate the strategy as it is being implemented, and take the necessary steps to adjust the strategy to the new requirements. In this manner, strategic controls are early warning systems and differ from post-action controls which evaluate only after the implementation has been completed.
The types of strategic controls are:
Special alert control
Premise control is necessary to identify the key assumptions, and keep track of any change in them so as to assess their impact on strategy and its implementation. Premise control serves the purpose of continually testing the assumptions to find out whether they are still valid or not. This enables the strategists to take corrective action at the right time rather than continuing with a strategy which is based on erroneous assumptions. The responsibility for premise control can be assigned to the corporate planning staff that can identify key assumptions and keep a regular check on their validity.
Implementation control may be put into practice through the identification and monitoring of strategic thrusts such as an assessment of the marketing success of a new product after pre-testing, or checking the feasibility of a diversification program after making initial attempts at seeking technological collaboration.
Strategic surveillance can be done through a broad-based, general monitoring on the basis of selected information sources to uncover events that are likely to affect the strategy of an organization.
Special Alert Control
Special alert control is based on trigger mechanism for rapid response and immediate reassessment of strategy in the light of sudden and unexpected events. Crises are critical situations that occur unexpectedly and threaten the course of a strategy. Organizations that hope for the best and prepare for the worst are in a vantage position to handle any crisis.
Crisis management follows certain steps:
Recovery leading to organizational learning.
6 stages of feed back
Find out what to control.
It determines the objectives of the organization in the light of strategy
Come up with control standards
It provides a guide in setting out targets and tolerance
It set the actual standard
Compare actual performance to standards
It compares the result vs. performance standard
Determine the reason for the deviation
The deviation of actual performance against standards are analyzed
Take necessary corrections
It corrects activities that are not aligned in the objectives of the organization.
Nature of Strategic Evaluation
Nature of the strategic evaluation and control process is to test the effectiveness of strategy. During the two proceedings phases of the strategic management process, the strategists formulate the strategy to achieve a set of objectives and then implement the strategy. There has to be a way of finding out whether the strategy being implemented will guide the organization towards its intended objectives. Strategic evaluation and control, therefore, performs the crucial task of keeping the organization on the right track. In the absence of such a mechanism, there would be no means for strategists to find out whether or not the strategy is producing the desired effect.
Importance of Strategic Evaluation
Strategic evaluation helps to keep a check on the validity of a strategic choice. An ongoing process of evaluation would, in fact, provide feedback on the continued relevance of the strategic choice made during the formulation phase. This is due to the efficacy of strategic evaluation to determine the effectiveness of strategy. During the course of strategy implementation managers are required to take scores of decisions. Strategic evaluation can help to assess whether the decisions match the intended strategy requirements. In the absence of such evaluation, managers would not know explicitly how to exercise such discretion. Strategic evaluation, through its process of control, feedback, rewards, and review, helps in a successful culmination of the strategic management process. The process of strategic evaluation provides a considerable amount of information and experience to strategists that can be useful in new strategic planning.
The effective control must be:
Control should involve only the minimum amount of information as too much information tends to clutter up the control system and creates confusion. Control should monitor only managerial activities and results even if the evaluation is difficult to perform. Controls should be timely so that corrective action can be taken quickly. Long-term and short-term controls should be used so that a balanced approach to evaluation can be adopted.
Requirements for Effective Evaluation
Controls should aim at pinpointing exceptions as nitpicking does not result in effective evaluation. The 80:20 principles, where 20 per cent of the activities result in 80 per cent of achievement, needs to be emphasized. Getting bogged down with the activities that do not really count for achievement makes the evaluation ineffective. Rewards for meeting or exceeding standards should be emphasized so that managers are motivated to perform. Unnecessary emphasis on penalties tend to pressurize the managers to rely on efficiency rather than effectiveness
Modes of Corrective Action
There are three choices of corrective action:
1.Normal mode – follow a routine, no crisis approach; this take more time 2.As hoc crash mode – saves time by speeding up the response process, geared to the problem ad hand. 3.Preplanned crisis mode – specifies a planned response in advance; this approach lowers the response time and increases the capacity for handling strategic surprises.
The below checklist suggest the following five general areas for corrective actions: • Revise the Standards. It is entirely possible that the standards are not in line with objectives and strategies selected. Changing an established standard usually is necessary if the standards were set too high or to low are the outset. In such cases it’s the standard that needs corrective attention not the performance. • Revise the Objective. Some deviations from the standard may by justified because of changes in environmental conditions, or other reasons. In these circumstances, adjusting the objectives can y much more logical and sensible then adjusting performance.
• Revise the Strategies. Deciding on internal changes and taking corrective action may involve changes in strategy. A strategy that was originally appropriate can become inappropriate during a period because of environmental shifts. •Revise the Structure, System or Support. The performance deviation may by caused by an inadequate organizational structure, systems, or resource support. Each of these factors is discussed elsewhere in this chapter, or other part of this thesis. •Revise Activity. The most common adjustment involves additional coaching by management, additional training, more positive incentives, more negative incentives, improved scheduling, compensation practices, training programs, the redesign of jobs or the replacement of personnel. Managers can also attempt to influence events or trends external to it through advertising or other public awareness programs. In such case, the changes should be made only after the most intense scrutiny. Management must remember that adjustments in any of the above areas may require adjustments in one or more of the other factors. For example, adjusting the objectives is likely to require different strategies, standards, resources, activities, and perhaps organizational structure and systems.
Characteristics of Good EVALUATION
E Ethically Conducted
V Values Diverse Opinions
A Accurate and Technically Adequate Information L Leads to Continuous Learning and Improvement U Uses Participatory Methods
A Affordable/Appropriate in Terms of Budget
T Technical Persons Carry it Out/Timely Carried Out I Indicators properly selected and Studied
O Opens opportunity for better understanding developmental change N Never Used for Fixing Blame and Finding Faults Ethically Conducted:
Every evaluation practice should be conducted ethically and the evaluators must recognise the participants’ entitlement to privacy. Evaluators should ensure that data is kept securely and that no publication will directly or indirectly lead to a breach of agreed confidentiality or anonymity. Evaluators shall respect people’s right to provide information in confidence and make participants aware of the scope and limits of confidentiality. Conflicts of interest shall be avoided as far as possible so that the credibility of the evaluation process and product shall not be undermined. Evaluations must give a comprehensive and balanced presentation of strengths and weaknesses of the policy, program, project or organizational unit being evaluated, taking due account of the views of a diverse cross-section of stakeholders.
Values Diverse Opinions:
The evaluator should include the opinions and ideas of all the stakeholders in his/her evaluation report. Accurate and Technically Adequate Information on the Merit of Program (Being Assessed) is Provided: Evaluator can also use the evaluation report to share his suggestions or even suggest alternatives.He/She should be able to refelct diffferences between alternatives and to distinguish the relative degree of impact across the alternatives.
Leads to Continously Learning and Continuous Improvement:
The evaluation must be such that all the stakeholders should be able to interperet the evaluation criteria and its findings. The evaluation report should be easily understadable and provide enough information so that informed decisions can be made on its basis. The evaluation practice should extract lessons learned during the project and communicate them to the concerned authorities to improve upon them. When communicated rightly, any mistakes previously done will not be repeated in the future and will pave way for efficiency, learning and improvement.
Uses Participatory Methods:
Participatory evaluation ensures that the evaluation focuses on locally relevant questions that meet the needs of project planners and beneficiaries. Participatory approaches also allow the stakeholders to determine the most important evaluation questions that will affect and improve the ongoing/ended project works. A participatory approach is empowering because it claims the right for local people to control and own the process of making evaluation decisions and implementing them.3 Participating in an evaluation from start to finish can give stakeholders a sense of ownership over the results. Recognizing local talents and expertise builds confidence and pride in the community, and among participants. Conducting a participatory evaluation promotes participant learning and is an opportunity to introduce and strengthen evaluation skills.
Active participation by stakeholders can result in new knowledge and a better understanding of their environment. This, in turn, enables groups to identify action steps and advocate for policy changes. It can provide participants with tools to transform their environments. Participatory evaluation builds teams and participant commitment through collaborative inquiry. Inviting a broad range of stakeholders to participate and lead different parts of the process can develop and celebrate local leadership skills. It can lead to stronger, more organized groups, strengthening the community’s resources and networks. Finally, a participatory evaluation is not just interested in findings; it is focused on creating a learning process. It creates a knowledge base among local people and organizations, which can be applied to other programs and projects. The techniques and skills acquired can lead to self-sustained action.
Affordable/Appropriate in terms of Budget:
The evaluation conducted or to be conducted should be efficient in the use of resources. Evaluation should be intelligently designed and executed. Trained Professionals Carry it Out
Timely Carried Out:
Nearly every evaluation is time bound. Either it has to be carried out in a specific time or at a certain time. Some project require its evaluation to be conducted soon after the project is finished and some require after some time. Hence, the best time for evaluation must be identified in the context of the project and then the practice should be carried out. Moreover, almost all the times there is been a specific time in which the evaluation practice should be completed. Like a week, a month or whatever limit has been set, must be followed.
Indicators Properly Selected And Studied:
The evaluator should properly select the indicators so that his findings are inline with the outcomes of the project. Moreover, the evaluator must evaluate all the indicators and its results in the context of the project, the project area and the project beneficiaries.
Opens Opportunity for Better Understanding Developmental Change/Process Never Used for Fixing Blame & Finding Faults:
As stated in the start, evaluation must be conducted ethically, with no intention of harming someone or supporting someone unethically.