The Impact of Corporate Culture and Change Responsiveness on Strategy Implementation

A dissertation proposal Submitted to The Arab Academy of Science & Technology & Maritime Transportation

In Partial fulfillment of the regime for the Degree of Doctorate of Business Administration Supervisor: Professor Dr. Adel Zayed April 2009

Abstract
Sustaining competitive advantage is imperative for all firms, which require effective strategic implementation to manage such changing situations. Many firms have found that implementation is very difficult to execute. This research will address the impact of corporate culture on the implementation of corporate strategies. The major components of strategic implementation will be examined and analyzed. Finally, there will be recommendations as to how companies can use its corporate culture throughout the change phases to enhance its implementation strategy over the long-term.

Introduction
"Some are born great, some achieve greatness, and some have greatness thrust upon 'em" Shakespeare, Twelfth Night Successful organizations are often credited with having an appropriate organizational culture and/or structure in place that allows them to reach their objectives and be able to implement successfully their strategies. In todays dynamic business world, strategies are dynamic. Hence, it is but logical that your organizational culture has to be dynamic too. It needs to adapt to the demands of business and change if needed for better results. Although the importance of cultural awareness aspects has been emphasized by earlier writers (Cleland, 1988) and the effective management of cultural diversity has received attention in recent years (Cox and Blake, 1991), to our best knowledge, there is still a lack of systematic and scientific studies on how these issues can be attributed as a major determinant for the success of international business strategies. Culture, "how we do things around here in order to succeed" (Schneider, 1994, 1997), is an organizations way, identity, pattern of dynamic relationships, "reality". It has everything to do with implementation and how success is actually achieved. No management idea, no matter how good, will work in practice (implementation) if it does not fit the culture. An organization can have the most superb strategy, but if its culture is not aligned with and promotive of that strategy, the strategy will either stall or fail. Culture establishes and underpins order, structure, membership criteria, conditions for judging effective performance, communication patterns, expectations and priorities, the nature of reward and punishment, the nature and use of power, decision making practices, and management practices. The importance of leadership roles in organizational culture formation and change it is apparent that in order to cultivate organizational cultures that support strategy implementation initiative, leadership that favor and believe in the importance of culture is mandatory. The connection between leadership and culture is so close that "leadership and culture may be two sides of the same coin" (Senge, 2000, quoting Edgar Schein Edgar). Primarily, the main goal of this research proposal is to determine how organizations are managing corporate culture to implement their strategies.

Further, this will also attempt how changes in terms of cultural aspects affect the strategy implementation. In this research proposal, the background of the research; the objectives of the research and the research statements of the problem are formulated. Here, vital concepts, questions and assumptions are stated. Finally, overview of the methodology to be used including different models and the significance of the research are discussed. Further, this paper will include the discussion of relevant literature.

Statement of the Problem

The research aims at determining how organizations managed itscorporate culture and how the cultural changes encountered by the organization affect the strategy implementation. Culture is formed by screening and selecting new employees who share the same values as the organization. However, culture evolves, it is not static. Both internal (hiring, staff turnover, etc) and external (technology, competition, etc.) factors shape the culture. Culture becomes a valuable ally in strategy implementation. That might affect the strategy-culture fit which by its turn results in failure for implementation. Strong cultures promote successful strategy implementation while weak cultures do not. A strong culture is a shared belief in practices, norms and other practices within the organization that helps energize everyone to do their jobs to promote successful strategy implementation. In weak cultures, it provides little or no assistance to implement strategy. Changing a culture is the toughest of all management tasks, it needs great leaders. It takes time to change unhealthy culture and this may lead to weeding out obstacles to a healthy culture.

Research Questions and Model

Many organizations have been facing serious complexities in terms of adjusting and managing their corporate culture. Hence, this research intends to determine how corporate culture in organization affects the strategy implementation and hinder change. Specifically, the research attempts to answer the following queries.

1. How do organizations differ in managing change? 2. How do factors such as leadership traits and organization culture have impact in the
degree of adoption strategy implementation?

3. In which sense the degree of change responsiveness can affect corporate culture?
4. How changes in terms of cultural aspects affect the strategy implementation?

The 7-S Model of Mackenzy.

This model will answer the following sub questions: Is any change necessary? Is this change the right one? Is this change feasible? Can we actually achieve it and achieve it without Irreparably harming the business? What kind of effort is it going to take? The McKinsey 7-S model is a holistic approach to companies, which collectively determines how the company will operate (12Manage, 2007). Fig 1 The Four Culture Models Although cultural characteristics vary from organization to organization, all organizations have central tendencies that allow them to be categorized into one of the four culture models, displayed in Figure 2 (Moore, 2000).

The Interpretation of the Model:

Culture Control Strategy o Market share dominance o Commodity o Commodity-like o High distribution intensive o Life and death o Predictability o Synergistic customer relationship o Close partnership with customer o High customization o Total solution for one customer o Incremental, step-by-step, customer relationship o Superiority o Excellence o Extremely unique o Create market niche o Constant innovation to stay ahead o Typically, carriage trade markets o Growth of customer o Fuller realization of potential o Enrichment of customer o Raise the human spirit o Further realization of ideals, values, higher-order purposes Leadership o Authoritative o Directive o Conservative o Cautious o Definitive o Commanding o Firm o Team builder o First among equals o Coach o Participative o Integrator o Trust builder o Standard setter o Conceptual visionary o Taskmaster o Assertive, convincing persuader o Challenger of others o Catalyst o Cultivator o Harvester o Commitment builder o Steward o Appeal to higher-level vision Epistemology o Certainty o Organizational systematism

Collaboration

o Synergy o Experiential knowing

Competence

o Distinction o Conceptual systematism

Cultivation

o Enrichment o Evaluational knowing

Review of Literature
Organizational Change/Implementation Strategy Models The 7-S Model, developed by consultants at McKinsey & Company, demonstrates that change is complex due to organizational resistant systems, difficult paradoxes, and the many interconnected variables involved, and that to be effective a change effort must address many of these issues simultaneouslyStrategy, Structure, Systems, Style, Staff, Shared Values, and Skills (Waterman, 1982). The 7-S Model demonstrates that key interdependencies exist among the seven components, which are imperative for the success of an organizations strategic implementation and success. The model clearly suggests the need for appropriate alignment and congruence, based on the managerial style of the organization, the organizations skills, the structure of the organization, and the culture. The 7-S Model does not explicitly capture the effect that external changes might have on the organization. Corporate Culture in Organizations Culture often becomes the focus of attention during periods of organizational change - when growth and other strategic change mean that the existing culture becomes inappropriate, and hinders rather than supports implementation of strategy. In more static environments, cultural issues may be responsible for low morale, absenteeism or high staff turnover, with all of the adverse effects those can have on productivity.

To be able to measure Culture, The Cultural Web model, developed by Gerry Johnson and Kevan Scholes in 1992, provides one such approach for looking at and changing your organizations culture. Using it, you can expose cultural assumptions and practices, and set to work aligning organizational elements with one another, and with your strategy Core Culture Model The core culture is central to the functioning of the organization, forming the nuclear core for how that organization operates in order to succeed. It is critical that this core or lead culture is aligned with the organizations strategy and core leadership practices. This alignment is, in the research, central to any organizations effectiveness. Without it, focus is lost and energy wasted, as people, systems and processes work at cross-purposes with one another. Collins and Porras (1994) for independent and confirming research.

The research indicates that there are four core cultures: control, collaboration, competence and cultivation. Leaders create one of these four core cultures, consciously and/or unconsciously, from their own personal history, nature, socialization experiences, and perception of what it takes to succeed in their marketplace. Each of the four core cultures emerges from the following social organization archetypes:

Control: military system; power motive Collaboration: family and/or athletic team system; affiliation motive Competence: university system; achievement motive Cultivation: religious system(s); growth, or self actualization, motive

There is a strong connection between strategy, culture, and leadership. The four epistemologies that correspond to each of the four core cultures are also listed. By epistemology it means the primary or central way that each core culture knows and understands. This notion of epistemology for each core culture is particularly important for any kind of intervention or practice. The more that an intervention adapts to the epistemology appropriate to the core culture in question, the more probable that intervention will take hold and significantly impact the organization. The Importance of Strategic Implementation Analyzing and formulating the appropriate strategy based on the objectives of the organization is the foundation for developing and transforming a plan, and refining it for the purpose of putting it into action. Strategic implementation is very difficult skill to master, which makes adjusting to environmental change so challenging for organizations. Due to the urgency of adapting to the changing market, strategic implementation is crucial to getting the initiatives launched and processes in place for organizations sustaining position. Implementing the strategy is also important because of the intense effort that strategic analysis and formulation undergo, for making strategic plans a reality. Most organizations concentrate a great deal on striving to outperform their competition, and are negligent with respect to enhancing their internal assets (i.e., corporate culture), which is why strategic implementation is a very important aspect for managerial practices. With such volatility in the business environment, trying to make adjustments associated with these changes, suggests the need for implementation of innovative strategies to leverage organizational culture. Challenges of Strategic Implementation The mindset of an organization should be focused on determining approaches as to attain objectives, by assessing increased external pressures of competitiveness within the respective industries, and by further establishing astute means to exploit its culture for sustained growth. Schein (1993) maintains that because of this natural tendency to resist change and prefer the status quo, organizations have developed a number of immune systems that leaders must overcome if they hope to implement a new strategy successfully. As the need to consistently monitor performance against defined organizational goals, and to sustain a competitive advantage, firms encounter challenges for effectively leading key resources to align with organizational change. It is crucial that these types of organizations create structures conducive to decision-making from multiple perspectives.

There are several elements involved in transforming a strategic plan of organizational change into action that result in desired outcomes. The model of change suggests that any change to one element will have consequential outcomes that affect other components, which have their own consequences, implying that the rippling effect continues. Managers also tend to have a proclivity to implement change to the entire organization by altering only one or two areas. It is crucial that organizations carefully assess each of the elements that are part of implementing change, particularly by applying a comprehensive representation that comprises the key facets necessary for long-term success. The components of strategic implementation will provide the critical factors that will provide guidance in executing the process. Strategy Implementation components Within strategic management, the implementation process is the most challenging aspect of activating established plans, and entails several interconnected elements that provide insight as to making any necessary modifications toward a successful endeavor. Strategic analysis and strategic formulation are imperative for initiating and developing the strategies for consideration of a firms strategic objective and exploration of opportunities. Influences as to the external environment, along with attributes as to internal skills/abilities and growth potential, are important for internal culture to develop unique compounds, while working to assess environmental factors affecting implementation. Along with creating a strategy that is market-driven, implementing strategy must be driven by the activities evolving around the employees and the business processes, to be successful. Most of the key components for the implementation process are apparently represented with respect to successful implementation; however, with so many areas to conquer, the leadership system has to be a key substance for applying this framework, in particular within the organizations realm. The implication would be to create some process for such a challenge, such as to augment long-term organizational progress. One important organizational asset would be the corporate culture strategy fit to provide continual enhancement to the implementation process.

Methodology and Research design

The objective of the research is basically two-pronged. Firstly is to examine the extent of adoption of strategy implementation practices in the organizations and secondly is to see how factors such as leadership traits, organization culture and change have impact in the adoption of strategy implementation. In order to identify the factors that enable or impede effective strategy implementation, we will analyze the variables related by utilizing three unique and powerful assessments, Strategic Focus Indicator (SFI), Organizational Culture & Alignment Indicator (OCAI), and Leadership Practices Indicator (LPI), Culturetek (TM) ensures sustained success in: change management; performance management; organizational development and team development. It has successfully determined why (among others): change programs are not working. Gathering of data on the extent of strategic implementation adoption in the ORGANIZATIONS will be based on models Culture, change management by notable gurus such as (Pascale & Athos, 1981; Peters & Waterman, 1982) & McKinsey & Company also Edgar Schein model of Culture.

The theoretical framework of the research is depicted by the diagram below:

Factors affecting strategy implementation in Organizations

Leadership traits

Extent of Adoption of Strategy Implementation

Types of Organizations

Organization Culture

Change responsiveness

Independent variables Moderating variables Dependent variable

Hypothesis: H1: There is significant statistical relationship between leadership style and strategy implementation. H2: Healthy corporate culture will affect strategy implementation positively. H3: Organization responsiveness to change tends to affect its culture and impact strategy implementation. H4: Types of organizations may influence the adoption of strategy implementation.

DEFINITION OF VARIABLES
The dimensions of each independent variable have been identified as follows:

Leadership:
Degree of ability

It refers to ability to organize, supervise and dealing with issues. This variable is adopted from Jameson and Soule (1991);

Degree of Visionary

It refers to ability to redefine the purpose of organization and embody new purposes into structure and systems; ability to design long-term plan and ability to forecast incoming issues. This variable is adopted from Bryson J.M (1988); Locus of Control

Locus of Control refers the extent to which individuals believe that they can control events affecting them. Individuals who have a high internal locus of control or referred to as internals, believe that the event in their lives are primarily the result of their own behaviour and actions. Organization Culture This variable adapted from Gerry Johnson and Kevan Scholes in 1992 & Burell and Morgan, the functionalistic sociology,1995.

Control: military system; power motive Collaboration: family and/or athletic team system; affiliation motive Competence: university system; achievement motive Cultivation: religious system(s); growth, or self actualization, motive

Change Responsiveness This variable adapted from (Pascale & Athos, 1981; Peters & Waterman, 1982) and was developed by McKinsey and Company in the early 1980s.. Staff

Wherever possible and feasible, opinions should be gathered from all levels of staff. Whether this is done formally through staff surveys and focus groups, or more informally will depend on many factors. It is always worth doing, as it avoids the pitfalls of making too many assumptions. However, sometimes factors such as commercial confidentiality or proposed lay offs make it very difficult to sample opinion. In this case, it might be possible to review previous surveys for clues. Style

Does the proposed change match with the management style and culture of the organisation? If the answer is yes, then while this aspect should be monitored, it should not present much of a problem. Sometimes a change is necessary for organisational survival even if this is contrary to the management style and culture. If the proposal is counter cultural, then there will be significant resistance. A change in culture will be required. If so, then you will need to deploy a wide range of Change Management techniques. Shared Values

The same applies to Shared Values or guiding principles. If the proposed change is counter to the Shared Values then you may actually be talking about a change initiative that needs to

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change the Shared Values or at the very least reinterpret them. If that is so, then it will be a large and potentially difficult change. Strategy

Finally, if the proposed change does not match the Organisational Strategy, then why is it being proposed at all?

Skills.

Soft skills as well as hard skills need to be examined. People were often initially recruited when the process required a different personal style. New processes may require different soft skills and sometimes these can be acquired.

Systems.

Many projects neglect to set up ongoing support systems that help to embed the new process such as ongoing coaching, local experts and a place for the local expert to escalate questions to, and methods for continuously improving the process.

Structure.

The informal structure. Formal organisation charts do not always reflect where the power lies and this should be considered in your stakeholder analysis. Dimensions of Dependent Variable The dimensions the dependent variable i.e. the Process Perspective; Behavior Perspective; Hybrid Perspective; and implementation task and skills. The determination of those dimensions were based on Kotler (1984) cited in Noble (1999b). Grinyer & Spender (1979) cited in Wernham (1985), (Singh, 1998). :Process Perspective Implementation is the process that turns plans into action assignments and ensures that such assignments are executed in a manner that accomplishes the plans stated objectives. Kotler (1984) cited in Noble (1999b). :Behavior Perspective It is a series of decisions and resultant actions which commit resources to achieving intended outcomes Grinyer & Spender (1979) cited in Wernham (1985). Hybrid Perspective: Strategy execution is defined as the step-by-step implementation of the various activities that make up a formulated decision-making strategy. Strategy execution also can be treated as a cognitive process (Singh, 1998).

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Research Design
This research applies a mix of quantitative method to examine the implementation of strategy in organizations. The central aim of the thesis is to provide empirical evidence on how organizations implement strategy and the impact of culture and change on the extent of actualization, and qualitative descriptive method, purpose of employing this method is to describe the nature of a situation, as it exists at the time of the research and to explore the cause/s of particular phenomena. Data will be gathered by means of a perception survey will be conducted to measure variables using structured questionnaire. All questions used a five-point Likert type scale; with a response of 1 indicating that an item received not agree and 5 indicating an item received agree. The sample will consist of different types of institutes that are located in the Egyptian Market mainly Educational Institutes. A postal questionnaire in addition to emails will be used in order and to protect the participants anonymity. Prior to distributing the questionnaire to the sample, a pilot study will be conducted to discover any errors, ambiguities, inadequate answers, or highlight any confusing questions. Enterprises that participated in the pilot study will be excluded from the main research. In addition, interviews will also be conducted at selected companies to solicit views from selected respondents especially top management. During data gathering the choice and design of methods will be somehow modified, based on ongoing analysis. This allows investigation of important new issues and questions as they arise, and allows the investigators to drop unproductive areas of research from the original research plan. Secondary data will be obtained from relevant research and seminar papers, annual reports, statistical abstract, magazines, newspapers and journals. Unit of Analysis Unit of analysis is organization i.e. Organizations under research.

Research Significance
Finding of the research will add to the knowledge and understanding of the subject and its application by the organizations. This research should be significant in the sense that it will: Allow the identification of the concept and framework of strategy implementation that takes into account the leadership, corporate culture and change; Support and enrich theory and the models used in local organizations that have similarities in their nature of other types of organizations; Generate greater awareness among local organizations on the importance of having a proper and practical strategy implementation framework as a vehicle to organizational effectiveness; Provide useful knowledge on factors that might have impact and contribute to the successful adoption of strategy implementation in different types of organizations under research.

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CONCLUSION This proposal is the first step of an endeavor to embark on a comprehensive research on strategy implementation adoption in different types of organizations. Its important is to see the extent of adoption and organizational factors that influence the strategy implementation. It is hoped that the output of the research will be beneficial to all parties concerned while at the .same time contribute to the knowledge enhancement in the academic world

ORGANIZATION OF THE RESEARCH

The organization of the research is planned as shown below: PART I: RESEARCH BACKGROUND AND METHODOLOGY Chapter 1: Introduction, Objective and Scope of the Research Problem Statements Research Focus Objective, Scope and Significance of the Research PART II: LITERATURE REVIEW Chapter 2: Different factors that affects strategy implementation Chapter 3: A General Overview of strategy implementation, change, leadership & corporate culture. Concept and Definition of Strategy implementation Historical and Evolution of Corporate culture Schools of Thought in change management Leadership and its impact on strategy implementation Corporate culture Model and Dimensions and its influence on change & implementation Chapter 4: Research Methodology Research Design The Population The Survey and Interview Techniques Data Analysis PART III ANALYSIS AND FINDINGS AND CONCLUSION

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Timeline/Plan of Work
First Draft Timeline Proposal Topic Selection Literature Search Questions Development Proposal Development Proposal Due 03/31/2009

Data Collection Develop Questionnaire Distribute Collect Questionnaire Tally Results Results Due 12/01/2009 Thesis First Draft Final Draft Presentation 01/01/2010 02/01/2010 04/01/2010

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