Monday, September 30, 2013

Explaining the Implementation Imperative: Why Effective Implementation may be Useful even with Bad Strategy

LEE Eucman, PURANAM Phanish
Read the working paper
INSEAD Working Paper 2013/103/STR

We propose a theory that explains why the relentless pursuit of effective implementation – the ability to get employees to take actions believed necessary to execute a strategy – may be useful even in a world in which the strategies being implemented are far from optimal. In keeping with typical models of organizational adaptation, we formulate a computational model in which an organization’s strategy adapts based on performance feedback. However, the distinctive feature of our approach is that we abandon the “organization as a unitary actor” assumption, and model a separation of beliefs and actions. In our models, the strategy believed to be optimal by a manager is imperfectly implemented by an employee. The central insight is that when there is a separation of belief and action, effective implementation has benefits beyond the well-known effect of enabling exploitation of good strategies. It also enables the discovery of better strategies by allowing more effective learning from feedback on the value of current strategies.