Welcome to Chapter: Action Plan Communication and Critical Success Factors!
Hello there! You’ve already learned how to create a strategy. But here is the big secret: even the best strategy in the world is just a dusty document on a shelf if no one knows about it or knows how to measure its success. In this chapter, we are looking at how to bridge the gap between "having a plan" and "making it happen."
We are in the Strategic Control section of your E3 syllabus. This is all about keeping the business on the right track. Think of it like a GPS for a long road trip—it doesn't just tell you the destination; it constantly checks where you are and tells you if you need to turn around!
1. Communicating the Action Plan
Imagine you are the captain of a huge ship. You’ve decided to sail to a tropical island. If you don't tell the crew, they might keep rowing toward the North Pole! Communication is the process of ensuring everyone in the organization understands the strategy and their specific role in achieving it.
Why is communication so important?
• Alignment: It gets everyone pulling in the same direction.
• Motivation: People work harder when they understand "why" they are doing something.
• Feedback: It allows employees to report back if the plan isn't working on the ground level.
How do we communicate effectively?
Don't worry if this seems like a lot of corporate talk; it’s actually quite simple. Good communication should be:
1. Two-way: It’s not just bosses talking to staff. Staff need to be able to talk back (upward communication).
2. Consistent: The message shouldn't change every five minutes.
3. Tailored: A factory floor worker needs different information than a middle manager.
Did you know? Many strategies fail because of "silo thinking"—where different departments don't talk to each other. Good communication breaks these silos down!
Quick Review: Strategic communication isn't just a memo; it's an ongoing process to make sure the strategy "lives" inside the company.
2. Critical Success Factors (CSFs)
A Critical Success Factor (CSF) is something that must go right for the organization to achieve its mission. Think of these as the "must-haves."
Analogy time: If you are opening a high-end pizza restaurant, your CSFs might be:
• High-quality ingredients (Must have!)
• Fast delivery (Must have!)
• Great location (Must have!)
If you fail at any of these, the business fails. That’s why they are "critical."
Rockart’s Sources of CSFs
John Rockart suggested that CSFs usually come from four specific places. You can remember these with the mnemonic ISET:
1. Industry Characteristics: Things all companies in your industry must do (e.g., safety in the airline industry).
2. Strategy/Competitive Position: Where you sit in the market (e.g., if you are a "budget" brand, low costs are a CSF).
3. Environmental Factors: Outside things like the economy or changing regulations.
4. Temporal Factors: Short-term "one-off" things (e.g., surviving a sudden supply chain crisis).
Key Takeaway: CSFs are usually qualitative (descriptive). They tell you what is important, but they don't give you a number yet.
3. Key Performance Indicators (KPIs)
Now that we know what is important (the CSF), we need to measure it. That’s where KPIs come in. A Key Performance Indicator is a quantitative (numerical) measure used to track how well you are doing against your CSFs.
The Golden Rule: For every CSF, you should have at least one KPI.
Example:
• CSF: Excellent Customer Service.
• KPI: Achieve a customer satisfaction score of 9/10 or higher.
The Relationship: CSF vs. KPI
Many students get these mixed up. Think of it this way:
• CSF = The Goal (e.g., "I want to be healthy").
• KPI = The Measurement (e.g., "My heart rate should be 70 beats per minute").
Common Mistake to Avoid: Don't have too many KPIs! If you try to measure 100 things, you aren't focusing on what is actually "critical." Stick to the vital few.
4. Monitoring and Control
Strategic control is the final piece of the puzzle. Once we have our Action Plan, our CSFs, and our KPIs, we use them to monitor progress.
The Control Loop Process:
1. Set Targets: Based on your KPIs.
2. Measure Performance: See what is actually happening.
3. Compare: Actual performance vs. the Target. (This difference is called a variance).
4. Take Action: If you aren't meeting the target, change something! This is the "control" part.
Real-World Example: A tech company has a CSF of "Innovation." Their KPI is "30% of revenue must come from products launched in the last 2 years." If they measure and find it's only 10%, they realize their strategy is failing and they need to invest more in Research and Development (R&D).
Quick Review: Strategic control isn't about looking at the past; it's about checking if the current path will lead to the future goal.
5. Summary and Key Tips
• Communication ensures the strategy moves from the boardroom to the shop floor.
• CSFs are the vital areas where "things must go right." Remember Rockart's ISET.
• KPIs are the numbers we use to see if we are hitting our CSFs.
• Strategic Control is the process of measuring, comparing, and acting to keep the strategy on track.
Final Tip for the Exam: If a question asks about a company struggling to implement a plan, look for whether they communicated it properly or if they are measuring the wrong things (bad KPIs)!