Integrated framework to mitigate risks during strategy implementation

Abstract

In today's competitive business environment, business entities are faced with greater uncertainties (threats and opportunities) as they strive to create value. In the quake of the current global economic crisis, businesses in a bid to stay competitive have taken several crucial measures. However, for companies to keep track of their strategies, achieve their strategic objectives and reduce the impact of uncertainties, appropriate decisions should be made with a solution that reduces the impact of risks. Technical reports from companies showed that there is deviation from their original strategic plan tracks, and they are unable to achieve their strategic objectives. A preliminary study was conducted to identify the factors that lead to inefficiencies during strategic plan implementation. The result of the preliminary study showed that there is lack of risk management, especially information and incentive alignment risks. This research aims to propose a framework that mitigates risks during strategy implementation, through how the key choices made in strategy will either increase or reduce two characteristic types of risk (information and incentive alignment risks). These two types of risk (which are not mentioned in depth in other or past types of risk management categories) are the key inefficiency creators in the strategic planning and decision making that arise because of decision patterns. The proposed framework considers how to question the key decisions and how to turn inefficiencies into opportunities and points of power to create value. The proposed framework also presents essential fundamental concepts and enablers for achieving sustainable performance such as developing organizational capability, creative thinking, innovation, agility, succeeding through people and sustained outstanding results. The framework presents a mechanism to identify and assess the information and incentive alignment risks in the key decisions. The developed framework helps to reinvent desired strategic performance which lies in changing how decisions are made.