Real-time strategy implementation in the electricity industry
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Date
02-May
Authors
Van Buuren, Rudolph Barend
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Free State
Abstract
Afrikaans: Hierdie studie fokus op die elektrisiteitsindustrie, met spesifieke
verwysing na die wyse waarop organisasies in die industrie hul
strategiese beplanning implementeer. Die elektrisiteitsindustrie is
spesifiek geselekteer aangesien dit in 'n toenemende komplekse en
snelveranderende omgewing opereer. Herstrukturering en
deregulering is verskynsels wat tans regoor die wêreld in die
elektrisiteitsindustrie plaasvind. Van 'n eens beskermde monopolistiese
organisasie tot een waar mededinging tussen konkurrente
toegelaat word. Tradisioneel het elektrisiteitsorganisasies gebruik
gemaak van beplanningsiklusse wat wissel vanaf een jaar en langer.
Hierdie studie fokus spesifiek daarop om die beginsel van intydse
strategiese implementering as 'n alternatief vir beplanningsiklusse in
die elektrisiteitsindustrie te ondersoek, aangesien die industrie tans
in 'n komplekse en snelveranderde omgewing opereer, wat nie
gunstig vir die gebruik van beplanningsiklusse is nie.
Die empiriese navorsing vir hierdie studie is onder vier van die
grootste elektrisiteitsmaatskappye in die Verenigde State van
Amerika gedoen. Die Verenigde State van Amerika is spesifiek
gekies omdat die elektrisiteitsindustrie in hierdie land van die eerstes
was om 'n mededingende mark vir elektrisiteit bekend te stel.
Aan die hand van hierdie studie is 'n aantal gapings tussen
strategiese beplanning en strategiese implementering blootgelê.
Hierdie gapings het toenemend bygedra tot die algemene opvatting
dat strategiese beplanning nie as effektief in die industrie gereken
word nie en dat dit bloot 'n vermorsing van tyd is. Hierdie gapings
kan soos volg saamgevat word:
(a) Probleme word ondervind om te reageer op geïsoleerde en
onvoorspelbare gebeure in die industrie en wat die potensiaal
het om die huidige mededingende posisie van die
elektrisiteitsindustrie te vernietig.
(b) Die herstrukturering van die industrie en die gevolglike
ontbondeling van die eens vertikaal geïntegreerde aard van die
elektrisiteitsindustrie het gelei tot die onstaan van konflik wat
betref strategiese doelstellings tussen die korporatiewe vlak in
die organisasie en die besigheidseenhede van die organisasie.
(c) Dit het verder tot gevolg gehad dat die strategiese
beplanningsprosesse wat in hierdie organisasies gebruik word,
lomp en tydsintensief geraak het, met die gevolg dat senior
bestuur nie effektief aan die proses wou deelneem nie.
(d) Ten spyte van die beskikbaarheid van 'n verskeidenheid van
strategiese beplanningsinstrumente, soos industrie- en
mededingerontledings, is gevind dat die meeste van die
strategiese beplanningsprosesse in die elektrisiteitsindustrie
intern gesentreer is.
(e) 'n Algemene probleem om die ontwikkelde strategie te koppel
aan effektiewe metingsnorme en verwante metingstelsels , is
ondervind.
Gevolglik word die belangrikste aanbevelings, gebaseer op die
resultate van hierdie studie, gegee:
(d) Ten spyte van die beskikbaarheid van 'n verskeidenheid van
strategiese beplanningsinstrumente, soos industrie- en
mededingerontledings, is gevind dat die meeste van die
strategiese beplanningsprosesse in die elektrisiteitsindustrie
intern gesentreer is.
(e) 'n Algemene probleem om die ontwikkelde strategie te koppel
aan effektiewe metingsnorme en verwante metingstelsels , is
ondervind.
(a) Top bestuur behoort 'n goeie basis te lê vir die implementering
van 'n strategie. Dit moet gedoen word deur 'n openlike
verbintenis en vrywillige betrokkendheid by die strategiese
beplanning en implementering, ten einde die strategiese
vaardighede van die organisasie uit te bou en strategiese
outonomie regdeur die organisasie te bewerkstellig.
(b) Intydse (real-time) strategiese beplanningsprosesse behoort
geïnisieer te word, insluitende intensiewe en volgehoue
situasie-analise en implementeringsinitiatiewe om strategiese
kwessies teen markspoed op te los.
(c) Effektiewe strategiese ondersteuningstelsels en -prosesse
behoort geïmplementeer te word. Dit sluit
inligtingsondersteuning in en verseker effektiewe integrasie
van die strategie regdeur die organisasie.
(d) Effektiewe strategiese gerigtheid regdeur die organisasie is
noodsaaklik. Dit sluit die koppeling van effektiewe prestasiebestuursprosesse
aan die strategie van die organisasie in,
asook om die betrokkenheid van soveel werknemers as
moontlik, op verkeie vlakke met betrekking tot strategiese
beplanning en implementering te bewerkstellig.
Verdere, meer spesifieke aanbevelings vir die implementering van
intydse strategiese beplanningsisteme sluit die volgende riglyne is:
(a) Topbestuur behoort betrokke te raak by die strategiese
beplanning en implementeringsprosesse van die organisasie,
as voorvereiste vir strategiese sukses.
(b) Alle vlakke binne die organisasie behoort aangemoedig te word
om op 'n outonome manier betrokke te raak by strategiese
beplanning en implementering.
Intydse strategiese beplanningsprosesse behoort as
effektiewe inligtingstelsels ontwikkel te word.
(d) Strategiese doelwitte en strategieë behoort op 'n deurlopende
basis hersien te word.
(e) Die gebruik van strategiese beplanningsiklusse behoort
gestaak te word in die lig van 'n intydse strategiese
implementeringsproses.
(f) Werkprestasie ooreenkomste behoort by wyse van konsensus
tussen werknemers en bestuurders onderhandel te word,
asook horisontaal tussen verskillende departemente.
(g) Die gebruik van omslagtige strategiese beplanningsdokumente
behoort gestaak te word.
(h) Strategiese beheer behoort aan die hand van 'n gebalanseerde
meetkaart (balanced scorecard) gedoen te word.
English: This study focuses on the electricity industry with specific reference to the manner in which organisations in the industry implement strategic plans. The electricity industry was chosen in particular as it operates in an increasingly complex and volatile environment. Restructuring and deregulation are phenomena that occur currently in electricity markets across the world. Organisations that once functioned in a protected, monopolistic environment are now entering the era of full competition. In their traditional approach to strategic planning, electricity organisations generally utilise one-year planning cycles. This study focuses particularly on testing the concept of realtime strategy implementation in electricity organisations as an alternative to using planning cycles. The empirical research for the study was conducted in the United States of America. Included in the sample were four of the largest electricity holding companies in that country. The United States of America was specifically chosen because the electricity industry in that country was one of the first in the world to introduce a competitive market for electricity. Through this study a number of gaps were identified between strategic planning and strategy implementation in the electricity industry. These gaps led increasingly to the general perception that strategic planning is ineffective in the industry. In summary these gaps are: (a) The problem of responding to isolated and unpredictable issues that arise in a volatile and complex industry situation and that have the potential to erode the current competitive position of the electricity utility. (b) The restructuring of the industry and the subsequent unbundling of the vertically integrated nature of many electricity utilities, giving rise to conflict between business units and corporate strategy issues. This tends to reduce strategic planning to the level of a business review process. (c) The associated issue where the strategic planning process employed is often too time-intensive for senior management to participate in, or it cannot provide the leverage required to get maximum value from the time that senior personnel are able to invest in the process. (d) Despite the existence of strategic instruments like industry analysis and competitor analysis, most of the strategic planning processes in electricity utilities remain highly introspective of nature. (e) A general problem of linking the resulting strategy with explicit measures of success and associated tracking systems. The following are the most important recommendations based on the results of this study: (a) Top management should build a solid foundation for the implementation of strategy in real-time. This should be done through their visible commitment and voluntary involvement in strategic planning and strategy implementation, building the strategic capabilities of the organisation and implanting strategic autonomy throughout the organisation. (b) Real-time strategic planning processes need to be initiated, including intensive and ongoing situation analysis and implementing initiatives to resolve strategic issues at market speed. (c) Effective strategy support systems and processes need to be implemented. This includes information support as well as ensuring effective integration of strategy throughout the entire organisation. (d) Effective strategic alignment of the entire organisation is required. This includes the linking of effective performance management processes to the strategy of the organisation and multi-level involvement of as many employees as possible in strategic planning and strategy implementation. Further recommendations for the implementation of real-time strategic planning systems include the following guidelines: (a) Involvement of top management in strategic planning and strategy implementation is a prerequisite for strategic success. (b) Organisations should allow for autonomy in strategic decisions by lower levels of employees and departments. (c) Real-time strategy systems should be designed as effective information systems. (d) Strategic objectives and strategies should be reviewed on a real-time basis. (e) Strategic planning cycles should be discarded to allow for realtime strategy implementation (f) Performance contracts should be negotiated on a consensus basis, including aspects of performance expectations from both the subordinate and the manager, and between different departments. (g) The use of comprehensive and complex written strategic planning documents should be discarded. (h) Strategic control should be implemented through the use of a balanced scorecard.
English: This study focuses on the electricity industry with specific reference to the manner in which organisations in the industry implement strategic plans. The electricity industry was chosen in particular as it operates in an increasingly complex and volatile environment. Restructuring and deregulation are phenomena that occur currently in electricity markets across the world. Organisations that once functioned in a protected, monopolistic environment are now entering the era of full competition. In their traditional approach to strategic planning, electricity organisations generally utilise one-year planning cycles. This study focuses particularly on testing the concept of realtime strategy implementation in electricity organisations as an alternative to using planning cycles. The empirical research for the study was conducted in the United States of America. Included in the sample were four of the largest electricity holding companies in that country. The United States of America was specifically chosen because the electricity industry in that country was one of the first in the world to introduce a competitive market for electricity. Through this study a number of gaps were identified between strategic planning and strategy implementation in the electricity industry. These gaps led increasingly to the general perception that strategic planning is ineffective in the industry. In summary these gaps are: (a) The problem of responding to isolated and unpredictable issues that arise in a volatile and complex industry situation and that have the potential to erode the current competitive position of the electricity utility. (b) The restructuring of the industry and the subsequent unbundling of the vertically integrated nature of many electricity utilities, giving rise to conflict between business units and corporate strategy issues. This tends to reduce strategic planning to the level of a business review process. (c) The associated issue where the strategic planning process employed is often too time-intensive for senior management to participate in, or it cannot provide the leverage required to get maximum value from the time that senior personnel are able to invest in the process. (d) Despite the existence of strategic instruments like industry analysis and competitor analysis, most of the strategic planning processes in electricity utilities remain highly introspective of nature. (e) A general problem of linking the resulting strategy with explicit measures of success and associated tracking systems. The following are the most important recommendations based on the results of this study: (a) Top management should build a solid foundation for the implementation of strategy in real-time. This should be done through their visible commitment and voluntary involvement in strategic planning and strategy implementation, building the strategic capabilities of the organisation and implanting strategic autonomy throughout the organisation. (b) Real-time strategic planning processes need to be initiated, including intensive and ongoing situation analysis and implementing initiatives to resolve strategic issues at market speed. (c) Effective strategy support systems and processes need to be implemented. This includes information support as well as ensuring effective integration of strategy throughout the entire organisation. (d) Effective strategic alignment of the entire organisation is required. This includes the linking of effective performance management processes to the strategy of the organisation and multi-level involvement of as many employees as possible in strategic planning and strategy implementation. Further recommendations for the implementation of real-time strategic planning systems include the following guidelines: (a) Involvement of top management in strategic planning and strategy implementation is a prerequisite for strategic success. (b) Organisations should allow for autonomy in strategic decisions by lower levels of employees and departments. (c) Real-time strategy systems should be designed as effective information systems. (d) Strategic objectives and strategies should be reviewed on a real-time basis. (e) Strategic planning cycles should be discarded to allow for realtime strategy implementation (f) Performance contracts should be negotiated on a consensus basis, including aspects of performance expectations from both the subordinate and the manager, and between different departments. (g) The use of comprehensive and complex written strategic planning documents should be discarded. (h) Strategic control should be implemented through the use of a balanced scorecard.
Description
Thesis (Ph.D.(Business Management))--University of the Free State, 2002
Keywords
Strategic planning, Real-time strategy implementation, Strategy implementation, Electricity industry, Electricity industry regulation, Strategic flexibility, Complexity, Robust strategies, Volatility, Grounded theory, Management -- Planning, Electric industries -- Management