Brasil Foods: Overcoming Barriers to Successful Strategy Implementation

Brasil Food’s (BRF) corporate strategy (domain selection), embodied in its vision “BRF 2015”, is internationalisation through three phases described by Bell and Kindred (2012, p.9) as:

The success of BRF’s strategic formulation will be judged by results obtained; as even the most advanced and academically-grounded strategic intention may not deliver the actual commercial results required. Nutt (1999) suggests “half the decisions made in organisations result in failure, many of which during the implementation phase”. In order to achieve its vision, BRF must not only have a clearly defined strategy, but ensure implementation is successful to align behaviours to the vision. This report considers common barriers that BRF may encounter when implementing a strategy of internationalisation and provides practical recommendations, substantiated by academic literature, to ensure strategic intent is realised.

Relationship between implementation and strategy formulation

Implementation can be regarded as the activities undertaken to realise a given strategy; and, as supported by the findings of Hrebiniak (2006) is typically a longer process than formulation – in BRF’s case, anticipated to take years. This length of time can introduce unforeseen events (e.g. changes in legislation or the economy) so the process must be dynamic but well-controlled. This is exacerbated by implementation involving more people (than formulation) and consequently raises issues of communication: The wider the involvement, the more challenging it is for managers to link strategic objectives to day-day objectives.

Hrebiniak (2006) claims managers are “trained to plan, not execute plans” as strategies for each functional discipline (marketing, operations management etc.) are taught in isolation, which is “deleterious to the integrative view demanded by execution”. Hrebriniak argues the importance of a “simultaneous view” because formulation and planning are interdependent and successful implementation depends on when “those responsible for implementation are also part of the … formulation process”.

As Open University (2014a, p.5) illustrates, strategy is commonly regarded as a linear process (analysis – decision – implementation) but the “transition between these stages is not seamless” and “the three parts of the process cannot be treated as discontinuous”. Implementation should inform strategic decisions. For example, BRF must consider if the necessary resources to undertake international trade are present.

The iterative process of strategic implementation (stages informing each other) complements non-deliberate perspectives of strategy such as emergent or realised; as defined by Mintzberg (1996). These perspectives counter the normative assumption that strategy is the reserve of senior management and BRF must acknowledge and utilise the potential of all the organisational roles of actors involved in strategic change.

Factors determining the success of implementation

Using the list of five key obstacles to implementation offered by Alexander (1985) and the results from a survey of managers conducted by Hrebiniak (2006) identifying prevalent themes in why execution of strategy failed; the following combined list summarises key points and the implications for BRF’s strategy toward internationalisation are considered in the subsequent sections.

  1. Poor or vague strategy. Key tasks not defined in sufficient detail.
  2. No model or guidelines to derive a logical approach and an inability to manage change – at the core is cultural change; concerns over the speed of execution
  3. Problems requiring intervention by top management were not communicated to them fast enough or unanticipated major problems arising during implementation.
  4. Key formulators of the strategic decision did not play an active enough role in implementation.
  5. Changes in roles and responsibilities were not clearly defined
  6. Poor information sharing and subsequent unclear roles and responsibilities; which is detrimental to the cross-organisational nature of implementation
  7. Working against the power structure – unable to gain support for actions

To address the first obstacle, BRF needs to ensure that formulated strategy is clear because a good implementation, with people ‘taking the initiative’, cannot compensate for poorly conceived strategy. Sometimes detail is overlooked but the seemingly small issues arising could prevent, or at least delay, implementation. For example, in extending into new markets, has implications for BRF’s existing information systems and BRF may need to carefully manage any software upgrades to be compatible with multiple currencies or time zones. The judgement of clarity of a strategy though is how-well received (i.e. accessible) that strategy is – whether or not it is ‘heard above the noise of day to day activities’.

Structure

Organisations’ structures are defined in terms of how people interact, information flows and activities are coordinated (Open University, 2014, p.49). It is imperative that BRF’s structure supports its strategy and does not, itself, present a barrier to implementation where actors are “working against the power structure”.

Raisch (2008) describes how “efficient exploitation of existing capabilities has been related to a mechanistic form of organization, relying on standardization, centralization and hierarchy” but “exploration may be better supported by organic structures with high levels of decentralization”. BRF’s strategy, however, has potentially conflicting implications on structure: BRF wants to preserve existing domestic market share (exploitation) but conversely develop new opportunities (exploration), domestically, with foodservice and in foreign markets. Rasich (2008) states “The pursuit of profitable growth implies the challenge of maintaining a balance between the exploitation of existing capabilities and the exploration of new possibilities” and proposes three design options that can be pursued; as described below.

Table 1. How BRF can use the three types of ‘balanced design’ solutions, adapted from Reich (2008)

Temporal separation is an expensive and risky process whereby the internal (not customer facing) operations functions of BRF are centralised or decentralised. However, from BRF (2012), BRF has long benefitted from the efficiencies of its internal value chain. BRF must simultaneous purses exploitation and exploration strategies in the relative short term to realise the “BRF 2015” vision. Structural separation has a major disadvantage for BRF. By separating into domestic (exploitation) and foreign (exploratory) divisions, the change will be counter-intuitive to BRF’s ultimate goal of “becoming a world-class multi-national”. BRF would not operate as a multinational but merely a domestic company with foreign subsidiaries; but the paradigm as an international company must pervade the organisation.

Open University (2014, p.66) suggests that ‘parallel structures’ enable “incremental innovation by exploiting existing resources, capabilities and technologies” and are “demand-led”. This would enable the BRF’s core (corporate parent) to manage, and gain economies of scope/scale, from its existing capabilities such as supply chain management, logistics, information management and human resource management. Then, in each market (whether that segmentation is geographic or along product groupings) a subsidiary would be formed and their increased levels of autonomy would permit innovative processes to explore opportunities without being detrimental to the efficiencies they would benefit from. This should start with BRF’s existing domestic structure because ultimately, BRF must evolve beyond its historical and cultural association to its home territory and view Brasil as just one (albeit the largest) of its market presences.

This high-level structural model is typical among many multinational companies (and in some cases whole industries); albeit somewhat hidden by the distinct ownership of business entities in franchise-franchisee arrangements. This author has been involved in the automotive industry for over a decade and parallel structures govern the structure of automotive giants such as Fiat – manufacturing, logistics, supply chain management occurs centrally whereas sales and customer relationships are managed by the dealers.

BRF should consider that Raisch (2008) suggests the three solutions need not be mutually exclusive but can be, and often are, used in a complementary manner. This could mean that while adopting an approach today in implementing strategy, a combination of approaches could be indicated to maintain that same strategy.

Facilitating Implementation

Implementation will commonly involve the coordination of multiple projects, which are regarded as focussed activities with a limited time and defined outcomes. For example, in realising the strategy to establish a global supply chain for its products, BRF may identify several projects such as ‘setup warehousing facilities in Africa’ (the size and scope of such projects may vary). Tools such as critical path analysis and Gnatt charts will assist BRF in effective project management (and subsequently in, successful implementation) as described by Open University (2014 pp.13-15).

Projects, however, differ from implementing strategic change as the latter tend to on a larger scale (across the organisation), ongoing with iterative improvements and the focus is less well-defined. The management control loop (Open University, 2014 p.17) provides a useful model of the stages of strategy implementation, as illustrated below.

Figure 1 The management control loop – Open University, 2014, p.17

The management control loop can help address the obstacle of poor information sharing by ensuring BRF’s management translate strategy into objectives and indicate the performance required (1). In phase (2), the tasks are then derived from objectives and key performance indicators (KPI) can be used. In order to accomplish phase (3), BRF needs to ensure that mechanisms for monitoring progress are utilised. This is a critical step because as Hrebiniak (2006) illustrates with his recollection of experience of bank’s introduction of a new procedure, it could seem like progress is occurring but without reliable (even, objective) monitoring, lack of progress or even moving backward could be hidden. By employing effective monitoring systems, BRF could ensure that the obstacle of “problems requiring intervention by top management were not communicated to them” is avoided. Management would be able to act on results and take corrective actions where necessary (4) to (2) or revise objectives (4) to (1).

The model has been extended by Argyris and Schon (1978) to allow for the re-assessment of strategic goals – ‘double loop learning’. Morgan (1986) suggests ways to ensure this is possible and BRF should adopt these principles to encourage the exploratory behaviour required from personnel: An open and reflective approach, encouraging multiple viewpoints, with participants guided by generalised goals means that BRF can help nurture management into creating and planning more effective strategies that take advantage of opportunities that internationalisation offers.

Managing Change

BRF’s strategy has implications for change across the organisation (with micro-level changes feeding macro-level). Change should be carefully managed to avoid the undesirable consequences inherent with strategic change (e.g. strike action) and to ensure that implementation is delivered according to plan. Open University (2014, pp.71 – 72) discusses three perspectives of change:

  • Planned: “Change is the outcome of careful, objective analysis and planning”
  • Incremental: With overall direction, change occurs in stages as a negotiated process involving decisions, compromises and adjustments and is more sensitive to context
  • Punctuated Equilibrium: A combination of the former perspectives; organisations make incremental changes in stable periods and radical changes when competitive pressures demand it.

Balogun and Hailey (2008) state “‘successful change requires the development of a context-sensitive approach” which is because “The content of change (what is actually changed) and the process (the way change is implemented and emerges) are both influenced by the internal as well as the external contexts of change” – Open University (2014, p.70)

BRF should adopt a context-sensitive approach to managing change because a planned approach can fail to consider, seemingly unrelated, undesirable consequences (that were not planned for) but additionally, just undertaking incremental changes can mean “organisations become trapped in strategic inertia” i.e. they just carry with ‘business as usual’.

Balogun and Hailey (2008) provide four categories of change determined by the speed and scope of change, as shown below.

Figure 2 Types of strategic change – Balogun and Hailey (2008)

In the matrix, the nature change (vertical axis) represents how quickly the change is implemented and the scope of change (horizontal axis) represents change either fundamentally transforms culture or, less-radically, re-aligns existing activities and discourses to the desired. BRF’s change is ‘Evolution’ because implementation is expected to occur during phases defined by ‘BRF 2015’ over years but the change will transform the company to a global culture. BRF recognises the “biggest challenge in HR is to get people who really think globally” – Bell and Kindred (2012, p.11). The research of Hrebiniak (2006) has “placed culture at the core of many change-related problems” and Hrebiniak describes that ‘change’ and ‘culture change’ were viewed as synonymous.

To overcome resistance to cultural change, BRF needs to ensure that its strategy involves communicating why there is a need to change. The context-sensitive approach to this is ensuring that each manager takes time to personally deliver the strategy to subordinates so that fears can be allayed.

Recommendations for Implementing Strategy

Hickson et al. (2003) highlight factors that were often present in successful implementations, from research undertaken as summarised below with considerations for BRF.

By adopting approaches from the implications above, BRF could overcome the common barriers to implementation. From research and analysis of implementation across organisations, Hrebiniak (2006) proposes a model of execution – addressing the barrier of “No model or guidelines to derive a logical approach”.

Conclusion

As discussed in this report, anticipating and addressing barriers to implementation, has a significant impact on ensuring strategy is realised – implementation is not just the “doing” stage after the “thinking stage” but an inherent part of strategy. Implementation informs and shapes strategy and the strength of BRF’s strategy may be tested by its implementation.

BRF, like any organisation, is governed by political relationships (formal and informal) and it is evident from the implementation barriers discussed that significant focus on people, as complex components, will help ensure a successful strategy. BRF fortunately recognises this: “Fay and his team believed the quality of BRF’s people, and their ability to work together, would ultimately determine their success.” – Bell and Kindred (2012, p.11)

The (non-exhaustive) list of recommendations provide some key considerations for BRF that may fundamentally change the norms by which the process of strategy is understood, but at the very least, provide BRF with the insights and tools to ensure implementation is carefully managed.

References

Alexander, L. (1985) ‘Successfully implementing strategic decisions’, Long Range Planning, vol.18, no.3,pp. 91–7.

Argyris, C. and Schön, D. (1978) Organisational Learning: A Theory of Action Perspective, New York, Addison-Wesley.

Balogun, J.and Hope Hailey, V.(2008) Exploring strategic change, 3rd edn, Harlow, Prentice-Hall.

Bell, D. and Kindred, N. (2012) Brasil Foods, Harvard Business School, Boston, Harvard Business School Publishing

HicksonD.J., Miller,S.J.and Wilson,D.C.(2003) ‘Planned or prioritised? Two options in the implementation of strategic decisions’, Journal of Management Studies, vol. 40, no. 7, pp. 1803–36.

Hrebiniak, L.G. (2006) ‘Obstacles to effective strategy implementation’, Organizational Dynamics, vol.35, no. 1,pp. 12–31.

Mintzberg, H. (1996) ‘Crafting Strategy’, The Strategy Process, London, Prentice Hall

Morgan, G. (1986) Images of Organisation, London, Sage.

Nutt, P.C. (1999) ‘Surprising but true: half the decisions in organizations fail’, Academy of Management Executive, vol. 13, no. 4, pp. 75–90.

Raisch,S.(2008) ‘Balanced structures: designing organizations for profitable growth’, Long Range Planning, vol. 41, pp. 483–508.

Open University (2014) B301 Block 5: Strategic Implementation, 2nd Edn, Milton Keynes, The Open University

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