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Author:Melnyk, S.A.
Hanson, J.D.
Calantone, R.J.
Title:Hitting the target ... but missing the point: Resolving the paradox of strategic transition
Journal:Long Range Planning
2010 : AUG, VOL. 43:4, p. 555-574
Index terms:strategic management
performance measurement
executives
companies
case studies
USA
Language:eng
Abstract:In many firms, there is a strategic shift (henceforth as: str-s.) going on from cost leadership via process management (here as: mgmt.) to differentiation based on radical product innovation (as: innvn). This study examines the challenges of managing this transition, focusing especially on the role of performance (as: perf.) metrics (as: mtrs). According to conventional wisdom, top mgmt. can use mtrs., that is, measures, standards and rewards, to communicate new directions and priorities. Based on findings, this approach is found to be potentially fatally flawed when applied to a situation where the corporate goals and the means of achieving these goals have changed. Based on detailed data collected from a multi-level analysis of a major international corporation engaging such a str-s., this study explores the process by which mtrs. are formed and deployed, and the impact of this process on the ability of the firm to successfully achieve the change. Using measures such as the percentage of sales from new products, top mgmt. in the case study had the impression that the strategy was being successfully followed through by the various operating divisions. However, radical innvn. had been replaced by incremental innvn. Reasons for the situation are identified. A major finding is that the perf. measurement and mgmt. system can both allow and hide this failure. Firms trying to significantly change their strategic directions must change their selection of perf. mtrs. to focus less on the intended outcomes and more on the means by which these outcomes are to be achieved.
SCIMA record nr: 271508
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