Strategy Implementation, Change and Performance Measurement
Domain 3 examines execution: how structure, culture, change management and measurement turn a chosen strategy into results. The exam favours answers that connect implementation choices to measurable outcomes.
Core rules and concepts
- Structure follows strategy: a single-business firm may use a functional structure; diversified firms often use divisional or SBU structures; complex global firms use matrix structures with dual reporting.
- Alignment: culture, reward systems, processes and capabilities must reinforce the strategy. The McKinsey 7S model (strategy, structure, systems, style, staff, skills, shared values) is a diagnostic, not a checklist.
- Change management: Kotter's sequence (urgency, coalition, vision, communication, short-term wins, consolidation) and Lewin's unfreeze–change–refreeze both stress participation and reinforcement.
- Performance measurement: the balanced scorecard links financial, customer, internal-process and learning-and-growth perspectives. Use leading and lagging KPIs, and keep the set small enough to be actionable.
Worked example
A retail bank's strategy is digital growth. Scorecard: financial - cost-to-income ratio; customer - net promoter score and digital active users; internal process - loan approval cycle time; learning and growth - certified digital staff. The causal chain is: training raises certification, shorter cycle times improve customer experience, higher digital usage lowers cost-to-income. If budgeted profit is LKR 120m and actual is LKR 108m, the LKR 12m adverse variance (10%) can be decomposed into volume (LKR 3m), margin (LKR 6m) and cost overrun (LKR 3m), pointing to different corrective actions.
Traps that cost marks
Relying only on financial KPIs; using too many measures; confusing leading with lagging indicators; launching change without stakeholder analysis; and blaming culture when reward and process systems are the real drivers.