Chapter 11 Employing Strategy Implementation Levers

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Chapter 11Employing StrategyImplementation
Levers
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OBJECTIVES
Understand the interdependence between strategy
formulation and implementation
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FORMULATION AND IMPLEMENTATION
Strategy formulation
Strategy implementation
The central, integrated, externallyoriented
concept of how we willachieve our objectives

• Arenas
• Staging
• Vehicles
• Differentiators
• Economiclogic

Implementation Levers StrategicLeadership
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THREE QUESTIONS
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KNOWING Vs. DOING GAP
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Percent of large companies who
regarded themselves as goodor excellent at
generating newknowledge
46
reported having launched newproducts based on
the applicationof new knowledge
14 (of the same firms)
Source J. Pfeiffer and R.I. Sutton, The Knowing
Doing Gap (Boston Harvard Business School
Press, 2000)
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CAUSES OF THE KNOWING DOING GAP INTERNAL
EXTERNAL RESISTANCE
When Compaq tried to copy Dells direct-sales
model, it met stiff resistance from Comp USA,
Best Buy, and other retailers
External

• Internal
• Businessunits
• Culture

SAP attempted to launch consulting service to
supplement its core technology offering but
failed to align with SAP culture
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HOW WOULD YOU DO THAT? SAP AMERICA
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CEO CHALLENGE IMPLEMENT
The strategist will not be able to nail down
every action step when the strategy is first
crafted, nor should this even be attempted.
However, he or she must have the ability to look
ahead at the major implementation obstacles and
ask, Is this strategy workable? Can I make it
happen?
Source Hambrick and Cannella, Strategy
Implementation as Substance and Selling
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KEY FACETS OF STRATEGIC IMPLEMENTATION

• Organization structureSystems and
  processesPeople and rewards

IntendedStrategy
Realized EmergentStrategies
Implementation Levers
Strategic Leadership

• Lever and resourceallocation decisionsCommunicat
  ing thestrategy to stakeholders

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ORGANIZATIONAL STRUCTURE ALIGNED TO STRATEGY
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HOW STRUCTURE INFLUENCES STRATEGY AIR LIQUIDE
Structure
Strategy
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SIX FORMS OF ORGANIZATIONAL STRUCTURE
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FUNCTIONAL STRUCTURE
Corporate Office
Organizes activities according to the specific
functions that a company performs
Marketing/Sales
Finance
Operations
RD
Example
Platypus Technologies has 30 employees organized
into small departments finance, marketing, HR,
and RD
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MULTIDIVISIONAL STRUCTURE
Headquarters
Business Group A
Business Group B
Business Group C
One solution to problems of managing activities
in multiple markets or managing multiple products
Finance
Finance
Finance
Marketing
Marketing
Marketing
Operations
Operations
Operations
Example
GM is organized according to product division (GM
Trucks, Chevrolet, Buick, Cadillac, Pontiac,
Saturn, etc. Each maintains its own finance,
marketing, and other support functions
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MATRIX STRUCTURE
Headquarters
Product or Region A
Product or Region B
Product or Region C
Product or Region D
RD
Hybrid between functional and multidivisional
structure
Operations
Marketing
Finance
Source http//www.cio.com/archive/090103/hs_reloa
d.html
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NETWORK STRUCTURE
Small, semi-autonomous, and potentially temporary
groups brought together for a specific purpose
Gores 6,000 employees spread across the world
work in small teams and are encouraged to seek
out colleagues on their own
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PARTNERSHIPS AND FRANCHISES
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BALANCED SCORECARD IS A MEASUREMENT SYSTEM TO
MANAGE STRATEGY IMPLEMENTATION
Source Kaplan Norton, 1996
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STRATEGY MAPS HELP LINK ALL PERFORMANCE METRICS
TO STRATEGY
Implementation levers
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HOW WOULD I DO THAT? BALANCED SCORECARD AT US
NAVAL UNDERSEA WARFARE CENTER
NUWC Vision Be our nations provider of choice
for undersea superiority satisfying todays
needs and meeting tomorrows challenges NUWC
Mission We provide the technical foundation
which enables the conceptualization, research,
development, fielding, modernization, and
maintenance of systems that ensure our navys
undersea superiority.
NUWC Vision Be our nations provider of choice
for undersea superiority satisfying todays
needs and meeting tomorrows challenges NUWC
Mission We provide the technical foundation
which enables the conceptualization, research,
development, fielding, modernization, and
maintenance of systems that ensure our navys
undersea superiority.
Financial To succeed, how must we look to our
constituents in terms of balanced budgets,
revenue sources, and value?
External To achieve our vision and mission, how
must we look to our customers on the dimensions
of purpose, service, and quality?
Internal To satisfy our customers, at what
business processes must we excel in order to
decrease lag time, raise productivity, and lower
costs?
Employee learning and growth To accomplish our
vision and mission and support internal
processes, what kind of staff and information
systems do we need to foster innovation,
continuous learning, and value in intellectual
assets?
Implementation levers
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PEOPLE AND REWARDS
Successful CEOs attended to people first and
strategy second. They got the right people on the
bus, moved the wrong people off, ushered the
right people to right seats and then they
figured out where to drive it
JetBlue and Southwest Airlines both expend
considerable effort making sure new hires will
fit the firm
People
Jim Collins
Rewards
Implementation levers
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PEOPLE AND REWARDS
People

• Reward systems have two components
• Performance evaluation and feedback
• Compensation (e.g., salary, bonuses, stock,
  promotions, coveted office space)
• They can serve as a force of control over
  outcomes or behaviors

GE which owns several unrelated companies, links
division manager pay to the performance of the
unit they manage
Rewards
Implementation levers
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STRATEGIC LEADERSHIP IS RESPONSIBLE FOR 2 KEY
OBJECTIVES
Strategic Leadership
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RESOURCE ALLOCATION DECISIONS
Resource dimensions in the airline industry
Major airlines
Level of offering
Southwest
JetBlue
Most airlines mimic each other while Southwest
and JetBlue follow decidedly different strategies
Factors ofcompetition
Source Adapted from W.C. Kim and R. Mauborgne,
Charting Your Companys Future, Harvard
Business Review, June. 2002
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STRATEGIC LEADERSHIP COMMUNICATING WITH KEY
STAKEHOLDERS
Convince top managementof a new strategy (e.g.,
Intels shift to microprocessors)
Win cooperation of external stakeholders
including customers and distributors (e.g.,
Compaq failed to do this with retailers)
Win support of other units within the firm
Enlist support of those who implement
Strategic Leadership
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THREE CS OF STRATEGY COMMUNICATION
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STRUCTURAL OPTIONS
Transnational configuration
Global configuration
Multinationalconfiguration
Internationalconfiguration
Coordinated group of federations over which more
administrative control is exerted by home country
headquarters
Resembles a decentralized federation much like
the relation-ship between US federal government
and 50 states
Description
Foreign offices are used to access customers, but
demand is filled by centralized production
Structure allows dispersion, specialization, and
interdependence networked control system
Examples
Japanese companies 1970s 1980s
SAP pre 1990
SAP post 1990
McDonalds
Global and Dynamic contexts
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FIRM RESPONSES TO DYNAMIC CONTEXTS
Challenges of dynamic, high velocity contexts
Global and Dynamic contexts
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THE AMBIDEXTROUS ORGANIZATION
Corporate Office
Structural barriers preventing interference and
interactions between existing and emerging
businesses
Existing Business
Emerging Business
Manufacturing
Sales
RD
Manufacturing
Sales
RD
New organization develops its own levers
consistent with the needs of the radical
innovation
Existing organization with historic
implementation levers
Ambidextrous organizations establish units that
are structurally independent from all other
units. The emerging business units are to
develop their own structures, processes, systems,
cultures, strategies, etc. They are only
integrated into the mother organization at the
level of senior management
Global and Dynamic contexts
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PATCHING
Global and Dynamic contexts
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SUMMARY