Strategy Implementation

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Strategy Implementation

• What must we do to put the strategy in place,
  execute it proficiently, and produce good
  results?
• Creating FITS between strategy and external
  environment and creating FITS inside the
  organization
• Control, coordination, and motivation issues

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Figure 11.1 The Eight Componentsof the
Strategy Execution Process
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ALLOCATING RESOURCES TO SUPPORT STRATEGY
IMPLEMENTATION
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Allocating Resources toSupport Strategy
Execution

• Resource allocation should fit strategy
• Changing strategy requires changes to resource
  allocation process
• Shifting resources downsizing some
  areas,upsizing others, getting rid of activities
  no longer needed, and funding new strategically
  critical activities
• Financial and other resources (physical and human
  assets)
• Historical process vs. Zero-based Budgeting

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CREATING STRATEGY-SUPPORTIVE POLICIES AND
PROCEDURES
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Fig. 12.1 How Prescribed Policies
andProcedures Facilitate Strategy Execution
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INSTITUTING BEST PRACTICES AND CONTINUOUS
IMPROVEMENT
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Instituting Best Practicesand Continuous
Improvement

• Searching out and adopting best practicesis
  integral to effective implementation
• Benchmarking is the backbone of theprocess of
  identifying, studying, andimplementing best
  practices
• Key tools to promote continuous improvement
• Business process reengineering
• TQM
• Six Sigma quality control

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What Is Total Quality Management?

• A philosophy of managing a set of business
  practices that emphasizes
• Continuous improvement in all phases of
  operations
• 100 percent accuracy in performing activities
• Involvement and empowermentof employees at all
  levels
• Team-based work design
• Benchmarking and
• Total customer satisfaction

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Six Sigma Quality Control A Tool for
Promoting Operating Excellence

• Six Sigma is a disciplined, statistics-basedsyste
  m aimed at having not more than 3.4 defects per
  million iterations for any business practice
• From manufacturing to customer transactions
• Applying Six Sigma to value chain activities can
  significantly improve the proficiency of strategy
  implementation

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INSTALLING STRATEGY-SUPPORTIVE INFORMATION AND
OPERATING SYSTEMS
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Installing Strategy-SupportiveInformation and
Operating Systems

• Good information and operating systems
  areessential for first-rate strategy execution
• Support systems can relate to all value-chain
  activities
• Includes all type of Computer Based Information
  Systems (CBISs)
• MIS, DBMS, TPS, DSS, E-commerce and e-business
  systems, CRM, SCM, etc
• Mobilizing information and creating systemsto
  use knowledge effectively can yield
• Competitive advantage

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TYING REWARDS AND INCENTIVES TO GOOD STRATEGY
IMPLEMENTATION
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Exercising Adequate ControlOver Empowered
Employees

• Challenge Behavioral Control
• How to ensure actions of employeesstay within
  acceptable bounds
• Control approaches
• Managerial control
• Establish boundaries on what not todo, allowing
  freedom to act with limits
• Track and review daily operating performance
• Peer-based control

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Gaining Commitment Componentsof an
Effective Reward System

• Monetary Incentives
• Base pay increases
• Performance bonuses
• Profit sharing plans
• Stock options
• Retirement packages
• Piecework incentives

• Non-monetary Incentives
• Praise
• Constructive criticism
• Special recognition
• More, or less, job security
• Stimulating assignments
• More, or less, autonomy
• Rapid promotion

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Linking the Reward Systemto Performance
Outcomes

• Rewards are the single most powerful tool to win
  the commitment of company personnel to effective
  strategy implementation
• Objectives in designing the reward system
• Generously reward those achieving objectives
• Deny rewards to those who dont
• Tie incentive compensation to relevant outcomes -
  both strategic and financial

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Key Considerations inDesigning Reward Systems

• Create a results-oriented system
• Reward people for results, not for activity
• Define jobs in terms of what to achieve
• Incorporate several performance measures
• Tie incentive compensation to relevant outcomes
• Top executives Incentives tied tooverall firm
  performance
• Department heads, teams, andindividuals
  Incentives tied toachieving performance
  targetsin their areas of responsibility

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BUILDING A STRATEGY-SUPPORTIVE CORPORATE
CULTURE
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Defining Characteristics of Corporate Culture

• Core values, beliefs, and business principles
• Ethical standards
• Operating practices and behaviors defininghow
  we do things around here
• Approach to people management
• Chemistry and personality permeatingwork
  environment
• Often told stories illustrating
• Companys values
• Business practices
• Traditions

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Identifying the Key Featuresof Corporate
Culture

• A companys culture is manifested in . . .
• Values, business principles, and ethical
  standards preached and practiced by management
• Approaches to people management and problem
  solving
• Official policies and procedures
• Spirit and character permeating work environment
• Interactions and relationships among managers and
  employees
• Peer pressures that exist to display core values
• Its revered traditions and often repeated stories
• Its relationships with external stakeholders

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Where Does CorporateCulture Come From?

• Founder or early leader
• Influential individual or work group
• Policies, vision, or strategies
• Operating approaches
• Companys approach to people management
• Traditions, supervisory practices, employee
  attitudes
• Organizational politics
• Relationships with stakeholders
• Internal sociological forces

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How Is a Companys Culture Perpetuated?

• Selecting new employees based on how well their
  personalities fit in
• Systematic indoctrination of new employees
• Senior employees reinforcement of core values
• Story-telling of company legends
• Ceremonies honoring employees who display
  cultural ideals
• Visibly rewarding those who follow cultural norms

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Types of Corporate Cultures
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Characteristics ofStrong Culture Companies

• Conduct business according to a clear,
  widely-understood philosophy
• Considerable time spent by management
  communicating and reinforcing values
• Values are widely shared and deeply rooted
• Have a well-defined corporate character,reinforce
  d by a creed or values statement
• Careful screening/selection of newemployees to
  be sure they will fit in

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Characteristics of Weak Culture Companies

• Lack of a widely-shared core set of values
• Few behavioral norms evident in operating
  practices
• Few strong traditions
• No strong sense of company identity
• Little cohesion among departments
• Weak employee allegiance tocompanys vision and
  strategy

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Characteristics of Unhealthy Cultures

• Highly politicized internal environment
• Issues resolved on basis of political clout
• Hostility to change
• Avoid risks and dont screw up
• Experimentation and efforts toalter status quo
  discouraged
• Not-invented-here mindset company personnel
  discount need to look outside for
• Best practices
• New or better managerial approaches
• Innovative ideas
• Disregard for high ethical standards and
  overzealous pursuit of wealth by key executives

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Characteristics ofHigh-Performance Cultures

• Standout cultural traits include
• A can-do spirit
• Pride in doing things right
• No-excuses accountability
• A results-oriented work climate in which people
  go the extra mile to achieve performance targets
• Strong sense of involvement by all employees
• Emphasis on individual initiative and creativity
• Performance expectations are clearly identified
  for all organizational members
• Strong bias for being proactive, not reactive
• Respect for the contributions of all employees

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Hallmarks of Adaptive Cultures

• Willingness to accept change and embrace
  challenge of introducing new strategies
• Risk-taking, experimentation, and innovation to
  satisfy stakeholders
• Entrepreneurship is encouraged and rewarded
• Funds provided for new products
• New ideas openly evaluated
• Genuine interest in well-being of all key
  constituencies
• Proactive approaches toimplement workable
  solutions

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Why is Culture Important?

• Matching culture to strategy will improve
  performance
• A culture that promotes attitudes and behaviors
  that are well-suited to strategy is a valuable
  ally in the strategy implementation process
• Can hinder strategy implementation and
  performance if not compatible with strategy
• A culture where attitudes and behaviors impede
  good strategy implementation is a huge obstacle
  to overcome
• Provides another means to control, coordinate,
  and motivate employees

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Grounding the Culture inCore Values and
Ethics

• A culture based on ethical principles is vital to
  long-term strategic success
• Ethics programs help make ethical conduct a way
  of life
• Executives must provide genuine support of
  personnel displaying ethical standards in
  conducting the companys business
• Value statements serve as a cornerstone for
  culture-building
• Can be used to control employees to behave in
  the right way

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STRATEGIC LEADERSHIP
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Numerous Roles of Strategic Leaders
Culture Builder
Mentor
Taskmaster
Visionary
Process Integrator
Negotiator
Coach
Chief Entrepreneur Strategist
Capabilities Builder
Head Cheerleader
Resource Acquirer Allocator
Spokesperson
Arbitrator
Consensus Builder
Crisis Solver
Motivator
Chief Administrator Strategy Implementer
Policy Enforcer
Policymaker
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Leadership Roles of theStrategy Implementer

• Staying on top of whats happening
• Putting constructive pressure on the organization
  to achieve good results
• Leading the development of stronger core
  competencies and competitive capabilities
• Displaying ethical integrity and leading social
  responsibility initiatives
• Pushing corrective actions to improve strategy
  execution and achieve the targeted results

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Role 1 Stay on Top of Whats Happening

• Develop a broad network of formaland informal
  sources of information
• Talk with many people at all levels
• Be an avid practitioner of MBWA
• Observe situation firsthand
• Monitor operating results regularly
• Get feedback from customers
• Watch competitive reactions of rivals

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Role 2 Put Constructive Pressure
onCompany to Achieve Good Results

• Successful leaders spend time
• Mobilizing organizational energy behind
• Good strategy execution and
• Operating excellence
• Nurturing a results-oriented work climate
• Promoting certain enabling cultural drivers
• Strong sense of involvement on part of company
  personnel
• Emphasis on individual initiative and creativity
• Respect for contributions of individuals and
  groups
• Pride in doing things right

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Role 3 Promote Stronger CoreCompetencies
and Capabilities

• Top management intervention is required to
  establish better or new
• Resource strengths and competencies
• Competitive capabilities
• Senior managers must lead the effort because
• Competencies reside in combinedefforts of
  different work groups and departments, thus
  requiring cross-functional collaboration
• Stronger competencies and capabilitiescan lead
  to a competitive edge over rivals

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Role 4 Display Ethics Leadership and Lead
Social Responsibility Initiatives

• Set an excellent example in
• Displaying ethical behaviors
• Demonstrating character andpersonal integrity in
  actions and decisions
• Declare support of companys ethics codeand
  expect all employees to conductthemselves in an
  ethical fashion
• Encourage compliance and establish
  toughconsequences for unethical behavior

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Role 5 Lead the Process ofMaking
Corrective Adjustments

• Requires deciding
• When adjustments are needed
• What adjustments to make
• Involves
• Adjusting long-term direction, objectives, and
  strategy on an as-needed basis in response to
  unfolding events and changing circumstances
• Promoting fresh initiatives to bring internal
  activities and behavior into better alignment
  with strategy
• Making changes to pick up the pace when results
  fall short of performance targets