Strategy Implementation: Organizing for Action

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Strategy Implementation Organizing for Action

• Does organizational structure come after strategy
  formulation? Well, yes, in theory!
• New strategy is created
• New administrative problems emerge
• Economic performance declines
• New appropriate structure is invented
• Profit returns to its previous level.

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Strategy Implementation Organizing for Action

• Simple structure Entrepreneur and staff
• Efficient implementation of formulated strategy
• Sales growth coordination and control problems
• Functional structure RD, finance, etc.
• Efficient implementation of formulated strategy
• Sales growth coordination and control problems
• Multidivisional (M-form) structure business
  units or profit centers
• Top level management responsible for formulating
  and implementing overall strategies
  acquisitions, restructuring, international and
  cooperative strategies

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Strategy Implementation Organizing for Action

• Matrix Structure
• Based on the concept that horizontal
  relationships across the firm are just as
  important as the traditional reporting
  relationship within a typical functional
  organization

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Strategy Implementation Organizing for Action

• Matrix Structure
• Uncertainty in business environment try to
  spend less time catching up, more time
  responding to external changes
• Adaptation to change cope with ambiguity, learn
  quickly, gain new competencies
• Differentiation and specialization across
  business units integration challenge
• Management - a high degree of empowerment in
  those who compose and organize the activities of
  key teams high levels of trust.

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Strategy Implementation Organizing for Action

• Matrix Structure
• Companies using Matrix Structure
• International Business Machines
• IBM Research Labs Worldwide
• Nokia
• New structure in 2003 Designed to focus on the
  needs of particular customer segments while
  retaining centralized manufacturing,
  administration and marketing capabilities to
  benefit from economies of scale.
• Philips
• General Electric

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Strategy Implementation Organizing for Action

• Resource Allocation
• Attempt to allocate resources according to
  priorities established by annual objectives
• Financial,
• Physical
• Human and
• Technological

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Strategy Implementation Organizing for Action

• Resource Allocation
• A number of factors inhibit effective resource
  allocation
• Overprotection of resources,
• too great an emphasis on short-term financial
  criteria,
• organizational politics,
• vague strategy targets,
• a reluctance to take risks, and
• a lack of sufficient knowledge

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Strategy Implementation Organizing for Action

• Strategy Implementation Action Agenda
• What to do now versus later?
• What requires much time and personal attention?
• What can be delegated to others?

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Strategy Implementation Organizing for Action

• Managerial Components of Implementing Strategy
• Strategic leadership to drive implementation
  forward
• Shape work environment and corporate culture to
  fit strategy
• Setting up appropriate award/incentive systems to
  achieve strategic targets
• Installing necessary information, communication,
  and operating systems to enable personnel to
  carry out roles

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Strategy Implementation Organizing for Action

• Managerial Components of Implementing Strategy
• Instituting best practices and pushing continuous
  improvement
• Establishing strategy-supporting policies
• Allocating ample resources to strategy-critical
  activities
• Building core competencies (resources
  capabilities) for successful strategy execution

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Strategy Implementation Organizing for Action

• Elements of Implementation
• Programs activities, timeframes, and
  deliverables
• Budgets doesnt necessarily follow program
  development as text suggests
• Procedures operating procedures set up for each
  key activity (distribution, inventory management,
  pricing strategies, etc.)

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Strategy Implementation Organizing for Action

• How strategic activities require cooperation
  among different departments
• Filling customer orders accurately and promptly
  sales (wins the order) finance (check credit
  terms) production (product goods and replenish
  stock) warehousing (check stock, pick, package
  and ship order) shipping (get product to
  customer).

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Strategy Implementation Organizing for Action

• How strategic activities require cooperation
  among different departments
• Speeding new products to market process is
  fragmented among RD, engineering, purchasing,
  manufacturing , and marketing.

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Strategy Implementation Organizing for Action

• How strategic activities require cooperation
  among different departments
• Obtaining feedback from customers and making
  product modifications to meet their needs
  involves customer service and after-sales
  support, RD, engineering and design, components
  purchasing, manufacturing and assembly, and
  marketing research.

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Strategy Implementation Organizing for Action

• The level of autonomy given to certain business
  units, divisions, and projects depends on many
  criteria.
• The following three are considered the primarily
  criteria
• volatility of environment
• low cost versus differentiation focus
• degree of resource-sharing between functional
  areas

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Strategy Implementation Organizing for Action

• Greater autonomy generally associated with
• Higher the volatility
• Higher levels of differentiation
• Lower levels of resource sharing

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Strategy Implementation Organizing for Action

• How many possible scenarios are possible based
  on these three criteria?
• Which scenarios suggest highest and lowest
  autonomy?
• Can you think of business types that fit into
  each of these scenarios?

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Strategy Implementation Organizing for Action

• Why do we have organizational charts?
• The Matrix structure - Is it outdated?
• Coordinating product and functional areas, or
  product and geographic areas.
• Provides coverage, but creates redundancy and
  lacks flexibility.

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Fluidity of Organizational Charts TimeVisions
intranet-based org chart software
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Strategy Implementation Organizing for Action
TimeVisions customers include (partial listing)

• European Council
• American Airlines
• Georgia-Pacific
• Ericsson
• Bayer Corporation

• GTE
• Mercedes-Benz
• Chevron
• Colgate-Palmolive
• Compaq (Houston)
• Toyota Motor

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Strategy Implementation Organizing for Action

• Job Design Issues
• Rethinking the individual tasks to make them more
  relevant to the company and the employees
• Try to answer the question Based on what the
  company does (and does well), how should
  individual tasks be assigned and accomplished?

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Strategy Implementation Organizing for Action

• Job Design Issues
• How much task variety should there be?
• How should teams be used?
• To what degree should job rotation be used?
• How should authority in decision-making be
  increased/decreased?
• What channels of communication should be provided?

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Strategy Implementation Organizing for Action

• Application of Technology to Manage
• Human resources
• Logistics (in- and out-bound)
• Knowledge flow
• Apply technologies based on strategic priorities