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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

2

Building aCapableOrganization

Allocating Resources

Establishing Strategy-Supportive Policies

Instituting BestPractices forContinuousImprovement

Installing SupportSystemsTying Rewards

to Achievementof Key Strategic Targets

Exercising StrategicLeadership

Shaping CorporateCulture to Fit Strategy

Strategy

Implementer’s

Action Agenda

Figure 11.1: The Eight Componentsof the Strategy Execution Process

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Figure 11.2: The Three Components of Building a Capable Organization

Staffing the Organization

A Company with the

Competencies and Capabilities

Needed for Proficient Strategy

Execution

Building Core Competencies and Competitive Capabilities

Matching the OrganizationStructure to Strategy

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ALLOCATING ALLOCATING

RESOURCES TO RESOURCES TO

SUPPORT STRATEGY SUPPORT STRATEGY

IMPLEMENTATIONIMPLEMENTATION

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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)

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CREATING STRATEGY-CREATING STRATEGY-

SUPPORTIVE POLICIES AND SUPPORTIVE POLICIES AND

PROCEDURESPROCEDURES

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Fig. 12.1: How Prescribed Policies andProcedures Facilitate Strategy Execution

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INSTITUTING BEST PRACTICES INSTITUTING BEST PRACTICES

AND CONTINUOUS IMPROVEMENTAND 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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INSTALLING STRATEGY-INSTALLING STRATEGY-

SUPPORTIVE SUPPORTIVE

INFORMATION AND INFORMATION AND

OPERATING SYSTEMSOPERATING 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 systems

to use knowledge effectively can yield Competitive advantage

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TYING REWARDS AND TYING REWARDS AND

INCENTIVES TO GOOD INCENTIVES TO GOOD

STRATEGY IMPLEMENTATIONSTRATEGY IMPLEMENTATION

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Challenge – Behavioral Control How to ensure actions of employees

stay within acceptable bounds Control approaches

Managerial control Establish boundaries on what not to

do, allowing freedom to act with limitsTrack and review daily operating

performance Peer-based control

Exercising Adequate ControlOver Empowered Employees

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Monetary IncentivesMonetary Incentives

Base pay increases

Performance bonuses

Profit sharing plans

Stock options

Retirement packages

Piecework incentives

Non-monetary IncentivesNon-monetary Incentives

Praise

Constructive criticism

Special recognition

More, or less, job security

Stimulating assignments

More, or less, autonomy

Rapid promotion

Gaining Commitment: Componentsof an Effective Reward System

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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 don’t Tie incentive compensation to relevant

outcomes - both strategic and financial

Linking the Reward Systemto Performance Outcomes

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BUILDING A STRATEGY-BUILDING A STRATEGY-

SUPPORTIVE CORPORATE SUPPORTIVE CORPORATE

CULTURE CULTURE

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Defining Characteristics of Corporate Culture

Core values, beliefs, and business principles Ethical standards Operating practices and behaviors defining

“how we do things around here” Approach to people management “Chemistry” and “personality” permeating

work environment Often told stories illustrating

Company’s values Business practices Traditions

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A company’s 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

Identifying the Key Featuresof Corporate Culture

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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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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 company’s business

Value statements serve as a cornerstone for culture-building

Can be used to control employees – to behave in the “right” way

Grounding the Culture inCore Values and Ethics