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1
IMPLEMENTING AND EXECUTING IMPLEMENTING AND EXECUTING
STRATEGY: BUDGETS, POLICIES, STRATEGY: BUDGETS, POLICIES,
BEST PRACTICES, SUPPORT BEST PRACTICES, SUPPORT
SYSTEMS, AND REWARDSSYSTEMS, AND REWARDS
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Linking Budgets to Strategy
Allocating resources in ways that support effective strategy execution involves Funding capital projects that can make a
contribution to strategy implementation Funding efforts to strengthen
competencies and capabilities or to create new ones
Shifting resources—downsizing some areas, upsizing others, killing activities no longer justified, and funding new activities with a critical strategy role
ESTABLISH STRATEGY-ESTABLISH STRATEGY-
SUPPORTIVE POLICIES SUPPORTIVE POLICIES
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How Policies and ProceduresAid Strategy Implementation
Provide top-down guidance regarding expected behaviors
Help align internal actions with strategy, channeling efforts along the intended path
Enforce consistency in performance of activities in geographically scattered units
Serve as powerful lever for changing corporate culture to produce stronger fit with a new strategy
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Creating Strategy-SupportivePolicies and Procedures
Role of new policies Channel behaviors and decisions
to promote strategy execution Counteract tendencies of people
to resist chosen strategy Too much policy can be as stifling as
Wrong policy or as Chaotic as no policy Often, the best policy is empowering
employees and letting them operate between the white lines anyway they think best
INSTITUTE BEST PRACTICES INSTITUTE BEST PRACTICES
AND MECHANISMS (FOR AND MECHANISMS (FOR
CONTINUOUS IMPROVEMENT)CONTINUOUS IMPROVEMENT)
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Instituting Best Practicesand Continuous Improvement
Searching out and adopting best practices is integral to effective implementation
Benchmarking has created new approaches to improve strategy execution
Reengineering
TQM
Continuous improvement programs
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What is TTotal QQuality MManagement?
TQM is 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 empowerment of employees at
all levels, Team-based work design, Benchmarking, and Fully satisfying customer expectations
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Components of Popular TQM Approaches
1. Consistency of purpose2. Adopt the philosophy3. Don’t rely on mass
inspection4. Don’t award business
on price5. Constant improvement6. Training7. Leadership
8. Drive out fear 9. Break down barriers10. Eliminate slogans
and exhortations11. Eliminate quotas12. Pride of
workmanship13. Education and
retraining14. Plan of action
Deming’s 14 Points
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The Juran Trilogy
Quality Planning Quality Control Quality Improvement
• Set goals
• Identify customers and their needs
• Develop products and processes
• Evaluate performance
• Compare to goals
• Establish infrastructure
• Identify projects and teams
• Provide resources and training
• Establish controls
Components of Popular TQM Approaches
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1. Management commitment
2. Quality improvement teams
3. Quality measurement
4. Cost of quality evaluation
5. Quality awareness
6. Corrective action
7. Zero-defects committee
8. Supervisor training
9. Zero-defects day
10. Goal-setting
11. Error cause removal
12. Recognition
13. Quality councils
14. Do it over again
Crosby’s 14 Quality Steps
Components of Popular TQM Approaches
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Baldridge Award Criteria (1000 points)
Quality
1. Leadership (90 points)
2. Information & analysis (80 points)
3. Strategic quality planning (60 points)
4. Human resource development (150 points)
5. Management of process quality (140 points)
6. Quality & operation results (180 points)
7. Customer focus & satisfaction (300 points)
Components of Popular TQM Approaches
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Implementing a Philosophy of Continuous Improvement
Instill enthusiasm to do things right throughout company
Strive to achieve little steps forward each day, (what the Japanese call kaizen)
Ignite creativity in employees to improve performance of value-chain activities
Preach there is no such thing as good enough
Reform the corporate culture
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TQM vs. Process Reengineering
Objectivity
Reengineering Aims at quantum gains of 30 to 50% or more
TQM Stresses incremental progress
Techniques are not mutually exclusive
Reengineering - Used to produce a good basic design yielding dramatic improvements
TQM - Used to perfect process, gradually improving efficiency and effectiveness
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Using Best Practice Programsas an Implementation Tool
Select indicators of successful strategy execution
Benchmark against best practice companies Reengineer business processes Build a TQ culture
Requires top management commitment Install TQ-supportive employee practices Empower employees to do the right things Provide employees with quick access to
required information Preach that performance can be improved
INSTALL SUPPORT INSTALL SUPPORT
SYSTEMSSYSTEMS
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Installing Support Systems
Essential to promote successful strategy execution
Types of support systems On-line data systems Internet and company intranets Electronic mail E-commerce systems
Mobilizing information and creating systems to use knowledge effectively can yield Competitive advantage
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Examples: Support Systems
Airlines
Computerized reservation system
Federal Express
Computerized parcel-tracking system, leading-edge flight operations systems, and
e-business tools
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Examples: Support Systems
Otis Elevator
Sophisticated maintenance support system
Domino’s Pizza
Computerized systems at each outlet facilitate ordering, inventory, payroll, cash flow, and
work flow functions
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Formal Reporting ofStrategy-Critical Information
Accurate, timely information is essential to guide action
Prompt feedback on implementation activities is needed before actions are fully completed
Key strategic performance indicators must be tracked as often as practical
Barometers of overall performance Statistical information Reports and meetings Personal contact
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What Areas ShouldInformation Systems Address?
Customer data
Operations data
Employee data
Supplier/partner/collaborative ally data
Financial performance data
DESIGN STRATEGY-DESIGN STRATEGY-
SUPPORTIVE REWARD SUPPORTIVE REWARD
SYSTEMSSYSTEMS
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Gaining Commitment: Componentsof an Effective Reward System
Monetary Incentives
Salary raises
Performance bonuses
Stock options
Retirement packages
Promotions
Perks
Non-monetary Incentives
Praise
Constructive criticism
Special recognition
More, or less, job security
Interesting assignments
More, or less, job responsibility
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Approaches: Motivating Peopleto Execute the Strategy Well
Inspire employees to do their best
Get employees to buy into strategy
Structure individual efforts in teams to facilitate a supportive climate
Allow employees to participate in decisions about their jobs
Make jobs interesting and satisfying
Devise strategy-supportive motivational approaches
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Examples: Motivational Practices
No Lay-Off Policies
Japanese automobile producers, along with
several U.S. based companies (Southwest
Airlines, FedEx, Lands’ End, and Harley Davidson)
have no lay-off policies, using employment
security both as a positive motivator and a means
of reinforcing good strategy execution.
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Examples: Motivational Practices
Stock Options
More than 35 of the 58 publicly held companies on the 1999 list of the 100 Best Companies to Work for in America (includes Cisco Systems, Procter & Gamble, Merck, Charles Schwab, General Mills, Amgen, and
Tellabs) provide stock options to all employees. Having employee-owners sharing in a company’s success is widely viewed as a positive motivator.
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Balancing Positive vs. Negative Rewards
Elements of both are necessary Challenge and competition are necessary
for self-satisfactionPrevailing view
Positive approaches work better than negative ones in terms of EnthusiasmEffortCreativityInitiative