11-1 Chapter 11 Roadmap A Framework for Executing Strategy The Principal Managerial Components of the Strategy Execution Process Building an Organization Capable of Good Strategy Execution Staffing the Organization Building Core Competencies and Competitive Capabilities Execution-Related Aspects of Organizing the Work Effort Current Organizational Trends 11-2 Crafting the Strategy Primarily a market-driven activity Successful strategy making depends on Business vision Perceptive analysis of market conditions and company capabilities Attracting and pleasing customers Outcompeting rivals Using company capabilities to forge a competitive advantage Executing the Strategy Primarily operations-driven Successful strategy execution depends on Doing a good job/ working through others Good organization-building Building competitive capabilities Creating a strategy- supportive culture Getting things done and delivering good results Crafting vs. Executing Strategy 11-3 An action-oriented, make-things happen task involving managements ability to Direct organizational change Achieve continuous improvement in operations and business processes Move toward operating excellence Create and nurture a strategy-supportive culture Consistently meet or beat performance targets Tougher and more time-consuming than crafting strategy Implementation involves... Executing the Strategy 11-4 Implementing a New Strategy Requires Adept Leadership Implementing a new strategy takes adept leadership to Convincingly communicate reasons for the new strategy Overcome pockets of doubt Secure commitment of concerned parties Build consensus and enthusiasm Get all implementation pieces in place and coordinated 11-5 Why Executing Strategy Is a Tough Management Job Overcoming resistance to change Wide array of demanding managerial activities to be performed Numerous ways to tackle each activity Number of bedeviling issues to be worked out Demands good people management skills Requires launching and managing a variety of initiatives simultaneously Hard to integrate efforts of many different work groups into a smoothly-functioning whole 11-6 Hoosiers What does the short clip suggest as far as implementing a strategy? (Assume the new coach had one in mind.) 11-7 Who Are the Strategy Implementers? Implementing and executing strategy involves a companys whole management team and all employees Just as every part of a watch plays a role in making the watch function properly, it takes all pieces of an organization working cohesively for a strategy to be well-executed Top-level managers must lead the process and orchestrate major initiatives But they must rely on cooperation of Middle and lower-level managers to see things go well in various parts of an organization and Employees to perform their roles competently 11-8 Goals of the Strategy Implementing-Executing Process Unite total organization behind strategy See that activities are done in a manner that is conducive to first-rate strategy execution Generate commitment so an enthusiastic crusade emerges to carry out strategy Fit how organization conducts its operations to strategy requirements 11-9 Every manager has an active role No proven formula for implementing particular types of strategies There are guidelines, but no absolute rules and must do it this way rules Many ways to proceed that are capable of working Cuts across many aspects of how to manage Characteristics of the Strategy Implementation Process 11-10 Each implementation situation occurs in a different context, affected by differing Business practices and competitive situations Work environments and cultures Policies Compensation incentives Mix of personalities and firm histories Approach to implementation/execution has be customized to fit the situation People implement strategies - Not companies! Characteristics of the Strategy Implementation Process (continued) 11-11 Challenge and Responsibility: Securing Commitment Encourage initiative and creativity but within a game plan Corridor of Comparative Indifference Orchestrating or achieving coordination Opportunistic 11-12 Focus Attention 11-13 Fig. 11.1: The Eight Components of the Strategy Execution Process 11-14 Fig. 11.2: The Three Components of Building an Organization Capable of Proficient Strategy Execution 11-15 Execution-Related Aspects of Organizing Work Efforts Few hard and fast rules for organizing One Big Rule: Role and purpose of organization structure is to support and facilitate good strategy execution! Each firms structure is idiosyncratic, reflecting Prior arrangements and internal politics Executive judgments and preferences about how to arrange reporting relationships How best to integrate and coordinate work effort of different work groups and departments Vice President CEO 11-16 Managing Corporate Strategy Through the Multidivisional Structure Functional or product structures are not sufficient when a company enters new industries Multidivisional structure innovations Divisions (operating responsibility) Corporate headquarters staff to monitor divisions (strategic responsibility) Each division may be organized differently 11-17 Multidivisional Structure 11-18 Corporate Strategy and Structure and Control 11-19 Fig. 11.3: Structuring the Work Effort to Promote Successful Strategy Execution 11-20 11-21 Discuss: Apollo 13 & One Smooth Stone What are the differences in structure used by the two organizations? What accounts for the difference? 11-22 Characteristics of Organizations of the Future Extensive use of Internet technology and e-commerce business practices Fewer barriers between Different vertical ranks Functions and disciplines Units in different geographic locations Company and its suppliers, distributors, strategic allies, and customers Capacity for change and rapid learning Collaborative efforts among people in different functions and geographic locations Change & Learning 11-23 E-business illustration: Chemoil Corp, San Francisco Sells bunker fuel to ships Marketing and bunker operations: on US west, east, gulf coast, Europe (Rotterdam and Monaco), and Asia (Singapore) Headquarters in San Francisco; finance, personnel, legal, senior management Accounting in India 11-24 Chemoil Corp Owners were a Japanese company and an Indian who emigrated to US Employees reflected locations Dutch, Italians, French, Indians, Filipinos and diversity of locations Hispanics, German, etc. 11-25 Chemoil Corp. Communications:, mobile phones, fax, video phones, personal contact when person happened to be in the office Data on operations sent through shared files,, etc. 11-26 Chemoil Corp Objectives-setting: monthly video conference between San Francisco and different offices (meeting with two locations possible from SF office) Transaction data uploaded in the afternoon, posted by next morning. Decisions made by phone, etc. 11-27 E-business Implications for Management E-business E-business involves using the Internet to facilitate every aspect of running a business. E-Management E-Management Fast paced; Virtual teams, Networking skills E-communication E-communication use/abuse; Telecommuting promised and drawbacks Goal setting and feedback Goal setting and feedback Web-based goal-setting/evaluation; Risk of over control? Organizational structure Organizational structure Virtual teams and organizations; Lack of trust and loyalty in faceless organizations? Job design Job design Sticky work settings; Unrealistic expectations? 11-28 E-Business Implications (continued) Decision making Decision making Less time to make more decisions; Information overload; Empowerment and participative decision making Knowledge management Knowledge management E-training; E-learning; distance learning: Asynchronous vs. synchronous Speed, conflict, and stress Speed, conflict, and stress Does relentless speed equal burnout? Change and resistance to change Change and resistance to change Stop the World, I want to get off! Constant change equals conflict Ethics Ethics Net slaves (low pay with unrealistic promises of riches); Electronic monitoring; Repetitive motion injuries; Abuse of part-timers (no benefits, no job security); Privacy issuesOthers?? 11-29 Chapter 12 Roadmap Marshaling Resources Behind the Drive for Good Strategy Execution Instituting Policies and Procedures that Facilitate Strategy Execution Adopting Best Practices and Striving for Continuous Improvement Installing Information and Operating Systems Tying Rewards and Incentives to Strategy Execution 11-30 Marshalling Resources Example Transform a government agency through a re- engineering and reorganization Improve processes and control systems Install automated systems to reduce human discretion Reduce size Resources required Organization design specialists Funds for retirement and separation Funds for information system Communications campaign Etc. 11-31 Value of Policies and Procedures Lima policewomen Hire the right people Install effective control systems to sustain values 11-32 Operations Management Tools Economic Order Quantity operations management tool to determine when to reorder materials, i.e. raw materials or finished products, given inventory holding costs and set-up costs Materials Requirement Planning (MRP) operations management tool to achieve similar purpose, when to reorder; useful for processes where products are linked, Example, demand for TV drives TV sets and antennas, which in turn drives demand for tubes, parts, etc. Push system once demand is determined, MRP system determines what to reorder and produce 11-33 Total Quality Management (TQM) Manufacturing managers traditionally relied on EOQ (Economic Order Quantity) and MRP (Materials Requirement Planning) TQM approached based on statistical quality control methods and the following principles Outputs vary around a mean Think Michael Jordan taking foul shots Output can be measured in terms of variation and mean Output variation can be reduced by systematic methods Output can be improved once sources of variation are minimized. The idea was that 0 defects was desirable and obtainable. 11-34 TQM - continued Statistical Quality Control techniques to measure whether process was under control Kanban system for production control make one product at a time Pull system - produce small lots, order parts and components as lot moves through system Quality circles for enabling cross-functional teams to focus on problems Total Quality Management, Toyota Production System, Kaizen, etc. are closely related