Principles of Business Implementing Strategy

Lecture 2 – implementing strategy

Objectives of the session

► To appreciate the importance of excellent implementation

of strategy

► To be able to work through Kotter’s 8 steps to managing a

strategic implementation

► To be able to develop a balanced scorecard as a way of

making strategy relevant to an organisation

“70% of major … strategy

implementation projects fail …because

organisations do not take a holistic

approach to seeing change through”

John Kotter

Implementing Strategy

STRATEGYFlawed Sound

EXECU

TIO

N

Sound

Fla

wed

Doomed from the outset

Flirting withdisaster

A pretty good

chance

A botchedjob

The map is not the territory

A

B

Kotter’s Eight Steps

1. Create a sense of urgency

2.Create a guiding coalition

3.Create a vision for the strategy/change

4.Communicate the vision

5.Remove obstacles

6.Create some short term wins

7.Build on what you have started

8.Anchor the strategy/changes into the corporate culture

Step One: Create a Sense of Urgency

-Compelling reasons.

-Spark the initial motivation.

For change to be successful 75% of the management needs to

buy in to it

Step Two: Form a Guiding Coalition

- Strong leadership.

- Coalition, or team, of influential (not hierarchical) people.

-

Step Three: Create a Vision for the Strategy/Change

- Easily grasped and remembered.

- Help everyone understand why.

Can you communicate the vision in 5 minutes?

Step Four: Communicate the Vision

- Communicate it frequently and powerfully.

- Keep it fresh on everyone's minds.

Step Five: Remove Obstacles

- Empowers the people you need to execute your vision.

Are all your internal processes aligned with the vision?

Step Six: Create Short-term Wins

- Plan for a taste of victory early in the change process.

- Have results that people can see.

Step Seven: Build on What you have Started

- Don’t declare victory too early.

- Keep looking for improvements.

The first sign of improvement does not signify a war won!

Step Eight: Anchor the Changes in Corporate Culture

- Make the change part of the core of the organization.

Changes stick when they become ‘the way we do things round here’

Implementing Strategy – Balancing the Scorecard

WHAT ARE WE TRYING TO ACHIEVE HERE? (HOW WILL WE KNOW?)

FINANCIAL PERSPECTIVE

CUSTOMER PERSPECTIVE

INTERNAL PROCESS PERSPECTIVE

LEARNING AND GROWTHPERSPECTIVE

INCREASEDINCOME

REDUCED COST

EXCELLENTEXECUTION

CUSTOMERUNDERSTANDING

GREAT PRODUCT

INNOVATIONCONTINUOUSIMPROVEMENT

ENVIRONMENTALAWARENESS

THE RIGHT SKILLS

THE RIGHT TECHNOLOGY

A POSITIVECULTURE

KPI/

UN

IT O

F M

EASU

RE

TO BE THE PERSONAL TRANSPORT BRAND OF CHOICE BY MAKING OUTSTANDING PRODUCTS

FIN

AN

CE

PERSPECTIV

ECU

STO

MER

PERSPECTIV

EIN

T.

PRO

CESS

PERSPECTIV

E

LEARIN

G &

G

RO

WTH

PERSPECTIV

E

40% GrossMargin by 2014

10% Net Profit by 2012

20% turnover growth year on year

15% Unit Sales growth year on year

Maintain cash Position£1m in the Bank

Right Productto customer at the right time

Innovate on existing coreoffering

Create newMarkets &Develop existingones

Provide better Information to The customer

Provide Excellentservice

New Productsto market

FairPricing Strategy thatReflects International differences

Improve dealer info management

Improve order & invoice completion and tracking

Improve employee engagement

Improve quality cost and delivery

Improve knowledge and infomgmt

Greater representation in the community

Greater ethical compliance, Waste management and recycling

Give people the tools and permission to be effective

Improved communication

Improved recruitment and on-boarding

Greater visibility of leadership

Improved performance management process

Great at managing resources. Inspirational leadership, change

IMPLEMENT MEASURES TO REDUCE PRODUCTION COSTS

MAINTAIN CORE REVENUE GROWTH AND IDENTIFY AREAS OF IMPROVED REVENUE OPPORTUNITY

Our Mission is to be “The personal transport brand of choice by making outstanding products.” Our reputation will be about producing something that is truly outstanding – that is why people will choose us!

So how will we do that? Well we clearly must make sure that the business itself continues to grow and we have identified two clear areas for focus:

1.Maintain core revenue growth and identify areas of improved revenue opportunity2.Implement measures to reduce production costs

We will achieve these very demanding financial progress by focusing our attention fully on our customers and:- Making sure we have the right product for every customer and we get it to them at the time they expect it- Providing excellent service EVERY time the customer makes contact with us, for whatever reason.

If we do these things with our customers, we will achieve the stretching financial targets we have set ourselves.

However, we cannot do any of them unless we:- Improve our overall dealer information management and keep on top of their own performance.- Deliver improvements on quality, cost and delivery

We could not do it without the support and dedication to quality of every member of the organisation. And there are a number of things we are now working on that we think will improve this whole area:

- We want to improve communication generally across the whole business. - As a leadership team need to be more visible - helping you to do your job by listening to you and taking away the things that get in the way.

- We want to review our recruitment, induction and performance management processes so that every member of Brompton staff will understand exactly what is required of them, and what will happen when the meet or exceed those requirements.

In summary

It is hard work developing a strategy

It is hard work executing it

It is particularly hard work when neither are done properly.

Strategy is about knowing where you are, where you want to be, and understanding the steps you need to take to get there.

Then it is about taking those steps!

The Seminars

The seminars accompanying this part of the module will take some of these ideas and develop them further:

1.

2.

3.

4.