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Strategy Implementation

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					      Strategy Implementation
u What must we do to put the strategy in
  place, execute it proficiently, and
  produce good results?

u Creating FITS between strategy and
  external environment and creating FITS
  inside the organization

u Control, coordination, and motivation
  issues
                                           1
Figure 10.1: The Eight Components
 of the Strategy Execution Process




             The Action Agenda
               for Executing
                  Strategy




                                     2
   ALLOCATING
RESOURCES TO THE
STRATEGY EXECUTION
     EFFORT
  ALLOCATING RESOURCES TO THE STRATEGY
            EXECUTION EFFORT

u Resource allocation should fit strategy
u Changing strategy requires changes to resource
  allocation process
u Shifting resources — downsizing some areas,
  upsizing others, getting rid of activities no longer
  needed, and funding new strategically critical
  activities
u Financial and other resources (physical and
  human assets)
u Historical process vs. Zero-based Budgeting

                                                         4
INSTITUTING POLICIES AND
   PROCEDURES THAT
  FACILITATE STRATEGY
      EXECUTION
        11.1
   How Policies and
 Procedures Facilitate
Good Strategy Execution




                          6
USING PROCESS MANAGEMENT
    TOOLS TO STRIVE FOR
 CONTINUOUS IMPROVEMENT
 USING PROCESS MANAGEMENT TOOLS TO
 STRIVE FOR CONTINUOUS IMPROVEMENT
u Searching out and adopting best practices
  is integral to effective implementation
u Benchmarking is the backbone of the
  process of identifying, studying, and
  implementing best practices
u Key tools to promote continuous improvement

   è Business process reengineering

   è TQM

   è Six Sigma quality control
                                                8
 What Is Total Quality Management?

u A philosophy of managing a set of business
  practices that emphasizes
   è Continuous improvement in all phases of
     operations
   è 100 percent accuracy in performing activities
   è Involvement and empowerment
     of employees at all levels
   è Team-based work design
   è Benchmarking and
   è Total customer satisfaction

                                                     9
 Six Sigma Quality Control — A Tool for
     Promoting Operating Excellence
u Six Sigma is a disciplined, statistics-based
  system aimed at having not more than 3.4 defects
  per million iterations for any business practice
   è From manufacturing to customer transactions
u Applying Six Sigma to value chain activities can
  significantly improve the proficiency of strategy
  implementation




                                                      10
   INSTALLING
 INFORMATION AND
OPERATING SYSTEMS
    Installing Information and Operating
                    Systems
u Good information and operating systems are
    essential for first-rate strategy execution
u   Support systems can relate to all value-chain
    activities
u   Includes all type of Computer Based Information
    Systems (CBISs):
     è MIS, DBMS, TPS, DSS, E-commerce and e-
        business systems, CRM, SCM, etc…
u   Mobilizing information and creating systems
    to use knowledge effectively can yield
     è Competitive advantage
u   Can be used for coordination and control
                                                      12
  TYING REWARDS AND
INCENTIVES TO STRATEGY
      EXECUTION
       Exercising Adequate Control
       Over Empowered Employees
u Challenge – Behavioral Control
   è How to ensure actions of employees
    stay within acceptable bounds
u Control approaches
  è Managerial control
     l Establish boundaries on what not to
       do, allowing freedom to act with limits
     l Track and review daily operating
       performance
  è Peer-based control
     l Culture
                                                 14
   Gaining Commitment: Components
    of an Effective Reward System
    Monetary Incentives    Non-monetary Incentives
u Base pay increases      u Praise

u Performance bonuses     u Constructive criticism

u Profit sharing plans    u Special recognition
                          u More, or less, job security
u Stock options
                          u Stimulating assignments
u Retirement packages
                          u More, or less, autonomy
u Piecework incentives
                          u Rapid promotion




                                                          15
        Linking the Reward System
         to Performance Outcomes
   Rewards are the single most powerful tool to win the
 commitment of company personnel to effective strategy
                       implementation
uGenerously reward those achieving objectives and deny
rewards to those who don’t
uCreate a results-oriented system
uDefine jobs in terms of what to achieve
uTie incentive compensation to relevant outcomes- both
strategic and financial
    è Top executives – Incentives tied to overall firm
       performance
    è Department heads, teams, and individuals –
       Incentives tied to achieving performance targets
       in their areas of responsibility
                                                          16
INSTILLING A CORPORATE
    CULTURE THAT
   PROMOTES GOOD
 STRATEGY EXECUTION
         Identifying the Key Features
             of Corporate Culture
A company’s culture is manifested in . . .
u   Values, business principles, and ethical standards
    preached and practiced by management
u   Approaches to people management and problem solving
u   Atmosphere and spirit permeating work environment
u   The way managers and employees interact and relate to
    one another
u   Peer pressures that exist to display core values
u   Encouraged and rewarded actions and behaviors
u   Its revered traditions and often repeated stories
u   Its relationships with external stakeholders
                                                            18
              Where Does Corporate
              Culture Come From?
u   Founder or early leader
u   Influential individual or work group
u   Policies, vision, or strategies
u   Operating approaches
u   Company’s approach to people management
    è   Traditions, supervisory practices, employee attitudes
u   Organizational politics
u   Relationships with stakeholders
u   Internal sociological forces


                                                                19
       How Is a Company’s Culture
              Perpetuated?
u Screening and selecting new employees based
  on how well they “fit” in
u Systematic indoctrination of new employees
u Senior employees’ reinforcement of core values
u Story-telling of company legends
u Ceremonies honoring employees who display
  cultural ideals
u Visibly rewarding those who follow cultural
  norms
                                                20
Types of Corporate Cultures


  Strong vs. Weak Cultures


     Unhealthy Cultures


  High-Performance Cultures


      Adaptive Cultures
                              21
            Characteristics of
        Strong Culture Companies
u Conduct business according to a clear, widely-
  understood philosophy
u Considerable time spent by management
  communicating and reinforcing values
u Values are widely shared and deeply rooted

u Have a well-defined corporate character,
  reinforced by a creed or values statement
u Careful screening/selection of new
  employees to be sure they will “fit in”
                                                   22
      Characteristics of Weak Culture
                 Companies
u Lack of a widely-shared core set of values

u Few behavioral norms evident in operating
  practices

u Few strong traditions

u No strong sense of company identity

u Little cohesion among departments

u Weak employee allegiance to
  company’s vision and strategy
                                               23
 Characteristics of Unhealthy Cultures
u Highly politicized
  è Issues resolved on basis of political clout
u Resistant to change
  è Avoid risks and don’t screw up
  è Experimentation and efforts to
      alter status quo discouraged
u Inwardly focused – company
  personnel discount need to look outside for
   è Best practices
   è New or better managerial approaches
   è Innovative ideas
u Unethical and greed-driven
u Incompatible subcultures                        24
              Characteristics of
          High-Performance Cultures
u Standout cultural traits include
    è A can-do spirit
    è Pride in doing things right
    è No-excuses accountability
    è A results-oriented work climate in which people go
        the extra mile to achieve performance targets
u   Strong sense of involvement by all employees
u   Emphasis on individual initiative and creativity
u   Performance expectations are clearly identified for all
    organizational members
u   Strong bias for being proactive, not reactive
u   Respect for the contributions of all employees            25
      Hallmarks of Adaptive Cultures

u Willingness to accept change and embrace challenge
    of introducing new strategies
u   Risk-taking, experimentation, and innovation to satisfy
    stakeholders
u   Entrepreneurship is encouraged
    and rewarded
u   Funds provided for new products
u   New ideas openly evaluated
u   Genuine interest in well-being
    of all key constituencies
u   Proactive approaches to
    implement workable solutions
                                                              26
           Why is Culture Important?

u Matching culture to strategy will improve
  performance
   èA  culture that promotes attitudes and behaviors that are
     well-suited to strategy is a valuable ally in the strategy
     implementation process
u Can hinder strategy implementation and
  performance if not compatible with strategy
   èA   culture where attitudes and behaviors impede good
     strategy implementation is a huge obstacle to overcome
u Provides another means to control, coordinate, and
  motivate employees

                                                                  27
          Grounding the Culture in
          Core Values and Ethics
u A culture based on ethical principles is vital to long
    -term strategic success
u   Ethics programs help make ethical conduct a way
    of life
u   Executives must provide genuine support of
    personnel displaying ethical standards in
    conducting the company’s business
u   Value statements serve as a cornerstone for
    culture-building
u   Can be used to control employees – to behave in
    the “right” way
                                                           28
LEADING THE
STRATEGY EXECUTION
PROCESS
Numerous Roles of Strategic Leaders
                             Culture
                                              Taskmaster            Mentor
        Visionary            Builder


                                  Negotiator           Process         Coach
                 Chief                                Integrator
             Entrepreneur
              & Strategist             Capabilities
                                                               Head
                                         Builder
                                                            Cheerleader
         Resource Acquirer
            & Allocator                   Spokesperson
                                                                   Arbitrator


    Crisis           Motivator             Consensus
                                            Builder             Chief
    Solver
                                                             Administrator
                  Policy                                      & Strategy
                 Enforcer              Policymaker           Implementer

                                                                                30
          Leadership Roles of the
           Strategy Implementer

u Staying on top of how well things are going
u Putting constructive pressure on organizational
  units to execute the strategy well and achieve
  operating excellence
u Leading the process of making corrective
  adjustments




                                                   31

				
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posted:7/22/2013
language:English
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