Post on 08-Apr-2018
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Building Resource Strengths andBuilding Resource Strengths andOrganizational CapabilitiesOrganizational Capabilities
Building Resource Strengths andBuilding Resource Strengths andOrganizational CapabilitiesOrganizational Capabilities
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Chapter
Screen graphics created by:
Jana F. Kuzmicki, Ph.D.
Troy State University-Florida and Western Region
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Crafting vs. Executing StrategyCrafting vs. Executing StrategyCrafting vs. Executing StrategyCrafting vs. Executing Strategy
Crafting the Strategy
Primarily a market-drivenactivity
Successful strategy makingdepends on
Business vision
Perceptive analysis ofmarket conditions andcompany resources andcapabilities
Attracting and pleasingcustomers
Outcompeting rivals
Using company resourcesand capabilities to forge acompetitive advantage
Executing the Strategy
Primarily an operations-drivenactivity
Successful strategy executiondepends on
Good organization-buildingand people management
Creating a strategy-supportive culture
Continuous improvement
Getting things done anddelivering good results
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Executing the StrategyExecuting the StrategyExecuting the StrategyExecuting the Strategy
An action-oriented, make-things happen taskinvolvingmanagements ability to
Direct organizational change
Achieve continuous improvement inoperations and business processes
Move toward operating excellence
Create and nurture astrategy-supportive culture
Consistently meet or beat performance targets
Tougher and more time-consuming than crafting strategy
Implementation
involves . . .
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Why Executing Strategy Is aWhy Executing Strategy Is aTough Management JobTough Management Job
Why Executing Strategy Is aWhy Executing Strategy Is aTough Management JobTough Management Job
The demanding variety of managerial
activities to be performed
Numerous ways to tackle each activity
Requires good people management skills
Requires launching and managing
a variety of initiatives simultaneously
Number of bedeviling issues to be worked out Battling resistance to change
Hard to integrate efforts of many different work groups
into a smoothly-functioning whole
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Implementing a Newly ChosenImplementing a Newly ChosenStrategy Requires Adept LeadershipStrategy Requires Adept Leadership
Implementing a Newly ChosenImplementing a Newly ChosenStrategy Requires Adept LeadershipStrategy Requires Adept Leadership
Implementinga new strategy
takes adeptleadership to
Convincingly communicate
reasons for the new strategy
Overcome pockets of doubt
Build consensus and enthusiasm
Secure commitment of concerned parties
Get all implementation pieces in place and coordinated
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Who Are theWho Are theStrategy Implementers?Strategy Implementers?
Who Are theWho Are theStrategy Implementers?Strategy Implementers?
Implementing and executing strategy involves acompanys whole management team and allemployees
Just as every part of a watch plays a role in making thewatch function properly, it takes all pieces of anorganization working cohesively for a strategyto be well-executed
Top-level managers must lead the processand orchestrate major initiatives
Butthey must rely on the cooperation of Middle and lower-level managers to see that things go
well in the various parts of the organization and
Employees to perform their roles competently on a daily
basis
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What Are the Goals of the StrategyWhat Are the Goals of the StrategyImplementingImplementing--Executing Process?Executing Process?
What Are the Goals of the StrategyWhat Are the Goals of the StrategyImplementingImplementing--Executing Process?Executing Process?
Unite total organizationbehind strategy
See that activities are done in a manner that is conducive
tofirst-rate strategy execution
Generate commitmentso an enthusiastic
crusade emerges to carry out strategy
Fithow organization conducts its
operations to requirements of strategy
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Characteristics of the StrategyCharacteristics of the Strategy
Implementation ProcessImplementation Process
Characteristics of the StrategyCharacteristics of the Strategy
Implementation ProcessImplementation Process
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 arecapable of working
Cuts across many aspects of how to manage
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BUILDING A CAPABLEBUILDING A CAPABLE
ORGANIZATIONORGANIZATION WHATWHAT
IS INVOLVED?IS INVOLVED?
McGraw-Hill/Irwin 2005 The McGraw-Hill Companies, Inc. All rights reserved.
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Putting Together a StrongPutting Together a StrongManagement TeamManagement Team
Putting Together a StrongPutting Together a StrongManagement TeamManagement Team
Assembling a capable management team is a cornerstone
of the organization-building task
Find the right people to fill each slot
Existing management team
may be suitable
Core executive group
may need strengthening
Promote from within
Bring in skilled outsiders
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Selecting the ManagementSelecting the ManagementTeam: Key ConsiderationsTeam: Key Considerations
Selecting the ManagementSelecting the ManagementTeam: Key ConsiderationsTeam: Key Considerations
Determine mix of
Backgrounds
Experiences and know-how
Beliefs and values
Styles of managing and personalities
Personal chemistry must be right
Talent base needs to be appropriate
Picking a solid management team needs to be acted on
early in implementation process
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Building Core CompetencesBuilding Core Competencesand Competitive Capabilitiesand Competitive CapabilitiesBuilding Core CompetencesBuilding Core Competencesand Competitive Capabilitiesand Competitive Capabilities
Craftingthe strategy involves
Identifyingthe desired competences and capabilities to
build into the strategy and help achieve competitive
advantage
Good strategy execution requires
Puttingdesired competences and capabilities in place,
Upgradingthem as needed, and
Modifyingthem as market
conditions evolve
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ThreeThree--Stage Process of DevelopingStage Process of Developing
Competences and CapabilitiesCompetences and Capabilities
ThreeThree--Stage Process of DevelopingStage Process of Developing
Competences and CapabilitiesCompetences and Capabilities
1. Develop ability to do something
2. As experience builds,
ability can translate into a
competence or capability
3. Ifability continues to be polished and refined, itcan become a distinctive competence,providing a
potential competitive advantage!
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Competitive Advantage PotentialCompetitive Advantage Potentialof Competences and Capabilitiesof Competences and Capabilities
When it is difficultto outstrategize rivals
with a superior strategy ...
... Best avenue to industry
leadership is to out-compete
rivals with superior strategy
execution!
Building competences and capabilities
rivals cant match is one of the
best ways to out-compete them!
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Strategic Role ofStrategic Role ofEmployee TrainingEmployee TrainingStrategic Role ofStrategic Role of
Employee TrainingEmployee Training Training plays a critical role in implementation when a
firm shifts to a strategy requiring different
Skills or core competences
Competitive capabilities Managerial approaches
Operating methods
Types of training approaches
Internal universities Orientation sessions for new employees
Tuition reimbursement programs
Online training courses
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Pinpointing StrategyPinpointing Strategy--CriticalCriticalActivities: Ask 2 QuestionsActivities: Ask 2 Questions
Pinpointing StrategyPinpointing Strategy--CriticalCriticalActivities: Ask 2 QuestionsActivities: Ask 2 Questions
1.What functions or business processes
have to be performed extra well or in
timely fashion to achieve competitive advantage?
2. In what value-chain activities wouldpoor execution seriously impair
strategic success?
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Potential Advantages ofPotential Advantages ofOutsourcing NonOutsourcing Non--Critical ActivitiesCritical Activities
Potential Advantages ofPotential Advantages ofOutsourcing NonOutsourcing Non--Critical ActivitiesCritical Activities
Decrease internal bureaucracies
Flatten organization structure
Speed decision-making
Provide firm with heightened strategic focus
Improve a firms innovative capacity
Increase competitive responsiveness
Outsourcing makes strategic sense when an outsider
can perform an activity cheaper or better.
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Appeal of OutsourcingAppeal of OutsourcingAppeal of OutsourcingAppeal of Outsourcing
Outsourcing non-critical activities allows a firm to
concentrate its energies and resources on those value-
chain activities where it
Can create unique value
Can be best in the industry
Needs direct control to
Build core competences
Achieve competitive advantage
Manage key customer-supplier-distributor relationships
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Potential AdvantagesPotential Advantagesof Partneringof Partnering
Potential AdvantagesPotential Advantagesof Partneringof Partnering
By building, improving, and then leveragingpartnerships, a firm enhances its overall capabilities andbuilds resource strengths that
Deliver value to customers
Rivals cant quite match
Consequently pave the wayfor competitive success
Partnering makes strategic sense when the
result is to enhance a companys competences and
competitive capabilities.
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Dangers of OutsourcingDangers of OutsourcingDangers of OutsourcingDangers of Outsourcing
A company must guard against hollowing out its
knowledge base and capabilities
Way to guard against pitfalls of outsourcing
Avoid sourcing key components from a single supplier
Use two or three suppliers to minimize
dependence on any one supplier
Regularly evaluate suppliers
Work closely with key suppliers
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Step 2: Make StrategyStep 2: Make Strategy--CriticalCriticalActivities the Main Building BlocksActivities the Main Building Blocks
Step 2: Make StrategyStep 2: Make Strategy--CriticalCriticalActivities the Main Building BlocksActivities the Main Building Blocks
Assign managers of strategy-critical activities a visible,
influential position
Avoidfragmenting responsibility for strategy
-criticalactivities across many departments
Provide coordinating linkages
between related work groups
Meld into a valuable
competitive capability
Assign
managers
key roles
Primaryactivities
Strategic
relation-
ships
Coordi-
nation
Valuable
capability
Supportfunctions
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Why StructureWhy StructureFollows StrategyFollows StrategyWhy StructureWhy StructureFollows StrategyFollows Strategy
Changes in strategy typically require a new or modified
organization structure
A new strategy often involves different skills,
different key activities, and different staffingand organizational requirements
Hence, a new strategy signals a need to
reassess and often modify the organization
structure
How work is structured is a means to an end
not an end in itself!
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Examples of FragmentedExamples of FragmentedStrategyStrategy--Critical ActivitiesCritical ActivitiesExamples of FragmentedExamples of FragmentedStrategyStrategy--Critical ActivitiesCritical Activities
Filling customer orders
Speeding new products to market
Improving product quality
Supply chain management
Building capability to conduct business via the Internet
Obtaining feedback from customers, making product
modifications to meet their needs
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Advantages of aAdvantages of aDecentralized StructureDecentralized Structure
Advantages of aAdvantages of aDecentralized StructureDecentralized Structure
Creates a more horizontal structure with fewer management layers
Managers and employees develop their own answers and action plans
Make decisions in their areas of responsibility
Held accountable for results
Shortens organizational response times and spurs New ideas
Creative thinking and innovation
Greater involvement of managers and employees
Jobs can be defined more broadly
Fewer managers are needed
Electronic communication systems provide quick, direct access to
data
Genuine gains in morale and productivity
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Step 4: Provide for InternalStep 4: Provide for InternalCrossCross--Unit CoordinationUnit Coordination
Step 4: Provide for InternalStep 4: Provide for InternalCrossCross--Unit CoordinationUnit Coordination
Classic methodofcoordinating activities Have related
units reportto single manager
Upper-level managers have clout to
coordinate efforts of their units
Support activities should be
woven into structure to
Maximize performance of primary activities
Contain costs of support activities
Formalreporting relationships often need to be
supplementedtofacilitate coordination
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Coordinating Mechanisms to SupplementCoordinating Mechanisms to Supplement
the Basic Organization Structurethe Basic Organization Structure
Coordinating Mechanisms to SupplementCoordinating Mechanisms to Supplement
the Basic Organization Structurethe Basic Organization Structure
Cross-functional task forces
Dual reporting relationships
Informal networking
Voluntary cooperation
Incentive compensation tied
to group performance
Teamwork and cross-
departmental cooperation
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Step 5: Provide forStep 5: Provide forCollaboration With OutsidersCollaboration With Outsiders
Step 5: Provide forStep 5: Provide forCollaboration With OutsidersCollaboration With Outsiders
Need multiple ties at multiple levels to ensure
Communication
Coordination and control
Find ways to produce collaborative efforts to
enhance firms capabilities and resource strengths
While collaborative relationships present opportunities,nothing valuable is realized untilthe relationship
develops into an engine for betterorganizational
performance
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Roles of Relationship ManagersRoles of Relationship ManagersWith Strategic PartnersWith Strategic Partners
Roles of Relationship ManagersRoles of Relationship ManagersWith Strategic PartnersWith Strategic Partners
Get right people together
Promote good rapport
See plans for specific activitiesare developed and implemented
Help adjust internal procedures
and communication systems to
Iron out operating dissimilarities
Nurture interpersonal ties
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Perspectives on OrganizingPerspectives on OrganizingPerspectives on OrganizingPerspectives on Organizing
All basic organization designs have strategy-related
strengths and weaknesses
No idealorganization design exists
To do a good job ofmatching
structure to strategy
Pick a basic design
Modify as needed
Supplement with appropriate coordinating, networking,
and communication mechanisms to support effective
execution of the strategy
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Drawbacks of CentralizedDrawbacks of CentralizedAuthoritarian StructuresAuthoritarian Structures
Drawbacks of CentralizedDrawbacks of CentralizedAuthoritarian StructuresAuthoritarian Structures
Centralizedor authoritarian structures have often
turned out to be a liability where
Customer preferences shift from
standardized to customized products Product life-cycles grow shorter
Flexible manufacturing replaces
mass production
Customers want to be treated as individuals
Pace of technological change accelerates
Market conditions are fluid
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Characteristics ofCharacteristics ofOrganizations of the FutureOrganizations of the Future
Characteristics ofCharacteristics ofOrganizations of the FutureOrganizations of the Future
Fewer barriersbetween
Different vertical ranks
Functions and disciplines
Units in different geographic locations Company and its suppliers, distributors,
strategic allies, and customers
Capacity forchange and rapidlearning
Collaborative efforts among people in differentfunctions and geographic locations
Extensive use ofInternet technology
and e-commercebusiness practices
Change &Learning
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Building Resource Strengths andBuilding Resource Strengths andOrganizational CapabilitiesOrganizational Capabilities
Building Resource Strengths andBuilding Resource Strengths andOrganizational CapabilitiesOrganizational Capabilities
11111111
Chapter
Screen graphics created by:
Jana F. Kuzmicki, Ph.D.
Troy State University-Florida and Western Region