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Strategy Imp lementat ion

What must we do to put the strategy inp lace, execu te it p ro f ic ient ly, and

produce good resul ts?

CreatingFITSbetween s trategy and

external env ironment and creat ingFITS

ins ide the organizat ion

Con trol , coord ination , and mot ivat ion

issues

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Building a

Capable

Organization

Allocating

ResourcesEstablishing Strategy-

Supportive Policies

Instituting BestPractices for

Continuous

Improvement

Installing

Support

SystemsTying Rewardsto Achievement

of Key Strategic Targets

ExercisingStrategic

Leadership

Shaping Corporate

Culture to Fit

Strategy

Strategy

Implementers

Action Agenda

Figu re 11.1: The Eigh t Componentsof the Strategy Execu t ion Process

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Figu re 11.2: The Three Components o fBu i lding a Capab le Organizat ion

Staffing the Organization

A Company withthe

Competencies

and Capabilities

Needed forProficient

Strategy

Execution

Building Core Competencies andCompetitive Capabilities

Matching the Organization

Structure to Strategy

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ALLOCATING

RESOURCES TO

SUPPORT STRATEGY

IMPLEMENTATION

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A l locat ing Resources toSuppo rt Strategy Execu t ion

Resource allocation should fit strategy Changing strategy requires changes to resource

allocation process

Shifting resources downsizing some areas,

upsizing others, getting rid of activities no longer

needed, and funding new strategically critical

activities

Financial and other resources (physical andhuman assets)

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CREATING STRATEGY-

SUPPORTIVE POL ICIES ANDPROCEDURES

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Fig. 12.1: How Presc ribed Policies and

Procedu res Faci l i tate Strategy Execu t ion

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INSTITUTING BEST PRACTICESAND CONTINUOUS IMPROVEMENT

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Ins t i tut ing Best Pract icesand Cont inuous Improvement

Searching out and adopting best p ract icesis integral to effective implementation

Benchmark ingis the backbone of the

process of identifying, studying, andimplementing best practices

Key toolsto promote cont inuous imp rovement

Business process reengineering

TQM

Six Sigma quality control

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INSTALLING STRATEGY-

SUPPORTIVE

INFORMATION AND

OPERATING SYSTEMS

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Instal l ing Strategy -Suppo rt iveInfo rmat ion and Operat ing Sys tems

Good information and operating systems areessential for first-rate strategy execution

Support systems can relate to all value-chainactivities

Includes all type of Computer Based InformationSystems (CBISs):

MIS, DBMS, TPS, DSS, E-commerce and e-business systems, CRM, SCM, etc

Mobilizing information and creating systemsto use knowledge effectively can yield

Competitive advantage

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TYING REWARDS AND

INCENTIVES TO GOOD

STRATEGY IMPLEMENTATION

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Chal lenge Behavioral Contro l How to ensure actions of employees

stay within acceptable bounds

Contro l approaches

Managerial contro l

Establish boundaries on what not to

do, allowing freedom to act with limits

Track and review daily operatingperformance

Peer-based contro l

Exercis ing Adequate Con tro lOver Empowered Employees

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Monetary IncentivesBase pay increases

Performance bonuses

Profit sharing plansStock options

Retirement packages

Piecework incentives

Non-monetary IncentivesPraise

Constructive criticism

Special recognition

More, or less, job security

Stimulating assignments

More, or less, autonomy

Rapid promotion

Gain ing Comm itment : Componentso f an Effect ive Reward Sys tem

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Rewards are the single most powerful too l towin the comm itment of company personnel to

effect ive strategy implementat ion

Objectives in designing the reward system Generously rewardthose achieving objectives

Deny rewardsto those who dont

Tie incentive compensation to relevantoutcomes - both strategic and financial

Link ing the Reward Systemto Performance Outcomes

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BUILDING A STRATEGY-

SUPPORTIVE CORPORATE

CULTURE

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Defining Characterist icsof Corporate Culture

Core values, beliefs, and business principles

Ethical standards

Operating practices and behaviors defining

how we do things around here

Approach to people management

Chemistry and personality permeating

work environment

Often told stories illustrating Companys values

Business practices

Traditions

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A companys culture is manifestedin . . . Values, business principles, and ethical standards

preached and practiced by management

Approaches to people management and problem solving

Official policies and procedures

Spirit and character permeating work environment

Interactions and relationships among managers and

employees

Peer pressures that exist to display core values

Its revered traditions and often repeated stories

Its relationships with external stakeholders

Iden t i fy ing the Key Featu resof Corporate Culture

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Why is Cul ture Impo rtant?

Matching culture to strategy will improveperformance

A culture that promotes attitudes and behaviors that are

well-suited to strategy is a valuable allyin the strategy

implementation process Can hinder strategy implementation and

performance if not compatible with strategy

A culture where attitudes and behaviors impede good

strategy implementation is a huge obstacle to overcome Provides another means to control, coordinate, and

motivate employees

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A culture based on ethical principles is vital tolong-term strategic success

Ethics programs help make ethical conduct a way

of life

Executives must provide genuine support ofpersonnel displaying ethical standards in

conducting the companys business

Value statements serve as a cornerstone forculture-building

Can be used to control employees to behave in

the right way

Grounding the Cul ture inCore Values and Ethics