Transcript Strategy Implementation - University of South Florida St

Strategy Implementation
 What must we do to put the strategy in
place, execute it proficiently, and
produce good results?
 Creating FITS between strategy and
external environment and creating FITS
inside the organization
 Control, coordination, and motivation
issues
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Figure 10.1: The Eight Components
of the Strategy Execution Process
The Action Agenda
for Executing
Strategy
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ALLOCATING
RESOURCES TO THE
STRATEGY EXECUTION
EFFORT
ALLOCATING RESOURCES TO THE STRATEGY
EXECUTION EFFORT
 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 and
human assets)
 Historical process vs. Zero-based Budgeting
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INSTITUTING POLICIES AND
PROCEDURES THAT
FACILITATE STRATEGY
EXECUTION
11.1
How Policies and
Procedures Facilitate
Good Strategy Execution
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USING PROCESS MANAGEMENT
TOOLS TO STRIVE FOR
CONTINUOUS IMPROVEMENT
USING PROCESS MANAGEMENT TOOLS TO
STRIVE FOR CONTINUOUS IMPROVEMENT
 Searching out and adopting best practices
is integral to effective implementation
 Benchmarking is the backbone of the
process of identifying, studying, and
implementing best practices
 Key tools to promote continuous improvement
 Business process reengineering
 TQM
 Six Sigma quality control
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What Is Total Quality Management?
 A philosophy of managing a set of business
practices that emphasizes
 Continuous improvement in all phases of
operations
 100 percent accuracy in performing activities
 Involvement and empowerment
of employees at all levels
 Team-based work design
 Benchmarking and
 Total customer satisfaction
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Six Sigma Quality Control — A Tool for
Promoting Operating Excellence
 Six Sigma is a disciplined, statistics-based
system aimed at having not more than 3.4 defects
per million iterations for any business practice
 From manufacturing to customer transactions
 Applying Six Sigma to value chain activities can
significantly improve the proficiency of strategy
implementation
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INSTALLING
INFORMATION AND
OPERATING SYSTEMS
Installing Information and Operating
Systems
 Good information and operating systems are
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essential for first-rate strategy execution
Support systems can relate to all value-chain
activities
Includes all type of Computer Based Information
Systems (CBISs):
 MIS, DBMS, TPS, DSS, E-commerce and ebusiness systems, CRM, SCM, etc…
Mobilizing information and creating systems
to use knowledge effectively can yield
 Competitive advantage
Can be used for coordination and control
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TYING REWARDS AND
INCENTIVES TO STRATEGY
EXECUTION
Exercising Adequate Control
Over Empowered Employees
 Challenge – Behavioral Control
 How to ensure actions of employees
stay within acceptable bounds
 Control approaches
 Managerial control
 Establish boundaries on what not to
do, allowing freedom to act with limits
 Track and review daily operating
performance
 Peer-based control
 Culture
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Gaining Commitment: Components
of an Effective Reward System
Monetary Incentives
Non-monetary Incentives
 Base pay increases
 Praise
 Performance bonuses
 Constructive criticism
 Profit sharing plans
 Special recognition
 Stock options
 Retirement packages
 Piecework incentives
 More, or less, job security
 Stimulating assignments
 More, or less, autonomy
 Rapid promotion
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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
 Generously reward those achieving objectives and
deny rewards to those who don’t
 Create a results-oriented system
 Define jobs in terms of what to achieve
 Tie incentive compensation to relevant outcomes- both
strategic and financial
 Top executives – Incentives tied to overall firm
performance
 Department heads, teams, and individuals –
Incentives tied to achieving performance targets
in their areas of responsibility
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INSTILLING A CORPORATE
CULTURE THAT
PROMOTES GOOD
STRATEGY EXECUTION
Identifying the Key Features
of Corporate Culture
A company’s culture is manifested in . . .
 Values, business principles, and ethical standards
preached and practiced by management
 Approaches to people management and problem solving
 Atmosphere and spirit permeating work environment
 The way managers and employees interact and relate to
one another
 Peer pressures that exist to display core values
 Encouraged and rewarded actions and behaviors
 Its revered traditions and often repeated stories
 Its relationships with external stakeholders
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Where Does Corporate
Culture Come From?
 Founder or early leader
 Influential individual or work group
 Policies, vision, or strategies
 Operating approaches
 Company’s approach to people management
 Traditions, supervisory practices, employee attitudes
 Organizational politics
 Relationships with stakeholders
 Internal sociological forces
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How Is a Company’s Culture
Perpetuated?
 Screening and selecting new employees based
on how well they “fit” in
 Systematic indoctrination of new employees
 Senior employees’ reinforcement of core values
 Story-telling of company legends
 Ceremonies honoring employees who display
cultural ideals
 Visibly rewarding those who follow cultural
norms
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Types of Corporate Cultures
Strong vs. Weak Cultures
Unhealthy Cultures
High-Performance Cultures
Adaptive Cultures
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Characteristics of
Strong Culture Companies
 Conduct business according to a clear, widely-
understood philosophy
 Considerable time spent by management
communicating and reinforcing values
 Values are widely shared and deeply rooted
 Have a well-defined corporate character,
reinforced by a creed or values statement
 Careful screening/selection of new
employees to be sure they will “fit in”
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Characteristics of Weak Culture
Companies
 Lack of a widely-shared core set of values
 Few behavioral norms evident in operating
practices
 Few strong traditions
 No strong sense of company identity
 Little cohesion among departments
 Weak employee allegiance to
company’s vision and strategy
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Characteristics of Unhealthy Cultures
 Highly politicized
 Issues resolved on basis of political clout
 Resistant to change
 Avoid risks and don’t screw up
 Experimentation and efforts to
alter status quo discouraged
 Inwardly focused – company
personnel discount need to look outside for
 Best practices
 New or better managerial approaches
 Innovative ideas
 Unethical and greed-driven
 Incompatible subcultures
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Characteristics of
High-Performance Cultures
 Standout cultural traits include
 A can-do spirit
 Pride in doing things right
 No-excuses accountability
 A results-oriented work climate in which people go
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the extra mile to achieve performance targets
Strong sense of involvement by all employees
Emphasis on individual initiative and creativity
Performance expectations are clearly identified for all
organizational members
Strong bias for being proactive, not reactive
Respect for the contributions of all employees
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Hallmarks of Adaptive Cultures
 Willingness to accept change and embrace challenge
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of introducing new strategies
Risk-taking, experimentation, and innovation to satisfy
stakeholders
Entrepreneurship is encouraged
and rewarded
Funds provided for new products
New ideas openly evaluated
Genuine interest in well-being
of all key constituencies
Proactive approaches to
implement workable solutions
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Why is Culture Important?
 Matching culture to strategy will improve
performance
 A culture that promotes attitudes and behaviors that are
well-suited to strategy is a valuable ally in 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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Grounding the Culture in
Core Values and Ethics
 A culture based on ethical principles is vital to
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long-term strategic success
Ethics programs help make ethical conduct a way
of life
Executives must provide genuine support of
personnel displaying ethical standards in
conducting the company’s business
Value statements serve as a cornerstone for
culture-building
Can be used to control employees – to behave in
the “right” way
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LEADING THE
STRATEGY EXECUTION
PROCESS
Numerous Roles of Strategic Leaders
Culture
Builder
Visionary
Chief
Entrepreneur
& Strategist
Resource Acquirer
& Allocator
Crisis
Solver
Motivator
Policy
Enforcer
Mentor
Taskmaster
Negotiator
Process
Integrator
Capabilities
Builder
Spokesperson
Consensus
Builder
Policymaker
Coach
Head
Cheerleader
Arbitrator
Chief
Administrator
& Strategy
Implementer
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Leadership Roles of the
Strategy Implementer
 Staying on top of how well things are going
 Putting constructive pressure on organizational
units to execute the strategy well and achieve
operating excellence
 Leading the process of making corrective
adjustments
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