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 11.1: The Eight Components of the Strategy Execution Process

Building a Capable Organization Exercising Strategic Leadership Allocating Resources Establishing StrategySupportive Policies

Strategy Implementers Action Agenda

Instituting Best Practices for Continuous Improvement

Shaping Corporate Culture to Fit Strategy

Tying Rewards to Achievement of Key Strategic Targets

Installing Support Systems

Figure 11.2: The Three Components of Building a Capable Organization

A Company with the Competencies and Capabilities Needed for Proficient Strategy Execution

Staffing the Organization

Building Core Competencies Competitive Capabilities

and

Matching the Organization Structure to Strategy

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ALLOCATING RESOURCES TO

SUPPORT STRATEGY
IMPLEMENTATION

Allocating Resources to Support Strategy Execution

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)

CREATING STRATEGYSUPPORTIVE POLICIES AND

PROCEDURES

Fig. 12.1: How Prescribed Policies and Procedures Facilitate Strategy Execution

INSTITUTING BEST PRACTICES AND CONTINUOUS IMPROVEMENT

Instituting Best Practices and 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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INSTALLING STRATEGY-

SUPPORTIVE
INFORMATION AND OPERATING SYSTEMS
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Installing Strategy-Supportive Information and Operating Systems

Good information and operating systems are

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
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TYING REWARDS AND INCENTIVES TO GOOD

STRATEGY IMPLEMENTATION

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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
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Gaining Commitment: Components of an Effective Reward System

Monetary Incentives
Base pay increases Performance bonuses Profit sharing plans Stock options Retirement packages Piecework incentives

Non-monetary Incentives
Praise
Constructive criticism Special recognition

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

Objectives in designing the reward system Generously reward those achieving objectives Deny rewards to those who dont Tie incentive compensation to relevant

outcomes - both strategic and financial

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BUILDING A STRATEGY-

SUPPORTIVE CORPORATE
CULTURE

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Defining Characteristics of 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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Identifying the Key Features of Corporate Culture

A companys culture is manifested in . . .
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
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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

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 companys 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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