Strategy Implementation

1. Strategy Implementation Payne (8)

2. The sum total of the activates and choices required for the execution of a strategic plan – it is the process by which strategies are put into action through budgets, programs, and procedures. Implementation is the means to the ends (i.e., the strategy), these take place primarily through functional strategies and/or structure changes. Ask: Who? What? How? When? What is Strategy Implementation?

3. Top 10 Problems in Implementation • Slower implementation than originally planned. • Unanticipated major problems. • Ineffective coordination of activities. • Competing activities and crises that distract attention. • Insufficient capabilities of the involved employees. • Inadequate training and instruction of lower-level employees. • Uncontrollable external environmental factors. • Inadequate leadership and direction by departmental managers. • Poor definition of key implementation tasks and activities. • Inadequate monitoring of activities by the information system.

4. Implementation involves a the wholemanagement team Every unitand all employees have a role and need to be committed CEO, other senior executives, and heads of major organizational units must lead the process and orchestrate major initiatives Butthey must rely on middle and lower-level managers to push things on the front line and see that strategy is well-executed on a daily basis. Who Implements?

5. Functional Strategies Functional Strategies: The collective pattern of day-to-day decisions made and actions taken by employees responsible for value activities. These include… • R&D Strategy • Research focus/orientation • Project priorities (budget, quality, time) • Relationships to external organizations • Information Systems • Hardware/software capability and integration • Linkages to external organizations • Investments needed • HR Strategy • Recruitment, Selection, Appraisals, Salaries, Wages, Training, etc. • Financial Strategy • Capital, Investments, Returns • Resource allocation • Marketing Strategy • Customer Targeting • Product/service positioning, mix, breadth, and pricing • Promotions practices • Distribution channels • Customer service policies • Product/service policies • Marketing research • Operations Strategy • Capacity planning • Location and layout of facility • Equipment choices • Scheduling • Workforce policies

6. Linking Budgets to Strategy New strategies usually call for significant budget reallocations. Depriving strategy-critical groups of the funds needed to execute their pieces of the strategy can undermine the implementation process! Establishing Strategy-Supportive Policies Provide top-down guidance regarding expected behaviors Note: Too muchpolicy can be as bad as the wrong policyorno policy at all Instituting Best Practices / Continuous Improvement Searching out and adopting best practices& benchmarkingis integral to effective implementation (see next slide) Installing Support Systems Mobilizing information and creating systems to use knowledge effectively Motivational Practices and Incentive Compensation Systems Monetary and Non-monetary reward systems to motivate positive actions Functional Strategies - Examples

7. Basic Characteristics of TQM/CQI Programs: Valuable competitive assetin a company’s resource portfolio Have hard-to-imitate aspects Require substantial investment of management time and effort Expensive in terms of training and meetings Seldom produce short-term results Long-term payoff- Instilling a TQM culture Aspects Common to TQM and Continuous Improvement Programs • Committed leadership • Adoption & communication of TQM • Closer customer relationships • Closer supplier relationships • Benchmarking • Increased training • Open organization • Employee empowerment • Zero-defects mentality • Flexible manufacturing • Process improvement • Measurement

8. Control: Challenge is how to ensure actions of employees stay within acceptable bounds Purpose of diagnostic control systems is to relieve managers of burden of constant monitoring Control methods establish boundaries on what not to do, allowing freedom to act with limits. Rewards (Two Types): Monetary Incentives Salary raises Performance bonuses Stock options Retirement packages Promotions Perks Employee Control and Rewards • Non-Monetary Incentives • Praise • Constructive criticism • Special recognition • More, or less, job security • Interesting assignments • More, or less, job responsibility

9. Changes to structure are often keys to strategy implementation success. A Few hard and fast rules for organizing: Main rule:Structure mustsupport and facilitategood strategy execution. Research indicates: Structure affects performance Structure merits reassessment whenever strategy changes New strategy typically involves different skills and key activities How work is structured is a means to an end- not an end in itself! All the basic structures have strategic advantages and disadvantages There is no ideal organization design To do a good job ofmatchingstructure to strategy Pick a basic design Modify as needed Supplement with coordinating mechanisms and communication arrangements Structural Changes

10. General Manager General Manager Research & Development Manufacturing Human Resources Foundry & Castings Screw Machining Inspection Customer Service Engineering Marketing Finance & Accounting Milling & Grinding Finishing & Heat Treating Loading & Shipping Billing & Accounting Structural Forms Traditional FunctionalStructure Process-Oriented Functional Structure

11. General Manager CEO Head R&D Head Manufacture Head Marketing Head Finance Corporate Services Venture Manager 1 R&D Specialists Production Specialists Marketing Specialists Finance Specialists Venture Manager 2 Group VP SBU I Group VP SBU III Group VP SBU II R&D Specialists Production Specialists Marketing Specialists Finance Specialists Venture Manager 3 R&D Specialists Production Specialists Marketing Specialists Finance Specialists Strategically Related Business Units Strategically Related Business Units Strategically Related Business Units Venture Manager 4 R&D Specialists Production Specialists Marketing Specialists Finance Specialists Structural Forms (2) SBU Structure Matrix Structure

12. Strategic Control

13. Strategic Control System: “a system to support managers in assessing the relevance of the organization’s strategy to its progress in the accomplishment of its goals, and when discrepancies exist to support areas needing attention” Lorange, Morton & Ghoshal, 1986 Strategic Control Systems • Controls come in two primary types: • Feedback • Concurrent

14. Provides managers with information concerning the outcomes of the organizational activities. Budgets: holding employees accountable for staying within or well below an established budget Ratio Analysis: ROI, ROA, debt-to-equity, current ratio, etc. Audits: Measures and controls firm conduct by comparing to established guidelines such as GAAP (general accepted accounting principles) or ethical standards. Goals and Objectives Balanced Score Card Measures Feedback Controls

15. Provides managers with real-time information about processes and activities, so that deviations can be identified and corrected before they affect organizational results. Statistical Process Control and Warning Systems: Setting preferences for specific work activities (e.g., automobile manufacturing line assembly) and allowing for warnings to occur before it can impact outcomes. Inventory Controls: Tracks stock levels of different items so new orders can be made (e.g., Amazon.com) Behavioral Controls: Encourage employees to comply to norms and procedures (rules, regulations, and socialization processes). Concurrent Controls