Strategy Implementation

1. Strategy Implementation Session -21

2. Nuances of Strategy Implementation • Strategic Choice • Decision which selects from among the alternative grand strategies which will best meet the enterprises’ objectives. The choice involves consideration of selection factors, evaluation of the alternatives against these criteria and the actual choice

20. Building an Organization Capable of Good Strategy Execution

21. “The best game plan in the world never blocked or tackled anybody.” Vince Lombardi

22. “A second-rate strategy perfectly executed will beat a first-rate strategy poorly executed every time.” Richard M. Kovacevich

23. Chapter Roadmap • A Framework for Executing Strategy • The Principal Managerial Components of the Strategy Execution Process • Building an Organization Capable of Good Strategy Execution • Staffing the Organization • Building Core Competencies and Competitive Capabilities • Execution-Related Aspects of Organizing the Work Effort • Current Organizational Trends

24. Crafting the Strategy Primarily a market-driven activity Successful strategy making depends on Business vision Perceptive analysis of market conditions and company capabilities Attracting and pleasing customers Outcompeting rivals Using company capabilities to forge a competitive advantage Executing the Strategy Primarily an operations-driven activity Successful strategy execution depends on Doing a good job of working through others Good organization-building Building competitive capabilities Creating a strategy-supportive culture Getting things done and delivering good results Crafting vs. Executing Strategy

25. Implementation involves . . . Executing the Strategy • An action-oriented, make-things happen task involving management’s 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

26. Implementing a New StrategyRequires Adept Leadership • Implementing a new strategytakes adept leadership to • Convincingly communicatereasons for the new strategy • Overcome pockets of doubt • Secure commitment of concerned parties • Build consensus and enthusiasm • Get all implementation pieces in place and coordinated

27. Why Executing Strategy Isa Tough Management Job • Overcoming resistance to change • Wide array of demanding managerialactivities to be performed • Numerous ways to tackle each activity • Number of bedeviling issues to be worked out • Demands good people management skills • Requires launching and managinga variety of initiatives simultaneously • Hard to integrate efforts of many different work groups into a smoothly-functioning whole

28. Who Are the Strategy Implementers? • Implementing and executing strategy involves a company’s whole management team and all employees • Just as every part of a watch plays a role in making the watch function properly, it takes all pieces of an organization working cohesively for a strategy to be well-executed • Top-level managers must lead theprocess and orchestrate major initiatives • But they must rely on cooperation of • Middle and lower-level managers to see things go well in various parts of an organization and • Employees to perform their roles competently

29. Goals of the Strategy Implementing-Executing Process • Unite total organization behind strategy • See that activities are done in a manner that is conducive to first-rate strategy execution • Generate commitment so an enthusiasticcrusade emerges to carry out strategy • Fit how organization conducts itsoperations to strategy requirements

30. Characteristics of the Strategy Implementation 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 are capable of working • Cuts across many aspects of “how to manage”

31. Characteristics of the Strategy Implementation Process (continued) • Each implementation situation occurs in a different context, affected by differing • Business practices and competitive situations • Work environments and cultures • Policies • Compensation incentives • Mix of personalities and firm histories • Approach to implementation/execution has be customized to fit the situation • People implement strategies - Not companies!

32. Fig. 11.1: The Eight Components of the Strategy Execution Process

33. What Top Executives Have to Do inLeading the Implementation Process • Communicate the case for change • Build consensus on how to proceed • Arouse enthusiasm for the strategy to turn implementation process into a companywide crusade • Empower subordinates to keep process moving • Establish measures of progress and deadlines • Reward those who achieveimplementation milestones • Direct resources to the right places • Personally lead strategic change processand the drive for operating excellence

34. Test Your Knowledge Management's handling of the strategy implementation/execution process can be considered successful A. so long as a company is profitable. B. if and when the company meets or beats its performance targets and shows good progress in achieving its strategic vision for the company. C. once the company's management team convinces a majority of company personnel that the company is headed in the right direction. D. if management is able to put the strategy in place within 6 months. E. once a capable top management team has been hired, employees have been appropriately empowered, and effective training programs for company personnel have been put in place.

35. BUILDING A CAPABLE ORGANIZATION — WHAT IS INVOLVED?

36. Fig. 11.2: The Three Components of Building anOrganization Capable of Proficient Strategy Execution

37. Putting Together aStrong Management Team • Assembling a capable management team is a cornerstone of the organization-building task • Find the right people to fill each slot • Existing management teammay be suitable • Core executive groupmay need strengthening • Promote from within • Bring in skilled outsiders

38. Selecting the Management Team: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

39. Recruiting and Retaining Talented Employees: Implementation Issues • The quality of a company’s people is an essential ingredient of successful strategy execution • Biggest challenge facing companies • How to recruit and retain the bestand brightest talent with strongskill sets and management potential • Intellectual capital, not tangible assets, is increasingly being viewed as the most important investment • Talented people are a prime source of competitive advantage

40. Key Human Resource Practices toAttract and Retain Talented Employees • Spend considerable effort in screening job applicants, selecting only those with • Suitable skill sets • Energy and initiative • Judgment and aptitudes for learning • Ability to adapt to firm’s work environment and culture • Put employees through training programs throughout their careers • Give promising employees challenging, interesting, and skills-stretching assignments

41. Key Human Resource Practices toAttract and Retain Talented Employees(continued) • Rotate employees through jobs with great content, spanning functional and geographic boundaries • Encourage employees to • Be creative and innovative • Challenge existing ways of doing things and offer better ways • Submit ideas for new products or businesses • Foster a stimulating work environment • Exert efforts to retain high-potential employees with excellent salary and benefits • Coach average employees to improve their skills

42. Building Core Competenciesand Competitive Capabilities • Crafting the strategy involves • Identifying the desired competencies andcapabilities to build into the strategy to helpachieve a competitive advantage • Good strategy execution requires • Putting desired competencies and capabilities in place, • Upgrading them as needed, and • Modifying them as marketconditions evolve

43. Example: Intel’s Core Competence Design and mass productionof complex chipsfor personal computers

44. Example: Procter & Gamble’sCore Competencies Superb marketing-distribution skills and R&D capabilities in five core technologies - fats, oils, skin chemistry, surfactants, emulsifiers

45. Example: General Electric’sCore Competencies Developing professional managers with broad problem-solving skills andproven ability to growglobal businesses

46. Example: Disney’s Core Competencies Theme park operation and family entertainment

47. Example: Dell’s Core Competencies Capabilities to deliver state-of-the-art products to customers within days of next-generation components coming available and at attractively low costs

48. Example: Toyota’s Core Competence Legendary “production system” giving it the capability to produce high-quality vehicles at relatively low costs

49. Three-Stage Process of Developing Competencies and Capabilities 1. Develop ability to do something 2. As experience builds,ability can translate into acompetence or capability 3. If ability continues to be polished and refined, it can become a distinctive competence, providing a path tocompetitive advantage!

50. Step 1 in Developing Competencies • Develop ability to do something • Select people with relevant skills/experience • Broaden or expand individual abilities as needed • Mold efforts and work products ofindividuals into a cooperative effortto create organizational ability