Build Execution into Strategy Chapter 8 Build Execution into Strategy Milos Kustudija, Dustin Pace, Matt Zaney

A company is everybody From top executives to line employees. When all employees support and are aligned around a strategy, that is when a company can stand apart as great consistent executor. Trust and commitment must create an environment that motivate people to execute the strategy. Build execution into strategy from the start. Especially in blue ocean because trepidations builds as people are less involved. Fair process is key….

Poor process can ruin strategy execution Poor process can lead to sabotage Increase risk Employees will fight against change if not properly introduced or instructed on the strategy. Example: Lubber sales reps Were not included in the execution of strategy, and sabotaged sales with clients.

The Power of Fair Process Procedural justice: people care as much about the justice of the process through which an outcome is produced as they do about the outcome itself. Managerial expression – people need to buy in up front. Get employees involved early. People trust that a level playing field exist. Employees will cooperate voluntarily.

The Three E Principles of Fair Process Engagement: Involving individuals in the strategic decisions by asking them for their input. Builds better collective wisdom. Greater commitment from all involved. Explanation: Everyone involved and affected should understand why final strategic decisions are made as they are. People know their opinions have been considered. Enhances learning. Expectation Clarity: After a strategy is set, managers state clearly the new rules of the game. Political jockeying and favoritism is minimized. New goals and milestones are set.

A tale of Two Plants Elco Elevator systems manufacturer. Domestic demand falling, elevator industry declining. Blue ocean strategy – go from batch manufacturing to a cellular approach Allow self-directing teams to achieve superior performance. Two plants: Chester plant High Park plant

Chester Plant Exemplary employee relations Decertified their own union “They were the ideal workforce”

High Park Plant Strong union Resist change Needed Chester plant to build momentum for High Park Plant.

Which plant took the new manufacturing process better? High Park plant accepted the new process Chester plant let to disorder and rebellion. Why did this occur.

No fair process at the Chester Plant Failed to engage employees in the strategic decisions. Consultants were briefed to have no involvement with employees. Chester employees were not introduced to consultants who would implement new system. Consultant dressed differently, in black suits and ties. Fear off layoffs Employees brought newspaper clippings of plants that had been shut down around the country Plant manager absent Did not explain why new system was being implemented Neglected to tell employees what would be expected of them

Chester plant Employees felt undermined. Fights erupted. Refused to work in groups. No trust.

Fair process as High Park plant Introduced consultants to employees right at the start. Engaged employees in plant wide meetings. Discussing declining business conditions and how new strategic change would help break from the competition. Announced pro-action time policy so employees would not fear layoffs. Worked with employees to develop new goals and establish new responsibilities. Employees spoke of their plant manager with admiration.

Why does fair process matter? Individuals seek recognition of their value. Seek recognition that their ideas are sought after. Intellectual and emotional recognition that fair process conveys.

Intellectual and Emotional Recognition Theory When individuals feel recognized for their intellectual worth, they are willing to share their knowledge. Violation of fair process – violation of individuals intellectual and emotional worth. This can lead to sabotage – “You don’t value my ideas. So I don’t value your ideas, nor do I trust in or care about the strategic decisions you’ve reached.