11-1 Chapter 11 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

11-2 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 operations-driven  Successful strategy execution depends on  Doing a good job/ 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

11-3  An action-oriented, make-things happen task involving management’s ability to  Direct organizational change  Achieve continuous improvement in operations and business processes Move toward operating excellence  Create and nurture a strategy-supportive culture  Consistently meet or beat performance targets  Tougher and more time-consuming than crafting strategy Implementation involves... Executing the Strategy

11-4 Implementing a New Strategy Requires Adept Leadership  Implementing a new strategy takes adept leadership to  Convincingly communicate reasons 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

11-5 Why Executing Strategy Is a Tough Management Job  Overcoming resistance to change  Wide array of demanding managerial activities 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 managing a variety of initiatives simultaneously  Hard to integrate efforts of many different work groups into a smoothly-functioning whole

11-6 Hoosiers  What does the short clip suggest as far as implementing a strategy? (Assume the new coach had one in mind.)

11-7 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 the process 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

11-8 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 enthusiastic crusade emerges to carry out strategy  Fit how organization conducts its operations to strategy requirements

11-9  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” Characteristics of the Strategy Implementation Process

11-10  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! Characteristics of the Strategy Implementation Process (continued)

11-11 Challenge and Responsibility: Securing Commitment Encourage initiative and creativity but within a “game plan” “Corridor of Comparative Indifference” “Orchestrating” or achieving coordination Opportunistic

11-12 Focus Attention

11-13 Fig. 11.1: The Eight Components of the Strategy Execution Process

11-14 Fig. 11.2: The Three Components of Building an Organization Capable of Proficient Strategy Execution

11-15 Execution-Related Aspects of Organizing Work Efforts  Few hard and fast rules for organizing  One Big Rule: Role and purpose of organization structure is to support and facilitate good strategy execution!  Each firm’s structure is idiosyncratic, reflecting  Prior arrangements and internal politics  Executive judgments and preferences about how to arrange reporting relationships  How best to integrate and coordinate work effort of different work groups and departments Vice President CEO

11-16 Managing Corporate Strategy Through the Multidivisional Structure  Functional or product structures are not sufficient when a company enters new industries  Multidivisional structure innovations  Divisions (operating responsibility)  Corporate headquarters staff to monitor divisions (strategic responsibility)  Each division may be organized differently

11-17 Multidivisional Structure

11-18 Corporate Strategy and Structure and Control

11-19 Fig. 11.3: Structuring the Work Effort to Promote Successful Strategy Execution

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11-21 Discuss: Apollo 13 & One Smooth Stone  What are the differences in structure used by the two organizations?  What accounts for the difference?

11-22 Characteristics of Organizations of the Future  Extensive use of Internet technology and e-commerce business practices  Fewer barriers between  Different vertical ranks  Functions and disciplines  Units in different geographic locations  Company and its suppliers, distributors, strategic allies, and customers  Capacity for change and rapid learning  Collaborative efforts among people in different functions and geographic locations Change & Learning

11-23 E-business illustration: Chemoil Corp, San Francisco  Sells bunker fuel to ships  Marketing and bunker operations: on US west, east, gulf coast, Europe (Rotterdam and Monaco), and Asia (Singapore)  Headquarters in San Francisco; finance, personnel, legal, senior management  Accounting in India

11-24 Chemoil Corp  Owners were a Japanese company and an Indian who emigrated to US  Employees reflected locations – Dutch, Italians, French, Indians, Filipinos – and diversity of locations – Hispanics, German, etc.

11-25 Chemoil Corp.  Communications: , mobile phones, fax, video phones, personal contact when person happened to be in the office  Data on operations sent through shared files, , etc.

11-26 Chemoil Corp  Objectives-setting: monthly video conference between San Francisco and different offices (meeting with two locations possible from SF office)  Transaction data uploaded in the afternoon, posted by next morning.  Decisions made by phone, etc.

11-27 E-business Implications for Management E-business E-business involves using the Internet to facilitate every aspect of running a business. E-Management – E-Management – Fast paced; Virtual teams, Networking skills E-communication – E-communication – use/abuse; Telecommuting promised and drawbacks Goal setting and feedback – Goal setting and feedback – Web-based goal-setting/evaluation; Risk of over control? Organizational structure – Organizational structure – Virtual teams and organizations; Lack of trust and loyalty in “faceless” organizations? Job design – Job design – “Sticky” work settings; Unrealistic expectations?

11-28 E-Business Implications (continued) Decision making – Decision making – Less time to make more decisions; Information overload; Empowerment and participative decision making Knowledge management – Knowledge management – E-training; E-learning; distance learning: Asynchronous vs. synchronous Speed, conflict, and stress – Speed, conflict, and stress – Does relentless speed equal burnout? Change and resistance to change – Change and resistance to change – Stop the World, I want to get off! Constant change equals conflict Ethics – Ethics – Net slaves (low pay with unrealistic promises of riches); Electronic monitoring; Repetitive motion injuries; Abuse of part-timers (no benefits, no job security); Privacy issuesOthers??

11-29 Chapter 12 Roadmap  Marshaling Resources Behind the Drive for Good Strategy Execution  Instituting Policies and Procedures that Facilitate Strategy Execution  Adopting Best Practices and Striving for Continuous Improvement  Installing Information and Operating Systems  Tying Rewards and Incentives to Strategy Execution

11-30 Marshalling Resources Example  Transform a government agency through a re- engineering and reorganization  Improve processes and control systems  Install automated systems to reduce human discretion  Reduce size  Resources required  Organization design specialists  Funds for retirement and separation  Funds for information system  Communications campaign  Etc.

11-31 Value of Policies and Procedures  Lima policewomen  Hire the right people  Install effective control systems to sustain values

11-32 Operations Management “Tools”  Economic Order Quantity – operations management tool to determine when to reorder materials, i.e. raw materials or finished products, given inventory holding costs and set-up costs  Materials Requirement Planning (MRP) – operations management tool to achieve similar purpose, when to reorder; useful for processes where products are linked,  Example, demand for TV drives TV sets and antennas, which in turn drives demand for tubes, parts, etc.  Push system – once demand is determined, MRP system determines what to reorder and produce

11-33 Total Quality Management (TQM)  Manufacturing managers traditionally relied on EOQ (Economic Order Quantity) and MRP (Materials Requirement Planning)  TQM approached based on statistical quality control methods and the following principles  Outputs vary around a mean Think Michael Jordan taking foul shots  Output can be measured in terms of variation and mean  Output variation can be reduced by systematic methods  Output can be improved once sources of variation are minimized.  The idea was that 0 defects was desirable and obtainable.

11-34 TQM - continued  Statistical Quality Control techniques to measure whether process was under “control”  Kanban system for production control – make one product at a time  Pull system - produce small lots, order parts and components as lot moves through system  Quality circles for enabling cross-functional teams to focus on problems  Total Quality Management, Toyota Production System, Kaizen, etc. are closely related