1. Strategy Implementation: Internal Control and Performance
Chapter 12

2. Learning Objectives
Translate strategy into functional goals and activities.
Develop effective metrics for control and growth.
Different models for implementation and control.
Strategic leadership core responsibilities.

3. 5 Keys to Implementation & Control
Top management involvement
Demonstrates importance & commitment
Fit
Strategy, structure, value chain, resources
Clear and compelling objectives
Relevance to employees at their levels
Single currency
Uniform incentive system applied to all
Resource allocation
Matched to goals & supports incentives

4. Strategic Metrics
Tied to vision, mission, overall corporate objectives
Translated down to all levels and value chain activities
All departments / functions included
Appropriate for the level within the function
Include quantitative & qualitative measures
Can be used as part of a uniform incentive system

5. Metrics Provide Feedback, Create Learning
Expected Effect
Activities
Actual Effect B
A is expected, but B occurs
Next steps
Diagnose if more of activities is needed, or
Change activities

6. Three Implementation Models
Balanced Scorecard Model
Value-Driver-Action Model
McKinsey 7-S Framework

7. Balanced Scorecard Driven by strategy
All activities and metrics consistent with strategic approach
Develops "cause-and-effect logic" across four levels of the organization
Requires developing "lead" and "lag" performance metrics for each level
Consistent with Value Chain focus on activities

8. Cause and Effect Logic
Actions and performance in each level contribute to and enable the next level

9. Develop Lead and Lag Metrics
Lead – measure activities performed
Lag – measure results of activities

10. Discount Airline Example
Work from the bottom up
Success in each level enables the next level of performance

11. Value-Action-Driver Model
Focuses on value creation efforts
Easier to implement vs. Balanced Scorecard
Draws upon
Key Success Factors (industry analysis)
Extraordinary Resource positions
Vision and mission

12. Value-Action-Driver Model Steps
Identify key value drivers.
Outline desired stakeholder experience for each value driver dimension.
Translate stakeholder experience to business / market position.
Identify actions to take to achieve position.
Develop metrics to assess progress toward position.

13. Ford Inc. Example Value Driver Desired Stakeholder Experience
Translation
to Position
Consumer Economic Value
Getting most "bang for the buck."
"Buying is no haggling, straightforward."
"Get a great price when I sell my Ford."
Develop classic, popular designs to ensure high retained value.
List price = sales price.
No haggle sales process.
Reduce cost structure to best in class.

14. Ford Inc. Example Translation to Position Actions to Take Metrics
Develop classic, popular designs to ensure high retained value.
List price = sales price.
No haggle sales process.
Reduce cost structure to best in class.
Revamp designs where needed.
Change sales process and sales incentive structure.
Reduce excessive overhead costs in management and production.
Consumer choice awards for design, performance, and value.
Cash rebates usage lowest in industry.
Average list price discounts lowest in industry.
Production unit cost/model lowest compared to peer group.

15. McKinsey 7-S Framework Popular model dating from 1970s.
Focuses on alignment and fit across the organization.
Seven S's
"Hard" 3 – easier to identify
"Soft" 3 – more difficult to pin down exactly
Centered around "Shared Values & Goals"

16. McKinsey 7-S Framework

17. McKinsey 7-S Framework Shared Values & Goals Strategy Structure
Embodied in Vision, Mission, Principles
Strategy
Value chain, resources, type of strategic approach
Structure
How structures help coordinate & organize
Systems
Alignment of systems to support strategy & structure
Skills
Core capabilities & related training / learning
Style
Culture & how it supports the type of work done
Staff
Onboarding process & continuity of support

18. Strategic Leadership
Establish and extol vision, mission, principles, goals
Establish code of ethics
Build senior management team
Establish structure for communication, coordination, control
Establish culture and match leadership style
Ensure process exists to recognize new opportunities
Rational decision making
Motivation through style, and incentives