1. Chapter 9 Realizing Strategy F.S
Team 1: Krista Andreassen, Benji Padilla, John Thrash, Andrew Harrison

2. “Most of these strategies remain just wishful thinking: if strategy is to yield results, it must be backed by commitment and translated into action.”

3. Introduction
Realizing strategy presents organizations with even more challenges than those faced by individuals, it requires an effort from everyone within the organization
Implementation still lacks because it requires commitment, persistence, and hard work
The way a company organizes itself is fundamental to the effectiveness of its strategic management
Organizational structure, systems and culture are essential to be well developed in order to be effective of how the strategy is executed.

4. Objectives
Understand how strategic planning links to operational planning, performance management, and resource allocation in implementing strategy
Appreciate the basic principles that determine the structural characteristics of complex human organizations
Select the organizational structure best suited to a particular business context
Recognize how companies have been changing their organizational structures in recent years and the forces that have been driving these changes
Appreciate the role an organization’s culture plays in realizing strategy

5. Opening Case
BP was once one of the most admired companies in the world
Deepwater Horizon, April 2010 incident led to an interest in people looking at their corporate strategy, structure, systems and culture.
Corporate goals: Focuses on high returns for shareholders. battle with short term targets for profits and long term targets might be conflicted as they’re on the back end of the thought.
Performance Metrics: established monitoring performance targets, BP’s safety performance metric was “days since last injury”
Systems and Culture: Decentralization of power, where local decisions and implementation at each branch leads to success

6. Adidas’ strategy
Creating the New

7. From strategy to execution
First formulation then implementation
During implementation strategy it is usually is reformed from intended strategy to emergent strategy. During the implementation stage circumstances change, unforeseen issues arise.
Strategy formulation also must take into account implementation. Strategy formulation and and implementation are interdependent.

8. The strategic planning system
Linking strategy to action
The strategic planning process becomes more explicit and structured the bigger of an operation it is with slight variations.
Small companies it is usually not very explicit or structured
Big corporations are explicit and systematic with their strategic process. Most plans tend to be a mix from both top-down and bottom-up strategy proposals from different divisions.

9. Changes in strategic planning
Strategic plans need to have flexibility built into them because it is impossible to predict the future and companies realize this.
They focus less on economic and market forecasts and more on general issues of strategic direction and alternative views of the future by doing scenario analysis.

10. Organizational Design: The fundamentals of Organizing
Implementing strategy is not about just strategic planning processes and linking to goal setting
Organizational design is about selecting structures, systems, and management styles that best implement strategies
To design a firm we must recognize what it’s supposed to do
Every organized human activity has two fundamental requirements:
1. Division of labor into various tasks
Coordination of these tasks to accomplish the activity

11. Specialization and Division of Labor
Firms exist because because of their efficiency advantages in producing goods and services
The more the production process is divided between specialists, the harder to integrate the efforts of individual specialists
Two organizational problems:
Cooperation problem - aligning the interests of others who have different goals
Coordination problem- how do individuals harmonize their different activities?

12. The Cooperation Problem
The problem is aligning interests of 2 different parties:
For ex: an agency relationship, managers and shareholders
How to align interests? Use of incentives, monitoring, and appraisal designed to encourage the pursuit of organizational objectives
Different mechanisms to for managers to align the goals of individuals”:
Control- supervise behavior and performance, through positive and negative incentives
Pay-for-performance when measuring output
Shared values- organizational values are one component of culture

13. The Coordination Problem
Everyone in the organization may have the same goal, but desire to cooperate is not enough to integrate efforts.
Coordination drives efficient production by:
Rules and instructions- general employment contracts, standardized outcomes required
Routines- These regular sequences of coordinated actions are the foundation of organizational ability
Mutual Adjustment- Engaged in related tasks, without any authority relationship

14. Hierarchy in organizational Design
Hierarchy is the fundamental feature in Organizational Design
Bureaucracy
Each individual reports to a superior
Top-down control
Modularity
When designed independently but works together as a whole
Multi-divisional firm is a modular structure

15. The modular structure of the team mirrors the modular structure of the product

16. Contingency approaches
Different organizational organizational characteristics suited to different circumstances
Ex: Although Google and Mcdonalds are both highly profitable, their structures and systems are very different
Mcdonalds highly emphasizes on rules, and specialization , more bureaucratic, more standard operating procedures
Google emphasizes low specialization, and principles over rules
Trend has shifted towards more organic approaches to organization
Shift from supervision to accountability
Difference between Rules and Principles?
Contingency: future event thats possible but not certain
Principles: like a ground rule that you personally follow
Rules: imposed on you

17. Choosing the Right Structure
In order to undertake organizational tasks, people grouped into organizational units
In creating a hierarchical structure, on what basis are individuals assigned to units? Employees can be grouped by:
Common tasks: Teachers assigned to faculty unit
Products: Customer service assistants assign to different department
Location: Starbucks stores
Process: Airlines
Those individuals that need to be interacted closely should be located in same organizational unit.

18. James Thompson analysis of interdependence
Operate independently but depend on one another EX: RELAY TEAM
Output of individual is input of another EX: ASSEMBLY LINE
Mutually dependent

19. Three basic organizational forms:
After grouping tasks and activities
The functional structure: Grouping together similar tasks (organizational unit) across functional lines
EX: In 1984 John Scully became the CEO of Apple, and company organized by product, but the products were not integrated: Apple II, Apple III, Macintosh were not compatible
Scully’s response was to reorganize along functional lines
Problems arise when more products are made available.

20. Multidivisional Structure
Strategies and operating decisions made at the divisional level
DEcentralized decision making
Modular organization
Fosters leadership within division
Product or geographically based
Important to have a common set of organizational tools to a range of different businesses

21. Matrix Structure
Multiple products, multiple functions, multiple locations
Can represent slower decision making
Top heavy corporate Headquarters more involved

22. Trends in organizational design
Delayering: companies have made their organizational hierarchies flatter, motive is to reduce costs and and increases responsiveness
Adhocracy and Team based approach: having shared values, participation, flexible communication
Project based: work assignments are finite, having knowledge of previous project to complete the next
Network structures: social relationships, informal mechanisms where coordination occurs
Permeable organizational structures: Outsourcing because complexity of products increasing

23. Workplace Culture and Closing Case
Corporate Culture vs Organizational Culture
Weak vs Strong
Classifications and Descriptions
Two Fundamental Questions
Closing Case - Cisco: Designing and Redesigning
Product Line Focus
Customer Focus
Technology Organization
Redesigned Tech Organization