1. Build Execution into Strategy Blue Ocean Strategy: Chapter 8 (pg. 171)
MGT 4380
Group 6
Preston, Mason, Blake
Blake

2. 6th Principle of Blue Ocean Strategy
Build people’s trust and commitment deep in the ranks and inspire their voluntary cooperation.
Blake

3. Poor Process can Ruin Strategy Execution
Neglecting to inform effected parties can cause problems
In the end the changes may go unappreciated even if it is a more effective processes.
Sections of a company can feel threatened and sometimes work against new systems when not introduced or discussed properly
Ex: Oakline Floors Warehouse Vs. Office
Blake

4. The Power of Fair Process
Origin of fair process leads back to 1970’s Social Scientists John W. Thibaut & Laurens Walker created the term Procedural Justice: fairness in the processes that involve dispute.
People care as much about the process to get to an outcome as they do the outcome itself.
Blake

5. How Fair Process Affects People’s Attitudes and Behaviors
Fair Process is used people assume that there is a level playing field involved.
Blake

6. The Three E Principles of Fairness Process
Engagement - involving individuals in the strategic decisions within the company.
Explanation - everyone involved and/ or affected should understand why final strategic decisions are what they are.
Expectation Clarity - the goals, expectations, and decisions that have been decided on should be restated and clarified to everyone if need. This includes penalties and consequences of failure.
These three E principles collectively and properly executed lead to judgements of Fair Process.
Blake

7. A tale of Two Plants
How do the three E principles of fair process work to affect strategy execution?
Elevator systems manufacturer Elco
Industry sales in steady decline
Set out to offer buyers a leap in value while lowering its costs to stimulate new demand and break away from the competition
Blue ocean strategy required the company to replace its batch manufacturing system with a cellular approach that would allow self directed teams to achieve superior performance
New system implemented first at Chester plant and then at High Park plant

8. Lead to disorder and rebellion
Chester Plant
Lead to disorder and rebellion
Cost and quality performance began to fall
Elco managers violated all three of the basic principles of fair process
Failed to engage employees in strategic decisions that directly affected them
Failed to explain why strategic decisions were being made the way they were and what they meant to employees
Failed to make clear what would be expected of employees under new process
High Park Plant
Accepted the strategic shift
Abided by all three principles of fair process
Engaged employees by holding a series of plant wide meetings
Explained that they had visited other companies’ plants and had seen the productivity improvements
Made announcements informing employees what to expect

9. Ford in process of $11 billion dollar restructuring
People in the front line care as much about the proper process as those at the top
By violating fair process in making and rolling out strategies, managers can turn their best employees into their worst, creating distrust and resistance
If managers practice fair process, the worst employees can turn into the best and can execute even difficult strategic shifts with their willing commitment while building their trust
Ford in process of $11 billion dollar restructuring
Company has been vague about their strategy
Anxiety beginning to build among employees
Many feel CEO Jim Hackett is without clear direction
Company’s best years are thought to be in the past
Ford asks investors to be patient and have faith

10. Why Does Fair Process Matter?
Emotionally, individuals seek recognition of their value, not as “labor”, “personnel,” or “human resources”but as human beings who are treated with full respect and dignity and appreciated for their individual worth regardless of hierarchical level
Intellectually, individuals seek recognition that their ideas are sought after and given thoughtful reflection, and that others think enough of their intelligence to explain their thinking to them
Managers must see the nearly universal value of the intellectual and emotional recognition that fair process conveys.

11. Intellectual and Emotional Recognition Theory
The use of fair process in strategy is linked to intellectual and emotional recognition
When recognized for intellectual worth, individuals are willing to share knowledge and will work to prove their value
Frederick Herzberg’s study on motivation showed recognition inspired strong intrinsic motivation
If people do not feel valued, they won’t share ideas or expertise

12. Fair Process and Intangible Capital of an Organization
Commitment, trust, and voluntary cooperation are known as intangible capital
Companies wrestle with how to create trust, commitment, and voluntary cooperation within the organization.
When people have trust in one another they have heightened sense of confidence in their peers
With commitment comes the willingness to override self-interest in the interests of the company.
Commitment, trust, and voluntary cooperation allow companies to stand apart from competition

13. Fair Process and Intangible Capital of an Organization
Traditional incentives of promotions/raises and demotions (carrots and sticks) help. But fail to truly inspire
Short-term personal sacrifices, or compromises, are sometimes required in order to advance the long-term interests of the company
One example of Ford’s intangible capital comes externally from the trust of the customers

14. Fair Process and External Stakeholders
External stakeholders can play a key role in an organization's’ success
External stakeholders are outside the company’s typical hierarchy and can have diverging interests from internal stakeholders
Without the commitment and cooperation of the external stakeholders’ goal alignment can easily come into conflict and lead to diverging values and missed opportunities
The more a company relies on external stakeholders the more likely conflict is to occur