1. BLUE OCEAN STRATEGY CH 8: Build Execution Into Strategy
Team 3:
Taylor Carroll, Andrew Stack, Andrea Lapotaire, Andrew West, Jessica Sharpless

2. Strategy Execution Create a culture of trust and commitment
Does Wal-Mart's employees trust management?
Must align hearts and minds
Require people to step outside of comfort zone
Do employees think outside of the norm
Inspire voluntary cooperation
Quick to grasp new strategy? Strategy must be forced onto them?

3. Strategic Execution (cont.)
Best planned strategies often fail
Implementation must be programed into the strategy to minimize risk of failure

4. Poor Process Can Ruin Strategy Execution
Failure to explain a strategy can halt the execution
Trust must be built with employees to begin to accept the new strategy

5. Lubber Example
Lubber: water-based liquid coolant for the metalworking industry
Several types of coolants to choose from
Must be tested to determine right one
Machine downtime and sampling costs
Expensive for customers and Lubber
New strategy created that would eliminate complexity and costs of trial phase
Cut down failure rate of selecting coolants from 50% to less than 10%

6. Lubber Example Cont: Excellent strategy doomed from the start
Sales red saw it as a direct threat to their most valuable contribution
Expressed doubts about effectiveness to customers
Directly effected sales
Management forced to pull the system

7. What could be learned?
Using the proper process could have prevented the demise of the expert system
Make sure that the new strategy was properly explained to all the employees
Train on how to use
Explain the benefits and effectiveness
Make sure employees know that their job is safe and the new strategy is simply put in place to enhance efficiency
Work manager-employee trust
If employees would have trusted management, they would have known that the new strategy was put in place to better the company and would have known that their jobs were safe

8. The Power of Fair Process
What is fair process?
Engagement
Explanation
Expectation clarity
How does it allow companies to build execution into strategy?

9. Fairness/Justice
Social scientists John W. Thibaut and Laurens Walker combined interest of psychology of justice with the study of process
Created: Procedural Justice
What makes people comply with laws without being made to do so
People care as much about the justice of the process as they do about the actual outcome
Satisfaction of outcome increases if it is believed that procedural justice is exercised

10. Fairness/Justice Cont.
When fair process is exercised, it is believed that a level playing field exists
Inspires employees to voluntarily cooperate in executing the new strategy
Involves going beyond the call of duty

12. Walmart’s Treatment of Employees
Wal-Mart has taken many hits on treatment of employees
Unpaid overtime
Sexual discrimination
Poor health plan
Anti-union activities
Unfair process and justice
Could this be causing poor performance?
*Wal-mart has since been working to better employee satisfaction

13. Google Google is famous for treating employees well
Leisure facilities on campus
Excellent health plan
Equal employment
What is the outcome of Google’s fair process?
Excellent performance
New innovations happen frequently
Very successful

14. The Three E Principles of Fair Process
Engagement- Involving individuals in the strategic decisions that affect them by asking for their input.
Communicates management’s respect
Better strategic decisions
Greater commitment from those involved
Explanation- Making sure everyone involved and affected should understand why final strategic decisions are made.
Establish confidence in managers
Allows employees to trust managers
Powerful feedback loop
Expectation clarity- Stating clearly the new rules of the game after a strategy is set.
Understood standards to be held by
Strategy can be executed rapidly
WALMART

15. A Tale of Two Plants

16. Why Does Fair Process Matter?
Intellectually
Recognition and reflection of individual’s ideas
Emotionally
Individual recognition of value
“It all comes down to intellectual and emotional recognition.” –Pg. 181

17. Intellectual and Emotional Recognition Theory
Individuals share knowledge, when intellectual worth is recognized.
Fair process=voluntary cooperation.

18. Overcoming Fair Process Adversities
Employees reject opposing ideas.
If individual ideas are not fostered, they will refrain from sharing them.
Lack of trust in strategy-making process= lack of trust in implemented strategy
Employees may resist strategies, no matter how efficient it may be.

19. Wal-Mart and Fair Process
Systematic operation
Micromanagement
Adherence to protocol

20. Fair Process and Blue Ocean Strategy
Commitment, trust, and voluntary cooperation are intangible capital
Allows companies to stand apart in the speed, quality, and consistency of their execution and to implement strategic shifts fast at low cost
When people have trust, they have heightened confidence in others intentions and actions
When people have commitment, they are willing to override personal self-interest in the interests of the company

21. Fair Process and Blue Ocean Strategy (Continued)
Intangible Capital is directly related to success or failure in executing blue ocean strategies
How do companies create trust, commitment, and voluntary cooperation?
Incentives of money and power
Exercise of fair process

22. Fair Process and Blue Ocean Strategy (Continued)
By organizing the strategy formulation process around the principles of fair process, you can build execution into strategy making from the start
Compromises and sacrifices are necessary in building a strong company

24. Wal-Mart's Commitments
Wal-Mart is committed to purchasing food from local growers for distribution to stores in their areas.
This commitment reflects their ever-important goal to provide consumers with quality, affordable, home-grown agricultural selections.