1. Implementing Strategy in Companies That Compete in a Single Industry12
Implementing Strategy in Companies That Compete in a Single Industry

2. Overview Strategy implementation
How a company should create, use, and combine organizational structure, control systems, and culture to pursue strategies that lead to a competitive advantage and superior performance

3. Implementing Strategy

4. Six Organization Shapers
Buyer Power
Buyers are gaining power and learning how to use it
Variety and solutions
Customers do not want bundle of products and services
They want them integrated into a solution
The Internet
The web site becomes a single face to the customer forcing functions to integrate

5. Six Organization Shapers
Multiple dimensions (of organizations)
Functions, products, geographies (old)
Segments, solutions, channels, processes (new)
Change
Rapid change requires management to re-learn and re-decide
To make more decisions more frequently
It requires more decentralized management and networks of decision makers

6. Six Organization Shapers
More variety, more comprehensive solutions – FASTER!
Shorter lead times, shorter cycle times
Speed is a force for decentralization
Can you think of examples?

7. Competitive Advantage
An organization design that facilitates
Variety,
Change,
Speed, and
Integration
is a source of competitive advantage It is difficult to execute but also difficult to copy

8. Tradeoffs Hype Teamwork, reengineering, virtual organizations etc.
There has been an overselling of credible ideas
Teamwork, reengineering, virtual organizations etc.
Any organizational design requires tradeoffs and will have positives and negatives

9. The Star Model
Strategy
People
Structure
Rewards
Processes

10. The Star Model Strategy Is the company’s formula for winning!
Goals, mission, objectives, values
Delineates products, markets, value proposition, competitive advantage
First part of the model to be addressed
Establishes criteria for choosing among different organizational forms
Drives resource allocation

11. Structure Specialization Shape Distribution of power
Type and number of job specialties
Shape
Span of control – flat vs. tall structures
Distribution of power
Centralization vs. decentralization
Departmentalization
Function, product, process, market or geography

12. Processes Vertical processes Horizontal (or lateral) processes
Business planning, budgeting, resource allocation decisions
Horizontal (or lateral) processes
Designed around the work flow
Cross functional
Value chain emphasis

13. Rewards Purpose Some Issues
To align the goals of the employees with the goals of the organization
Some Issues
Individual vs. Team
Function vs. Cross function (‘citizenship’)
Monetary vs. Non-monetary rewards
Rewards must be congruent with other parts of organization design

14. People Human resources Must also develop organizational capabilities
Recruiting, selection, rotation, training, development
Creating the skills and mind-sets needed to implement the strategy (culture)
Must also develop organizational capabilities
Flexibility, ability to work with others
Knowledge management

15. Implications Structure is only one facet of design Congruence
Structure usually overemphasized
status and power issues
Processes, rewards, and people are becoming more important
Congruence
Different strategies lead to different organizations!
All policies must be aligned and in harmony

16. Matching strategy and structure
Departmentalization
Departments arise when org size>24
Consider:
Functional
Product
Market
Geographical
Process
Hybrid
What are the (dis)advantages of each?

17. Five Types of Lateral Processes
Voluntary (or informal)
Rotation, interdept events, co-location, mirror image depts, consistent reward system
E-coordination
Formal group
Full-time integrators
Project managers, brand managers, process managers etc.
Matrix organization
Level of coordination grows but so does cost and difficulty of implementation

18. Types of Strategic Control System
Personal control
Face-to-face interaction
Output control
Performance goals for each division, department, and employee
Behavior control
Rules and procedures to direction actions or behaviors of divisions, functions, and individuals
Operating budget
Standardization

19. Strategic Reward Systems
Based on strategy managers must decide which behaviors to reward
A control system measures those behaviors and links the reward structure to them

20. Organizational Culture
Culture and strategic leadership
Traits of strong and adaptive corporate cultures
Bias for action
Sticking with what the organization does best
Motivating employees to do their best
Anything else?
Is culture a control mechanism?

21. How Organizational Design Increases Profitability

22. Restructuring and Reengineering
Restructuring involves
Streamlining hierarchy of authority and reducing number of levels
Downsizing the workforce to reduce costs
Reasons
Change in the business environment
Excess capacity
Organization grew too tall and inflexible; bureaucratic costs
To improve competitive advantage and stay on top

23. Restructuring and Reengineering (cont’d)
Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements
Focuses not on functions, but on processes (which cut across functions)

24. Exercises
Wal-Mart Control System
Soft Drink Restructure