1. MODULE 10 IMPLEMENTING STRATEGY :
BUDJETS, POLICIES, BEST PRACTICES, SUPPORT SYSTEMS, AND REWARDS

2. MODULE OUTLINE Linking Budgets to Strategy
Crafting Strategy-Supportive Policies &
Procedures
Instituting Best Practices & a
Commitment to Continuous Improvement
Installing Support Systems
Designing Strategy-Supportive Reward
Systems

3. LINKING THE BUDGET TO STRATEGY
Strategy implementers need to
See that strategy-critical units have enough resources
Screen requests for new capital projects & bigger
operating budgets
Be willing to shift resources to support new strategic
priorities
Make persuasive case to superiors on what resources
are really needed

4. LINKING THE BUDGET TO STRATEGY
New strategies often call for significant budget reallocations
Down sizing some areas & upsizing others
Killing activities that make or break success
How Well allocations are linked to the needs of strategy can either
promote or impeded the implementation process!

5. HOW POLICIES & PROCEDURE AID STRATEGY IMPLEMENTATION
Provide top-down guidance regarding expected behaviors & performance
Help align actions & behavior with strategy
Help enforce consistency in performance of strategy – critical activities in geographically
scattered operating units
Serves as powerful lever for changing corporate culture to produce strong fit with a new strategy

6. CREATING STRATEGY-SUPPORTIVE POLICIES & PROCEDURES
Role of new policies in implementing strategy
Channel actions, behaviors, & decisions in directions to promotes strategy execution counteract tendencies of people to resist chosen strategy.
Too much policy can be as stifling as wrong policy or as chaotic as no policy
Sometimes, BEST POLICY is willingness to “ empower” employees
“ Empowerment “ is important when employee initiative is essential to good strategy execution.

7. INSTITIUTING BEST PRACTICES & CONTINUOUS IMPROVEMENT
Searching out & adopting “ best practices “ is integral to effective implementation
Benchmarking has spawned new approach to improving strategy execution
Reengineering
Continuous improvement programs
Total quality management- TQM

8. INSTITUTING BEST PRACTICE & CONTINUOS IMPROVEMENT
Quality improvement programs are tools for implementing strategies keyed to
Defect-free manufacture
Superior product quality service
Total customer satisfaction
Identifying & implementing best practices is a journey, not a
Destination; it’s an exercise in doing things in a world-class
manner!

9. WHAT IS TOTAL QUALITY MANAGEMRENT-TQM?
Creating a TOTAL QUALITY
CULTURE bent on
CONTINOUSLY IMPROVING
The performance of every task and
Value –chain activity!

10. IMPLEMENTING A CONTINIOUS IMPROVEMENT PHILOSOPHY
Instill enthusiasm & commitment to doing things right from top to bottom of forward each day : kaizen
Ignite employee efforts to be creative in improving performance of value-chain activities.
Preach there is no such thing as good enough & everyone must be involved
Reform the corporate culture

11. BEST PRACTICE PROGRAMS
Aim at
Improved efficiency
Reduced costs
Better product quality
Greater customer satisfaction
Involves benchmarking against companies regarded as
“ Best in industry “ or
“ Best in world “

12. REENGINEERING & TQM Reengineering vs. TQM programs
REENGINEERING seeks one-time quantum gains on order of 30 to 50% or more TQM seeks ongoing incremental improvement
Reengineering vs. TQM are not mutually exclusive
First, reengineering is used to produce a good basic design yielding dramatic improvements
Then, TQM is used to perfect process, gradually improving efficiency.

13. USING BEST PRACTICE PROGRAMS AS AN IMPLEMENTATION TOOL
Select indicators of successful strategy execution
Next,benchmark against best practice companies
Reengineer business processes
Then, build a TQ culture
Starts with management commitment
Install TQ-supportive employees to do the “ right things”
Provide employees with quick access to required information
Preach that performance can be improved

14. INSTALLING SUPPORT SYSTEMS
Strategy implementers must
Invest in creating support
Systems that promote
Successful strategy execution!

15. EXAMPLES: SUPPORT SYSTEMS
Computerized reservation system
Computerized parcel-tracking system &
leading –edge flight operations systems
Sophisticated maintenance support system

16. EXAMPLES: SUPPORT SYSTEMS
System to obtain early warning signs of
product problems & changing tastes
System to monitor sales, at 15inutes intervals, to suggest product mix changes & to improve customer response

17. STRATEGIC MANAGEMENT PRINCIPLE
Innovative, state-of-the-art
Support systems can be a basis
For competitive advantage if
They give a firm capabilities if
They give a firm capabilities that rivals can’t match!

18. FORMAL REPORTIN OFN STRATEGY-CRITICAL INFORMATION
Accurate & timely information is essential to guide action
Prompt feedback on implementation initiatives needed BEFFORE actions are fully completed monitoring early implementation actions serves two purposes
Quick detection of needed to adjust either strategy or its implementation
Assuring things move ahead as planned
Key strategic performance indicators must be tracked as often as practical

19. FORMAL REPORTING OF STRATEGY-CRITICAL INFORMATION
Information systems should cover 4 areas
Customer data
Operations data
Employee data
Financial performance data
Accurate, timely information allows
Strategists to monitor progress and take
Corrective actions promptly!

20. GAINING COMMITMENT TO CHOSEN STRATEGY
Motivational practices
Rewards & incentives inducing employees to make the strategy work promoting a results orientation
The strategy implementer’s challenges to design a
reward structure that motivates people to do the things
It takes to make the strategy work successfully!

21. DEVELOPING AN EFFECTIVE REWARD STRUCTURE INVOLVES
CREATIVE using full range of reward punishment mechanisms
Salary raises
Bonuses, stock options,& “ perks”
Promotions
Praise & recognition
Constructive criticism
peer pressure
More (or less) responsibility
Opportunity for personal satisfaction

22. MOTIVATING PEOPLE TO EXECUTE THE STRATEGY WELL
Support for good strategy execution involves
Inspiring & challenging employees to
do their best
Involving employees in decisions about how to perform their jobs
Making jobs interesting & satisfying

23. EXAMPLES: MOTIVATIONAL PRACTICES
Every employee, including the president, gets a weekly 10% bonus by coming to work on time each day that week
Employees meet regularly to hear inspirational speeches, sing company songs, & chant the corporate litany

24. EXAMPLE : MOTIVATIONAL PRACTICES
Hold inspirational get-together for
sales force organizations
Encourages competition among brand managers; system breeds people who love to compete and excel

25. POSITIVE OR NAGATIVE REWARS?
Elements of both are necessary
But, positive reinforcement should outweigh negative work environment

26. LINKING WORK ASSIGNMENTS TO PERFORMANCE TARGETS
Create RESULT-ORIENTED reward system
Define jobs in terms of RESULTS TO BE ACCOMPLISHWS
Stress “ achievement “
Track actual achievement vs. targeted performance
Use performance targets in strategic plan as basis for incentive compensation
Have SEVERAL PERFORMANCE measures

27. REWARDING PERFORMANCE
Objective
Provide ample rewards to people
Who achieve objectives
and
Deny rewards to those not
Achieving objectives!

28. REWARDING PERFORMANCE
Standards
“ Doing a good job” means achieving agreed-upon performance targets
“ No excuses “ standard must prevail
Cannot reward “ trying hard”

29. STRATEGIC MANAGEMENT PRINCIPLE
The strategy implementer’s standard for judging whether individuals and organizational units have done a good job must be whether the performance targets in the strategic plan were achieved!

30. GUIDELINES: DESIGNING AN EFFECTIVE REWARD SYSTEM
Performance payoff must be a major, not minor, piece of total compensation package
Incentive must be administered with scrupulous care & employee
System must be administered with scrupulous care & fairness
Incentives must be linked tightly to achieving only performance targets in strategic plan
Performance targets each person is expected to achieve must involve outcomes person can personally affect

31. WHY PERFORMANCE-REWARD LINK IS IMPORTANT
Reward structure is management’s most powerful implementation tool
Kinds of incentives offered signal desired behavior & performance
Rewards induce people to go all out to
Execute strategy effectively
Achieve objectives in strategic plan

32. MAKING PERFORMANCE-DRIVEN COMPENSATION WORK
Keys to implementing pay-for-performance
Make performance targets basis for designing incentive system
Ensure performance targets are clearly defined & every person/group is accountable for achieving them
Be fair & impartial in comparing actual performance against targets
Avoid skirting system to reward non-performers

33. MAKING PERFORMANCE-DRIVEN COMPENSATION WORK
Keys to implementing pay-for-performance
Explore causes of deviations to assess if they are due to
“ poor” individual performance or
Circumstances beyond individual’s control
Hold people accountable for carrying out their assigned part of strategic plan
Base rewards on caliber of each individual’s accomplishments