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11-1

Building an Organization Capable ofGood Strategy Execution

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11-2

Crafting the Strategy Primarily a market-driven

activity

Successful strategy makingdepends on

Business visionPerceptive analysis of

market conditions andcompany capabilities

Attracting and pleasingcustomers

Outcompeting rivals

Using companycapabilities to forge acompetitive advantage

Executing the Strategy Primarily an operations-

drivenactivity

Successful strategyexecution depends on

Doing a good job ofworking through others

Good organization-building

Building competitivecapabilities

Creating a strategy-supportive culture

Getting things done anddelivering good results

Crafting vs. Executing Strategy

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11-3

An action-oriented, make-things happen taskinvolving managements ability to

Direct organizational change

Achieve continuous improvement inoperations and business processes

Move toward operating excellence

Create and nurture a

strategy-supportive culture Consistently meet or beat performance targets

Tougher and more time-consuming than crafting

strategy

Implementationinvolves . . .

Executing the Strategy

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11-4

Implementing a New StrategyRequires Adept Leadership

Implementinga new strategytakes adept leadershipto

Convincingly communicate

reasons for the new strategy

Overcome pockets of doubt

Secure commitment of concerned parties

Build consensus and enthusiasm

Get all implementation pieces in place and coordinated

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11-5

Goals of the StrategyImplementing-Executing Process

Unitetotal organizationbehind strategy

See that activitiesare donein a manner that is

conducive to first-rate strategy execution

Generate commitmentso an enthusiastic

crusade emerges to carry out strategy

Fithow organization conducts itsoperationsto strategy requirements

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11-6

Fig. 11.1: The Eight Components of the Strategy Execution Process

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Communicatethe case for change Build consensuson how to proceed

Arouse enthusiasmfor the strategy to turnimplementation process into a companywide crusade

Empowersubordinates to keep process moving

Establish measuresof progress and deadlines

Rewardthose who achieve

implementation milestones

Direct resourcesto the right places

Personally leadstrategic change process

and the drive for operating excellence

What Top Executives Have to Do inLeading the Implementation Process

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Fig. 11.2: The Three Components of Building anOrganization Capable of Proficient Strategy Execution

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Assembling a capable management team is acornerstone of the organization-building task

Find the right people to fill each slot

Existing management teammay be suitable

Core executive group

may need strengthening

Promote from within

Bring in skilled outsiders

Putting Together aStrong Management Team

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Building Core Competenciesand Competitive Capabilities

Craftingthe strategyinvolves

Identifyingthe desired competenciesandcapabilitiesto build into the strategy to helpachieve a competitive advantage

Good strategy executionrequires

Puttingdesired competenciesand capabilities inplace,

Upgradingthem as needed, and

Modifyingthem as marketconditions evolve

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1. Develop abilityto do something

2. As experience builds,

abilitycan translateinto acompetence or capability

3. If abilitycontinues to be polished andrefined, it can become a distinctivecompetence, providing a path to

competitive advantage!

Three-Stage Process of DevelopingCompetencies and Capabilities

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Execution-Related Aspectsof Organizing Work Efforts

Few hard and fast rules for organizing One Big Rule: Role and purpose of organization

structure is to support and facilitate good strategyexecution!

Each firms structure is idiosyncratic, reflecting Prior arrangements and internal politics

Executive judgments and preferences about how toarrange reporting relationships

How best to integrate and coordinate work effort ofdifferent work groups and departments

Vice President Vice President Vice President

CEO

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Fig. 11.3: Structuring the Work Effortto Promote Successful Strategy Execution

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Step 1: Decide Which Value Chain Activities toPerform Internally and Which to Outsource

Involves decidingwhich activitiesareessentialto strategic success

Most strategies entail certain crucial business processesor activities that must be performed exceedingly well orin closely coordinated fashion if the strategy isto be executed with real proficiency

These processes/activities usuallyneed to be performed internally

Other activities, such as routineadministrative housekeeping andsome support functions, may becandidates for outsourcing

Critical

activities

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Assignmanagers of strategy-critical activities avisible, influential position

Avoidfragmenting responsibility for strategy-criticalactivities across many departments

Providecoordinating linkages

between related work groups

Meld into a valuablecompetitive capability

Assignmanagerskey roles

Primaryactivities

Strategicrelation-

ships

Coordi-nation

Valuablecapability

Supportfunctions

Step 2: Make Strategy-CriticalActivities the Main Building Blocks

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In a centralized structure

Top managers retain authorityfor most decisions

In a decentralized structure

Managers and employees areempowered to make decisions

Trendin most companies

Shift from authoritarian to decentralizedstructures stressing empowerment

Step 3: Determine How MuchAuthority to Delegate to Whom

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Classic methodof coordinating activities Haverelated units reportto single manager

Upper-level managers have clout tocoordinate efforts of their units

Support activitiesshould bewoven into structureto

Maximize performance of primary activities

Contain costs of support activities

Formal reporting relationshipsoften need to besupplementedto facilitate coordination

Step 4: Provide for InternalCross-Unit Coordination

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Step 5: Provide forCollaboration With Outsiders

Need multiple tiesat multiple levelsto ensure

Communication

Coordination and control

Find ways to produce collaborativeeffortsto enhancefirms capabilitiesand resource strengths

While collaborative relationships presentopportunities, nothing valuable is realized untilthe relationship develops into an engine for

better organizational performance

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Current Organizational Trends

Numerous companies have completed the task ofremodeling traditional, hierarchical structures builton

Functional specialization and Centralized authority

Corporate downsizing movement in the

late 1980s and early 1990s was aimed at Recasting authoritarian, pyramidal

organizational structures

Into flatter, decentralized structures

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Organizational Structures ofthe Future: Overall Themes

Revolutionary changesin how workis organizedhave been triggered by

New strategic priorities

Rapidly shifting competitive conditions

Toolsof organizational designinclude

Empowered managers and workers

Reengineered work processes

Self-directed work teams

Rapid incorporation of Internettechnology

Networking with outsiders

The future

structure

will be . . .

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Characteristics ofOrganizations of the Future

Extensive useof Internet technologyand e-commercebusiness practices

Fewer barriersbetween

Different vertical ranks Functions and disciplines

Units in different geographic locations

Company and its suppliers, distributors,

strategic allies, and customers

Capacityfor changeand rapid learning

Collaborative effortsamong people in different

functions and geographic locations

Change &Learning