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Strategy Implementation
What must we do to put the strategy in place, execute it proficiently, and produce good results?
Creating FITS between strategy and external environment and creating FITS inside the organization
Control, coordination, and motivation issues
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Building aCapableOrganization
Allocating Resources
Establishing Strategy-Supportive Policies
Instituting BestPractices forContinuousImprovement
Installing SupportSystemsTying Rewards
to Achievementof Key Strategic Targets
Exercising StrategicLeadership
Shaping CorporateCulture to Fit Strategy
Strategy
Implementer’s
Action Agenda
Figure 11.1: The Eight Componentsof the Strategy Execution Process
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Figure 11.2: The Three Components of Building a Capable Organization
Staffing the Organization
A Company with the
Competencies and Capabilities
Needed for Proficient Strategy
Execution
Building Core Competencies and Competitive Capabilities
Matching the OrganizationStructure to Strategy
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ALLOCATING ALLOCATING
RESOURCES TO RESOURCES TO
SUPPORT STRATEGY SUPPORT STRATEGY
IMPLEMENTATIONIMPLEMENTATION
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Allocating Resources toSupport Strategy Execution
Resource allocation should fit strategy Changing strategy requires changes to resource
allocation process Shifting resources — downsizing some areas,
upsizing others, getting rid of activities no longer needed, and funding new strategically critical activities
Financial and other resources (physical and human assets)
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CREATING STRATEGY-CREATING STRATEGY-
SUPPORTIVE POLICIES AND SUPPORTIVE POLICIES AND
PROCEDURESPROCEDURES
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Fig. 12.1: How Prescribed Policies andProcedures Facilitate Strategy Execution
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INSTITUTING BEST PRACTICES INSTITUTING BEST PRACTICES
AND CONTINUOUS IMPROVEMENTAND CONTINUOUS IMPROVEMENT
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Instituting Best Practicesand Continuous Improvement
Searching out and adopting best practicesis integral to effective implementation
Benchmarking is the backbone of theprocess of identifying, studying, andimplementing best practices
Key tools to promote continuous improvement
Business process reengineering
TQM
Six Sigma quality control
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INSTALLING STRATEGY-INSTALLING STRATEGY-
SUPPORTIVE SUPPORTIVE
INFORMATION AND INFORMATION AND
OPERATING SYSTEMSOPERATING SYSTEMS
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Installing Strategy-SupportiveInformation and Operating Systems
Good information and operating systems areessential for first-rate strategy execution
Support systems can relate to all value-chain activities
Includes all type of Computer Based Information Systems (CBISs): MIS, DBMS, TPS, DSS, E-commerce and e-
business systems, CRM, SCM, etc… Mobilizing information and creating systems
to use knowledge effectively can yield Competitive advantage
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TYING REWARDS AND TYING REWARDS AND
INCENTIVES TO GOOD INCENTIVES TO GOOD
STRATEGY IMPLEMENTATIONSTRATEGY IMPLEMENTATION
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Challenge – Behavioral Control How to ensure actions of employees
stay within acceptable bounds Control approaches
Managerial control Establish boundaries on what not to
do, allowing freedom to act with limitsTrack and review daily operating
performance Peer-based control
Exercising Adequate ControlOver Empowered Employees
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Monetary IncentivesMonetary Incentives
Base pay increases
Performance bonuses
Profit sharing plans
Stock options
Retirement packages
Piecework incentives
Non-monetary IncentivesNon-monetary Incentives
Praise
Constructive criticism
Special recognition
More, or less, job security
Stimulating assignments
More, or less, autonomy
Rapid promotion
Gaining Commitment: Componentsof an Effective Reward System
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Rewards are the single most powerful tool to win the commitment of company personnel to effective strategy implementation
Objectives in designing the reward system Generously reward those achieving objectives Deny rewards to those who don’t Tie incentive compensation to relevant
outcomes - both strategic and financial
Linking the Reward Systemto Performance Outcomes
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BUILDING A STRATEGY-BUILDING A STRATEGY-
SUPPORTIVE CORPORATE SUPPORTIVE CORPORATE
CULTURE CULTURE
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Defining Characteristics of Corporate Culture
Core values, beliefs, and business principles Ethical standards Operating practices and behaviors defining
“how we do things around here” Approach to people management “Chemistry” and “personality” permeating
work environment Often told stories illustrating
Company’s values Business practices Traditions
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A company’s culture is manifested in . . . Values, business principles, and ethical standards
preached and practiced by management Approaches to people management and problem solving Official policies and procedures Spirit and character permeating work environment Interactions and relationships among managers and
employees Peer pressures that exist to display core values Its revered traditions and often repeated stories Its relationships with external stakeholders
Identifying the Key Featuresof Corporate Culture
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Why is Culture Important?
Matching culture to strategy will improve performance A culture that promotes attitudes and behaviors that are
well-suited to strategy is a valuable ally in the strategy implementation process
Can hinder strategy implementation and performance if not compatible with strategy A culture where attitudes and behaviors impede good
strategy implementation is a huge obstacle to overcome
Provides another means to control, coordinate, and motivate employees
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A culture based on ethical principles is vital to long-term strategic success
Ethics programs help make ethical conduct a way of life
Executives must provide genuine support of personnel displaying ethical standards in conducting the company’s business
Value statements serve as a cornerstone for culture-building
Can be used to control employees – to behave in the “right” way
Grounding the Culture inCore Values and Ethics