Building An Organization Capable of Good Strategy Execution

11
Building an
Chapter Title
Organization Capable
of Good Strategy
Execution
Screen graphics created by:

16/e PPT Jana F. Kuzmicki, Ph.D.
Troy University-Florida Region
McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Crafting vs. Executing Strategy
Crafting the Strategy Executing the Strategy

 Primarily a market-driven  Primarily an operations-
activity driven activity
 Successful strategy making  Successful strategy
depends on execution depends on
 Business vision  Doing a good job of
 Perceptive analysis of working through others
market conditions and  Good organization-
company capabilities building
 Attracting and pleasing  Building competitive
customers capabilities
 Outcompeting rivals  Creating a strategy-
 Using company supportive culture
capabilities to forge a  Getting things done and
competitive advantage delivering good results
11-2
Executing the Strategy
 Anaction-oriented, make-things happen task

involving management’s ability to
Implementation
 Direct organizational change involves . . .
 Achieve continuous improvement in
operations 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
11-3
Implementing a New Strategy
Requires Adept Leadership
 Implementing a new strategy
takes adept leadership to
 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

11-4
Goals of the Strategy
Implementing-Executing Process
 Unite total organization behind strategy
 See that activities are done in a manner that is

conducive to first-rate strategy execution
 Generate commitment so an enthusiastic

crusade emerges to carry out strategy
 Fithow organization conducts its

operations to strategy requirements
11-5
Fig. 11.1: The Eight Components of the Strategy Execution Process
11-6
What Top Executives Have to Do in
Leading the Implementation Process
 Communicate the case for change
 Build consensus on how to proceed
 Arouse enthusiasm for the strategy to turn
implementation process into a companywide crusade
 Empower subordinates to keep process moving
 Establish measures of progress and deadlines
 Reward those who achieve
implementation milestones
 Direct resources to the right places
 Personally lead strategic change process
and the drive for operating excellence
11-7
Fig. 11.2: The Three Components of Building an
Organization Capable of Proficient Strategy Execution
11-8
Putting Together a
Strong Management Team
 Assembling a capable management team is a
cornerstone of the organization-building task
 Find the right people to fill each slot

 Existing management team
may be suitable
 Core executive group

may need strengthening
 Promote from within
 Bring in skilled outsiders
11-9
Building Core Competencies
and Competitive Capabilities
 Crafting the strategy involves
 Identifying the desired competencies and
capabilities to build into the strategy to help
achieve a competitive advantage
 Good strategy execution requires

 Putting desired competencies and capabilities in
place,
 Upgrading them as needed, and
 Modifying them as market
conditions evolve
11-10
Three-Stage Process of Developing
Competencies and Capabilities
1. Develop ability to do something
2. As experience builds,
ability can translate into a
competence or capability
3. If ability continues to be polished and

refined, it can become a distinctive
competence, providing a path to
competitive advantage!
11-11
Execution-Related Aspects
of 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 strategy
execution!
 Each firm’s structure is idiosyncratic, reflecting
 Prior arrangements and internal politics
 Executive judgments and preferences about how to
arrange reporting relationships
 How best to integrate and coordinate work effort of
different work groups and departments
CEO
Vice President Vice President Vice President

11-12
Fig. 11.3: Structuring the Work Effort
to Promote Successful Strategy Execution
11-13
Step 1: Decide Which Value Chain Activities to
Perform Internally and Which to Outsource
 Involvesdeciding which activities are
essential to strategic success
 Most strategies entail certain crucial business processes
or activities that must be performed exceedingly well or
in closely coordinated fashion if the strategy is
to be executed with real proficiency
 These processes/activities usually
Critical
need to be performed internally activities
 Other activities, such as routine
administrative housekeeping and
some support functions, may be
candidates for outsourcing
11-14
Step 2: Make Strategy-Critical
Activities the Main Building Blocks
 Assign managers of strategy-critical activities a
visible, influential position
 Avoid fragmenting responsibility for strategy-critical

activities across many departments
Assign
 Providecoordinating linkages managers
key roles
between related work groups Support

Primary
activities functions
 Meld into a valuable

Strategic Coordi- Valuable
competitive capability relation- nation capability
ships
11-15
Step 3: Determine How Much
Authority to Delegate to Whom
 In a centralized structure
 Top managers retain authority
for most decisions
 In a decentralized structure
 Managers and employees are
empowered to make decisions
 Trend in most companies

 Shift from authoritarian to decentralized
structures stressing empowerment
11-16
11-17
Step 4: Provide for Internal
Cross-Unit Coordination
 Classicmethod of coordinating activities – Have
related units report to single manager
 Upper-level managers have clout to
coordinate efforts of their units
 Supportactivities should be
woven into structure to
 Maximize performance of primary activities
 Contain costs of support activities
 Formal
reporting relationships often need to be
supplemented to facilitate coordination
11-18
Step 5: Provide for
Collaboration With Outsiders
 Need multiple ties at multiple levels to ensure
 Communication
 Coordination and control
 Findways to produce collaborative

efforts to enhance firm’s capabilities
and resource strengths
 Whilecollaborative relationships present
opportunities, nothing valuable is realized until
the relationship develops into an engine for
better organizational performance
11-19
Current Organizational Trends
 Numerous companies have completed the task of

remodeling traditional, hierarchical structures built
on
 Functional specialization and
 Centralized authority
 Corporatedownsizing movement in the
late 1980s and early 1990s was aimed at
 Recasting authoritarian, pyramidal
organizational structures
 Into flatter, decentralized structures
11-20
Organizational Structures of
the Future: Overall Themes
 Revolutionary changes in how work is organized
have been triggered by
 New strategic priorities
 Rapidly shifting competitive conditions
 Tools of organizational design include
 Empowered managers and workers The future
structure
 Reengineered work processes will be . . .
 Self-directed work teams
 Rapid incorporation of Internet
technology
 Networking with outsiders
11-21
Characteristics of
Organizations of the Future
 Extensiveuse of Internet technology
and e-commerce business practices
 Fewer barriers between
 Different vertical ranks Change &
Learning
 Functions and disciplines
 Units in different geographic locations
 Company and its suppliers, distributors,
strategic allies, and customers
 Capacity for change and rapid learning
 Collaborative efforts among people in different
functions and geographic locations
11-22

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11

Screen graphics created by:

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Crafting the Strategy Executing the Strategy

 Anaction-oriented, make-things happen task

 Overcome pockets of doubt

 Secure commitment of concerned parties

 Build consensus and enthusiasm

 Get all implementation pieces in place and coordinated

 Unite total organization behind strategy

 See that activities are done in a manner that is

 Generate commitment so an enthusiastic

 Fithow organization conducts its

 Find the right people to fill each slot

 Core executive group

 Bring in skilled outsiders

 Good strategy execution requires

3. If ability continues to be polished and

Vice President Vice President Vice President

 Avoid fragmenting responsibility for strategy-critical

between related work groups Support

 Meld into a valuable

 Trend in most companies

 Findways to produce collaborative

 Numerous companies have completed the task of

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