STRATEGY IMPLEMENTATION

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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

issues1

Figure 11.1: The Eight Components of the Strategy Execution ProcessBuilding a Capable Organization Exercising Strategic Leadership Allocating Resources Establishing StrategySupportive Policies

Strategy Implementers Action Agenda

Instituting Best Practices for Continuous Improvement

Shaping Corporate Culture to Fit Strategy

Tying Rewards to Achievement of Key Strategic Targets

Installing Support Systems

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Figure 11.2: The Three Components of Building a Capable OrganizationA Company with the Competencies and Capabilities Needed for Proficient Strategy Execution

Staffing the Organization

Building Core Competencies Competitive Capabilities

and

Matching the Organization Structure to Strategy3

ALLOCATING RESOURCES TO SUPPORT STRATEGY IMPLEMENTATION

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Allocating Resources to Support 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 STRATEGYSTRATEGYSUPPORTIVE POLICIES AND PROCEDURES

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Fig. 12.1: How Prescribed Policies and Procedures Facilitate Strategy Execution

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INSTITUTING BEST PRACTICES AND CONTINUOUS IMPROVEMENT

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Instituting Best Practices and Continuous Improvement Searching out and adopting best practices

is integral to effective implementation Benchmarking is the backbone of the

process of identifying, studying, and implementing best practices Key tools to promote continuous improvement

Business process reengineering TQM Six Sigma quality control9

INSTALLING STRATEGYSTRATEGYSUPPORTIVE INFORMATION AND OPERATING SYSTEMS10

Installing Strategy-Supportive Information and Operating Systems Good information and operating systems are

essential 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 ebusiness systems, CRM, SCM, etc Mobilizing information and creating systems to use knowledge effectively can yield Competitive advantage11

TYING REWARDS AND INCENTIVES TO GOOD STRATEGY IMPLEMENTATION

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Exercising Adequate Control Over Empowered Employees 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 limits Track and review daily operating performance Peer-based control13

Gaining Commitment: Components of an Effective Reward SystemMonetary Incentives Base pay increases Performance bonuses Profit sharing plans Stock options Retirement packages Piecework incentives

NonNon-monetary Incentives Praise Constructive criticism Special recognition More, or less, job security Stimulating assignments More, or less, autonomy Rapid promotion

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Linking the Reward System to Performance Outcomes 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 dont Tie incentive compensation to relevant outcomes - both strategic and financial

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BUILDING A STRATEGYSTRATEGYSUPPORTIVE CORPORATE 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 Companys values Business practices Traditions17

Identifying the Key Features of Corporate CultureA companys 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 stakeholders18

Why is Culture Important? Matching culture to strategy will improve

performanceA 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 strategyA culture where attitudes and behaviors impede good strategy implementation is a huge obstacle to overcome Provides another means to control, coordinate, and

motivate employees19

Grounding the Culture in Core Values and Ethics 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 companys business Value statements serve as a cornerstone for culture-building Can be used to control employees to behave in the right way20