Strategic Implementation Chapter 10

Chapter 10: Strategy Implementation: Organizing and Structure

• Learning Objectives (1 of 2):

  • Describe the major issues impacting successful strategy implementation.
  • Explain developing programs, budgets, and procedures for implementing strategic change.
  • List the stages of corporate development and the associated structures.

• Learning Objectives (2 of 2):

  • Explain how matrix, network, and modular structures are used to implement strategy.
  • Discuss the issues of centralization versus decentralization in structuring organizations.

Strategy Implementation (1 of 2)

• Strategy implementation is the sum total of all activities and choices needed to execute a strategic plan.

Strategy Implementation (2 of 2)

• Key questions to ask when starting this process include:
  • Who will carry out the strategic plan?
  • How will company operations be aligned with the new direction?
  • How will everyone work together effectively?

Parts of Strategy Implementation (1 of 2)

• Setting Objectives: Define clear, specific, and measurable goals aligning with the strategic plan.
• Allocating Resources: Distribute financial, human, and technological resources for effective strategy execution.
• Structuring the Organization: Design the organizational structure, including roles, responsibilities, and hierarchies, to support strategy execution.
• Developing Operational Plans: Translate strategic objectives into detailed short-term plans specifying tasks, personnel, and deadlines.

Parts of Strategy Implementation (2 of 2)

• Establishing a Performance Management System: Implement a system to monitor, measure, and evaluate performance against strategic objectives for individuals, teams, and the organization as a whole.
• Building a Supportive Culture: Foster a corporate culture that supports the strategic plan through leadership, communication, and alignment of incentives/rewards.
• Managing Change: Effectively handle changes in processes, systems, and culture needed to implement the strategy, including overcoming resistance and ensuring stakeholder buy-in.
• Leadership and Direction: Provide leadership to guide, motivate, inspire employees to achieve strategic objectives, including clear communication of the vision and strategy.

Ten Common Strategy Implementation Problems (1 of 2)

• Problems can include:
  • Taking more time than planned
  • Unanticipated major problems
  • Ineffective coordination
  • Competing activities/crises creating distractions
  • Employees with insufficient capabilities

Ten Common Strategy Implementation Problems (2 of 2)

• Additional problems can include:
  • Inadequate training for lower-level employees
  • Uncontrollable external environmental factors
  • Poor departmental leadership/direction
  • Key implementation tasks/activities poorly defined
  • Information system inadequately monitoring activities

Developing Programs, Budgets, and Procedures

• Program: A collection of tactics, where tactics are individual actions taken to accomplish a plan.
• Tactically-oriented programs make strategies more action-oriented.

Timing Tactics: When to Compete (1 of 2)

• Timing tactic: Deals with when companies implement a strategy.
• First mover: First company to manufacture and sell a new product/service.

Timing Tactics: When to Compete (2 of 2)

• Late movers: May imitate competitors to implement their strategies only after a certain standard is set or when a market is established.
• Late movers are likely to avoid errors and challenges faced by first movers.

Market Location Tactics: Where to Compete

• Market location tactic: Deals with where a company implements a strategy.
• Offensive tactic: Usually implemented in an established competitor's market territory.
• Defensive tactic: Usually takes place in the firm's current market position as defense against a competitor or rival.

Offensive Tactics

• Offensive tactics are strategic maneuvers designed to seize market share or gain an advantage over competitors.
  • Frontal assault
  • Flanking maneuver
  • Bypass attack
  • Encirclement
  • Guerilla warfare

Defensive Tactics

• Defensive Tactics: Designed to protect current market position or minimize the impact of a competitor's actions.
  • Raising structural barriers
  • Increasing expected retaliation
  • Lowering the inducement for attack

Budgets and Procedures

• Budgeting: The last real check a corporation has on the practicality of its chosen strategy.
• Procedures: Detail the activities needed to complete programs. Standard operating procedures (SOPs) provide uniform processes.

Achieving Synergy

• Synergy: For a divisional corporation, the return on investment is greater than what the return would be if each division were an independent business.

Six Forms of Synergy

• Shared know-how
• Coordinated strategies
• Shared tangible resources
• Economies of scale or scope
• Pooled negotiating power
• New business creation

Structure Follows Strategy

• Corporate strategy changes cause organizational structures to shift.
• The five stages of Corporate development are:
  • New strategy is created
  • New administrative problems emerge
  • Economic performance declines
  • New structure to support implementation
  • Economic performance rises

Stages of Corporate Development

• Simple Structure: This structure is flexible and dynamic
• Functional Structure: Entrepreneur is replaced by a team of managers when the company grows
• Divisional Structure: Management of diverse product lines/multiple industries, decentralized decision-making is seen in this structure
• Beyond SBU’s: The structure may be a matrix or network structure

Blocks to Changing Stages

• Internal blocks: Lack of resources, lack of ability, top management unwillingness to delegate.
• External blocks: Economic conditions, labor shortages, & lack of market growth

Organizational Life Cycle

• A cycle through the stages of birth, growth, maturity, decline, and death of an organization.

Flexible Types of Organizational Structures (1 of 4)

• Matrix structure: Combines functional and product forms simultaneously at the same level in an organization.

Flexible Types of Organizational Structures (2 of 4)

• Conditions for Matrix Structures:
  • Ideas need to be cross-fertilized
  • Resources are scarce
  • Decision-making and information-processing abilities need improvement

Flexible Types of Organizational Structures (3 of 4)

• Three distinct phases of matrix structure development:
  • Temporary cross-functional task forces
  • Product/brand management
  • Mature matrix

Flexible Types of Organizational Structures (4 of 4)

• Network Structure: Virtual elimination of in-house business functions.
• Virtual organization: Composed of project groups or collaborations linked by electronic networks.

Cellular/Modular Organization

• A structure composed of interacting cells which can operate independently but work together to accomplish tasks more effectively.
• This structure is seen often in organizations that focus heavily on rapid product/service innovation.

Reengineering and Strategy Implementation

• Reengineering: Radical redesign of business processes to improve cost, service, or time. Often used for turnaround strategies.

Principles for Reengineering (1 of 2)

• Organize around outcomes, not tasks.
• Have those who use the output of a process perform the process.
• Integrate information processing into the process.
• Treat geographically dispersed resources as centralized.

Principles for Reengineering (2 of 2)

• Link parallel activities instead of integrating their outcomes.
• Put the control point where the work is performed.
• Record information once at the source.

Six Sigma

• Six Sigma: Analytical method for achieving perfect results on a production line by focusing on reducing product variance to improve quality and efficiency.
• Lean Six Sigma: Includes removing unnecessary steps in any process and fixing those which remain

Process of Six Sigma

• Identify processes with sub-optimal results
• Measure current process performance
• Analyze to identify errors
• Improve the process to eliminate errors
• Establish controls to prevent future defects

Designing Jobs to Implement Strategy (1 of 2)

• Job design: the study of individual tasks to make them relevant to the company and employees.
• Job design techniques:
  • Job enlargement: Combining tasks to give a worker more similar duties
  • Job rotation: Moving workers through several jobs to increase variety

Designing Jobs to Implement Strategy (2 of 2)

• Job characteristics: Using task characteristics to improve employee motivation.
• Job enrichment: Altering jobs to give the worker more autonomy and control over activities.

Centralization versus Decentralization

• Product group structure: Enables managing similar products globally, centralizing decision-making.
• Geographic area structure: Allows tailoring products for different regional differences, for enhanced regional coordination.