Building an Organization Capable of Good Strategy Execution
Building an Organization Capable of Good Strategy Execution
“A second-rate strategy perfectly executed will beat a first-rate strategy poorly executed every time. ” Richard M. Kovacevich
Crafting vs. Executing Strategy Crafting the Strategy u Primarily a market-driven activity u Successful strategy making depends on è Business vision è Perceptive analysis of market conditions and company capabilities è Attracting and pleasing customers è Outcompeting rivals è Using company capabilities to forge a competitive advantage Executing the Strategy u Primarily an operationsdriven activity u Successful strategy execution depends on è Doing a good job of working through others è Good organizationbuilding è Building competitive capabilities è Creating a strategysupportive culture è Getting things done and delivering good results
Implementing a New Strategy Requires Adept Leadership u Implementing a new strategy takes adept leadership to è Convincingly communicate reasons for the new strategy è Overcome è Secure è Build è Get pockets of doubt commitment of concerned parties consensus and enthusiasm all implementation pieces in place and coordinated
Goals of the Strategy Implementing-Executing Process u Unite total organization behind strategy u See that activities are done in a manner that is conducive to first-rate strategy execution u Generate commitment so an enthusiastic crusade emerges to carry out strategy u Fit how organization conducts its operations to strategy requirements
Characteristics of the Strategy Implementation Process u Every manager has an active role u No proven “formula” for implementing particular types of strategies u There are guidelines, but no absolute rules and “must do it this way” rules u Many ways to proceed that are capable of working u Cuts across many aspects of “how to manage”
BUILDING A CAPABLE ORGANIZATION — WHAT IS INVOLVED?
Fig. 11. 2: The Three Components of Building an Organization Capable of Proficient Strategy Execution
Recruiting and Retaining Talented Employees: Implementation Issues u The quality of a company’s people is an essential ingredient of successful strategy execution u Biggest challenge facing companies è How to recruit and retain the best and brightest talent with strong skill sets and management potential u Intellectual capital, not tangible assets, is increasingly being viewed as the most important investment è Talented people are a prime source of competitive advantage
Building Core Competencies and Competitive Capabilities u Crafting the strategy involves è Identifying the desired competencies and capabilities to build into the strategy to help achieve a competitive advantage u Good strategy execution requires è Putting desired competencies and capabilities in place, è Upgrading è Modifying them as needed, and them as market conditions evolve
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!
Step 1 in Developing Competencies u Develop è Select ability to do something people with relevant skills/experience è Broaden è Mold or expand individual abilities as needed efforts and work products of individuals into a cooperative effort to create organizational ability
Step 2 in Developing Competencies u As experience builds and company learns how to perform the activity consistently well and at acceptable cost, the ability evolves into a competence or capability u Typically, a capability or competence emerges from establishing and nurturing collaborative relationships between è Individuals and groups in different departments and/or è A company and its external allies
Step 3 in Developing Competencies u If company masters the activity, performing it better than rivals, the “capability” or “competence” becomes a è Distinctive competence and è Holds potential for competitive advantage This is the optimal outcome of the process of building capabilities-competencies!
Strategic Role of Employee Training u Training plays a critical role in implementation when a firm shifts to a strategy requiring different è Skills or core competences è Competitive capabilities è Managerial approaches è Operating methods u Types of training approaches è Internal “universities” è Orientation sessions for new employees è Tuition reimbursement programs è Online training courses
Current Organizational Trends u Numerous companies have completed the task of remodeling traditional, hierarchical structures built on è Functional specialization and è Centralized authority u Corporate downsizing movement in the late 1980 s and early 1990 s was aimed at è Recasting authoritarian, pyramidal organizational structures è Into flatter, decentralized structures
Drawbacks of Centralized Authoritarian Structures u Centralized or authoritarian structures have often turned out to be a liability where è Customer preferences shift from standardized to customized products è Product life-cycles grow shorter è Flexible manufacturing replaces mass production è Customers è Pace want to be treated as individuals of technological change accelerates è Market conditions are fluid
Organizational Structures of the Future: Overall Themes u Revolutionary changes in how work is organized have been triggered by è New strategic priorities è Rapidly shifting competitive conditions u Tools of organizational design include è Empowered managers and workers è Reengineered work processes è Self-directed work teams è Rapid incorporation of Internet technology è Networking with outsiders The future structure will be. . .
Characteristics of Organizations of the Future u Extensive use of Internet technology and e-commerce business practices u Fewer barriers between è Different vertical ranks è Functions and disciplines è Units in different geographic locations è Company and its suppliers, distributors, strategic allies, and customers u Capacity Change & Learning for change and rapid learning u Collaborative efforts among people in different functions and geographic locations
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