Eight Levers SI
Transcript of Eight Levers SI
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Building a Capable Organization:
The eight levers of StrategicImplementation
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Strategy Formulation Implementation Performance Cycle
According to Johnson (2005) 60% of the strategy isnever implemented.
Companies attribute this to fact that 95% of the
employees do not understand the companysstrategy.
Faulty strategy or Poor implementation or bothleads to a strategy performance gap.
Cues from current poor strategy executioninfluences the future strategy formulation leading toa vicious cycle.
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Reasons of poor Strategy implementation
Beer and Eisenstat identify six killers of Strategyimplementation:
1. Top-down or Laissez-Fair Senior Management Style
2. Unclear Strategy and conflicting priorities.
3. An Ineffective senior management team.
4. Poor vertical communication.
5. Poor coordination across functions, businesses orborders.
6. Inadequate down-the-line leadership skills anddevelopment
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Strategic Implementation as an ally
Critical Structural & Managerial levers are necessaryto build a capable organization.
The identification of these 8 critical levers allows
companies to identify their strong and weak pointsthat could impact implementation process.
Structural Levers: Constitute the configuration orframework in which the companies operate
effectively. Managerial levers: The managerial skills or
managerial tasks that arise in executing strategy.
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Structural levers
1. Actions: Who, what and when of cross functionalintegration.
2. Programs: Instilling organizational learning andcontinuous improvement practices
3. Systems: Installing strategic support systems
4. Policies: Establishing Strategy Supportive policies
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Structural levers:1. Actions: Fostering cross functional integration and company
collaboration
Eg: Lack of support from pilots was one of the roadblocks to the cost cutting
strategy of AI
Input and Collaboration of all the members at all the levels of strategy
Cross Functional Integration
Eg: At ICICI bank aggressive sales pitch is backed by streamlined operations.
Integration between the all the activities of the value chain
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2. Programs: Instilling organizational learning &continuous improvement practices
Organizational learning & continuous improvement must incorporateinnovation into the implementation lever
Creation of Innovation Chain to include global partners in the innovation effort
Eg: Practiced by Japanese Auto giants pioneered by Toyota
Eg: Partnership between Reva Motors and General Motors for producing smallpassenger cars
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3. Systems
Importance of systems as a lever is simply illustrated by the fact thatcompanies managing their IT systems successfully generate a 40% higherreturns than others
The purpose of systems is to provide timely access to both qualitative andquantitative data for effective decision making, both strategic and tactical
Floral Farms successfully utilized this systems lever to develop a decisionsupport model
Lufthansa wanted to increase its utilization and flexibility of Pilots, but hadissues with its pilot training schedule, communication and resulting stresslevels. They therefore introduced mobile computing which helped the Pilots
to be updated regarding training, scheduling and other communication froma remote location and thus increased utilization and satisfaction levels
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4. Policies
Strategy supportive policies MUST necessarily envelope a COLLECTIVEpattern of day-to-day decisions and actions
There might be a tendency to formulate policies based on particularincidents rather than a pattern of incidents which in totality may not supportthe companys overall objective
A good example is of the Powrtron company which tended to react quickly toan unprecedented problem by forming a policy. From a larger perspective,these served to defeat strategic objectives and decisions
Policies also tend to change with change in management resulting ininconsistencies
Communication and percolation of these Policies top-down to all ranks isimperative for effective implementation of strategic goals
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Managerial levers
1. Interacting: The exercising of strategic leadership
2. Allocating: Understanding when and where toallocate resources.
3. Monitoring: Tying rewards to achievements.
4. Organizing: The strategic shaping of corporateculture.
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INTERACTING: Exercising of strategic leadership
Strategic Leadership is a critical implementation leverfor building a capable organization.
Responsibilities under strategic leadership
Direction Protection Orientation
Motivation Managing conflict
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Interacting Continued
Five levels of Leadership hierarchy:
Level 1- Highly capable individuals(contributionsthrough talent, knowledge ,skills etc.)
Level 2-Contributing team member(works effectively in agroup)
Level 3-Competent manager(organizes people &resources)
Level 4-Effective leader(vision) Level 5 Executive(enduring greatness through personal
humility and professional will)
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ALLOCATING: Understanding when and where toallocate resources
Encompasses the use of major resources such asmoney ,people and capabilities.
In addition to financial resources;
Physical capital(plant, equipment, geo. Location)
Human capital(training ,experience ,judgment etc.)
Organizational capital(formal reporting systems,firm and its environment etc.
Eg: OMED Medical Supplies
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Monitoring: Tying Rewards to Achievements
Outcome
Favourable
Incentives/ Rewards
Monetary
(Salary Increases, Bonuses,Promotions, perks, stock options, etc.)
Non Monetary
(Praise, recognition, job security,responsibility, etc.)
Unfavourable
Tackling/Corrective Actions
One of the most prevalent technique for tying reward to achievements is linking executivepay to organization's overall ROE
The lever suggests using multiple type of awards for motivating and encouragingemployees
E.g. Genpact has the system of awarding - Gold, Silver and Bronze RecognitionCertificates to their employees along with the commensurate performance bonuses
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Organizing Shaping of Corporate Culture
Organization Culture is a powerful strategic implementation tool for business
Culture is a system of shared values and norms in an organization
Shaping of Organizational Culture requires: Clarity
Consistency
Comprehensiveness
The Strategy formulation performance gap can only be removed if theorganization culture is ready to adapt to higher standards and developappropriate attitude and behaviour in the long run
Culture
Executive Culture(A Model to follow)
EngineeringCulture
(Core technology)
Internal(operational)
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Established Firms v/s Start-ups
The established firms have the advantage of compensatingwith another lever to overcome the weaknesses in one leverand reduce its impact
The start-ups do not have this luxury and the entrepreneur
needs to understand the impact of each of the levers and itsstrengths and weaknesses
It was observed through the OMED case that the weak-links in a start-ups implementation efforts rest within the
structural levers
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Conclusion
Use of Levers as a managerial tool allowed identificationof:
Efforts that facilitated formulation and implementationof strategies
Forces of resistance that inhibit the implementation.Unless weak levers were identified and overcome, theywould constrain future strategy formulation efforts
Although the use of all Eight Levers is not necessary whilebuilding and organization, a clear understanding of eachlevers role and its impact on the ability to succeed isnecessary
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Thank You !!