Strategy implementation

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Strategy Implementation: Organizing for Action

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Strategy Implementation

--Sum total of activities & choices --Sum total of activities & choices required for the execution of a required for the execution of a strategic planstrategic plan

--Process by which strategies and --Process by which strategies and policies are put into action through policies are put into action through programs, budgets, and proceduresprograms, budgets, and procedures

--Everyone in the organization is --Everyone in the organization is involved in the processinvolved in the process

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WHAT DOES STRATEGY IMPLEMENTATION INCLUDE?

•Building a firm capable of carrying out strategy successfully

•Allocating ample resources to strategy-critical activities

•Establishing strategy-supportive policies•Instituting best practices & programs for continuous

improvement•Installing support systems

•Tying reward structure to achievement of results•Creating a strategy-supportive corporate culture

•Exerting strategic leadership

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Key Questions in the Key Questions in the Implementation Process –Implementation Process –

–Who carries out strategic plan?Who carries out strategic plan?–What needs doing to align operations What needs doing to align operations with new direction/strategy?with new direction/strategy?–How is work going to be coordinated?How is work going to be coordinated?

Common Implementation Problems

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Problems in ImplementingStrategic plans

More time than plannedUnanticipated problemsActivities ineffectively coordinatedCrises deferred attention awayEmployees w/o capabilitiesInadequate employee trainingUncontrollable external factorsInadequate leadershipPoorly defined tasksInadequate information systems

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Programs – Defining ActivitiesPrograms – Defining Activities– Purpose is to define activities and to Purpose is to define activities and to

make the strategy make the strategy action orientedaction oriented

– The The Matrix of changeMatrix of change – – It is a tool to check It is a tool to check for:for:

Feasibility, sequence of execution, location of activities, Feasibility, sequence of execution, location of activities, pace & nature of change, and stakeholder’s evaluation.pace & nature of change, and stakeholder’s evaluation.

– It compare proposed and existing It compare proposed and existing programs and activities and can be used programs and activities and can be used to address the following types of to address the following types of questions:questions:

1.1. How quick change should proceed?How quick change should proceed?2.2. In what order change should take place?In what order change should take place?3.3. Is the proposed system stable and coherent?Is the proposed system stable and coherent?

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The Matrix of Change

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BudgetsBudgets –– Allocate funds to the new Allocate funds to the new activitiesactivities

–Define how much implementation Define how much implementation will cost.will cost.–The budget is the last real check a The budget is the last real check a firm has on the feasibility of the firm has on the feasibility of the selected strategy.selected strategy.

Procedures – Handle the day-to-day Procedures – Handle the day-to-day detailsdetails

–Standard Operating Procedures Standard Operating Procedures (SOP’s) detail the various activities (SOP’s) detail the various activities that must be carried out to complete that must be carried out to complete a corporation’sa corporation’s programs programs

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Achieving Synergy – Achieving Synergy – between and between and among functions and business among functions and business units.units.

– It occurs if ROI is greater than what it It occurs if ROI is greater than what it would be if division was an independent would be if division was an independent business.business.

It takes place in one of the six It takes place in one of the six forms:forms:

1.1. Shared know-howShared know-how2.2. Coordinated strategiesCoordinated strategies3.3. Shared tangible resourcesShared tangible resources4.4. Economies of scale or scopeEconomies of scale or scope5.5. Pooled negotiating powerPooled negotiating power6.6. New business creationNew business creation

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Structure follows strategy view–Structure follows strategy view– Changes in corporate strategy lead Changes in corporate strategy lead to changes in org. structure as to changes in org. structure as follows:follows:

–New strategy is createdNew strategy is created–New administrative problems emergeNew administrative problems emerge–Economic performance declinesEconomic performance declines–New appropriate structure is inventedNew appropriate structure is invented–Profit returns to previous levelProfit returns to previous level

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STRUCTURE: Stages of Corporate Development

Stage I: Simple Structure (Entrepreneur)Stage I: Simple Structure (Entrepreneur)

Flexible and dynamicFlexible and dynamic

Decision making tightly controlledDecision making tightly controlled

Little formal structureLittle formal structure

Planning short range/reactivePlanning short range/reactive

Stage II: Functional StructureStage II: Functional Structure

Functional specializationFunctional specialization

Delegation of decision makingDelegation of decision making

Concentration/specialization in industryConcentration/specialization in industry

Stage III: Divisional Structure (SBU)Stage III: Divisional Structure (SBU)

Diverse product linesDiverse product lines

Decentralized decision makingDecentralized decision making

Stage IV: Beyond SBU’s: Matrix, Network, and CellularStage IV: Beyond SBU’s: Matrix, Network, and Cellular

Increasing environmental uncertainty & Tech Increasing environmental uncertainty & Tech advancesadvances

More empahsis on TeamsMore empahsis on Teams

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Strategy ImplementationAdvanced Types of Organizational Advanced Types of Organizational Structures –Structures –

1) Matrix Structure – Combine division with function 1) Matrix Structure – Combine division with function form. form.

–Cross-functional task forces / teamsCross-functional task forces / teams–Employees with two superiorsEmployees with two superiors

2) Network Structure or “2) Network Structure or “non structurenon structure” (virtual ” (virtual organization)organization)

–Elimination of in-house business functions - Elimination of in-house business functions - OUTSOURCINGOUTSOURCING–Useful in unstable environments when there is need Useful in unstable environments when there is need for innovation and quick responsesfor innovation and quick responses

3) Cellular Organization: New type composed of 3) Cellular Organization: New type composed of “cells” “cells”

–Includes dispersed entrepreneurship from Includes dispersed entrepreneurship from DIVISIONAL, customer responsiveness of the MATRIX, DIVISIONAL, customer responsiveness of the MATRIX, and self-organizing knowledge and asset-sharing of and self-organizing knowledge and asset-sharing of the NETWORKthe NETWORK–Self-managing / autonomous teams and business Self-managing / autonomous teams and business unitsunits–ModularModular

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Network Structure

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Organizational Life Cycle

Organization Life Cycle Approach Organization Life Cycle Approach (Instead of Stage of Development (Instead of Stage of Development approach)approach)Describes how organization grows, Describes how organization grows, develop and eventually declinesdevelop and eventually declines

Impact of each stage on strategy and Impact of each stage on strategy and structurestructure

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TRENDS: Changing Structural Characteristics of Modern Organizations

Reengineering & Strategy Implementation

Radical redesign of business processes to achieve major gains in cost, service, or time

Effective way to implement a

turnaround strategy

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Designing Jobs to Implement Strategies Making jobs more relevant to the

company and employees serves as a source of competitive advantage

New Job Design Techniques:1. Job enlargement: Combining tasks 2. Job rotation: Increase variety of tasks3. Job enrichment: More autonomy and control

to workers

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International Issues

International Development Stages–International Development Stages––Domestic companyDomestic company–Domestic company w/export divisionDomestic company w/export division–Domestic company w/int’l divisionDomestic company w/int’l division–MNC w/ multidomestic emphasisMNC w/ multidomestic emphasis–MNC w/global emphasisMNC w/global emphasis

Decision Issues for MNC’s:Decision Issues for MNC’s:Strategic alliances to enter new marketsStrategic alliances to enter new marketsProduct-group vs. Geographic-area structureProduct-group vs. Geographic-area structureCentralization vs. Decentralization of Centralization vs. Decentralization of AuthorityAuthority

–Decentralization - pressure for local responsiveness Decentralization - pressure for local responsiveness –Centralization - pressure for efficiency / low costCentralization - pressure for efficiency / low cost

Strategy implementation

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