McGraw-Hill/Irwin Copyright ©2010 The McGraw-Hill Companies, All Rights Reserved. Superior Strategy Execution—Another Path to Competitive Advantage

10-2 The Eight Components of Strategy Execution

10-3 Staffing the Organization—Building Managerial Talent  Assembling a capable management team is a cornerstone of the organization-building task  Find people who can “make it happen” to fill each slot Existing management team may be suitable Core executive group may need strengthening Promote from within Bring in skilled outsiders

10-4  Competencies and capabilities must continuously be deepened, broadened, upgraded and perhaps even replaced with new ones due to New strategic requirements Evolving market conditions Changing customer expectations  Building dynamic capabilities and core competencies is a multistage process that occurs over months or years Building Dynamic Capabilities and Core Competencies

10-5 Aligning Organizational Structure with Strategy  A company’s key value adding activities and processes should be the building blocks of its organizational structure  Attempting to carry out a strategy with an ill-fitting organizational structure is unwise

10-6 Types of Organizational Structures  Departmental Structure—Organizes strategy critical activities into distinct functional, product, geographic, process, or customer groups  Divisional Structure—Organizes value chain activities involved in making a product or service available to consumers into a common division  Matrix Structure—Allow for dual reporting relationships between divisional heads and departmental heads

10-7 Allocating Resources to Strategy Critical Activities  Allocating resources in ways to support effective strategy execution involves Funding proposals that hold promise, while turning down those that don’t Providing the proper amount of funding to support new strategic initiatives New strategies call for the reallocation of resources

10-8 Instituting Strategy Supportive Policies and Procedures  Policies and procedures facilitate good strategy execution by: Providing top-down guidance regarding how things need to be done Enforcing consistency in how strategy-critical activities are to be performed Promote a work climate that facilitates good strategy execution

10-9 Installing Information and Operating Systems  Good information and operating systems are essential for first-rate strategy execution  Information systems are needed to track and report: Customer data Operations data Employee data Supplier data Financial data

10-10 Using Rewards and Incentives  Reward systems should include both monetary rewards and non- monetary rewards Monetary   Base pay increases   Bonuses   Profit sharing plans   Stock options   Piecework incentivesNon-Monetary   Praise and recognition   Stimulating assignments   Autonomy   Rapid promotion

10-11 Corporate Culture  A company’s corporate culture includes its Core values, beliefs, and business principles Its style of operating Ingrained behaviors and attitudes  Corporate culture is the company’s organizational DNA

10-12 Unhealthy Corporate Cultures  Highly politicized internal environment Issues resolved on basis of political clout  Hostility to change Avoid risks Experimentation and efforts to alter status quo discouraged

10-13 Unhealthy Corporate Cultures  Insular, inwardly focused “Not- invented-here” mindset Company personnel discount need to look outside for best practices  Disregard for high ethical standards and overzealous pursuit of wealth by key executives

10-14 High-Performance Cultures  Strong sense of involvement by all employees  Emphasis on individual initiative and creativity  Performance expectations are clearly stated  Issues are promptly addressed  Constructive pressure to achieve good results

10-15 Changing a Problem Culture