1. Implementing and Executing Strategy: Culture and Leadership

2. “An organization’s capacity to execute its strategy depends on its “hard” infrastructure--its organization structure and systems--and on its “soft” infrastructure--its culture and norms.”
Amar Bhide
“Quote” 2

3. Chapter Outline Building a Strategy-Supportive Corporate Culture
Where Does Corporate Culture Come From?
Culture and Strategy Execution
Types of Cultures
Creating a Fit Between Strategy and Culture
Establishing Ethical Standards
Building a Spirit of High Performance
Exerting Strategic Leadership
Staying on Top of How Well Things are Going
Establishing a Strategy-Supportive Culture
Keeping Internal Organization Innovative
Exercising Ethics Leadership
Making Corrective Adjustments

4. BUILD A STRATEGY-SUPPORTIVE CORPORATE CULTURE4

5. What Makes Up a Company’s Culture?
Beliefs about how business ought to be conducted
Values and principles of management
Work climate and atmosphere
Patterns of “how we do things around here”
Oft-told stories illustrating company’s values
Taboos and political don’ts
Traditions
Ethical standards

6. Features of the Corporate Culture at Wal-Mart
Dedication to customer satisfaction
Zealous pursuit of low costs
Belief in treating employees as partners
Sam Walton’s legendary frugality
Ritualistic Saturday morning meetings
Executive commitment to
Visit stores
Talk to customers
Solicit employees’ suggestions

7. Features of the Corporate Culture at General Electric
Hard-driving, results-oriented atmosphere prevails
All businesses are held to a standard of being #1 or #2 in their industries as well as achieving good business results
Concept of boundaryless organization exists
Reliance upon “workout sessions” to identify, debate, and resolve “burning issues”
Commitment to Six Sigma Quality
Globalization of the company

8. Features of the Corporate Culture at Nordstrom’s
Company motto
“Respond to Unreasonable Customer Requests”
Out-of-the-ordinary customer requests viewed as opportunities for “heroic” acts
Promotions based on outstanding service
Salaries based entirely on commission
Weeds out those not meeting or living up to standards/expectations/shared values and rewards those who do

9. Where Does Corporate Culture Come From?
Founder or early leader
Influential individual or work group
Policies, vision, or strategies
Traditions, supervisory practices, employee attitudes
Organizational politics
Relationships with stakeholders
Internal sociological forces

10. How Is a Company’s Culture Perpetuated?
Selecting new employees based on how well their personalities “fit” in
Systematic indoctrination of new employees
Senior employees’ reinforcement of core values
Story-telling of company legends
Ceremonies honoring employees who display cultural ideals
Visibly rewarding those who follow cultural norms

11. Forces and Factors Causing Culture to Evolve
Internal crises
Revolutionary technologies
New challenges
Arrival of new leaders
Turnover of key employees
Diversification into new businesses
Expansion into different geographic areas
Rapid growth adding new employees
Merger with or acquisition of another company
Globalization

12. Culture and Strategy Execution: Ally or Obstacle?
Culture can contribute to -- or hinder -- successful strategy execution
Requirements for successful strategy execution may -- or may not -- be compatible with culture
A close match between culture and strategy promotes effective strategy execution

13. Why Culture Matters: Benefits of a Good Culture-Strategy Fit
Strategy-supportive cultures
Shape mood and temperament of the work force, positively affecting organizational energy, work habits, and operating practices
Provide standards, values, informal rules and peer pressures that nurture and motivate people to do their jobs in ways that promote good strategy execution
Strengthen employee identification with the company, its performance targets, and strategy

14. Why Culture Matters: Benefits of a Good Culture-Strategy Fit (continued)
Strategy-supportive cultures
Stimulate people to take on the challenge of realizing the company’s vision, do their jobs competently and with enthusiasm, and collaborate with others to execute the strategy
Optimal condition: A work environment that
Promotes can do attitudes
Accepts change
Breeds needed capabilities
Can
Do!

15. Strategic Management Principle
Anything so fundamental as implementing a new or different strategy involves aligning the organization’s culture with the requirements for competent strategy execution!

16. Types of Corporate Cultures
Strong vs. Weak Cultures
Unhealthy Cultures
Adaptive Cultures

17. Characteristics of Strong Culture Companies
Conduct business according to a clear, widely-understood philosophy
Management spends considerable time communicating and reinforcing values
Values are widely shared and deeply rooted
Typically have a values statement
Careful screening/selection of new employees to be sure they will “fit in”
Visible rewards for those following norms; penalties for those who don’t

18. How Does a Culture Come to Be Strong?
Leader who establishes values consistent with
Customer needs
Competitive conditions
Strategic requirements
A deep, abiding commitment to espoused values and business philosophy
Practicing what is preached!
Genuine concern for well-being of
Customers
Employees
Shareholders
Values
Customers
Employees
Shareholders

19. Strategic Management Principle
Strong cultures promote good strategy execution where there’s strategy-culture fit and hurt execution where there’s little fit!

20. Characteristics of Weak Culture Companies
Many subcultures
Few values and norms widely shared
Few strong traditions
Little cohesion among the departments
Weak employee allegiance to company’s vision and strategy
No strong sense of company identity

21. Characteristics of Unhealthy or Low Performance Cultures
Politicized internal environment
Issues resolved on basis of turf
Hostility to change
Experimentation and efforts to alter status quo discouraged
Avoid risks and don’t screw up
Promotion of managers more concerned about process and details than results
Aversion to look outside for superior practices
Must-be-invented here syndrome
Avoid
risks!

22. Hallmarks of Adaptive Cultures
Introduction of new strategies to achieve superior performance
Strategic agility and fast response to new conditions
Risk-taking, experimentation, and innovation to satisfy stakeholders
Proactive approaches to implement workable solutions
Entrepreneurship encouraged and rewarded
Top managers exhibit genuine concern for customers, employees, shareholders, suppliers

23. Types of Culture-Changing Actions
Revising policies and procedures to help drive cultural change
Altering incentive compensation to reward desired cultural behavior
Visibly praising and recognizing people who display new cultural traits
Hiring new managers and employees who have desired cultural traits and can serve as role models
Replacing key executives strongly associated with old culture
Communicating to all employees the basis for cultural change and its benefits

24. Symbolic Culture-Changing Actions
Emphasize frugality
Eliminate executive perks
Require executives to spend time talking with customers
Alter practices identified as cultural hindrances
Visible awards to honor heroes
Ceremonial events to praise people and teams who “get with the program”

25. Substantive Culture-Changing Actions
Benchmarking and best practices
Set world-class performance targets
Bring in new blood, replacing traditional managers
Shake up the organizational structure
Change reward structure
Increase commitment to employee training
Reallocate budget, downsizing and upsizing

26. Establishing Ethical Standards and Values
A culture based on ethical principles is vital to long-term strategic success
Ethics programs make ethical conduct a way of life
Value statements serve as a cornerstone for culture-building
A code of ethics serves as a cornerstone for developing a corporate conscience
Approaches to establishing ethical standards
Word-of-mouth indoctrination and tradition
Written documents
Our ethics
program
consists of . . .

27. Instilling Values and Ethics in the Culture
Incorporate values statement and ethics code in employee training programs
Screen out applicants who do not exhibit compatible character traits
Communicate the values and ethics code to all employees
Management involvement and oversight
Strong endorsement by CEO
Word-of-mouth indoctrination

28. Building a Spirit of High Performance into the Culture
Emphasize achievement and excellence
Promote a results-oriented culture
Pursue practices to inspire people to excel
Desired outcome
Produce extraordinary results with ordinary people

29. Approaches to Building a Spirit of High Performance
Treat employees with dignity and respect
Train each employee thoroughly
Encourage employees to use initiative
Set clear performance standards
Use rewards and punishment to enforce high-performance standards
Hold managers responsible for employee development
Grant employees autonomy to contribute
Make champions out of people who excel

30. People Management Practices That Promote a Spirit of High Performance
Belief in the worth of the individual
Strong commitment to
Job security
Promotion from within
Managerial practices that encourage employees to exercise individual initiative and creativity
Pride in doing the “itty-bitty, teeny-tiny things” right

31. STRATEGIC LEADERSHIP 33

32. Leadership Roles of the Strategy Implementer
1. Stay on top of what’s happening
2. Promote a culture energizing organization to accomplish strategy
3. Keep firm responsive to changing conditions
4. Exercise ethics leadership
5. Take corrective actions to improve overall strategic performance

33. Role #1: Stay on Top of What’s Happening
Develop a broad network of formal and informal sources of information
Talk with many people at all levels
Be an avid practitioner of MBWA
Observe situation firsthand
Monitor operating results regularly
Get feedback from customers
Watch competitive reactions of rivals

34. Role #2: Foster a Strategy - Supportive Culture
Successful leaders spend time
Convincing organization members chosen strategy is right and competent strategy execution is top priority
Nurturing values
Building and nurturing a culture promoting good strategy execution
Jack Welch
CEO of General Electric

35. Leader’s Role in Matching Culture and Strategy
Implement a “stakeholders-are-king” philosophy
Challenge status quo with very “basic” questions
Create events where all managers must listen to
Angry customers
Dissatisfied strategic allies
Alienated employees
Disenchanted stockholders
Energize employees to make new strategy happen
Initiate substantive actions to reinforce desired cultural traits
Reward people exhibiting desired cultural norms

36. Role #3: Keep Internal Organization Responsive
Promote openness to fresh ideas
Pursue attractive new opportunities
Support people who are willing to champion
Innovative ideas and products
Better services
New technologies
Promote continuous adaptation to changing conditions
Build new competencies and capabilities

37. Leader’s Role in Empowering Champions
Encourage people to be creative and imaginative
Tolerate mavericks with creative ideas
Promote lots of tries and be willing to accept failures (most ideas don’t pan out)
Use all kinds of organizational forms to support experimentation (venture teams, task forces, “skunk works” and individual champions)
See that rewards for successful champions are large and visible

38. Leader’s Role in Developing New Capabilities
Responding to changes requires top management intervention to establish new
Organizational capabilities
Resource strengths and competencies
Senior managers must lead the effort because
Competencies reside in combined efforts, requiring integration
Clout is needed to enforce necessary networking and cooperation

39. Role #4: Exercising Ethics Leadership
Display unequivocal commitment to ethical and moral conduct
Insist upon strong code of ethics
Encourage compliance and establish tough consequences for unethical behavior
Make it a duty for employees to
Observe ethical codes
Report ethical violations
Our ethics
code is . . .

40. Manager’s Role in Exercising Ethics Leadership
Set an excellent ethical example
Provide training to employees about what is ethical and what isn’t
Reiterate unequivocal support of ethics code
Remove people from key positions if found guilty of a violation
Reprimand people lax in monitoring ethical compliance

41. Key Approaches to Enforcing Ethical Behavior
Conduct an annual audit to assess
Each manager’s efforts to uphold ethical standards
Actions taken by managers to remedy deficient conduct
Require all employees to sign a statement annually certifying they have complied with company’s code of ethics

42. Actions Demonstrating Corporate Citizenship and Social Responsibility
Having “family friendly” employment practices
Operating a safe workplace
Taking special pains to protect the environment
Taking an active role in community affairs
Interacting with community officials to minimize impact of
Layoffs or
Hiring large numbers of new employees
Being a generous supporter of charitable causes and projects that benefit society

43. Role #6: Lead the Process of Making Corrective Adjustments
Requires both
Reactive adjustments
Proactive adjustments
Involves
Reshaping long-term direction, objectives, and strategy to unfolding events
Promoting initiatives to align internal activities and behavior with strategy