1. SUPERIOR STRATEGY EXECUTION—ANOTHER PATH TO COMPETITIVE ADVANTAGE
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Crafting versus Executing Strategy
Crafting the Strategy
Primarily a market- driven activity
Successful strategy making depends on
Attracting and pleasing customers
Outcompeting rivals
A firm’s collection of resources and capabilities
Executing the Strategy
Primarily an operations- driven activity
Successful strategy execution depends on management’s ability to
Direct change
Improve operations
Build a strategy-supportive culture
Get things done and deliver good results 2

3. Who Is Responsible for Implementation of the Chosen Strategy?
The organization’s chief executive officer and other senior managers are responsible for ensuring that the strategy is executed successfully.
It is middle and lower-level managers who must see that employees and work groups perform the strategy-critical activities that result in achievement of the firm’s performance targets.
All managers are involved and thinking:
“What does my area have to do to implement its part of the strategic plan, and what should I do to get these things accomplished effectively and efficiently?”

4. Principal Managerial Components of the Strategy Execution Process
Building an organization with the capabilities, people, and structure needed to execute the strategy successfully.
Allocating ample resources to strategy-critical activities.
Ensuring that policies and procedures facilitate rather than impede effective strategy execution.
Adopting process management programs that drive continuous improvement in how strategy execution activities are performed.

5. Principal Managerial Components of the Strategy Execution Process (cont’d)
Installing information and operating systems that enable company personnel to perform essential activities.
Tying rewards directly to the achievement of performance objectives.
Fostering a corporate culture that promotes good strategy execution.
Exerting the internal leadership needed to propel implementation forward.

6. Staffing the Organization— Building Managerial Talent
Assembling a critical mass of talented managers is a cornerstone organization- building task:
Putting people with strong strategy implementation skills and a results orientation in key managerial posts
Replacing weak executives, strengthening the skills of those who remain, and bringing in fresh outsiders

7. Recruiting and Retaining a Capable Workforce
The quality of a firm’s people is an essential ingredient of successful strategy execution.
Staffing the right people at all levels is required to ensure competent performance of value chain activities.
Find, develop, and then retain engaged employees with excellent compensation packages, opportunities for rapid advancement and professional growth, and challenging and interesting assignments.

8. Building and Strengthening Core Competencies and Competitive Capabilities
A firm’s core competencies and capabilities must continuously be deepened, broadened, upgraded, and replaced due to:
The need for better strategy execution
Changing or new strategic requirements
Evolving market conditions and customer expectations
Organization building requires deciding when and how to recalibrate competencies and capabilities. 8

9. Matching Organizational Structure to the Strategy
Key value chain activities within a firm’s organizational structure are critical to its proficient strategic performance.
A new or changed strategy will require a new or different structure and entail new or different key activities or capabilities.
Attempting to carry out a strategy with an ill- fitting organizational structure is unwise.

10. Types of Organizational Structures
Functional (or Departmental) Structure
Organizes strategy, critical activities into functional, product, geographic, process, or customer groups
Multidivisional (or Divisional) Structure
Organizes value chain activities involved in making a product or service available to consumers into a common (self-contained) division
Matrix Structure
Allows for dual reporting relationships between divisional heads and departmental heads

11. Organizational Structure and Authority in Decision Making
In a centralized structure:
Top managers retain authority for most decisions.
In a decentralized structure:
Decision-making authority is pushed down to the lowest organizational level capable of making timely, informed, competent decisions.
The trend in most companies
A shift from authoritarian to decentralized structures stressing empowerment

12. Allocating Resources to Strategy-Critical Activities
Reasons for the allocation process include:
To determine what funding is needed to execute new strategic initiatives
To bolster value-creating processes
To strengthen firm’s capabilities and competencies
Allocating resources to support strategy execution involves:
Funding promising proposals; turning down those that are not
Providing the proper amount of funding to support new strategic initiatives
Reallocation of resources to support new strategies

13. Instituting Strategy-Supportive Policies and Procedures
Strategy execution is facilitated by policies and procedures that:
Help enforce the necessary consistency in how particular strategy-critical activities are performed.
Provide top-down guidance regarding how certain things need to be done.
Promote a work climate that facilitates good strategy execution.

14. Striving for Continuous Improvement in Processes and Activities
Benchmarking
Is the backbone of the process of identifying, studying, and implementing best practices
Involves searching out and adopting best practices integral to effective strategy implementation
Key tools for continuous improvement:
Business process reengineering
TQM
Six Sigma quality control

15. Management Tools for Continuous Improvement
Business process reengineering
Involves pulling the pieces of strategy-critical activities out of different departments and unifying their performance in a single department or cross-functional work group.
Total quality management (TQM)
Emphasizes continuous improvement in all phases of operations, 100% accuracy in performing tasks, involvement and empowerment of employees at all levels and departments, team-based work design, benchmarking, and total customer satisfaction.

16. Management Tools for Continuous Improvement (cont’d)
Six Sigma
Is a statistics-based quality control system aimed at producing not more than 3.4 defects per million iterations for any business process—from manufacturing to customer transactions.
Seeks to define, measure, analyze, improve, and control variability in the organization’s processes.
Improves the efficiency of operating activities and processes, but its rigidity can also stifle innovation.

17. Installing Information and Operating Systems
Strategies and value-creating internal processes cannot be executed well without a number of internal operating systems.
Information systems are needed to track and report:
Customer data
Operations data
Employee data
Supplier data
Financial data

18. Using Rewards and Incentives to Promote Better Strategy Execution
Reward systems include both monetary rewards and nonmonetary rewards:
Monetary
Base pay increases
Bonuses
Profit sharing plans
Stock options
Piecework incentives
Nonmonetary
Praise and recognition
Stimulating assignments
Autonomy
Rapid promotion

19. Instilling a Corporate Culture that Promotes Good Strategy Execution
A corporate culture or work climate is the long-term product of work practices and behaviors that define its:
Shared core values, beliefs, and business principles that are ingrained in employee behaviors and attitudes
Operating style—the human chemistry of the firm’s work environment (“how we do things around here”)
Organizational DNA—its approach to people management

20. Characteristics of Unhealthy Corporate Cultures
Highly politicized internal environment
Issues are resolved on the basis of political clout
Hostility to change
Avoid risks; experimentation and efforts to alter status quo are discouraged
Insular, inwardly focused “Not-invented-here” mind-set
Company personnel discount the need to look outside for best practices
Disregard for high ethical standards and overzealous pursuit of wealth by key executives

21. High-Performance Cultures
Standout cultural traits include:
A can-do spirit
Pride in doing things right
No-excuses accountability
A results-oriented work climate in which people go the extra mile to achieve performance targets

22. Adaptive Cultures
Adaptive cultures are well-suited to fast-changing industries
Characteristics of adaptive cultures include:
Willingness to accept change and embrace challenge of introducing new strategies
Risk-taking, experimentation, and innovation to satisfy stakeholders
Internal entrepreneurship is encouraged and rewarded

23. Leading the Strategy Execution Process
Managers at all levels of the firm must:
Stay on top of what is happening and closely monitor progress by engaging in managing by walking around (MBWA).
Put constructive pressure on the organization to achieve good results and operating excellence.
Not delay in initiating corrective actions to improve strategy execution and achieve the targeted performance results.