Title: Strategy Implementation: Organizing for Action
1Strategy Implementation Organizing for Action
- Does organizational structure come after strategy
formulation? Well, yes, in theory! - New strategy is created
- New administrative problems emerge
- Economic performance declines
- New appropriate structure is invented
- Profit returns to its previous level.
2Strategy Implementation Organizing for Action
- Simple structure Entrepreneur and staff
- Efficient implementation of formulated strategy
- Sales growth coordination and control problems
- Functional structure RD, finance, etc.
- Efficient implementation of formulated strategy
- Sales growth coordination and control problems
- Multidivisional (M-form) structure business
units or profit centers - Top level management responsible for formulating
and implementing overall strategies
acquisitions, restructuring, international and
cooperative strategies
3Strategy Implementation Organizing for Action
- Matrix Structure
- Based on the concept that horizontal
relationships across the firm are just as
important as the traditional reporting
relationship within a typical functional
organization
4Strategy Implementation Organizing for Action
- Matrix Structure
- Uncertainty in business environment try to
spend less time catching up, more time
responding to external changes - Adaptation to change cope with ambiguity, learn
quickly, gain new competencies - Differentiation and specialization across
business units integration challenge - Management - a high degree of empowerment in
those who compose and organize the activities of
key teams high levels of trust.
5Strategy Implementation Organizing for Action
- Matrix Structure
- Companies using Matrix Structure
- International Business Machines
- IBM Research Labs Worldwide
- Nokia
- New structure in 2003 Designed to focus on the
needs of particular customer segments while
retaining centralized manufacturing,
administration and marketing capabilities to
benefit from economies of scale. - Philips
- General Electric
6Strategy Implementation Organizing for Action
- Resource Allocation
- Attempt to allocate resources according to
priorities established by annual objectives - Financial,
- Physical
- Human and
- Technological
7Strategy Implementation Organizing for Action
- Resource Allocation
- A number of factors inhibit effective resource
allocation - Overprotection of resources,
- too great an emphasis on short-term financial
criteria, - organizational politics,
- vague strategy targets,
- a reluctance to take risks, and
- a lack of sufficient knowledge
8Strategy Implementation Organizing for Action
- Strategy Implementation Action Agenda
- What to do now versus later?
- What requires much time and personal attention?
- What can be delegated to others?
9Strategy Implementation Organizing for Action
- Managerial Components of Implementing Strategy
- Strategic leadership to drive implementation
forward - Shape work environment and corporate culture to
fit strategy - Setting up appropriate award/incentive systems to
achieve strategic targets - Installing necessary information, communication,
and operating systems to enable personnel to
carry out roles
10Strategy Implementation Organizing for Action
- Managerial Components of Implementing Strategy
- Instituting best practices and pushing continuous
improvement - Establishing strategy-supporting policies
- Allocating ample resources to strategy-critical
activities - Building core competencies (resources
capabilities) for successful strategy execution
11Strategy Implementation Organizing for Action
- Elements of Implementation
- Programs activities, timeframes, and
deliverables - Budgets doesnt necessarily follow program
development as text suggests - Procedures operating procedures set up for each
key activity (distribution, inventory management,
pricing strategies, etc.)
12Strategy Implementation Organizing for Action
- How strategic activities require cooperation
among different departments - Filling customer orders accurately and promptly
sales (wins the order) finance (check credit
terms) production (product goods and replenish
stock) warehousing (check stock, pick, package
and ship order) shipping (get product to
customer).
13Strategy Implementation Organizing for Action
- How strategic activities require cooperation
among different departments - Speeding new products to market process is
fragmented among RD, engineering, purchasing,
manufacturing , and marketing.
14Strategy Implementation Organizing for Action
- How strategic activities require cooperation
among different departments - Obtaining feedback from customers and making
product modifications to meet their needs
involves customer service and after-sales
support, RD, engineering and design, components
purchasing, manufacturing and assembly, and
marketing research.
15Strategy Implementation Organizing for Action
- The level of autonomy given to certain business
units, divisions, and projects depends on many
criteria. - The following three are considered the primarily
criteria - volatility of environment
- low cost versus differentiation focus
- degree of resource-sharing between functional
areas
16Strategy Implementation Organizing for Action
- Greater autonomy generally associated with
- Higher the volatility
- Higher levels of differentiation
- Lower levels of resource sharing
17Strategy Implementation Organizing for Action
- How many possible scenarios are possible based
on these three criteria? - Which scenarios suggest highest and lowest
autonomy? - Can you think of business types that fit into
each of these scenarios?
18Strategy Implementation Organizing for Action
- Why do we have organizational charts?
- The Matrix structure - Is it outdated?
- Coordinating product and functional areas, or
product and geographic areas. - Provides coverage, but creates redundancy and
lacks flexibility.
19Fluidity of Organizational Charts TimeVisions
intranet-based org chart software
20Strategy Implementation Organizing for Action
TimeVisions customers include (partial listing)
- European Council
- American Airlines
- Georgia-Pacific
- Ericsson
- Bayer Corporation
- GTE
- Mercedes-Benz
- Chevron
- Colgate-Palmolive
- Compaq (Houston)
- Toyota Motor
21Strategy Implementation Organizing for Action
- Job Design Issues
- Rethinking the individual tasks to make them more
relevant to the company and the employees - Try to answer the question Based on what the
company does (and does well), how should
individual tasks be assigned and accomplished?
22Strategy Implementation Organizing for Action
- Job Design Issues
- How much task variety should there be?
- How should teams be used?
- To what degree should job rotation be used?
- How should authority in decision-making be
increased/decreased? - What channels of communication should be provided?
23Strategy Implementation Organizing for Action
- Application of Technology to Manage
- Human resources
- Logistics (in- and out-bound)
- Knowledge flow
- Apply technologies based on strategic priorities