Strategies are intellectually simple their execution is not'

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• Strategies are intellectually simple their
  execution is not.
• Lawrence A. Bossidy
• CEO
• Allied Signal

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Why Implementing Strategy Isa Tough
Management Job

• Implementing a new strategy takes adept
  leadership to
• Overcome pockets of doubt
• Build consensus
• Secure commitment of concerned parties
• Get all implementation pieces in place and
  coordinated

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The Eight Components ofImplementing Strategy
Allocating Resources
Building a Capable Organization
Establishing Strategy- Supportive Policies
Strategy Implementers Action Agenda
Instituting Best Practices for Continuous Improvem
ent
Exercising Strategic Leadership
Installing Support Systems to Carry out Strategic
Roles
Shaping Corporate Culture to Fit Strategy
Tying Rewards to Achievement of Key Strategic
Targets
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What Is the Goal ofStrategy Implementation?

• Unite total organization
• Insure quality of execution
• Generate commitment so an enthusiastic crusade
  emerges to carry out strategy

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What is the CEOs job?

• Lead the formulation of the strategy
• Lead the implementation of the strategy
• corporate structure
• policies
• people resources
• Oversee the strategy control and adjustment.

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Who Are theStrategy Implementers?

• Implementation involves a companys whole
  management team
• Every organization unit and all employees have a
  role and need to be committed

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Building aCapable Organization
Select able people
for key positions
Develop skills, core competencies, managerial
talents, competitive capabilities
Organize business processes, value chain
activities, and decision-making to promote
successful strategy execution
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Example Procter GamblesCore Competencies

• Superb marketing-distribution skills and RD
  capabilities in five core technologies - fats,
  oils, skin chemistry, surfactants, emulsifiers

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Building Core Competencies The Necessary
Understanding

• 1. Core competencies are rarely grounded in a
  single department
• 2. How does a core competence become a
  competitive advantage?
• Concentrate more effort and more talent than
  rivals
• 3. Sustaining competitive advantage requires
  adapting competencies to new conditions

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Building Competitively Valuable Competencies
and Capabilities

• Involves
• Managing human skills knowledge bases
• Coordinating efforts
• Collaborative networking among internal groups
  and with external partners
• Achieving dominating depth

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Strategy and Organization Structure

• Few hard and fast rules for organizing
• Main rule Structure must support and facilitate
  good strategy execution

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Strategic Management Principle
Attempting to carry out a new strategy with an
old organizational structure is usually unwise!
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How to Make Organizational Structure Match
Strategy

• 1. Pinpoint critical activities and capabilities
• 2. Decide which activities to outsource
• 3. Decide which activities require partners
• 4. Make primary, internally-performed activities
  the main building blocks
• 5. Determine degree of authority to delegate
• 6. Establish ways to achieve coordination
• 7. Assign responsibility for managing
  relationships with outsiders

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Step 1 Pinpoint Strategy-Critical Activities

• 1. What functions have to be performed with
  competence to produce success?
• 2. In what value-chain activities would poor work
  performance endanger success?

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Step 2 Looking for Outsourcing Opportunities

• Makes strategic sense when outsiders can perform
  certain activities
• At a lower cost and/or
• With higher value-added

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Step 3 Deciding Which Activities Require
Partners

• The advantages partnering may offer
• Speed to market
• Lower inventories
• Better/faster customer Service
• Geographically wider distribution
• Economical custom manufacture
• More extensive after-sale support services

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Step 4 Making Strategy-Critical Activities
the Main Building Blocks

• Managers of strategy-critical activities should
  have power
• Avoid fragmenting responsibility for
  strategy-critical activities
• Provide coordinating linkages between related
  work groups
• Meld into a valuable
  competitive capability

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Strategic Management Principle
Matching structure to strategy requires making
strategy-critical activities and organizational
units the main building blocks in the
organization structure!
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Step 5 Decentralization and Empowerment

• Three beliefs are driving company preferences for
  flatter, more decentralized structures
• 1. Cross-functional capabilities render
  traditional hierarchical structures ineffective
• 2. Decisions are best made those performing the
  function
• 3. Empowering employees to exercise judgment on
  job-related matters improves motivation and job
  performance

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Step 6 Reporting Relationships and Cross-Unit
Coordination

• Coordinate activities by having related units
  report to single manager
• Managers coordinate and unify
• Support activities should support
• maximize performance of primary activities
• Add minimal costs

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Step 7 Assign Responsibility
forCollaboration With Outsiders

• Need multiple ties at multiple levels to ensure
• Communication
• Coordination and control
• While forming alliances and collaborative
  Partnerships presents opportunities once the
  relationship with outsiders grows and develops

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Why Structure Follows Strategy

• Structure affects performance
• New strategy involves different skills and key
  activities
• Structure merits reassessment whenever strategy
  changes
• How work is structured is a means to an end --
  not an end in itself!

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Types of Organizational Structure

• Functional and process specialization
• Geographic organization
• Decentralized business units
• Strategic business units
• Matrix structures

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A Traditional FunctionalOrganizational
Structure
General Manager
Research Development
Manufacturing
Human Resources
Engineering
Marketing
Finance Accounting
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A Process-Oriented Functional Structure
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A GeographicOrganizational Structure
CEO
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A Decentralized Line-of-Business Organization
Structure
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An SBU Organization Structure
CEO
Corporate Services
Group VP SBU I
Group VP SBU II
Group VP SBU III
Strategically Related Business Units
Strategically Related Business Units
Strategically Related Business Units
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A Matrix Organization Structure
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Perspectives on Organizing

• All the basic organization structures have
  strategic advantages and disadvantages
• There is no ideal organization design
• To do a good job of matching structure to
  strategy
• Pick a basic design
• Modify as needed
• Supplement with coordinating mechanisms and
  communication arrangements

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Organizational Structures of the Future
Success Depends On . . .

• Quick response to shifting customer preferences
• Short design-to-market cycles
• First-time quality
• Custom order and multi-version production
• Expedited delivery and accurate order filling
• Personalized customer service
• Rapid assimilation of new technologies
• Creativity and innovativeness
• Speedy reaction to competitive developments

The future structure will be . . .
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Characteristics ofOrganizations of the Future

• Fewer boundaries between
• Different vertical ranks
• Functions and disciplines
• Units in different geographic locations
• Firm and its suppliers, distributors, strategic
  allies, and customers
• Constant change and learning
• Collaborative efforts among people in different
  functions and geographic locations
• Extensive use of digital technology