IMPLEMENTING STRATEGY: CULTURE AND LEADERSHIP

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CHAPTER 11

• IMPLEMENTING STRATEGY CULTURE AND LEADERSHIP

Screen graphics created by Jana F. Kuzmicki,
PhD, Indiana University Southeast
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Chapter Outline

• Building a Strategy-Supportive Corporate Culture
• Where Does Corporate Culture Come From?
• Power of Culture
• Types of Cultures
• Creating a Fit Between Strategy and Culture
• Establishing Ethical Standards and Values
• Building a Spirit of High Performance

• Exerting Strategic Leadership
• MBWA
• Fostering a Strategy-Supportive Culture
• Keeping Internal Organization Innovative
• Dealing With Company Politics
• Enforcing Ethical Behavior
• Making Corrective Adjustments

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What Makes Up aCompanys Culture?

• Beliefs about how business ought
  to be conducted
• Values and principles of management
• Patterns of how we do things around here
• Oft-told stories illustrating companys values
• Taboos and political donts
• Traditions
• Ethical standards

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Where Does CorporateCulture 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

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How Is Culture Sustained?

• Continuity of leadership
• Select new employees based on how well their
  personalities fit
• 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

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The Power of Culture

• 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

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Why Culture Matters The Benefitsof a Good
Culture-Strategy Fit

• Strategy-supportive cultures
• Shape the 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

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Why Culture Matters The Benefitsof a Good
Culture-Strategy Fit (cont.)

• Strategy-supportive cultures
• Stimulate people to take on the challenge of
  realizing the companys 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

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Types of Corporate Cultures
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Characteristics ofStrong Culture Companies

• Conduct business according to a clear,
  widely-understood philosophy
• Management spends considerable time spent
  communicating and reinforcing values
• Values widely shared and deeply rooted
• Often 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 dont

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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

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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

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Creating a Strategy - Supportive Cultural Fit

• STEP 1
• Diagnose which facets of present culture are
  strategy-supportive and which are not
• STEP 2
• Talk openly about those aspects of
  present culture that need to be changed
• STEP 3
• Follow with swift, visible actions -- some
• substantive and some symbolic

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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

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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

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Establishing Ethical Values

• A culture based on ethical principles is vital to
  long-term strategic success
• Ethics programs make ethical conduct
  a way of life
• Approaches to establishing
  ethical standards
• Word-of-mouth
  indoctrination and tradition
• Written codes of ethics

Our ethics program consists of . . .
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Topics Covered in Value Statements and
Codes of Ethics

• Topics in Value Statements
• Customer importance
• Commitment to quality
• Commitment to innovation
• Respect for individual employee
• Importance of honesty
• Duty to stockholders
• Duty to suppliers
• Corporate citizenship
• Protecting the environment

• Topics in Codes of Ethics
• Honesty observing the law
• Conflicts of interest
• Fairness in marketing practices
• Using inside information
• Supplier relations
• Corrupt practices
• Acquiring information
• Political activities
• Use of company assets
• Proprietary information
• Pricing, contracting, billing

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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 vales and ethics code to all
  employees
• Management involvement and oversight
• Strong endorsement by CEO
• Word-of-mouth indoctrination

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Building a Spirit of HighPerformance 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

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Approaches to Building aSpirit 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

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Six Roles of theStrategy Implementer

• 1. Stay on top of whats happening
• 2. Promote a culture energizing organization to
  accomplish strategy
• 3. Keep firm responsive to changing conditions
• 4. Build consensus and deal with politics of
  crafting and implementing strategy
• 5. Enforce ethical standards
• 6. Take corrective actions to improve overall
  strategic performance

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Leaders Role in MatchingCulture and
Strategy

• Create events where all managers must listen to
• Angry customers
• Dissatisfied stockholders
• Alienated employees
• Energize employees to make new strategy happen
• Repeat desired cultural values again and again
• Reward people exhibiting desired cultural norms

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Leaders Role inEmpowering Champions

• Encourage people to be creative and imaginative
• Tolerate mavericks with creative ideas
• Promote lots of tries and be willing to accept
  failures -- every idea wont pan out
• Use all kinds of organizational means to support
  experimentation (teams, task forces, skunkworks
  and individual champions)
• See that rewards for successful champions are
  large and visible

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Leaders Role inDeveloping 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

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Political Tactics ofSuccessful Executives

• Let weakly supported ideas die via inaction
• Establish hurdles for strongly supported ideas
  that shouldnt be opposed
• Keep low profile on unacceptable ideas by getting
  subordinates to say no
• Let most negative decisions come from group
  consensus

• Lead the strategy but dont dictate it
• Stay alert to symbolic impact of ones actions
• Ensure all major power bases have access to top
  managers
• Inject new views when considering major changes
• Minimize political exposure on highly
  controversial issues

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Leaders Role inEnforcing Ethical Behavior

• Set an excellent ethical example
• Provide training to employees about what is
  ethical and what isnt
• Reiterate unequivocal support of ethics code
• Remove people from key positions if found guilty
  of a violation
• Reprimand people lax in monitoring ethical
  compliance