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The Task of Implementing Strategy

An action-oriented, operations-driven activity revolving around managing people and business processes

Tougher and more time-consuming than crafting strategy

Success depends on doing a good job of Leading Motivating Working with others to create fits between

strategy and how organization does things

Implementation involves . . .

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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

Strategy Implementer’s

Action Agenda

Building aCapableOrganization

Allocating Resources

Establishing Strategy-Supportive Policies

Instituting BestPractices forContinuousImprovement

Installing SupportSystems to Carryout Strategic RolesTying Rewards

to Achievementof Key Strategic Targets

Exercising StrategicLeadership

Shaping CorporateCulture to Fit Strategy

supportive “fits”

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Task # 1: 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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Building Core Competencies: The Necessary Understanding

1. Core competencies are rarely grounded in skills or know-how of a single department Typically emerge from

collaborative efforts of different work groups

2. Leveraging competencies into competitive advantage requires concentrating more effort and more talent than rivals on strengthening competencies and creating valuable organizational capabilities

4. 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,

and intellect Coordinating efforts of related work groups Collaborative networking among internal

groups and with external partners Achieving dominating depth

Senior managers have to guide the process The Ongoing Challenge: Broaden, deepen, or

modify competencies and capabilities in response to customer/market changes

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The Process of BuildingOrganizational Capabilities: Step 1

Step one is to Select people with relevant skills/experience Broaden or deepen individual abilities as

needed Mold the energies and

work products of individuals into a cooperative group effort

to create organizational ability

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The Process of BuildingOrganizational Capabilities: Step 2

As experience builds, such that the organization learns to accomplish the activity consistently well and at acceptable cost, the “ability” translates into a competence and an organizational capability

Capabilities emerge from establishing and nurturing collaborative working relationships between individuals and groups in departments and between a company and its external allies

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The Process of BuildingOrganizational Capabilities: Step 3

If mastery is achieved to the point where the organization has the capability to perform the activity better than rivals, the “capability” becomes adistinctive competence and holds potential forcompetitive advantage

This is the optimal outcomeof the capability-building process!!

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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 Each firm’s organization structure is

idiosyncratic, reflecting Prior arrangements, internal politics Executive judgments and preferences about

how to arrange reporting relationships

V ice P res id en t V ice P res id en t V ice P res id en t

C E O

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Matching Organization Structure to Strategy: The Steps to Take

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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Strategy-Driven Approachesto Organization 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

ManufacturingHuman

Resources

Engineering MarketingFinance &

Accounting

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A Process-Oriented Functional Structure

General Manager

Foundry &Castings

ScrewMachining

InspectionCustomer

Service

Milling &Grinding

Finishing &Heat Treating

Loading &Shipping

Billing &Accounting

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A GeographicOrganizational Structure

CEO

CorporateStaff

GMEurope

GMLatin America

GMNorth America

GMAsia Pacific

GMCentral Asia &

Africa

Marketing &Distribution

ProductionEngineering &Prod. Design

DistrictStaff

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A Decentralized Line-of-Business Organization Structure

CEO

CorporateServices

GMBusiness B

Functional/ProcessDepartments

GMBusiness A

Functional/ProcessDepartments

GMBusiness C

Functional/ProcessDepartments

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An SBU Organization Structure

CEO

CorporateServices

Group VPSBU II

Strategically RelatedBusiness Units

Group VPSBU I

Strategically RelatedBusiness Units

Group VPSBU III

Strategically RelatedBusiness Units

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A Matrix Organization Structure

HeadManufacture

HeadR&D

VentureManager 1

HeadMarketing

HeadFinance

VentureManager 2

VentureManager 3

VentureManager 4

R&DSpecialists

ProductionSpecialists

MarketingSpecialists

FinanceSpecialists

R&DSpecialists

ProductionSpecialists

MarketingSpecialists

FinanceSpecialists

R&DSpecialists

ProductionSpecialists

MarketingSpecialists

FinanceSpecialists

R&DSpecialists

ProductionSpecialists

MarketingSpecialists

FinanceSpecialists

General Manager

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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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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 Capacity for change and learning Collaborative efforts among people in different

functions and geographic locations Extensive use of digital technology

Change &Learning