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MBA 625 Strategy in Action

Dickson Jay Department of Management

Lecture 1 Strategy Implementation

Course Objectives

To learn how we can translate strategic goals

into action To improve our ability to develop strategydriven operational plans To be able to recognize typical strategy implementation mistakes and pitfalls

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Six Challenges
1. Knowing the strategic plan 2. Understanding how to link strategic concepts 3. 4. 5. 6.

to action Being good at defining goals, targets and measures Using operational planning to drive strategy Handling the people side well Avoiding the typical pitfalls of strategy execution

Strategy Review
Strategy is the pattern or plan that integrates

a firms major goals, policies and action sequences into a cohesive whole. Competitive moves and business approaches that management employs in running a company Managements game plan to

Please customers Position a company in its chosen market Compete successfully Achieve good business performance

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Levels of Strategy
Societal Level What role should the organization perform for society? Corporate Level What business or businesses should the company be in? Business Level How should a firm compete in a given industry? Functional Level How to integrate various sub-function activities of the firm?

A Portfolio Of Businesses

Related or Unrelated? How much diversification? Theme to create identity?

CORPORATE STRATEGY How to allocate capital?

How to build competitive advantage?

Moves to add or divest business units?

Moves to strengthen each business?

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Elements of Strategy
Where will we be active? Products, markets, geographic areas, technologies, value stage?

ARENAS

What will be our speed and sequence of moves? Speed of expansion Sequence of moves
STAGING ECONOMIC LOGIC VEHICLES

How will we get there? Internal development, Acquisitions, Licensing, Franchising JVs

DIFFERENTIATORS

How will we obtain our returns? Lowest price scale Lowest price scope Premium prices- features services How will we win? Price, Image, Reliability, Style Customized

Some Realities That We Cant Ignore

In the real world, formulation and

implementation occur simultaneously .. in other words, the process is not linear. Strategies are emergent Each context is different

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The Problems of Implementation

Formulation is Analytical and Intellectual Implementation is Action-Oriented People Implement Strategies How strategies Develop There is No One Model Different Contexts Exist

Differences between Creation and Implementation

Strategy Content
Analysis Thinking Initiate Broad strategic

Implementation
Execution Action (doing) Follow through Operational

perspective

perspective

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Strategy Development Processes

Processes of intended strategy development strategic vision, leadership and command strategic planning externally imposed strategies Processes of emergent strategy development logical incrementalism resource allocation routines cultural processes political processes

Challenges and implications intended and realized strategy the learning organization uncertain and complex conditions

Dual Nature of Implementation

ACTIONSTOBETAKEN PROGRAMSTEPS ACTIONPLANS CONNECTIONWITHOPERATIONAL PLANS&BUDGETS STRATEGICARCHITECTURE STRUCTURE MANAGEMENTCONTROL SYSTEM PERFORMANCEEVALUATION PROCESSES REWARDSYSTEM STRATEGICPLANNINGSYSTEM

Implementation

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Elements of Alignment

PEOPLE LEADERSHIP STRATEGIC GOALS SUPPORTIVE ACTIVITIES INCENTIVES STRUCTURE

CULTURE

McKinsey 7 S

STAFF SKILLS

STYLE STRATEGY

SYSTEMS SUPERORDINATE GOALS

STRUCTURE

27/06/2013

MBA 625 Strategy in Action

Dickson Jay Department of Management

Lecture 1 - Organizational Structure

Structure Follows Strategy!

Structure is the architecture for People Incentives and controls Supporting organizational processes Leadership & governance Culture Structural fit - alignment or complementarity

among implementation instruments Structural fit - alignment with the demands of the strategy

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Implementation Generic Business Strategies

Differentiation Learning orientation, flexible, horizontal coordination, Capabilities in research, marketing Close to the customer Reward employee creativity and risk-taking innovation Cost leadership Efficiency orientation, strong central authority tight cost control, frequent detailed cost controls standard operating procedures Tight supervision, routine task definition, limited employee empowerment

Classic Organization Structures with Known Strengths and Weaknesses

Functional structure Product or divisional structure Matrix organization Hybrid structures Horizontal: process and customer centered

structures

Geographic and multinational organization Structures for different diversification strategies

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Functional Structure Example

Pros and Cons of Functional Structure

Economies of scale Slow response to

within functional units Enables in-depth knowledge and skill development Enables pursuit of functional goals Works best with limited product range

environmental change Potential for hierarchical overload Poor horizontal coordination Reduced innovation Managers restricted view of organization purpose

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Divisional Organizational Structure

Pros and Cons of Divisional Structure

Responsive to Lost economy of scale

environmental change Client satisfaction and product responsibility contact points are clear Better coordination among functions decentralized decisionmaking profit and loss accountability Best in organizations with multiple products

and functional departments Loss of in-depth functional competence and technical specialization Poor coordination across product lines, weak knowledge transfer Competition for central resources, reduces cooperation Integration and standardization across product lines difficult

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Matrix Organization Example

Pros and Cons Matrix Organization

Enables coordination to Frustration of dual

meet dual customer demands Flexible sharing of human resources across products Enables both functional product skilled development Suited to complex decisions and frequent changes in and stable environment Best in medium organization sized with multiple products, projects

authority
Demands high

interpersonal skills extensive training Time-consuming, frequent meetings, conflict resolution Participants must adopt collegial not vertical type relationships Prone to tipping over, effort required to maintain balance of the matrix

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Many Types of Hybrid Structure

Horizontal Structure - Recent Innovation

Organized around core processes, breakdown

organizational silos
Self-directed, cross functional teams facilitate

communication
Employees crosstrained combined skills to

perform a task, customers drive horizontal cooperation, value assessed on customer centric measures Process owners have responsibility for process in its entirety Open culture, trust, empowerment, continuous improvement, self-control and well-being

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Horizontal Structure Example

Pros and Cons of Horizontal Structure

Enables flexibility and fast Determining core

response and consumer needs Focuses attention toward the production and valued customer Employees have broad view of organization purpose Focus on teamwork and collaboration Empowerment and control offers better quality of work life

processes often difficult

Costly changes in culture

Job design management philosophy information reward systems Traditional hierarchical managers have difficulty Costly employee training to work effectively in team environment Multi-skilling limits development of portable functional skills

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