MAN 6721 APPLIED STRATEGY

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MAN 6721APPLIED STRATEGY BUSINESS
POLICYChapter 11 Part of 12

• Building Resource Strengths Capabilities
• Managing Internal Operations (Chapter 12, in
  part)

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Crafting v. Executing Strategy

• Crafting the Strategy
• Primarily a market-driven activity
• Successful strategy making depends on
• Business vision
• Perceptive analysis of market conditions and
  resource capabilities
• Attracting and pleasing customers
• Outcompeting rivals
• Using company resources and capabilities to forge
  a competitive advantage

• Executing the Strategy
• Primarily an operations-driven activity
• Successful strategy execution depends on
• Good organization-building and people management
• Creating a strategy-supportive culture
• Continuous improvement
• Getting things done and delivering good results

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Executing the Strategy

• An action-oriented, make-things happen task
  involving managements ability to (Conceive,
  Believe Achieve)
• Direct organizational change
• Achieve continuous improvement inoperations and
  business processes
• Move toward operating excellence
• Create and nurture astrategy-supportive culture
• Consistently meet or beat performance targets
• Tougher and more time-consuming than crafting
  strategy

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Three Approaches to Change Getting Ahead of the
Change Curve

• Anticipatory Change Most difficult to initiate
  but the Cotly to the Organization in the
  long-run. But provides the greatest Competitive
  Advantage
• Reactive Change still difficult to initiate but
  has moderate cost.
• Crisis Change easiest to initiate but extremely
  costly to the organization and threatens survival.

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Putting Together a Strong Change Management Team

• Change Leaders with Anticipatory capabilities are
  in high demand
• Possess a high Inquisitiveness Quotient (iQ)
• Continually scanning the MEA
• Challenge existing maps
• Validate the need for change
• Create new schemes and approaches
• Develop future leaders

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Implementing Change

• ? Art as much as a Science
• Three Broad Roles of Change
• Change Strategist Visionary
• Change Implementers (Champions)
• Manage and facilitate the Change Process
• Change Recipients (Effected Employees)
• Intellectual capital, not tangible assets, is
  increasingly being viewed as the most important
  investment
• Talented people are a prime source of competitive
  advantage

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Three-Stage Process of Developing Competences and
Capabilities

• 1. Develop ability to do something
• 2. As experience builds,ability can translate
  into acompetence or capability
• 3. If ability continues to be polished and
  refined, it can become a distinctive competence,
  providing a potential competitive advantage!

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Approaches toDeveloping Competencies

• Internal development involves either
• Strengthening the companys base of skills,
  knowledge, and intellect or
• Coordinating and networking the efforts of
  various work groups and departments
• Partnering with key suppliers, forming strategic
  alliances, or maybe even outsourcing certain
  activities to specialists
• Buying a company that has needed capabilities and
  integrating these competences into the firms
  value chain

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Matching OrganizationStructure to Strategy

• Few hard and fast rules for organizing
• One Big Rule Role and purpose of organization
  structure is to support and facilitate good
  strategy execution!
• Each firms structure is idiosyncratic,
  reflecting
• Prior arrangements and internal politics
• Executive judgments and preferences about how to
  arrange reporting relationships
• How best to integrate and coordinate work effort
  of different work groups and departments
• KEY Resource Capability

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Matching Organizational Structure Strategy

• ? The Environmental ? Organizational Link
• Step 1 Decide which Value Chain activities to
  perform internally
• and which to Outsource
• Step 2 Make Strategy-Critical activities the
  main building blocks
• Step 3 Determine how much authority to
  delegate to whom
• Step 4 Provide for Internal Cross-Unit
  coordination
• Step 5 Provide for Collaboration with outsiders

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Organizational Structures ofthe Future Overall
Themes

• Revolutionary changes in how work is organized
  have been triggered by
• New strategic priorities
• Rapidly shifting competitive conditions
• Tools of organizational design include
• Empowered managers and workers
• Reengineered work processes
• Self-directed work teams
• Networking with outsiders
• Rapid incorporation of Internet technology

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Characteristics ofOrganizations of the Future

• Fewer barriers between
• Different vertical ranks
• Functions and disciplines
• Units in different geographic locations
• Company and its suppliers, distributors,strategic
  allies, and customers
• Capacity for change and rapid learning
• Collaborative efforts across the
  differentfunctions and geographic locations
• Extensive use of Internet technology
• KEY Flexible Networking Structure and
  decision-core

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Strategic Allocation of Resources

• Allocating resources in ways to support effective
  strategy execution involves
• Funding strategic initiatives that can makea
  contribution to strategy implementation
• Funding efforts to strengthen competenciesand
  capabilities or to create new ones
• Shifting resources downsizing some
  areas,upsizing others, killing activities no
  longer justified,and funding new activities with
  a critical strategy role

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Creating Strategy-SupportivePolicies and
Procedures

• Role of new policies
• Channel behaviors and decisions to promote
  strategy execution
• Counteract tendencies of people to resist
• chosen strategy
• Too much policy can be as stifling as
• Wrong policy or as
• Chaotic as no policy
• Often, the best policy is empowering employees,
  letting them operate between the lines anyway
  they think best

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Installing Strategy-Supportive Information and
Operating Systems

• Essential to promote successful strategy
  execution
• Types of support systems
• On-line data systems
• Internet and company intranets
• Electronic mail
• E-commerce systems
• Mobilizing information and creating systems to
  use knowledge effectively can yield a
• Competitive advantage

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Exercising Adequate ControlOver Empowered
Employees

• Challenge KEY is not to become stifling
• How to ensure actions of employees stay within
  acceptable bounds
• Control approaches
• Managerial control
• Establish boundaries on what not to do, allowing
  freedom to act with limits
• Track and review daily operating performance
• Peer-based control

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Linking the Reward Systemto Performance Outcomes

• Tying rewards to the achievement of strategic and
  financial performance targets is managements
  single most powerful tool to win the commitment
  of company personnel to effective strategy
  execution
• Objectives in designing the reward system
• Generously reward those achieving objectives
• Deny rewards to those who dont
• Make the desired strategic and financial
  outcomes the dominant basis for designing
  incentives, evaluating efforts, and handing out
  rewards