Strategy Implementation

1
Strategy Implementation

• What must we do to put the strategy in place,
  execute it proficiently, and produce good
  results?
• Creating FITS between strategy and external
  environment and creating FITS inside the
  organization
• Control, coordination, and motivation issues

2
Figure 10.1 The Eight Componentsof the
Strategy Execution Process
The Action Agenda for Executing Strategy
3
Figure 10.2 The Three Components of Building a
Capable Organization
4
Matching Organization Structure to Strategy

• Few hard and fast rules for organizing
• The One Big Rule The role and purpose of the
  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

5
What is Structure?

• How the firm is organized?
• Includes
• Reporting relationships
• How coordination is achieved
• Authority
• Degree of centralization
• Degree of integration
• Formalization
• Used to control, coordinate, and motivate
  employees and the activities they perform

6
Figure 10.3 Structuring the Work Effort to
Promote Successful Strategy Execution
7
Important Implications of Structure

• Appropriate structure depends on the firms
  strategy
• Changes in strategy typically require a new
  structure
• New strategy often involves different skills,
  different key activities, different staffing and
  organizational requirements
• Hence, a new strategy signals a need to reassess
  the organization structure

8
Perspectives on Organizing

• All basic organization designs have
  strategy-related strengths and weaknesses
• No ideal organization design exists
• To do a good job of matching structure to
  strategy
• Pick a basic design
• Modify as needed
• Supplement with appropriate coordinating,
  networking, and communication mechanisms to
  support effective execution of the strategy

9
Structural Arrangements The Basics

• Simple
• Functional and process specialization
• Geographic organization
• Multidivisional
• Strategic business units

10
A Traditional FunctionalOrganizational
Structure
General Manager
Research Development
Manufacturing
Human Resources
Engineering
Marketing
Finance Accounting
11
A Process-Oriented Functional Structure
12
Functional Structure for Cost Leadership Strategy

• Operations is main function
• Process engineering is emphasized over RD
• Large centralized staff
• Formalized procedures
• Structure is mechanical, job roles highly
  structured

13
Functional Structure for Differentiation Strategy

• Marketing is the main function for tracking new
  product ideas
• New product RD is emphasized
• Most functions are decentralized
• Formalization is limited to foster change and
  promote new ideas
• Overall structure is organic job roles are less
  structured

14
A GeographicOrganizational Structure
CEO
15
A Multidivisional Organizational Structure
16
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
17
Options to Supplement theBasic Organization
Structure

• Coordinating mechanisms
• Cross-functional task forces, special project
  teams, self-contained work teams, etc
• Instituting networking and communications
  arrangements that support implementation