Implementing Strategy

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• Implementing Strategy

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Overview

• Strategy Implementation
• Structure
• Vertical differentiation
• Horizontal differentiation
• Integration
• Control Systems
• Culture and Leadership

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Implementing Strategy Through Organizational
Structure

• Organizational structure
• Assigns employees to specific value creation
  tasks and roles and specifies how those are
  linked to increase efficiency, quality,
  innovation, and responsiveness to customers
• To coordinate and integrate the efforts of all
  employees

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Implementing Strategy Through Organizational
Control and Culture

• Control system
• A set of incentives to motivate employees to
  increase efficiency, quality, innovation, and
  responsiveness to customers
• Provides feedback on performance so corrective
  action can be taken
• Organizational culture
• The collection of values, norms, beliefs, and
  attitudes shared within an organizations and that
  control interactions within and outside the
  organization

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Building Blocks of Organizational Structure

• Vertical Differentiation (allocating authority
  and control)
• Hierarchy or chain of command
• Span of control (number of subordinates)
• Tall and flat organizations
• Drawbacks of taller organizations
• Less flexibility and slower response time
• Communication problems
• Distortion of commands
• Expense

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Allocating Authority and Responsibility

• Centralization or decentralization?
• Delegating responsibility reduces information
  overload and enables managers to focus on
  strategy
• Empowering lower-level managers increases
  motivation and accountability
• Empowering employees requires fewer managers
• Centralized decisions allow easier coordination
  of activities
• Centralization means that decisions fit broad
  organizational objectives

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Building Blocks of Organizational Structure

• Integration and integrating mechanisms
• Direct contact among managers across functions or
  divisions
• Liaison roles
• Gives one manager in each function or division
  the responsibility for coordinating with the
  other
• Teams

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Steps in Designing an Effective Control System
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Levels of Organizational Control
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Types of Strategic Control Systems

• Output control
• Often financial and almost always quantitative
• Performance goals for each division, department,
  and employee
• Behavior control
• Rules and procedures to direction actions or
  behaviors of divisions, functions, and
  individuals
• Operating budget
• Standardization
• Organization culture

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Horizontal Differentiation

• Increasing responsiveness to customer groups
  products, markets and place
• Group people by product
• Group people and functions by customer or market
  segments
• Group people by geography

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Kodaks Product Structure
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Market Structure
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Geographic Structure
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Implementing Strategy

• Matrix structure
• Value chain activities are grouped by function
  and by product or project
• Flat and decentralized
• Promotes innovation and speed
• Norms and values based on innovation and product
  excellence
• Product-team structure
• Tasks divided along product or project lines
• Functional specialists are part of permanent
  cross-functional teams

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Matrix Structure
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Product-Team Structure
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Implementing Strategy

• Matrix and Product-team structures are useful in
  competing in fast-changing, high-tech
  environments
• Matrix and Product-team structures are also
  useful in multi-business companies

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Managing Corporate Strategy Through the
Multidivisional Structure

• Functional or product structures are not
  sufficient when a company enters new industries
• Multidivisional structure innovations
• Divisions (operating responsibility)
• Corporate headquarters staff to monitor divisions
  (strategic responsibility)
• Each division may be organized differently

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Thought for the Day
Take time to deliberate but when the time for
action arrives, stop thinking and go in. Andrew
Old Hickory Jackson