Critical Success Factors

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Planning
Organizing
Critical Success Factors
Stakeholders
Marketing
Economic
Top Management
INTERNAL
Vision
Operations
Finance
EXTERNAL
Social
Political
Mission
Human Resources
Technological
Strategy
Middle Management
First-Line Management
Controlling
Directing
2
Process of Management

• Planning
• Strategy
• Organizing
• Directing / Leading
• Motivating
• Controlling
• Change and Innovation

3
Planning Process
Determine Goals / Objectives
Develop Plans
Measure Results and Make Changes
Implement Plans
4
Purpose of Planning

• set goals (the objectives the business hopes to
  achieve)
• formulate strategy

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Qualities of Goals / Objectives

• clear and specific
• objective and measurable
• challenging but attainable
• realistic wrt environment
• time limit
• prioritized
• fit with other objectives - integrated
• flexible
• stated in terms of accomplishments not activities

S.M.A.R.T.
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• Levels of Planning

Long-term goals (5-10 yrs)

• Top Management
• organizational structure
• strategy-structure-performance

Intermediate-term goals (1-5 yrs.)
Middle Management of functional areas
First Line Management
Short-term goals (lt1 yr.)
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Thinking Strategically

• decide where the business is going (direction)
  and how it intends to get there (strategy)
• direction articulated in the Vision statement
• and further refined in the Mission statement

target customers and markets principal products
or services geographic domain core technologies
survival, growth and profitability company
philosophy company self-concept desired public
image
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Strategic Planning Process
at start-up
External Environment
Stakeholders
SWOT Industry Analysis Core Competencies
Competitive Advantage
Vision and Mission
Internal Environment
X as established org.
Goals / Objectives
Strategy
Action
Review
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S.W.O.T. Analysis
Opportunities Threats
Economic
Marketing
Vision
Social
EXTERNAL
Political
Mission
INTERNAL
Operations
Finance
Strategy
Human Resources
Technological
Strengths Weaknesses
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Industry Analysis
Number and power of
Buyers
Potential Entrants

• Profitability
• Growth

Suppliers
Competitors
Substitutes
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Competencies and Competitive Advantages

• Core Competence
• Distinctive Competence
• Competitive Advantage
• Sustainable Competitive Advantage

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Resource-Based View of the Firm

• view firm as bundle of capabilities
• actively seek ways to extract value from
  capabilities

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Levels of Strategies

• 3 levels of strategic planning
• corporate
• business (competitive)
• unit / functional
• Corporate Strategy
• portfolio / master strategies - what
  business(es) should we be in?- SBUs
• concentration
• growth
• integration
• diversification
• investment reduction

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Corporate-level strategies

• Concentration
• focusing on one product or product line
• Outcome
• Growth
• market penetration
• new product development
• geographic expansion
• export management firm
• licensing
• foreign sales office
• wholly owned subsidiary

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Corporate-level strategies (contd)

• Integration (Merger or Acquisition within value
  chain)
• vertical integration
• horizontal integration
• Diversification
• branching out into related or unrelated products
  or market segments
• product diversification
• market diversification
• concentric diversification
• conglomerate or portfolio diversification

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Corporate-level strategies (contd)

• Investment Reduction
• retrenchment
• divestiture (liquidation)
• consolidation

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Business-level strategies

• how do we compete in the business(es) we are
  in?
• Competitive Position
• market/product/service emphasis
• Michael Porters competitive strategy - the
  specific approach a business chooses to pursue
  for addressing its environment
• generic competitive positions...

• Low-cost Leadership
• Differentiation
• Focus

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• Low-Cost Leadership
• focus on value and price
• Differentiation
• focus on specific market niche and its needs
• Focus
• selecting a market segment and serving its
  customers better than competitors either from a
  price or product (unique features) perspective

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• Business-Level Strategies
• Lower Cost Differentiation
• Broad
• Target
• Comp.
• Scope
• Narrow
• Target

Cost Leadership
Differentiation
Focus
Cost Focus
Differentiation Focus
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Organizing Process
Break Down the Work
Link the Parts Together
Monitor Results and Make Changes
Structure
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• Organizational Design
• process of developing organizational structure
• Break down the work to be performed (division of
  labour)
• specialization
• departmentalization-
• function, geography, product, customer, process

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Organization Chart(depicts the organization
structure)
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Customer-Driven Organizational Design

• restructuring
• teams
• cross-functional, participatory, self-managed
• strategic rightsizing vs. downsizing
• integrated structures vs. functional departments
• matrix - cross-functional teams - networking
• empowerment - decentralization
• reengineering - continuous improvement - TQM
• inside out - outsourcing

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• Evolution of organizational structures
• growth via creativity crisis of leadership
• growth via direction crisis of autonomy
• growth via delegation crisis of control
• growth via coordination crisis of red tape
• growth via collaborationcrisis?

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• Whats not on the organization chart?
• Culture
• Informal organizations
• old vs. new structures
• importance of open communication
• listening!
• remove barriers
• facilitate communication

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The Role of Culture

• the shared experiences, stories, beliefs, and
  norms that characterize a firm
• powerful because
• Purposes/Implications

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Directing/Leading/Motivating Process
Determine Employee Needs
Establish Reward System based on Needs
Monitor Results and Make Changes
Reinvent Work
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Gaining Employee Commitment

• performance is a function of both talent and
  commitment
• talent has to be energized and committed to
  achieve its full potential
• level of commitment comes from degree of
  motivation

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• BUT motivation comes from inside
• AND each worker is unique
• managers must understand each workers needs and
  tailor approach to individual
• must understand human motivation...

NEED AROUSAL
BEHAVIOUR CHOICE
BEHAVIOUR
FEEDBACK/ADJUST
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NEED AROUSAL Theories

• Abraham Maslow

self-actualization
self-esteem
social
safety and security
physiological
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• management implications?
• Alderfers ERG model
• reworked Maslow to align more closely with
  empirical research
• 3 need categories

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• Frederick Herzberg
• when asking people what causes them to be
  satisfied and what causes them to be dissatisfied
  - found that the factors were separate and
  distinct Two-Factor Theory

Job Dissatisfn --- NO job dissatisfn NO job
satisfn --- Job Satisfn
HYGIENE FACTORS
MOTIVATOR FACTORS
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• If hygiene factors fall below a certain level
  what will happen?
• must build motivators into the job
• achievement
• recognition
• advancement
• responsibility
• growth
• challenging and interesting work

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• Job Enrichment and Job Redesign
• combine tasks
• create natural work units
• expand vertically
• open feedback channels

35

• Hackman Oldham
• redesign jobs to suit level of workers growth
  needs Job Characteristics Model
• 5 core dimensions in every job
• variety, task identity, task significance,
  autonomy, feedback

• People are internally motivated when

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• critical psychological states necessary for
  motivation come from the core dimensions
• Core Dimensions Critical Psych. States Outcomes

• Variety
• Task Identity
• Task Significance
• Autonomy
• Feedback

Meaningfulness of Work
Responsibility for Outcomes
Knowledge of Results
depending on the level of growth needs
37
BEHAVIOUR CHOICE Theories

• cognitive vs. acognitive
• Cognitive - conscious decision
• Victor Vroom - Expectancy Theory
• motivation is a function of
• management implications?

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• Acognitive - subconscious decision
• B.F. Skinner - Reinforcement Theory

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FEEDBACK Theories

• Douglas McGregor
• a managers assumptions about workers will
  influence his/her management style which in turn
  influences motivation
• Theory X / Theory Y
• Theory X behaviour... organizational problems
• mistaken notion of cause and effect
• Theory Y assumptions... organizational design
  Theory X behaviour problems
• management implications?

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• Blake Moutons Managerial Grid

concern for production
Team Leader
Country Club
HI
Middle of the Roader
concern for people
Early Retirement
Sherman Tank
LOW
HI
LOW
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Controlling Process
Set Performance Standards Indicators
Measure Actual Performance
Compare Actual vs. Plans
Take Corrective Action / Making Changes
42

• Standards Critical Success Factors
• achieving financial performance
• meeting customer needs
• building quality products and services
• encouraging innovation and creativity
• gaining employee commitment
• Measuring Results
• what are the indicators?
• Making Changes...

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• Types of Controls
• preventative
• steering
• corrective
• Principles
• economy
• efficiency
• effectiveness
• timeliness
• usefulness

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Customer Perspective

• Meeting customer needs
• Customer sensitivity and service
• Timeliness

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Meeting Customer Needs

• more complicated to assess than financial
  performance
• impossible to make comparisons with other firms
• if unmeasured - problem will not be corrected
  until it is too late!
• perform a Gap Analysis

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• Steps
• 1. Determine real gap
• 2. Determine sources and causes of gap
• 3. Take corrective action

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Customer Sensitivity and Service

• customer service
• can be measured using gap analysis
• customer sensitivity (how well the business
  reacts to customer communications)

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Timeliness

• important efficiency and customer service measure

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Quality and Value Perspective

• benchmark indicators against other firms
• Product Quality indicators
• reliability
• durability
• ease of maintenance
• ease of use

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• Service Quality indicators
• knowledgeable staff
• responsiveness
• empathy
• tangibles

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Innovation and Creativity Perspective

• measure processes (creativity) as well as results
  (innovations)
• partly objective
• partly subjective
• ambience
• excitement

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Employee Perspective

• measure how well the business utilizes its
  workers, how good their performance actually is,
  and how committed they are
• Workforce Utilization and Productivity
• Performance Appraisal
• Employee Satisfaction and Commitment

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Workforce Utilization Productivity

• important for efficiency
• easy to measure if workers are producing tangible
  products and individual input is identifiable and
  controllable
• must measure underutilization, overutilization,
  allocation/mix of workers

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Performance Appraisal

• process used to measure productivity
• measure and communicate to employee
• focus on activities an outcomes critical for
  performance
• objective and subjective

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Employee Satisfaction and Commitment

• fundamental for building business culture
• objective indicators
• absenteeism and turnover rates
• morale/opinion surveys and exit interviews
• subjective approaches
• staff meetings to discuss problems
• recruitment and retention committees

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Making Changes

• Innovation and change are necessary for success
• random change vs. planned change
• Planned change
• intentional movement
• key is to begin when things are still going well

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• Resistance to Change
• why?
• this is NORMAL!
• Philosophy of Change
• Kurt Lewin
• unfreezing, moving, refreezing

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• Process of Planned Change

Awareness of the need for change
Leaders who will champion change
Vision of the desired future state
Plan and manage the action steps
Monitor and modify
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Building Innovative Organizations

• encourage risk and experimentation
• tolerate and learn from mistakes
• embrace diversity and differences