Lecture Strategic Management: Lesson 4 - Executing a strategy

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Lesson 4 – Executing a strategy has outline 4.1 Superior strategy execution – another path to competitive advantage. Gain command of what managers must do to build an organization capable of good strategy execution; Learn why resource allocation should always be based on strategic priorities; Understand why policies and procedures should be designed to facilitate good strategy execution.

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Nội dung Text: Lecture Strategic Management: Lesson 4 - Executing a strategy

Lesson 4 – EXECUTING A STRATEGY McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
LESSON 4 - OUTLINE u 4.1 Superior strategy execution – another path to competitive advantage 4-2
LO1 Gain command of what managers must do to build an organization capable of good strategy execution. LO2 Learn why resource allocation should always be based on strategic priorities. LO3 Understand why policies and procedures should be designed to facilitate good strategy execution. LO4 Understand how process management programs that drive continuous improvement help an organization achieve operating excellence. 4-3
(cont’d) LO5 Recognize the role of information and operating systems in enabling company personnel to carry out their strategic roles proficiently. LO6 Learn how and why the use of well- designed incentives and rewards can be management’s single most powerful tool for promoting operating excellence. LO7 Gain an understanding of how and why a company’s culture can aid the drive for proficient strategy execution. LO8 Understand what constitutes effective managerial leadership in achieving superior strategy execution. 4-4
4.1. SUPERIOR STRATEGY EXECUTION—ANOTHER PATH TO COMPETITIVE ADVANTAGE McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Crafting versus Executing Strategy Crafting the Strategy Executing the Strategy Ø Primarily a market- Ø Primarily an operations- driven activity driven activity Ø Successful strategy Ø Successful strategy making depends on execution depends on v Attracting and pleasing management’s ability to customers v Direct change v Outcompeting rivals v Improve operations v A firm’s collection of v Build a strategy-supportive resources and capabilities culture v Get things done and deliver good results 4-6
 Core Concept  Good strategy execution requires a team effort. All managers have strategy executing responsibility in their areas of authority, and all employees are active participants in the strategy execution process. 4-7
Who Is Responsible for Implementation of the Chosen Strategy? u The organization’s chief executive officer and other senior managers are responsible for ensuring that the strategy is executed successfully. u It is middle and lower-level managers who must see that employees and work groups perform the strategy-critical activities that result in achievement of the firm’s performance targets. u All managers are involved and thinking: Ø “What does my area have to do to implement its part of the strategic plan, and what should I do to get these things accomplished effectively and efficiently?” 4-8
4.1.1. Principal Managerial Components of the Strategy Execution Process
4.1.1. Principal Managerial Components of the Strategy Execution Process 1. Building an organization with the capabilities, people, and structure needed to execute the strategy successfully. 2. Allocating ample resources to strategy-critical activities. 3. Ensuring that policies and procedures facilitate rather than impede effective strategy execution. 4. Adopting process management programs that drive continuous improvement in how strategy execution activities are performed. 4-10
4.1.1. Principal Managerial Components of the Strategy Execution Process (cont’d) 5. Installing information and operating systems that enable company personnel to perform essential activities. 6. Tying rewards directly to the achievement of performance objectives. 7. Fostering a corporate culture that promotes good strategy execution. 8. Exerting the internal leadership needed to propel implementation forward. 4-11
FIGURE 10.1 The Eight Components of Strategy Execution 4-12
4.1.2. Building an Organization with the Capabilities, People, and Structure Needed for Good Strategy Execution
4.1.2. Building an Organization with the Capabilities, People, and Structure Needed for Good Strategy Execution Organization- building actions Staffing the Building and Structuring the organization’s strengthening organization and managerial talent capabilities and work effort core competencies 4-14
4.1.2.1. Staffing the Organization— Building Managerial Talent u Assembling a critical mass of talented managers is a cornerstone organization- building task: Ø Putting people with strong strategy implementation skills and a results orientation in key managerial posts Ø Replacing weak executives, strengthening the skills of those who remain, and bringing in fresh outsiders 4-15
4.1.2.2. Recruiting and Retaining a Capable Workforce u Thequality of a firm’s people is an essential ingredient of successful strategy execution. Ø Staffing the right people at all levels is required to ensure competent performance of value chain activities. Ø Find, develop, and then retain engaged employees with excellent compensation packages, opportunities for rapid advancement and professional growth, and challenging and interesting assignments. 4-16
Tactics for Recruiting and Retaining a High-Performance Workforce u Put extra effort into screening and evaluating job applicants— selecting for skill sets, energy, initiative, judgment, aptitudes for learning, and adaptability to the firm’s culture. u Invest in training programs that continue throughout employees’ careers. u Provide promising employees with challenging, interesting, and skill-stretching assignments. u Rotate people through jobs that span functional and geographic boundaries. u Retain high-performing employees via promotions, salary increases, performance bonuses, stock options and equity ownership, fringe benefit packages, and other perks. u Coach average performers to improve their skills and capabilities, weeding out underperformers and benchwarmers. 4-17
Building and Strengthening Core Competencies and Competitive Capabilities uA firm’s core competencies and capabilities must continuously be deepened, broadened, upgraded, and replaced due to: Ø The need for better strategy execution Ø Changing or new strategic requirements Ø Evolving market conditions and customer expectations u Organization building requires deciding when and how to recalibrate competencies and capabilities. 4-18
Concepts and Connections 10.1 Toyota’s Legendary Production System—A Capability That Translates into Competitive Advantage The heart of Toyota’s strategy in motor vehicles is to The TPS utilizes a unique vocabulary of terms (such as outcompete rivals by manufacturing world-class, quality kanban, takt-time, jikoda, kaizen, heijunka, monozukuri, poka vehicles at lower costs and selling them at competitive yoke, and muda ) that facilitates precise discussion of price levels. Executing this strategy requires top-notch specific TPS elements. In 2003, Toyota established a Global manufacturing capability and super-efficient management Production Center to efficiently train large numbers of shop- of people, equipment, and materials. Toyota began floor experts in the latest TPS methods and better operate an conscious efforts to improve its manufacturing competence increasing number of production sites worldwide. Since more than 50 years ago. Through tireless trial and error, the then, additional upgrades and refinements have been company gradually took what started as a loose collection introduced, some in response to the large number of defects of techniques and practices and integrated them into a full- in Toyota vehicles that surfaced in 2009–2010. fledged process that has come to be known as the Toyota Production System (TPS). The TPS drives all plant There is widespread agreement that Toyota’s ongoing effort operations and the company’s supply chain management to refine and improve on its renowned TPS gives it important practices. TPS is grounded in the following principles, manufacturing capabilities that are the envy of other motor practices, and techniques: vehicle manufacturers. Not only have such auto manu- • Use just-in-time delivery of parts and components to the facturers as Ford, Daimler, Volkswagen, and General Motors point of vehicle assembly. attempted to emulate key elements of TPS, but elements of • Develop people who can come up with unique ideas for Toyota’s production philosophy have been adopted by production improvements. hospitals and postal services. • Emphasize continuous improvement. • Empower workers to stop the assembly line when there’s Sources: Information posted at www.toyotageorgetown.com; a problem or a defect is spotted. Hirotaka Takeuchi, Emi Osono, and Norihiko Shimizu, “The • Deal with defects only when they occur. Contradictions that Drive Toyota’s Success,” Harvard • Ask yourself “Why?” five times. Business Review 86, no. 6 (June 2008), pp. 96–104; and • Organize all jobs around human motion to create a Taiichi Ohno, Toyota Production System: Beyond Large- production/assembly system with no wasted effort. Scale Production (New York:Sheridan Books, 1988). • Find where a part is made cheaply and use that price as a benchmark. 4-19
Concepts and Connections 10.2 What Companies Do to Motivate and Reward Employees Companies have come up with an impressive variety of motivational and reward practices to help create a work • Nordstrom, widely regarded for its environment that energizes employees and promotes better strategy execution. Here’s a sampling of what firms are doing: superior in-house customer • Google has a sprawling 20-building headquarters complex service experience, typically pays known as the Googleplex where its several thousand employees have access to 19 cafes and 60 snack centers, its retail salespeople an hourly unlimited ice cream, four gyms, heated swimming pools, ping- wage higher than the prevailing pong and pool tables, and community bicycles to go from building to building. Management built the Googleplex to be rates paid by other department “a dream workplace” and a showcase for environmentally correct building design and construction. store chains plus a commission on • Lincoln Electric, widely known for its piecework pay scheme each sale. Spurred by a culture that and incentive bonus plan, rewards individual productivity by paying workers for each non-defective piece produced. encourages salespeople to go all Workers have to correct quality problems on their own time; out to satisfy customers and to defects in products used by customers can be traced back to the worker who caused them. Lincoln’s piecework plan seek out and promote new fashion motivates workers to pay attention to both quality and volume produced. In addition, the company sets aside a substantial ideas, Nordstrom salespeople portion of its profits above a specified base for worker bonuses. To determine bonus size, Lincoln Electric rates each often earn twice the average worker on four equally important performance measures: (1) incomes of sales employees at dependability, (2) quality, (3) output, and (4) ideas and cooperation. The higher a worker’s merit rating, the higher the competing stores. The typical incentive bonus earned; the highest rated workers in good profit years receive bonuses of as much as 110 percent of Nordstrom salesperson earns their piecework compensation. nearly $38,000 per year, and sales department managers earn, on average, $49,500 per year. 4-20