CHAPTER 10 : BUILDING ORGANIZATION CAPABLE OF GOOD STRATEGY EXECUTION

Learning Objectives :

1) Gain command of what managers must do to execute strategy successfully .

2) Learn why hiring , training and retaining the right people constitute a key component of the strategy execution process .

3) Understand that good strategy execution requires continuously building and upgrading the organization's resources and capabilities .

4) Recognize what issues to consider in establishing a strategy-supportive organizational structure and organizing the work effort .

5) Become aware of the pros and cons of centralized and decentralized decision making in implementing the chosen strategy .

the principal components of the strategy execution process : 

1) Staff the organization with managers and employees capable of executing the strategy well.

2) Build the organizational capabilities required for successful strategy execution.

3) Create a strategy-supportive organizational structure .

4) Allocate sufficient resources (budgetary and otherwise) to the strategy execution effort .

5) Institute policies and procedures that facilitate strategy execution.

6) Adopt best practices and business processes that drive continuous improvement in strategy execution activities .

7) Install information and operating systems that enable company personnel to carry out their strategic roles proficiently.

8) Tie rewards and incentives directly to the achievement of strategic and financial targets.

9) Instill a corporate culture that promotes good strategy execution.

10) Exercise the internal leadership needed to propel strategy implementation forward .

the 10 basic tasks of the strategy execution process : 

• Build the organizational capabilities required for successful strategy execution
• Establish a strategy-supportive organizational structure.
• Allocate sufficient resources to the strategy execution effort .
• Institute policies and procedures that facilitate strategy execution .
• Adopt best practices and business processes that drive continuous improvement in strategy execution activities .
• Install information and operating systems that enable company personnel to carry out their strategic roles proficiently.
• Tie rewards and incentives directly to the achievement of strategic and financial targets.
• Instill a corporate culture that promotes good strategy execution.
• Exercise the internal leadership needed to propel strategy implementation forward .

THREE key actions : 

² Staffing the organization - putting together a strong management team,and recruitment and retaining employees with the needed experience , technical skills and intellectual capital.

² Acquiring , developing and strengthening strategy-supportive resources and capabilities - accumulating the required resources ,developing proficiencies in performing strategy-critical value chain activities , and updating the company’s capabilities to match changing market conditions and customer expectations.

² Structuring the organization and work effort - Organizing value chain activities and business processes,establishing lines of authority and reporting relationships, and deciding how much decision-making authority to delegate to lower-level managers and frontline employees.

CENTRALIZED ORGANIZATIONAL STRUCTURES 

BASIC TENETS : decisions on most matters of importance should be in the hands of top-level managers who have the experience,expertise,and judgement to decide what is the best course of action , lower-level personnel have neither the knowledge,the time,nor the inclination to properly manage the tasks they are performing , strong control from the top is a more effective means for coordinating company actions

CHIEF ADVANTAGES ; fixes accountability through tight control from the top , eliminates potential for conflicting goals and actions on the part of lower-level managers , facilitates quick decision making and strong leadership under crisis situations.

PRIMARY DISADVANTAGES ; lengthens response times by those closest to the market conditions because they must seek approval for their actions , does not encourage responsibility among lower-level managers and rank-and-file employees , discourages lower-level managers and rank-and-file employees from exercising any initiative .

DECENTRALIZED ORGANIZATIONAL STRUCTURES 

BASIC TENETS : decision-making authority should be put in thee hands of the people closest to,and most familiar with,the situation , those with decision-making authority should be trained to exercise good judgment , a company that draws on the combined intellectual capital of all its employees can outperform a command-and-control company.

CHIEF ADVANTAGES ; encourages company employees to exercise initiative and act responsibly , promotes greater motivation and involvement in the business on the part of more company personnel , spurs new ideas and creative thinking , allows for fast response to market change , entails fewer layers of management . 

PRIMARY DISADVANTAGES ; higher-level managers may be unaware of actions taken by empowered personnel under their supervision , plus the organization at risk of empowered employees happen to make 'bad' decisions  can impair cross-unit collaboration .