4. Strategy Implementation .1. Business Policy and Strategy Strategic management
- 2. What is strategy implementation? • It is putting the formulated strategy into effect. • It is the doing part of the job.
- 3. Strategy implementation as a process • It is a process of selecting (1)the most appropriate structure for the chosen strategy: ensure that structure and strategy are compatible (2)Mechanisms (polices, approaches, systems) for resource allocation, and (3)Applying suitable motivation: incentives, inspirations by the leader
- 4. Importance of governance in strategy implementation • Corporate Governance (CG) is one of the most important mechanisms in strategy implementation • CG: directing, governing, overseeing the entire organization, including the implementation of the selected strategy • CG; managing workers, managing various stakeholders, appointing leaders (CEOS and board of directors etc…), ensuring harmonious labor relationships etc…. • Corporate governance is the set of mechanisms used to manage the relationship among stakeholders that is used to determine and control the strategic direction and performance of organizations. • The relationship between owners and managers, and the various mechanisms that owners use to govern managers to ensure that they comply with their responsibility to maximize shareholder value are central to the issue of corporate governance. • Electing board of directors, appointing a CEO are some of internal governance mechanisms.
- 5. organizational structure and how it helps implement strategies • What is an organizational structure? It is a framework of an organization that is used to depict authority, responsibility, and reporting directions within an organization. Types of organizational Structure - Simple Structure – small/micro business - Functional structure- HRM, Marketing, Finance, Procurement, etc - Geographic/Divisional Structure- geographic locations of business - Product Structure: types of products (product line based): Software vs hardware dept - SBU Structure: Strategic Business Units of an organization - Matrix Structure: it is mostly the combination of Functional and any other option such as geographic or product depart mentation
- 6. Basic Forms of Structure Functional Structure Divisional Structure - this is based on geographic area, or product/ service or customers or process ( eg. Residential program vs distance program) Strategic Business Unit Structure (SBU) Matrix Structure
- 7. Functional Structure • Group tasks and activities based on business functions: marketing, Finance, Production, HRM etc
- 8. Functional Structure pros and cons
- 9. Divisional Structure • Can be organized in one of four ways: • - geographic area • - product or service • - customer • - process ( eg. Residential program vs distance program)
- 11. Strategic Business Unit Structure (SBU) • Group similar divisions into strategic business units and delegate authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer of the overall company
- 12. Matrix Structure •The most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication
- 13. Matrix structure
- 14. the relationship between structure and strategy- reciprocal relationship • Strategy and structure have a reciprocal relationship. This relationship highlights the interconnectedness between strategy formulation and strategy implementation. • In general, the reciprocal relationship finds structure flowing from or following the selection of the firm’s strategy. Once in place, structure can influence current strategic actions as well as choices about future strategies.
- 15. Corporate culture and strategy implementation • The corporate culture is a pattern of norms, attitudes, values, beliefs, and customs that governs the behavior of people within the organization. • It is pervasive and refers to how people within the corporation think and act as members of the organization. • Shared beliefs among the members of an organization • A system of shared meaning/beliefs held by members of an organization
- 16. corporate culture and strategy implementation The following factors explain the essence of culture 1) Innovation and risk taking. The degree to which employees are encouraged to be innovative and take risks. 2) Attention to detail. The degree to which employees are expected to exhibit precision, analysis, and attention to detail. 3) Outcome orientation. The degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve them.
- 17. corporate culture and strategy implementation 4) People orientation. The degree to which management decisions take into consideration the effect of outcomes on people within the organization. 5) Team orientation. The degree to which work activities are organized around teams rather than individuals. 6) Aggressiveness. The degree to which people are aggressive and competitive rather than easygoing. 7) Stability. The degree to which organizational activities emphasize maintaining the status quo in contrast to growth.
- 18. Major strategic leadership actions in strategy implementation What is leadership, to begin with? Leadership is influencing the behavior of followers(employees) to get compliance/adherence with the goal to get the job done. What is strategic leadership? STL= Visionary, flexible, and able to empower followers Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.
- 19. Key Strategic leadership Actions 1) Determining Strategic Direction : head towards the vision of the organization. 2) Effectively Managing the Firm’s Resource Portfolio 3) Exploiting and Maintaining Core Competencies 4) Developing Human Capital and Social Capital 5) Sustaining Entrepreneurial Mind-Set - encourage and promote innovation 6) Changing the Organizational Culture and Restructuring (if necessary) 7) Emphasizing Ethical Practices - act ethically (moral obligation). Ethical business practice 8) Establishing Balanced Organization- use both financial and non financial measures using tools like Balanced Scorecard (BSC)! Reading Assignment: Balanced Scorecard Read and understand what it is. (Discuss )
- 20. Major strategic leadership actions in strategy implementation – Class Activity • List and explain key leadership actions?! (let the students discuss on this points) • Key Strategic leadership Actions A. Determining Strategic Direction – determining image/reputation that the firm wishes to build in the future B. Effectively Managing the Firm’s Resource Portfolio – effectively managing the firms resource bases: financial capital, human capital, social capital, and organizational capital (including organizational culture). C. Exploiting and Maintaining Core Competencies - Core competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals.
- 21. Major strategic leadership actions in strategy implementation D. Developing Human Capital and Social Capital – Human capital refers to the knowledge and skills of a firm’s entire workforce. Social capital involves relationships inside(eg with employees) and outside the firm (eg with stakeholders such as other partner firms, communities, government….) that help the firm accomplish tasks and create value for customers and shareholders. E. Sustaining Entrepreneurial Mind-Set - encourage and promote innovation
- 22. Major strategic leadership actions in strategy implementation F. Changing the Organizational Culture and Restructuring (if necessary) G. Emphasizing Ethical Practices - act ethically H. Establishing Balanced Organization- use both financial and non financial measures using tools like Balanced Scorecard BSC! (See the discussion on BSC on the next slides)
- 23. Meaning of Balanced Scorecard The balanced scorecard (BSC) is a strategic planning and management system that organizations use to: • Communicate what they are trying to accomplish • Align the day-to-day work that everyone is doing with strategy • Prioritize projects, products, and services • Measure and monitor progress towards strategic targets
- 24. Balanced Scorecard Objectives Financial Objectives Outcomes focused on improving Financial Performance Strategic Objectives Customer • Value creation Internal Processes • Value creating processes Learning and Growth • Aligning organizational, information, and human capital with strategy
- 25. More on BSC dimensions The BSC suggests that we view the organization from four perspectives, and to develop objectives, measures (KPIs), targets, and initiatives (actions) relative to each of these points of view: • Financial: this perspective views organizational financial performance and the use of financial resources • Customer/Stakeholder: this perspective views organizational performance from the point of view the customer or other key stakeholders that the organization is designed to serve
- 26. More on BSC dimensions • Internal Process: views organizational performance through the lenses of the quality and efficiency related to our product or services or other key business processes • Organizational Capacity (originally called Learning and Growth): views organizational performance through the lenses of human capital, infrastructure, technology, culture and other capacities that are key to breakthrough performance