Building Resource Strengths and Organizational Capabilities

Implementing and executing strategy involves technology organization, resource acquisition,

people organization, staffing, management of people and business processes. The managerial
emphasis is on converting strategic plans into actions and good results.

The starting point for managers to start in implementing and executing a new or different
strategy is a list of activities which the organization has to do differently from now onwards to
achieve the strategic goals in the time frame envisaged. Then, the necessary steps to make the
internal changes have to be instituted as early as possible.

Top-level managers have to rely on the middle and lower managers to understand and develop
their unit levels plans to support strategy and explain strategy changes and related business
process changes to department members and see that the organization actually operates in
accordance with the strategy at department levels. Every step in the organization has certain
people questioning it and the middle and lower managers must have the understanding to explain
and persuade people to follow strategy.

A Framework for Executing Strategy

1. Implementing and executing strategy entails figuring out all the hows – the specific
techniques, actions, and behaviors – that are needed for a smooth strategy-supportive operation –
and then following through to get things done and deliver results.

2. The first step in implementing strategic changes is for management to communicate the
case for organizational changes so clearly and persuasively to organizational members that a
determined commitment takes hold throughout the ranks to find ways to put the strategy into
place, make it work, and meet performance targets.

3. Management’s handling of the strategy implementation process can be considered

successful if and when the company achieves the targeted strategic and financial performance
and shows good progress in making its strategic vision a reality.

4. There is no definitive 10-step checklist or managerial recipe for successful strategy

execution. Strategy execution varies according to individual company situations and
circumstances, the strategy implementer’s best judgment, and the implementer’s ability to use
particular organizational change techniques effectively.

The Principal Management Components of the Strategy Executing Process

The eight managerial tasks that crop up repeatedly in company efforts to execute strategy include:
 a. Building an organization with the competences, capabilities, and resource strengths to
execute strategy successfully
b. Marshaling resources to support the strategy execution effort
c. Instituting policies and procedures that facilitate strategy execution
d. Adopting best practices and striving for continuous improvement
e. Installing information and operating systems that enable company personnel to carry out their
strategic roles proficiently
f. Tying rewards and incentives directly to the achievement of strategic and financial targets
and to good strategy execution
g. Shaping the work environment and corporate culture to fit the strategy
h. Exerting the internal leadership needed to drive implementation forward and keep improving
on how the strategy is being executed.

Building a Capable Organization

Successful strategy execution depends on competent personnel, better than adequate customer
satisfying and competitive capabilities, and effective internal organization that facilitates
communication and control.

Building an organization capable of good strategy execution involves three dimensions:

(1) Acquiring adequate Resources and Staff: Appropriate infrastructure, adequate equipment and
a talented, can-do team with the needed experience, technical skills, and intellectual capital;
(2) Building core competencies and competitive capabilities
(3)Structuring the organization and work effort - Organizing value chain activities and business
processes and developing communication and authority delegation lines that complete the tasks
assigned to them after required operational planning with effectiveness and efficiency.

Staffing the Organization

Assembling a capable senior management team is a cornerstone of the organisation - building
task. The personal chemistry among the members of the team needs to be right, and the
competencies of the need to be appropriate for the chosen strategy. People of the senior
management team have to be persons who can be counted on to get things done. Sometimes the
existing management team is suitable; at other times it may requires changes.

Even at other levels, the organization must have a recruitment and selection procedure that gives
best of the available persons to the organization. The organization must have training and
development processes that convert the average performers into competent persons.

Building Core Competencies and Competitive Capabilities

Building core competencies and competitive capabilities is a time-consuming development activity that
involves three stages:
(1) Developing the ability to do something as novice act as a team.

(2) Learning from the initial performances, and developing methods to perform the activity consistently
well at marketable and profitable costs, setting the stage to transform the ability into a tried-and-true
business getting competence or capability; and

(3) Continuing to polish and refine the organization's know-how and otherwise sharpen performance such
that it becomes better than competitors at performing the activity, and make efforts to raise it to the core
competence level (or capability) or to the rank of a distinctive competence (or competitively superior
capability) thus opening an avenue to competitive advantage. Many companies manage to get through
stages 1 and 2 but comparatively few achieve sufficient proficiency to qualify for the third stage. The idea
of top three in any industry illustrates this idea of many not being able to develop that superiority in
competitive scenario.

Four ideas regarding the process of developing core competencies or capabilities

1. Core competencies grow out of combined efforts of many in the department. Core capabilities grow out
of the combined efforts of cross-functional work groups.
2. A core competence and capability emerges incrementally out of company efforts to strengthen skills
that contributed to successful customer related outcomes.
3. Only by concentrating more effort and talent than rivals in deepening the knowledge and skills that a
company develops core competence and capability.
4. Evolving changes in customer needs and competitor successes demand changes in competencies and
the organization has to recognize the change in the environment and determine the new competencies
required and start taking steps to put into motion the three steps - Do as novice - Make it market
acceptable - Develop it into competency and then into core competency.

Competitive Advantage
While competitors can readily duplicate some strategy features, core competencies and
capabilities are very difficult or costly for imitations and they give durable competitive edge.
They become difficult to imitate when they are based on research and development inside an
organization.

Developing Organization Structure Matched to Strategy

Outsourcing of Value Chain Activities

Partnering for Value Chain Activities

Pure functional departments are impeding strategy execution.

Determining the Degree of Authority and Independence to Give Each Unit and Each Employee

Contingency theory of management is applicable here.

Providing for Internal Cross-Unit Coordination

 Supply Chain Development based Partnership Model

Organizational Structures of the Future

Five new ideas are being emphasized in organization:

1. Empowered managers and workers.

2. Reengineering of work processes.
3.Self directed work teams
4. Rapid incorporation of internet.
5. Networking with outsiders to improve existing organization capabilities.

Sustainability and Strategic Management

Sustainability in an organization is defined by its commitment to economic factors,
environmental factors, and factors of social commitment in a firm. A framework is used to
develop a strategic or long-term justification for the concept of sustainability.

Sustainable management takes the concepts from sustainability and synthesizes them with the
concepts of management. Sustainability has three branches: the environment, the needs of
present and future generations, and the economy. Using these branches, it creates the ability of a
system to thrive by maintaining economic viability and also nourishing the needs of the present
and future generations by limiting resource depletion. From this definition, sustainable
management has been created to be defined as the application of sustainable practices in the
categories of businesses, agriculture, society, environment, and personal life by managing them
in a way that will benefit current generations and future generations.

Sustainable management is needed because it is an important part of the ability to successfully

maintain the quality of life on our planet. Sustainable management can be applied to all aspects
of our lives. For example, the practices of a business should be sustainable if they wish to stay in
businesses, because if the business is unsustainable, then by the definition of sustainability they
will cease to be able to be in competition. Communities are in a need of sustainable management,
because if the community is to prosper, then the management must be
sustainable. Forest and natural resources need to have sustainable management if they are to be
able to be continually used by our generation and future generations. Our personal lives also
need to be managed sustainably. This can be by making decisions that will help sustain our
immediate surroundings and environment, or it can be by managing our emotional and physical
well-being. Sustainable management can be applied to many things, as it can be applied as a
literal and an abstract concept. Meaning, depending on what they are applied to the meaning of
what it is can change.
The triple bottom line (or otherwise noted as TBL or 3BL) is an accounting framework with
three parts: social, environmental (or ecological) and financial. Some organizations have adopted
the TBL framework to evaluate their performance in a broader perspective to create greater
business value.

In traditional business accounting and common usage, the "bottom line" refers to either the
"profit" or "loss", which is usually recorded at the very bottom line on a statement of revenue
and expenses. Over the last 50 years, environmentalists and social justice advocates have
struggled to bring a broader definition of bottom line into public consciousness by
introducing full cost accounting. For example, if a corporation shows a monetary profit, but their
asbestos mine causes thousands of deaths from asbestosis, and their copper mine pollutes a river,
and the government ends up spending taxpayer money on health care and river clean-up, how do
we perform a full societal cost benefit analysis? The triple bottom line adds two more "bottom
lines": social and environmental (ecological) concerns.[4] With the ratification of the United
Nations and ICLEI TBL standard for urban and community accounting in early 2007,[5] this
became the dominant approach to public sector full cost accounting. Similar UN standards apply
to natural capital and human capital measurement to assist in measurements required by TBL,
e.g. the EcoBudget standard for reporting ecological footprint. Use of the TBL is fairly
widespread in South African media, as found in a 1990–2008 study of worldwide national
newspapers.[6]

An example of an organization seeking a triple bottom line would be a social enterprise run as a
non-profit, but earning income by offering opportunities for handicapped people who have been
labelled "unemployable", to earn a living by recycling. The organization earns a profit, which is
controlled by a volunteer Board, and ploughed back into the community. The social benefit is the
meaningful employment of disadvantaged citizens, and the reduction in the society's welfare or
disability costs. The environmental benefit comes from the recycling accomplished. In
the private sector, a commitment to corporate social responsibility (CSR) implies an obligation to
public reporting about the business' substantial impact for the better of the environment and
people. Triple bottom line is one framework for reporting this material impact. This is distinct
from the more limited changes required to deal only with ecological issues. The triple bottom
line has also been extended to encompass four pillars, known as the quadruple bottom line
(QBL). The fourth pillar denotes a future-oriented approach (future generations,
intergenerational equity, etc.). It is a long-term outlook that sets sustainable development and
sustainability concerns apart from previous social, environmental, and economic considerations.

The challenges of putting the TBL into practice relate to the measurement of social and
ecological categories. Despite this, the TBL framework enables organizations to take a longer-
term perspective and thus evaluate the future consequences of decisions.
Definition

Sustainable development was defined by the Brundtland Commission of the United Nations in
1987.[8] Triple bottom line (TBL) accounting expands the traditional reporting framework to take
into account social and environmental performance in addition to financial performance.

In 1981, Freer Spreckley first articulated the triple bottom line in a publication called 'Social
Audit - A Management Tool for Co-operative Working'.[9] In this work, he argued that
enterprises should measure and report on financial performance, social wealth creation, and
environmental responsibility. The phrase "triple bottom line" was articulated more fully by John
Elkington in his 1997 book Cannibals with Forks: the Triple Bottom Line of 21st Century
Business'.'[10]

A Triple Bottom Line Investing group advocating and publicizing these principles was founded
in 1998 by Robert J. Rubinstein.[11]

For reporting their efforts companies may demonstrate their commitment to corporate social
responsibility (CSR) through the following:

 Top-level involvement (CEO, Board of Directors)

 Policy Investments

 Programs

 Signatories to voluntary standards

 Principles (UN Global Compact-Ceres Principles)

 Reporting (Global Reporting Initiative)

The concept of TBL demands that a company's responsibility lies with stakeholders rather
than shareholders. In this case, "stakeholders" refers to anyone who is influenced, either directly
or indirectly, by the actions of the firm. Examples of stakeholders include employees, customers,
suppliers, local residents, government agencies, and creditors. According to the stakeholder
theory, the business entity should be used as a vehicle for coordinating stakeholder interests,
instead of maximizing shareholder (owner) profit. A growing number of financial institutions
incorporate a triple bottom line approach in their work. It is at the core of the business of banks
in the Global Alliance for Banking on Values, for example.

The Detroit-based Avalon International Breads interprets the triple bottom line as consisting of
"Earth", "Community", and "Employees".

The triple bottom line consists of social equity, economic, and environmental factors. The
phrase, "people, planet, and profit" to describe the triple bottom line and the goal
of sustainability, was coined by John Elkington in 1994 while at SustainAbility, and was later
used as the title of the Anglo-Dutch oil company Shell's first sustainability report in 1997. As a
result, one country in which the 3P concept took deep root was The Netherlands.

People, the social equity bottom line

The people, social equity, or human capital bottom line pertains to fair and beneficial business
practices toward labour and the community and region in which a corporation conducts its
business. A TBL company conceives a reciprocal social structure in which the well-being of
corporate, labour and other stakeholder interests are interdependent.

An enterprise dedicated to the triple bottom line seeks to provide benefit to many constituencies
and not to exploit or endanger any group of them. The "upstreaming" of a portion of profit from
the marketing of finished goods back to the original producer of raw materials, for example, a
farmer in fair trade agricultural practice, is a common feature. In concrete terms, a TBL business
would not use child labour and monitor all contracted companies for child labour exploitation,
would pay fair salaries to its workers, would maintain a safe work environment and tolerable
working hours, and would not otherwise exploit a community or its labour force. A TBL
business also typically seeks to "give back" by contributing to the strength and growth of its
community with such things as health care and education. Quantifying this bottom line is
relatively new, problematic and often subjective. The Global Reporting Initiative (GRI) has
developed guidelines to enable corporations and NGOs alike to comparably report on the social
impact of a business.

Planet, the environmental bottom line

The planet, environmental bottom line, or natural capital bottom line refers to sustainable
environmental practices. A TBL company endeavors to benefit the natural order as much as
possible or at the least do no harm and minimize environmental impact. A TBL endeavour
reduces its ecological footprint by, among other things, carefully managing its consumption of
energy and non-renewables and reducing manufacturing waste as well as rendering waste
less toxic before disposing of it in a safe and legal manner. "Cradle to grave" is uppermost in the
thoughts of TBL manufacturing businesses, which typically conduct a life cycle assessment of
products to determine what the true environmental cost is from the growth and harvesting of raw
materials to manufacture to distribution to eventual disposal by the end user.

Currently, the cost of disposing of non-degradable or toxic products is born financially by

governments and environmentally by the residents near the disposal site and elsewhere. In TBL
thinking, an enterprise which produces and markets a product which will create a waste problem
should not be given a free ride by society. It would be more equitable for the business which
manufactures and sells a problematic product to bear part of the cost of its ultimate disposal.
Ecologically destructive practices, such as overfishing or other endangering depletions of
resources are avoided by TBL companies. Often environmental sustainability is the more
profitable course for a business in the long run. Arguments that it costs more to be
environmentally sound are often specious when the course of the business is analyzed over a
period of time. Generally, sustainability reporting metrics are better quantified and standardized
for environmental issues than for social ones. A number of respected reporting institutes and
registries exist including the Global Reporting Initiative, CERES, Institute 4 Sustainability and
others.

The ecological bottom line is akin to the concept of eco-capitalism.

Profit, the economic bottom line

The profit or economic bottom line deals with the economic value created by the organization
after deducting the cost of all inputs, including the cost of the capital tied up. It therefore differs
from traditional accounting definitions of profit. In the original concept, within a sustainability
framework, the "profit" aspect needs to be seen as the real economic benefit enjoyed by the host
society. It is the real economic impact the organization has on its economic environment. This is
often confused to be limited to the internal profit made by a company or organization (which
nevertheless remains an essential starting point for the computation). Therefore, an original TBL
approach cannot be interpreted as simply traditional corporate accounting profit plus social and
environmental impacts unless the "profits" of other entities are included as a social benefit.

Criticism

While many people agree with the importance of good social conditions and
preservation of the environment, there are also many who disagree with the triple
bottom line as the way to enhance these conditions. The following are the reasons
why:
 Reductive method: Concurrently the environment comes to be treated as an externality or
background feature, an externality that tends not to have the human dimension build into
its definition. Thus, in many writings, even in those critical of the triple-bottom-line
approach, the social becomes a congeries of miscellaneous considerations left over from
the other two prime categories.[21] Alternative approaches, such as Circles of
Sustainability,[22] that treat the economic as a social domain, alongside and in relation to
the ecological, the political and the cultural are now being considered as more appropriate
for understanding institutions, cities and regions.[21][23][24]

 Inertia: The difficulty of achieving global agreement on simultaneous policy may render
such measures at best advisory, and thus unenforceable. For example, people may be
 unwilling to undergo a depression or even sustained recession to replenish
lost ecosystems.[citation needed]

 Application: According to Fred Robins' The Challenge of TBL: A Responsibility to

Whom? one of the major weaknesses of the TBL framework is its ability to be applied in
the practical world.

 Equating ecology with environment: TBL is seen to be disregarding ecological

sustainability with environmental effects, where in reality both economic and social
viability is dependent on environmental well being. While greenwashing is not new, its
use has increased over recent years to meet consumer demand for environmentally
friendly goods and services. The problem is compounded by lax enforcement by
regulatory agencies such as the Federal Trade Commission in the United States, the
Competition Bureau in Canada, and the Committee of Advertising Practice and the
Broadcast Committee of Advertising Practice in the United Kingdom. Critics of the
practice suggest that the rise of greenwashing, paired with ineffective regulation,
contributes to consumer skepticism of all green claims, and diminishes the power of the
consumer in driving companies toward greener solutions for manufacturing processes and
business operation.

 Time dimension: While the triple bottom line incorporates the social, economical and
environmental (People, Planet, Profit) dimensions of sustainable development, it does not
explicitly address the fourth dimension: time. The time dimension focuses on preserving
current value in all three other dimensions for later. This means assessment of short term,
longer term and long term consequences of any action.[25]

 "One problem with the triple bottom line is that the three separate accounts cannot easily
be added up. It is difficult to measure the planet and people accounts in the same terms as
profits—that is, in terms of cash."[3] This has led to TBL being augmented with cost-
benefit analysis in Triple Bottom Line Cost Benefit Analysis (TBL-CBA).

 Elkington himself has called for a rethink on TBL and a "product recall" on use of the
concept. He argues that the original idea was to encourage businesses to manage the
wider economic, social and environmental impacts of their operations, but its practical
use as an accounting tool has now undermined its value.[2]

In short, the criticisms can be summarised as:

 attempting to divert the attention of regulators and deflating pressure for regulatory
change;

 seeking to persuade critics, such as non-government organisations, that they are both
well-intentioned and have changed their ways;
  seeking to expand market share at the expense of those rivals not involved in
greenwashing; this is especially attractive if little or no additional expenditure is required
to change performance; alternatively, a company can engage in greenwashing in an
attempt to narrow the perceived 'green' advantage of a rival;

 reducing staff turnover and making it easier to attract staff in the first place;

 making the company seem attractive for potential investors, especially those interested in
ethical investment or socially responsive investment;

 Inability to add up the three accounts unless tools such as cost-benefit analysis are added
to put social and environmental externalities in monetary terms.

BA1ANCED SCORECARD

What is the balanced scorecard

A system of corporate appraisal which looks at financial and non-financial elements from a
variety of perspectives.

An approach to the provision of information to management to assist strategic policy formation

and achievement.

It provides the user with a set of information which addresses all relevant areas of performance
in an objective and unbiased fashion.

A set of measures that gives top managers a fast but comprehensive view of the business.

Why the balanced scorecard

Allows managers to look at the business from four important perspectives.

Provides a balanced picture of overall performance highlighting activities that need to be

improved.

combines both qualitative and quantitative measures.

Relates assessment of performance to the choice of strategy.

Includes measures of efficiency and effectiveness.

Assists business in clarifying their vision and strategies and provides a meansto translate these
into action.

In what way is the scorecard a balance

The scorecard produces a balance between:

Four key business perspectives: financial, customer, internal processes and innovation.

How the organization sees itself and how others see it.

The short run and the long run

The situation at a moment in time and change over time

Main benefits of using the balanced scorecard

Increases the focus on the business strategy and its outcomes.

Leads to improvised organizational performance through measurements.

Align the workforce to meet the organizations strategy on a day-to-day basis.

Targeting the key determinants or drivers of future performance.

Improves the level of communication in relation to the organizations strategy and vision.

helps to prioritize projects according to the timeframe and other priority factors.

The basics of balanced Scorecard

Following is the simplest illustration of the concept of balanced scorecard. The four boxes
represent the main areas of consideration under balanced scorecard. All four main areas of
consideration are bound by the business organizations vision and strategy.