4980 Strategic Management

Chapter Ten
Building an Organization
Capable of Good Strategy Execution:
People, Capabilities, and Structure
 Motivation
• Quotes from our text:
– “In the end, a strategy is nothing but good intentions
unless it’s effectively implemented” Clayton Christensen
– “It’s been rather easy for us to decide where we
wanted to go. The hard part is to the organization to
act on the priorities.”
– “Putting the strategy into place and getting the
organization to execute it well calls for different sets
of organizational skills”
– “…crafting strategy is largely an analysis-driven
activity…”
– “Without strategy, execution is aimless; without
execution, strategy is useless”
 Motivation
• Groups/sheets:
– What skills are necessary to develop strategy?
– What skills are needed to execute strategy?
– Would the typical business leader possess both
sets of skills?
– Do you?
 Motivation

• Strategy execution
– Involves both people and business processes
management
– Is a job for the whole management team, not just
a few senior managers, or THE leader (small
business)
– Can take years to develop strategy execution
proficiency, longer than building strategy
proficiency
– Requires a determined commitment to change,
action, performance, and assessment
 Motivation

• Our goal: to shed light on this vital skill…

…Strategy execution
 Topics

• Executing Strategy- General Thoughts

• People
• Strategic Capabilities
• Structure
 Executing Strategy-
General Thoughts
• Executing a strategy:
– Entails specific techniques, actions, and
behaviors necessary for a strategy-supportive
organization
– Culture (chapter 12)
– Following through to get things done and
delivering results
– Making things happen (leadership) and making
them happen right (management)
– Knitting the strategy and the organization
 Executing Strategy-
General Thoughts
• Staffing: Assemble a strong, competent
team...People
• Developing: Renew, upgrade, and revise
resources and capabilities
• Structure: Create strategy-supportive
organization reporting arrangement
 Topics

• Executing Strategy- General Thoughts

• People
• Strategic Capabilities
• Structure
 People
• https://www.youtube.com/watch?v=7KOwLa
Cf0y0

Groups/sheets:
What points from Schembechler’s words are relevant to
successful strategy execution
 People
• Good strategy execution requires a team
effort.
• All managers have strategy-executing
responsibility.
• All employees are active participants in
strategy execution
 Groups/sheets:
People
What is Jim Collins saying? Do you agree? Why or why
not?
• Jim Collins….“First Who, Then What?”

– You are a bus driver. The bus, your company, is at a standstill,

and it’s your job to get it going. You have to decide where
you’re going, how you’re going to get there, and who’s going
with you.
– Most people assume that great bus drivers (read: business
leaders) immediately start the journey by announcing to the
people on the bus where they’re going—by setting a new
direction or by articulating a fresh corporate vision.
– In fact, leaders of companies that go from good to great start
not with “where” but with “who.” They start by getting the
right people on the bus, the wrong people off the bus, and the
right people in the right seats. And they stick with that
discipline—first the people, then the direction—no matter how
dire the circumstances.
Groups/sheets:
People
Why might a business leader avoid seeking management
team members with these skills?
What’s the key lesson?
• One of the first steps in launching the strategy-
executing process is...
• ...building a management team with the right mix of
experiences, skills, and abilities to get things done
– Planners who ask tough questions and figure out what
needs to be done
– Implementers who can select, manage, and lead the right
people
– Executors who turn decisions into actions that drive
changes and produce sustainable competitive advantages
– A critical mass of talented activist managers
 Clear path to partnership
Learning and
development
programs that
contribute
to Deloitte’s Formal training programs
successful
people strategy
execution
Special programs
for high performers

Sponsorship, not mentorship

 People
• The best companies make a point of
recruiting and retaining talented employees
• Training and developing
• Leading and motivating them
• The objective: make the firm’s entire
workforce (managers and rank-and-file
employees) a genuine competitive asset.
Groups/sheets:
Name a company that does this very well?
What specific tactics do they employ?
Do their team strategy/tactics affect their performance? Why or
why not?
 Topics

• Executing Strategy- General Thoughts

• People
• Strategic Capabilities
• Structure
 Strategic Capabilities

• The first step is to determine what

capabilities are needed!

Groups/sheets:
• Share a small business idea. Name its product,
target market, and strategy (cost leader,
differentiate, focus, broad, best cost).
• Name at least one strategic capability needed.
 Thinking Evolving the ability
Setting a stretch
Strategically into a competence
goal… developing
assessing current or capability…
the ability to do
knowledge and performing it well
something well
skills base at an acceptable cost

Thinking
Refreshing, updating, and
strategically
upgrading competencies and
about
capabilities to gain and maintain
opportunities
competitive advantage
and challenges
 Managerial Actions to
Internally Develop
Competencies and Capabilities

Strengthen the Coordinate and integrate

firm’s base of skills, work groups and
knowledge, and intellect departments

Groups/sheets:
What are skills, knowledge, and intellect? How is each
important to strategy execution? What is the difference
between coordinate and integrate?
 Approaches to Building and
Strengthening Capabilities

Acquire
Develop Access capabilities
capabilities
capabilities via collaborative
through mergers
internally partnerships
and acquisitions
 Strategic Capabilities

• Reasons for acquiring capabilities through

mergers and acquisitions
– When a market opportunity can slip by faster than a
firm can create the needed capability internally
– When industry conditions, technology, or
competitors are moving at a rapid clip and timing is
vital
• Potential problem
– Tacit knowledge and complex routines may not
transfer readily from one organization to another
 Topics

• Executing Strategy- General Thoughts

• People
• Strategic Capabilities
• Structure
 Structure

• Organizational structure
– The formal and informal arrangement
of tasks, responsibilities, lines of authority, and
reporting relationships for the firm
• Structure is aligned with strategy when:
– It contributes to the creation of value for
customers
– It's aligned with the strategy
– It lowers operating costs through lower
bureaucratic costs and operational efficiencies
 Simple Structure
(Line-and-Staff)

To decide the
organizational
structure:
Functional Structure
(Departmental)
Chosen
Strategy

Capabilities
Multidivisional Structure and Competencies
(Divisional)
Centralized
or
Decentralized

Matrix Structure
 Structure

• Groups/sheets
– Organizational forms
• Functional
• Divisional
• Matrix
– Name a hypothetical company, its product, and
its generic strategy.
– Name the organizational form that best fits that
firm strategically
– Explain why!
Groups/sheets:
• Read these slides. What strikes you an interesting?

The Importance of Organizational

Design and Structure
by Gill Corkindale

February 11, 2011

• One of the wonderful things about being a coach is that I

meet hundreds of executives who freely share their business
and leadership challenges with me. As well as helping me
understand how hard it is to run an organization, they show
me how they are managing to adapt — or not — to
changing organizational structures.
• I rarely come across leaders who advocate
wholesale organizational redesign or use it as a way
to support their people and business. When
organizational strategy changes, structures, roles,
and functions should be realigned with the new
objectives. This doesn’t always happen, with the
result that responsibilities can be overlooked,
staffing can be inappropriate, and people — and
even functions — can work against each other.
• Often, I see little more than a traditional hierarchy
flattening out, perhaps broadening into a matrix
structure in parts of the organization. More often
than not, though, the hierarchy remains embedded
in the “new” structure, which can cut across its
effectiveness and leave people confused. Worse,
organizations rarely show people how to operate in
a new structure, which can also undermine
effectiveness.
• Poor organizational design and structure results in
a bewildering morass of contradictions: confusion
within roles, a lack of co-ordination among
functions, failure to share ideas, and slow decision-
making bring managers unnecessary complexity,
stress, and conflict. Often those at the top of an
organization are oblivious to these problems or,
worse, pass them off as or challenges to overcome
or opportunities to develop.
 • dysfunctional structures. My prevailing
impression is that organizations either overlook the
importance of organizational design or simply don’t
know what to do.
• This isn’t surprising since the subject is complex
and often poorly explained by academics and
consultants, finding a practical approach to
organizational design can be difficult, although
Groups/sheets:
some business schools are attempting to simplify
• things
From(pdf).
your work experience, do leaders overlook
organizational structure?
• If the time statement is correct, why do leaders
overlook organizational structure?
 Organizational
Centralized Decentralized
Approaches
Decision Decision
Making to Decision- Making
Making

Authority is retained Authority delegated to

by top management lower-level managers
and employees
 Structure
• Centralized
– 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 in
crisis situations
– Disadvantages
• Lengthens response times
• 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
 Structure
• Decentralized
– 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
– Disadvantages
• May result in higher-level managers being unaware of actions
taken by empowered personnel
• Can lead to inconsistent or conflicting approaches by different
managers and employees
• Can impair cross-unit collaboration
 Structure

• Groups/sheets
– Centralized and decentralized...
– Name companies for which each fits their
strategy
– Explain why.
 Structure

• What is outsourcing?
• Is outsourcing related to organizational
structure? How so?

• May decrease bureaucracy, flatten structure,

heighten strategic focus, or speed decision
making
• How so for each??
 Closing Thoughts

• Strategy execution is a capability in itself!

• Are y’all drinking this Jack Daniels?

• Hopefully, we’ve help prepare you for that

challenging, yet so satisfying, endeavor!