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CONFIDENTIAL

Chapter 11
Employing Strategy
Implementation Levers

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record of the discussion.
OBJECTIVES
Unit of measure

1 Understand the interdependence between


strategy formulation and implementation
2 Demonstrate how to use organizational
structure as a strategy implementation levers
3 Understand the use of systems and
processes as strategy implementation levers
4 Identify the roles of people and rewards as
implementation levers
5 Explain the dual roles that strategic leadership
plays in strategy implementation
6 Understand how global and dynamic contexts
affect the use of implementation levers

* Footnote
2
Source: Source
FORMULATION AND IMPLEMENTATION
Unit of measure
Strategy formulation Strategy implementation
The central, integrated, externally
oriented concept of how we will
achieve our objectives

• Arenas
• Staging
Implementation
• Vehicles
Levers & Strategic
• Differentiators
Leadership
• Economic
logic

* Footnote
3
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THREE QUESTIONS
Unit of measure

Is its strategy flawed?


When a firm is
experiencing
Is the implementation of its
difficulties, its
strategy flawed?
good to ask
three questions Are both strategy and imple-
mentation flawed?

* Footnote
4
Source: Source
3

KNOWING – DOING GAP


Unit of measure

Percent of large companies who …

… regarded themselves as good


or excellent at generating new 46%
knowledge

… reported having launched new


products based on the application 14% (of the same firms)
of new knowledge

* Footnote
Source: J. Pfeiffer and R.I. Sutton, The Knowing – Doing Gap (Boston: Harvard Business School Press, 2000) 5
Source: Source
CAUSES OF THE KNOWING – DOING GAP: INTERNAL & EXTERNAL RESISTANCE
Unit of measure

When Compaq tried to copy


Dell’s direct-sales model, it met
stiff resistance from Comp USA,
Best Buy, and other retailers
External

Internal
• Business
units
• Culture
SAP attempted to launch
consulting service to supple-
ment its core technology
offering but failed to align
with SAP culture

* Footnote
6
Source: Source
HOW WOULD YOU DO THAT? – SAP AMERICA
Unit of measure

• Cultural focus
on costs
Profitability
Revenue • Professionalism
Customer • HR policies
service
• Account “farming”
Employees (not just growth)
Reputation • Web-based
software

* Footnote
7
Source: Source
CEO CHALLENGE – IMPLEMENT
Unit of measure

[T]he strategist will not be able to nail down


every action step when the strategy is first
crafted, nor should this even be attempted.
However, he or she must have the ability to look
ahead at the major implementation obstacles
and ask, “Is this strategy workable? Can I make
it happen?”

* Footnote
Source: Hambrick and Cannella, “Strategy Implementation as Substance and Selling” 8
Source: Source
KEY FACETS OF STRATEGIC IMPLEMENTATION
Unit of measure

• Organization structure
Systems and processes
People and rewards

Implementation Levers
Realized
Intended &
Strategy Emergent
Strategie
s
Strategic Leadership

• Lever and resource


allocation decisions
Communicating the
strategy to stakeholders

* Footnote
9
Source: Source
ORGANIZATIONAL STRUCTURE ALIGNED TO STRATEGY
Unit of measure

Organizational
Strategy
structure
• Insures control
• Coordinates
information,
decisions, and
activities

* Footnote
10
Source: Source
HOW STRUCTURE INFLUENCES STRATEGY – AIR LIQUIDE
Unit of measure
Structure Strategy

Air Liquide decides to locate


personnel at client sites

Air Liquide pursues a wealth of


new-business opportunities

Customer-site employees receive


more decision-making autonomy

Higher-margin services improve


firm performance
Customer-site employees see
new services Air Liquide could
offer (e.g., hazardous material
handling, inventory management

* Footnote
11
Source: Source
SIX FORMS OF ORGANIZATIONAL STRUCTURE
Unit of measure

Functional

Multidivisional

Matrix

Network

Partnerships

Franchises

* Footnote
12
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FUNCTIONAL STRUCTURE
Unit of measure

Corporate Office
Organizes
activities
according to the
specific functions
that a company
performs
Marketing/
Finance Operations R&D
Sales

Example
Platypus Technologies has 30 employees
organized into small departments: finance,
marketing, HR, and R&D
* Footnote
13
Source: Source
MULTIDIVISIONAL STRUCTURE
Unit of measure
Headquarters

One solution
Business Group A Business Group B Business Group C to problems of
managing
activities in
Finance Finance Finance multiple
markets or
managing
Marketing Marketing Marketing
multiple
products
Operations Operations Operations

Example
GM is organized according to product division
(GM Trucks, Chevrolet, Buick, Cadillac,
Pontiac, Saturn, etc. Each maintains its own
finance, marketing, and other support functions
* Footnote
14
Source: Source
MATRIX STRUCTURE
Unit of measure
Corporate Office

Product or Product or Product or Product or


Region A Region B Region C Region D

R&D

Hybrid between
functional and
Operations multidivisional
structure

Marketing

Finance

* Footnote
Source: http://www.cio.com/archive/090103/hs_reload.html 15
Source: Source
NETWORK STRUCTURE
Unit of measure

Indi-
vidual

Project Small, semi-


group autonomous,
and potentially
temporary
groups brought
Project together for a
group specific purpose

Example
Gore’s 6,000 employees spread across the
world work in small teams and are encouraged
to seek out colleagues on their own
* Footnote
16
Source: Source
PARTNERSHIPS AND FRANCHISES
Unit of measure

Partnerships Franchises
The company is organized Company not only trans-
as a group of partners fers ownership of local
who own shares or units facilities to franchisees,
in the corporation but license all local man-
agement responsibility

Example Example

Most law firms Burger King

* Footnote
17
Source: Source
BALANCED SCORECARD IS A MEASUREMENT SYSTEM TO MANAGE STRATEGY IMPLEMENTATION

Unit of measure

“To succeed Financial


financially, Objectives Measures Targets Initiatives
how should
we appear
to our
share-
holders?”

“To achieve External “To satisfy our Internal Business Process


our vision, Objectives Measures Targets Initiatives shareholders Objectives Measures Targets Initiatives
how should and custo-
we appear to Vision and mers, at what
our business pro-
customers?” Strategy cesses must
we excel?”

“To achieve Learning and Growth


our vision, Objectives Measures Targets Initiatives
how will we
sustain our
ability to
change and
improve?”

* Footnote
Source: Kaplan & Norton, 1996 18
Source: Source
STRATEGY MAPS HELP LINK ALL PERFORMANCE METRICS TO STRATEGY
Unit of measure

* Footnote
Implementation levers 19
Source: Source
HOW WOULD I DO THAT? – BALANCED SCORECARD AT US NAVAL UNDERSEA WARFARE CENTER

Unit ofNUWC
measure
NUWC Vision:
Vision: Be our nation’s provider of choice
for
forundersea
underseasuperiority
superiority––satisfying
satisfyingtoday’s
today’sneeds
needs
and
andmeeting
meetingtomorrow’s
tomorrow’schallenges
challenges

NUWC
NUWC Mission:
Mission: We provide the technical
foundation
foundationwhich
whichenables
enablesthe
theconceptualization,
conceptualization,
research,
research,development,
development,fielding,
fielding,modernization,
modernization,andand
maintenance
maintenanceofofsystems
systemsthat
thatensure
ensureour
ournavy’s
navy’s
undersea
underseasuperiority.
superiority. Financial: To succeed, how must we
look to our constituents in terms of
External: To achieve our vision and balanced budgets, revenue sources,
mission, how must we look to our and value?
customers on the dimensions of
purpose, service, and quality?

Internal: To satisfy our customers, at


what business processes must we excel
in order to decrease lag time, raise
productivity, and lower costs?

Employee learning and growth: To


accomplish our vision and mission and
support internal processes, what kind
of staff and information systems do we
need to foster innovation, continuous
learning, and value in intellectual
assets?
* Footnote
Implementation levers 20
Source: Source
PEOPLE AND REWARDS
Unit of measure

Successful CEOs “attended to people JetBlue and Southwest Airlines both


first [and] strategy second. They got expend considerable effort making
the right people on the bus, moved sure new hires will fit the firm
People
the wrong people off, ushered the
right people to right seats – and then
they figured out where to drive it”
Jim Collins

Rewards

* Footnote
Implementation levers 21
Source: Source
PEOPLE AND REWARDS
Unit of measure

People

Reward systems have two GE which owns several unrelated


components companies, links division manager
• Performance evaluation and pay to the performance of the unit
feedback they manage
Rewards • Compensation (e.g., salary,
bonuses, stock, promotions,
coveted office space)
They can serve as a force of control
over outcomes or behaviors
* Footnote
Implementation levers 22
Source: Source
STRATEGIC LEADERSHIP IS RESPONSIBLE FOR 2 KEY OBJECTIVES
Unit of measure

• Making substantive implementation


lever and resource allocation decisions

• Communicating the strategy to key


stakeholders

* Footnote
Strategic Leadership 23
Source: Source
RESOURCE ALLOCATION DECISIONS
Unit of measure
Resource dimensions in the airline industry Major airlines
Level of offering Southwest
12
JetBlue
10

8
Most airlines
6 mimic each
other while
4 Southwest
and JetBlue
2 follow
decidedly
0 different
strategies
ity

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ub

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In

* Footnote
Source: Adapted from W.C. Kim and R. Mauborgne, “Charting Your Company’s Future, “Harvard Business 24
Source: Source
Review, June. 2002
STRATEGIC LEADERSHIP – COMMUNICATING WITH KEY STAKEHOLDERS
Unit of measure
Convince top management
of a new strategy (e.g., Intel’s
shift to microprocessors)

Upward
Win cooperation of
Managers external stakeholders
Win support of other must sufficiently including customers
Across Outward
units within the firm communicate in and distributors (e.g.,
4 directions Compaq failed to do
this with retailers)
Downward

Enlist support of those


who implement
* Footnote
Strategic Leadership 25
Source: Source
THREE C’S OF STRATEGY COMMUNICATION
Unit of measure

C ontacts

C ultural understanding

C redibility

* Footnote
26
Source: Source
STRUCTURAL OPTIONS
Unit of measure

Multinational International Global Transnational


configuration configuration configuration configuration
Description

Resembles a Coordinated group Foreign offices Structure allows


decentralized of federations over are used to dispersion,
federation much which more access specialization,
like the relation- administrative customers, but and
ship between US control is exerted demand is filled interdependence
federal by home country by centralized – networked
Examples

government and headquarters production control system


50 states
Japanese companies
SAP pre 1990 SAP post 1990 McDonald’s
1970s & 1980s

* Footnote
Global and Dynamic contexts 27
Source: Source
FIRM RESPONSES TO DYNAMIC CONTEXTS
Unit of measure

Two common
Challenges responses
of dynamic, • Ambidextrous
high-veto city organization
contexts
• Patching

* Footnote
Global and Dynamic contexts 28
Source: Source
THE AMBIDEXTROUS ORGANIZATION
Unit of measure
Structural barriers preventing
interference and interactions
Corporate Office
between existing and emerging
businesses

Existing Business Emerging Business

Manu- Manu-
Sales R&D Sales R&D
facturing facturing

Existing organization with historic New organization develops its own levers
implementation levers consistent with the needs of the radical
innovation

Ambidextrous organizations establish units that are structurally independent from all other units. The
emerging business units are to develop their own structures, processes, systems, cultures, strategies,
etc. They are only integrated into the mother organization at the level of senior management

* Footnote
Global and Dynamic contexts 29
Source: Source
PATCHING
Unit of measure

Example: HP

Laser printing
business
Patching: regularly
remapping businesses in
accordance with
changing market New technologies
conditions and restitching
them into internal
business ventures
New business unit

* Footnote
Global and Dynamic contexts 30
Source: Source
SUMMARY
Unit of measure

1 Understand the interdependence between


strategy formulation and implementation
2 Demonstrate how to use organizational
structure as a strategy implementation levers
3 Understand the use of systems and
processes as strategy implementation levers
4 Identify the roles of people and rewards as
implementation levers
5 Explain the dual roles that strategic leadership
plays in strategy implementation
6 Understand how global and dynamic contexts
affect the use of implementation levers

* Footnote
31
Source: Source
INSERT TITLE TEXT
Unit of measure

* Footnote
32
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