STRATEGIC CONTROL

11.24.2021
 At the end of the lesson, the students
should have a good understanding of
the following:
• The value of effective strategic control systems in
strategy implementation.
LEARNING • The key difference between “traditional” and
OBJECTIVES “contemporary” control systems.
• The imperative for contemporary control systems
in today’s complex and rapidly changing
competitive and general environments.
• The benefits of having the proper balance among
the three levers of behavioral control: culture,
rewards and incentives, and boundaries.
• The value of control humility and trust in God.
TOPICS FOR DISCUSSION:
01
Ensuring Informational Control: Responding
effectively to Environmental Change
• A Traditional Approach to Strategic Control
• A Contemporary Approach to Strategic Control
02
Attaining Behavioral Control: Balancing
Culture, Rewards, and Boundaries
• Building a Strong and Effective Culture
• Motivating with Rewards and Incentives
• Setting Boundaries and Constraints
• Behavioral Control in Organizations: Situational Factors
• Evolving from Boundaries to Rewards Culture
SUCCESS STORY: NEBUCHADNEZZAR II
In the Bible, he destroyed Judah &
Jerusalem and he has taken all the
wise men in the land for him to train
in the ways of the Chaldeans. This
circumstance can be described as a
management style wherein human
resources are honed for the benefit of
the organization.
Much more, his many
accomplishments such as the Hanging
Garden of Babylon, his subjugation of
the different kingdoms, his methods
to make all people listen to him,
brought prosperity in Babylon.
SUCCESS STORY: NEBUCHADNEZZAR II

The story of the golden idol he had created for all people to bow to
shows a controlling measure that he has setup. Anyone who will not
do as he had said will be thrown to the fiery furnace.

But then, there is a God who is more powerful and he cannot do

anything against Him.
 • In Daniel 4:3, Nebuchadnezzar declares, “How great are his signs,
how mighty his wonders! His kingdom is an everlasting kingdom,
and his dominion endures from generation to generation.”
Nebuchadnezzar continued in Daniel 4:34–37, “For his dominion
SUCCESS STORY: is an everlasting dominion, and his kingdom endures from
generation to generation; all the inhabitants of the earth are
NEBUCHADNEZZ accounted as nothing, and he does according to his will among
AR II the host of heaven and among the inhabitants of the earth; and
none can stay his hand or say to him, ‘What have you done?’ …
“Now I, Nebuchadnezzar, praise and extol and honor the King of
heaven, for all his works are right and his ways are just; and
those who walk in pride he is able to humble.”
 WHAT IS
STRATEGIC
CONTROL?
IT IS THE PROCESS OF MONITORING AND
CORRECTING A FIRM’S STRATEGY AND
PERFORMANCE.
ENSURING
INFORMATIONAL
CONTROL: RESPONDING Strategic Formulate
EFFECTIVELY TO Control Strategies
ENVIRONMENTAL
CHANGE

- THE TRADITIONAL
APPROACH
Implement
strategies
ENSURING
INFORMATIONA Strategic Formulate
L CONTROL: control strategies
RESPONDING Is the
organization
Is the
EFFECTIVELY TO doing the right
organization
doing things
ENVIRONMENTA things? things?

L CHANGE Informational
control
Behavioral
control

- THE CONTEMPORARY Implement

APPROACH strategies
 INFORMATIONAL CONTROL (“DOING THE
RIGHT THING”)

• Deals with the internal environment as well as the external strategic context.
• It addresses the assumptions and premises that provide the foundation for an organization’s strategy.
• Do the organization’s goals and strategies still “fit” within the context of the current strategic
environment?
• Depending on the type of business, such assumptions may relate to changes in technology, customer
tastes, government regulation, and industry competition.
• Examples:
• Resignation of key executives
• Delays in the completion of major production facilities
BENEFITS OF INFORMATIONAL CONTROL

• Time lags are dramatically shortened

• Changes in the competitive environment are detected earlier
• Organization’s ability to respond with speed and flexibility is enhanced
FOUR CHARACTERISTICS OF AN EFFECTIVE
CONTEMPORARY CONTROL

The information is important

The focus is on constantly
enough to demand frequent
changing information that has
and regular attention from all
potential strategic importance.
levels of the organization.

The data and information The control system is a key

generated are best interpreted catalyst for an ongoing debate
and discussed in face-to-face about underlying data,
meetings. assumptions, and action plans.
ATTAINING BEHAVIORAL CONTROL: BALANCING
CULTURE, REWARDS, AND BOUNDARIES

Culture Rewards Boundaries

TWO REASONS FOR AN INCREASED
EMPHASIS ON CULTURE AND REWARDS

• Competitive environment is increasingly complex and

unpredictable, demanding both flexibility and quick response to its
challenges.
• Implicit long-term contract between the organization and its key
employees has been eroded.
• Organizational culture is a BUILDING A
system of shared values (what is
important) and beliefs (how things
work) that shape a company’s
STRONG AND
people, organizational structures,
and control systems to produce EFFECTIVE
behavioral norms (the way we do
things around here).
CULTURE
 • The Role of Culture:
BUILDING A • Zappos and Amazon focus on customer service
STRONG AND • Lexus and Apple emphasize product quality
EFFECTIVE • Google and 3M place a high value on innovation

CULTURE • Nucor (steel) and Walmart are concerned, above all,

with operational efficiency
BUILDING A STRONG AND EFFECTIVE
CULTURE

• Sustaining an Effective Culture:

• Culture must be cultivated, encouraged, and “fertilized.”
• 3M uses powerful stories
• Actions of leaders and culture warriors can also play a
critical role in reinforcing a firm’s culture.
• Sustaining an Effective Culture:
• I make a point of walking around the
office every day and thanking people
for their contributions. It could be
something as small as, “I really BUILDING A
appreciated the email
announcement you crafted,” or STRONG AND
something more substantive like,
“Thanks for handling that tough EFFECTIVE
situation a few days ago.” Thanking
them reminds them to thank others CULTURE
and be appreciative of what we
have. – Brent Beshore, CEO of
adventur.es, a private investment
firm.
CORPORATE
CULTURE
• Corporate Culture - Corporate
culture refers to the beliefs and
behaviors that determine how a
company's employees and
management interact and handle
outside business transactions.
Often, corporate culture is
implied, not expressly defined,
and develops organically over time
from the cumulative traits of the
people the company hires. (Tarver,
2021)
LEARNING
FROM
MISTAKES
• Discussion Questions:
What changes should Tesco
make to avoid future similar
scandals?
To what degree do you think
the scandal at Tesco was
related to how the firm had
been performing?