CHAPTER 11 MANAGING INTERNAL OPERATIONS Actions That Promote Good Strategy Execution.
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Transcript of CHAPTER 11 MANAGING INTERNAL OPERATIONS Actions That Promote Good Strategy Execution.
CHAPTER 11
MANAGING INTERNAL OPERATIONSActions That Promote Good Strategy Execution
11–3© 2013 by McGraw-Hill Education. All rights reserved.
FIGURE 10.1 The 10 Basic Tasks of the Strategy Execution Process
Chapter 10
Chapter 12
Chapter 11
The Action Agenda for Executing Strategy
11–5© 2013 by McGraw-Hill Education. All rights reserved.
ALLOCATING RESOURCES TO THE STRATEGY EXECUTION EFFORT
Possible Adverse Resource Allocation Outcomes:● Too little funding that slows progress and impedes the
efforts of organizational units to execute their pieces of the strategic plan proficiently.
● Too much funding that wastes organizational resources and reduces financial performance.
11–7© 2013 by McGraw-Hill Education. All rights reserved.
STRATEGY-DRIVEN BUDGETING: ALLOCATING RESOURCES
Screen resource requests carefully. Approve only those that contribute to
strategy execution. Provide the level of resources necessary
for the success of strategic initiatives. Shift resources to higher-priority activities
where new execution initiatives are needed.
11–9© 2013 by McGraw-Hill Education. All rights reserved.
INSTITUTING POLICIES AND PROCEDURES THAT FACILITATE
STRATEGY EXECUTION
Policies and operating procedures facilitate strategy execution by:● Providing top-down guidance regarding how things
need to be done.
● Helping ensure consistency in how execution-critical activities are performed.
● Promoting the creation of a work climate that facilitates good strategy execution.
11–11© 2013 by McGraw-Hill Education. All rights reserved.
FIGURE 11.1How Policies and Procedures Facilitate Good Strategy Execution
11–14© 2013 by McGraw-Hill Education. All rights reserved.
FIGURE 11.2 From Benchmarking and Best-Practice Implementation to Operating Excellence
The more that organizational units use best practices in performing their work, the closer a company moves toward performing its value
chain activities as effectively and efficiently as possible.
This is what excellent strategy execution is all about.
11–16© 2013 by McGraw-Hill Education. All rights reserved.
REENGINEERING THE ORGANIZATION
Business Process Reengineering● Involves radically redesigning and streamlining work
effort, flows and processes to achieve dramatic improvements in performance.
● Uses cross-functional teams, cutting-edge technology and information systems to reset and refocus the organization’s strategy.
11–18© 2013 by McGraw-Hill Education. All rights reserved.
ACHIEVING CONTINUOUS IMPROVEMENT
Total Quality Management (TQM )● Creating a total quality culture bent on continuously
improving the performance of every task and value chain activity.
● Is a long-term race without a finish in which success comes slowly in small steps forward (kaizen).
11–20© 2013 by McGraw-Hill Education. All rights reserved.
A STATISTICAL APPROACH TO ACHIEVING CONTINUOUS
IMPROVEMENT
Six Sigma Programs● Utilize statistical methods to improve quality by
reducing defects and variability in business processes.
Six Sigma Principles● All work is a process.
● All processes have variability.
● All processes create data that explain variability.
11–25© 2013 by McGraw-Hill Education. All rights reserved.
THE DIFFERENCE BETWEEN BUSINESS PROCESS REENGINEERING AND
CONTINUOUS IMPROVEMENT
Top-notch Strategy
Execution and Operating Excellence
Continuous Improvement (TQM, Six Sigma)
Business Process
Reengineering
Aims at one-time quantum
improvement
Aims at ongoing incremental
improvements
11–29© 2013 by McGraw-Hill Education. All rights reserved.
INSTALLING INFORMATION AND OPERATING SYSTEMS
Benefits of Information Technologies● Enable better strategy execution through data-based
decisions
● Strengthen organizational capabilities
● Allow for real-time tracking of implementation initiatives and daily operations
● Provide monitoring of empowered employee performance (electronic scorecards)
● Build closer relationships with customers
11–30© 2013 by McGraw-Hill Education. All rights reserved.
INSTITUTING ADEQUATE INFORMATION SYSTEMS, PERFORMANCE TRACKING,
AND CONTROLS
Employee data
Financial performance data
Customer data
Operations data Supplier/partner/collaborative ally data
Key Strategic Performance Indicators Tracked by Information Systems
11–32© 2013 by McGraw-Hill Education. All rights reserved.
USING REWARDS AND INCENTIVES TO PROMOTE BETTER STRATEGY
EXECUTION
Techniques for winning sustained,
energetic commitment of
employees to the strategy execution
process
Providing incentives and an engaging in motivational practices that facilitate good strategy execution.
Striking the right balance between rewards and punishment for individual performance.
Linking employee rewards to strategically relevant organizational performance outcomes.
11–35© 2013 by McGraw-Hill Education. All rights reserved.
NONMONETARY APPROACHES TO ENHANCING MOTIVATION
Provide attractive perks and fringe benefits.
Give awards and other forms of public recognition.
Rely on promotion from within whenever possible.
Invite and act on ideas and suggestions.
Create a work atmosphere of caring and mutual respect.
State the strategic vision in inspirational terms.
Share the firm’s critical information with employees.
Provide a comfortable working environment.
11–36© 2013 by McGraw-Hill Education. All rights reserved.
STRIKING THE RIGHT BALANCE BETWEEN REWARDS AND
PUNISHMENT
The firm’s motivational approaches and reward
structurePunishmentRewards
Commitment-generating incentives and rewards
Adverse employment consequences
Performance
11–39© 2013 by McGraw-Hill Education. All rights reserved.
LINKING REWARDS TO STRATEGICALLY RELEVANT PERFORMANCE OUTCOMES
1. Focus on and reward results, not effort.
a. Create a results-oriented work environment that focuses on what to achieve, not what to do.
2. Set strategically-relevant, specific, and measurable stretch performance goals that are difficult but achievable.
a. Link the performance goals of each individual in an organizational unit to the unit’s goals.
3. Reward and recognize as success superior performance in accomplishing the goals.
11–41© 2013 by McGraw-Hill Education. All rights reserved.
GUIDELINES FOR DESIGNING EFFECTIVE INCENTIVE COMPENSATION SYSTEMS
4. Make financial incentives a major, not minor, piece of the total compensation package.
5. Have incentives that extend to all managers and all workers, not just top management.
6. Administer the reward system with scrupulous objectivity and fairness.
7. Keep the time between achieving targeted performance outcome and payment of the reward as short as possible.
