Eight Levers SI

8/2/2019 Eight Levers SI

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Building a Capable Organization:

The eight levers of StrategicImplementation


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Strategy Formulation Implementation Performance Cycle

According to Johnson (2005) 60% of the strategy isnever implemented.

Companies attribute this to fact that 95% of the

employees do not understand the companysstrategy.

Faulty strategy or Poor implementation or bothleads to a strategy performance gap.

Cues from current poor strategy executioninfluences the future strategy formulation leading toa vicious cycle.


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Reasons of poor Strategy implementation

Beer and Eisenstat identify six killers of Strategyimplementation:

1. Top-down or Laissez-Fair Senior Management Style

2. Unclear Strategy and conflicting priorities.

3. An Ineffective senior management team.

4. Poor vertical communication.

5. Poor coordination across functions, businesses orborders.

6. Inadequate down-the-line leadership skills anddevelopment


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Strategic Implementation as an ally

Critical Structural & Managerial levers are necessaryto build a capable organization.

The identification of these 8 critical levers allows

companies to identify their strong and weak pointsthat could impact implementation process.

Structural Levers: Constitute the configuration orframework in which the companies operate

effectively. Managerial levers: The managerial skills or

managerial tasks that arise in executing strategy.


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Structural levers

1. Actions: Who, what and when of cross functionalintegration.

2. Programs: Instilling organizational learning andcontinuous improvement practices

3. Systems: Installing strategic support systems

4. Policies: Establishing Strategy Supportive policies


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Structural levers:1. Actions: Fostering cross functional integration and company

collaboration

Eg: Lack of support from pilots was one of the roadblocks to the cost cutting

strategy of AI

Input and Collaboration of all the members at all the levels of strategy

Cross Functional Integration

Eg: At ICICI bank aggressive sales pitch is backed by streamlined operations.

Integration between the all the activities of the value chain


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2. Programs: Instilling organizational learning &continuous improvement practices

Organizational learning & continuous improvement must incorporateinnovation into the implementation lever

Creation of Innovation Chain to include global partners in the innovation effort

Eg: Practiced by Japanese Auto giants pioneered by Toyota

Eg: Partnership between Reva Motors and General Motors for producing smallpassenger cars


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3. Systems

Importance of systems as a lever is simply illustrated by the fact thatcompanies managing their IT systems successfully generate a 40% higherreturns than others

The purpose of systems is to provide timely access to both qualitative andquantitative data for effective decision making, both strategic and tactical

Floral Farms successfully utilized this systems lever to develop a decisionsupport model

Lufthansa wanted to increase its utilization and flexibility of Pilots, but hadissues with its pilot training schedule, communication and resulting stresslevels. They therefore introduced mobile computing which helped the Pilots

to be updated regarding training, scheduling and other communication froma remote location and thus increased utilization and satisfaction levels


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4. Policies

Strategy supportive policies MUST necessarily envelope a COLLECTIVEpattern of day-to-day decisions and actions

There might be a tendency to formulate policies based on particularincidents rather than a pattern of incidents which in totality may not supportthe companys overall objective

A good example is of the Powrtron company which tended to react quickly toan unprecedented problem by forming a policy. From a larger perspective,these served to defeat strategic objectives and decisions

Policies also tend to change with change in management resulting ininconsistencies

Communication and percolation of these Policies top-down to all ranks isimperative for effective implementation of strategic goals


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Managerial levers

1. Interacting: The exercising of strategic leadership

2. Allocating: Understanding when and where toallocate resources.

3. Monitoring: Tying rewards to achievements.

4. Organizing: The strategic shaping of corporateculture.


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INTERACTING: Exercising of strategic leadership

Strategic Leadership is a critical implementation leverfor building a capable organization.

Responsibilities under strategic leadership

Direction Protection Orientation

Motivation Managing conflict


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Interacting Continued

Five levels of Leadership hierarchy:

Level 1- Highly capable individuals(contributionsthrough talent, knowledge ,skills etc.)

Level 2-Contributing team member(works effectively in agroup)

Level 3-Competent manager(organizes people &resources)

Level 4-Effective leader(vision) Level 5 Executive(enduring greatness through personal

humility and professional will)


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ALLOCATING: Understanding when and where toallocate resources

Encompasses the use of major resources such asmoney ,people and capabilities.

In addition to financial resources;

Physical capital(plant, equipment, geo. Location)

Human capital(training ,experience ,judgment etc.)

Organizational capital(formal reporting systems,firm and its environment etc.

Eg: OMED Medical Supplies


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Monitoring: Tying Rewards to Achievements

Outcome

Favourable

Incentives/ Rewards

Monetary

(Salary Increases, Bonuses,Promotions, perks, stock options, etc.)

Non Monetary

(Praise, recognition, job security,responsibility, etc.)

Unfavourable

Tackling/Corrective Actions

One of the most prevalent technique for tying reward to achievements is linking executivepay to organization's overall ROE

The lever suggests using multiple type of awards for motivating and encouragingemployees

E.g. Genpact has the system of awarding - Gold, Silver and Bronze RecognitionCertificates to their employees along with the commensurate performance bonuses


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Organizing Shaping of Corporate Culture

Organization Culture is a powerful strategic implementation tool for business

Culture is a system of shared values and norms in an organization

Shaping of Organizational Culture requires: Clarity

Consistency

Comprehensiveness

The Strategy formulation performance gap can only be removed if theorganization culture is ready to adapt to higher standards and developappropriate attitude and behaviour in the long run

Culture

Executive Culture(A Model to follow)

EngineeringCulture

(Core technology)

Internal(operational)


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Established Firms v/s Start-ups

The established firms have the advantage of compensatingwith another lever to overcome the weaknesses in one leverand reduce its impact

The start-ups do not have this luxury and the entrepreneur

needs to understand the impact of each of the levers and itsstrengths and weaknesses

It was observed through the OMED case that the weak-links in a start-ups implementation efforts rest within the

structural levers


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Conclusion

Use of Levers as a managerial tool allowed identificationof:

Efforts that facilitated formulation and implementationof strategies

Forces of resistance that inhibit the implementation.Unless weak levers were identified and overcome, theywould constrain future strategy formulation efforts

Although the use of all Eight Levers is not necessary whilebuilding and organization, a clear understanding of eachlevers role and its impact on the ability to succeed isnecessary


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Thank You !!

Eight Levers SI

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