Action Items Refer to your work on these previous assignments to inform your work on this one: Corporate Strategic Goals Service Area Competitor Analysis Strat

Chapter 9 Value-Adding Support Strategies

Why Value-Adding Support Strategies Are Important

As advanced by Michael Porter, the value chain may be used to identify and analyze the strategically relevant activities that create value and ultimately com- petitive advantage for an organization. Strategically relevant value-adding sup- port activities include the organization’s culture, organizational structure, and strategic resources (financial resources, human resources, information systems resources, and strategic technologies resources). In a similar manner to service delivery, the support strategies must be linked to demands of the overall strategy and the organization’s strengths and weaknesses. Developing strategies for the strategically relevant support activities is crucial because of the ways these activi- ties add value and differentiate the organization. The support activities may be less visible than service delivery activities, yet are profoundly important.

“The value chain disaggregates a firm into its strategically relevant activities in order to understand the behavior of costs and the existing and potential sources of differentiation.”

—MIchAel PorTer, STrATegy AuThor AnD ProfeSSor

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-21 14:57:09.

C op

yr ig

ht ©

2 01

8. J

oh n

W ile

y &

S on

s, In

co rp

or at

ed . A

ll rig

ht s

re se

rv ed

.

360 StrAtegic mAnAgement of HeAltH cAre orgAnizAtionS

Ideology or culture is at the center of determining the ability of an organization to support service delivery and the overall organizational strategy. The organiza- tion’s culture is not separate from the organization but inherent to it. In addition, an organization’s culture infuses life into the organization’s structure as well as into the strategic resources. If the organizational culture is adaptive, it can respond to the periodic changes that must be made in all elements of the value chain that enable the organization to remain relevant.

The organization’s structure is critical to accomplishing the strategy – structure should probably follow strategy. Whether the organization structure will be flat or tall; whether the organization will make decisions centrally or will decentralize deci- sion making, will be tied not only to the organization’s strategy but also to its culture. Therefore, the organization’s structure is dependent on the culture.

further, culture infuses life into the strategic resources – the strategically rel- evant support activities that make the service delivery and broader organizational strategies possible. Without the right people, adequate financial resources, a strate- gic information system, and appropriate technology, service delivery will be ham- pered and the overall strategy will not be accomplished. Pulling these strategic resources together is essential for successful implementation of the strategic plan.

Developing effective value-adding support strategies is aided by processes and guidelines that determine whether the support functions need to remain the same or change to meet the demands of the strategy and align with the organization’s strengths. Proper translation of the strategy, an adaptive culture, and the appro- priate strategic resources are necessary for a successful organizational strategy.

use the concepts in this chapter to develop effective value-adding support strategies for a health care organization!

learning objectives

After completing the chapter you will be able to: 1. Explain why the value-adding support strategies are important elements in the

implementation of strategy. 2. Align the value-adding support strategies to ensure they point the organization

toward achieving its mission, vision, and goals. 3. Link the results of internal analysis of the support activities to the implementa-

tion of value-adding support strategies. 4. Demonstrate how the culture, structure, and strategic resources of an organiza-

tion must be explicitly linked to directional, adaptive, market entry/exit, and competitive strategies, as well as the value-adding service delivery strategies.

5. Discuss how the value-adding support strategies may be used to create or solidify competitive advantages and strengthen weaknesses to overcome com- petitive disadvantages.

6. Explain how the value-adding support strategies provide guidance for the devel- opment of organizational objectives and action plans.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-21 14:57:09.

C op

yr ig

ht ©

2 01

8. J

oh n

W ile

y &

S on

s, In

co rp

or at

ed . A

ll rig

ht s

re se

rv ed

.

Chapter 9 Value-adding Support StrategieS 361

Strategic Management Competency After completing this chapter you will be able to create effective value-adding support strategies for a health care organization.

Implementing Support Strategies

As indicated in chapter 8, implementation strategies take a decidedly internal focus. effective and efficient operations make strategies work. Along with the pre-service, point-of-service, and after-service strategies, the value-adding support strategies should be developed and specified. Similar to the service delivery strategies, the value-adding support strategies are implementation strate- gies directed toward accomplishment of all the other strategies including the directional, adaptive, market entry/exit, competitive, and service delivery strategies.

unfortunately, as with service delivery strategies, value-adding support strate- gies may not succeed because of a lack of proper implementation. Three pillars of effective execution are necessary for successful implementation of strategies – direction, structure, and people.1 Direction involves stepping down the strategic plan to the specifics of getting things done. Structure is the organization of the processes necessary to accomplish the strategy and people means that the organi- zation must have the engaged individuals required to make strategy happen. for organizations to reach ambitious strategies, they must thoughtfully and purpose- fully manage the way the strategy is implemented.2

Similar to service delivery, the value chain provides a strategic thinking map of the support activities that create value for the organization and may be a source of competitive advantage or disadvantage. The value-adding support strategies are based on the elements of the lower portion of the value chain and are the means for accomplishing the decisions made in strategy formulation (see exhibit 9–1). once the support strategies are determined, more specific action plans may be developed (see chapter 10).

Decision Logic for the Value-Adding Support Strategies

once the service delivery strategies (the primary value-adding activities) are for- mulated, support strategies that provide the appropriate organizational context and resources to carry out the organization’s strategy are needed. As illustrated in exhibit 9–2, the support strategies are dependent primarily on the organiza- tion’s market entry/exit strategies (which achieve the adaptive strategies), com- petitive strategies (strategic posture and positioning), and the service delivery strategies. The success of these strategies may be dependent on the effectiveness of the organization’s culture, structure, or strategic resources. for example, an

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-21 14:57:09.

C op

yr ig

ht ©

2 01

8. J

oh n

W ile

y &

S on

s, In

co rp

or at

ed . A

ll rig

ht s

re se

rv ed

.

362 StrAtegic mAnAgement of HeAltH cAre orgAnizAtionS

ExhIbIt 9–1 The Value Chain

PRE-SERVICE Market/Marketing Research Target Market Services Offered/Branding Pricing Distribution/Logistics Promotion

POINT-OF-SERVICE Clinical Operations

Quality Process Innovation

Marketing Patient Satisfaction

AFTER-SERVICE Follow-up

Clinical Marketing

Billing Follow-on

Clinical Marketing

ORGANIZATIONAL STRUCTURE Function Division Matrix

STRATEGIC RESOURCES Financial Human Information Technology

A dd

Va lu

e A

dd Va

lu e

S er

vi ce

D el

iv er

y S

up po

rt A

ct iv

iti es

ORGANIZATIONAL CULTURE Shared Assumptions Shared Values Behavioral Norms

Source: Adapted from Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York: Free Press, 1985), p. 37.

acquisition or merger market entry strategy may require the combining of two very different organization cultures. Similarly the demands of a differentia- tion positioning strategy may require additional technical, human, or financial resources. Additionally, changes in the service delivery strategy will likely initiate culture and structure modifications.

Process for Developing Support Strategies

Just as a step-wise process was helpful in developing the broader strategies and service delivery strategies, a similar process for formulating the support strategies is presented in exhibit 9–3. for each of support activities – culture, structure, and strategic resources – the demands of the broader strategies (market entry/exit, competitive strategies, and service delivery strategies) must be matched to the results of the internal analysis to determine if the sup- port strategies need to be maintained or changed to accomplish the selected strategies. once the strategy is determined, guidance can be provided to the organizational units.

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-21 14:57:09.

C op

yr ig

ht ©

2 01

8. J

oh n

W ile

y &

S on

s, In

co rp

or at

ed . A

ll rig

ht s

re se

rv ed

.

Chapter 9 Value-adding Support StrategieS 363

ExhIbIt 9–2 Decision Logic for Developing Support Strategies

Directional Strategies

Adaptive Strategies • Expansion of Scope • Reduction of Scope • Maintenance of Scope

Market Entry/Exit Strategies

• Purchase • Cooperation • Development • Market Exit

Competitive Strategies • Strategic Posture • Positioning

Implementation Strategies

• Organizational Culture • Organizational Structure • Strategic Resources

Implementation Strategies • Service Delivery Strategies

Implementation Strategies • Unit Action Plans

Unit-level Strategies

Organization-level Strategies

Corporate- and Divisional-level Strategies

Support Strategies

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-21 14:57:09.

C op

yr ig

ht ©

2 01

8. J

oh n

W ile

y &

S on

s, In

co rp

or at

ed . A

ll rig

ht s

re se

rv ed

.

364 StrAtegic mAnAgement of HeAltH cAre orgAnizAtionS

Step 1: Identify the Support Requirements of the Strategy and Support Value-Adding Potential

The appropriate directional, adaptive, market entry/exit, and competitive strate- gies have been discussed in chapters 5 through 7. As illustrated in exhibit 9–2, the market entry/exit, competitive, and service delivery strategies place the great- est demands on the support strategies. The value-chain support strategies must aid in the accomplishment of these strategies. Although the requirements of the market entry/exit, competitive, and service delivery strategies will be unique to each particular situation and organization, general internal resource, competency, and capability requirements for the market entry/exit strategies were presented in exhibit 7–19, for the posture strategies in exhibit 7–22, and for the positioning strategies in exhibit 7–24. using these tables can stimulate strategic thinking for most any organization. for example, an internal venture market entry strategy

ExhIbIt 9–3 Process for Developing Support Strategies

Step 1 – Identify the Support Requirements of the Strategy and Support Value-Adding Potential

Step 2 – Compare the Strategy Requirements with the Results of the Support Activities Internal Analysis

Step 3 – Decide to Maintain or Change Organizational Culture

Step 4 – Decide to Maintain or Change Organizational Structure

Step 5 – Decide to Maintain or Change Strategic Resources

Step 6 – Provide Guidance to Organizational Units

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-21 14:57:09.

C op

yr ig

ht ©

2 01

8. J

oh n

W ile

y &

S on

s, In

co rp

or at

ed . A

ll rig

ht s

re se

rv ed

.

Chapter 9 Value-adding Support StrategieS 365

will require financial resources, an entrepreneurial culture, and marketing exper- tise. A defender strategy will require development of a single core technology, cost efficiency, and management emphasis on centralized control and stability. further, a cost leadership strategy will require investments in efficiency, process engineering skills, focus on minimizing labor costs, and so on. finally, there may be additional requirements of the support activities depending upon the adopted service delivery strategies.

Importantly, strategic managers must think through how the support strat- egies are able to assist in carrying out the broader organizational strategies. unfortunately, no formula or template exists for determining strategy require- ments; each organization, service category, and service area has its own particular considerations. focused strategic thinking will be needed to work out a plan, then learning what works – and what does not – as the plan unfolds, will be essential.

Value-Adding Support Strategies Potential The lower portion of the value chain provides direction for the development of the value-adding support strategies and includes the organization’s culture, structure, and strategic resources. More specifically, the support strategies concern areas such as the behavioral norms, organization structure and flexibility, human resources, finance, information systems, and technology, and play a major role in the implementation of the organization’s overall strategy. each area adds value in the organization. Thus, strategies are required to maintain or enhance the organi- zation’s competitive advantages and to strengthen competitive disadvantages. Increasingly, health care managers are trying to implement evidence-based man- agement practices to improve the organization’s culture, structure, and strategic resources (see essentials for a Strategic Thinker 9–1, “What Is evidence-Based Management?”).

ESSEntIALS foR A StRAtEgIC thInkER 9–1

What is evidence-Based management?

Evidence-based management (EBMgt or EBM) is an emerging philosophy of management that employs current best management practices that have been tested in real-world organiza- tional settings and are supported by data docu- menting their effectiveness or efficiency. The approach involves hypothesis development and testing, documentation of results, and the syn- thesis of best management practices. Spurring this movement is the belief that when manag- ers act on better logic and the best available

evidence, their organizations will fare better than organizations not using best practices.1 Evidence-based management uses a systems approach to identify components of a manage- ment problem and to identify sound evidence supporting a solution. This approach can be particularly helpful when conducting external analysis during strategic planning. Both external and internal analyses require the collection and analysis of data, and can benefit from the incor- poration of best practices (including thinking

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-21 14:57:09.

C op

yr ig

ht ©

2 01

8. J

oh n

W ile

y &

S on

s, In

co rp

or at

ed . A

ll rig

ht s

re se

rv ed

.

366 StrAtegic mAnAgement of HeAltH cAre orgAnizAtionS

through future implications of current trends, etc.). Once a part of the culture, managers can practice evidence-based management system- atically so that it becomes second nature.

Evidence-based management has its origins in evidence-based medicine. In an attempt to rely less on traditional, more subjective, practices, evidence-based medicine focuses on the devel- opment of medical best practices using data from well-designed empirical research concern- ing the outcomes of medical procedures, drugs, and practices. An emphasis on evidence-based medicine helped to generate the field of medical decision making and outcomes research.

Much of the activity of developing evidence of effective management begins with organiza- tional experiments and is a matter of developing management practices, putting those practices in place, measuring the practices’ effectiveness against objectives, and redesigning best prac- tices based on results. Thus, the evidence in evidence-based management  comes largely from scientific research, but internal business information and even professional experience can count as evidence as well.2

Management professors and authors, Jeffrey Pfeffer and Robert Sutton conclude:

As with medicine, management is and will

likely always be a craft that can be learned

only through practice and experience. Yet

we believe that managers (like doctors) can

practice their craft more effectively if they

are routinely guided by the best logic and

evidence – and if they relentlessly seek new

knowledge and insight, from both inside

and outside their companies, to keep updat-

ing their assumptions, knowledge, and

skills. We aren’t there yet, but we are getting

closer. The managers and companies that

come closest already enjoy a pronounced

competitive advantage.1

RefeRences

1. Jeffrey Pfeffer and Robert I. Sutton, “Evidence-

Based Management,” Harvard Business Review

84, no. 1 (2006), pp. 62–74, 133.

2. www.cebma.org/faq/evidence-based-

management (accessed July 1, 2017).

As with the service delivery strategies, value-adding support strategies must be consciously aligned. Strategic managers should take care to ensure that the support strategies are consistent and compatible with each other and that they contribute to the accomplishment of the organization’s overall strategy. Therefore, the support strategies for each area cannot be developed or evaluated in isolation. It is the strategic manager’s responsibility to make decisions concerning each support strategy and ensure that these elements are coordinated to help achieve the overall strategy of the organization. Strategic thinking, strategic planning, and managing strategic momentum are central to this process. A brief review of value- chain support strategies demonstrates their potential for achieving organizational goals and strategies.

organizational Culture Strategies Organizational culture is unique and exerts a powerful influence on how people function and act as a key factor in how well the organization performs. Studies have demonstrated that in addition to strategy, execution, and structure, the

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-21 14:57:09.

C op

yr ig

ht ©

2 01

8. J

oh n

W ile

y &

S on

s, In

co rp

or at

ed . A

ll rig

ht s

re se

rv ed

.

Chapter 9 Value-adding Support StrategieS 367

proper culture is imperative for organizations that outperform their industry peers.3 Moreover, effective culture has been shown to vary significantly from industry to industry.4 Successful strategic managers understand the importance of organizational culture and that shaping organizational culture is an essential part of leadership.5 Therefore, strategic leaders implementing strategy must effectively integrate operational changes, as well as cultural changes, into the fabric of the organizations they lead.6 In the case of health care delivery, cultural factors such as excellence in health care delivery, ethical values, involvement, professional- ism, value for money, cost of care, commitment to quality, strategic thinking, plus diversity and inclusion are important determinants of the quality of care7 (see essentials for a Strategic Thinker, 9–2, “What Are Diversity and Inclusion?”).

ESSEntIALS foR A StRAtEgIC thInkER 9–2

What Are Diversity and inclusion?

Diversity and inclusion are often used inter- changeably, but these terms are not synonymous. Diversity is the breadth of lived experiences by people from different backgrounds. These differ- ent backgrounds may relate to identities such as race, ethnicity, age, gender, gender identity, sexual orientation, disability, social class, religion, political identity, and national origin. Whereas diversity rec- ognizes the differences among people, inclusion goes beyond recognition and focuses on valuing these differences. It is the intentional engagement of people from different backgrounds that fosters inclusion. As consultant, Vernā Myers, masterfully states: “Diversity is being invited to the party; inclu- sion is being asked to dance.”1

Diversity is typically measured by review- ing data on the number of people from differ- ent backgrounds within an organization. For example, organizations may review annual data regarding the recruitment, interviewing, and hiring of women and individuals from histori- cally underrepresented groups. These efforts to collect and monitor data are necessary; how- ever, diversity in numbers is just the first step. It is not sufficient to increase the numerical repre- sentation of people from different backgrounds,

without also developing an organizational cul- ture that values the lived experiences of every individual. The intentional engagement of peo- ple from diverse backgrounds is needed to create and cultivate an inclusive culture.

For diversity and inclusion, the adage “every organization is perfectly designed to get the results that it is getting” is poignant, yet real. A diverse and inclusive culture will not occur by happenstance. Organizations that make lit- tle to no progress in the areas of diversity and inclusion seek members who will acclimate to the existing culture and make a good “fit.” In contrast, organizations that make diversity and inclusion a priority seek a cultural environment that is welcoming to members from different backgrounds. For the latter, “fit” is no longer about whether the individual will conform to the current environment, but about how the individual will enrich the current environment. Initial assessments of whether an organiza- tional culture embodies diversity and inclusion may examine:

● Do the vision, mission and values of the organization embrace diversity and inclusion?

Ginter, P. M., Swayne, L. E., & Duncan, W. J. (2018). The strategic management of health care organizations. John Wiley & Sons, Incorporated. Created from franklin-ebooks on 2023-10-21 14:57:09.

C op

yr ig

ht ©

2 01

8. J

oh n

W ile

y &

S on

s, In

co rp

or at

ed . A

ll rig

ht s

re se

rv ed

.

368 StrAtegic mAnAgement of HeAltH cAre orgAnizAtionS

In some situations culture may be more important than strategy, as an organiza- tion can copy a strategy, but replicating culture is much more difficult.8 Strategy implementation is most likely to be successful when the culture of the organi- zation is appreciated and considered. Indeed, culture should serve strategy.9 A cognitive culture, as well as an underlying emotional culture, are operating in organizations. The cognitive culture is made up of its stated intellectual values, norms, artifacts, and assumptions that serve as a guide for behavior and might include such values as customer focus, teamwork, and quality.10 The cognitive cultural values are typically promoted and documented in an organization’s strat- egy and provide meaningful behavioral guidance.

The cognitive c

Collepals.com Plagiarism Free Papers

Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.

Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS

Why Hire Collepals.com writers to do your paper?

Quality- We are experienced and have access to ample research materials.

We write plagiarism Free Content

Confidential- We never share or sell your personal information to third parties.

Support-Chat with us today! We are always waiting to answer all your questions.