July 12, 2022

Select a company that you would like to work for and audit the company using the 7S model as a guide (Dyer et al, (2020), Chapt 12 pp. 217-222 and in the Handout: Dyer et al (2

Directions

Select a company that you would like to work for and audit the company using the 7S model as a guide (Dyer et al, (2020), Chapt 12 pp. 217-222 and in the Handout: Dyer et al (2016), Appendix A, pp. 10-12).

Briefly describe each “S” for for that company and how well you think the company is aligned between the S’s.

Use content from Horwath’s Discipline 3 in your post.

Unit 6: Discussion 2

Directions

Briefly describe each “S” for for that company and how well you think the company is aligned between the S’s.

Use content from Horwath’s Discipline 3 in your post.

Unit 6: Overview – Global Markets

Introduction

It is important for managers to recognize two opposing challenges. These include (1) being proactive in taking advantage of new opportunities (looking outward), and (2) ensuring the effective coordination and integration of existing operations (looking inward). Those challenges suggest the need for flexible organizations. Successful organizations are both efficient in how they manage existing assets and competencies as well as taking advantage of opportunities in rapidly changing and unpredictable environments.

Organizational structures need to be designed to handle both internal processes and external parties such as suppliers, customers, and alliance partners. The challenge for managers is to create systems that both maintain order and provide flexibility. There are different types of organizational structures with varying control systems.

Corporate governance can be defined as the relationship between the various participants in determining the direction and performance of the corporation. The primary participants include shareholders, management (led by the chief executive officer), and the boards of directors.

Successful organizations must ensure that they have the proper type of organizational structure. Furthermore, they must ensure that their firm incorporates the necessary integrating and processes so that the internal and external boundaries of the firm are flexible and permeable. Such a need is increasingly important, as the environments of firms become more complex, rapidly changing, and unpredictable.

Organizations also need to follow strategies to develop cultures and incentives that reward information and resource sharing as well as support the goals of the corporation.

Strategic Management

Jeff Dyer

Third Edition

Chapter 12

Implementing Strategy

Professor’s Goals for this Lecture

There are many types of problems that can be solved for a company by doing a cost analysis. A cost analysis can be used to solve problems as diverse as marketing (e.g., how much to spend to acquire additional customers) or HR (how much labor costs go down per unit with increases in volume). The principle tools to be learned in this chapter are designed to help the student examine the relationship between a company’s size (measured in volumes produced or market share) and cost per unit. This is primarily reinforced by teaching students how to create a scale/experience curve (both done in the same way with “cost per unit” on the “Y” axis but the scale curve uses volume for a given year on the “X” axis whereas the experience curve uses cumulative volume on the “X” axis. The students will have the opportunity to examine the relationship between scale/experience in the following assignments:

– the homework assignment involving calculating an experience curve in semiconductors

– Fry’s Credit Card Mini-case (in lecture); considers the relationship between total number of subscribers (X axis) and cost per subscriber (Y axis)

– the Southwest Case (after lecture); considers the relationship between total passengers flown (or market share) and performance (profitability) in the industry

I’d rather have a first-rate execution and second-rate strategy any time than a brilliant idea and mediocre management.

–Jamie Dimon

CEO, JP Morgan

This is a great quote to begin the session, and I’ll ask 2-3 students to weigh in here and tell me whether the agree or disagree.

I’ve usually found a student, who I’ve gotten to know by this point in the course, who will vehemently disagree with Dimon’s quote and will argue that it’s really critical to have a great strategy. You can even ask “Is Dimon really advocating bad strategy?”

Usually someone else will take up the charge and realize that Dimon is NOT advocating a poor strategy, but he’s advocating that people pay as much attention to implementation and execution as they do to crafting strategy.

I like this quote because it really wakes students up to the reality that, no matter how good their strategy is, implementation matters.

You can also play off the video here and ask a student to tell about one of their great New Year’s resolutions, and what happened to that it. They aren’t bad goals, just lacking in execution.

The source for the quote is:

Roger Martin, the Execution Trap, Harvard Business Review, July 2010. Available at http://hbr.org/2010/07/the-execution-trap/ar/1

Three important elements

Execution—getting things done

Alignment—getting the right things done

Change—Getting new things done

I’m going to spend a few minutes here, mostly to move from the basic notion of execution to the more complex concepts of alignment and change management.

The point that I’m trying to make here is that execution matters, but sometimes implementing a new strategy requires more than just “doing it!” Implementation becomes difficult because what needs to be done is the change elements of the whole organization in order to make the strategy work.

It’s not just enough to change from a cost leadership to differentiation strategy; changing strategy creates a need for alignment between the new strategy and the organization’s structure, it’s people, and its processes. This is the process of creating alignment.

Change is how that realignment actually happens. Change has to be a proactive and managed process because people in an organization all have a vested interest in maintaining the status quo. Some people will actively resist change efforts, but most will simply proceed with their daily routine; this creates substantial inertia and pressure the really dooms most change efforts.

The 7 S Model

The 7 S model helps describe organizational reality

A set of buckets to sort information

The 7 S’s as a balloon

Push on one side, the other sides all move

The 7 S’s constitute a system

Two components:

The Hard Triangle: Strategy, Systems, Structure

The Soft Square: Staffing, Skills, Style, Shared Values

I’ll spend a few minutes here because it’s important to understand how the 7 S model creates alignment.

The 7 S model is not a causal model of an organization, or the creation of competitive advantage. It is really a descriptive tool that allows you to create a useful picture of the elements of the organization. It’s a diagnostic tool, and a good diagnosis is essential if we want to make productive changes.

The model represents the organization as a set of interconnected elements, or as a system. This is why alignment is so challenging: when you change one element in the system, you change all the others as well. Whether or not you intend to. That means that executives are well served to think through how changes in one element (usually strategy) will affect the other elements.

It’s useful to think about the model in terms of two components: the hard triangle and soft square. Hard doesn’t mean difficult, it means tangible. Executives can create a new structure on the back of a napkin at lunch, or they can release a new strategy document. The hard triangle is actually the easiest and quickest set of elements to change. The problem is that they are also the elements that have the least impact on the overall, long term ability of the organization to execute a strategy and succeed.


	Strategy

Structure		Systems

	Shared Values


Staffing		Skills

	Style

Figure 12.1: The 7 S Model

I’m not going to spend much time here other than to show students that this is a graphic representation of the model.

The 7 S Model

Alignment- A condition where organizational elements fit together and reinforce each other.

Strategy- The plan or process that creates and sustains a competitive advantage for a firm.

Structure- The set of organizational arrangements that divide labor and tasks and the reporting or authority relationships.

Systems- Mechanisms, policies, or processes that coordinate and control the work of the different units of the organization.

Staffing- The human resource management processes in the organization for recruiting, hiring, training, and deploying human capital.

Skills- The abilities of individuals, groups, or organizations to perform tasks.

Style- The interpersonal relationships and patterns of interaction that organizational members consider appropriate and legitimate.

Shared Values

Shared Values- The priorities, values, and virtues that members of the organization see as important.

Superordinate Goals High-level, abstract goals that all stakeholders agree on to guide organizational action.

Hard Triangle- The elements of strategy, structure, and systems in the 7 S model. The hard triangle represents a set of “hard” levers that managers can quickly pull to create alignment or realignment.

Soft Square- The elements of style, staffing, skills, and shared values. Soft square elements are often difficult to codify and usually take a long time to influence and change.

	Strategy
	Organizational Goals Competitive Advantages
Structure		Systems
Division of Labor Reporting responsibilities		Coordination Control
	Shared Values
	Common Belief Priorities
Staffing		Skills
Hiring, Training, Promoting		Technologies What we do well
	Style
	Interpersonal relationships

I’ll spend some time here, probably about 10 minutes. I want to help students understand each of the elements in the model. Their connections will become apparent either through discussion in the next slides, or in the case that accompanies this chapter.

	Strategy
	Full Service Regional Coverage Focused on Core Long Term View
Structure		Systems
Decentralized Functional Expertise Geographic Focus		Tight Cost Control Bonus Incentives Merit Promotion
	Shared Values
	Conservative Profitability Loyalty Decentralization Equity & Generosity
Staffing		Skills
Hire good people MDP Promote from within		Customer Service Cost Control
	Style
	Informal Friendly Practical

The Positives

I’ll spend about 5 minutes here. This is an actual 7 S model for a company that the author team worked with. We’ve identified the elements of the organization that we uncovered in their relevant S.

I focus on the shared values first, and ask the students to tell me where they see these values influencing other elements of the 7 S model. For example, the combination of a conservative outlook and a focus on profitability influence systems and skills (cost control), staffing (promote from within), and a strategy that takes a long term view of the business.

You can ask the students to identify other connections they see in the model.

	Strategy
	No focus on niches No operating synergies Few strategic assets
Structure		Systems
Management by exception Functional Silos with little communication		Excessive Internal Focus Little incentive pay Promotion on Seniority
	Shared Values
	Comfortable Complacency Excessive Frugality
Staffing		Skills
Hire by W.O.M. Little Training Hard to Fire	Style Non-confrontational Little Challenge & debate Slow to decide	“We know what customers want” Reliance on traditional ways

The Negatives

I’ll spend a couple of minutes here to make very important point. This is the same company, and the same 7 S model, except this time we’ve created a picture to help the executive team understand the problems their organization was facing, and THAT THESE PROBLEMS ARE THE NATURAL CONSEQUENCE OF THEIR STRENGHTS.

I just focus on shared values here in order to make the point. Notice that one positive shared value was loyalty. It’s negative was complacency and a tolerance for work that was sub-standard. The firm’s conservative focus on profitability created a shared value of excessive frugality, where spending money—even wisely—was discouraged.

Students need to understand that misalignments and problems in organizations are not the result of people engaging in malicious or stupid actions; by and large misalignments are created as a natural byproduct of the strengths of a company—you can have too much of a good thing.

I’ll end this slide with a transition into change management, and it’s challenges.

The Three Phases of Change

Unfreezing- first step in organizational change. It begins when leaders recognize and publicly admit that the current situation is not producing acceptable or adequate results.

Changing- The middle step in organizational change that a company engages in to adapt to its environment and learn new behaviors.

Refreezing- The last phase of organizational change. This step involves formalizing and institutionalizing new behaviors, methods, processes, or routines.

Figure 12.4 :Change: Three key phases

Unfreezing

Change

Re-freezing

Publicly admit that current state isn’t working

Make a clear break with past actions or processes

Develop new behaviors

Use trial and error process

Create new Alignment

Embed new behaviors : training compensation, culture

Motivating

Moving

Maintaining

I’ll spend about 10 minutes on this slide. Understanding change from a very macro, or high level, perspective matters because if students don’t have some idea about the unfreezing stage and its importance, they’ll have a difficult time understanding why the change and refreezing parts fail.

To guide the discussion on change, I’ll take one of two tacks. I’ll either talk about a company that I’ve consulted with during this process, or I’ll ask the students to think about a change they’ve attempted to make in their own lives. Often, I’ll be talking about a company, but I’ll invite students to think about—and make notes about—a change they would like to make.

Unfreezing turns out to be the most important step because people won’t make changes until they see a real need. If a company has a vague sense that things are less than ideal, change won’t happen. It’s not until leaders admit to others in the organization (and maybe those outside) that the current state is no longer viable that change becomes possible.

The break can be substantive, as in a declaration that we are formally moving away from the current state, or it can be symbolic, such as a “funeral service” for current policies, processes, or strategies.

The important point is that until the organization unfreezes, and people admit the need for change, change efforts will lack the commitment and energy to succeed.

My comments about change on this slide will be limited, other than to say that the thing that stymies most change efforts is fear: few organizations reward people to develop new behaviors, or fail during a trial and error process.

Refreezing is a nice conceptual bookend, but the focus of the discussion (especially when students are thinking about their own lives) is on starting an effective change process.

The 8 Steps to Successful Change

Figure 12.5: The change process

Generate

urgency

Build

Coalition

Create

Vision

Empower

Action

Short-

Term

Wins

Consolidate

Gains

Institutionalize

Changes

The Silent Phase

(Unfreezing)

½ -1 ½ years

The Active Phase

(Change)

1-2 years

Completion

(Refreezing)

4-7 years

I’ll spend the remaining time on this slide, both explaining how this works, and answering student questions. I’d suggest reading John Kotter’s book, The Heart of Change (HBS Press, 2002) because it’s got some great stories about how real managers have used each of the elements to enact meaningful change in their organization. The stories are really captivating and will create a very strong impression among your students.

I end up spending most of the time talking about the first 6 elements, consistent with my emphasis on helping students understand how to BEGIN the change process.

The change process all starts with generating urgency. Urgency is both a cognitive and emotional response to data that suggests the organization is off track. Urgency is best generated from within. Hiring outside consultants is the worst way to establish urgency, followed by grand statements from the CEO. People need to find urgency on their own, and on their own time. Wise leaders establish urgency by allowing people in the organization to experience the problem first-hand (Kotter has a great story here about work gloves).

In terms of the coalition, it’s important that the coalition involve leaders (both formal and informal) throughout the organization. If top management isn’t involved in the coalition, change rarely succeeds; however, the same can be said for any level in the organization. The reality is that most levels in an organization can derail a change project they haven’t bought into.

Vision is tough, because you’re not really sure where you are headed, especially when change involves moving into new or innovative market spaces. Sharing the vision is important, and the most important thin for students to understand is that the vision needs to be shared in every conversation that managers have in the organization. It can’t be just a memo, or a video, or maybe a one-day offsite meeting.

Short term wins are really important, particularly if you’ve asked students to think about a personal change. The reality is that change takes a long time, and short term wins provide renewed energy to move forward and a confirming confidence that we’re on the right track.

The last two elements can usually be discussed in passing because I’m usually out of time here.

This is a great topic for student engagement, and most students taking a strategy course will have lived through some type of failed change effort, either personal or organizational. They usually have a lot of questions about how to make change more effective.

Measurement

Principle of Line Of Sight- The notion that individual members in an organization should be able to connect their daily work and tasks to the overall strategic goals of the organization.

Balanced Scorecard- A tool that measures four broad areas of organizational performance: financial results, customer goals, internal business processes, and

learning and growth.

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Select a company that you would like to work for and audit the company using the 7S model as a guide (Dyer et al, (2020), Chapt 12 pp. 217-222 and in the Handout: Dyer et al (2

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