Organizational Structure Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be a minimum of 300 words in length, and, you shou
Organizational Structure
Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be a minimum of 300 words in length, and, you should respond to two additional posts from your peers. If you have not done so lately, please review the Rules of Discussion.
Select an organization (for example, an employer, a social club, or a nonprofit agency) of which you are current a member. In your initial post, answer the following questions in reference to the organization that you selected.
- What is the organization's structure?
- Is the organization using the structure that is appropriate, given its strategy?
- If not, what structure should it use?
chapter 10 Building an Organization Capable of Good Strategy Execution
Arthur A. Thompson The University of Alabama
Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
All rights reserved. Not for distribution to non-registrants without permission.
An e-book published and distributed by McGraw Hill Education
Sixth Edition of Strategy: Core Concepts and Analytical Approaches (2020-2021). Arthur A. Thompson, The University of Alabama. Published and distributed by McGraw Hill Education. Image of globe comprised of puzzle pieces with several pieces dislodged and scattered below the globe. Chapter 5 The Five Generic Competitive Strategy Options: Which One to Employ
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“Strategies most often fail because they aren’t executed well.”
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Larry Bossidy, former CEO Honeywell International, and Ram Charan, author and consultant
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“A second-rate strategy perfectly executed will beat a first-rate strategy poorly executed every time.”
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Richard M. Kovacevich, former Chairman and CEO, Wells Fargo
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Costas Markides, professor
“Any strategy, however brilliant, needs to be implemented properly if it is to deliver the desired results.”
“People are not your most important asset. The right people are.”
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Jim Collins, professor and author
“Organizing is what you do before you do something, so that when you do it, it is not all mixed up.”
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
A. A. Milne, author of Winnie the Pooh
Learn the eight managerial tasks that underpin successful strategy execution.
Gain command of the three types of organization-building efforts critical to good strategy execution.
Understand the hows and whys of acquiring, developing, and upgrading the resources, competencies, and capabilities needed to execute strategy successfully.
Recognize what issues to consider in organizing the work effort and why strategy-critical activities should be the main building blocks of the organizational structure.
Become aware of the pros and cons of centralized and decentralized decision making in implementing and executing the chosen strategy.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Chapter Learning Objectives
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A Framework for Executing Strategy
Building an Organization Capable of Good Strategy Execution: Three Key Actions
Staffing the Organization
Developing and Strengthening Execution-Critical Resources and Capabilities
Structuring the Organization and Work Effort
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Chapter 10 Roadmap
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Crafting the Strategy
Is a market-driven activity
Successful strategy making depends on:
Business vision
Perceptive analysis of market conditions and the firm’s capabilities
Shrewd market positioning
Outcompeting rivals
Creating and deploying resources and capabilities to forge a competitive advantage
Executing the Strategy
Is an operations-driven activity
Successful strategy execution depends on doing a good job of:
Organization-building and people management
Continuously improving how activities are performed
Motivating/rewarding people in ways that support good execution
Creating and nurturing a strategy-supportive culture
Instilling a discipline of getting things done
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Crafting versus Executing Strategy
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It is much easier to develop than to execute a sound strategic plan and achieve its desired outcomes because:
A wide array of managerial activities must be attended to
There are many ways to put new strategic initiatives in place and keep things moving—which approach(es) to employ and when/how to make needed adjustments is not managerially simple
Bedeviling issues crop up and have to be resolved
Executing strategy tests the ability of managers to:
Direct organizational change to achieve continuous improvement in operations and business processes and thus build/strengthen competitive capabilities
Marshal organization-wide support and enthusiasm for executing the strategy as proficiently as possible
Consistently meet or beat performance targets
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Strategy Execution Is Tougher Than Strategy-Making
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Implementing and executing strategy requires that a firm’s whole management team and all employees be actively involved in the strategy execution process
Top-level managers must lead the process and orchestrate the big initiatives
Middle and lower-level managers must see that all goes well in their areas of the organization
Employees must perform their individual roles competently
The strategy execution process involves every part of the enterprise—all value chain activities, all organizational units, and all company personnel.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Executing Strategy Is a Team Effort
Strategic Insight
Ideally, senior managers need to create a companywide crusade to implement and execute the chosen strategy as fast and effectively as possible.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Core Concept
Good strategy execution requires a team effort:
All managers have strategy-executing responsibility in their areas of authority
All employees are active participants in the strategy execution process
All company personnel in one way or another are actively involved in the strategy execution process.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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It takes adept managerial leadership to:
Convincingly communicate reasons for the new strategy
Overcome pockets of doubt
Secure commitment of concerned parties
Build consensus and enthusiasm
Get all implementation pieces in place and coordinated
It takes first-rate “managerial smarts” to zero in on what exactly needs to be done and how to get good results in a timely manner.
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Implementing a New Strategy Requires Adept Leadership
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
A Framework for Executing Strategy
The managerial approach to implementing and executing a strategy always has to be customized to fit the particulars of a firm’s situation.
Making minor changes in an existing strategy differs greatly from implementing radical strategy changes
Some managers are more adept at using this or that approach to achieving desired organizational changes.
There is no one managerial recipe for strategy execution for all situations or for all types of strategies or for all managers.
Rather, the “to-do list” that constitutes management’s agenda for implementing and executing a given strategy always represents management’s judgment about how best to proceed in light of the prevailing circumstances.
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Staffing the organization and developing the resources, capabilities, competencies, and organizational structure to execute strategy successfully
Steering the needed financial and organizational resources to execution-critical value chain activities
Ensuring that policies and procedures facilitate rather than impede strategy execution
Adopting best practices and employing process management tools to drive continuous improvement in how value chain activities are performed
Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently
Tying rewards and incentives directly to the achievement of strategic and financial targets
Instilling a corporate culture that promotes good strategy execution
Exercising strong leadership to drive the execution process forward
The Principal Managerial Components of the Strategy Execution Process
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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FIGURE 10.1 The Eight Components of the Strategy Execution Process
Access alternate text for slide image.
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Strategic Insight
When strategies fail, it is often because of poor execution—needed actions are overlooked, lax oversight allows important details to slip through the cracks, key implementation approaches turn out to be ill chosen or mismanaged, or there is deficient motivation or slack effort on the part of company personnel to achieve the desired results.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
First assess what the organization must do differently and better to execute the strategy with a high degree of proficiency and meet or beat the targeted levels of financial and strategic performance
Each manager needs to ask the question:
“What needs to be done in my area of responsibility to implement our part of the company’s chosen strategy and what should I do to get these things accomplished in a manner that enables good strategy execution and produces the desired results?”
It is then incumbent on every manager to determine precisely how to make the necessary internal changes
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Devising an Action Agenda to Implement and Execute a Strategy
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CORE CONCEPT
The two best signs of good strategy execution are:
Whether a firm is meeting or beating its performance targets
Whether it is progressing well along the path to attaining real proficiency in performing strategy-critical value chain activities.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Staffing the organization
Putting together a strong management team, and recruiting and retaining employees with the needed experience, technical skills, and intellectual capital.
Acquiring, developing, and strengthening the resources and capabilities important to good strategy execution
Accumulating the required resources, developing competitively strong proficiencies in performing strategy-critical value chain activities, and updating the company’s resources and capabilities to match changing market and competitive conditions.
Structuring the organization and work effort
Organizing value chain activities and business processes and deciding how much decision-making authority to push down to lower-level managers and frontline employees
Building an Organization Capable of Good Strategy Execution: Three Key Actions
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FIGURE 10.2 Building an Organization Capable of Successful Strategy Execution: Three Key Actions
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Core Concept
Putting together a talented management team with the right mix of experiences, skills, and abilities to get things done is one of the first steps to take in launching the strategy execution process.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
One of the key organization-building tasks is filling managerial slots with smart people who are:
Clear thinkers
Good at figuring out what needs to be done
Skilled in “making it happen” and delivering good results
A capable management team ensures that the implementation-execution process is not hampered by wasted time and effort or managerial ineptness.
Staffing: Putting Together a Strong Management Team
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
A company’s management team can be strengthened by:
Promoting qualified people from within and/or
Bringing in outsiders whose experiences, talents, and leadership styles better suit the situation
Overriding aim:
To assemble a critical mass of talented managers who will function as agents of change to further the cause of first-rate strategy execution
A firm needs to get the right executives on the bus— and the wrong executives off the bus—before trying to drive the bus in the desired direction.
Staffing: Putting Together a Strong Management Team (continued)
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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The quality of an organization’s people is an essential ingredient of successful strategy execution
Knowledgeable, engaged employees are a firm’s best source of creative ideas for the nuts-and-bolts operating improvements that lead to operating excellence
The firm’s entire workforce (managers and rank-and-file employees) needs to be a genuine resource strength
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Recruiting and Retaining Capable Employees
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Core Concept
It is difficult for a firm to competently execute its strategy and achieve operating excellence without recruiting and retaining a large band of very capable, actively engaged, high-achieving employees.
The best firms strive hard to make their entire workforce (both managers and rank-and-file employees) a genuine resource strength.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Spend considerable effort in screening and evaluating job applicants, selecting only those with:
Suitable skill sets
Energy, initiative, and judgment
Aptitudes for learning and adaptability to the firm’s work environment and culture
Put employees through training programs that continue throughout their careers
Provide promising employees with challenging, interesting, and skill-stretching assignments
Rotate people through jobs that have great content and span functional and geographic boundaries
Best Practices to Attract and Retain Talented Employees
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Encourage employees to:
Challenge existing ways of doing things and propose better ways
Be creative and innovative
Push their ideas for new products or businesses
Make the work environment stimulating and engaging
Strive to retain talented, high-performing employees with attractive compensation and benefits
Coach average performers to improve their skills and weed out underperformers
Best Practices to Attract and Retain Talented Employees (continued)
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Good strategy execution requires:
Acquiring and developing the desired competencies and capabilities and integrating them into the appropriate value chain activities
Working diligently to improve how all execution-critical value chain activities are being performed
Modifying the resource/capability portfolio as needed to keep it well-matched to evolving market and competitive conditions
Creating dynamic and competitively valuable competencies and capabilities is an important organization-building priority
Developing and Strengthening Execution-Critical Resources and Capabilities
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Stage 1: The company must develop the ability to do something—however imperfectly or inefficiently—by selecting people with the requisite skills and experience, upgrading or expanding individual abilities as needed, and molding the efforts and work products of individuals into a collaborative effort to create organizational ability.
Stage 2: As experience grows and company personnel learn how to perform the activity consistently well and at an acceptable cost, the ability evolves into a tried-and-true capability or proven competence. If the competence is a key part of executing the firm’s strategy, then it qualifies as a core competence.
Stage 3: The third stage involves an ongoing effort to polish, refine, and otherwise sharpen the performance of a capability or competence, aiming not just for incremental improvements but, ultimately, for best-in-industry or best-in-world proficiency, the core competence evolves into a competitively superior distinctive competence, thus providing a path to competitive advantage.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Developing and Strengthening Capabilities Internally: Three Stages
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Many firms get through stages 1 and 2, but few achieve enough proficiency in performing strategy-critical activities to reach the third stage of dominating competitive advantage.
The key to building a distinctive competence (or competitively superior capability) is concentrating more talent/effort than rivals on strengthening the competence/capability needed for competitive advantage.
This does not require outspending rivals on building a competence or capability. It does mean consciously focusing more talent on strengthening the competence or capability and striving for best-in-industry, if not best-in-world, status.
Important Traits of the Process of Building Competencies and Capabilities
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Core Concept
Building competencies and capabilities is a three-stage process that occurs over a period of months and years. It is not accomplished overnight.
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Acquisitions and mergers are often used to upgrade and/or build a stronger present portfolio of competencies and capabilities when speed is of critical importance because:
A market opportunity can often slip by faster than a needed capability can be created or developed internally
When industry conditions, technology, or competitors are moving at a rapid clip then time is of the essence in developing the capability to capture the opportunity
Developing and Strengthening Capabilities via Acquisition or Merger
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
There are three basic ways to obtain needed capabilities via collaboration with outsiders:
Outsource a capability-deficient function to a key supplier or another provider having attractively strong capabilities.
Work collaboratively with key suppliers to achieve such valuable and mutually beneficial capabilities as just-in-time inventory management, speedy design and delivery of parts and components for new products, and defect-free or more durable parts and components.
Establish alliances or collaborative working relationships with one or more firms having valuable expertise and know-how for the purpose of sharing information, learning how each other does things, sharing certain resources and capabilities, or contributing resources to a joint venture of mutual interest.
Accessing Needed Capabilities via Collaborative Partnerships
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Core Concept
A company’s competencies and competitive capabilities must be continually refreshed and recalibrated to remain aligned with changing customer expectations, ever-evolving competitive conditions, and a company’s own strategic initiatives to outcompete rivals.
This refreshment and recalibration is what is meant by the term dynamic capabilities. Ongoing managerial efforts to build a dynamic set of competencies and capabilities is why it is appropriate to view a firm as a “bundle of evolving competencies and capabilities.”
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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It takes freshly honed, cutting-edge competencies and competitive capabilities to:
Stay abreast of changes in customer needs and expectations
Combat competitors’ offensives to win bigger sales and market shares and their efforts to strengthen their competencies and capabilities
Keep the firm’s resource portfolio in step with strategy changes
Build a more durable resource-based competitive edge over rivals
A firm’s competencies and competitive capabilities must be dynamic and constantly recalibrated to remain in step with evolving competitive circumstances.
Maximizing the Competitive Power of Competencies and Capabilities: The Challenge of Dynamically Managing a Company’s Resource/Capability Pool
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Building a dynamically evolving set of competencies and capabilities with maximum competitive power entails:
Making capability-building a companywide priority
Senior executives must insist on ongoing efforts to strengthen the company’s resource/capability portfolio in performing value chain activities
Deciding when and how to recalibrate existing competencies and capabilities, and either having the foresight or spotting opportunities to develop new or innovatively-enhanced competencies and capabilities.
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Building Dynamic Capabilities: The Managerial Challenges
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The organizational momentum that comes from astute and timely managerial efforts to develop a competitively formidable portfolio of dynamic capabilities often results in
Greater ability to attract new customers
Increases in sales revenues
Higher profitability
The Benefits of Dynamic Capabilities
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Training and retraining are important when:
A firm shifts to a strategy requiring different skills, competitive capabilities, and operating methods
A firm is striving to build skills-based competencies
Technical know-how is changing so rapidly that a firm loses its ability to compete unless its skilled people have cutting-edge knowledge and expertise
Better execution of the chosen strategy calls for new skills, deeper technological capability, or building and using new capabilities
In all such instances, training must be placed near the top of management’s action agenda.
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The Strategic Role of Employee Training
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The Importance of Out-Executing Close Competitors
Strong core competencies and competitive capabilities are key factors in securing a sustainable competitive edge over rivals when it is relatively easy for rivals to copy smart strategies.
When rivals can duplicate the successful features of a firm’s product or quickly
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