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Everything You
Ever Wanted to
Know About
Strategy….
Ends with
people!
McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
“If you want people
motivated to do a good
job, give them a
good job to do.”
Frederick Herzberg
Google 2007Google 2008
Creating a Strong FitBetween Strategy and Culture
Responsibility of Strategy MakerResponsibility of Strategy Maker – –Select a strategy compatible with theSelect a strategy compatible with the
sacred or unchangeable parts of sacred or unchangeable parts of organization’s prevailing corporate cultureorganization’s prevailing corporate culture
Responsibility of Strategy ImplementerResponsibility of Strategy Implementer – –Once strategy is chosen, changeOnce strategy is chosen, changewhatever facets of the corporatewhatever facets of the corporateculture hinder effective executionculture hinder effective execution
Types of Corporate Cultures
Strong vs. Weak CulturesStrong vs. Weak Cultures
Unhealthy CulturesUnhealthy Cultures
High-Performance CulturesHigh-Performance Cultures
Adaptive CulturesAdaptive Cultures
Lewin’s Change Model
Changing– Provides new information, new behavioral
models, or new ways of looking at things
Refreezing– Helps employees integrate the changed
behavior or attitude into their normal way of doing things
• Unfreezing– Creates the motivation to change
• Benchmarking Data• Financial data, emerging trends
A Systems Model of Change
Organizing Arrangemen
ts
PeopleGoals Social
Factors
Methods
Target Elements of Change
Internal
Strengths
Weaknesses
External
Opportunities
Threats
Inputs
Internal
Organizational
level
Department/
group level
Individual level
Outputs
Strategy
Leading Change: Why Transformation Efforts Fail
Kotter, Harvard Business Review, Jan. 2007
Leading Change1. Establish a sense of urgency2. Create a powerful guiding coalition3. Create a vision4. Communicate the vision5. Empower others to act on the vision6. Plan and create short term wins7. Consolidate improvements and produce still more
change8. Institutionalize the approach
Lincoln ElectricLincoln Electric
Rewards productivity by paying for each pieceproduced (defects can be traced to worker causing them).
Highest rated workers receive bonuses of as much110% of their piecework compensation.
GoogleGoogle
Employees are provided with free food,unlimited ice cream, pool and Ping-Pong tables, and
complimentary massages. Employees are allowed to spend 20% of their work time on any outside activity.
Examples: Motivational Practices
XilinxXilinx
New hires receive stock option grants. CEO responds promptly to employee e-mails.During hard times management takes a 20%
pay cut instead of laying off employees.
JM Family EnterprisesJM Family Enterprises
Benefits for employees include: a great lease on new Toyotas, cruises in the Bahamas on the 172-foot company yacht, office facility has a heated lap pool, a fitness center, and a free nail salon, and professionally made
take-home dinners.
Examples: Motivational Practices
Examples: Motivational Practices
NordstromNordstrom
Pay salespeople higher than prevailing rates,plus commission. “Rule #1: Use good judgment in
all situations. There will be no additional rules.”
Amazon.comAmazon.com
Hands out Just Do It awards to employees whodo something they think will help Amazon withoutgetting their boss’s permission; the action has to bewell thought through but doesn’t have to succeed.
Examples: Motivational Practices
W. L. GoreW. L. Gore
Employees get to choose what project/team they work on; each team member’s compensation is based on other team members’
ranking of his/her contribution to the enterprise.
AmgenAmgen
Employees get 16 paid holidays, generousvacation time, tuition reimbursements up to $10,000,
on-site massages, a discounted car wash, and the convenience of shopping at on-site farmers’ markets.
• Create a results-oriented system• Reward people for results, not for activity• Define jobs in terms of what to achieve • Incorporate several performance measures• Tie incentive compensation to relevant outcomes
– Top executives – Incentives tied tooverall firm performance
– Department heads, teams, andindividuals – Incentives tied toachieving performance targetsin their areas of responsibility
Key Considerations inDesigning Reward Systems
Guidelines for Designing anEffective Compensation System
1. Payoff must be a major, not minor, piece of total compensation package
2. Incentive plan should extend to all employees
3. Administer system with scrupulous fairness
4. Link incentives to achieving only the performance targets in strategic plan
5. Targets a person is expected to achieve must involve outcomes that can be personally affected
6. Keep time between performance reviewand payment short
7. Make liberal use ofnon-monetary rewards
8. Avoid ways of rewarding non-performers
Building an Organization Capable of
Good Strategy Execution
McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Crafting the Strategy• Primarily a market-driven
activity• Successful strategy making
depends on– Business vision– Perceptive analysis of
market conditions and company capabilities
– Attracting and pleasing customers
– Outcompeting rivals– Using company capabilities
to forge a competitive advantage
Executing the Strategy• Primarily an operations-driven
activity• Successful strategy execution
depends on– Doing a good job of working
through others– Good organization-building– Building competitive
capabilities– Creating a strategy-
supportive culture– Getting things done and
delivering good results
Crafting vs. Executing Strategy
Implementing a New StrategyRequires Adept Leadership
• Implementing a new strategytakes adept leadership to
– Convincingly communicatereasons 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
Goals of the Strategy Implementing-Executing Process
• Unite total organization behind strategy
• See that activities are done in a manner that is conducive to first-rate strategy execution
• Generate commitment so an enthusiasticcrusade emerges to carry out strategy
• Fit how organization conducts itsoperations to strategy requirements
• Communicate the case for change• Build consensus on how to proceed• Arouse enthusiasm for the strategy to turn implementation
process into a companywide crusade • Empower subordinates to keep process moving• Establish measures of progress and deadlines• Reward those who achieve
implementation milestones• Direct resources to the right places• Personally lead strategic change process
and the drive for operating excellence
What Top Executives Have to Do in
Leading the Implementation Process
Fig. 11.2: The Three Components of Building anOrganization Capable of Proficient Strategy Execution
Example: Intel’s Core Competence
Design and mass productionof complex chips
for personal computers
Example: Procter & Gamble’sCore Competencies
Superb marketing-distribution skills and R&D capabilities in five core technologies - fats, oils, skin
chemistry, surfactants, emulsifiers
Example: General Electric’sCore Competencies
Developing professional managers with broad problem-solving skills and
proven ability to growglobal businesses
Example: Disney’s Core Competencies
Theme park operation and family entertainment
Example: Dell’s Core Competencies
Capabilities to deliver state-of-the-art products to customers within days of next-generation
components coming available and at attractively low costs
Example: Toyota’s Core Competence
Legendary “production system” giving it the capability to produce high-quality vehicles at
relatively low costs
Organizational Structures ofthe Future: Overall Themes
• Revolutionary changes in how work is organized have been triggered by– New strategic priorities– Rapidly shifting competitive conditions
• Tools of organizational design include– Empowered managers and workers– Reengineered work processes– Self-directed work teams– Rapid incorporation of Internet
technology– Networking with outsiders
The future structure
will be . . .
Characteristics ofOrganizations of the Future
• Extensive use of Internet technologyand e-commerce business practices
• Fewer barriers between– Different vertical ranks– Functions and disciplines– Units in different geographic locations– Company and its suppliers, distributors,
strategic allies, and customers• Capacity for change and rapid learning• Collaborative efforts among people in different
functions and geographic locations
Change &Learning
Good Luck!