Strategy & Strategy Implementation:

What it is, What it isn’t, and Why we care

Associa t ion of Fundra is ing Profess ionalsGreater Houston Chapter

Margaret Cord ing, Ph .D.Jones Graduate School o f Business

Rice Univers i tyMay 21 , 2010

Why do we care?

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The central, brute empirical fact in strategy is that some organizations outperform others

- Powell

So what is it?

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The creation of a unique and valuable position, involving a different set of activities or doing the

activities differently from one’s “competitors”

– Making trade-offs – i.e., choice of what not to do

– Creating fit – how activities relate to one another – so that the firm can do many things well and integrating them

– If you don’t create value for your external stakeholders, you can’t develop a valuable position

Source: M.L. Porter. What is Strategy? Harvard Business Review, November-December, 1996.

Three levels of strategy (at least)

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CorporateHead Office

CorporateStrategy

Sales

Production

HR

Finance

Sales

Production

HR

Finance

FunctionalStrategies

Division A Division BBusinessStrategy

Three levels of strategy (at least)

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UniversityHead Office

UniversityStrategy

Teaching

Research

HR

Development

Teaching

Research

HR

Development

FunctionalStrategies

Engineering BusinessSchoolStrategy

A need to do “everything” right

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SuccessfulStrategies

EFFECTIVE IMPLEMENTATION

Long-term, simple and

agreed objectives

Profound understanding of the competitive

environment

Objective appraisal of resources

Vision, Goals & Objectives

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Vision:Aspiration; Stretch; Simple;

Inspirational; Domain

Goals:Qualitative intentions

Objectives:Quantitative targets

What usually happens?

63%Performance

Realized

5%Other

7%InadequateResources

25%PeopleIssues

Source: Mankins, M.C. & Steele, R. 2005. Turning Great Strategy into Great Performance. Harvard Business Review. 8

Alignment matters

Source: Oliver Wyman. The Congruence Model: A Roadmap forUnderstanding Organizational Performance.

Informal organization

Emerging arrangements & “unwritten” rules

Formal organization

Formal structures, processes, and systems that enable individuals to perform activities

People

The characteristics of individuals in the organization

Work

The basic and inherent work to be done by the organization and its parts

Input

Environment

Resources

History

Output

System

Unit

Individual

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Measure the right stuff

Determine the drivers of value creation• What resources are required to succeed?• What actions are required to succeed?• Are people actually doing these actions?

– Do they know what to do?– Do they understand the strategy? The required tradeoffs?– Are they being held accountable?

• Is progress being made? If not, why not? Continue to monitor the external environment

• How are competitors reacting?• What are customers saying?

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Closing the gap

Begin with the value we seek to create – not what we want to do or where we want to compete

Keep it simple, make it concrete Translate, interpret

Debate assumptions, not forecasts True for projections, also true for other decisions

Be rigorous, use common languageFocus on resources required (and why…) Identify/focus on key drivers and KPIsContinuously monitor performance

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Strategy: What it isn’t

InconsistentConstantly changingAll things to all peopleNever saying “no”Used to rationalize decisions Independent of the organization’s “heart”Bottom line:

• Simple, but not easy• Disciplined• Intelligent application of common sense…

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Thank You.

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