Ch12 implementation

1

IMPLEMENTING AND EXECUTING IMPLEMENTING AND EXECUTING

STRATEGY: BUDGETS, POLICIES, STRATEGY: BUDGETS, POLICIES,

BEST PRACTICES, SUPPORT BEST PRACTICES, SUPPORT

SYSTEMS, AND REWARDSSYSTEMS, AND REWARDS

2

Linking Budgets to Strategy

Allocating resources in ways that support effective strategy execution involves Funding capital projects that can make a

contribution to strategy implementation Funding efforts to strengthen

competencies and capabilities or to create new ones

Shifting resources—downsizing some areas, upsizing others, killing activities no longer justified, and funding new activities with a critical strategy role

ESTABLISH STRATEGY-ESTABLISH STRATEGY-

SUPPORTIVE POLICIES SUPPORTIVE POLICIES

4

How Policies and ProceduresAid Strategy Implementation

Provide top-down guidance regarding expected behaviors

Help align internal actions with strategy, channeling efforts along the intended path

Enforce consistency in performance of activities in geographically scattered units

Serve as powerful lever for changing corporate culture to produce stronger fit with a new strategy

5

Creating Strategy-SupportivePolicies and Procedures

Role of new policies Channel behaviors and decisions

to promote strategy execution Counteract tendencies of people

to resist chosen strategy Too much policy can be as stifling as

Wrong policy or as Chaotic as no policy Often, the best policy is empowering

employees and letting them operate between the white lines anyway they think best

INSTITUTE BEST PRACTICES INSTITUTE BEST PRACTICES

AND MECHANISMS (FOR AND MECHANISMS (FOR

CONTINUOUS IMPROVEMENT)CONTINUOUS IMPROVEMENT)

7

Instituting Best Practicesand Continuous Improvement

Searching out and adopting best practices is integral to effective implementation

Benchmarking has created new approaches to improve strategy execution

Reengineering

TQM

Continuous improvement programs

8

What is TTotal QQuality MManagement?

TQM is a philosophy of managing a set of business practices that emphasizes Continuous improvement in all phases of

operations, 100 percent accuracy in performing activities, Involvement and empowerment of employees at

all levels, Team-based work design, Benchmarking, and Fully satisfying customer expectations

9

Components of Popular TQM Approaches

1. Consistency of purpose2. Adopt the philosophy3. Don’t rely on mass

inspection4. Don’t award business

on price5. Constant improvement6. Training7. Leadership

8. Drive out fear 9. Break down barriers10. Eliminate slogans

and exhortations11. Eliminate quotas12. Pride of

workmanship13. Education and

retraining14. Plan of action

Deming’s 14 Points

10

The Juran Trilogy

Quality Planning Quality Control Quality Improvement

• Set goals

• Identify customers and their needs

• Develop products and processes

• Evaluate performance

• Compare to goals

• Establish infrastructure

• Identify projects and teams

• Provide resources and training

• Establish controls


11

1. Management commitment

2. Quality improvement teams

3. Quality measurement

4. Cost of quality evaluation

5. Quality awareness

6. Corrective action

7. Zero-defects committee

8. Supervisor training

9. Zero-defects day

10. Goal-setting

11. Error cause removal

12. Recognition

13. Quality councils

14. Do it over again

Crosby’s 14 Quality Steps


12

Baldridge Award Criteria (1000 points)

Quality

1. Leadership (90 points)

2. Information & analysis (80 points)

3. Strategic quality planning (60 points)

4. Human resource development (150 points)

5. Management of process quality (140 points)

6. Quality & operation results (180 points)

7. Customer focus & satisfaction (300 points)


13

Implementing a Philosophy of Continuous Improvement

Instill enthusiasm to do things right throughout company

Strive to achieve little steps forward each day, (what the Japanese call kaizen)

Ignite creativity in employees to improve performance of value-chain activities

Preach there is no such thing as good enough

Reform the corporate culture

14

TQM vs. Process Reengineering

Objectivity

Reengineering Aims at quantum gains of 30 to 50% or more

TQM Stresses incremental progress

Techniques are not mutually exclusive

Reengineering - Used to produce a good basic design yielding dramatic improvements

TQM - Used to perfect process, gradually improving efficiency and effectiveness

15

Using Best Practice Programsas an Implementation Tool

Select indicators of successful strategy execution

Benchmark against best practice companies Reengineer business processes Build a TQ culture

Requires top management commitment Install TQ-supportive employee practices Empower employees to do the right things Provide employees with quick access to

required information Preach that performance can be improved

INSTALL SUPPORT INSTALL SUPPORT

SYSTEMSSYSTEMS

17

Installing Support Systems

Essential to promote successful strategy execution

Types of support systems On-line data systems Internet and company intranets Electronic mail E-commerce systems

Mobilizing information and creating systems to use knowledge effectively can yield Competitive advantage

18

Examples: Support Systems

Airlines

Computerized reservation system

Federal Express

Computerized parcel-tracking system, leading-edge flight operations systems, and

e-business tools

19

Examples: Support Systems

Otis Elevator

Sophisticated maintenance support system

Domino’s Pizza

Computerized systems at each outlet facilitate ordering, inventory, payroll, cash flow, and

work flow functions

20

Formal Reporting ofStrategy-Critical Information

Accurate, timely information is essential to guide action

Prompt feedback on implementation activities is needed before actions are fully completed

Key strategic performance indicators must be tracked as often as practical

Barometers of overall performance Statistical information Reports and meetings Personal contact

21

What Areas ShouldInformation Systems Address?

Customer data

Operations data

Employee data

Supplier/partner/collaborative ally data

Financial performance data

DESIGN STRATEGY-DESIGN STRATEGY-

SUPPORTIVE REWARD SUPPORTIVE REWARD

SYSTEMSSYSTEMS

23

Gaining Commitment: Componentsof an Effective Reward System

Monetary Incentives

Salary raises

Performance bonuses

Stock options

Retirement packages

Promotions

Perks

Non-monetary Incentives

Praise

Constructive criticism

Special recognition

More, or less, job security

Interesting assignments

More, or less, job responsibility

24

Approaches: Motivating Peopleto Execute the Strategy Well

Inspire employees to do their best

Get employees to buy into strategy

Structure individual efforts in teams to facilitate a supportive climate

Allow employees to participate in decisions about their jobs

Make jobs interesting and satisfying

Devise strategy-supportive motivational approaches

25

Examples: Motivational Practices

No Lay-Off Policies

Japanese automobile producers, along with

several U.S. based companies (Southwest

Airlines, FedEx, Lands’ End, and Harley Davidson)

have no lay-off policies, using employment

security both as a positive motivator and a means

of reinforcing good strategy execution.

26

Examples: Motivational Practices

Stock Options

More than 35 of the 58 publicly held companies on the 1999 list of the 100 Best Companies to Work for in America (includes Cisco Systems, Procter & Gamble, Merck, Charles Schwab, General Mills, Amgen, and

Tellabs) provide stock options to all employees. Having employee-owners sharing in a company’s success is widely viewed as a positive motivator.

27

Balancing Positive vs. Negative Rewards

Elements of both are necessary Challenge and competition are necessary

for self-satisfactionPrevailing view

Positive approaches work better than negative ones in terms of EnthusiasmEffortCreativityInitiative

Ch12 implementation

Business