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INSTILLING A CORPORATE CULTURE CONDUCIVE TO GOOD STRATEGY
EXECUTIONCorporate CultureIs the meshing of shared values, beliefs,
business principles, and traditions that imbues a firms operating
style, behavioral norms, ingrained attitudes, and work
atmosphere.Is important because it influences the firms actions and
approaches to conducting business.12*
CORE CONCEPT
Corporate culture refers to the shared values, ingrained
attitudes, core beliefs and company traditions that determine norms
of behavior, accepted work practices, and styles of
operating.12*
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KEY FEATURES OF A FIRMS CORPORATE CULTUREStrength of peer
pressure to conform and observe normsActions and behaviors
encouraged and rewardedTraditions and stories and how we do things
around hereHow the firm treats its stakeholdersFeatures of a
Corporate CultureValues, principles, and ethical standards in
actual useManagement practices and organizational policesAtmosphere
and spirit embodied in the firms work climate How managers and
employees interact and relate to one another12*
STRATEGIC MANAGEMENT PRINCIPLE
A companys culture is grounded in and shaped by its core values
and ethical standards.12*
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FIGURE 12.1The Two Culture-Building Roles of a Companys Core
Values and Ethical Standards12*
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TRANSFORMING CORE VALUES AND ETHICAL STANDARDS INTO CULTURAL
NORMSRecruit and hire applicants with values and ethics compatible
to those of the firm.Incorporate the values statement and the code
of ethics into orientation and training programs.Have senior
executives frequently reiterate and stress the firms values and
ethical principles.Use values statements and codes of ethics as
benchmarks for the firms polices and practices.12*
STRATEGIC MANAGEMENT PRINCIPLE
A companys values statement and code of ethics communicate
expectations of how employees should conduct themselves in the
workplace.12*
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TRANSFORMING CORE VALUES AND ETHICAL STANDARDS INTO CULTURAL
NORMS (CONTD)Use core values and ethical principles when evaluating
each persons job performance.Encourage all employees to help
enforce the observance of core values and ethical
standards.Periodically have ceremonial occasions to recognize
individuals and groups who display the firms values and ethical
principles.Institute strict ethics enforcement procedures.12*
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PERPETUATING THE CULTURE12*
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FORCES THAT CAUSE A FIRMS CULTURE TO EVOLVE12*
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Strong-Culture FirmHas deeply rooted widely-shared values,
behavioral norms, and operating approaches.Insists that its values
and principles be reflected in the decisions and actions taken by
all company personnel.Weak-Culture FirmLacks values and principles
that are consistently preached or widely shared.Has few or no
traditions, beliefs, values, common bonds, or behavioral
norms.COMPANY CULTURES CAN BE STRONGLY OR WEAKLY EMBEDDED12*
CORE CONCEPT
In a strong-culture company, deeply rooted values and norms of
behavior are widely shared and regulate the conduct of the companys
business.12*
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DEVELOPMENT OF A STRONG CULTUREStrong CultureClosely aligning
corporate culture with the requirements for proficient strategy
execution merits the full attention of senior executives.12*
STRATEGIC MANAGEMENT PRINCIPLE
A strong culture that encourages actions, behaviors, and work
practices that are in sync with the chosen strategy and conducive
to good strategy execution is a valuable ally in the strategy
execution process.12*
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WHY CORPORATE CULTURES MATTER TO THE STRATEGY EXECUTION PROCESSA
culture well matched to the requirements of the strategy execution
effort focuses the attention of employees on what is most important
to this effort.Culture-induced peer pressure induces personnel to
do things in a manner that aids good strategy execution.A culture
consistent with the requirements for good strategy execution can
energize employees, deepen their commitment to execute the
strategy, and enhance worker productivity.12*
STRATEGIC MANAGEMENT PRINCIPLE
It is in managements best interest to dedicate considerable
effort to establishing a corporate culture that encourages
behaviors and work practices conducive to good strategy
execution.12*
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HEALTHY CULTURES THAT AID GOOD STRATEGY EXECUTIONGood Strategy
ExecutionAdaptive CulturesHigh-Performance CulturesCommitment to
achieving stretch objectives and accountabilityWillingness to
accept change and take on challenges12*
STRATEGIC MANAGEMENT PRINCIPLE
As a companys strategy evolves, an adaptive culture is a
definite ally in the strategy-implementing, strategy-executing
process as compared to cultures that are resistant to
change.12*
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UNHEALTHY CULTURES THAT IMPEDE GOOD STRATEGY EXECUTION12*
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CHANGING A PROBLEM CULTURE:THE ROLE OF LEADERSHIPA strong, out
of sync, or unhealthy culture must be changed in order to execute
strategy successfully.Competent leadership at the top is necessary
for culture-change efforts to succeed.
12*
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FIGURE 12.2Changing a Problem Culture12*
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MAKING A COMPELLING CASE FOR CULTURE CHANGESelling the
ChangeExplain why and how certain behavioral norms and work
practices are obstacles to good execution of strategic
initiatives.Explain how new behaviors and work practices will be
produce better results.Cite reasons why the current strategy has to
be modified, if the need for cultural change is due to a change in
strategy.12*
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SUBSTANTIVE CULTURE-CHANGING ACTIONSReplace key executives who
are stonewalling needed organizational and cultural changes.Promote
individuals who advocate for cultural shifts and can serve as a
role model for the cultural behavior.Appoint outsiders with the
desired cultural attributes to high-profile positions.Screening
candidates for positions carefully, hiring only those who appear to
fit in with the new culture.Mandate that all personnel attend
culture-training.Design compensation incentives that boost the pay
of teams and individuals.12*
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SYMBOLIC CULTURE-CHANGING ACTIONSTop executive and upper
management behaviorsCeremonial events to honor exemplary
employeesPhysical symbols that represent the new cultureChanging
the culture of an organization12*
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HOW LONG DOES IT TAKE TO CHANGE A PROBLEM CULTURE?Changing a
problem culture is never a short-term exercise.A sustained and
persistent effort to reinforce the culture at every opportunity
through word and deed is required.It takes time for a new culture
to emerge and prevail; it takes even longer for it to become deeply
embedded.Fixing a problem culture and instilling a new set of
attitudes and behaviors can take two to five years.12*
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LEADING THE STRATEGY EXECUTION PROCESSLeading Strategy Execution
Requires:Staying on top of what is happening and closely monitoring
progress.Putting constructive pressure on the organization to
execute the strategy well and achieve operating
excellence.Initiating corrective actions to improve strategy
execution and achieve the targeted performance results.12*
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ILLUSTRATION CAPSULE 12.2Changing the Old Detroit Culture at
ChryslerWhat is meant by culture is not part of the gameit is the
game?How did Doug Betts background prepare him for leading the
cultural change at Chrysler?What culture-changing actions did Doug
Betts take to produce cultural change at Chrysler Group LLC?12*
CORE CONCEPT
Management by walking around (MBWA) is one of the techniques
that effective leaders use to stay informed about how well the
strategy execution process is progressing.12*
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STAYING ON TOP OF HOW THINGS ARE GOINGManagement by Walking
Around (MBWA)Is used by leaders to stay informed about how well the
strategy execution process is progressing.Involves spending time
with people at company facilities, asking questions, listening to
their opinions and concerns, and gathering firsthand information
about how well aspects of the strategy execution process are
going.12*
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MOBILIZING THE EFFORT FOR EXCELLENCE IN STRATEGY EXECUTIONTreat
employees as valued partners.Foster an esprit de corps that
energizes members.Use empowerment to create a fully engaged
workforce.Make champions out of the people who spearhead new ideas
and/or turn in winning performances.12*
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MOBILIZING THE EFFORT FOR EXCELLENCE IN STRATEGY EXECUTION
(CONTD)Set stretch objectives that require personnel to give their
best in achieving performance targets.Use benchmarking,
reengineering, TQM, and Six Sigma to focus attention on continuous
improvement.Use motivational techniques and compensation incentives
to inspire, nurture a results-oriented work climate, and enforce
high standards.Celebrate individual, group, company
successes.12*
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LEADING THE PROCESS OF MAKING CORRECTIVE ADJUSTMENTS A thorough
analysis of the situationGood business judgment in deciding what
actions to takeGood implementation of the corrective actionsMaking
corrective actions successfully requires:12*
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A FINAL WORD ON LEADING THE PROCESS OF CRAFTING AND EXECUTING
STRATEGYIt is difficult to separate leading the process of
executing strategy from leading the strategy process.Crafting,
implementing, and executing strategy is a continuous process that
requires much adjusting and fine-tuning of the strategy to fit
changing circumstances.The tests of strategic leadership are
whether the firm has a good strategy and business model, whether
its strategy is competently executed, and whether the firm is
achieving its performance targets.If these three conditions exist,
then the firm has good strategic leadership and is a well-managed
enterprise.12*