Chapter 10 : Building An Organization Capable Of Good Strategy Execution. Chapter 11: Managing Internal Operations

Week 12

 Assalamualaikum to all the readers...

For the week 12 lecture I have learn two chapter which is Good Strategy Execution and  Managing Internal Operations. 
First of all, let's I start with first topic;  Good Strategy Execution. For this topic I learn about implementing and executing strategy is an operation-driven activity revolving around the management of people and business processes. The managerial emphasis is on converting strategic plans into actions and good results. Management's handling of the process of implementing and executing the chosen strategy can be considered
successful if and when the company achieves the targeted strategic and financial performance and shows good progress in making its strategic vision a reality. Shortfalls in performance signal weak strategy, weak execution or both.
The place for managers to start in implementing and executing a new or different strategy is with a probing assessment of what the organization must do differently and better to carry out the strategy successfully. They should then consider precisely how to make the necessary internal changes as rapidly as possible.
Like crafting strategy, executing strategy is a job for a company's whole management team, not just a few senior managers. Top-level managers have to rely on the active support and cooperation of middle and lower managers to push strategy changes into functional areas and operating units and to see that the organization actually operates in accordance with the strategy on a daily basis.

Eight managerial tasks crop up repeatedly in company efforts to execute strategy:

1. Building an organization with the competencies, capabilities, and resource strengths to execute strategy successfully.
2. Marshaling sufficient money and people behind the drive for strategy execution.
3. Instituting policies and procedures that facilitate rather than impede strategy execution.
4. Adopting best practices and pushing for continuous improvement in how value chain activities are performed.
5. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently.
6. Tying rewards directly to the achievement of strategic and financial targets and to good strategy execution.
7. Shaping the work environment and corporate culture to fit the strategy.
8. Exercising strong leadership to drive execution forward, keep improving on the details of execution, and achieve operating excellence as rapidly as feasible.

Building an organization capable of good strategy execution entails three types of organization-building actions: 

1. staffing the organization —assembling a talented, can-do management team, and recruiting and retaining        employees with the needed experience, technical skills, and intellectual capital,
2.   building core competencies and competitive capabilities that will enable good strategy execution and   updating them as strategy and external conditions change
3.  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 front       line employees.

Building core competencies and competitive capabilities is a time-consuming, managerial challenging exercise that involves three stages

1.   developing 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 then         molding the efforts and work products of individuals into a collaborative group effort
2. coordinating group efforts to learn how to perform the activity consistently well and at an acceptable   cost, thereby transforming the ability into a tried-and-true competence or capability
3. continuing to polish and refine the organization's know-how and otherwise sharpen performance such   that it becomes better than rivals at performing the activity, thus raising the core competence (or capability) to the rank of a distinctive competence (or competitively superior capability) and opening an avenue to competitive advantage. 

Structuring the organization and organizing the work effort in a strategy-supportive fashion has five aspects:   

1. deciding which value chain activities to perform internally and which ones to outsource
2. making internally performed strategy-critical activities the main building blocks in the organization         structure
3. deciding how much authority to centralize at the top and how much to delegate to down-the-line         managers and employees
4. providing for internal cross-unit coordination and collaboration to build and strengthen internal             competencies/capabilities
5.  providing for the necessary collaboration and coordination with suppliers and strategic allies.

Ok, we proceed with another topic; Managing Internal Operations. Managers implementing and executing a new or different strategy must identify the resource requirements of each new strategic initiative and then consider whether the current pattern of resource allocation and the budgets of the various subunits are suitable.

Anytime a company alters its strategy, managers should review existing policies and operating procedures, proactively revise or discard those that are out of sync, and formulate new ones to facilitate execution of new strategic initiatives. Prescribing new or freshly revised policies and operating procedures aids the task of strategy execution:

1. by providing top-down guidance to operating managers, supervisory personnel, and employees regarding      how certain things need to be done and what the boundaries are on independent actions and decisions
2.  by enforcing consistency in how particular strategy-critical activities are performed in geographically    scattered operating units
3.  by promoting the creation of a work climate and corporate culture that promotes good strategy            execution.

Competent strategy execution entails visible, unyielding managerial commitment to best practices and continuous improvement. Benchmarking, the discovery and adoption of best practices, business process reengineering, and continuous improvement initiatives like total quality management (TQM) or Six Sigma programs all aim at improved efficiency, lower costs, better product quality, and greater customer satisfaction. These initiatives are important tools for learning how to execute a strategy more proficiently.

Company strategies can't be implemented or executed well without a number of support systems to carry on business operations. Well-conceived state-of-the-art support systems not only facilitate better strategy execution but also strengthen organizational capabilities enough to provide a competitive edge over rivals. Real-time information and control systems further aid the cause of good strategy execution.

Strategy-supportive motivational practices and reward systems are powerful management tools for gaining employee commitment. The key to creating a reward system that promotes good strategy execution is to make strategically relevant measures of performance the dominating basis for designing incentives, evaluating individual and group efforts, and handing out rewards. Positive motivational practices generally work better than negative ones, but there is a place for both. There's also a place for both monetary and non monetary incentives.For an incentive compensation system to work well:

1.  the monetary payoff should be a major percentage of the compensation package
2.  the use of incentives should extend to all managers and workers
3.  the system should be administered with care and fairness
4.  the incentives should be linked to performance targets spelled out in the strategic plan
5.  each individual's performance targets should involve outcomes the person can personally affect
6.  rewards should promptly follow the determination of good performance
7.  monetary rewards should be supplemented with liberal use of non monetary rewards
8.  skirting the system to reward non performers or subpar results should be scrupulously avoided. Companies with operations in multiple countries often have to build some degree of flexibility into the design of incentives and rewards in order to accommodate cross-cultural traditions and preferences.

Before I finish my last entry for strategic management subject, let's pray for our family and friends who affected by flooding in Kelantan, Terengganu, Pahang and Gaza. 

That's all from me...