Implementing strategy is an operation-driven activity revolving around creating and deploying a company's human capital, information capital, and organizational capital in a manner calculated to produce first-rate execution of every key element of its overall business strategy. These three types of resources directly influence the company's ability to perform value chain activities and achieve good strategic and financial results. Shortfalls in performance signal weak strategy, weak execution, or both.
Actions and initiatives to align, integrate, and enhance human capital involved in strategy implementation include staffing the organization to provide the needed skills and expertise.
Actions and initiatives to align, integrate, and enhance information capital involved in strategy implementation include installing information and operating systems that enable company personnel to perform essential activities.
Actions and initiatives to align, integrate, and enhance organizational capital involved in strategy implementation include:
Exerting the internal leadership needed to propel implementation forward.
Adopting an organizational structure that supports strategies intended to create customer value.
Allocating ample resources to strategy-critical activities.
Ensuring that policies and procedures facilitate rather than impede effective execution.
Creating a company culture and work climate that support successful strategy execution.
Pushing for continuous improvement in how value chain activities are performed.
Tying rewards and incentives directly to the achievement of performance objectives.
Leading the drive for good strategy execution and operating excellence calls for three actions on the part of the manager in charge:
Staying on top of what is happening and learning what obstacles lie in the path of good execution.
Putting constructive pressure on the organization to achieve good results and operating excellence.
Displaying ethical integrity and leading social responsibility initiatives.
Structuring the organization and organizing the work effort in a strategy supportive fashion involves making internally performed strategy-critical activities the main building blocks in the organization structure and deciding how much authority to centralize at the top and how much to delegate to down-the-line managers and employees.
Managers implementing and executing a new or different strategy must identify the resource requirements of each new strategic initiative and then consider whether current resource allocations sufficiently support the various subunit budgetary needs.
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 strategy execution 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.
Enforcing consistency in how particular strategy-critical activities are performed in geographically scattered operating units.
Creating a work climate and corporate culture that promotes good strategy execution
The character of a company's culture is a product of the core values and business principles that define "how we do things around here" and the "chemistry" and the "personality" that permeates its work environment. A company's culture is important because it influences the organization's actions and approaches to conducting business—in a very real sense, the culture is the company's "operating system" or organizational DNA. 36
There are four types of unhealthy cultures: (1) those that are highly political and characterized by empire building, (2) those that are change resistant, (3) those that are insular and inwardly focused, and (4) those that are ethically unprincipled and driven by greed. High-performance cultures and adaptive cultures both have positive features that are conducive to good strategy execution.
Changing a company's culture, especially a strong one with traits that don't fit a new strategy's requirements, is a tough and often time-consuming challenge. Changing a culture requires competent leadership at the top. It requires symbolic and substantive actions that unmistakably indicate serious commitment on the part of top management.
Competent strategy execution entails visible, unyielding managerial commitment to best practices and continuous improvement. Benchmarking, the discovery and adoption of best practices, reengineering core business processes, and continuous improvement initiatives like total quality management (TQM) and Six Sigma all aim at improved efficiency, lower costs, better product quality, and greater customer satisfaction.
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.
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 nonmonetary rewards, and (8) skirting the system to reward nonperformers or subpar results should be scrupulously avoided.
Company strategies can't be implemented or executed well without a number of information 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.
Building an organization capable of good strategy execution requires staffing the organization with a can-do management team with the right mix of experiences, skills, and abilities to get things done. The overriding aim in building a management team should be to assemble a critical mass of talented managers who can function as agents of change and further the cause of first-rate strategy execution. 37
Staffing the organization with the right kinds of people must go much deeper than managerial jobs in order for value chain activities to be performed competently. The quality of an organization's people is always an essential ingredient of successful strategy execution. Companies dedicated to staffing jobs with the best people they can find frequently rely on the following tactics to recruit and retain "A player" employees:
Putting forth considerable effort in screening and evaluating job applicants—selecting only those with suitable skill sets, energy, initiative, judgment, aptitudes for learning, and adaptability to the company's culture.
Investing in training programs that continue throughout employees' careers.
Providing promising employees with challenging, interesting, and skill-stretching assignments.
Rotating people through jobs that span functional and geographic boundaries.
Making the work environment stimulating and engaging such that employees will consider the company a great place to work.
Striving to retain talented, high-performing employees via promotions, salary increases, performance bonuses, stock options and equity ownership, fringe benefit packages, and other perks.
Coaching average performers to improve their skills and capabilities, while weeding out underperformers and benchwarmers.
