Description
The PPT on how to go about implementing a strategy in an organization.
Note On Implementing Strategy
Company
LOGO
Contents
The Implementation Task: Creating FITS Functional & Administrative Fits
TOPICS
Implementation Situations and Modes
Reason For Misfits
Implementation Skills
Introduction
? ASSUMPTION: Strategy has already been determined and is not a subject of change. ? OBJECTIVES:
? Define the key implementation tasks ? Review the variety of approaches a manager can apply to this tasks ? Identify the key skills required to implement the strategy
The Implementation Task: Creating Fits
Types Of FITS
Between the strategy and functional policies
Between the strategy and Org. Structure, process and systems
Functional Fits
Each function needs to align itself in line with the strategy
Marketing
Engineering
HR
Functions
Finance
Operations
Unique Products to Order Specification
Value of product availability
Misfit with Sales
Administrative Fits
Org. Structure Information Sys. Incentive Sys.
Control Sys.
Administrative Fits
Leadership Style
Corporate Culture
Text Org. Processes Text Strategic Planning Sys. Mgmt. Selection & Dev
The Implementation Plan
1
Address key human and Organization issues that are likely to arise
2
Present a sequence of actions to be taken over time
3
Include a set of alternative actions that can be taken if events do not unfold as planned
Implementation Situations
Each transition present a unique and recurring implementation problem. All transition requires the achievement of fits between strategy and the firm’s functional and mgmt. system & process
MULTIBUSINESS
SINGLE BUSINESS
SINGLE PRODUCT
Implementation Modes
? General manager has two critical choices:
? Degree of involvement in implementation process ? Attention to administrative constraints.
? Based on the above dimensions the matrix is:
Administrative Constraints
High
Political Manager
Low
General Mgmt. Involvement
High
Entrepreneurial Manager
Low
Administrative Manager
People and Organizational Shaker
Reasons for Misfit
? Reason: ? Strategies tend to change and evolve in response to Environmental Changes ? Conscious permission of existence of misfits due to lack of time and energy ? Where more than one strategic options need to keep open, misfits serve strategic objectives
Implementations Skills
? Skills are
? Diagnosis of:
• Strategic or technical Component • Administrative or Organizational Component • Interpersonal Component
? When to make a decision alone and when to make it a collaborative process ? To identify those groups or individual who will be most affected by implementation of strategy ? Timing i.e. when to take appropriate decision ? To know what can and what cannot be accomplished ? Exercise Leadership
Turning Great Strategy into Great Performance
LOGO Paper 2
Company
The Idea in Brief
“Most companies’ strategies deliver only 63% of their promised financial value. Leaders press for better execution when they really need a sounder strategy. Or they craft a new strategy when execution is a true weak spot.”
Key Questions
What are the reasons of these errors? What are the implications? How to avoid these errors?
The Strategy to Performance Gap
? Survey conducted on senior executives from 197 companies worldwide with sales exceeding $500 million ? Objectives : i. To know how successful companies are at translating their strategies into performance ii. To find out the effectiveness of company’s meeting the financial projections set forth in their financial plans iii. To find out actions which they take to bridge the strategy to performance gap
Reasons discovered
? Companies rarely track performance against long term plans ? Multiyear results rarely meet projections ? A lot of value is lost in translation ? Performance bottlenecks are frequently invisible to top management ? The strategy to performance gap fosters a culture of underperformance
Companies rarely track performance against long term plans
?Less than 15% of companies make it a regular practice to go back and compare the business’s result with the performance forecast for each unit in its prior years’ strategic plans ?A confusing situation arises for the manager ?Managers risk embedding the same disconnect between results and forecasts in their future investment decisions
Multiyear results rarely meet projections; The Venetian Blinds of Business
A lot of value is lost in translation; Where the Performance Goes
Factor for performance loss Inadequate or unavailable resources Poorly communicated strategy Actions required to execute not clearly defined Unclear accountabilities for execution Organizational silos and culture blocking execution Inadequate performance monitoring Inadequate consequences or rewards for failure or success Poor senior leadership Percentage contribution 7.5 5.2 4.5 4.1 3.7 3.0 3.0 2.6
Uncommitted leadership
Unapproved strategy Other obstacles (including skills and capabilities) Total loss= 37% Average Realized Performance= 63%
1.9`
0.7 0.7
Contd..
?Strategies are approved but poorly communicated ?Lower levels in the organization don’t know what they need to do, when they need to do it, or what resources will be required to deliver the performance senior management expects.
Performance bottlenecks are frequently invisible to top management
?Due to ambitious projections, companies frequently write off performance shortfalls as “just another hockey stick forecast.” ?Few early warning signals to executives ?Very difficult to take corrective action due to lack of proper information
The strategy to performance gap fosters a culture of underperformance
Closing the strategy-to-performance gap
?Rule 1: Keep it simple, make it concrete ?Rule 2: Debate assumptions, not forecasts ?Rule 3: Use a rigorous framework, speak a common language ?Rule 4: Discuss resource deployments early ?Rule 5: Clearly identify priorities ?Rule 6: Continuously monitor performance ?Rule 7: Reward and develop execution capabilities
Keep it simple, make it concrete
?Strategy confused with vision or aspiration ?The link between strategy and performance can’t be drawn because the strategy itself is not sufficiently concrete ?Solution: High performance companies avoid long, drawn-out descriptions of lofty goals and instead stick to clear language describing their course of action ?Ex- Barclays Capital- Clarity on which market to compete and where to invest
Debate assumptions, not forecasts
? Planning is largely a political process, with unit management arguing for lower near term profit projections and top management pressing for more long term stretch ? Incorrect financial forecasts result because of it ? In politically correct organizations also, the approach to generate financial forecasting has built in biases ? Financial forecasting takes place in complete isolation from the marketing or strategy functions ? Solution: Companies have to ensure that the assumptions underlying their long term plans reflect both the real economics of their markets and the performance experience of the company relative to competitors ? Ex- Tyco- Formation of cross functional teams at each unit to turnaround the company
Use a rigorous framework, speak a common language
? Companies use the concept of profit pools ? The unit team and the corporate center agree on the likely share of the pool the business will capture over time ? The corporate center creates the financial projections that serves as the unit’s road map ? The financial projections are not always reasonable and realistically achievable ? Solution: The framework used to formulate strategy should establish a common language for dialogue between the corporate center and the units
Discuss resource deployments early
? Companies should discuss upfront the level and timing of critical resource deployment ? Answering the challenging questions about business helps ? Informs discussions about market trends and drivers, improving the quality of the strategic plan and making it far more executable ? Ex-Cisco Systems- A cross functional team reviews the level and timing of resource deployments early in the planning stage
Clearly identify priorities
? Managers should know which decision is important ? Steps must be taken at the right time and in the right way to meet planned performance ? ExTextronEach business unit identifies improvement priorities, translated into action items with clearly defined accountabilities, timetables, and KPIs ? Ex- Roche- Turns its business plans into detailed performance contracts that clearly specify the steps needed and the risks that must be managed to achieve the plans. These contracts all include a “delivery agenda” that lists the five to ten critical priorities with the greatest impact on performance
Continuously monitor performance
? Companies should harness capabilities of seasoned executives to calculate the resources required to deliver the goods ? Ex- Textron- Each KPI is fully monitored, and regular operating reviews percolate performance shortfalls, or “red light” events ? Ex- Dow Chemical- Performance Improvement Drive; defined clear performance metrics for each unit, reviewed on weekly basis ? Ex- Boeing Commercial Airplanes- Holds weekly business performance reviews to track the division’s results against its multiyear plan
Reward and develop execution capabilities
? Companies have to motivate and develop their human resource ? Nurturing capabilities in executives help in long run ? Ex- Barclays Capital- Emphasizes on hiring only A players with top team taking responsibility and having innovative pay schemes ? Ex- 3M- Developed a new leadership model based on 6 attributes- the ability to “chart the course”, “energize and inspire others”, “demonstrate ethics, integrity, and compliance”, “deliver results”, “raise the bar”, and “innovate resourcefully.”
Conclusion
? The price for closing the strategy-to-performance gap is huge, but instills true benefits in the organization ? Leaders become more confident in their own capabilities ? A culture of underperformance transforms to culture of overperformance ? Closing this gap creates a large and lasting impact on the organization’s capabilities, strategies and competitiveness
Company
LOGO
doc_551462718.ppt
The PPT on how to go about implementing a strategy in an organization.
Note On Implementing Strategy
Company
LOGO
Contents
The Implementation Task: Creating FITS Functional & Administrative Fits
TOPICS
Implementation Situations and Modes
Reason For Misfits
Implementation Skills
Introduction
? ASSUMPTION: Strategy has already been determined and is not a subject of change. ? OBJECTIVES:
? Define the key implementation tasks ? Review the variety of approaches a manager can apply to this tasks ? Identify the key skills required to implement the strategy
The Implementation Task: Creating Fits
Types Of FITS
Between the strategy and functional policies
Between the strategy and Org. Structure, process and systems
Functional Fits
Each function needs to align itself in line with the strategy
Marketing
Engineering
HR
Functions
Finance
Operations
Unique Products to Order Specification
Value of product availability
Misfit with Sales
Administrative Fits
Org. Structure Information Sys. Incentive Sys.
Control Sys.
Administrative Fits
Leadership Style
Corporate Culture
Text Org. Processes Text Strategic Planning Sys. Mgmt. Selection & Dev
The Implementation Plan
1
Address key human and Organization issues that are likely to arise
2
Present a sequence of actions to be taken over time
3
Include a set of alternative actions that can be taken if events do not unfold as planned
Implementation Situations
Each transition present a unique and recurring implementation problem. All transition requires the achievement of fits between strategy and the firm’s functional and mgmt. system & process
MULTIBUSINESS
SINGLE BUSINESS
SINGLE PRODUCT
Implementation Modes
? General manager has two critical choices:
? Degree of involvement in implementation process ? Attention to administrative constraints.
? Based on the above dimensions the matrix is:
Administrative Constraints
High
Political Manager
Low
General Mgmt. Involvement
High
Entrepreneurial Manager
Low
Administrative Manager
People and Organizational Shaker
Reasons for Misfit
? Reason: ? Strategies tend to change and evolve in response to Environmental Changes ? Conscious permission of existence of misfits due to lack of time and energy ? Where more than one strategic options need to keep open, misfits serve strategic objectives
Implementations Skills
? Skills are
? Diagnosis of:
• Strategic or technical Component • Administrative or Organizational Component • Interpersonal Component
? When to make a decision alone and when to make it a collaborative process ? To identify those groups or individual who will be most affected by implementation of strategy ? Timing i.e. when to take appropriate decision ? To know what can and what cannot be accomplished ? Exercise Leadership
Turning Great Strategy into Great Performance
LOGO Paper 2
Company
The Idea in Brief
“Most companies’ strategies deliver only 63% of their promised financial value. Leaders press for better execution when they really need a sounder strategy. Or they craft a new strategy when execution is a true weak spot.”
Key Questions
What are the reasons of these errors? What are the implications? How to avoid these errors?
The Strategy to Performance Gap
? Survey conducted on senior executives from 197 companies worldwide with sales exceeding $500 million ? Objectives : i. To know how successful companies are at translating their strategies into performance ii. To find out the effectiveness of company’s meeting the financial projections set forth in their financial plans iii. To find out actions which they take to bridge the strategy to performance gap
Reasons discovered
? Companies rarely track performance against long term plans ? Multiyear results rarely meet projections ? A lot of value is lost in translation ? Performance bottlenecks are frequently invisible to top management ? The strategy to performance gap fosters a culture of underperformance
Companies rarely track performance against long term plans
?Less than 15% of companies make it a regular practice to go back and compare the business’s result with the performance forecast for each unit in its prior years’ strategic plans ?A confusing situation arises for the manager ?Managers risk embedding the same disconnect between results and forecasts in their future investment decisions
Multiyear results rarely meet projections; The Venetian Blinds of Business
A lot of value is lost in translation; Where the Performance Goes
Factor for performance loss Inadequate or unavailable resources Poorly communicated strategy Actions required to execute not clearly defined Unclear accountabilities for execution Organizational silos and culture blocking execution Inadequate performance monitoring Inadequate consequences or rewards for failure or success Poor senior leadership Percentage contribution 7.5 5.2 4.5 4.1 3.7 3.0 3.0 2.6
Uncommitted leadership
Unapproved strategy Other obstacles (including skills and capabilities) Total loss= 37% Average Realized Performance= 63%
1.9`
0.7 0.7
Contd..
?Strategies are approved but poorly communicated ?Lower levels in the organization don’t know what they need to do, when they need to do it, or what resources will be required to deliver the performance senior management expects.
Performance bottlenecks are frequently invisible to top management
?Due to ambitious projections, companies frequently write off performance shortfalls as “just another hockey stick forecast.” ?Few early warning signals to executives ?Very difficult to take corrective action due to lack of proper information
The strategy to performance gap fosters a culture of underperformance
Closing the strategy-to-performance gap
?Rule 1: Keep it simple, make it concrete ?Rule 2: Debate assumptions, not forecasts ?Rule 3: Use a rigorous framework, speak a common language ?Rule 4: Discuss resource deployments early ?Rule 5: Clearly identify priorities ?Rule 6: Continuously monitor performance ?Rule 7: Reward and develop execution capabilities
Keep it simple, make it concrete
?Strategy confused with vision or aspiration ?The link between strategy and performance can’t be drawn because the strategy itself is not sufficiently concrete ?Solution: High performance companies avoid long, drawn-out descriptions of lofty goals and instead stick to clear language describing their course of action ?Ex- Barclays Capital- Clarity on which market to compete and where to invest
Debate assumptions, not forecasts
? Planning is largely a political process, with unit management arguing for lower near term profit projections and top management pressing for more long term stretch ? Incorrect financial forecasts result because of it ? In politically correct organizations also, the approach to generate financial forecasting has built in biases ? Financial forecasting takes place in complete isolation from the marketing or strategy functions ? Solution: Companies have to ensure that the assumptions underlying their long term plans reflect both the real economics of their markets and the performance experience of the company relative to competitors ? Ex- Tyco- Formation of cross functional teams at each unit to turnaround the company
Use a rigorous framework, speak a common language
? Companies use the concept of profit pools ? The unit team and the corporate center agree on the likely share of the pool the business will capture over time ? The corporate center creates the financial projections that serves as the unit’s road map ? The financial projections are not always reasonable and realistically achievable ? Solution: The framework used to formulate strategy should establish a common language for dialogue between the corporate center and the units
Discuss resource deployments early
? Companies should discuss upfront the level and timing of critical resource deployment ? Answering the challenging questions about business helps ? Informs discussions about market trends and drivers, improving the quality of the strategic plan and making it far more executable ? Ex-Cisco Systems- A cross functional team reviews the level and timing of resource deployments early in the planning stage
Clearly identify priorities
? Managers should know which decision is important ? Steps must be taken at the right time and in the right way to meet planned performance ? ExTextronEach business unit identifies improvement priorities, translated into action items with clearly defined accountabilities, timetables, and KPIs ? Ex- Roche- Turns its business plans into detailed performance contracts that clearly specify the steps needed and the risks that must be managed to achieve the plans. These contracts all include a “delivery agenda” that lists the five to ten critical priorities with the greatest impact on performance
Continuously monitor performance
? Companies should harness capabilities of seasoned executives to calculate the resources required to deliver the goods ? Ex- Textron- Each KPI is fully monitored, and regular operating reviews percolate performance shortfalls, or “red light” events ? Ex- Dow Chemical- Performance Improvement Drive; defined clear performance metrics for each unit, reviewed on weekly basis ? Ex- Boeing Commercial Airplanes- Holds weekly business performance reviews to track the division’s results against its multiyear plan
Reward and develop execution capabilities
? Companies have to motivate and develop their human resource ? Nurturing capabilities in executives help in long run ? Ex- Barclays Capital- Emphasizes on hiring only A players with top team taking responsibility and having innovative pay schemes ? Ex- 3M- Developed a new leadership model based on 6 attributes- the ability to “chart the course”, “energize and inspire others”, “demonstrate ethics, integrity, and compliance”, “deliver results”, “raise the bar”, and “innovate resourcefully.”
Conclusion
? The price for closing the strategy-to-performance gap is huge, but instills true benefits in the organization ? Leaders become more confident in their own capabilities ? A culture of underperformance transforms to culture of overperformance ? Closing this gap creates a large and lasting impact on the organization’s capabilities, strategies and competitiveness
Company
LOGO
doc_551462718.ppt