Key Points

Implementing and executing strategy is an operation-driven activity revolving around

the management of people and business processes. The managerial emphasis is on
converting sffategic plans into actions and good results. Management's handling of the
stratery can be considercd successful if and
when the coffipany achieaes the targeted strategic and financial performance and. shows good
progrcss in making its stlategic aisinn a rcalify.
Like crafting strategy, executing strategy is a job for a comprny's whole management
process of implementing and executing the chosen

team, not just a few senior managers. Top-level marugers have to rely on the active
support and cooperation of middle and lowe managers to push strategy changes into
functional areas ad 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 shategy:

1.

2.

3-

Building an organizatinn capable oJ etecutitlg the strategy successfully. Building an organization capable of good strateBy execution entails thee t1pes of
organization-building actions: (l) staffing the organization-assembling a talented,
can-do management team, and recruiting and retaining employees with the
needed experience, technical skills, and intellectual capital, (21building dynamic
capabilities and core competencies that will enable good strategy execution and
updating them as shategy and extemal conditions change and (3) structuring
tht organization and ztork effort---organizing value chain activities and business
processes and deciding how much decision-making authority to push down to
lower-level managers and frontline employees.
Allocating ample rcsources to strategy-critical actioities. Managers implementing and
executing a new or different strategy must identify the resource requirements
of each new sLrategic initiative and then consider whether the current pattem of
resource allocation and the budgets of the various subunits are suitable.
Ensuring that policies and procedures Jacilitate rather thnn impede ffictioe strategy
,\nyrne 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 factate execution of new shategic initiatives.
execution.

4.

Pushing for contnuous improztement in how oalue chain actiaities are performed.

Benchmarking, the discovery and adoption of best practices, reengineering core

business processes, 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.

5.

6.

lnstalling information and operating systems that

enable company personnel to peressential

acluifies.
Well-conceived
state-of-the-art
support systems not ory
form

facilitate bette strategy execution but also strengthen organizational capabilities

enough to provide a competitive edge over rivals.
Tying ranards directly to the achieaement of performance objectiaes. For an incentive
compensation system to work well (1) the monetary payoff should be a major
piece of the compensation package, (2) the use of incentives should extend to all
rnanagers and workers, (3) the system should be adrninistered 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, and (7) monetary rewards should be supplemented
with liberal use of nonmonetary rewards.

Fostering a corporate culture thnt protnotes gootl stratery executlon, The psyche of
corporate cultures varies n,idely. 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) thosc that are ethrcallv unprincipled and are driven by greed. Highperformancc culturcs and adaptive cultures both have positive features that are
8.

conducive to Bood stratefiy cxccution.

Exerting the internal leadership needed to propel implementation forzoarrl Leading the
drive for good strategy execution and operating excellence calls for three actions
on the part of the manager-in-charge: (1) staying on top of w'hat is happening,
closely monitoring progress, and learning lvhat obstacles lie in the path of good
cxecution; (2) putting constructive pressure on the organization to achieve good
rcsults and operating excellence; and (3) pushing corrective actions to improve
strategy execution and achieve the targeted results.

Read some of the recent Six Sigma articles posted at isixsigma.corn. Prepare a
one-page report to your instructor detailing how Six Sigma is being used in various companies and what benefits these cornpanies are reaping from Six Sigma

Assurance
of Learning
Exercises

LO4

implementation.
Consult the latest issue of Fortune conlaining the annual "100 Best Companies to
Work For" (usually a late January or early February issue, or else go to www
fortune.com to access the list) and identify at least five compensation incentives

LO6

and work practices that these companies use to enhance employee motivation
and reward them for good strategic and financial performance. You should
identify compensation methods and wok practices that are different from those
cited in Concepts & Connections 10.1.
J.

Exercises fbr
Sirnulation
Participants

1.

Go to the Jobs section at www.intel.com and see what Intel has to say about its
culture under the links for Careers, Diversity, and The Workplace. Does what's
on this Web site appear to be just recruiting propaganda, or does it convey the
type of work clirnate that management is actually trying to create? Explain your
answer.

How would you describe the organization of your company's top manage-

LO7

LOI

ment team? Is some decision making decentralized and delegated to individual LO2
re decisions ma.de

LO6

:;fi1'j""-Tjli
is employing?

Have you and your co-managers allocated ample resources to strategy-critical

areas? If so, explain how these investments have contributed to good strategy
execuon and improved company performance.
Does your company have opportunities to use incentive compensation techniques? If so, explain your company's approach to incentive compcnsation. Is
there any hard evidence you can cite that indicates your company's use of incentive mrnpensation techniques has worked? For example, have your company's

roz

compensaon incmtives actually

indicating that the productivity gains
productivity gains have zof translated in
that your company's use of incmtive cor

4.

If you were making a speech to coutpany I

about the kind of corporate cultule you w(x
What specific cultural traits would you like