Chapter 12: Implementing Strategy Flashcards
Larry Bossidy recipe for execution
There are four steps
to consider when execution is the issue:
(1) create a set of clear goals for people to follow;
(2) find ways to accurately measure
performance;
(3) hold people accountable for their performance; and
(4) richly reward those who perform well
Alignment definition
A condition where organizational elements fit
together and reinforce each other.
In an aligned
organization all the elements support the strategy
The seven Ss
1) strategy,
2) structure,
3) systems,
4) staffing,
5) skills,
6) style,
7) shared values
1) Strategy
Strategy definition: The plan or process that
creates and sustains a competitive advantage for a firm
Strategy represents the most important S.
The ultimate goal of any organization is excellent performance, whether it is a business, government,
or not-for-profit
Strategy enables an organization to perform well by guiding resource allocation
decisions that result in competitive advantage
2) Structure
Structure answers two critical questions for an organization: Who does what? Who reports to
whom?
Structure definition: The set of organizational arrangements that divide labor and tasks. Structure
also defines reporting or authority relationships.
If you want to understand an organization’s structure, look at its organization chart.
Companies may also want to structure using one of two Ms: a matrix structure or an M-form corporation
3) Systems
Systems definition: Mechanisms, policies, or processes that coordinate and control the work of the different
units of the organization.
Systems play two important roles: They coordinate and control work of the different units within the organization
4) Staffing
Staffing definition: The processes in the organization for recruiting, hiring, training, and deploying human capital.
Finally, some companies promote from within, while others tend to hire from the outside.
5) Skills
Skills definition: The abilities of individuals, groups, or organizations to perform tasks.
Refer to the abilities of individuals within the firm, as well as how the firm has combined those individual talents to build capabilities (processes), to create a competitive advantage
The relationship between skills and staffing is shown as companies either hire people who have the skills they need or develop workers in-house through training.
6) Style
Style definition: The interpersonal relationships and patterns of interaction that organizational
members consider appropriate and legitimate.
Refers to the interpersonal relationships between people in the organization and, along with shared values, comprises the culture of the organization
Style generally falls into one of two categories: formal or informal.
7) Shared Value
Shared Value definition: The priorities, values, and virtues that members of the organization see as
important.
Some people use the term superordinate goals, a set of high-level goals that all stakeholders agree on, to capture the same thing as shared values
Superordinate goals
Highlevel, abstract goals that all stakeholders agree on to guide organizational action.
Many companies choose to make their __________ explicit in a mission statement, or a statement of vision and values
shared values
Hard triangle
The elements of strategy, structure, and systems in
the 7 S model. The hard triangle represents a set of “hard” levers that managers can quickly pull to
create alignment or realignment.
Hard doesn’t refer to difficulty, but, rather, tangibility
Soft square
The elements of style, staffing, skills, and shared
values. Soft square elements are often difficult to codify and usually take a long time to influence and change.
The first time an entrepreneur sets a strategy to create unique value for customers in
a particular market, she aligns the organization with that strategy
At every other point in a
company’s history, a change in strategy requires realigning the organization with the new
direction.
Is changing the 7Ss easy?
Recent evidence puts the failure rate for organizational change at 60 percent to 70 percent,
and that percentage has not changed for several decades
The Three Phases of Change
1) Unfreezing
2) Changing
3) Refreezing
unfreezing definition
The first step in organizational change. It begins
when leaders recognize and publicly admit that the current situation is not producing acceptable or adequate results.
When individuals, groups, or companies make a “stop doing” list, they have begun the process
of unfreezing
change process
The middle step in organizational change that a
company engages in to adapt to its environment and learn new behaviors.
the most difficult part of the process.
refreeze
refreezing
The last phase of organizational change. This
step involves formalizing and institutionalizing new behaviors, methods, processes, or routines.
To make change permanent, individuals and companies have to do the hard work of
aligning the rest of their activities to support the change
The Eight Steps to Successful Change
- Generate a sense of urgency
- Build a guiding coalition
- Create a vision
- Communicate the vision
- Empower individuals to act
- Garner short-term wins
- Consolidate gains and move on for more change
- Institutionalize the change
1) Generate Urgency
People and organizations won’t change without a reason. In fact, organizations have been designed to ensure stability and that the same regular processes
will happen over and over again
That means
looking at larger environmental trends, spending time with customers, suppliers, employees,
or stakeholders to gather data, and then creating a compelling case that will help people see,
understand, and also feel the need to change
2) Build a guiding coalition
Effective change requires that many people see and feel the urgency, and those with the power to change the organization grasp the sense of urgency and actively work to create change
Guiding coalition
A group of influential people from all levels in the organization that support and lead the change effort.
All members have power
within their own work groups, either as formal managers or directors, or informally having
earned the respect, admiration, and ears of their peers
3) Create a vision
A meaningful vision is a clear statement of where the organization wants to go, and what life will be like when the change has been successful
However, without a clear vision of where they are going, people are either unable to move or they move in many different directions all at once.
Vision
A clear statement of desired outcomes and endpoints
for organizational change.
What helps a company unfreeze
The first three tasks—generating an urgency, building a coalition, and creating a vision—
help the organization unfreeze
What helps organizational members alter
their behaviors and work patterns and create the change.
The next three tasks— communicating the
vision, empowering action, and garnering short-term wins
4) Communicate the Vision
Many managers don’t communicate that vision clearly enough or often enough. They might communicate
through a memo or a post on the company’s intranet site
Managers who successfully lead change overcommunicate their vision.
They keep repeating the message even after they are sure most people have heard it.
5) Empower Action
Leaders and managers want creative behavior and new solutions, but many organizational cultures and systems punish creative behavior or new solutions that don’t work
Empowering people to act certainly means giving them authority to try new practices, but
it also means giving them the knowledge and resources they need to engage in new practices
Empowerment
A grant of authority, formal or informal, that
allows organizational members to try new practices. Empowerment includes giving members the
knowledge and resources they need to engage in new practices successfully. It also includes a safety
net for people should they fail.
6) Garner Short-Term Wins
Wise managers begin with projects that require the least change and have a high probability of success.
Short-term wins create both credibility and momentum that encourages key organizational members to get off the fence and work to make the change successful.
How long can it take to communicate the vision, empower, and create short-term wins?
The three tasks that accomplish the bulk of the change, communicating the vision,
empowering action, and creating short-term wins, can take one to two years.
7) Consolidate Gains and Press On
The clever manager might be honored at a company dinner and given a nice bonus, and people would assume the change effort was complete.
If a company stops after creating a few high-profile wins and fails to press ahead to work on the deeply rooted behaviors, policies, and practices that must change for a true realignment to occur, much of the value of the change effort will have been wasted
This is the least glamorous and longest task of successful change, but the one that truly prepares the organization to refreeze
8) Institutionalize Change
To institutionalize something is to make it so essential
that it is taken for granted and becomes part of the central values of the culture.
Managers institutionalize changes primarily through three of the 7 Ss: systems, staffing, and shared
values
Finally, strategic changes always alter the shared values of the organization
Institutionalize definition
When an organizational element or practice becomes so essential that its value is taken for granted.
Timeline for implementing change
The silent phase (unfreezing) - ½–1½ years
The Active Phase (Change) - 1-2 Years
Completion (Refreezing) - 4-7 Years
Measurement
In fact, measurement represents a general need for assessing whether any strategy, new or existing,
works.
An effective measurement system helps everyone, from top management to
front-line employees, understand how their daily work contributes to strategic success
Principle of line of sight
The notion that individual members in an organization should be able to connect their daily work and tasks to the overall strategic goals of the organization.
Line of Sight
If you have a very clear idea of the company’s overall strategy, and understand your role in furthering that strategy, you would have the tools to help decide which of the many urgent tasks is the most important.
If, however, the strategy is clear and explicit about creating value through low cost, a customer-centric differentiation, or bold product innovation, then you have more guidance and you can make a better decision
The line of sight principle recognizes that grand strategies don’t just happen, they come to
fruition only as individual managers and employees make decisions about how to allocate the
valuable resources they control
Balanced scorecard
A tool that measures four broad areas of
organizational performance: financial results, customer goals, internal business processes, and
learning and growth.
