Chapter 13 - Turning strategic choices into actions

Question 1

What are the challenges when implementing a strategy?

Answer 1

In general, only 10-20% of the strategies effectively formulated are effectively excecuted

1) People do not understand the strategy because management does not take enough time to communicate and explain the strategy
(→ only 5% of the work force understand the strategy)

2) Rewards and incentives system is not linked with the strategy (→ only 25% of managers have incentives linked to strategy)

3) Budgeting systems are not linked with the strategy (→ 60% of organizations do not link budgets to strategy)

Question 2

What is a strategy map, and what are the components of it?

Answer 2

It describes how an organization creates value by working on strategic schemes. It is a visual presentation of the companies overall goals and objectives.

Four perspectives:

• Financial
• Customers
  → What are we going for?
• Internal process
• Innovation and learning
  → How are we getting there?

Question 3

Describe the four perspectives of the strategy map further.

Answer 3

1) Financials

Two standard measures for financials: revenue growth and profitability

2) Customers

Customer value proposition is core of the strategy; Focus on one of the three strategies (see chapter 11) product leadership, operational excellence or customer intimacy

3) Internal processes

How to achieve the financial and customer objectives?!
Improve internal processes and work on Key account management (follow up with most important customers to give them the best solution) and limited overhead services (to assure costs are under control)

4) Innovation and Learning

Outlines the employee skills and knowledge required to make the process run smoothly

Question 4

What are Key Performance Indicators?

Answer 4

KPIs are used to measure and need to be clearly defined.
The best KPIs are the ones that can be measured in an objective way and are reliable over time.

For example:
the KPI more monitoring “Increase in market share” is the “Increase in turnover”

the KPI for monitoring “Customer Loyalty” is the “Turnover coming from existing customers”

Question 5

What do we do after we defined our KPIs?

Answer 5

After defining the KPIs, we can set targets and compare the actuals with the targets. Furthermore, we have to interpret the KPI and can give certain colors for example to express how good we are doing in a certain target.

Question 6

10 Tips for Success

Answer 6

1) Expect success
2) Make a good planning
3) Define priorities
4) Keep some KPI in mind
5) Keep in touch with customers
6) Keep an eye on competition
7) Perception is more important than reality
8) Select people on the base of attitude
9) Show enthusiasm
10) never stop going on!