Everything You

Ever Wanted to

Know About

Strategy….

Ends with

people!

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

“If you want people

motivated to do a good

job, give them a

good job to do.”

Frederick Herzberg

Google 2007Google 2008

Creating a Strong FitBetween Strategy and Culture

Responsibility of Strategy MakerResponsibility of Strategy Maker – –Select a strategy compatible with theSelect a strategy compatible with the

sacred or unchangeable parts of sacred or unchangeable parts of organization’s prevailing corporate cultureorganization’s prevailing corporate culture

Responsibility of Strategy ImplementerResponsibility of Strategy Implementer – –Once strategy is chosen, changeOnce strategy is chosen, changewhatever facets of the corporatewhatever facets of the corporateculture hinder effective executionculture hinder effective execution

Types of Corporate Cultures

Strong vs. Weak CulturesStrong vs. Weak Cultures

Unhealthy CulturesUnhealthy Cultures

High-Performance CulturesHigh-Performance Cultures

Adaptive CulturesAdaptive Cultures

Lewin’s Change Model

Changing– Provides new information, new behavioral

models, or new ways of looking at things

Refreezing– Helps employees integrate the changed

behavior or attitude into their normal way of doing things

• Unfreezing– Creates the motivation to change

• Benchmarking Data• Financial data, emerging trends

A Systems Model of Change

Organizing Arrangemen

ts

PeopleGoals Social

Factors

Methods

Target Elements of Change

Internal

Strengths

Weaknesses

External

Opportunities

Threats

Inputs

Internal

Organizational

level

Department/

group level

Individual level

Outputs

Strategy

Leading Change: Why Transformation Efforts Fail

Kotter, Harvard Business Review, Jan. 2007

Leading Change1. Establish a sense of urgency2. Create a powerful guiding coalition3. Create a vision4. Communicate the vision5. Empower others to act on the vision6. Plan and create short term wins7. Consolidate improvements and produce still more

change8. Institutionalize the approach

Lincoln ElectricLincoln Electric

Rewards productivity by paying for each pieceproduced (defects can be traced to worker causing them).

Highest rated workers receive bonuses of as much110% of their piecework compensation.

GoogleGoogle

Employees are provided with free food,unlimited ice cream, pool and Ping-Pong tables, and

complimentary massages. Employees are allowed to spend 20% of their work time on any outside activity.

Examples: Motivational Practices

XilinxXilinx

New hires receive stock option grants. CEO responds promptly to employee e-mails.During hard times management takes a 20%

pay cut instead of laying off employees.

JM Family EnterprisesJM Family Enterprises

Benefits for employees include: a great lease on new Toyotas, cruises in the Bahamas on the 172-foot company yacht, office facility has a heated lap pool, a fitness center, and a free nail salon, and professionally made

take-home dinners.

Examples: Motivational Practices

Examples: Motivational Practices

NordstromNordstrom

Pay salespeople higher than prevailing rates,plus commission. “Rule #1: Use good judgment in

all situations. There will be no additional rules.”

Amazon.comAmazon.com

Hands out Just Do It awards to employees whodo something they think will help Amazon withoutgetting their boss’s permission; the action has to bewell thought through but doesn’t have to succeed.

Examples: Motivational Practices

W. L. GoreW. L. Gore

Employees get to choose what project/team they work on; each team member’s compensation is based on other team members’

ranking of his/her contribution to the enterprise.

AmgenAmgen

Employees get 16 paid holidays, generousvacation time, tuition reimbursements up to $10,000,

on-site massages, a discounted car wash, and the convenience of shopping at on-site farmers’ markets.

• Create a results-oriented system• Reward people for results, not for activity• Define jobs in terms of what to achieve • Incorporate several performance measures• Tie incentive compensation to relevant outcomes

– Top executives – Incentives tied tooverall firm performance

– Department heads, teams, andindividuals – Incentives tied toachieving performance targetsin their areas of responsibility

Key Considerations inDesigning Reward Systems

Guidelines for Designing anEffective Compensation System

1. Payoff must be a major, not minor, piece of total compensation package

2. Incentive plan should extend to all employees

3. Administer system with scrupulous fairness

4. Link incentives to achieving only the performance targets in strategic plan

5. Targets a person is expected to achieve must involve outcomes that can be personally affected

6. Keep time between performance reviewand payment short

7. Make liberal use ofnon-monetary rewards

8. Avoid ways of rewarding non-performers

Building an Organization Capable of

Good Strategy Execution

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Crafting the Strategy• Primarily a market-driven

activity• Successful strategy making

depends on– Business vision– Perceptive analysis of

market conditions and company capabilities

– Attracting and pleasing customers

– Outcompeting rivals– Using company capabilities

to forge a competitive advantage

Executing the Strategy• Primarily an operations-driven

activity• Successful strategy execution

depends on– Doing a good job of working

through others– Good organization-building– Building competitive

capabilities– Creating a strategy-

supportive culture– Getting things done and

delivering good results

Crafting vs. Executing Strategy

Implementing a New StrategyRequires Adept Leadership

• Implementing a new strategytakes adept leadership to

– Convincingly communicatereasons for the new strategy

– Overcome pockets of doubt

– Secure commitment of concerned parties

– Build consensus and enthusiasm

– Get all implementation pieces in place and coordinated

Goals of the Strategy Implementing-Executing Process

• Unite total organization behind strategy

• See that activities are done in a manner that is conducive to first-rate strategy execution

• Generate commitment so an enthusiasticcrusade emerges to carry out strategy

• Fit how organization conducts itsoperations to strategy requirements

• Communicate the case for change• Build consensus on how to proceed• Arouse enthusiasm for the strategy to turn implementation

process into a companywide crusade • Empower subordinates to keep process moving• Establish measures of progress and deadlines• Reward those who achieve

implementation milestones• Direct resources to the right places• Personally lead strategic change process

and the drive for operating excellence

What Top Executives Have to Do in

Leading the Implementation Process

Fig. 11.2: The Three Components of Building anOrganization Capable of Proficient Strategy Execution

Example: Intel’s Core Competence

Design and mass productionof complex chips

for personal computers

Example: Procter & Gamble’sCore Competencies

Superb marketing-distribution skills and R&D capabilities in five core technologies - fats, oils, skin

chemistry, surfactants, emulsifiers

Example: General Electric’sCore Competencies

Developing professional managers with broad problem-solving skills and

proven ability to growglobal businesses

Example: Disney’s Core Competencies

Theme park operation and family entertainment

Example: Dell’s Core Competencies

Capabilities to deliver state-of-the-art products to customers within days of next-generation

components coming available and at attractively low costs

Example: Toyota’s Core Competence

Legendary “production system” giving it the capability to produce high-quality vehicles at

relatively low costs

Organizational Structures ofthe Future: Overall Themes

• Revolutionary changes in how work is organized have been triggered by– New strategic priorities– Rapidly shifting competitive conditions

• Tools of organizational design include– Empowered managers and workers– Reengineered work processes– Self-directed work teams– Rapid incorporation of Internet

technology– Networking with outsiders

The future structure

will be . . .

Characteristics ofOrganizations of the Future

• Extensive use of Internet technologyand e-commerce business practices

• Fewer barriers between– Different vertical ranks– Functions and disciplines– Units in different geographic locations– Company and its suppliers, distributors,

strategic allies, and customers• Capacity for change and rapid learning• Collaborative efforts among people in different

functions and geographic locations

Change &Learning

Good Luck!