CHAPTER 11

MANAGING INTERNAL
OPERATIONS: ACTIONS
THAT PROMOTE GOOD
STRATEGY EXECUTION
STUDENT VERSION
PROMOTING GOOD STRATEGY
EXECUTION


Allocating resources to the drive for good strategy
execution.



Instituting polici...
ALLOCATING RESOURCES TO THE
STRATEGY EXECUTION EFFORT


Possible Adverse Resource Allocation
Outcomes:
●

Too little fund...
STRATEGY-DRIVEN BUDGETING:
ALLOCATING RESOURCES


Screen resource requests carefully.



Approve only those that contrib...
INSTITUTING POLICIES AND
PROCEDURES THAT FACILITATE
STRATEGY EXECUTION


Policies and operating procedures facilitate
str...
INSTITUTING BEST PRACTICES AND
EMPLOYING PROCESS MANAGEMENT
TOOLS
Benchmarking

Best
Practices

Total Quality
Management
(...
REENGINEERING THE ORGANIZATION


Business Process Reengineering
●

Involves radically redesigning and streamlining work
e...
ACHIEVING CONTINUOUS
IMPROVEMENT


Total Quality Management (TQM )
●

Creating a total quality culture bent on continuous...
A STATISTICAL APPROACH TO
ACHIEVING CONTINUOUS
IMPROVEMENT


Six Sigma Programs
●



Utilize statistical methods to impr...
THE DIFFERENCE BETWEEN BUSINESS
PROCESS REENGINEERING AND
CONTINUOUS IMPROVEMENT

Business
Process
Reengineering

Aims at ...
CAPTURING THE BENEFITS OF
INITIATIVES TO IMPROVE
OPERATIONS
Action Steps to Realize the Value of
TQM and Six Sigma Initiat...
INSTITUTING ADEQUATE INFORMATION
SYSTEMS, PERFORMANCE TRACKING,
AND CONTROLS

Key Strategic Performance Indicators
Tracked...
USING REWARDS AND INCENTIVES
TO PROMOTE BETTER STRATEGY
EXECUTION
Providing incentives and an engaging
in motivational pra...
STRIKING THE RIGHT BALANCE
BETWEEN REWARDS AND
PUNISHMENT
Performance

Rewards

Commitment-generating
incentives and rewar...
LINKING REWARDS TO STRATEGICALLY
RELEVANT PERFORMANCE OUTCOMES


Focus on and reward results, not effort.



Create a re...
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MGMT449 chap011

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MGMT449 chap011

  1. 1. CHAPTER 11 MANAGING INTERNAL OPERATIONS: ACTIONS THAT PROMOTE GOOD STRATEGY EXECUTION STUDENT VERSION
  2. 2. PROMOTING GOOD STRATEGY EXECUTION  Allocating resources to the drive for good strategy execution.  Instituting policies and procedures that facilitate strategy execution.  Using process management tools to drive continuous improvement in how value chain activities are performed.  Installing information and operating systems that enable personnel to carry out their strategic roles proficiently.  Using rewards and incentives to promote better strategy execution and the achievement of strategic and financial targets. 11–2
  3. 3. ALLOCATING RESOURCES TO THE STRATEGY EXECUTION EFFORT  Possible Adverse Resource Allocation Outcomes: ● Too little funding that slows progress and impedes the efforts of organizational units to execute their pieces of the strategic plan proficiently. ● Too much funding that wastes organizational resources and reduces financial performance. 11–3
  4. 4. STRATEGY-DRIVEN BUDGETING: ALLOCATING RESOURCES  Screen resource requests carefully.  Approve only those that contribute to strategy execution.  Provide the level of resources necessary for the success of strategic initiatives.  Shift resources to higher-priority activities where new execution initiatives are needed. 11–4
  5. 5. INSTITUTING POLICIES AND PROCEDURES THAT FACILITATE STRATEGY EXECUTION  Policies and operating procedures facilitate strategy execution by: ● Providing top-down guidance regarding how things need to be done. ● Helping ensure consistency in how execution-critical activities are performed. ● Promoting the creation of a work climate that facilitates good strategy execution. 11–5
  6. 6. INSTITUTING BEST PRACTICES AND EMPLOYING PROCESS MANAGEMENT TOOLS Benchmarking Best Practices Total Quality Management (TQM) Managing for Continuous Improvement Process Reengineering Six Sigma Quality Programs 11–6
  7. 7. REENGINEERING THE ORGANIZATION  Business Process Reengineering ● Involves radically redesigning and streamlining work effort, flows and processes to achieve dramatic improvements in performance. ● Uses cross-functional teams, cutting-edge technology and information systems to reset and refocus the organization’s strategy. 11–7
  8. 8. ACHIEVING CONTINUOUS IMPROVEMENT  Total Quality Management (TQM ) ● Creating a total quality culture bent on continuously improving the performance of every task and value chain activity. ● Is a long-term race without a finish in which success comes slowly in small steps forward (kaizen). 11–8
  9. 9. A STATISTICAL APPROACH TO ACHIEVING CONTINUOUS IMPROVEMENT  Six Sigma Programs ●  Utilize statistical methods to improve quality by reducing defects and variability in business processes. Six Sigma Principles ● All work is a process. ● All processes have variability. ● All processes create data that explain variability. 11–9
  10. 10. THE DIFFERENCE BETWEEN BUSINESS PROCESS REENGINEERING AND CONTINUOUS IMPROVEMENT Business Process Reengineering Aims at one-time quantum improvement Top-notch Strategy Execution and Operating Excellence Continuous Improvement (TQM, Six Sigma) Aims at ongoing incremental improvements 11–10
  11. 11. CAPTURING THE BENEFITS OF INITIATIVES TO IMPROVE OPERATIONS Action Steps to Realize the Value of TQM and Six Sigma Initiatives Committing to total quality and continuous improvement Empowering all employees to improve quality Fostering qualitysupportive behaviors Emphasizing the necessity for improved performance Using online systems to speed the adoption of best practices 11–11
  12. 12. INSTITUTING ADEQUATE INFORMATION SYSTEMS, PERFORMANCE TRACKING, AND CONTROLS Key Strategic Performance Indicators Tracked by Information Systems Customer data Operations data Financial performance data Employee data Supplier/partner/ collaborative ally data 11–12
  13. 13. USING REWARDS AND INCENTIVES TO PROMOTE BETTER STRATEGY EXECUTION Providing incentives and an engaging in motivational practices that facilitate good strategy execution. Techniques for winning sustained, energetic commitment of employees to the strategy execution process Striking the right balance between rewards and punishment for individual performance. Linking employee rewards to strategically relevant organizational performance outcomes. 11–13
  14. 14. STRIKING THE RIGHT BALANCE BETWEEN REWARDS AND PUNISHMENT Performance Rewards Commitment-generating incentives and rewards The firm’s motivational approaches and reward structure Punishment Adverse employment consequences 11–14
  15. 15. LINKING REWARDS TO STRATEGICALLY RELEVANT PERFORMANCE OUTCOMES  Focus on and reward results, not effort.  Create a results-oriented work environment that focuses on what to achieve, not what to do.  Set strategically-relevant, specific, and measurable stretch performance goals that are difficult but achievable.  Link the performance goals of each individual in an organizational unit to the unit’s goals.  Reward and recognize as success superior performance in accomplishing the goals. 11–15

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