ppt

chapt11_lecture.pptx

Home >English homework help >Article writing homework help >ppt

CHAPTER 11

MANAGING INTERNAL OPERATIONS: ACTIONS THAT PROMOTE GOOD STRATEGY EXECUTION

(c) 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

11–2

THIS CHAPTER WILL HELP YOU UNDERSTAND:

LO 1 Why resource allocation should always be based on strategic priorities.

LO 2 How well-designed policies and procedures can facilitate good strategy execution.

LO 3 How best practices and process management tools drive continuous improvement in the performance of value chain activities and promote superior strategy execution.

LO 4 The role of information and operating systems in enabling company personnel to carry out their strategic roles proficiently.

LO 5 How and why the use of well-designed incentives and rewards can be management’s single most powerful tool for promoting adept strategy execution.

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.

11–3

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.

11–4

The funding requirements of good strategy execution must drive how capital allocations are made and the size of each unit’s operating budget. Underfunding organizational units and activities pivotal to the strategy impedes successful strategy implementation

11–5

STRATEGIC MANAGEMENT PRINCIPLE

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.

11–6

A company’s operating budget must be both strategy-driven (in order to amply fund the performance of key value chain activities) and lean (in order to operate as cost-effectively as possible).

11–7

STRATEGIC MANAGEMENT PRINCIPLE

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.

11–8

A company’s policies and procedures provide a set of well-honed routines for running the company and executing the strategy.

11–9

STRATEGIC MANAGEMENT PRINCIPLE

Well-conceived policies and procedures aid strategy execution; out-of-sync ones hinder effective execution.

There is wisdom in a middle-ground approach: Prescribe enough policies to give organization members clear direction and to place reasonable boundaries on their actions; then empower them to act within these boundaries in pursuit of company goals.

11–10

STRATEGIC MANAGEMENT PRINCIPLE

FIGURE 11.1

How Policies and Procedures Facilitate Good Strategy Execution

11–11

ADOPTING BEST PRACTICES AND EMPLOYING PROCESS MANAGEMENT TOOLS

Managing for Continuous Improvement

Best Practices

Benchmarking

Process Reengineering

Total Quality Management (TQM)

Six Sigma Quality Programs

11–12

A best practice is a method of performing an activity that consistently delivers superior results compared to other approaches.

11–13

CORE CONCEPT

FIGURE 11.2

From Benchmarking and Best-Practice Implementation to Operating Excellence

The more that organizational units use best practices in performing their work, the closer a company moves toward performing its value chain activities as effectively and efficiently as possible.

This is what excellent strategy execution is all about.

11–14

Wide-scale use of best practices across a firm’s entire value chain promotes operating excellence and good strategy execution.

The more that organizational units use best practices in performing their work, the closer a company comes to achieving effective and efficient strategy execution.

11–15

STRATEGIC MANAGEMENT PRINCIPLE

BUSINESS PROCESS REENGINEERING, TOTAL QUALITY MANAGEMENT, AND SIX SIGMA QUALITY PROGRAMS: TOOLS FOR PROMOTING OPERATING EXCELLENCE

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.

11–16

Business process reengineering involves radically redesigning and streamlining how an activity is performed, with the intent of achieving quantum improvements in performance.

11–17

CORE CONCEPT

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).

11–18

Total quality management (TQM) entails creating a total quality culture, involving managers and employees at all levels, bent on continuously improving the performance of every value chain activity.

11–19

CORE CONCEPT

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.

11–20

Six Sigma programs utilize advanced statistical methods to improve quality by reducing defects and variability in the performance of business processes.

11–21

CORE CONCEPT

SIX SIGMA AND NEW PROJECTS: DMADV

Define

What are our project goals and customer requirements?

Measure

How do we measure and determine both our goals and the needs of our customers?

Analyze

What existing process options do we have for meeting customer needs?

Design

Should we use an old or new process to meet customer needs and specifications?

Verify

How will we verify design performance and our ability to meet customer needs?

11–22

EXISTING PROCESSES AND SIX SIGMA: DMAIC

Define

Define what constitutes a defect or variation

Measure

Collect data to find out why, how, and how often this defect occurs

Analyze

Determine when, why and where the defect is occurring

Improve

Implement best practice to eliminate defect or variation

Control

Implement training, monitoring and controls to sustain the improvement

11–23

11–24

Why is Six Sigma a necessity for achieving continuous improvement, lean manufacturing capabilities and operating excellence?

Is Six Sigma a process or a culture?

How does Six Sigma prevent the build-up of inertia in organizations?

Whirlpool’s Use of Six Sigma to Promote Operating Excellence

ILLUSTRATION CAPSULE 11.1

Ambidextrous organizations are adept at employing continuous improvement in operating processes but allowing R&D to operate under a set of rules that allows for exploration and the development of breakthrough innovations.

11–25

STRATEGIC MANAGEMENT PRINCIPLE

THE DIFFERENCE BETWEEN BUSINESS PROCESS REENGINEERING AND CONTINUOUS IMPROVEMENT

Top-notch Strategy Execution and Operating Excellence

Continuous Improvement (TQM, Six Sigma)

Business Process Reengineering

Aims at one-time quantum improvement

Aims at ongoing incremental improvements

11–26

Business process reengineering aims at one-time quantum improvement, while continuous improvement programs like TQM and Six Sigma aim at ongoing incremental improvements.

11–27

STRATEGIC MANAGEMENT PRINCIPLE

CAPTURING THE BENEFITS OF INITIATIVES TO IMPROVE OPERATIONS

Empowering all employees to improve quality

Emphasizing the necessity for improved performance

Committing to total quality and continuous improvement

Fostering quality-supportive behaviors

Using online systems to speed the adoption of best practices

Action Steps to Realize the Value of TQM and Six Sigma Initiatives

11–28

The purpose of using benchmarking, best practices, business process reengineering, TQM, and Six Sigma programs is to improve the performance of strategy-critical activities and thereby enhance strategy execution.

11–29

STRATEGIC MANAGEMENT PRINCIPLE

INSTALLING INFORMATION AND OPERATING SYSTEMS

Benefits of Information Technologies

Enable better strategy execution through data-based decisions

Strengthen organizational capabilities

Allow for real-time tracking of implementation initiatives and daily operations

Provide monitoring of empowered employee performance (electronic scorecards)

Build closer relationships with customers

11–30

INSTITUTING ADEQUATE INFORMATION SYSTEMS, PERFORMANCE TRACKING, AND CONTROLS

11–31

Employee data

Financial performance data

Customer data

Operations data

Supplier/partner/ collaborative ally data

Key Strategic Performance Indicators Tracked by Information Systems

Having state-of-the-art operating systems, information systems, and real-time data is integral to superior strategy execution and operating excellence.

11–32

STRATEGIC MANAGEMENT PRINCIPLE

USING REWARDS AND INCENTIVES TO PROMOTE BETTER STRATEGY EXECUTION

Techniques for winning sustained, energetic commitment of employees to the strategy execution process

Providing incentives and an engaging in motivational practices that facilitate good strategy execution.

Striking the right balance between rewards and punishment for individual performance.

Linking employee rewards to strategically relevant organizational performance outcomes.

11–33

A properly designed reward structure is management’s most powerful tool for mobilizing organizational commitment to successful strategy execution and aligning efforts throughout the organization with strategic priorities.

11–34

STRATEGIC MANAGEMENT PRINCIPLE

Financial rewards provide high-powered incentives when rewards are tied to specific outcome objectives.

11–35

CORE CONCEPT

NONMONETARY APPROACHES TO ENHANCING MOTIVATION

Provide attractive perks and fringe benefits.

Give awards and other forms of public recognition.

Rely on promotion from within whenever possible.

Invite and act on ideas and suggestions.

Create a work atmosphere of caring and mutual respect.

State the strategic vision in inspirational terms.

Share the firm’s critical information with employees.

Provide a comfortable working environment.

11–36

STRIKING THE RIGHT BALANCE BETWEEN REWARDS AND PUNISHMENT

The firm’s motivational approaches and reward structure

Punishment

Rewards

Commitment-generating incentives and rewards

Adverse employment consequences

Performance

11–37

11–38

The times they are a changing: why are companies finding it increasingly necessary to motivate and reward workers to achieve higher levels of performance?

As businesses continue to globalize, how will companies have to adapt their reward and incentive systems?

How the Best Companies to Work for Motivate and Reward Employees

ILLUSTRATION CAPSULE 11.2

Incentives must be based on accomplishing the right results, not on dutifully performing assigned tasks.

11–39

STRATEGIC MANAGEMENT PRINCIPLE

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.

11–40

The key to creating a reward system that promotes good strategy execution is to make measures of good business performance and good strategy execution the dominating basis for designing incentives, evaluating individual and group efforts, and handing out rewards.

11–41

STRATEGIC MANAGEMENT PRINCIPLE

The first principle in designing an effective incentive compensation system is to tie rewards to performance outcomes directly linked to good strategy execution and the achievement of financial and strategic objectives.

11–42

STRATEGIC MANAGEMENT PRINCIPLE

GUIDELINES FOR DESIGNING EFFECTIVE INCENTIVE COMPENSATION SYSTEMS

Make financial incentives a major, not minor, piece of the total compensation package.

Have incentives that extend to all managers and all workers, not just top management.

Administer the reward system with scrupulous objectivity and fairness.

Ensure that the performance targets set for each individual or team involve outcomes that the individual or team can personally affect

Keep the time between achieving targeted performance outcome and payment of the reward as short as possible.

Avoid rewarding effort rather than results.

11–43

11–44

Tying incentives directly to strategy execution works when management has chosen the right strategy; what happens when the choice of strategy turns out to be seriously wrong?

What happens to employee morale and loyalty when a low-cost leadership firm achieves higher productivity at both its lower and higher wage locations and then needs to expand its production output? (productivity ≠ profitability)

Nucor Corporation: Tying Incentives Directly to Strategy Execution

ILLUSTRATION CAPSULE 11.3

The unwavering standard for judging whether individuals, teams, and organizational units have done a good job must be whether they meet or beat performance targets that reflect good strategy execution.

11–45

STRATEGIC MANAGEMENT PRINCIPLE