Making Strategy Work

Introduction to the Second Edition xxiii
Acknowledgments xxv
Introduction to the First Edition xxvii
Learning from Experience xxviii
What You Need to Lead xxviii
The Big Picture xxviii
Effective Change Management xxix
Applying What You Learn xxix
The Bottom Line xxx
On a Final Note xxx
A Few Thanks xxx

PART I: KEY FACTORS IN STRATEGY EXECUTION 1
Chapter 1 Strategy Execution Is the Key 3
Execution Is a Key to Success 5
Making Strategy Work Is More Difficult Than the Task of Strategy Making 6
A Focus on Making Strategy Work Pays Major Dividends 8
Managers Are Trained to Plan, Not Execute 9
Let the "Grunts" Handle Execution 10
Planning and Execution Are Interdependent 11
Execution Takes Longer Than Formulation 14
Execution Is a Process, Not an Action or Step 17
Execution Involves More People Than Strategy Formulation 18
Additional Challenges and Obstacles to Successful Execution 19
Wharton-Gartner Survey and Executive Education Data Collection . . . .20
The Results: Obstacles to Successful Strategy Execution 22
Execution Outcomes 26
The Execution Challenge 28
Having a Model or Guidelines for Execution 29
Strategy Is the Primary Driver 29
Choosing an Organizational Structure 29
Coordination and Information Sharing 30
Clear Responsibility and Accountability 30
The Power Structure 30
Incentives, Controls, Feedback, and Adaptation 31
The Right Culture 31
Leadership 31
Managing Change 32
Applications and Special Topics 33
The Next Step: Developing a Logical Approach to Execution Decisions and Actions 33
Summary 35
Endnotes 36
Chapter 2 Overview and Model: Making Strategy Work 37
Common Versus Unique Execution Solutions 38
A Need for Action 40
A Model of Strategy Execution 41
Corporate Strategy 43
Corporate Strategy and Structure 45
Need for Integration 50
Executing Business Strategy 53
"Demands" of Business Strategy 55
Integrating Strategy and Short-Term Operating Objectives 56
Incentives and Controls 61
Incentives 63
Controls 64
Another View of the Model of Strategy Execution 65
Context of Execution Decisions 67
The Execution Context 68
Managing Change 69
Culture 69
The Organizational Power Structure 70
The Leadership Climate 71
Need for a Disciplined Approach 72
Summary 73
Endnotes 74
Chapter 3 The Path to Successful Execution: Good Strategy Comes First 77
Is the Impact of Strategy Overrated? 78
Issue #1: The Need for Sound Planning and a Clear, Focused Strategy 80
Corporate-Level Planning 81
Corporate Strategy: Some Corporate Examples, Good and Bad 82
Business Strategy 86
The Service Business 93
Issue #2: The Importance of Integrating Corporate and Business Strategies 95
The Role of the Business Is Unclear 97
Inappropriate Performance Metrics 98
Battles Over Resource Allocations 99
Assessments of Business Performance Create Additional Problems 99
The Strategy Review 100
Issue #3: Thinking Short Term-The Need to Define and Communicate the Operational Components of Strategy 103
Integrating Strategic and Short-Term Objectives 105
Need for Measurable Objectives 106
Issue #4: Understanding the "Demands" of Strategy and Successful Execution 108
Low-Cost Producer 109
Differentiation Strategies 111
Developing the Right Capabilities 112
The Demands of Global Strategy 115
A Final Point 116
Summary 117
Endnotes 118
Chapter 4 Organizational Structure and Execution 119
The Challenge of Structural Choice 120
Johnson & Johnson 120
Citibank, ABB, and Other Large Global Players 122
Service Organizations and Nonprofits 123
The Critical Structural Issues 124
Structural Issue #1: Measuring Costs and Benefits of Structure 126
Structural Issue #2: Centralization Versus Decentralization 131
Structural Issue #3: The Strategy-Structure Relationship and Effective Execution 144
Summary 157
Endnotes 160
Chapter 5 Managing Integration: Effective Coordination and Information Sharing 163
The Importance of Integration 165
Boeing 165
Hewlett-Packard 165
General Motors 166
Royal Dutch/Shell Group 167
Law Firms and Integration 168
Interdependence and Coordination Methods 169
Types of Interdependence 169
Coordination Processes and Methods 174
The GE "Work Out" 178
Facilitating Information Sharing, Knowledge Transfer, and Communication 181
Creating, Using, and Sharing Knowledge 181
Methods, Tools, or Processes for Information Sharing 184
Informal Forces and Information Sharing 187
Additional Informal Factors Affecting Information Flow and Knowledge Transfer 190
Clarifying Responsibility and Accountability 197
Responsibility Plotting and Role Negotiation 198
Summary 202
Endnotes 204
Chapter 6 Incentives and Controls: Supporting and Reinforcing Execution 207
Role of Incentives and Controls 208
Incentives and Execution 209
A Basic Rule: Don't Demotivate People 209
Good Incentives 210
Reward the Right Things 214
Controls: Feedback, Learning, and Adaptation 216
The Control Process 216
Develop and Use Good Objectives 221
Controls Require Timely and Valid Information 222
Use and Act on the Information 223
Face the Brutal Facts Honestly 225
Reward the Doers, the Performers 226
Reward Cooperation 227
Clarify Responsibility and Accountability 228
Leadership, Controls, and Execution 229
The Strategy Review: Integrating Planning, Execution, and Control 232
Step 1: Strategy Formulation 234
Step 2: The Execution Plan 238
Step 3: Initiating the Control Process 239
Step 4: Cause-Effect Analysis and Organizational Learning 240
Step 5: Feedback and Change 241
Step 6: Follow Up and Continue the Process 242
Summary 243
Endnotes 245
Chapter 7 Managing Change 247
Managing Change: A Continuing Challenge 247
Steps in Managing Change 251
A Model of Change and Execution 253
Components of the Model 253
Relating Change to Execution Problems 255
Sequential Change 260
Complex Change 266
Other Factors Affecting Change 278
Summary 278
Endnotes 280
Chapter 8 Managing Culture and Culture Change 283
What Is Culture? 284
Culture Is Important for Execution 285
Culture Is Not Homogeneous 286
Culture Affects Performance 286
Organizational Performance Affects Culture 289
A Model of Culture and Cultural Change 291
The Top Line: The Effects of Culture 291
The Bottom Line: Changing Culture 295
Summary 309
Rule 1: The Reasons for Change Must Be Clear, Compelling, and Agreed Upon by Key Players 309
Rule 2: Focus on Changing Behavior-Not Directly on Changing Culture 310
Rule 3: Effective Communication Is Vital to Culture Change 310
Rule 4: Adequate Effort Must Be Expanded to Reduce Resistance to Change 310
Rule 5: Beware of Excessive Speed 310
Endnotes 311
Chapter 9 Power, Influence, and Execution 313
A View of Power and Influence 315
Strategy and Environment 316
Problems or Dependencies 317
Organizational Structure 318
Uneven Resource Allocations 319
Internal Dependencies and Power 320
Using Power and Influence 322
Coming Full Circle: Conclusions About Power 325
Power and Execution 325
Define Power Bases and Relationships 326
Form Coalitions or Develop Joint Ventures with Those in Power 328
Focus on Value-Added, Measurable Results 329
A Final Note on Power: The Downside 336
Summary 343
Endnotes 344

PART II: APPLICATIONS 347
Chapter 10 Making Mergers and Acquisitions Work 349
Making Merger and Acquisition Strategies Work 350
Why Focus on Mergers and Acquisitions? 350
Why Do So Many Mergers and Acquisitions Fail or Founder? 355
Using the Present Model and Approach to Execution 360
Corporate Strategy 360
Corporate Structure 363
Cultural Integration in M&A 367
Business Strategy and Short-Term Objectives 373
Business Structure/Integration 377
Project Management 378
Incentives and Controls 379
Managing Change 383
Managing Culture and Culture Change 387
The Critical Role of Leadership 391
Summary 392
Endnotes 394
Chapter 11 Making Global Strategy Work 397
Types of Global Growth and Execution Decisions 399
Early or Basic International Presence 399
The Multidomestic Global Organization 400
The Coordinated Global Strategy 405
Strategic Alliances 410
Summary 414
Endnotes 415
Chapter 12 Executing Strategy in Service Organizations 417
Similarities: Executing Strategy in Service Businesses 419
Strategy 419
Organizational Structure 422
Talent, Capabilities, and Need for Training/Skill Development Programs 424
Incentives and Controls 426
The Logical Conclusion? 427
Service Businesses: Possible Differences Affecting Strategy Execution 428
Production and Consumption of Services 428
Are Services Personal? 429
The Measurement Issue 430
Categories or Types of Service Organizations 432
Definition of Goals and Strategies 434
Professional Versus Administrative Controls 436
Knowledge and Power 438
Conclusion: A Difficult Setting for Strategy Execution 439
Strategy Execution in People-Based Professional Service Organizations 440
The Setting for Action: A Case of Reciprocal Interdependence 440
Deciding on Strategy and Goals 442
Defining Measurement Metrics and Cause-Effect Clarity 444
Structure and Coordination Processes 446
Effective Incentives 448
The Verdict: Execution in People-Based, Professional Service Organizations 449
Summary: Strategy Execution in Service Organizations 451
Endnotes 454
Chapter 13 Project Management and Strategy Execution 457
Possible Benefits of a Project Management Approach 458
An Example: Project Management and Making Strategy Work 460
Defining the Projects and Key Objectives 461
Potential Pitfalls with Project Management 466
Degree of Formality 466
Tension Between Routine and Autonomy 468
Managing Culture and Change 469
Evidence of Value Added 469
Summary 471
Endnotes 472
Appendix 473
Index 479