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