CHAPTER 10

BUILDING AN ORGANIZATION CAPABLE

OF GOOD STRATEGY EXECUTION
People, Capabilities, and Structure

Student Version
Copyright ®2012 The McGraw-Hill Companies, Inc. McGraw-Hill/Irwin
 A FRAMEWORK FOR EXECUTING
STRATEGY
♦ Committing to Executing a Strategy:
● Entails figuring out the specific techniques,
actions, and behaviors necessary for a
smooth strategy-supportive operation.
● Following through to get things done and
deliver results.
● Making things happen (leadership) and
making them happen right (management).

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 BUILDING AN ORGANIZATION
CAPABLE OF GOOD STRATEGY
EXECUTION: WHERE TO BEGIN

♦ Assemble a strong management team and

a cadre of capable employees.
♦ Renew, upgrade, and revise resources
and capabilities to match chosen strategy.
♦ Create an organizational structure that is
strategy-supportive.

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 STAFFING THE ORGANIZATION

♦ Assemble a Strong Management Team:

● Planners who ask tough questions and
figure out what needs to be done.
● Implementers who can select, manage, and
lead the right people.
● Executors who turn decisions into actions
that drive the changes that produce
sustainable competitive advantage.
♦ Key Takeaway:
● A critical mass of talented activist managers
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BUILDING AND STRENGTHENING
CORE COMPETENCIES AND
COMPETITIVE CAPABILITIES

Approaches to Build Building

Competencies and Capabilities

Develop Acquire capabilities Access capabilities

capabilities through mergers via collaborative
internally and acquisitions partnerships

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Developing Capabilities Internally

Managerial Actions to Develop

Competencies and Capabilities

Strengthen the Coordinate and

firm’s base of skills, integrate the efforts
knowledge, and of work groups and
intellect departments

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 Setting Stretch Goals:
From Capability to Competence

Setting a stretch Evolving the ability

Thinking
goal of into a competence
strategically
developing an or capability by
about a firm’s
organizational performing it well
knowledge and
ability to do and at an
skills base
something well acceptable cost

Thinking Refreshing, updating, and

strategically upgrading competencies and
about a firm’s capabilities as necessary
opportunities to gain and maintain
and challenges competitive advantage

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Acquiring Capabilities through Mergers
and Acquisitions

When a market opportunity can slip by

A Question of
faster than a needed capability can be
Market Opportunity created internally.

When industry conditions, technology,

A Question of
or competitors are moving at such a
Competitive Necessity rapid clip that time is of the essence.

Tacit knowledge and complex routines

A Question of
may not transfer readily from one
Successful Integration organizational unit to another.

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 Accessing Capabilities through
Collaborative Partnerships

Approaches to acquiring
capabilities from an external source

Engage in a
Outsource the Collaborate with
collaborative
function requiring a firm that has
partnership for the
the capabilities to complementary
purpose of learning
a key supplier or resources and
how the partner
another provider capabilities
does things

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 ORGANIZING THE WORK EFFORT
WITH A SUPPORTIVE
ORGANIZATIONAL STRUCTURE

♦ Ensuring that Structure Follows Strategy By:

● Deciding which value chain activities to perform
internally and which to outsource.
● Aligning the firm’s organizational structure with
its strategy.
● Determining how much authority to delegate.
● Facilitating collaboration with external partners
and strategic allies.

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 Aligning the Firm’s Organizational
Structure with Its Strategy
♦ Organizational Structure
● Comprises the formal and informal arrangement
of tasks, responsibilities, lines of authority, and
reporting relationships for the firm.
♦ Structure Is Aligned with Strategy When:
● Its design contributes to the creation of value for
customers.
● Its parts are aligned with one another and also
matched to the requirements of the strategy.
● It lowers operating costs through lower bureaucratic
costs and operational efficiencies.

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Matching Type of Organizational Structure
to Strategy Execution Requirements

Simple Structure
Strategy
(Line-and-Staff)
Execution
Requirements:

Chosen
Functional Structure
Strategy
(Departmental or Unitary)

Capabilities
and
Multidivisional Structure Competencies
(Divisional or M-form)
Centralized
or
Decentralized
Matrix Structure
Control
(Composite or Combination)

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Determining How Much Authority to Delegate

Organizational
Centralized Decentralized
Approach to
Decision Decision
Making Decision- Making
Making

Authority is retained Authority delegated to

by top management lower-level managers
and employees

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Capturing Cross-Business Strategic Fit
in a Decentralized Structure

Enforcing close cross-

business collaboration to
avoid duplication of effort
Capturing
Cross-Business
Strategic Fit
Centralizing related functions
requiring close coordination
at the corporate level

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Facilitating Collaboration with External
Partners and Strategic Allies

Creating a Strategic alliances

Network
Structure:
Using
“relationship
Outsourcing arrangements
managers”
to build and
maintain
cooperative
Joint ventures
arrangements
of value both
parties
Cooperative partnerships

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 Further Perspectives on Structuring
the Work Effort

Matching Structure to Strategy

Pick a basic Institute

Supplement
organizational collaborative
design with
design that networking and
appropriate
matches communication
coordinating
structure to arrangements
mechanisms
strategy

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