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Key Points
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Implementing and executing strategy is an operation-driven activity revolving around the management of people and business processes. The managerial emphasis is on converting strategic plans into actions and good results. Management's handling of the process of implementing and executing the chosen strategy can be considered successful if and when the company achieves the targeted strategic and financial performance and shows good progress in making its strategic vision a reality. Shortfalls in performance signal weak strategy, weak execution, or both.

The place for managers to start in implementing and executing a new or different strategy is with a probing assessment of what the organization must do differently and better to carry out the strategy successfully. They should then consider precisely how to make the necessary internal changes as rapidly as possible.

Like crafting strategy, executing strategy is a job for a company's whole management team, not just a few senior managers. Top-level managers have to rely on the active support and cooperation of middle and lower managers to push strategy changes into functional areas and operating units and to see that the organization actually operates in accordance with the strategy on a daily basis.

Eight managerial tasks crop up repeatedly in company efforts to execute strategy:

  1. Building an organization with the competencies, capabilities, and resource strengths to execute strategy successfully.

  2. Marshaling sufficient money and people behind the drive for strategy execution.

  3. Instituting policies and procedures that facilitate rather than impede strategy execution.

  4. Adopting best practices and pushing for continuous improvement in how value chain activities are performed.

  5. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently.

  6. Tying rewards directly to the achievement of strategic and financial targets and to good strategy execution.

  7. Shaping the work environment and corporate culture to fit the strategy.

  8. Exercising strong leadership to drive execution forward, keep improving on the details of execution, and achieve operating excellence as rapidly as feasible.

Building an organization capable of good strategy execution entails three types of organization-building actions: (1) staffing the organization —assembling a talented, can-do management team, and recruiting and retaining employees with the needed experience, technical skills, and intellectual capital, (2) building core competencies and competitive capabilities that will enable good strategy execution and updating them as strategy and external conditions change, and (3) structuring the organization and work effort —organizing value chain activities and business processes and deciding how much decision-making authority to push down to lower-level managers and frontline employees.

Building core competencies and competitive capabilities is a time-consuming, managerially challenging exercise that involves three stages: (1) developing the ability to do something, however imperfectly or inefficiently, by selecting people with the requisite skills and experience, upgrading or expanding individual abilities as needed, and then molding the efforts and work products of individuals into a collaborative group effort; (2) coordinating group efforts to learn how to perform the activity consistently well and at an acceptable cost, thereby transforming the ability into a tried-and-true competence or capability; and (3) continuing to polish and refine the organization's know-how and otherwise sharpen performance such that it becomes better than rivals at performing the activity, thus raising the core competence (or capability) to the rank of a distinctive competence (or competitively superior capability) and opening an avenue to competitive advantage. Many companies manage to get through stages 1 and 2 in performing a strategy-critical activity but comparatively few achieve sufficient proficiency in performing strategy-critical activities to qualify for the third stage.

Strong core competencies and competitive capabilities are an important avenue for securing a competitive edge over rivals in situations where it is relatively easy for rivals to copy smart strategies. Anytime rivals can readily duplicate successful strategy features, making it difficult or impossible to outstrategize rivals and beat them in the marketplace with a superior strategy, the chief way to achieve lasting competitive advantage is to outexecute them (beat them by performing certain value chain activities in superior fashion). Building core competencies and competitive capabilities that are difficult or costly for rivals to emulate and that push a company closer to true operating excellence is one of the best and most reliable ways to achieve a durable competitive edge.

Structuring the organization and organizing the work effort in a strategy-supportive fashion has five aspects: (1) deciding which value chain activities to perform internally and which ones to outsource; (2) making internally performed strategy-critical activities the main building blocks in the organization structure; (3) deciding how much authority to centralize at the top and how much to delegate to down-the-line managers and employees; (4) providing for internal cross-unit coordination and collaboration to build and strengthen internal competencies/capabilities; and (5) providing for the necessary collaboration and coordination with suppliers and strategic allies.

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