MORE TIME IS NEEDED THAN ORIGINALLY PLANNED
UNANTICIPATED MAJOR PROBLEMS
INEFFECTIVE COORDINATION OR ACTIVITIES
CRISES THAT DISTRACT ATTENTION
UNCONTROLLABLE EXTERNAL ENVIRONMENT
INADEQUATE LEADERSHIP AND DIRECTION
INADEQUATE TRAINING AND INSTRUCTION
POOR DEFINITION OF KEY TASKS AND ACTIVITIES
INADEQUATE MONITORING OF ACTIVITIES

-- ARE WE APPROPRIATELY ORGANIZED?
-- ARE WE ADEQUATELY STAFFED AND TRAINED?
-- ADEQUATE PHYSICAL AND FINANCIAL RESOURCES AVAILABLE?
-- ARE INFORMATION AND CONTROL SYSTEMS IN PLACE?
-- ARE MOTIVATION AND REWARD SYSTEMS IN PLACE?
-- WILL THE CORPORATE CULTURE SUPPORT US?
-- WILL WE HAVE COMPETENT STRATEGIC LEADERSHIP?
-- IS OUR PLANNING COMPLETE?

SIX PRINCIPAL TASKS:

1. BUILDING A CAPABLE ORGANIZATION
2. LINKING BUDGETS WITH STRATEGY
3. ESTABLISHING ADMINISTRATIVE SUPPORT SYSTEMS
4. DEVELOPING AN EFFECTIVE REWARD SYSTEM
5. BUILDING A STRATEGY-SUPPORTIVE CORPORATE CULTURE
6. EXERTING STRATEGIC LEADERSHIP

FUNCTIONAL ORGANIZATION STRUCTURE

Focuses on either Functions or Processes

ADVANTAGES

• Permits Centralized Control
• Well-suited for a Single Business
• Key Activities Designated as Functional Depts
• Promotes In-depth Functional Expertise
• Well-suited for Developing Distinctive Competence
• Enhances Efficiency where Tasks are Routine

• Problems with Coordination Across Functions
• Promotes Overspecialization & Narrow Viewpoints
• Hard to Develop "Generalist" Managers
• Forces Profit Responsibility to the Top
• Rigid, Difficult to Adapt or Change

Best with Diverse or Expansive Markets

ADVANTAGES

• Allows Tailoring of Strategy to Each Local Market
• Well-suited to Single Business Enterprise
• Delegates Responsibility to Lowest Level (Local)
• Expertise Developed in Solving Local Problems
• Good Training Ground for Generalist Managers
• Closer Contact with Local Customers

• How to Maintain a Uniform Image & Reputation?
• How Much Local Discretion Should Be Allowed?
• Adds Another Layer of Management to Run Units
• Results in Duplication of Staff and Equipment

Diversified Firms

ADVANTAGES

• Logical way of Delegating Authority
• Puts Responsibility for Strategy with the Experts
• Each Unit Organizes Around its own Key Activities
• Frees CEO to Handle Corporate Strategy Issues
• Autonomy Delegated to Business Unit Mgrs

• Overhead is High Due to Duplication of Staff, Etc
• What Decisions should be Centralized/Delegated?
• Leads to Division Rivalry for Resources
• Autonomy of Units works against Coordination
• Top Management very Dependent on Unit Mgrs
• Top Management Loses Touch with Unit Situations
• How to Realize Strategic "Fit" Benefits Without Cooperation?

Broadly Diversified Firms

ADVANTAGES

• Good way to Organize in Broadly Diversified Firm
• Facilitates Coordination of Related Units
• Promotes Cohesiveness Among New Related Units
• Allows Strategic Planning at a Relevant Level
• Top Management Reviews are Easier
• Helps Allocate Resources to Greatest Growth Areas

• Grouping of SBUs is Often Very Arbitrary
• Adds Another Layer To Top Management
• Group VPs may have Very Ill-Defined Authority
• Strategy Coordination Won't happen Automatically
• Performance Recognition gets Blurred

Business and Functional Lines Overlaid
When Two Variables have Equal Strategic Priorities
Normally Applies to only a Portion of the Firm

• Gives Formal Attention to Each Strategic Priority
• Creates Checks and Balances
• Helps Capture Strategic Fits in Diversified Firms
• Promotes Making Trade-off Decisions
• Encourages Cooperation and Coordination
• Allows Maximum Environmental Flexibility

• Very Complex to Manage
• High Stress for Workers Under Two Authorities
• Shared Authority Takes Time and Communication
• Can't Move Without Clearance From Others
• Promotes bureaucracy-hamstrings entrepreneurism

ADVANTAGES

• Able to respond quickly to customers--fast service
• Team selects their leaders, delegates roles and jobs
• Participative, free communication, no hierarchies
• Strong sense of ownership, commitment

• Specialists are cut off from their peers
• Inconsistencies in actions, policies across teams
• Difficult to coordinate and control from the top

COORDINATING MECHANISMS

LIAISON ROLES

Informal Contacts
Contact Managers

TASK FORCES

Temporary Problem-solving Groups

COMMITTEES

Ad Hoc
Permanent--Meets Regularly

TEAMS

More Permanent

ADVANTAGES

• Don't have to own or control all non-key functions
• Contract with experts to provide their services
• Can direct energy and capital at what Co. does best
• Very flexible, can get in and/or out quickly
• Can be very sensitive to cost and quality

• No ability to expedite or control some operations
• Contracts must be renegotiated -- not permanent
• Hard to identify where the organization is located
• No managerial expertise developed in these areas

DEVELOPING A SUPPORTIVE STRUCTURE

Functional Organization
Geographic Organization
Decentralized Divisions
Strategic Business Units
Matrix Organization
Team Organization
Network Organization

SELECTING PEOPLE FOR KEY POSITIONS

1. HOW MUCH NEW FUNDING WILL WE NEED TO SUCCESSFULLY IMPLEMENT OUR STRATEGY?

- Show and Justify Amounts!
- Where's the Detailed Budget?

A. INTERNAL CASH RESERVES

* Did you leave enough working capital?

B. REALLOCATION OF EXISTING OPERATING AND CAPITAL BUDGETS

* Can we really do this and still have a viable firm?
* Politically, can this be accomplished?

C. CASH GENERATED FROM FUTURE SALES AND PROFITS

* How dependent is your funding plan on extremely optimistic projections of sales/profits?
* Did you leave enough to pay reasonable dividends?

D. LOANS AND NOTES

* How much more can the firm borrow right now?
* What will be the likely rate of interest?
* What will the annual payments be? Can we afford it?

E. STOCK SALES

* Will anyone really be willing to buy our stock?
* How many shares can we sell? For what price?


F. SALE OF ASSETS OR EXISTING BUSINESSES

* Can we get along without this asset?
* Strategically, does it make good sense to sell this business?


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WHO GETS HOW MUCH?

HOW TO GET MAXIMUM BANG FOR THE BUCK?

IF TOO LITTLE FUNDING:

The Plan Can't Be Implemented Correctly

Wastes Organizational Resources
Reduces Performance

STRATEGY MUST DRIVE HOW BUDGET ALLOCATIONS ARE MADE--NOT POLITICS!!

1. CUSTOMER DATA

Names and Addresses
Demographic Data
Recent Purchases/Services
Customer Satisfaction Reports

Inventory
Production Reports
Labor Productivity

Customer Contacts
Efficiency and Performance Reports

Sales Reports
Profit and Loss Statements
Key Ratios

1. SHOULD INVOLVE NO MORE DATA THAN IS NEEDED TO GIVE A RELIABLE PICTURE OF WHAT IS GOING ON

Avoid adding "interesting" data

Is it too late to take corrective action?

Avoid complicated reports--focus on critical data

Are big variances from the plan "flagged?"
These data are what the decision maker must see!

HERZBERG

"If you want people motivated to do a good job, give them a good job to do."

How a company's incentives are structured signals what sorts of behavior and performance management wants.

EXAMPLES

MARS INC -- 10% bonus for coming to work on time each day
MARY KAY COSMETICS -- Inspirational meetings, speeches, songs
IBM -- Get togethers where managers talk about the state of the company
TEXAS INSTRUMENTS -- Teams set their own goals, use of group incentives
PROCTOR & GAMBLE -- Encourages internal competition among brands

USE OF TEAMS AND EMPOWERED GROUPS

DEFINE JOBS AND ASSIGNMENTS IN TERMS OF RESULTS TO BE ACCOMPLISHED, NOT THE DUTIES AND FUNCTIONS TO BE PERFORMED.

LINK REWARDS TO GROUP ACCOMPLISHMENT

-- PERFORMANCE PAYOFF MUST BE A MAJOR PIECE OF THE TOTAL COMPENSATION PACKAGE
-- THE INCENTIVE PLAN SHOULD IDEALLY EXTEND TO ALL MANAGERS AND ALL WORKERS
-- SYSTEM MUST BE ADMINISTERED WITH SCRUPULOUS CARE AND FAIRNESS
-- INCENTIVES MUST BE TIGHTLY LINKED TO ACHIEVING ONLY PERFORMANCE TARGETS SPELLED OUT IN THE STRATEGIC PLAN
-- PERFORMANCE TARGETS SHOULD INVOLVE OUTCOMES THAT THE INDIVIDUAL HAS THE PERSONAL ABILITY TO AFFECT OR CONTROL

COMPANY CONDUCTS BUSINESS ACCORDING TO A CLEAR AND EXPLICIT SET OF PRINCIPLES AND VALUES

MANAGEMENT SPENDS A LOT OF TIME COMMUNICATING THESE VALUES TO THE ORGANIZATION

VALUES ARE SHARED WIDELY ACROSS THE ORGANIZATION, AND ARE USED REGULARLY AS A BASIS FOR DECISION MAKING

A GENUINE CONCERN FOR THE WELL-BEING OF THE ORGANIZATION'S THREE MOST IMPORTANT CONSTITUENCIES: CUSTOMERS, EMPLOYEES, AND STOCKHOLDERS

CONTINUITY OF LEADERSHIP, STABLE GROUP MEMBERSHIP SMALL GROUP SIZE, GEOGRAPHIC CONCENTRATION, AND CONSIDERABLE SUCCESS ALL CONTRIBUTE TO EMERGENCE OF A STRONG CULTURE

LOW-PERFORMANCE or UNHEALTHY CULTURES

A politicized internal environment that allows managers to operate their fiefdoms autonomously and resist needed change
Hostility to change and to people who champion new ways of doing things (avoid risks, don't make mistakes)
Promoting managers who understand structures, systems, budgets, and controls, but don't understand vision, strategies, inspiration, and culture-building
An aversion to looking outside the organization for superior practices and approaches

1. IS STRATEGY COMPATIBLE WITH PRESENT CULTURE?

YES ..TIE ORGANIZATIONAL CHANGES INTO THE CULTURE

EXPLAIN HOW THE NEW STRATEGY WILL BETTER ACHIEVE THE CORPORATE MISSION THAN THE CURRENT STRATEGY DOES

2. IF NOT, CAN CURRENT CULTURE BE EASILY MODIFIED?

YES ..INTRODUCE A SET OF CULTURE-CHANGING ACTIVITIES---

MINOR STRUCTURAL CHANGES, TRAINING AND DEVELOPMENT ACTIVITIES, OR HIRE NEW MANAGERS

YES ..MANAGE AROUND THE CULTURE -- ESTABLISH A NEW STRUCTURAL UNIT
 

4. IF NOT, IS THE FIRM STILL COMMITTED TO ITS STRATEGY?

YES ..FIND A JOINT-VENTUrE PARTNER OR CONTRACT WITH ANOTHER FIRM TO CARRY OUT YOUR STRATEGY

5. IF NOT, FORMULATE A DIFFERENT STRATEGY

1. THE CEO HAS A STRATEGIC VISION OF WHAT IS POSSIBLE
2. THE VISION IS BROKEN DOWN INTO KEY ELEMENTS NECESSARY TO ACCOMPLISH THE VISION
3. FREQUENT COMMUNICATION TO EMPLOYEES AT ALL LEVELS OF:

A. THE CURRENT STATE OF THE FIRM IN COMPARISON TO THE COMPETITION AND THE FUTURE OUTLOOK ON BOTH
B. THE VISION OF WHAT THE COMPANY CAN BECOME AND HOW IT CAN ACHIEVE THAT VISION
C. THE PROGRESS THE COMPANY HAS MADE TOWARD THOSE KEY ELEMENTS NECESSARY TO ACHIEVE THE VISION

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WANDER AROUND (MBWA) TO STAY IN TOUCH WITH WHAT IS GOING ON IN THE ORGANIZATION?
EMPHASIZE ACHIEVEMENT AND EXCELLENCE?
INSPIRE PEOPLE TO DO THEIR BEST?
EMPOWER EMPLOYEES TO USE INITIATIVE AND CREATIVITY?
RECOGNIZE AND REWARD PEOPLE WHO TURN IN WINNING PERFORMANCES?
REMOVE MANAGERS WHO CONSISTENTLY PERFORM POORLY?

ACTION PLANS

• WHAT ACTIONS WILL BE TAKEN?
• BY WHOM?
• DURING WHAT TIME FRAME?
• WITH WHAT EXPECTED RESULTS?

CAMILLUS (86)

1. SPECIFIC ACTIONS TO BE TAKEN
2. DATES TO BEGIN AND END EACH ACTION
3. PERSON RESPONSIBLE FOR CARRYING OUT EACH ACTION
4. PERSON RESPONSIBLE FOR MONITORING THE TIMELINESS AND EFFECTIVENESS OF EACH ACTION
5. EXPECTED FINANCIAL AND PHYSICAL CONSEQUENCES OF EACH ACTION
6. CONTINGENCY PLANS -- FOR WHEN SOMETHING GOES WRONG!

UNIT SALES, DOLLAR SALES, NEW CUSTOMERS, TURNOVER OF CUSTOMERS, DELIVERY TIME

SUPPLIERS

COST OF RAW MATERIALS, DELIVERY TIME, AVAILABILITY, NEW IDEAS FROM SUPPLIERS

NUMBER OF SUGGESTIONS, GRIEVANCES, PRODUCTIVITY, PROMOTIONS, TURNOVER, STRIKES

COMPLAINTS, BOYCOTTS, PETITIONS, LETTERS TO THE EDITOR, COMMENDATIONS, NUMBER OF HOSTILE ENCOUNTERS

NUMBER OF NEW LAWS AND REGULATIONS, FINES AND COMPLAINTS, RATIO OF COOPERATIVE V. UNCOOPERATIVE ENCOUNTERS

EPS, STOCK PRICE, ROI, GROWTH IN ROE, NUMBER OF STOCKHOLDERS

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