Building an Organization Capable of Good Strategy Execution

Once managers have decided on a strategy, the emphasis turns to converting it into actions and good results. Executing strategy is an action-oriented, make-thing happen task that tests a manager’s ability to direct organization change, achieve continous improvement in operations and business processes, create and nurture a strategy-supportive culture, and consistently meet or beat performance target.
The challenge of sucessfully implementing new strategic initiatives goes well beyond managerial adeptness in overcoming resistance to change. Executing strategy is a job for the whole management team. Good strategy execution requires a team effort. All managers have strategy-executing responsibility in their areas of authority, and all employees are participants in the strategy execution process.

A Framework for Executing Strategy
Executing strategy entails figuring out all of the hows – the specific techniques, actions and behaviours that are needed for a smooth strategy-supportive operation – and then following through to get things done and deliver result. The eight principal managerial components of the strategy execution process are:
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. Instilling a corporate culture that promotes good strategy execution.
8. Exercising strong leadership to drive execution forward, keep improving on the details of execution, and achieve operating exellence as rapidly as feasible.

There are three types of organization-building capable of good strategy execution:
1. Staffing the organization :
Putting together a strong management team
Recruiting and retaining capable employees
2. Building core competencies and competitive capabilities :
Developing a set of competencies and capabilities suited to the current strategy
Updating and revising this set as external conditions and strategy change
Training and retraining company personnel as needed to maintain skills-based competencies
3. Structuring the organization and work effort :
Instituting organizational arrangements that facilitate good strategy execution.
Deciding how much decision-making authority to push down to lower level managers and frontline employees.

The application of the theory above can be viewed further in the “Whole Food Market.” Today it operates 194 stores and generates nearly $6 billion a year in sales, whish is also Americs’ most profitable food retailer when measured b profit per square foot. The key success of Whole Food Market is the result of the concept
creating community of purpose where the cofounder, chairman, and CEO John Mackery intend to create an organization based on love instead of fear : create value for others.

Its unique management system is based on a nexus of distinctive management principles: Love, Community, Autonomy, Egalitarianism, Transparency, Mission. The organization type is small empowered work groups who are granted a degree of autonomy decision making, such as the selection of the peer/applicant, also for all key operating decisions including pricing, ordering, staffing, and in-store promotion.

The transparancy exists due to the trust (“no-secrets” management philosophy) inside the organization, enable every staff can have access to the detail financial data which helps them to make decisions on issues liek ordering and pricing, also to encourage them to perform better by comparing their salary/incentive among the
other teams.

To futher reinvorce the notions of community and interdependence, every Whole Foods meeting ends with a round of “appreciation,” as a chance to exercise higher order capabilities – initiative, imagination, and passion. Communities is built around the shared sense of purpose (mission), as they have mantra: “Whole Foods, Whole
People, Whole Planet.”

The unconventional management model is effective to bring Whole Food Market has been ranked as one of Fortune magazine’s “100 Best Companies to Work For” every year since 1998. In 2007, it was voted as the 5th most rewarding place to work in America. Turns out that management innovation really can help a company overcome the disengagement and malaise that is endemic in traditionally managed workplaces. It is harder for competitors to imitate.

Source: Thompson, Crafting and Executing Strategy, Chapter 9