“Making Strategy Work” is a fairly long, but easily readable book, by Lawrence Hrebiniak, a professor at Wharton University, and consultant. The book draws on the author’s 25 years’ experience of teaching senior executives, and the underlying premise that runs throughout it is that, while setting a strategy is a good thing, it is the execution that is crucial for the success of an organization. Successful execution requires that a company looks very closely at such things, as power within the firms, and how to manage change.
Management, strategy, leadership, culture, organizational culture, organizational behavior, corporate culture, cultural economics.
The author states that getting people to own a strategy is the key to success and, from there, takes the reader from theoretical models to concrete examples of how managers might go about this. Clearly, he knows a great deal about the automobile industry, from the many examples taken from GM, Toyota, etc., which show how the companies have fared over the past three years and how they have implemented their strategy. General Motors, or GM, in particular, is singled out, for its failure to get its employees to adhere to a strategy the company’s senior management wish to impose.
Execution, according to the author, is a process, but in order to keep people aligned with that process, there is a need to understand the corporate culture. This means that managers need to address the behavior of people within the company, rather than just setting out some general goals. They also need to look on a day-to-day basis on how things are developing and to what extent the desired strategy is being adhered to. In line with many other authors and consultants, Hrebiniak is clear in the fact that many managers know how to define a strategy, but have great difficulties in executing them.
The author is extremely good at creating a story, which is quite readable, but also in simplifying that into easy-to-understand models, which can then be used and adapted by managers. Such models include strategic execution between the corporate level and the business level, and also strategy and how it relates to strategic objectives and short-term metrics. One particularly good passage sets out the differences between efficiency and effectiveness: efficiency being doing things right, effectiveness being doing the right things. Too often in companies, there is a confusion between the two. This, for example, has led to the relative demise of the Japanese economy, who have been incredible efficient over the past two decades, but have not necessarily brought products that consumers wanted to buy.
The book gives an excellent discussion on centralization and decentralization, and their relative merits. This is a discussion that goes back to Alfred Sloan’s book on his life in GM back in the 60s, that centralization brings efficiency, decentralization brings innovation. The trick is to get the correct balance of the two. Chapter 8 is an excellent chapter on how companies should manage change, and how managers should get all their employees to buy in on the desired changes that need to be adhered to. The final chapter gives another excellent discussion on power within companies, and how they can have an effect on the success of a strategy. Too often, books just give the idea that, by simply having a good strategy, all employees will adhere to them. Anybody who works in a company knows that this is simply not the case. Often, an idea is accepted because of the person it comes, rather than because of the idea itself. Other good examples in the book include the development of Intel, Ryanair and how it got close to bankruptcy, and also a discussion why mergers and acquisitions, more often than not, end in failure. This is an excellent book for some general background reading on strategy. It’s also an excellent book if you wish to go into the more modelized forms of how you can make strategy work within your own company.
Pietro Micheli: Making Strategy Work
Interesting quotes from the book:
In 2003, $1.2 trillion in mergers were consummated by investment banks. This is below the figure in the record year of 2000 when close to $3 trillion in mergers were arranged, but it still is significant. The sad truth, however, is that corporate mergers don’t often work. Between 1985 and 2000, 64 percent were marked by a drop in shareholder value.
Strategy execution is difficult and is not easily explained by managerial sound bytes or the idiosyncrasies of a few successful managers.
Most people in an organization can’t manage armed only with a strategy. Something else is needed to guide daily, monthly, or quarterly performance because many managers operate of necessity in the short-term. How do we reconcile and integrate long-term strategic aims with short-term operating plans and objectives?
More and more companies are creating internal “universities,” corporate center groups involved in critical educational tasks. Indeed, in May 2004, there were some 1,600 such company “universities” in the United States, more than the 1,300 or so conventional universities offering undergraduate business degrees. Clearly, the executive education function is becoming an increasingly important task for the corporate center concept.
A common problem with a matrix is not having a “tie breaker,” the top role in the matrix. Consequently, conflicts between division and country managers or business and functional managers are not handled or solved immediately. Work comes to a virtual standstill as information moves slowly up two hierarchies. Information sharing suffers immensely.
James Burke, a past CEO of Johnson & Johnson, was emphatic and succinct when he explained his company’s outstanding performance and ability to handle crises by stating that, “Our culture is really it.” Culture makes a big positive difference in execution.
In my experience, culture is so important in some companies- for example, Microsoft, Nucor, and GE- that new hires must virtually pass muster on an informal “cultural due diligence” before they are hired.
The first step in changing culture is communication and information sharing. The reasons and logic underlying the need for change must be complete, unambiguous, and compelling.
Don’t try to change attitudes, hoping for a change in behavior. Focus instead on behavior.
When changing culture, it is far wiser and effective to focus on changing people, incentives, controls, and organizational structure. These changes affect behavior that, in turn, brings about changes in culture.
Doing the right things doesn’t always work.
Individuals or units that create value chain obtain power. Results clearly count. An execution plan must show the benefits that will accrue to the organization from effective execution for it to be taken seriously.
Power depends on one’s perceived contributions to an organization’s bottom line or competitive position in an industry.
A history of successful execution and positive results not only increases power or influence, it also helps future plans and future requests for funding get approved more easily. Power positively affects future planning and execution.
Power is usually slow to change. Those in power normally wish to maintain it. Power can support execution, which is a positive aspect of it. Power, however, can also create inertia, negatively affecting change and organizational adaptation.
A 10-year study of 340 major acquisitions by Mercer Management Consulting is especially significant and important because it validates the fact that most business marriages do not work. The study found that a full 57 percent of the merged companies lagged behind industry performance averages three years after the transactions had been completed.
Lawrence G. Hrebiniak talks about the mismanagement of USA
|An excellent read that challenges managers to think about their own vision of what they and their organisation contribute to society.||The man who “saved” IBM. A great read on leadership and corporate culture.||A fun book that show why humans don’t always behave in a rational manner.|
Many have written about the key components of business success. Theories build on approaches ranging from evaluating lessons learned to recognizing opportunities and having a willingness to take measured risks. Clearly such concepts can play an influential role. However, there are three key foundational imperatives for ensuring enduring success. Read more….
I recently completed some research on the management and organisation of British universities, which concluded that despite being full of good intentions (in this case to internationalise their offering) they lacked the management experience and know-how to implement the changes necessary to implement their strategies. Whilst it seemed fairly clear to me that what they needed to do was improve their management knowledge and know-how, it did not feel entirely comfortable for me to be saying this. After all I work at a Business School, one of whose primary functions is to provide management education to help managers develop their knowledge and know-how.
AACSB Associate Deans Conference: Leadership Skills and Strategies (David Logan: CultureSync & USC Marshall School of Business)
At the AACSB Associate Deans Conference 2012 David Logan, Senior Partner, CultureSync and Lecturer, Marshall School of Business, University of Southern California, gave a highly entertaining talk about dealing with ‘tribes’ in organizations. The title of the talk was “Leadership Skills and Strategies: Techniques and Tools on Leveraging Group Dynamics” and it gave some useful advice on how we can teach groups to develop a more positive attitude to their work.
“Richard Rumelt’s Web Journal on Good and Bad Strategy in Business, Politics, and Economics”
“Blog of Dr. Peter Lorange , one of the world’s foremost business school academics.”