Making Strategy Work: Leading Effective Execution and Change

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Overview

Without effective execution, no business strategy can succeed. Unfortunately, most managers know far more about developing strategy than about executing it -- and overcoming the difficult political and organizational obstacles that stand in their way. In this book, leading consultant and Wharton professor Lawrence Hrebiniak offers the first comprehensive, disciplined process model for making strategy work in the real world. Drawing on his unsurpassed experience, Hrebiniak shows why execution is even more important than many senior executives realize, and sheds powerful new light on why businesses fail to deliver on even their most promising strategies. Next, he offers a systematic roadmap for execution that encompasses every key success factor: organizational structure, coordination, information sharing, incentives, controls, change management, culture, and the role of power and influence in your business. Making Strategy Work concludes with a start-to-finish case study showing how to use Hrebeniak's ideas to address one of today's most difficult business execution challenges: ensuring the success of a merger or acquisition.
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Editorial Reviews

Library Journal
What better place to start a book on implementing new corporate strategy than with AT&T during its landmark breakup in 1984. Amid this grand upheaval, Wharton management professor Hrebiniak had an enlightening conversation with colleague Randy Tobias, then a division head at AT&T and later CEO of Eli Lilly. Tobias confided that his biggest leadership challenge was not in coming up with a new strategic direction for his division but in actually getting his plan up and running. The conversation stayed with Hrebiniak, ultimately inspiring this book, which offers a detailed analysis of how organizational structure, institutional culture, coordination, and communication methods affect a company's ability to act on its strategic initiatives. Since change management lies at the heart of strategy implementation, Hrebiniak details its role in successfully transforming an organization. But he also gives airtime to the role of incentives in motivating behavior and of controls in providing feedback to keep the plan on track while highlighting how executive attitudes toward strategy implementation can get in the way of successful execution. The text is liberally peppered with diagrams, step-by-step processes, and real-world scenarios. Recommended for academic business collections.-Carol J. Elsen, Univ. of Wisconsin, Whitewater Copyright 2005 Reed Business Information.
Soundview Executive Book Summaries
Formulating strategy is difficult. Executing it throughout the organization — that's even harder. Without effective execution, no business strategy can succeed. Unfortunately, most managers know far more about developing strategy than they know about executing it — and overcoming the difficult political and organizational obstacles that stand in the way. In Making Strategy Work, Lawrence Hrebiniak offers a comprehensive, disciplined process model for making strategy work in the real world. He shows why execution is even more important than many senior executives realize, and sheds new light on why businesses fail to deliver on even their most promising strategies. He also offers a systematic road map for execution that encompasses every key success factor: organizational structure, coordination, information sharing, incentives, controls, change management, culture, and the role of power and influence in the execution process.

Strategy Execution Is the Key
Execution is a disciplined process or logical set of connected activities that enables an organization to make its strategy work. Without a careful, planned approach to execution, strategic goals cannot be attained.

Execution can itself be a source of competitive advantage. If there's a series of internally consistent, integrated activities, imitation is extremely difficult if not impossible.

Consider how Southwest Airlines executes its lowest-cost strategy: no baggage transfer, meal service or boarding pass; only one type of airplane; and incentives for fast turnarounds at the gate. It's not impossible to copy Southwest, but it's extremely difficult for competitors already committed to different routines and methods.

Why Execution Is Often Handled Poorly
Despite its importance, execution is often handled poorly because of the following reasons:

  • Managers are trained to plan, not execute. Execution is learned in the "school of hard knocks," with many mistakes and frustrations on the way to successful results.
  • Some top managers believe that implementation is best left to lower-level employees, who then get the blame if things go awry. But execution is not trivial: It defines the essence of managerial work. It demands ownership at all levels of management.


Planning and execution are highly interdependent. The greater the interaction between "doers" and "planners" — or the greater the overlap of the two processes or tasks — the greater the likelihood of successful execution. Planning and doing should be simultaneous: Managers must be thinking about execution as they're formulating their plans.

  • Execution usually takes longer than formulating strategy. As conditions change over time, it can be hard for managers to focus on and control the execution process. The longer execution takes, the more likely that unforeseen circumstances will derail it.
  • Strategy implementation always involves more people than strategy formulation. Communication down the organization or across different functions becomes a challenge. The more people who are involved, the harder it is to execute strategy effectively.


Making Strategy Work
Successful execution involves decisions about strategy, structure, coordination, information sharing, incentives and controls. These decisions take place within an organizational context of power, culture, leadership and the ability to manage change. To understand how to make strategy work, we need to understand the interactions among these key decisions and contextual forces. Copyright © 2005 Soundview Executive Book Summaries
—Soundview Summary

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Product Details

  • ISBN-13: 9780131467453
  • Publisher: Pearson Prentice Hall
  • Publication date: 1/17/2005
  • Pages: 408
  • Product dimensions: 6.35 (w) x 9.25 (h) x 1.27 (d)

Meet the Author

About the Author

Dr. Lawrence Hrebiniak is a professor in the Department of Management of the Wharton School at the University of Pennsylvania. He has been a member of the Wharton faculty since 1976, and currently teaches courses in strategic management and strategy implementation in the Wharton M.B.A. and Executive Education programs. He held several managerial positions in industry prior to entering academia, and is a past president of the Organization Theory Division of the Academy of Management. For over two years, he was one of five Wharton faculty providing commentaries on the Wharton Management Report, a daily program on the Financial News Network.

His consulting activities and executive development programs focus on strategy implementation, the formulation of strategy, and organizational design, both inside and outside the U.S. Dr. Hrebiniak's clients have included Johnson & Johnson, AT&T, Chemical Bank, Isuzu (Japan), Weyerhauser, Dun & Bradstreet, DuPont, Management Centre (Europe), the Social Security Administration, First American Bankshares, General Motors (U.S., Brazil, Japan, Venezuela), Chase Manhattan, Studio Amrosetti (Milan), and GE.

Dr. Hrebiniak's current research is concerned primarily with strategy implementation, especially the relationships among strategy, structure and performance. He is also interested in strategic adaptation as organizations change over time to remain competitive. He has authored four books, including Implementing Strategy (PHPTR 1984) and The We-Force in Management (Jossey-Bass, Inc. 1994).

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Read an Excerpt

INTRODUCTIONINTRODUCTION

This book focuses on a critical management issue: Making strategy work or executing strategy effectively.

Theories and advice about the requisites of good planning and strategy formulation abound in management literature. A vast array of planning models and techniques has been paraded before managers over the years, and managers for the most part understand them and know how to use them effectively.

The problem with poor performance typically is not with planning, but with doing. That is, strategies often aren't implemented successfully. Making strategy work is more difficult than strategy making. Sound plans flounder or die because of a lack of execution know-how. This book focuses on execution—the processes, decisions, and actions needed to make strategy work.

What differentiates this book from others, beyond its emphasis on a critical management need? I'm excited about the present approach to execution for the six following reasons.Learning from Experience

This book is based on data. It borrows from the experiences of hundreds of managers actually involved in strategy execution. There are multiple sources of data, which ensures complete coverage of execution-related issues. This book doesn't rely on the armchair musings of a few people relating unconnected anecdotes; it is based on real-world execution experiences, problems, and solutions—including mine over the last two decades.What You Need to Lead

The focus of the book is on the knowledge, skills, and capabilities managers need to lead execution efforts. Its content is action- and results-oriented.

Most organizations recruit, train, andretain good managers; they are staffed by good people—even great people. Most managers are motivated and qualified people who want to perform well.

Even good people, however, can be hampered by poor incentives, controls, organizational structures, and company policies or operating procedures that inhibit their ability to execute and get things done. Even great leaders, in top management positions, will fail if they're not well versed in the conditions that affect execution success. Managers need to understand what makes strategy work. Intuition and personality simply aren't sufficient, given such a complex task. This book focuses on this knowledge and the capabilities and insights leaders need for execution success.The Big Picture

In this book, I develop a unifying, integrated approach to execution. I focus on the big picture, as well as the nitty-gritty of the execution process and methods. I spell out a logical approach to execution and the relationships among key execution decisions.

This book not only identifies these key factors and their relationships, but also goes into detail on each of the factors needed for execution success. It provides an important, integrated approach to execution and dissects the approach to focus on its key elements, actions, or decisions. This book then provides both an overview of the execution process and an in-depth reference manual for key aspects of this process.Effective Change Management

Leading successful execution efforts usually demands the effective management of change, and this book integrates important change-management issues into its treatment of execution.

This book discusses power, influence, and resistance to change. It focuses on real and practical change-related issues—such as whether to implement execution related changes quickly, all at once, or in a more deliberate and sequential fashion over time. I tell you why "speed kills" and explain how large, complex changes can severely hurt execution outcomes. I focus on the details of cultural change and the organizational power structure, and how they can be used to make strategy work.Applying What You Learn

This book practices what it preaches. The final chapter shows how to apply the logic, insights, and practical advice of preceding chapters to a real, huge, and pervasive problem: Making mergers and acquisitions (M&A) work.

M&A strategies often flounder or fail; my last chapter explains why this is the case and how to increase the success of M&A efforts by applying the book's approach to execution. I also highlight the utility of the book's advice and guidelines when trying to make M&A efforts successful. I feel it is only fitting and proper to end an execution book on a positive and useful note—by showing how practical execution can be in confronting an important and pervasive real-world issue and how it can save management a lot of time, effort, and money.The Bottom Line

Sixth and finally, the reasons above—taken together—distinguish this book significantly from other recent works, such as Bossidy and Charan's Execution (Crown Business, 2002). This book covers more of the important factors and decisions related to successful execution. It offers an empirically-based, integrative, complete approach to making strategy work and focuses more extensively on managing change than other publications dealing with implementation.

The bottom line is that my book greatly adds to and follows logically Bossidy and Charan's Execution. It is an important and necessary addition to the toolkit of managers looking to execute strategy and change effectively.On a Final Note

Leading execution and change to make strategy work is a difficult and formidable task. For the six reasons I have listed, I believe this task can be made more logical, manageable, and successful by the present book's approach and insights.A Few Thanks

An undertaking such as the present one is challenging and difficult because of its complexity. I alone assume responsibility for the book's content, its interpretation of data and facts, and its conclusions. Still, while the ultimate responsibility is mine, there are a number of people who helped me in my task, and I would like to recognize them for their contributions. Brian Smith of the Gartner Research Group helped immensely with the creation of the online research survey, and contributed important technical support. Cecilia Atoo of Wharton was a real stalwart as she typed the manuscript, created figures and tables, and otherwise helped meet my demands and those of the copyeditors. Many thanks are due to my editor, Tim Moore, as well as Russ Hall, Christy Hackerd, and others at Pearson Prentice Hall who helped me develop the manuscript into its present form. The anonymous reviewers who provided valuable feedback and suggestions for improving the manuscript also deserve recognition for their efforts. Finally, special thanks are due to my son, Justin, and my muse, Laura, whose encouragement, friendship, and support were constant sources of motivation to me.

© Copyright Pearson Education. All rights reserved.

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Table of Contents

Introduction.

1. Strategy Execution Is the Key.

Execution Is a Key to Success

Making Strategy Work Is More Difficult Than the Task of Strategy Making

Sound Execution Is Critical-A Focus on Making Strategy Work Pays Major Dividends

Managers Are Trained to Plan, Not Execute

Let the "Grunts" Handle Execution

Planning and Execution Are Interdependent

Execution Takes Longer Than Formulation

Execution Is a Process, Not an Action or Step

Execution Involves More People Than Strategy Formulation Does

Additional Challenges and Obstacles to Successful Execution

Wharton-Gartner Survey

Wharton Executive Education Survey

Panel Discussions

The Results: Opinions About Successful Strategy Execution

Poor Execution Outcomes

Making Sense of the Data and Going Forward

The Execution Challenge

Having a Model or Guidelines for Execution

Strategy is the Primary Driver

Managing Change

The Power Structure

Coordination and Information Sharing

Clear Responsibility and Accountability

The Right Culture

Leadership

Controls, Feedback, and Adaptation

The Next Step: Developing a Logical Approach to Execution Decisions and Actions

Summary

Endnotes

2. Overview and Model: Making Strategy Work.

Common vs. Unique Execution Solutions

A Need for Action

A Model of Strategy Execution

Corporate Strategy

Corporate Structure

Need for Integration

Executing Business Strategy

"Demands" of Business Strategy

Integrating Strategy and Short-term Operating Objectives

Incentives and Controls

Incentives

Controls

Context of Execution Decisions

The Execution Context

Managing Change

Culture

The Organizational Power Structure

The Leadership Climate

Need for a Disciplined Approach

Summary

Endnotes

3. The Path to Successful Execution: Good Strategy Comes First.

Is the Impact of Strategy Overrated?

Issue #1: The Need for Sound Planning and a Clear, Focused Strategy

Corporate-Level Planning

AT&T: Bad Corporate Strategy?

Business Strategy

Issue #2: The Importance of Integrating Corporate and Business Strategies

The Role of the Business Is Unclear

Inappropriate Performance Metrics

Battles Over Resource Allocations

Assessments of Business Performance Create Additional Problems

The Strategy Review

Issue #3: The Need to Define and Communicate the Operational Components of Strategy

Integrating Strategic and Short-Term Objectives

Need for Measurable Objectives

Issue #4: Understanding the "Demands" of Strategy and Successful Execution

Low-Cost Producer

Differentiation Strategies

Developing the Right Capabilities

The Demands of Global Strategy

A Final Point

Summary

Endnotes

4. Organizational Structure and Execution.

The Challenge of Structural Choice

General Motors

Johnson & Johnson

Citibank and ABB

The Critical Structural Issues

Structural Issue #1: Measuring Costs and Benefits of Structure

Structural Issue #2: Centralization vs. Decentralization

Structural Issue #3: The Strategy-Structure-Performance Relationship

Summary

Endnotes

5. Managing Integration: Effective Coordination and Information Sharing.

The Importance of Integration

Boeing

Royal Dutch/Shell Group

Dell Computers

Interdependence and Coordination Methods

Types of Interdependence

Coordination Processes and Methods

The GE "Work Out"

Facilitating Information Sharing, Knowledge Transfer, and Communication

Creating, Using, and Sharing Knowledge

Methods, Tools, or Processes for Information Sharing

Informal Forces and Information Sharing

Additional Informal Factors Affecting Information Flow and Knowledge Transfer

Clarifying Responsibility and Accountability

Responsibility Plotting and Role Negotiation

Summary

Endnotes

6. Incentives and Controls: Supporting and Reinforcing Execution.

Role of Incentives and Controls

Incentives and Execution

A Basic Rule: Don't Demotivate People

Good Incentives

Reward the Right Things

Controls: Feedback, Learning, and Adaptation

The Control Process

Develop and Use Good Objectives

Reward the Doers, the Performers

Face the Brutal Facts Honestly

Reward Cooperation

Clarify Responsibility and Accountability

Controls Require Timely and Valid Information

Leadership, Controls, and Execution

The Strategy Review: Integrating Planning, Execution, and Control

Step 1: Strategy Formulation

Step 2: The Execution Plan

Step 3: Initiating the Control Process

Step 4: Cause-Effect Analysis and Organizational Learning

Step 5: Feedback and Change

Step 6: Follow Up and Continue the Process

Summary

Endnotes

7. Managing Change.

Managing Change: A Continuing Challenge

Steps in Managing Change

A Model of Change and Execution

Components of the Model

Relating Change to Execution Problems

Sequential Change

Complex Change

Other Factors Affecting Change

Summary

Endnotes

8. Managing Culture and Culture Change.

What Is Culture?

Culture is Important for Execution

Culture is Not Homogeneous

Culture Affects Performance

Organizational Performance Affects Culture

A Model of Culture and Cultural Change

The Top Line: The Effects of Culture

The Bottom Line: Changing Culture

Summary

Rule 1: The Reasons for Change Must Be Clear, Compelling, and Agreed Upon By Key Players

Rule 2: Focus on Changing Behavior-Not Directly on Changing Culture

Rule 3: Effective Communication is Vital to Culture Change

Rule 4: Adequate Effort Must Be Expanded to Reduce Resistance to Change

Rule 5: Beware of Excessive Speed

Endnotes

9. Power, Influence, and Execution.

A View of Power and Influence

Strategy and Environment

Problems or Dependencies

Organizational Structure

Uneven Resource Allocations

Internal Dependencies and Power

Using Power and Influence

Coming Full Circle: Conclusions About Power

Power and Execution

Define Power Bases and Relationships

Form Coalitions or Develop Joint Ventures with Those in Power

Focus on Value-Added, Measurable Results

A Final Note on Power: The Downside

Summary

Endnotes

10. Summary and Application: Making Mergers and Acquisitions Work.

Making Merger and Acquisition Strategies Work

Why Focus on Mergers and Acquisitions?

Why Do So Many Mergers and Acquisitions Fail or Founder?

Using the Present Model and Approach to Execution

Corporate Strategy

Corporate Structure

Cultural Integration in M&A

Business Strategy and Short-Term Objectives

Business Structure/Integration

Incentives and Controls

Managing Change

Managing Culture and Culture Change

The Critical Role of Leadership

Summary

Endnotes

Appendix.

Index.

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Preface

INTRODUCTION

This book focuses on a critical management issue: Making strategy work or executing strategy effectively.

Theories and advice about the requisites of good planning and strategy formulation abound in management literature. A vast array of planning models and techniques has been paraded before managers over the years, and managers for the most part understand them and know how to use them effectively.

The problem with poor performance typically is not with planning, but with doing. That is, strategies often aren't implemented successfully. Making strategy work is more difficult than strategy making. Sound plans flounder or die because of a lack of execution know-how. This book focuses on execution—the processes, decisions, and actions needed to make strategy work.

What differentiates this book from others, beyond its emphasis on a critical management need? I'm excited about the present approach to execution for the six following reasons.

Learning from Experience

This book is based on data. It borrows from the experiences of hundreds of managers actually involved in strategy execution. There are multiple sources of data, which ensures complete coverage of execution-related issues. This book doesn't rely on the armchair musings of a few people relating unconnected anecdotes; it is based on real-world execution experiences, problems, and solutions—including mine over the last two decades.

What You Need to Lead

The focus of the book is on the knowledge, skills, and capabilities managers need to lead execution efforts. Its content is action- and results-oriented.

Most organizations recruit, train, and retain good managers; they are staffed by good people—even great people. Most managers are motivated and qualified people who want to perform well.

Even good people, however, can be hampered by poor incentives, controls, organizational structures, and company policies or operating procedures that inhibit their ability to execute and get things done. Even great leaders, in top management positions, will fail if they're not well versed in the conditions that affect execution success. Managers need to understand what makes strategy work. Intuition and personality simply aren't sufficient, given such a complex task. This book focuses on this knowledge and the capabilities and insights leaders need for execution success.

The Big Picture

In this book, I develop a unifying, integrated approach to execution. I focus on the big picture, as well as the nitty-gritty of the execution process and methods. I spell out a logical approach to execution and the relationships among key execution decisions.

This book not only identifies these key factors and their relationships, but also goes into detail on each of the factors needed for execution success. It provides an important, integrated approach to execution and dissects the approach to focus on its key elements, actions, or decisions. This book then provides both an overview of the execution process and an in-depth reference manual for key aspects of this process.

Effective Change Management

Leading successful execution efforts usually demands the effective management of change, and this book integrates important change-management issues into its treatment of execution.

This book discusses power, influence, and resistance to change. It focuses on real and practical change-related issues—such as whether to implement execution related changes quickly, all at once, or in a more deliberate and sequential fashion over time. I tell you why "speed kills" and explain how large, complex changes can severely hurt execution outcomes. I focus on the details of cultural change and the organizational power structure, and how they can be used to make strategy work.

Applying What You Learn

This book practices what it preaches. The final chapter shows how to apply the logic, insights, and practical advice of preceding chapters to a real, huge, and pervasive problem: Making mergers and acquisitions (M&A) work.

M&A strategies often flounder or fail; my last chapter explains why this is the case and how to increase the success of M&A efforts by applying the book's approach to execution. I also highlight the utility of the book's advice and guidelines when trying to make M&A efforts successful. I feel it is only fitting and proper to end an execution book on a positive and useful note—by showing how practical execution can be in confronting an important and pervasive real-world issue and how it can save management a lot of time, effort, and money.

The Bottom Line

Sixth and finally, the reasons above—taken together—distinguish this book significantly from other recent works, such as Bossidy and Charan's Execution (Crown Business, 2002). This book covers more of the important factors and decisions related to successful execution. It offers an empirically-based, integrative, complete approach to making strategy work and focuses more extensively on managing change than other publications dealing with implementation.

The bottom line is that my book greatly adds to and follows logically Bossidy and Charan's Execution. It is an important and necessary addition to the toolkit of managers looking to execute strategy and change effectively.

On a Final Note

Leading execution and change to make strategy work is a difficult and formidable task. For the six reasons I have listed, I believe this task can be made more logical, manageable, and successful by the present book's approach and insights.

A Few Thanks

An undertaking such as the present one is challenging and difficult because of its complexity. I alone assume responsibility for the book's content, its interpretation of data and facts, and its conclusions. Still, while the ultimate responsibility is mine, there are a number of people who helped me in my task, and I would like to recognize them for their contributions. Brian Smith of the Gartner Research Group helped immensely with the creation of the online research survey, and contributed important technical support. Cecilia Atoo of Wharton was a real stalwart as she typed the manuscript, created figures and tables, and otherwise helped meet my demands and those of the copyeditors. Many thanks are due to my editor, Tim Moore, as well as Russ Hall, Christy Hackerd, and others at Pearson Prentice Hall who helped me develop the manuscript into its present form. The anonymous reviewers who provided valuable feedback and suggestions for improving the manuscript also deserve recognition for their efforts. Finally, special thanks are due to my son, Justin, and my muse, Laura, whose encouragement, friendship, and support were constant sources of motivation to me.

© Copyright Pearson Education. All rights reserved.

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  • Anonymous

    Posted November 23, 2005

    A bridge over the execution gap

    Lawrence G. Hrebiniak has crafted a valuable addition to the library of books on how to implement strategic shifts - a much-needed contribution considering companies¿ usual abysmal track records when they try to make fundamental changes. He confirms that great execution cannot save a poorly conceived strategy, and he finds that most managers believe that failure to manage change is the primary reason strategic initiatives fail. The author suggests that the first step toward great execution is to take time at the beginning of an initiative to make managers more aware of the pitfalls ahead. In today¿s environment, execution is increasingly difficult: merger and acquisition deals involve strategic integration of companies that may be culturally incompatible, and globalism raises the challenge of implementing strategic change across multiple borders. Clearly, if your company can¿t execute, there¿s no point in devising grand or elegant strategies. We highly recommend this bridge over the execution gap.

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