Chapter 10

Capabilities-motivated acquisitions are essential when:

1. A market opportunity can slip by faster than a needed capability can be created internally. 2. Industry conditions, technology, or competitors are moving at such a rapid clip that time is of the essence. 3. Form collaborative partnerships with suppliers and other companies having the expertise or capabilities that the company lacks internally.

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 organizational 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 the internal cross-unit coordination and collaboration to build and strengthen internal competencies/capabilities. 5. Providing for the necessary collaboration and coordination with external partners and strategic allies.

Building competencies and competitive capabilities internally 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 individuals' efforts and work products 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. 3. Continuing to polish and refine the organizations know-how and otherwise sharpen performance so 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.

Executing strategy is an action-oriented, make-things-happen task that tests a manager's ability to:

1. Direct organizational change 2. Achieve continuous improvement in operations and business processes 3. Create and nurture a strategy-supportive culture 4. Consistently meet or beat performance targets

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. Acquiring, developing, and strengthening the resources, competencies, and capabilities important to good strategy execution. (accumulating the necessary resources, building competitively strong proficiencies in performing strategy-critical value chain activities, and updating the company's resources and capabilities to match changing market conditions and customer expectations.) 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)

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

1. Staffing the organization and developing the resources, competencies, capabilities, and organizational structure to execute strategy successfully. 2. Steering the needed resources to execution-critical value chain activities. 3. Ensuring that policies and procedures 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. Using rewards and incentives to promote good strategy execution and the achievement of strategic and financial targets. 7. Instilling a corporate culture that promotes good strategy execution. 8. Exercising strong leadership to improve execution, make needed corrective adjustments, and move toward companywide operating excellance as rapidly as feasible.

Making provisions for coordination of internal organizational units is an important part of organizing the work effort because:

Close cross-unit collaboration is usually needed to build core competencies and competitive capabilities--examples include such strategically important activities as speeding new products to market and providing superior customer service that involve the efforts of company personnel in different departments and organizational units.

Delegating greater authority to subordinate managers and employees.

Creates a more horizontal organization structure with fewer management layers and usually acts to shorten organizational response times.

When rivals can readily duplicate the successful features of a company's strategy (making it difficult or impossible to outstrategize rivals and beat them in the marketplace with a superior strategy), the only dependable path to sustainable competitive advantage over its rivals is to:

Develop a superior capability to execute strategy by building a competitively valuable collection of resource competencies, and capabilities that enables the company to: 1. Perform certain important value chain activities at lower cost than rivals or 2. Perform value chain activities with greater effectiveness than rivals such that the company gains the ability to deliver a better differentiated product and/or greater value to customers.

Making those organizational units performing strategy-critical value chain activities the main building blocks in the enterprise's organizational scheme:

Has the advantages of giving these organizational units the resources, decision-making influence, and organizational visibility they need to execute their piece of the strategy capably.

The task of developing and strengthening a company's competencies and competitive capabilities:

Is sometimes best accomplished via acquisition or merger with a company having the desired competencies and capabilities or by forming collaborative partnerships with suppliers or other companies having the expertise or capabilities the company lacks internally.

Outsourcing the performance of certain value chain activities can lead to such strategy-executing advantages as:

Less internal bureaucracy, speedier decision-making, lower costs, heightened strategic focus, and a better arsenal of competencies and capabilities.

Which of the following statements about creating dynamic and competitively valuable competencies and capabilities is false?

Most companies keep their portfolio of competencies and capabilities fresh and dynamic by either acquiring another company with recently remodeled resource capabilities or by entering into collaborative partnerships with suppliers that are highly regarded for their innovativeness and cutting-edge know-how.

Which of the following is not a shortcoming or disadvantage of a decentralized organizational structure?

Raises employee anxiety levels, thus discouraging many company personnel from being deeply involved in the business and lowering their motivation levels.

The advantages of a centralized organization structure include:

Reduced potential for conflicting actions and decisions on the part of lower-level managers, facilitation of strong top management leadership in crisis situations, and tight control by the manager in charge--it is easy to know who is accountable when things do not go well.

Organizing a company's work effort in ways that promote successful strategy execution does not include which one of the following?

Revamping and streamlining the performance of value chain activities in ways that lower operating costs.

Which one of the following is not among the principal managerial components of the strategy execution process?

Revamping the value chain in a manner that maximizes operating efficiency.

Building an organization capable of good strategy execution entails:

Structuring the organization and work effort, staffing the organization, and acquiring, developing, and strengthening the resources, competencies, and capabilities important to good strategy execution.

Which of the following is generally not among the practices that companies use to staff jobs with the best people they can find?

Weeding out the 15% lowest performing employees each year and replacing them with more talented and motivated job applicants.

Which one of the following statements falsely characterizes the managerial task of executing strategy?

What really makes executing strategy a tough, time-consuming management challenge is the long, drawn out process of trial-and-error experimentation required to identify and implement effective approaches to strategy execution.

The two best signs of good strategy execution are:

Whether a company is meeting or beating its performance targets and the proficiency with which it is able to perform strategy-critical value chain activities.

The two best signs of good strategy execution are:

Whether the company has attained real proficiency in performing strategy-critical value chain activities and is meeting or beating its performance targets.