Restructuring and re-engineering (SMUnit 4 of 1-4)

Compare and contrast restructuring and reengineering and explain why it is important for strategic management. Your response should be at least 200 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

Learning Objectives
Upon completion of this unit, students should be able to:
1. Assess the strategic management process.
2. Analyze the steps used to implement strategies in the functional
management systems of a firm.
Written Lecture
Implementation From Top to Bottom
All chosen strategies, regardless of the resulting positioning of the company,
tend to be conceptual in nature and associated with a mission and vision that
may be only understood at a high level. Although it is a good thing for a
company to have a focus and a general direction, the top-level strategy is
usually not sufficient for rank and file employees in terms of providing direction
for their day-to-day work. For this reason, effective execution of strategy involves
the breaking down of the top-level strategy into tangible work. For a large
company this can be rather daunting. For example, imagine that you are a CEO
of a company that employs thousands of people. Since a company is only
profitable when it is doing work that advances its strategy, each employee must
be advancing the strategy of the company every hour of every day by doing only
those things which contribute to products and services that customers value and
are willing to pay for. How is this done? The process starts with critical success
factors.
What Are Critical Success Factors?
Critical success factors spell out important strategic elements that must be in
place in order for a company to achieve its strategy. For example, if the
company intends to compete using a high-end product line, then a critical
success factor may be marketing a line of full-featured product line within the
next 18 months. If marketing such a product line is critical for the success and
profitability of the company, then it is correct to identify this as a critical success
factor. Although this does break down a top-level strategy into a greater level of
detail, it is still not sufficiently elaborated for an organization to take action. It is
for this reason that objectives are so important. A critical success factor such as
marketing a full-featured product line may involve a number of more detailed
objectives such as creating an initial product design concept, or developing a
business plan, or finally, increasing the research and development team by 10%.
Are these objectives significantly detailed to allow for action? You could argue
that yet more detail is needed, and it is for this reason that underneath the level
of objectives is more specific direction in the form of critical business activities.
These are actions that a company must take in order to achieve its objectives.
As an example, if increasing the research and development team by 10% is an
objective, then a critical business activity associated with this objective would be
to place a series of recruiting ads in the top three target markets.
Reading
Assignment
Chapter 7:
Implementing strategies:
Management and
Operations Issues
Supplemental
Reading
Click here to access a
PDF of the Chapter 7
Presentation.
Key Terms
1. Annual objectives
2. Benchmarking
3. Bonus system
4. Decentralized
structure
5. Defusion
6. Delayering
7. Divisional structure
8. Downsizing
9. Horizontal consistency
of objectives
10. Matrix structure
11. Vertical consistency of
objectives
BBA 4951, Business Policy and Strategy  2
Strategy As a Series of Projects
Ultimately, all strategies may be broken down to the point that individuals can
actually do something that contributes to the company strategy. It is at this
lowest level that project management practices support the management of the
implementation of strategic initiatives. Project management processes spell out
how to take very large pieces of work, and break them down into units that one
person, or a small team of people, can complete within a timeframe of about two
weeks. The detailed decomposition of the top level work is referred to as the
Work Breakdown Structure. The smallest actionable unit of work is referred to as
the work package. As you can see, a CEO is able to guide a company in the
pursuit of its strategy by successively breaking down a top level strategy into
critical success factors, objectives, critical business activities, and finally work
packages that employees can actually complete. It is, in effect, a hierarchy of
strategic implementation.
Policies
Strategic objectives outline what the company has to in order to achieve
strategic success. However, such objectives don’t explicitly state how things
should be done, or the basic approach the company will take in its execution of
objectives. Polices provide guidance in this area and this is typically how
companies use policies. Some companies, especially traditional manufacturing
companies, use an annual policy system as a means for carrying out strategy.
The policy for the year becomes the strategic activities of focus, to the exclusion
of others. Some companies use the annual policy process as a means for rolling
out not only strategy, but the annual business plan of the company.
Conflict
It is one thing to formulate a strategy, and have a framework for its execution. It
is quite another to get all employees to support the stated strategy. Employees
who have been with a company for many years, for example, may seek to work
against a strategy that breaks with the past in order to try something new.
Likewise, new employees may see the company as “living in the past” and may
push for a new approach.
These are but two simple examples of a myriad of possible reasons for conflict
to exist in the development and execution of strategy. Regardless of the source
of the conflict, it is essential to recognize that conflict will always exist among
any who have an interest in the strategic direction of the company. This means
that it is not only employees that may have conflict—customers, investors, and
even competitors, or any stakeholders (ie those who have an interest in the
company) may have a role to play. This infers that the CEO must think about
conflict in the context of strategy, and consider how to deal with it.
Rewards and Culture
When the stakeholders of the company are progressing toward the strategic
goals, the company is said to be in a state of strategic alignment. This is not
easy to achieve, but rewards and culture go a long way toward aligning the
efforts of employees. Rewards incentivize work that progresses toward strategic
goals, and are not available to those who work against the company strategy.
Further, having an environment conducive to strategic success is really what
successful culture is all about. Motivated and incentivized stakeholders can be
contagious, and as a result, success has a way of spreading through the
company—leaving strategic alignment in its wake!