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Strategy Implementation

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Strategic Implementation

Strategic Alternative
Status quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring

Each with its own focus


Internal or external Product Market Control Risk etc...

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Status Quo

Strategic Alternative Status Quo


Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring

Focus
Internal Stability Continue in present products/markets

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Concentration

Strategic Alternative
Status Quo

Focus
Internal Single product line Do one thing well

Concentration
Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Horizontal Integration

Strategic Alternative
Status Quo Concentration

Focus
External Ownership of control of competitors Gain market power and economies of scale

Horizontal Integration
Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Vertical Integration

Strategic Alternative
Status Quo Concentration Horizontal Integration

Focus
External Transform cost centres to profit centres Improve economies of scale, reduce dependence on suppliers or distributors

Vertical Integration
Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Diversification

Strategic Alternative
Status Quo Concentration Horizontal Integration Vertical Integration Joint Venture Retrenchment Divestiture or Liquidation Innovation Restructuring

Focus
External or Internal Broadening of product line Reduce competitive pressure; gain greater profitability; spread risk

Diversification

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Joint Venture

Strategic Alternative
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Retrenchment Divestiture or Liquidation Innovation Restructuring

Focus
External Complementary benefits Spread risk; create synergy

Joint Venture

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Retrenchment

Strategic Alternative
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture

Focus
Internal Reduction of activity or operations Respond to adversity by permanent phase-out

Retrenchment
Divestiture or Liquidation Innovation Restructuring

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Divestiture or Liquidation

Strategic Alternative
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment

Focus
Internal Removal of entity that does not fit Realign products/markets or organization

Divestiture or Liquidation
Innovation Restructuring

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Innovation

Strategic Alternative
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation

Focus
Internal Seizing of leadership position Take initiative; gain position early in product life cycle

Innovation
Restructuring

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Restructuring

Strategic Alternative
Status Quo Concentration Horizontal Integration Vertical Integration Diversification Joint Venture Retrenchment Divestiture or Liquidation Innovation

Focus
internal Cost reduction, growth potential Concentrate on products and divisions with high potential

Restructuring

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Strategy Implementation Variables


Key Tasks
Staffing and Leadership Style
Recruiting, selection Transfer, promotion Training and development Leadership

Structure
Division of labor Shape Distribution of power

Reward Systems
Compensation Promotion Job design Special awards Performance measures

IM and Decision Making Process


Planning and control Resource allocation systems Integrating roles and departments Information systems

Effectiveness
Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Efficiency
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Strategy Implementation
Strategy Implementation Variables Information/Decision Making Follows Strategy Staffing Follows Strategy Incentives Follows Strategy Culture/Leadership Follows Strategy Structure Follows Strategy Project Profiles Along the Lifecycle

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Implementation Design Guide


Staffing Structure Decision Supports

Incentives

Effectiveness staffing, incentives Efficiency structure, decision supports Integrators staffing, decision supports Differentiators structure, incentives Ex: Corporate culture + Integrators reinforce culture Differentiators dilute culture Downstream company effectiveness/consumer markets Upstream company efficiency/costs/contract sales

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Connections

External Contingencies
Strategic Performance Technology Environment Firm Size Centre of Gravity

Strategy
Product Based Niche Based Market Based

Market Structure
Market Share Market Strength Market Growth Market Margins

Structure
Functional M-Form (SBU, Core) Holding Matrix (weak, strong, balanced)
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Performance
ROA, ROCE ROI ROE EPS Growth

Strategic Controls
High Industry Growth Rate

(Cash use)

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? ?
$

Low Low Relative Market Share


(Cash Generation)
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High

Culture/Leadership Follows Strategy


Organizational Life Cycle Transformational (revolutionary)
Leadership Style

Directive
Leadership Style

Logical
Leadership Style

Organizational Culture

Production
Organizational Culture

Supportive
Leadership Style

Inspirational
Organizational Culture

Organizational Culture

Quality

Supportive

Transactional (evolutionary)
Focus Niche Cost Focus Cost Leadership

Creative
Product Differentiation

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Decision Style Model

Low Structure

Analytic (Achievement) Dell

Conceptual (Recognition) Stentor

High Structure

Directive (Power) Gp Schneider

Behavioral (Affiliation) Giant Tiger

Task

People

VALUES ORIENTATION
Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-19

Leadership Styles
Efficiency Logical
Production/people based (IBM system integration) Theory J

Effectiveness Inspirational
Creativity based (IBM software)

Theory E

Directive
Production/asset based (IBM chip manufacturing) Theory J,Z

Supportive
Team/knowledge based (IBM outsourcing)

Theory J,Z

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Types of Change

Theory X - Control Theory Y - Incentives Theory Z - Paternalistic

Change hygiene factors


Executive style Corporate Culture Individual values Organizational commitment

(Japanese) hierarchy, rigidity Theory J - X + Y Theory E - Opportunistic

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Organizational Cultures
Quality
Planning/ Problem Solving Accepts change

Creative
Risk Taking Innovative Initiates change

Production
Productivity/Procedures

Supportive
Teamwork

Resists change

Responds to change

Technical Social Organizational Culture Efficiency = differentiation


Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Effectiveness = integration
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Importance of Cultural Fit to Strategic Change

10

Constrained
Reconsider cultural change

Supportive
Incorporate culture explicitly in pursuing strategy

Importance of Elements in Culture

Inconsistent
Consider factors other than culture 0 0

Related
Minimal attention required to cultural elements 10

Compatibility of Elements with Proposed Strategy


Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-23

Staffing Follows Strategy


Organizational Life Cycle
Functional differentiation Risk containment Functional Proactive but grouping reactive capability Risk reduction Some planning Change Results/process questioning Discipline by tradeoffs Change accepting routines Team discipline Specialists Risk avoiders Anticipative Process motivated Predictable Change resistant Disciplined

Generalists Risk takers Reactive Improvisers Results motivated Change promoting Undisciplined Product Differentiation

Focus

Niche

Cost Focus

Cost Leadership

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Information/Decision Making Follows Strategy


Organizational Life Cycle
Planning and guessing Experience anchored Formal systems and executive by function More internal Organized Regular silos emerging Proactive Deductive Structured process System based Internal focus Deliberate Continuous Compartmentalized

Reactive Inductive Informal External focus Spontaneous Sporadic Widely shared Product Differentiation

Some planning Experience based Formulize by functions More organized Regular sharing by skills and functions Focus Niche

Cost Focus

Cost Leadership

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Impact of Information Needs on Structure


Factors increasing information flows in organizations
More team based decisions Decentralized decision making Smaller span of control Emphasis on quality/innovation/customer Higher level skills Weakening of culture/structure/performance Unstable market dynamics Geographical dispersion complexity of performance Standards and measurement

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Incentives Follows Strategy


Organizational Life Cycle
Short term (quarterly) Process oriented Individual based Differentiated (by functions ) Objective (Formulize based) Risk Avoiding Formalized

Long term Output oriented Team based Uniform Subjective Risk promoting Informal Product Differentiation

Shorter term (yearly) Quality/reliabili Medium term ty based Output/production More individual oriented and some team Team and Differentiation individual by functions and levels Segregated by function Risk tolerance Objective with Formalized with subjective elements some informal More risk averse aspects Mostly informal with formal components Niche Cost Focus

Focus

Cost Leadership

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Incentives

Why bonus pay?


Variable cost base Responds to extra performance Links to corporate goals Flexibility in design and implementation

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Incentives

Basic requirements (SMART)


Specific
Line of sight / match

Meaningful
Reality / perception (ROI)

Achievable
Levels of expectation / control

Reliable
Easy to determine

Timely
Pay-off proximity

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Incentives

Organizational hygiene factors


Organizational stability
Competitive stability

Consistent measurements
Absolute / relative results

Positive culture
Leadership / champion / change agents

Employee buy-in
Track record (premise / promise)

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Incentives

Measurement Challenges
Objective / subjective component Outcome / process orientation Time span Performance level specificity Performance variation sensitivity
(0/1 schemes vs. continuity)

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Design Criteria for Good Incentive Measures

Linkage between individual performance and corporate goals Maximize payoff/payout ratio Accuracy of measurement
Verifiable and objective methods to determine results

Proximity of payoff to accomplishment Maximum control by employee of factors producing expected achievements Buy-in by employees
Preset, stable, simple, fair and challenging standards or performance and meaningful incentives

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Key Aspects of Incentive Compensation


Policy Financial Performance Issues Instruments Measures Degree of Size and Discretion in Frequency Allocating Of Awards Bonus Awards
Non-discretionary, formula based bonuses tend to encourage a shortrun point of view Frequent bonus awards encourage concentration on short-term performance

Short run Mix of current vs. long bonus awards run and stock options should reflect the relevant time horizon for policy level execs Deferred instruments are weak reinforcers of short-term performance

Mix of quantitative measures of performance and more qualitative measures should reflect the relevant time horizon for execs. Qualitative measures usually reflect long run considerations more effectively than quantitative measures.

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Key Aspects of Incentive Compensation


Performance Policy Financial Issues Instruments Measures Size and Degree of Discretion in Frequency Of Awards Allocating Bonus Awards
Completely discretionary, highly personalized bonuses do not clarify the rules of the game and as a result can discourage risktaking behaviour. The size of both salary and incentive awards should be commensurate with the business and personal risks involved.

Risk Aversion vs. risk taking

Current bonus awards, in cash or stock, can reinforce risktaking behaviour

Qualitative measures of performance can reinforce initiative by assuring execs that total performance will be evaluated for purposes of bonus awards.

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Key Aspects of Incentive Compensation


Policy Issues Financial Performance Degree of Instr.s Measures Discretion in Allocating Bonus Awards
Bonus pools can be based on divisional performance, total corporate performance or some mix of the two. Each arrangement sends different signals in terms of interdivisional cooperation Non- discretionary, formula based bonuses for division managers are most practical in companies where little cooperation among divisions is required. Discretionary bonuses are practical when top management wants to encourage cooperation among divisions.
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Size and Frequency Of Awards

Interdivisional relationships

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Key Aspects of Incentive Compensation


Policy Issues Financial Performance Degree of Instr.s Measures Discretion in Allocating Bonus Awards
Use of objective measures of performance for division managers is more meaningful where the primary role of headquarters is to allocate capital than it is in instances where the head office plays an important role in managing the business of the divisions. Non- discretionary, formula based bonuses for division managers are most practical in companies where headquarters does not interfere in management of the profit centers. Discretionary bonuses are most useful when top management wants to exert a direct influence in the divisions.
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Size and Frequency Of Awards

CompanyStock options division can relationships effectively link the interests of division personnel to the interests of the corporation

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Structure Follows Strategy


Organizational Life Cycle
Lack of Market Research (Adapt) Lack of Market Flexibility (Control) Lack of market Fit (Align) Lack of Market Match (Invent)

SBU Matrix

Divisional Structure Functional Structure

Entreprene ur
Product Differentiation Focus Niche Cost Focus Cost Leadership

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Structure - follows Strategy

Example
GVA horizontal Functional Strategy GVA Vertical Divisional Strategy

Whenever market rejuvenates


Delayer structure

Structure
Effectiveness shallow structure Productivity deep structure

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Entrepreneurial Structure

Entrepreneurial Firm President

Employees

Context: Environment: Highly uncertain/Unstable Technology: Simple/Routine Size: Small

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Entrepreneurial Structure

Internal Systems
Market capture/Product introduction Informal contacts Lack of consistency/reliability of information flow

Strengths
Pursuits, maximum flexibility and innovation Rapid response to start-up situation Pursuits initiative & informality

Weaknesses
Critical dependence on CEO Employer flexibility is a must Non-specialization leads to inefficiencies Avoidance of responsibility by individuals Manageable to adjust high growth

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Functional/Bureaucratic Structure

CEO

Marketing

Finance

HR

Engineering

Operations

Context: Lower uncertainty, more stability Technology: Routine, low interdependence Size: Small to medium Goals: Internal efficiency, technical quality, sales growth

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Functional/Bureaucratic Structure
Internal Systems
Internal efficiency, technical quality Cost basis planing & budgeting

Strengths
Economies of scale Skill development Best in small to medium companies Best for one or few products Slow response time Hierarchy overload Low innovation Restricted view of goals

Weaknesses

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Divisional Structure
Divisional/Product Firm CEO

Corporate Staff

Manager Division A

Manager Division B

Manager Division C

Context: Technology: Non-routine, high interdependence Size: Large Goals: External effectiveness, adaptation, client satisfaction
Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-43

Product/Multi-Divisional Structure
Internal System Goals: Effectiveness, client satisfaction Profit-based planning Product managers formal authority Strengths Fast change in unstable environment High client satisfaction high functional coordination decentralized decision making Weaknesses Poor economies of scale Poor coordination across product lines Eliminates tech specialization

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Matrix Structure
General Manager

Head of Programs

Head of Marketing

Head of R&D

Head of Professional Services

Head of Corporate Services

Director Program 1

Marketing Specialist

R&D Specialist

Professional Specialist

Specialist (e.g. Finance)

Director Program 2

Marketing Specialist

R&D Specialist

Professional Specialist

Specialist (e.g. Finance)

Director Program 3

Marketing Specialist

R&D Specialist

Professional Specialist

Specialist (e.g. Finance)

Environment: high uncertainty, high stability, changing, constant demands Technology: innovative, many interdependencies Size: moderate to large Goal: external effectiveness, innovation, tech specialization, adaptive capacity Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-45

Matrix Structure
Internal System Dual goals: product & technical Plan & budget by product & function Joint authority: functional/product Strengths Flex sharing HR Suitable for unstable environment Best in medium-sized company with many products Weaknesses Two bosses requires good interpersonal skills Frequent coordination meetings Must be a collegial culture
Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-46

Symptoms of Structural Deficiency


A. Decision making is delayed or lacking in quality -decision makers may be overloaded -delegation to lower levels may be insufficient B. The organization does not respond innovatively to a changing environment. -lack of horizontal coordination -department responsibilities including environment scanning and innovation must be specified. C. Too much conflict is evident -conflicting departmental goals -horizontal linkages mechanisms are not adequate
Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-47

Structures
Design Principles
- formal reporting relationships - groupings of individuals into departments - systems regulating communications coordination and integration

Vertical Structures (efficiency)


- linkage mechanisms - chain of command - rules and procedures - plans and schedules - vertical information flow and filters - systems based

Horizontal Structures (effectiveness)


- linkage mechanisms - teams and task forces - integrating departments - direct contact - organizational goal setting
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Integrating Mechanisms
Hierarchy Rules Goal Setting (Planning) Direct Contact Interdepartmental Liaison Rules Temporary Task Forces Permanent Teams Integrating Roles Integrating Departments
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Integrating Mechanisms
Centre Diversity (tasks) of gravity Info. incentives staffing Hierarchy Rules Goal Setting (Budgeting/Planning) Direct Contact Interdepartmental Liaison Temporary Task Force Permanent Teams Integrating Roles Integrating Departments O O O High Low Cost of maintenance Low Degree of centralization High Org/Env. stability High

Y Y

Y Low behaviour control/passive X organization control/passive Y contingency based O prescription based High Low

High

Low

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Business Profiles
Product Structural rigidity Info. Flow Use of incentives as control high low Service low high Service/Product medium medium

low

high high

medium medium

Staffing skills span (variety) low

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Centres of Gravity
Supply Stages or Vertical Integration in Manufacturing

Supply Flow

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Centres of Gravity
Paper Companies - Different Centres of Gravity
Weyerhauser

International Paper

Container Corporation

Appleton

Proctor & Gamble

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Centres of Gravity
Upstream
Commodity Standardize Maximize End Users Low-cost Producers Sales Push Line-driven Org. Process Innovation Capital Budget Capital Intensive Technological Culture Supply & Manuf. & Engineering

Downstream
Proprietary Customize Target End Users High margins Marketing Pull Line/Staff Product Innovation R&D/Advertising Budget People Intensive Marketing Culture Product Development & Marketing

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Business Stages
Stage
Stage 1 Entrepreneurial Single Business (Market Introduction)

Business Dynamics
Entrepreneurial management style Small size, informal and vague structure Emphasis on creating initial product and marketing

Transitional Crisis
Entrepreneurial skills not appropriate to manage demands of growth Founder may be unwilling to acknowledge that he can no longer the company on his own Effective transition to Stage 2 requires introduction of professional manager

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Business Stages
Stage Business Dynamics Transitional Crisis
Decision to diversify into a multi-business operations represents a major shift in strategy requiring new management behaviour Stage 2 Centralized analytical Professional decision making and Single Business directive leadership (Growth Stage) Formalized, functional organization structure Emphasis on increased efficiency in operations Stage 3 Professional Multi Business (Maturity) Decentralized analytical decision making Divisional or strategic business unit (SBU) structure Emphasis on portfolio management, especially where businesses are unrelated
Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-56

Strategy Organization Fit

Strategy Rewards

Dominant Business

Unrelated Diversified

Related Diversified Bonus based on divisional and corporate profit performance Mix of objective and subjective performance measures

Performance against Formula-based bonus functional objectives on ROI or profitability of divisions Mix of objective and subjective Equity rewards performance Strict objective, measures impersonal evaluation

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Strategy Organization Fit

Strategy People and careers

Dominant Business

Unrelated Diversified

Related Diversified Broad requirements for general managers and integrators Career developments cross-functional, interdivisional, and corporate-divisional

Primarily functional Aggressive, specialists independent general managers of divisions Some interfunctional movement Career development to develop some opportunities are general managers primarily intradivisional

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Strategy Organization Fit

Strategy

Dominant Business Unrelated Diversified No integration across businesses Coordination and information flows between corporate and division levels around management information systems and budgets

Related Diversified Coordinate and integrate across businesses and between levels with planning, integrating roles, integrating departments

Information Coordination and and decision integration through process structure, rules, planning and budgeting Use of integrating roles for project activity across functions

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Strategy Organization Fit


Strategy Dominant Business Unrelated Diversified Related Diversified Centralized Structure functional and decisionTop control of making style strategic decisions Delegation of operations through plans and procedures Highly decentralized Multidivisional/ product divisions/profit profit centres centres Grouping of highly Small corporate office related business with some centralized No centralized line functions within functions groups Almost complete Delegated delegation of responsibility for operations and strategy operations within existing businesses Shared responsibility for strategy Control through results, selection of management, and capital allocation
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Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Strategy Organization Fit

Strategy

Dominant Business Unrelated Diversified Growth through acquisition Degree of diversity Types of business Resource allocation across discrete businesses

Related Diversified Growth through internal development, some acquisition Realization of synergy from related products, technologies, markets Resource allocation

Vertically Strategic Focus/ Task integrated Focus Degree of integration Market share Product line breadth

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Project Profiles
Supports strategy Supports strategy /implementation Supports implementation

Low success rate (1-10%) Product focus

Higher success rate (>50%) Delivery focus: suppliers/channels

Medium success rate (10-30%) Alliances focus: M&A, joint ventures Inter-company based

Portfolio based (R&D motivated) Short duration (3-12 months) High immediate payoff People centred

Functional based (marketing, logistics,etc) Longer duration (6-18 months) Payoff spread out in time People/asset centred

Longer duration (2-3 years) Payoff only end of project Asset centred (people problems) Focus both on company and target

Company based

Focus outside company

Outside funded (venture capital)

Internally funded

Internally/ investor funded

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Lifecycle Summary
External forces External/ Internal forces External/ Internal forces Leveling Shake out Decline Take off Intro Specific Strategy Concentration Diversify Status Quo Innovation (product) Focus No structure culture max Focus/niche Defensive Functional culture Matrix culture Divest Liquidate Restructure Innovation (process) Horizontal Vertical Expansion Joint venture Cost Divisional M-Div culture Leadership Divisional Functional Retrench Status Quo External forces Maturity Internal forces

Generic Strategy Structures

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Lifecycle Summary
Intro Market Structure Mkt share min Mkt strength max Mkt growth margins max Take Off share strength growth margins Product Leveling share strength growth margins Product /process Maturity share strength growth margins Process Decline share strength growth margins Process

Tech Focus Product Incentive Emphasis

Incentive Features

Sales/ Sales/ marketing product design product design product design manufacturing process innov. manufacturing finance Discretionary Predetermined MBO risk taking medium term risk Individual management company short term based company/ risk avoidance individual medium term
Copyright by Authors Tom Koplyay and David Goldsmith July 1998 6-64

advertising process manuf. process manufacturing finance finance Formula based Multi level risk averse long horizons long term risk averse multilevel company performance

Lifecycle Summary
Intro Strategic Info markets financing Maturity Leveling margins mkt share volumes competitors prod capacity mkt fragment costs adjacent product design prod. Costs markets internal strategic controls controls single/ dominant dominant /strongly related spread deeper Take Off Decline Costs margins

Relatedness single of businesses

related dominant diversified strongly unrelated-SBU related spread Marketing finance accounting planning deeper Accounting finance sales

Centre of Gravity

unique

deeper

Career paths entrepreneur to top mgt

Product devel. Manuf. Functional Sales manager accounting Functional managers

Leadership Source

CEO

Culture Portfolio CEO organizational corporate plans direction executive performance executive
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Copyright by Authors Tom Koplyay and David Goldsmith July 1998

Lifecycle Summary

Intro Priorities Product/ market match

Take Off Organization stability cash flow market growth internal

Leveling Product mix markets dynamics internal /external

Maturity

Decline

Production Production market share costs

Strategic Focus

external

internal /external

internal

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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Project Profiles Along the Lifecycle


Organizational Life Cycle
Growth Phase Projects Supports strategy/implementation Higher success rate (>50%) Delivery focus: suppliers/channels Functional based (marketing, logistics, etc) Longer duration (6-18 months) Payoff spread out in time People/asset centred Focus outside company Internally funded Niche Cost Focus Mature Phase Projects Supports implementation Medium success rate (10-30%) Alliances focus: M&A, joint ventures Inter-company based Longer duration (2-3 years) Payoff only end of project Asset centered (people problems) Focus both on company and target Internally/ investor funded Cost Leadership

Startup Projects Supports strategy Low success rate (1-10%) Product focus Portfolio based (R&D motivated) Short duration (3-12 months) High immediate payoff People centred Company based Outside funded (venture capital) Product Differentiation Focus

Copyright by Authors Tom Koplyay and David Goldsmith July 1998

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