Bài giảng Crafting and Executing Strategy - Chapter 12: Corporate Culture and Leadership: Keys to Good Strategy Execution

Chapter 12: Corporate Culture and Leadership: Keys to Good Strategy Execution Screen graphics created by:Jana F. Kuzmicki, Ph.D.Troy UniversityChapter Learning ObjectivesBe able to identify the key features of a company’s corporate culture.Understand how and why a company’s culture can aid the drive for proficient strategy execution and operating excellence.Learn the kinds of actions management can take to change a problem corporate culture.Learn why corporate cultures tend to be grounded in core values and ethical principles and help establish a corporate conscience.Understand what constitutes effective managerial leadership in achieving superior strategy execution and operating excellence.Chapter RoadmapInstilling a Corporate Culture that Promotes Good Strategy ExecutionIdentifying the Key Features of a Company’s Corporate CultureStrong versus Weak CulturesUnhealthy CulturesHigh-Performance CulturesAdaptive CulturesCulture: Ally or Obstacle to Strategy Execution?Changing a Problem CultureGrounding the Culture in Core Values and EthicsEstablishing a Strategy-Culture Fit in Multinational CompaniesLeading the Strategy Execution ProcessMaking Corrective Adjustments in Timely FashionA Final Word on Managing the Process of Crafting and Executing StrategyINSTILLING A STRATEGY-SUPPORTIVE CORPORATE CULTURE 12-4Defining Characteristics of Corporate CultureCore values, beliefs, and business principles Ethical standardsOperating practices and behaviors defining“how we do things around here”Approach to people management“Chemistry” and “personality” permeatingwork environmentOft-told stories illustratingCompany’s valuesBusiness practicesTraditionsA company’s culture is manifested in . . . Values, business principles, and ethical standards preached and practiced by managementApproaches to people managementand problem solvingOfficial policies and proceduresSpirit and character permeating work environmentInteractions and relationships among managers and employeesPeer pressures that exist to display core valuesIts revered traditions and oft-repeated storiesIts relationships with external stakeholdersIdentifying the Key Featuresof Corporate CultureFounder or early leaderInfluential individual or work groupPolicies, vision, or strategiesOperating approachesCompany’s approach to people managementTraditions, supervisory practices,employee attitudesOrganizational politicsRelationships with stakeholdersWhere Does CorporateCulture Come From?Selecting new employees who will “fit” inSystematic indoctrination of new employeesSenior management effortsto reinforce core values, beliefs,principles, key operating practices Story-telling of company legendsCeremonies honoring employeeswho display cultural idealsVisibly rewarding thosewho follow cultural normsHow Is a Company’s Culture Perpetuated?Forces Causing Culture to EvolveNew challenges in marketplaceRevolutionary technologiesShifting internal conditionsInternal crisisTurnover of top executivesA new CEO who opts to change thingsDiversification into new businessesExpansion into foreign countriesRapid growth that involves adding many new employeesMerger with or acquisition of another company Company Subcultures: Problems Posed by New Acquisitions and Multinational OperationsValues, beliefs, and practices within a company can vary byDepartmentGeographic locationBusiness unitSubcultures can clash ifThey embrace conflicting business philosophiesKey executives use different approaches to people managementDifferences between a company’s culture and recent acquisitions have not been ironed outExistence of subcultures does not preclude important areas of commonality and compatibility being established in different countriesTypes of Corporate CulturesStrong vs. Weak CulturesUnhealthy CulturesHigh-Performance CulturesAdaptive Cultures12-11Conduct business according to aclear, widely-understood philosophy Considerable time spent by management communicating and reinforcing valuesValues are widely shared and deeply rootedHave a well-defined corporate character,reinforced by a creed or values statementCareful screening/selection of newemployees to be sure they will “fit in”Characteristics ofStrong Culture CompaniesHow Does a Culture Come to Be Strong? Leader who establishes values and behaviors consistent withCustomer needsCompetitive conditionsStrategic requirementsA deep, abiding commitment to espousedvalues, beliefs, and business philosophyPracticing what is preached!Genuine concern for well-being ofCustomersEmployeesShareholdersValuesCustomersEmployeesShareholdersCharacteristics of Weak Culture CompaniesLack of a widely-shared core set of values Few behavioral normsevident in operating practices Few strong traditionsNo strong sense of company identityLittle cohesion among departmentsWeak employee allegiance to company’s vision and strategyHighly politicized internal environmentIssues resolved on basis of political cloutHostility to changeAvoid risks and don’t screw upExperimentation and efforts toalter status quo discouraged“Not-invented-here” mindset – company personnel discount need to look outside forBest practicesNew or better managerial approachesInnovative ideasDisregard for high ethical standards and overzealous pursuit of wealth by key executivesCharacteristics of Unhealthy CulturesStandout cultural traits includeA can-do spiritPride in doing things rightNo-excuses accountabilityA results-oriented work climate in which people go the extra mile to achieve performance targetsStrong sense of involvement by all employeesEmphasis on individual initiative and creativityPerformance expectations are clearly identified for all organizational membersStrong bias for being proactive, not reactiveRespect for the contributions of all employees Characteristics ofHigh-Performance CulturesWillingness to accept change and embrace challenge of introducing new strategiesRisk-taking, experimentation, andinnovation to satisfy stakeholdersEntrepreneurship isencouraged and rewardedFunds provided for new productsNew ideas openly evaluatedGenuine interest in well-being of all key constituencies Proactive approaches toimplement workable solutionsHallmarks of Adaptive CulturesA company’s culture can contribute to – or hinder – successful strategy executionA culture that promotes attitudes and behaviors that are well-suited to first-rate strategy execution is a valuable ally in the strategy execution processA culture where attitudesand behaviors impedegood strategy execution is ahuge obstacle to be overcome Culture: Ally or Obstacleto Strategy Execution?A culture that encourages actions and behaviors supportive of good strategy executionProvides employees with clear guidance regarding what behaviors and results constitute good job performanceCreates significant peer pressure among co-workers to conform to culturally acceptable normsA deeply embedded culture tightly matched to the strategyAids the cause of competent strategy execution by top management to culturally approved behaviors, thusMaking it far simpler for management to root out operating practices that are a misfitA culture imbedded with values and behaviorsthat facilitate strategy execution promotesstrong employee commitment to the company’sVisionPerformance targetsStrategyWhy Culture Matters: Benefitsof a Tight Culture-Strategy FitA good job of culture-buildingby managersPromotes can-do attitudes Encourages acceptance of changeInstills strong peer pressure forstrategy-supportive behaviorsEnlists enthusiasm and dedicatedeffort to achieve company objectivesOptimal Outcome of a Tight Culture-Strategy FitClosely aligning corporate culture with the requirements for proficient strategy execution merits the full attention of senior executives!Conflicts between culturally-approvedbehaviors and behaviors needed for goodstrategy execution send mixed signalsShould employees by loyal to the culture and company traditions and resist actions and behaviors promoting better strategy execution?Or should they support the strategyby engaging in behaviors that runcounter to the culture?The Perils of Strategy-Culture ConflictWhen a company’s culture is out of sync with what is needed for strategic success, the culture has to be changed as rapidly as can be managed!Creating a Strong FitBetween Strategy and CultureResponsibility of Strategy Maker –Select a strategy compatible with thesacred or unchangeable parts of organization’s prevailing corporate cultureResponsibility of Strategy Implementer –Once strategy is chosen, changewhatever facets of the corporateculture hinder effective execution12-22Figure 12.1: Changing a Problem Culture12-23Make a compelling case why a new cultural atmosphere is in best interests of both company and employeesChallenge status quoCreate events where employeesmust listen to angry key stakeholdersCite why and how certain behavioral norms and work practices in current culture pose obstacles to good execution of new strategic initiativesExplain how new behaviors and work practices to be introduced will be more advantageous and produce better resultsMenu of Culture-Changing ActionsReplace key executives strongly associated with old culturePromote individuals who have desired cultural traits and can serve as role modelsAppoint outsiders who have desired cultural attributes to high-profile positionsScreen all candidates for newpositions carefully, hiring only thosewho fit in with the new cultureMandate all company personnel attend culture-training programs to learn more about new work practices, operating approaches, and behaviors Substantive Culture-Changing ActionsPush hard to implement new-style work practices and operating proceduresDesign compensation incentives to reward teams and individuals who display the desired cultural behaviorsGrant generous pay raises to individuals who lead the way in adopting desired work practices, displaying new-style behaviors, and achieving pace-setting resultsRevise policies and proceduresin ways to drive cultural changeSubstantive Culture-Changing Actions (continued)Lead by example – Walk the talkEmphasize frugalityEliminate executive perksRequire executives to spend time talking with customersCeremonial events to praise people andteams who “get with the program”Alter practices identifiedas cultural hindrancesVisible awards to honor heroesSymbolic Culture-Changing ActionsA culture based on ethical principles isvital to long-term strategic successEthics programs help make ethical conduct a way of lifeExecutives must provide genuine supportof personnel displaying ethical standardsin conducting the company’s business Value statements serve as a cornerstone for culture-buildingGrounding the Culture inCore Values and EthicsFigure 12.2: The Two Culture-Building Roles of a Company’s Core Values and Ethical Standards12-29Techniques to Transform Core Values and Ethical Standards into Cultural NormsScreen out applicants who do not exhibit compatible character traitsIncorporate values statement and ethics code in employee training programsStrong endorsement by senior executives of the importance of core values and ethical principles at company events and in internal communicationsUse values statements and codes of ethics as benchmarks to judge appropriateness of company policies and operating practicesMake the display of core values and ethical principles a big factor in evaluating employee performanceTechniques to Transform Core Values and Ethical Standards into Cultural Norms (continued)Make sure managers at all levels are diligent in stressing the importance of ethical conduct and observance of core valuesEncourage everyone to use their influence in helping enforce observance of core values and ethical standardsHold periodic ceremoniesto recognize individuals andgroups who display the valuesInstitute ethics enforcement proceduresFigure 12.3: The Benefits of Cultural Norms StronglyGrounded in Core Values and Ethical Principles12-32Establishing a Strategy-Culture Fit in Multinational and Global CompaniesInstitute training programs toCommunicate the meaning of core values andExplain the case for common operatingprinciples and practicesCreate a cultural climate where the norm is toAdopt best practicesUse common work proceduresPursue operating excellenceGive local managersFlexibility to modify people managementapproaches or operating stylesDiscretion to use different motivational and compensation incentives to induce personnel to practice desired behaviorsLeading the Strategy-Execution Process12-34Leading the Strategy-Execution ProcessTop executives must be outfront personallyLeading the process andDriving the pace of progressEntire management teammust work diligently to engage all employees byDelegating authority to middle and lower-level managers to move the implementation process forward with all due speedEmpowering all employees to exercise initiative, get things done in a timely, efficient, and effective mannerKey Roles in Leading theStrategy-Execution ProcessBe out in the field, seeinghow well operations are goingGather information firsthandGauge the progress being madeBe diligent and adept in spotting gridlockFerret out problems and issuesLearn the obstacles in the path of good execution and clear the way for progressExert constructive, unrelenting pressure on organizational units toDemonstrate growing consistency in strategy executionAchieve performance targets Making Corrective Adjustments Requires decidingWhen adjustments are neededWhat adjustments to makeInvolves Adjusting long-term direction, objectives, and strategy on an as-needed basis in response to unfolding events and changing circumstancesPromoting fresh initiatives to bring internal activities and behavior into better alignment with strategyMaking changes to pick up the pace when results fall short of performance targetsProcess of Making Corrective AdjustmentsVaries according to the situationCrisis situation – Take remedial action quicklyNon-crisis situation – Incrementally solidify commitment to a specific course of actionDeciding on specific corrective adjustments is the same for both proactive and reactive situationsSuccess in initiating correctiveactions hinges onThorough analysis of the situationExercise of good business judgment in deciding on specific actionsGood implementation of the corrective actions