Strategy Implementation: Internal
Control and Performance
Chapter 12
Strategic Management:Value Creation, Sustainability, and Performance, 3e, 2014
Learning Objectives
1.
Translate strategy into functional goals and
activities.
2.
Develop effective metrics for control and
growth.
3.
Different models for implementation and
control.
4.
Strategic leadership core responsibilities.
5 Keys to Implementation & Control

Fit
 Strategy, structure, value chain, resources

Clear and compelling objectives
 Relevance to employees at their levels

Single currency
 Uniform incentive system applied to all

Top management involvement
 Demonstrates importance & commitment

Resource allocation
 Matched to goals & supports incentives
Strategic Metrics
Tied to vision, mission, overall corporate
objectives
 Translated down to all levels and value chain
activities

 All departments / functions included
 Appropriate for the level within the function
Include quantitative & qualitative measures
 Can be used as part of a uniform incentive
system

Metrics Provide Feedback, Create
Learning
Expected
Effect
A
Activities
Actual
Effect
B
A is expected, but B occurs
 Next steps

 Diagnose if more of activities is needed, or
 Change activities
Three Implementation Models

Balanced Scorecard Model

Value-Driver-Action Model

McKinsey 7-S Framework
Balanced Scorecard

Driven by strategy
 All activities and metrics consistent with
strategic approach

Develops "cause-and-effect logic" across
four levels of the organization

Requires developing "lead" and "lag"
performance metrics for each level

Consistent with Value Chain focus on
activities
Cause and Effect Logic

Actions and performance in each level
contribute to and enable the next level
Develop Lead and Lag Metrics
Lead – measure activities performed
 Lag – measure results of activities

Discount Airline Example
• Work from the bottom up
• Success in each level enables the next level of performance
Value-Action-Driver Model

Focuses on value creation efforts
 Easier to implement vs. Balanced Scorecard

Draws upon
 Key Success Factors (industry analysis)
 Extraordinary Resource positions
 Vision and mission
Value-Action-Driver Model Steps
1.
Identify key value drivers.
2.
Outline desired stakeholder experience
for each value driver dimension.
3.
Translate stakeholder experience to
business / market position.
4.
Identify actions to take to achieve position.
5.
Develop metrics to assess progress
toward position.
Ford Inc. Example
Value
Driver
Consumer
Economic
Value
Desired
Stakeholder
Experience
Translation
to Position
1. Getting most "bang for the
buck."
• Develop classic, popular designs to
ensure high retained value.
2. "Buying is no haggling,
straightforward."
• List price = sales price.
• No haggle sales process.
3. "Get a great price when I sell
my Ford."
• Reduce cost structure to best in
class.
Ford Inc. Example
Translation
to Position
Actions
to Take
Metrics
• Develop classic, popular
designs to ensure high
retained value.
• Revamp designs where
needed.
• Consumer choice awards
for design, performance,
and value.
• List price = sales price.
• No haggle sales process.
• Change sales process and
sales incentive structure.
• Cash rebates usage lowest
in industry.
• Average list price discounts
lowest in industry.
• Reduce cost structure to • Reduce excessive
best in class.
overhead costs in
management and
production.
• Production unit cost/model
lowest compared to peer
group.
McKinsey 7-S Framework
Popular model dating from 1970s.
 Focuses on alignment and fit across the
organization.


Seven S's
 "Hard" 3 – easier to identify
 "Soft" 3 – more difficult to pin down exactly
 Centered around "Shared Values & Goals"
McKinsey 7-S Framework
McKinsey 7-S Framework
Shared Values & Goals
 Embodied in Vision, Mission, Principles

Strategy

 Value chain, resources,
type of strategic approach

Structure
 Core capabilities & related
training / learning

 How structures help
coordinate & organize

Systems
 Alignment of systems to
support strategy &
structure
Skills
Style
 Culture & how it supports
the type of work done

Staff
 Onboarding process &
continuity of support
Strategic Leadership








Establish and extol vision, mission, principles, goals
Establish code of ethics
Build senior management team
Establish structure for communication,
coordination, control
Establish culture and match leadership style
Ensure process exists to recognize new
opportunities
Rational decision making
Motivation through style, and incentives