Making Strategy Work | Lawrence G. Hrebiniak

Summary of: Making Strategy Work: Leading Effective Execution And Change
By: Lawrence G. Hrebiniak

Introduction

In ‘Making Strategy Work: Leading Effective Execution and Change’, author Lawrence G. Hrebiniak highlights the challenges of implementing strategic plans in organizations. This book summary delves into the nuances of executing strategies, focusing on issues related to communication, organizational structure, accountability, and adaptability. By understanding the factors that can hinder execution, managers can identify areas for improvement and increase their chances of success. The book offers a comprehensive model for strategy execution consisting of five key elements: corporate strategy, corporate structure/integration, business structure integration, business strategy and short-term operating objectives, and incentives and controls.

Effective Strategy Execution

Effective strategy execution is challenging, despite the high expectations placed on managers. Execution requires involvement at all managerial levels, emphasizing the fact that higher executives cannot pass execution to lower levels. Poor execution stems from issues such as too many people being involved, creating a lengthy process, poor communication and information sharing, and undefined accountability and responsibility. Making strategy work requires not only understanding these hazards but equipping managers with a model of guidelines to steer them through the process. By doing this, companies increase their chances of proper implementation exponentially.

Executing Business Strategy

Successful execution of a business strategy requires a model with five key elements: corporate strategy, corporate structure/integration, business structure integration, business strategy and short-term objectives, and incentives and controls. Corporate strategy and execution are interdependent, and businesses need to incorporate feedback loops to ensure efficacy of strategies. Corporate structure and integration are crucial for successful execution, and coordination between different units deeply affects managers’ ability to execute strategy. Integration of business strategy and short-term objectives is also essential, along with designing incentives that align with the company’s strategic goals. Finally, effective execution requires discipline, clear metrics, and fine-tuning through a feedback loop. Without a comprehensive execution plan, strategies often remain unimplemented and result in poor performance.

Navigating Global Strategy

Executing a coordinated global strategy can be a daunting task. However, companies like Citibank have proven that it’s possible by adopting certain key factors. First, they concentrate on coordination by sharing valuable skills and establishing economies of scale. Second, they focus on nurturing a cadre of capable global managers. Third, they rotate key managers abroad to gain a more global outlook. Fourth, they ensure a dual, simultaneous focus on both the worldwide business and their own internal area or unit. Finally, they develop incentives and feedback mechanisms to monitor performance and ensure corporate and regional goals are met.

The Balancing Act: Centralization and Decentralization in Business

Businesses must strike the right balance between centralization and decentralization to execute strategies effectively. This involves understanding the match between organizational systems and strategies, emphasizing efficiency, and considering technology relatedness and company size.

In the business world, the relationship between centralization and decentralization is crucial. Companies need to make decisions on centralizing scarce resources, such as grouping all research and development functions in the headquarters instead of every unit. However, execution is also critical to success, and it’s done through a disciplined process that enables organizations to make their strategies work.

Knowing when to decentralize functions to be more responsive to line managers handling day-to-day operations can greatly influence a company’s ability to implement strategies. Decentralization enables more rapid response, less friction, and accelerated decision-making, while centralization is necessary for cost-leadership strategies, and when there are technologies that apply across product mixes.

The trick is to find the right balance between the two organizational models. There is no one-size-fits-all approach. Some organizations use “tall” structures, with many layers managing a given output. Others adopt a “flat” hierarchy for more rapid response. Matching organizational systems to strategies is crucial. Some structures help reduce costs, which would be beneficial to companies differentiating themselves based on price. Other structures, such as those emphasizing innovation, are needed for R&D-based organizations.

When it comes to operational tactics, efficiency is key. Cost-leadership strategies require centralization, while coordination becomes harder in larger companies. Regional offices and decentralization can help alleviate these issues. Technology relatedness also plays a role, with manufacturing being more decentralized in companies with fewer technology links between business units.

In conclusion, businesses need to balance centralization and decentralization to ensure success. By understanding the match between organizational systems and strategies, emphasizing efficiency, and considering technology relatedness and company size, businesses can find the right balance for their specific needs.

Want to read the full book summary?

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed