Behavioural Issues in Strategy

Implementation
 Behavioural Issues in Strategy
Implementation

• Leadership and Power

• Directing and staffing
• Values and Ethics
• Managing change
• Managing conflict
 Leadership
• Leadership success is linked to the ability of a
leader to exercise the right kind of influence at
the right time,
• Influence Tactics
– Consultation
– Persuasion
– Inspirational appeal
– Coalition
– Pressure tactics
– Upward appeal
– Exchange tactics
 Power
• Leaders use power to influence and implement
strategy
• Types of Power
– Formal Power
• Legitimate
• Reward
• Punishment
• Coercive
– Informal power
• Referent
• Charisma
• Information
 Leadership Style and Strategy
Implementation
• Growth Strategy with Concentration
– Dynamic industry expert
• Growth Strategy with Diversification
– Analytical portfolio manager
• Stability:
– Cautious profit planner
• Retrenchment to save company
– Turnaround specialist
• Retrenchment to close company
– Professional liquidator
 Leadership Style and Strategy
Implementation
• Transformation leaders needed to bring culture
change
• Transformation leaders transmit a sense of
mission, stimulate learning and inspire new way
of thinking.
– Henry Ford envisioned a people’s car
– Selling price dropped from $500 in 1913 to $390 in
1915 and $260 in 1925.
– Time to produce car reduced from 12.5 worker hours
in 1912 to 1.5 in 1914.
 Directing and staffing
• Implementation of new strategy calls for
new HR priorities
– Hiring people with new skills
– Firing people with obsolete skills
– Training existing people in new skills
A study of 102 companies following an
acquisition shows that, 26% of old employees
were asked to leave within one year and 61%
within five years
 Directing and staffing
• Differentiation strategy:
– People with high internal locus of control
– Expertise in R&D
• Low Cost strategy
– Expertise in production
– Eye for minute details
When past CEO successful, company repeats
the background (P&G: always from brand
management route)
 Selection strategy
• Insider vs outsider
• Four options
– Selective blend: internal when existing skills
match new strategy else outsider
– Stability: mainly internal
– Turnaround: outsiders with new skills/attitude
– Reorientation: outsider to replace weakness
 Retrenchment
• Retrenchment is combination of organising and
staffing
• Downsizing very crucial
– Necessary jobs may be eliminated
– VRS may bring negative outcome
– Overload on remaining employees
– Morale and productivity issues

Survey of 400 companies after downsizing:

only 50% recorded improved earning
34% increased productivity
33% improved customer service
50% reported to refill the jobs within one year
 Guidelines for successful
retrenchment
• Eliminate unnecessary work
• Contract out non core activity
• Plan for long term efficiencies
– Redeployment
– Maintenance
– R&D
• Invest in employees
– New job specification
– Performance standard
– Compensation package
– Training
 Values
•Values represent basic convictions that ‘a
specific mode of conduct or end-state of
existence is personally or socially preferable to
an opposite mode of conduct or end-state of
existence.

•We have a hierarchy of values that forms our

value system. This system is identified by the
relative importance we assign to values such
as freedom, pleasure, self-respect, honesty,
obedience, and equality.
 Ethics
• Study of moral issues and choices
• Concerned with right vs. wrong, good vs. bad
• Ethics try to set the standard for the ultimate
end or the highest good to be pursued
• Normative; judgmental
• Unstructured; abstract
No universal Standard
Different background of people

Different experiences

Value System

Moral standards

Ethics

Behaviour
 Work Ethics
A trade-off between economic objectives
and social obligations

Management Dilemma : Choice between

right and wrong (Gray areas)
 Characteristics of Work Ethics
• Differ with individuals
No unique solutions
Multitude of alternatives
• Have synchronic effects
• Involve trade-off between costs & benefits
profits and responsibility
the ethical dilemma
Impact on strategy implementation

• Studies show that there is high positive

correlation between value based business
and success.
• Companies facing global challenges are
formulating globally consistent codes for
ethical understanding and decision making
at all levels.
 Forces of Change
• Internal forces
– Human Resource Factors
– Managerial Decisions

• External forces
– Technological developments
– Demographic characteristics
– Market changes
– Social and political pressure
 Change Actors
• Change Strategists
– Contribute to initiating, planning and
designing change

• Change Implementers
– Flag bearers of change programs

• Change Recipients
– Affected by the change
Change levers

Technology Quality

Leadership

Marketing Costs
 Change levers
Leadership

• Without leadership organization is VICTIM of

change rather MASTER of change.
• The leader empowers the organizational
members through appropriate changes, so
employees feel important and work becomes
exciting.
• Creates a trusting culture and builds the
credibility of the change programme.
Change levers

People
• New organisational culture
• New entrants
• New skills
• Changed relationships
• Changed responsibilities
 Change levers
Strategy
• It’s like a map that shows path and goal of
change
• It aims to create unity, cohesion, focus and
energy.
• it spells out the direction of change.
• Strategy is different from vision statement.
If the vision statement tells the organization
where to go, the strategies tell how to
reach there.
 Change levers
Structure
• Change in roles, responsibilities, decision
making, procedure and coordination
mechanism.
• More and more Organic structure
characterized by:
Less of hierarchy and rules
More of teamwork
Decentralisation
 Change levers
Technology

• The term ‘Technology’ does not refer to tools,

equipment and machinery alone. It includes
information, knowledge and expertise.
• Faster and cheaper computers induced changes
• New mobile communication devices also forced
to change.
 Change levers Contd…
Marketing

• Customers are more quality and cost

conscious.
• More customization of products and
services.
• Demand more than mere delivery and
after-sales service.
Strategy for Managing change
Do not Change Change
Environment Environment
Don’t Change

Avoid Influence
Company

• ignore • lobby
• hide • co-opt

React Anticipate
Company
Change

• follow leader • Strategic

• reorganise manageme
nt
 Rules for Effective Change
Management
• Work hard at establishing a sense of urgency
• Do not think out the change, think through it
• Form powerful coalition
• Initiate change through informal discussion to get
feedback and participation
• Positively encourage objections
• Listen actively
• Plan for and create short term gains
• Institutionalise new approaches
• Monitor the change and reinforce it
Create Learning Organisations

• Learning organisation is one that has

developed continuous capacity to adapt and
change.
• It uses double-loop learning
– Errors are corrected by modifying existing
organisational objectives, policies, standard
routines and not merely on basis of past
practices.
Characteristics of Learning
Organisations

• Shared vision
• Creating new ways of solving problems
• A system of interrelationships
• Open communication
• Superiority of organisational interest
 International Perspective of
Change management
• MNCs/ Companies with offshore clients
• New Market Development Strategy
• Effective change management requires
– Training and knowledge of host country’s
culture to expatriate.
– Rational compensation package.
– A well defined repatriation plan
 Conflict
• A process that begins when one party
perceives that another party has
negatively affected, or is about to
negatively affect, something that the first
party cares about.
• New Strategy implementation may bring
out many such concerns among different
group of persons.
Conflict management
 Conflict management
CONFLICT RESOLUTION TECHNIQUES
• Problem Solving : Analytical; face to face discussion
• Super ordinate goals: Creating a shared goal that cannot be
attained without the cooperation of each conflicting parties
• Expansion of resources: expansion of resources can create a
win -win situation
• Avoidance: Withdrawal or suppression of conflict
• Smoothing: Playing down the difference and highlight common
interest between conflicting parties
• Compromise: Each party to conflict give something of value
• Authoritative command: Management uses formal authority to
resolve conflict and then conveys their wishes to concerned
parties.
 Conflict management
CONFLICT STIMULATION TECHNIQUES
• Communication: Using ambiguous or
threatening messages
• Bringing in outsiders: adding employees to a
group whose backgrounds values or styles differ
from present members
• Restructuring the organization: realigning
workgroup, altering roles, increasing inter
dependence to disturb the status quo
• Appointing a devil’s advocate: designating a
critique to purposely argue against the majority
positions.
Conflict- handling Strategies