UNIT 4:

STRATEGY IMPLEMENTATION

Prof. Rema Gopalan

Associate Professor, Dept. of Management Studies,
CMRIT
ORGANIZATIONAL STRUCTURE

 It is a set of formal tasks and reporting

relationships which provide a framework for
control and coordination within the
organization.

 The purpose of an organizational structure is

to coordinate and integrate the efforts of
employees at all levels
BASIC PRINCIPLES OF
ORGANIZATIONAL STRUCTURE

 Hierarchy
 Chain of Command
 Specialization
 Authority, Responsibility and Delegation
 Centralization and Decentralization
 Formalization
 Departmentalization
ORGANIZATIONAL DESIGN

 The process of designing an organization's

structure to match with its situation is called
organizational design.

 The best design for an organization is

determined by many aspects of its situation,
viz. the size, technology, environment and
strategy.
RELATION BETWEEN STRATEGY
AND STRUCTURE
 Strategic management posits that the
strategy and the organization structure of the
firm must match.
 Chandler proposed the following as the

sequence of what occurs

1. New strategy is created
2. New administrative problems
emerge
3. Economic performance declines
4. New appropriate structure is
invented
5. Profit returns to its previous level
IMPROVING EFFECTIVENESS OF TRADITIONAL
ORGANIZATIONAL STRUCTURES
TYPES OF ORGANISATIONAL
STRUCTURES
 Simple structure
 Functional structure

 Divisional structure

 Matrix structure

 Network structure

 Virtual structure
SIMPLE STRUCTURE
FUNCTIONAL STRUCTURE
DIVISIONAL STRUCTURE
MATRIX STRUCTURE
NETWORK STRUCTURE
STRATEGY AND STRUCTURE ARE
INTERLINKED
 Strategy and the structure associated with it
may need to develop at the same time in an
experimental way.

 If the strategy process is emergent, then

learning and experimentation involved may
need a more open and less formal
organization structure
THE CONCEPT OF ‘STRATEGIC FIT’

 For an organization to be economically

effective, there needs to be a matching
process between the organization's strategy
and its structure.
STAKEHOLDERS AND STRATEGY
 A firm’s stakeholders are the individuals,
groups, or other organizations that are
affected by and also affect the firm’s
decisions and actions.

 Stakeholders also play a role in the decision

making process in a business.

 An organisation needs to have an effective

stakeholder management system in place,
which
provides a great support in achieving its
strategic objectives.
STRATEGIC LEADERSHIP
 Specific styles of leadership are often
associated with specific approaches to the
crafting and execution of strategies.

 Strategic leadership establishes the firm’s

direction by developing and communicating a
vision of the future and inspiring organisation
members to move in that direction.

 Example: Bill Gates of Microsoft, Akio Morita of

Sony, Jack Welch of General Electric, Gianni
Agnelli of Fiat, Narayana Murthy of Infosys
ROLE OF A STRATEGIC
LEADERSHIP
 Clarifying strategic intent

 Setting the direction

 Building an organization

 Shaping organization culture

 Creating a learning organization

 Instilling ethical behavior

LEADERSHIP APPROACHES

 Transactional Leadership

 Transformational Leadership

 Charismatic and Visionary Leadership

CORPORATE CULTURE AND
STRATEGIC MANAGEMENT
 A company’s culture is manifested in the
values and business principles that
management preaches and practices.

 An organization's culture can exert a

powerful influence on the behavior of all
employees. It can, therefore, strongly affect a
company’s ability to adopt new strategies.
CREATING STRATEGY
SUPPORTIVE CULTURE

 Changing a company’s culture to align it with

strategy is one of the toughest management
tasks.
 Changing a Problem Culture

 Managing Culture Change

 Managing Culture Clash

STRATEGY AND INNOVATION
INTRODUCTION TO INNOVATION

 Innovation can be defined as the application

of new ideas to the products, processes, or
other aspects of the activities of a firm that
lead to increased “value.”
 This “value” is defined in a broad way to

include higher value added for the firm and

also benefits to consumers or other firms
 An invention does not become an innovation

until, it has processes through production

and marketing tasks and is diffused to the
market place
TYPES OF INNOVATION
According to focus of innovation, there are
three types of innovation

 Product innovation
 Process innovation

 Organizational innovation
PRODUCT INNOVATION
 It is the introduction of a good or service that is
new or significantly improved with respect to its
characteristics or intended uses.
 New products: These are goods and services

that differ significantly in their characteristics or

intended uses from products previously produced
by the firm. The first microprocessors and digital
cameras are examples of new products using new
technologies.
 New uses for products. The development of a

new use for a product with only minor changes to

its technical specifications is a product innovation.
An example is the introduction of a new detergent
using an existing chemical composition that was
previously used as an intermediary for coating
production only.
PROCESS INNOVATION
 It is the implementation of a new or significantly
improved production or delivery method. This includes
significant changes in techniques, equipment and/or
software.
 Production methods. These methods involve the
techniques, equipment and software used to produce
goods or services. Examples of new production
methods are the implementation of new automation
equipment on a production line or the implementation
of computer-assisted design for product development.
 Delivery methods. These concern the logistics of the
firm and encompass equipment, software and
techniques to source inputs, allocate supplies within
the firm or deliver final products. An example of a new
delivery method is the introduction of a bar-coded or
active RFID (radio frequency identification) goods
tracking system.
ORGANIZATIONAL INNOVATION

 An idea, a new product, a new method, a new

service, a new process, a new technology, or
a new strategy adopted by an organization.
The introduction of something new to an
organization.
 Innovations in workplace organisation involve

the implementation of new methods for

distributing responsibilities and decision
making among employees for the division of
work within and between firm activities (and
organisational units), as well as new concepts
for the structuring of activities, such as the
integration of different business activities.
PLATFORM INNOVATION

 Platform innovation is the practice of rapidly

iterating upon the platform business model
by either creating new platforms or
improving upon an ex
 There are four main approaches to deliver

platform innovation: in-house, acquisition,

advisory and private equityplatform.
CREATIVE DESTRUCTION

 Creative destruction, when

manifested in a product-cannibalism
strategy, refers to a firm’s initiative
to supersede its own product or
process-even when it is selling well-
before a competitor does so.
 Renowned economist Joseph
Schumpeter in 1939 described a
process he termed “creative
destruction.” The central idea is that
technological innovation is the
driving force for progress in a
capitalistic economy
EXAMPLES

 Schumpeter believed that entrepreneurs and

businesses, recognizing new opportunities for
profit, will exploit emerging technological
innovations, which in turn generate
additional investments from imitators.
 You know the song “Radio Killed the Video

Star’, that’s Creative Destruction.

 Cable TV killed antenna TV but it is in turn

now getting stabbed by media service

providers such as Netflix and Hotstar.
CREATIVE DESTRUCTION- KODAK

 The company which once sold 90% of the film

used in the US and made a type of film –
Kodachrome - finally succumbed to the digital
revolution which left its products obsolete after
years of ferocious competition.
 now mostly concentrates on commercial
printing and packaging, although it still
manufacturers some film, particularly for the
motion picture industry
NOKIA
 Was once the leading mobile company
 Pioneered many innovations

 Own operating system

 Role in development of GSM & SIM technologies

 Earns Euro 400 million in royalties from

competitors
 Was late in responding to the smart phone

disruption.

What went wrong?

 2004: Citing risks of failure, did not pursue the

development of smartphones.
 Has missed the disruptive innovation that

opened up new customers & Markets.

DISRUPTIVE TECHNOLOGIES

 According to Schumpeter, without disruptions

in the market there would be no
development.

 Clayton Christensen's concept of disruptive

technology and how it helps us to understand
why companies go bankrupt under conditions
of technological change.
WHAT IS DISRUPTIVE
INNOVATION
 Definition of Disruption:
the act of breaking regular flow or continuity of
something; disturbance; a disorderly outburst
or tumult; dislocation, especially an event
resulting in dislocation or discontinuity.
 Clearly to be disruptive, something has to

disrupt the status quo.

 Certainly a disruptive innovation should minimally
cause a market disturbance.
 it needs to succeed at obsoleting a product
category altogether.
 https://www.youtube.com/watch?v=DaKgMcFP4Mo
CHARACTERISTICS
 Offers inferior outcome in the beginning
 But has an extendable core within it

 It is adopted by an underserved or not served market

 It follows a pattern and could happen to any one

 Decimates the market share of large incumbents in

few short years

 Comes almost from where it is least expected

 Incumbents are unable to respond to the competition

 Usually a technology innovation is present, but not

always
IT – AN ENABLER OF DISRUPTION

 The disruptions are inherent

 Catching up like a viral disease

 Brings impacts in unrelated industries as well

 It is the application of technology that

 disrupts and not the technology itself

 Mobility is bringing in a wider disruption

1. POST PC DEVICES
2. MOBILE APPLICATIONS AND
HTML 5
3. TRANSPORTATION
REVOLUTION
 Battery-powered cars, trucks, and
motorcycles will continue to increase in
popularity, and mainstream manufacturers
will begin an accelerated march toward a
future when self-driving vehicles rule the
road.
ORGANIZATIONS FOR INNOVATION

 Organizational innovation is concerned with

the progress of management in an innovative
way.

 The world’s most innovative companies have

largely created structures that remove
structural barriers.
ORGANIZATIONAL INNOVATION AT

“Good design is the most important way to

differentiate us from our competitors,”-
@ Samsung

 “Noodle Team” instead of rigid hierarchies- @

McDonald’s
INSTITUTIONAL INNOVATION AND
ENVIRONMENTS
 Redefining the rationale for institutions and
developing new relationship architectures
within and across institutions to break existing
performance trade-offs and expand the realm
of what is possible.

 It means bringing together capital, talent, and

information in new and more effective ways. In
today’s environment of exponential
technology change and market uncertainty,
institutions that can drive accelerated learning
will be more likely to create significant
economic value on a sustainable basis.
CO-CREATION OF VALUE
 Co-creation of value is a business strategy,
one that promotes and encourages active
involvement from the customer to create on-
demand and made-to-order products.

 With co-creation, consumers get exactly what

they want and have a hand in making it
happen.
NIKE'S CO-CREATION STORY
OPEN INNOVATION AND OPEN
STRATEGY
 Open innovation is “the use of purposive
inflows and outflows of knowledge to
accelerate internal innovation, and expand
the markets for external use of innovation,
respectively.”
 Companies implement open innovation

practices in different ways such as alliances

between companies, research chairs in
universities, crowd sourcing competitions,
and innovation ecosystems.
 The modern concept of open innovation was

coined in the early 2000s by writer Henry

Chesbrough.
EXAMPLES OF OPEN INNOVATION

 NASA

 COCA-COLA

 LEGO- The Lego Ideas platform has created a direct

line for fans to suggest great new ideas for Lego sets,
with the company releasing a bunch of new products
every year. This has helped drive increased sales
and cemented Lego’s community of fans.
 Unilever- Unilever’s open innovation portal lists
technical challenges facing the company (for
example, oil oxidation prevention), and asks
engineers, inventors, academics, and designers to
contribute their best potential solutions to these.
NATIONAL SYSTEM OF INNOVATION

 A national system of innovation has been

defined as follows:
 • “ .. the network of institutions in the public

and private sectors whose activities and

interactions initiate, import, modify and
diffuse new technologies.” (Freeman, 1987)
 • “ .. the elements and relationships which

interact in the production, diffusion and use

of new, and economically useful,
knowledge ... and are either located within or
rooted inside the borders of a nation state.”
(Lundvall, 1992)