Chapter 8
Executing the Strategy:
Building a Capable Organization
and Instilling a Culture
Screen graphics created by:
Jana F. Kuzmicki, PhD
Troy University - Florida and Western Region
Quote . . .
“An organization’s capacity to execute
its strategy depends on its ‘hard
infrastructure’—its organizational
structure and systems—and on its ‘soft’
infrastructure—its culture and norms.”
Amar Bhide
Chapter Outline
 A Framework for Executing Strategy
 The Principal Managerial Components of the Strategy
Execution Process
 Building a Capable Organization
 Staffing the Organization
 Building Core Competencies and Competitive
Capabilities
 Organizing the Work Effort
 Instilling a Corporate Culture
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Executing the Strategy
 An action-oriented, make-things happen task
involving management’s ability to
 Direct organizational change
Implementation
involves . . .
 Achieve continuous improvement in
operations and business processes
 Move toward operating excellence
 Create and nurture a
strategy-supportive culture
 Consistently meet or beat performance targets
 Tougher and more time-consuming than crafting
strategy
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Fig. 8.1: The Eight Components of the Strategy Execution Process
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Fig. 8.2: The Three Components of Building a Capable Organization
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Selecting the Management Team:
Key Considerations
 Determine mix of
 Backgrounds
 Experiences and know-how
 Beliefs and values
 Styles of managing and personalities
 Personal chemistry must be right
 Talent base needs to be appropriate
 Picking a solid management team needs to be acted
on early in implementation process
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Building Core Competencies
and Competitive Capabilities
 Crafting the strategy involves
 Identifying the desired competencies and capabilities to
build into the strategy and help achieve competitive
advantage
 Good strategy execution requires
 Putting desired competencies and capabilities in place,
 Upgrading them as needed, and
 Modifying them as market
conditions evolve
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Three-Stage Process of Developing
Competencies and Capabilities
1. Develop ability to do something
2. As experience builds,
ability can translate into a
competence or capability
3. If competence or capability continues to be
polished and refined, it can become a
distinctive competence, providing a potential
competitive advantage!
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Step 1 in Developing Competencies
 Develop ability to do something
 Select people with relevant skills/experience
 Broaden or expand individual abilities as needed
 Mold efforts and work products of
individuals into a cooperative effort
to create organizational ability
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Step 2 in Developing Competencies
 As experience builds and company learns how to
perform the activity consistently well and at acceptable
cost, the ability gradually evolves into a
competence or capability over a period of time
 Typically, a capability or competence emerges from
establishing and nurturing collaborative
relationships between
Individuals and groups in different departments and/or
A company and its external allies
The process is cross-functional and involves a
total team effort to do something particularly well
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Step 3 in Developing Competencies
 If company masters the activity, performing it
better than rivals, the “capability” or “competence”
becomes a
Distinctive competence and
Holds potential for
competitive advantage
This is the optimal outcome of the process
of building capabilities and competencies!
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Organizing the Work Effort to
Support Good Strategy Execution
 Few hard and fast rules for organizing
 One Big Rule: Role and purpose of organization structure is
to support and facilitate good strategy execution!
 Each firm’s structure is idiosyncratic, reflecting
 Prior arrangements and internal politics
 Executive judgments and preferences about how to arrange
reporting relationships
 How best to integrate and coordinate work effort of different
work groups and departments
CEO
Vice President
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Instilling Values and Ethics in the Culture
 Incorporate values statement and ethics
code in employee training programs
 Screen out applicants who do not
exhibit compatible character traits
 Frequent communications of the
values and ethics code to all employees
 Management involvement and oversight
 Strong endorsement by CEO
 Ceremonies and awards for individuals
and groups who display the values
 Institute ethics enforcement procedures
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