STRATEGY:

Core Concepts and

Analytical Approaches
7th Edition (2022-2023)
Arthur A. Thompson
The University of Alabama

Chapter 10
Building an
Organization Capable
of Good Strategy
Execution

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 Strategies most often fail because they aren’t
executed well.
—Larry Bossidy, former CEO, Honeywell International, and
Ram Charan, author and consultant

A second-rate strategy perfectly executed will beat a

first-rate strategy poorly executed every time.
—Richard M. Kovacevich, former Chairman and CEO, Wells Fargo

Any strategy, however brilliant, needs to be

implemented properly if it is to deliver the desired
results.
—Costas Markides, professor

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–2

 People are not your most important asset. The right
people are.
—Jim Collins, professor and author

Organizing is what you do before you do something,

so that when you do it, it is not all mixed up.
—A. A. Milne, author of Winnie the Pooh

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–3

 Chapter Learning Objectives

1. Learn the eight managerial tasks that underpin successful

strategy execution.
2. Gain command of the three types of organization-building
efforts critical to good strategy execution.
3. Understand the hows and whys of acquiring, developing,
and upgrading the resources, competencies, and
capabilities needed to execute strategy successfully.
4. Recognize what issues to consider in organizing the work
effort and why strategy-critical activities should be the
main building blocks of the organizational structure.
5. Become aware of the pros and cons of centralized and
decentralized decision making in implementing and
executing the chosen strategy.
Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–4
 Chapter 10 Roadmap

• A Framework for Executing Strategy

• Building an Organization Capable of Good
Strategy Execution: Three Key Actions
• Staffing the Organization
• Developing and Strengthening Execution-Critical
Resources and Capabilities
• Structuring the Organization and Work Effort

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–5

 Crafting versus Executing Strategy
Crafting the Strategy Executing the Strategy
• Is a market-driven activity • Is an operations-driven activity
• Successful strategy making • Successful strategy execution
depends on: depends on doing a good job of:
• Business vision • Organization-building and people
• Perceptive analysis of market management
conditions and the firm’s • Continuously improving how
capabilities activities are performed
• Shrewd market positioning • Motivating/rewarding people in
• Outcompeting rivals ways that support good execution

• Creating and deploying resources • Creating and nurturing a strategy-

and capabilities to forge a supportive culture
competitive advantage • Instilling a discipline of getting
things done

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–6

 Strategy Execution Is Tougher
Than Strategy-Making
• It is much easier to develop than to execute a sound
strategic plan and achieve its desired outcomes because:
• A wide array of managerial activities must be attended to
• There are many ways to put new strategic initiatives in place and
keep things moving—which paths to take?
• Bedeviling issues crop up and have to be resolved
• Executing strategy tests the ability of managers to:
• Direct organizational change to achieve continuous improvement in
operations and business processes that builds and strengthens
competitive capabilities
• Marshal organization-wide support and enthusiasm for executing the
strategy as proficiently as possible
• Consistently meet or beat performance targets
Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–7
 Executing Strategy Is a Team Effort
•Implementing and executing strategy requires that a firm’s
whole management team and all employees be actively
involved in the strategy execution process
• Top-level managers must lead the process and orchestrate the big
initiatives
• Middle and lower-level managers must see that all goes well in their
areas of the organization
• Employees must perform their individual roles competently
The strategy execution process involves every part
of the enterprise—all value chain activities, all
organizational units, and all company personnel.

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 Strategic Insight

Ideally, senior managers need to create

a companywide crusade to implement
and execute the chosen strategy as fast
and effectively as possible.

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 Core Concept
Good strategy execution requires a team effort:
• All managers have strategy-executing responsibility in
their areas of authority
• All employees are active participants in the strategy
execution process
All company personnel in one way or another are
actively involved in the strategy execution process.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–10

 Implementing a New Strategy
Requires Adept Leadership
• It takes adept managerial leadership to:
• Convincingly communicate reasons for the new strategy
• Overcome pockets of doubt
• Secure commitment of concerned parties
• Build consensus and enthusiasm
• Get all implementation pieces in place and coordinated

Ideally, senior managers need to create a companywide

crusade to implement and execute the chosen strategy
as fast and effectively as possible.

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 A Framework for Executing Strategy
• The managerial approach to implementing and executing a
strategy always has to be customized to fit the particulars
of a firm’s situation.
• Making minor changes in an existing strategy differs greatly from
implementing radical strategy changes
• Some managers are more adept at using this or that approach to
achieving desired organizational changes.
There is no one managerial recipe
for strategy execution for all situations
or all types of strategies or all managers.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–12

 The Principal Managerial Components
of the Strategy Execution Process
1. Staffing the organization and developing the resources, capabilities,
competencies, and organizational structure to execute strategy successfully
2. Allocating ample resources to those activities critical to successful strategy
execution and the achievement of financial and strategic objectives
3. Ensuring that policies and procedures facilitate rather than impede strategy
execution
4. Adopting best practices and employing process management tools to drive
continuous improvement in how value chain activities are performed
5. Installing information and operating systems that enable company personnel
to better perform important value chain activities and operate the business
more proficiently
6. Tying rewards and incentives directly to the achievement of strategic and
financial targets
7. Instilling a corporate culture that promotes good strategy execution
8. Exercising strong leadership to drive the execution process forward

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–13

FIGURE 10.1 The Eight Components of the Strategy Execution Process

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 Strategic Insight

When strategies fail, it is often because of poor

execution—needed actions are overlooked, lax
oversight allows important details to slip through
the cracks, key implementation approaches turn
out to be ill chosen or mismanaged, or there is
deficient motivation or slack effort on the part of
company personnel to achieve the desired results.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–15

 Devising an Action Agenda to Implement and
Execute a Strategy
• First assess what the organization must do differently and
better to execute the strategy with a high degree of
proficiency and meet or beat the targeted levels of financial
and strategic performance
• Each manager needs to ask the question:
“What needs to be done in my area of responsibility to implement our
part of the firm’s chosen strategy and what should I do to get these
things accomplished in a manner that enables good strategy
execution and produces the desired results?”

• It is then incumbent on every manager to determine precisely how to

make the necessary internal changes in their areas of responsibility

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What Are the Signs of Good Strategy Execution?

• The two best signs of whether management

is doing a good job of implementing and
executing the company’s strategy are
whether the company is:
• Meeting or beating its performance targets
• Learning to perform strategy critical value chain
activities with real proficiency and making good
progress toward achieving operating excellence in
all of its activities

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 CORE CONCEPT

The two best signs of good strategy execution

are whether a firm is meeting or beating its
performance targets and whether it has attained
(or is clearly on track to attain) real proficiency in
performing strategy-critical value chain activities.

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 Building an Organization Capable of Good
Strategy Execution: Three Key Actions
• Staffing the organization
• Putting together a strong management team, and recruiting and
retaining employees with the needed experience, technical skills,
and intellectual capital.
• Acquiring, developing, and strengthening resources
and capabilities important to good strategy execution
• Accumulating the required resources, developing competitively
strong proficiencies in performing strategy-critical value chain
activities, and updating the company’s resources and capabilities to
match changing market and competitive conditions.
• Structuring the organization and work effort
• Organizing value chain activities and business processes,
establishing lines of authority and reporting relationships, and
deciding how much decision-making authority to push down to lower-
level managers and frontline employees
Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–19
FIGURE 10.2 Building an Organization Capable of Successful Strategy
Execution: Three Key Actions

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 Core Concept

Putting together a talented management team with

the right mix of experiences, skills, and abilities to
get things done is one of the first steps to take
in launching the strategy execution process.

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 Staffing: Putting Together a
Strong Management Team
• One of the key organization-building tasks is filling
managerial slots with smart people who are:
• Clear thinkers
• Good at figuring out what needs to be done
• Skilled in “making it happen” and delivering good results

A capable management team ensures that the

implementation-execution process is not hampered
by wasted time and effort or managerial ineptness.

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 Staffing: Putting Together a Strong
Management Team (continued)
• A firm’s management team can be strengthened by:
• Promoting qualified people from within and/or
• Bringing in outsiders whose experiences, talents, and leadership
styles better suit the situation
• Overriding aim:
• To assemble a critical mass of talented managers who will function
as agents of change to further the cause of first-rate strategy
execution
A firm needs to get the right executives on the bus—
and the wrong executives off the bus—before trying
to drive the bus in the desired direction.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–23

 Recruiting and Retaining Capable Employees
• The quality of an organization’s people is an
essential ingredient of successful strategy
execution
• Knowledgeable, engaged employees are a firm’s best
source of creative ideas for the nuts-and-bolts operating
improvements that lead to operating excellence
• The firm’s entire workforce (managers and rank-
and-file employees) needs to be a genuine
resource strength

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 Core Concept

It is difficult for a firm to competently execute

its strategy and achieve operating excellence
without recruiting and retaining a large band
of very capable, actively engaged, high-
achieving employees.

Well-managed firms strive hard to make their

entire workforce (both managers and rank-and-file
employees) a genuine resource strength.

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 Best Practices to Attract and Retain
Talented Employees
• Spend considerable effort in screening and evaluating
job applicants, selecting only those with:
• Suitable skill sets
• Energy, initiative, and judgment
• Aptitudes for learning and adaptability to the firm’s work environment
and culture
• Put employees through training programs that continue
throughout their careers
• Provide promising employees with challenging, interesting,
and skill-stretching assignments
• Rotate people through jobs that have great content and
span functional and geographic boundaries

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 Best Practices to Attract and Retain
Talented Employees (continued)
• Encourage employees to:
• Challenge existing ways of doing things and propose better ways
• Be creative and innovative
• Push their ideas for new products or businesses
• Make the work environment stimulating and engaging
• Strive to retain talented, high-performing employees with
attractive compensation and benefits
• Coach average performers to improve their skills and weed
out underperformers

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Developing and Strengthening Execution-Critical
Resources and Capabilities
• Good strategy execution requires:
• Acquiring and developing desired competencies and
capabilities and integrating them into the appropriate
value chain activities
• Working diligently to improve how all execution-critical
value chain activities are being performed
• Modifying the resource/capability portfolio to keep it
well-matched to evolving market and competitive
conditions
Creating dynamic and competitively valuable
competencies and capabilities is an important
organization-building priority
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 Developing and Strengthening Capabilities
Internally: The Process Has Three Stages
• Stage 1: The firm must develop the ability to do something—however
imperfectly or inefficiently—by selecting people with the requisite skills and
experience, upgrading or expanding individual abilities as needed, and molding
the efforts and work products of individuals into a collaborative effort to create
organizational ability.

• Stage 2: As experience grows and personnel learn how to perform the activity
consistently well and at an acceptable cost, the ability evolves into a tried-
and-true capability or proven competence. If the competence is a key part of
executing the firm’s strategy, then it qualifies as a core competence.

• Stage 3: The focus is on an ongoing effort to polish, refine, and sharpen the
performance of a capability or competence, aiming not only for incremental
improvements but, ultimately, for best-in-industry or best-in-world proficiency,
the core competence evolves into a competitively superior distinctive
competence, providing a path to competitive advantage.

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 Important Traits of the Process of Building
Competencies and Capabilities
• Many firms get through stages 1 and 2, but few achieve enough
proficiency in performing strategy-critical activities to successfully
complete Stage 3 and achieve best-in-industry or best-in-world
proficiency.
• The key to building a distinctive competence (or competitively superior capability) is
concentrating more talent/effort than rivals on strengthening the competence/capability
to achieve the dominance needed for competitive advantage.
• This does not require outspending rivals on building a competence or capability. It does
mean consciously focusing more talent on strengthening the competence or capability
and striving for best-in-industry, if not best-in-world, status.

While a firm may fall short of attaining a distinctive competence it

can (and should!) still maintain an ongoing effort to polish, refine,
and sharpen the performance of a core competence or competitively
valuable capability

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 Core Concept

Building competencies and capabilities is a

three-stage process that occurs over a period
of months and years. It is not accomplished
overnight.

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 Developing and Strengthening Capabilities
via Acquisition or Merger
• Acquisitions and mergers are often used to
upgrade and/or build a stronger present portfolio
of competencies and capabilities when speed is of
critical importance because:
• There is risk an attractive market opportunity will slip
before a needed capability can be created or developed
internally
• Industry conditions, technology, or competitors are
moving at such a rapid clip that time is of the essence

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 Accessing Needed Capabilities
via Collaborative Partnerships
• There are three basic ways to obtain needed capabilities
via collaboration with outsiders:
1. Outsource a capability-deficient function to a key supplier or
another provider having the desired expertise or capability.
2. Work collaboratively with key suppliers to achieve such valuable
and mutually beneficial capabilities as just-in-time inventory
management, speedy design and delivery of parts and
components for new products, and defect-free or more durable
parts and components.
3. Establish a collaborative partnership with a firm outside the
industry having the desired capability the company needs for
internal use. Such partnerships are viable when both partners
each have a capability the other partner can benefit from
acquiring.

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 Core Concept
A company’s competencies and competitive capabilities
must be continually refreshed and recalibrated to remain
aligned with changing customer expectations, ever-
evolving competitive conditions, and a company’s own
strategic initiatives to outcompete rivals.
This refreshment and recalibration is what is meant by the
term dynamic capabilities. Ongoing managerial efforts to
build a dynamic set of competencies and capabilities is
why it is appropriate to view a firm as a “bundle of evolving
competencies and capabilities.”

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 Maximizing the Competitive Power of Capabilities and
Competencies: The Challenge of Dynamically
Managing a Company’s Resource Pool

• It takes freshly honed, cutting-edge competencies and

competitive capabilities to:
• Stay abreast of changes in customer needs and expectations
• Combat competitors’ offensives to win bigger sales and market
shares and their efforts to strengthen their competencies and
capabilities
• Keep the firm’s resource portfolio in step with strategy changes
• Build a more durable resource-based competitive edge over rivals
based on having a competitively superior collection of resources
and capabilities

A firm’s competencies and competitive capabilities must be

dynamic and constantly recalibrated to remain in step with
evolving competitive circumstances.

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 Building Dynamic Capabilities:
The Managerial Challenges

Building dynamically evolving competencies and

capabilities with maximum competitive power entails:
1. Making capability-building a companywide priority
Senior executives must insist on ongoing efforts to strengthen the
firm’s resource/capability portfolio in performing value chain
activities
2. Deciding when and how to recalibrate existing
competencies and capabilities, and either having the
foresight or spotting opportunities to develop new or
innovatively-enhanced competencies and capabilities.

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 The Benefits of Dynamic Capabilities

The organizational momentum that comes from

astute and timely managerial efforts to develop
a competitively formidable portfolio of dynamic
capabilities often results in
• Greater ability to attract new customers
• Increases in sales revenues
• Higher profitability

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 The Strategic Role of Employee Training
Training and retraining are important when:
• A firm shifts to a strategy requiring different skills,
competitive capabilities, and operating methods
• A firm is striving to build skills-based competencies
• Technical know-how is changing so rapidly that a firm
loses its ability to compete unless its skilled people have
cutting-edge knowledge and expertise
• Better execution of the chosen strategy calls for new
skills, deeper technological capability, or building and
using new capabilities
In all such instances, training must be placed
near the top of management’s action agenda.
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 Translating Resources and Capabilities
into Competitive Advantage
Strong core competencies and competitive capabilities are key factors in
securing a sustainable competitive edge over rivals when it is relatively
easy for rivals to copy smart strategies.

When rivals can duplicate the successful features of a firm’s

product or quickly imitate its maneuvers in the marketplace to
attract customers, the only dependable path to durable
competitive advantage is to out-execute them by performing
certain value chain activities in superior fashion.

Because a first-mover’s competitively powerful resources and capabilities

are time-consuming and expensive to match or overpower, the
competitive edge they produce in the form of superior strategy execution
capabilities tends to be more sustainable

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 Strategic Insight

A superior capability to execute strategy better

than rivals is the only path to sustainable
competitive advantage when a firm’s product
features and strategy are easy for rivals to copy.
When company managers deliberately strive to
develop a portfolio of resources and capabilities
that enable superior strategy execution, the
door is open to creating a sustainable
competitive advantage over rivals.

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 Structuring the Organization and Work Effort

• Each firm’s organizational structure is partly a

product of its own situation, reflecting:
• Prior organizational patterns and internal circumstances
• Executive judgments about reporting relationships
• The politics of who gets which assignments

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FIGURE 10.3 Structuring the Work Effort to Promote Successful Strategy
Execution

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 Deciding Which Value Chain Activities to
Perform Internally and Which to Outsource

• Outsourcing the performance of assorted

administrative support functions and perhaps even
selected core or primary value chain activities to
outside vendors offer the potential to improve
strategy execution by enabling a firm to
• Heighten its strategic focus
• Concentrate its full energies and resources on even more
competently performing those value chain activities at the
core of its strategy and for which it can create unique
value

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 Execution-Related Benefits
of Astute Outsourcing
• Heightened focus on performing strategy-critical activities
can yield three important execution-related benefits:
• Improved chances for outclassing rivals in performing strategy-critical
activities and turning a core competence into a distinctive
competence
• A streamlining of internal operations that acts to
• Decrease internal bureaucracies
• Flatten the organization structure
• Speed internal decision making
• Shorten the response time to changing market conditions
• Added ability to draw on partnerships with outsiders to add to a firm’s
arsenal of capabilities

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 Core Concept

Wisely choosing which activities to perform

internally and which to outsource can lead to
several strategy-executing advantages:
• Lower costs
• A heightened strategic focus
• Less internal bureaucracy
• Speedier decision making
• A better arsenal of competencies and capabilities

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Guarding Against Outsourcing the Wrong Things
Outsourcing is best for strategically less important activities:
• Handling customer inquiries and providing technical support
• Doing the payroll and administering employee benefit programs
• Providing corporate security
• Managing stockholder relations
• Maintaining fleet vehicles
• Operating the firm’s web site
• Conducting employee training
• Handling certain information and data processing functions
A firm is not the master of its own destiny unless it maintains
expertise and resource depth in performing those value chain
activities that underpin its long-term competitive success.

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 Making Strategy-Critical Value Chain Activities the
Main Building Blocks of the Organization Structure
• Making organizational units that perform
execution-critical value chain activities
centerpieces of the enterprise’s organizational
structure has the advantages of:
• Helping ensure these organizational units have
adequate decision-making influence
• Increasing the likelihood they will be allocated ample
resources to execute their piece of the strategy capably

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 What Types of Organization Structures
Fit Which Strategies?
• A single business is usually organized around one of two types of
organizational building blocks:
• Traditional functional departments
• Process departments (a work unit with full responsibility for a performing all
aspects of a particular process)
• In firms with global operations (or with geographically scattered
organizational units within a country), the basic building blocks often
include geographic organizational units in addition to functional and/or
process departments
• In vertically integrated firms, the major building blocks are divisional
units performing the major processing steps along the value chain
• A diversified firm’s typical building blocks are its individual businesses

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 Determining How Much Authority to Delegate
• Firms must decide:
• How much authority to delegate to the managers of each
organization unit

• How much decision-making latitude to give individual employees

in performing their jobs

• Options for organizing decision-making authority are to:

• Centralize decision making at the top (the CEO and a few other
top managers)

• Decentralize decision making by giving mid- and lower-level

managers and employees considerable decision-making latitude
in their areas of responsibility

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TABLE 10.1 Advantages and Disadvantages of Centralized vs.
Decentralized Decision Making

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 Centralized Decision Making: The Advantages
• In a highly centralized organization structure, top executives retain
authority for most strategic and operating decisions by:
• Keeping a tight rein on business-unit heads, department heads, and the
managers of key operating units
• Granting little discretionary authority to frontline supervisors and rank-and-file
employees.

• The thesis underlying command-and-control authoritarian structures

is that strict enforcement of detailed procedures backed by rigorous
managerial oversight is the most reliable way to keep the daily
execution of strategy on track
• Tight control by the manager in charge makes it easy to know who is
accountable when things do not go well.

• Centralizing decision-making at the top reduces the potential for

conflicting actions and decisions on the part of lower-level managers

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Centralized Decision-Making: The Disadvantages

• Centralized decision-making has important weaknesses:

• Command-and-control structures make an organization sluggish in
responding to changing conditions because of the time it takes for the
review/approval process to run up all the layers of the management
bureaucracy—long response times can be problematic
• It is difficult for high-level executives far from the scene of the action to
have full understanding of the situation and make wise decisions
• Top managers have too much room to micromanage activities that are
best delegated to personnel close to the scene of the action
• Lower-level managers and rank-and-file employees are discouraged from
exercising any initiative. They are expected to wait to be told what to do.
• Command-and-control from above does not encourage lower-level managers
and rank-and-file employees to be responsible or accountable for their
actions or to exercise any initiative for improving things.

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Decentralized Decision Making: The Advantages

•Decision-making authority is pushed down to the lowest

organizational level capable of making timely, informed, competent
decisions.
• Puts decision-making authority in the hands of the people closest to and
most familiar with the situation and trains them to weigh all the factors and
exercise good judgment
• Top management maintains adequate control by:
• Placing limits on the authority that empowered personnel can exercise
• Holding people accountable for their decisions
• Instituting compensation incentives that reward people for doing their jobs
in a manner that contributes to good company performance
• Creating a corporate culture where there is strong peer pressure on
individuals to act responsibly

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Decentralized Decision Making: The Advantages
(continued)

• Delegating greater authority to managers and employees

creates a horizontal organization structure with fewer
management layers and less management bureaucracy:
• Employees have latitude to develop their answers and action plans
because deciding how to do things is part of each person’s or team’s
job, rather than having to go up the ladder of authority for an answer
• Pushing decision-making authority down to the heads of
business units, departments, and operating units and then
further on to work teams and individual employees:
• Shortens organizational response times
• Spurs new ideas, creative thinking, innovation, and greater
involvement on the part of subordinate managers and employees
• Promotes higher employee morale and productivity

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 Decentralized Decision-Making:
The Disadvantages
• Higher-level managers lack “full control” to the extent they
may be unaware of actions taken by empowered personnel
under their supervision
• Such lack of control can put a firm at risk in the event that
empowered employees happen to make unwise decisions
• Cross-unit collaboration is impaired if decentralization gives
organizational units too much authority to act
independently, with no obligation to coordinate or
cooperate with other organizational units

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 Capturing Strategic Fits in
a Decentralized Structure
Diversified firms striving to capture cross-business strategic fits must not
give business heads total authority to operate independently when
cross-business collaboration is essential to capturing strategic-fit benefits
Cross-business strategic fits typically must be captured by:
• Enforcing and rewarding close cross-business collaboration
• Centralizing performance of business-level functions and activities with
strategic fits at the corporate level
• For example, centralizing the related activities of separate businesses makes
sense when there are opportunities to share a common sales force, use
common distribution centers, rely on a common field service organization to
provide maintenance and repair services, use common e-commerce systems
and approaches, and economize on administrative costs by utilizing a
common administrative infrastructure to perform support activities for each
business unit

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 Providing for Internal Cross-Unit Coordination
• Close cross-unit collaboration
• Builds core competencies and competitive capabilities into activities
that involve employees scattered across several internal
organization units and, in some instances, employees of outside
strategic partners or specialty vendors.
• Requires reengineering the organizational structure to pull the
pieces together into process departments (like customer service)
• Other coordinating mechanisms include
• Strong executive-level insistence on teamwork and cross-
department cooperation (including removal of managers who resist
collaborative efforts)
• The use of cross-functional task forces
• Incentive compensation tied to performance of cross-unit tasks

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–57

 Strategic Insight

Getting managers of execution-critical activities

to voluntarily but conscientiously live up to their
promises and commitments to coordinate closely
with sister organizational unit turns out to be the
key factor in achieving good internal cross-unit
coordination.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–58

 Strategy-Critical Activities that
Cut Across Different Functions
• Filling customer orders accurately and promptly.
• Fast, ongoing introduction of new products.
• Improving product quality.
• Supply chain management.
• Building the capability to conduct business via the Internet.
• Obtaining feedback from customers and making product
modifications to meet their needs.
These types of activities require close cross-
department coordination and collaboration

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–59

 Providing for Collaboration with
External Partners and Strategic Allies
• Building organizational bridges with strategic partners and
external allies is accomplished by appointing “relationship
managers” with responsibility and authority for:
• Getting the right people together
• Promoting good rapport and information-sharing
• Nurturing interpersonal cooperation and communication
• Ensuring effective coordination
Unless top management sees that constructive organizational bridge-
building with external partners occurs and that productive working
relationships emerge, the value of partnerships and alliances is lost
and the firm’s power to execute its strategy is weakened.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–60

 Collaboration with External Partners

If close collaboration with key suppliers is crucial,

then designated people in the firm’s supply chain
organization must be tasked with responsibility for:
• Establishing routine communications with these key
suppliers (via telephone, e-mail, instant messaging, online
teleconferencing, and face-to-face meetings)
• Making sure that information flows freely both ways and in
a timely manner
• Facilitating or personally coordinating all of the company’s
cooperative actions with these suppliers.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–61

 Strategic Insight

Organizational capabilities emerge from a process

of consciously knitting together the efforts of
different work groups, departments, and external
allies.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–62

Accessibility Content: Text Alternatives to Images

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. 10–63

FIGURE 10.1 The Eight Components of the
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Strategy Execution Process, Text Alternate
The Action Agenda for Implementing and Executing Strategy:
• What to change or improve? How to get it done?
• Staffing the organization and developing the resources, capabilities,
competencies, and organizational structure to execute strategy successfully.
• Steering the needed financial and organizational resources to execution-critical
value chain activities.
• Ensuring policies and procedures facilitate rather than impede strategy execution.
• Adopting best practices and employing process management tools to drive how
value chain activities.
• Installing information are performed and operating systems that enable company
personnel to carry out their strategic roles proficiently.
• Tying rewards and incentives directly to the achievement of strategic and financial
performance targets.
• Instilling a corporate culture that promotes good strategy execution.
• Exercising strong leadership to drive the execution process forward and attain
companywide operating excellence as rapidly as feasible.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. Return to parent slide 10–64
FIGURE 10.2 Building an Organization Capable of Successful Strategy
Execution: Three Key Actions, Text Alternate
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A well-staffed company with the Resources, Competencies, Capabilities, and

Organizational Structure to Execute Strategy Successfully. Staffing the organization
requires:
• Putting together a strong management team.
• Recruiting and retaining talented employees.
• Acquiring, Developing, and Strengthening the Resources and Capabilities Important to
Good Strategy Execution:
• Building competitively strong proficiencies in performing strategy-critical value chain
activities.
• Updating the Competitive value of the firm’s resources and capabilities as externa
conditions and the firm’s strategy change.
• Training and retraining company personnel as needed to maintain knowledge-based and
skills-based capabilities.
• Structuring the Organization and Work Effort
• Instituting organizational arrangements, lines of authority, and reporting relationships that
facilitate good strategy execution.
• Deciding how much decision-making authority to delegate to lower-level managers and
frontline employees.
Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. Return to parent slide 10–65
FIGURE 10.3 Structuring the Work Effort to Promote Successful Strategy Execution,
Text Alternate
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• An organization structure matched to the requirements of

successful strategy execution.
• Decide which value chain activities to perform internally and
which ones to outsource.
• Make internally performed strategy-critical activities the main
building blocks in the organization structure.
• Decide how much authority to centralize at the top and how
much to delegate to down-the-line managers and employees.
• Provide for cross-unit coordination.
• Provide for necessary collaboration with suppliers and strategic
allies.

Copyright © 2022 by Arthur A. Thompson and Glo-Bus Software, Inc. Return to parent slide 10–66