A.A.
2025 - 2026
Introduction to Management / Management
and Digital Technologies I part
Bachelor’s degree in Economics and Business/Economics with data science
[Link] Maria Fedele
Because learning changes everything.®
CHAPTER 10
Superior Strategy Execution—
Another Path to Competitive
Advantage
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LEARNING OBJECTIVES (1 of 2)
1. Recognize what managers must do to build an
organization capable of good strategy execution.
2. Explain why resource allocation should always be
based on strategic priorities.
3. Understand why policies and procedures should be
designed to facilitate good strategy execution.
4. Understand how process management programs that
drive continuous improvement help an organization
achieve operating excellence.
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LEARNING OBJECTIVES (2 of 2)
5. Recognize the role of information and operating
systems in enabling company personnel to carry out
their strategic roles proficiently.
6. Explain how and why the use of well-designed
incentives and rewards can be management’s single
most powerful tool for promoting operating
excellence.
7. Explain how and why a company’s culture can aid the
drive for proficient strategy execution.
8. Recognize what constitutes effective managerial
leadership in achieving superior strategy execution.
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Crafting Versus Implementing Strategy
Crafting Strategy: Implementing Strategy:
Market- and resource- Execution of operations-
driven activities. driven activities.
Success depends on: Success depends on
management’s ability to:
• Attracting and pleasing
• Direct change.
customers.
• Allocate resources.
• Outcompeting rivals.
• Build capabilities.
• Developing the firm’s
• Build strategy-supportive
collection of resources
policies and culture.
and capabilities.
• Deliver good results.
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CORE CONCEPT: Strategy Execution
Good strategy execution requires a team effort.
All managers have strategy-executing
responsibility in their areas of authority, and all
employees are active participants in the strategy
execution process.
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Who Is Responsible for Implementation
of the Chosen Strategy?
The organization’s chief executive officer and other
senior managers are ultimately responsible for ensuring
that the strategy is executed successfully.
It is middle- and lower-level managers who must see to it
that frontline employees and work groups competently
perform strategy-critical activities that allow
companywide performance targets to be met.
All managers should think:
• “What does my area have to do to implement its part of the
strategic plan, and what should I do to get these things
accomplished effectively and efficiently?”
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Figure 10.1 The Eight Components of Strategy Execution
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The Principal Managerial Components
of Strategy Execution (1 of 2)
Components:
Building an organization with the capabilities, people, and
structure needed to execute the strategy successfully.
Allocating ample resources to strategy-critical activities.
Ensuring that policies and procedures facilitate rather than
impede effective strategy execution.
Adopting process management programs that drive continuous
improvement in how strategy execution activities are performed.
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The Principal Managerial Components
of Strategy Execution (2 of 2)
Components, continued:
Installing information and operating systems that enable
company personnel to perform essential activities.
Tying rewards directly to the achievement of performance
objectives.
Fostering a corporate culture that promotes good strategy
execution.
Exerting the internal leadership needed to propel
implementation forward.
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Building an Organization Capable of Good Strategy
Execution: Three Key Actions
Key organization building actions:
• Staff the organization’s workforce.
• Acquire, develop, and strengthen strategy-
supportive resources and capabilities.
• Structure the organization and work effort.
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Staffing the Organization—Building Managerial Talent
Assembling a capable management team is a
cornerstone organization-building task.
• Put people with strong strategy implementation skills
and a results orientation in key managerial posts.
• Replace weak executives, strengthening the skills of
those who remain, and bringing in fresh outsiders.
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Concepts and Connections 10.1 Management Development
at Deloitte Touche Tohmatsu Limited
Learning and development programs that
contribute to Deloitte’s successful execution
of its talent strategy.
• Clear path to partnership.
• Formal training programs.
• Special programs for high performers.
• Sponsorship, not mentorship.
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Staffing the Organization—Recruiting and
Retaining a Capable Workforce
The quality of a firm’s people is an essential
ingredient of successful strategy execution.
• Staffing the right people at all levels is required to
ensure competent performance of value chain
activities.
• Find, develop, and then retain engaged employees
with excellent compensation packages, opportunities
for rapid advancement and professional growth, and
challenging and interesting assignments.
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Tactics for Recruiting and Retaining
a High-Performance Workforce
Put extra effort into screening and evaluating job applicants—
selecting for skill sets, energy, initiative, judgment, aptitudes for
learning, and adaptability to the firm’s culture.
Invest in training programs throughout employees’ careers.
Provide promising employees with challenging, interesting, and
skill-stretching assignments.
Rotate people through jobs that span functional and geographic
boundaries.
Strive to retain high-performing employees via promotions, salary
increases, performance bonuses, stock options and equity
ownership, fringe-benefit packages, and other perks.
Coach average performers to improve their skills and capabilities,
weeding out underperformers and benchwarmers.
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Acquiring, Developing, and Strengthening
Key Resources and Capabilities
Good strategy execution requirements:
• Putting key resources and capabilities into place.
• Refreshing and strengthening them as needed.
• Modifying them as market conditions evolve.
Organization building requires deciding when and
how to recalibrate competencies and capabilities.
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Three Approaches to Building and
Strengthening Capabilities
Developing dynamic capabilities to manage
organizational change
• Become proficient in developing capabilities internally.
• Acquire capabilities through mergers and acquisitions.
• Access capabilities via collaborative partnerships.
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Accessing Capabilities Through Collaborative Partnerships
Acquiring capabilities from an external source via
collaborative partnerships:
• Outsource the function or activity requiring new capabilities
to an outside provider to conserve resources.
• Collaborate with a firm that has complementary resources
and capabilities in a partnership to achieve a shared strategic
objective.
• Engage in a collaborative partnership to learn how the
partner performs activities, internalizing its methods, and
thereby acquiring its capabilities.
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Characteristics of Centralized Decision Making
Retention of authority by top executives:
• Command-and-control paradigm rein in lower-level managers.
Minimal discretionary authority:
• Frontline supervisors and rank-and-file employees must seek
prior approval by their superiors for their actions.
Key advantage:
• Easy to know who is accountable when things do not go well.
Disadvantages:
• Bureaucracy creates sluggish response to changing conditions.
• Large firms with widely scattered operations require that
decision-making authority be granted to onsite managers.
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Exercising Control over the Actions
of Empowered Employees
Place limits on the authority that empowered
personnel can exercise.
Hold employees accountable for their decisions.
Institute compensation incentives that reward
people for doing their jobs in a manner that
contributes to good company performance.
Create a corporate culture where there is strong
peer pressure for employees to act responsibly.
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Facilitating Collaboration with External Partners
and Strategic Allies
Actively manage collaborative relationships.
Appoint “relationship managers” with responsibility
for fostering strategic partnership success.
• Get the right people together.
• Promote good rapport.
• Facilitate the flow of information.
• Nurture interpersonal communication and cooperation.
• Ensure effective coordination.
Adopt a network structure that links independent
organizations involved in cooperative arrangements
to achieve some common undertaking.
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Organizational Structure and Authority in Decision Making
Centralized structure:
• Top managers retain authority for most decisions.
Decentralized structure:
• Decision-making authority is pushed down to the
lowest organizational level capable of making
timely, informed, competent decisions.
The current trend in most companies:
• A shift from authoritarian to decentralized
structures stressing empowerment.
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Matching Organizational Structure to the Strategy
Key value chain activities that deliver value to the
customer are critical to an organization’s proficient
strategic performance.
Structure follows strategy—a changed strategy requires
a new or different structure and new or different key
activities and capabilities.
• Attempting a new strategy with an outdated
organizational structure is unwise.
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Organizing
Organizing involves assigning tasks, delegating authority, and
allocating human and non-human resources across the
organization. During the organizing process, managers
coordinate employees, resource and activities to achieve the
organization goals.
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Thecorporate
The corporate organizational
organizational system
system
It is the result of the dynamic interaction between the
following elements:
• Strategies and fundamental orientations
• Structures and roles
• Human resources
• Operational mechanisms
• Technologies
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The determinants of organizational design choices
The structural needs that emerge from the strategic analysis
guide the organizational design choices, which translate
into the following aspects:
- Identification of different combinations of
organizational characteristics, functional to the strategic
and operational behavioural needs of the company
system;
- Definition of the most suitable organizational structure,
referring to a set of model-types;
- Analysis of interactions between the organizational
structure and other aspects of the corporate
organizational system, to facilitate the effective
implementation and functionality of the defined
organizational structure.
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The design of the organizational structure
• The organizational structure is made up of organizational units, which
are characterised by the presence of a set of actors, each of which is
specifically assigned a role, task or centre of responsibility (e.g. head of
function/head of department).
• The organizational structure is represented by the organizational
chart/organigram, which highlights the hierarchical levels and formal
reporting relationships between organizational positions.
The analysis is conducted in the following sense:
• Vertical, hierarchical dependency relationships and span of control
• Horizontal, communication, integration and coordination requirements
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The
The design
design of
of the
the organizational
organizational structure
structure
The choice of the model depends on:
• Company size, intended as the volume of resources to manage
• Product-market situation
• Technology
• Structure and dynamics of the environment
• Strategies adopted both at the Strategic Business Unit (SBU) level and at
the Corporate level
The adequacy of the organizational structure is evaluated based on:
• Efficiency
• Operational elasticity
• Strategic elasticity
• Structural elasticity
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The design of the organizational structure
Characteristics of the structure:
→ elasticity, intended as the ability of the governing body to
adapt the structure over time through:
- elasticity of the product;
- elasticity of the mix;
- elasticity of the price;
- elasticity of supply.
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The design of the organizational structure
Characteristics of the structure:
→ flexibility intended as the governing body's ability to transform and/or
restructure the specific structure over time.
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Principal organizational
Organizational structures
Structures
The main models to inspire organizational design are:
• Elementary
• Functional
• Multidivisional
• Matrix
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The elementary organizational structure
• Low complexity: few hierarchical levels and a simple structure;
• low formalization: minimal documentation and formal rules
and processes rely on direct and informal relationships;
• limited specialization: roles are broad, and employees often
perform diverse tasks.
High effectiveness and efficiency in the case of:
• small size: micro-enterprises;
• organizations in the early stages of development or with a
limited number of employees;
• environments with low complexity and stable dynamics;
• strategies focused on simplicity and close customer
relationships.
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The elementary organizational
An elementary organizationalstructure
structure
Enterpreneur
=
General Manager
=
Owner
Sales Operational
Production
operations administrative
operations
officer officer
officer
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The elementary organizational structure
Strengths:
- flexibility in the short-term;
- low structure costs;
- interpersonal relationships.
Main limitations:
- low capacity for monitoring the environment;
- accumulation of unsolved problems;
- little focus on growth;
- operational imbalance.
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The functionalorganizational
A functional organizationalstructure
structure
• High functional specialization
• High structural rigidity
High effectiveness and efficiency in the case of:
• small company size;
• low product differentiation and long life cycle;
• stable technology;
• stable environment;
• strategies based on development in existing markets and
penetration into new ones.
• Methods of mitigating functional rigidity.
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The functionalorganizational
A functional organizationalstructure
structure
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The functionalorganizational
A functional organizationalstructure
structure
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The multidivisional organizational structure
• High autonomy for divisions.
• High operational elasticity.
High effectiveness and efficiency in case of:
• growth in company size;
• proliferation of products/services;
• technological development;
• tendentially unstable competitive environments;
• differentiation strategies.
• Degree of divisionalization and central structures.
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AThe multidivisionalorganizational
multidivisional organizational structure
structure
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The multidivisionalorganizational
A multidivisional organizationalstructure
structure
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The multidivisional organizational structure
The GEOGRAPHIC AREA STRUCTURE is a type of divisional structure that groups
activities according to the geographic areas in which the organization is present, each
of which includes all the functions necessary to produce and market products or
services in that territorial area.
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The matrix organizational structure
Organizational structures divided along two or more dimensions:
• Business unit-function;
• Project-function;
• Function-product.
Organizational units of two types:
• Operational units;
• Support units.
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The matrix organizational structure
Depending on the «weight» of the project manager in relation to the functional
manager, there are three types of matrix structures:
• Weak Matrix
In the weak matrix, the functional manager holds the majority of authority. The
project manager acts as a coordinator or facilitator, with limited decision-making
power.
• Strong Matrix
In the strong matrix the project manager has significant authority over
resources, decisions, and project outcomes. Functional managers provide
technical or specialist support, but operational control is centralized under the
project manager.
• Balanced Matrix
The balanced matrix represents a shared authority between the project
manager and functional managers. Both collaborate to meet project goals,
balancing operational and project needs. It’s a flexible structure but may lead to
conflicts if not well-managed.
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The matrix organizational structure
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The matrix organizational structure
It allocates organizational responsibilities by defining a matrix of responsibilities
through the adoption of two (or more) specialization criteria.
It represents the most effective organizational solution when the following
conditions occur:
- medium to large size;
- products with a short life cycle;
- need to carry out internal technological development activities;
- segmentation and strong differentiation strategies.
It can be considered as an evolution of the divisional or holding structure.
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The matrix organizational structure
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Allocating Resources to Strategy-Critical Activities
Reasons for the allocation process include:
• To determine what funding is needed to execute new
strategic initiatives.
• To bolster value-creating processes.
• To strengthen the firm’s capabilities and competencies.
Allocating resources to support strategy execution
involves:
• Funding promising proposals; turning down those that do
not.
• Providing the proper amount of funding to support new
strategic initiatives.
• Reallocating resources to support new strategies.
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Instituting Strategy-Supportive Policies and Procedures
Strategy execution is facilitated by policies and
procedures that:
• Help enforce the needed consistency in how
particular strategy-critical activities are performed.
• Provide top-down guidance regarding how certain
things now need to be done.
• Promote a work climate that facilitates good
strategy execution.
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When Do Policies and Procedures Become “Excessive”?
Too much policy:
• Can be confusing and erect obstacles to good strategy
implementation.
• Is inappropriate when individual creativity and initiative are
more essential to good strategy execution than
standardization and strict conformity.
Wisdom in a middle approach:
• Prescribe enough policies to place boundaries on employees’
actions, then empower them to act within these boundaries in
ways they think makes sense.
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Striving for Continuous Improvement
in Processes and Activities
Key tools for continuous improvement:
• Business process reengineering.
• Total quality management (TQM) programs.
• Six Sigma quality control techniques.
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Management Tools for Continuous Improvement (1 of 2)
Business process reengineering:
• Involves pulling the pieces of strategy-critical activities out of
different departments and unifying their performance in a
single department or cross-functional work group.
Total quality management (TQM):
• Emphasizes continuous improvement in all phases of
operations, 100 percent accuracy in performing tasks,
involvement and empowerment of employees at all levels and
departments, team-based work design, benchmarking, and total
customer satisfaction.
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Management Tools for Continuous Improvement (2 of 2)
Six Sigma:
• Statistics-based quality control system aimed at producing not
more than 3.4 defects per million iterations for any business
process—from manufacturing to customer transactions.
• Seeks to define, measure, analyze, improve, and control
variability in the organization’s processes.
• Improves the efficiency of operating activities and processes,
but its rigidity can also stifle innovation.
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The Difference Between Business Process Reengineering
and Continuous Improvement Programs
Business process:
• Reengineering that seeks to achieve
quantum gains of 30 to 50 percent.
Continuous improvement programs:
• Stress incremental progress—the never-
ending pursuit of inch-by-inch quality gains.
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Installing Information and Operating Systems
Execution of strategies and value-creating internal
processes depends on a number of internal operating
systems.
Information systems track and report data on:
• Customers.
• Operations.
• Employees.
• Suppliers.
• Finances.
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Using Rewards and Incentives to Promote
Better Strategy Execution
Rewards should motivate employees to focus on what
results must be achieved and not on simply performing
their jobs.
Reward systems should include both monetary and
nonmonetary incentives.
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Guidelines for Designing Monetary Incentive Plans
Compensation incentives:
• Make performance payoff a major piece of the total
compensation package.
• Have incentives that extend to all managers and all workers.
• Administer the reward system with scrupulous objectivity and
fairness.
• Tie incentives to strategy execution and financial performance.
• Set performance targets that individuals or teams can
personally affect.
• Keep the time between achieving the target performance
outcome and payment of the reward as short as possible.
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Common Nonmonetary Rewards
Used to Enhance Motivation
Provide attractive perks and fringe benefits.
Adopt promotion from within policies.
Act on suggestions from employees.
Create a work atmosphere where there is sincerity,
caring, and mutual respect among all employees.
Share information with employees about financial
performance, strategy, operational measures,
market conditions, and competitors’ actions.
Have attractive office spaces and facilities.
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Instilling a Corporate Culture That Promotes
Good Strategy Execution
A corporate culture:
• Is the firm’s organizational DNA—its approach to
people management.
• Is comprised of shared core values, beliefs, and
business principles that are engrained in employee
behaviors and attitudes.
• Defines its operating style—the chemistry of the firm’s
work environment (“how we do things around here”).
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CORE CONCEPT: Corporate Culture
Corporate culture is a firm’s internal work climate and is
shaped by its core values, beliefs, and business principles.
A firm’s culture is important because it influences its
traditions, work practices, and style of operating.
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Characteristics of High-Performance Cultures
Characteristics:
• A strong sense of involvement by all employees.
• An emphasis on individual initiative and creativity.
• Clear statement of performance expectations.
• Prompt addressing of critical issues.
• Constructive pressure to achieve good results.
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Adaptive Cultures
Adaptive cultures are well suited to fast-changing
industries.
Characteristics of adaptive cultures:
• Willingness to accept change and embrace challenge
of introducing and executing new strategies.
• Internal entrepreneurship on the part of individuals
and groups encouraged and rewarded.
• Adopting a proactive approach to identifying issues,
evaluating the implications and options, and quickly
moving ahead with workable solutions.
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Traits of Unhealthy Corporate Cultures
Highly politicized internal environment:
• Issues are resolved on the basis of political clout.
Hostility to change:
• Avoid risks; experimentation and efforts to alter status quo are
discouraged.
Insular, inwardly focused “not-invented-here” mindset.
• Personnel discount the need to look outside for best practices.
Disregard for high ethical standards.
Presence of incompatible, clashing subcultures.
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Figure 10.2 Steps in Changing a Problem Culture
Access the text alternative for slide images.
© McGraw Hill LLC 63
Making a Compelling Case for a Culture Change
Why is there a need for change?
• Cite reasons the current strategy has to be
modified and why new strategic initiatives
are being undertaken.
• Cite why and how current behavioral norms
and work practices are obstacles to new
strategic initiatives.
• Explain how new behaviors and work
practices will produce better results.
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Symbolic Culture Changing Actions
Lead by executive example.
• Be alert to the fact that company personnel
will be watching their actions and decisions to
see if they are walking the talk.
Executive action to promote the strategy.
• Fit into the culture by appearing at ceremonial
functions to celebrate the culture and praise
individuals and groups that get with the
program.
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Leading the Strategy Execution Process
Managers at all levels of the firm must:
• Stay on top of what is happening and closely monitoring
progress by engaging in managing by walking around
(MBWA).
• Put constructive pressure on the organization to achieve
good results and operating excellence.
• Not delay in initiating corrective actions to improve strategy
execution and achieve the targeted performance results.
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Putting Constructive Pressure on Organizational Units
to Achieve Good Results and Operating Excellence
To foster a results-oriented, high-performance culture:
• Treat employees with dignity and respect.
• Encourage employee initiative and creativity.
• Set stretch objectives and clearly communicate
expectations.
• Focus attention on continuous improvement.
• Use motivation and compensation to reward high
performance.
• Celebrate individual, group, and company successes.
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Initiating Corrective Actions to Improve
Both the Firm’s Strategy and Its Execution
Decide when adjustments are needed.
Make corrective adjustments.
Decide what adjustments to make.
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