Building Resource Strengths and Organizational Capabilities - Review Notes

Based on Thompson and Strickland's Book

Implementing and executing strategy involves technology organization, resource acquisition, people organization, staffing, management of people and business processes. The managerial emphasis is on converting strategic plans into actions and good results.

The starting point for managers to start in implementing and executing a new or different strategy is a list of activities which the organization has to do differently from now onwards to achieve the strategic goals in the time frame envisaged. Then, the necessary steps to make the internal changes have to be instituted as early as possible.

Top-level managers have to rely on the middle and lower managers to understand and develop their unit levels plans to support strategy and explain strategy changes and related business process changes to department members and see that the organization actually operates in accordance with the strategy at department levels. Every step in the organization has certain people questioning it and the middle and lower managers must have the understanding to explain and persuade people to follow strategy .

Thompson and Strickland described eight managerial tasks as cropping up repeatedly in company efforts to execute strategy:

1. Building an organization with the competencies, capabilities, and resource strengths to execute strategy successfully.
2. Marshaling people behind the drive for strategy execution.
3. Instituting policies and procedures that facilitate rather than impede strategy execution.
4. Adopting best practices and pushing for continuous improvement in both marketing and operations activities.
5. Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently.
6. Tying rewards directly to the achievement of strategic and financial targets.
7. Shaping the work environment and corporate culture to fit the strategy.
8. Exercising management control to drive execution forward, keep improving on the details of execution, and achieve operating and marketing excellence as rapidly as feasible.

Building an organization capable of good strategy execution involves three dimension: (1) Staff: a talented, can-do team with the needed experience, technical skills, and intellectual capital; (2) Core competencies and competitive capabilities (3) the technology and people organization .

Building core competencies and competitive capabilities is a time-consuming development activity that involves three stages: (1) developing the ability to do something as novice act as a team. (2) Learning from the initial performances, and developing methods to perform the activity consistently well at marketable and profitable costs,, thereby transforming the ability into a tried-and-true business getting competence or capability; and (3) continuing to polish and refine the organization's know-how and otherwise sharpen performance such that it becomes better than competitors at performing the activity, thus raising it to the core competence (or capability) or to the rank of a distinctive competence (or competitively superior capability) and opening an avenue to competitive advantage. Many companies manage to get through stages 1 and 2 but comparatively few achieve sufficient proficiency to qualify for the third stage. The idea of top three in any industry illustrates this idea of many not being able to develop that superiority in competitive scenario.

While competitors can readily duplicate some strategy features, core competencies and capabilities are very difficult or costly for imitations and they give durable competitive edge.

Presentation slides

Conceptual Framework for Modeling Business Capabilities
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