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Strategy Implementation

Strategy Implementation. E-C Value Creation Process Redesign Change Management IT Project Management. E-C Value Creation: Five Levers. Time (cycle time reduction) Distance (overcome distance) Relationships (trust and loyalty) Interactions (chat, bboard, community)

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Strategy Implementation

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  1. Strategy Implementation • E-C Value Creation • Process Redesign • Change Management • IT Project Management

  2. E-C Value Creation: Five Levers • Time (cycle time reduction) • Distance (overcome distance) • Relationships (trust and loyalty) • Interactions (chat, bboard, community) • Product (enhancements, new products)

  3. Value Creation: Time

  4. Value Creation: Distance

  5. Value Creation: Relationships

  6. Value Creation: Interactions

  7. Value Creation:Product

  8. Three types of Value Creation • Efficiency or cost reduction • Effectiveness or better decisions • Strategic or competitive advantage

  9. E-C Value CreationEfficiency Effectiveness Strategic Time Distance Relationships Interaction Product

  10. Strategy Implementation • E-C Value Creation • Process Redesign • Change Management • IT Project Management

  11. Process Definition Process: A set of activities to produce output for customer/market - Set of inputs + Ordered activities - Cost, time, quality & customer satisfaction - Dynamic view of how value is created Focus:How, not just what Organizational Structure: Cross functional teams

  12. New Product Development Competitor Analysis & Market Research R & D Marketing Manufacturing NewProduct New Product Development Examples of Cross-Functional Processes Business Proposal Commitment Configuration Credit Delivery Billing Collection Processes Business Sales Manufacturing Finance Logistics Functions Order Management

  13. Efficiency Functional Same old rules Control Low risk, low gain Automation vs. Reengineering

  14. Principles of Process Design • Focus on outcomes, not tasks • Do it yourself (Production buys from certified suppliers) • Integrate information processing with real work (Ford) • Treat distributed work as centralized (Global buying) • Link parallel activities while in process, not at the end • Match decision point with work location (empower) • Capture information once, and at the source

  15. Ford Purchasing (1) Purchase Order Vendor Goods (2) Purchase Order Copy (3) Receiving Document Ford Receiving (4) Invoice Accounts Payable (500) (5) Payment Before Ford’s Procurement Process After Ford Purchasing Vendor EDI Goods Ford Receiving EFT Accounts Payable (125) EFT Ford & Vendor Banks Procurement Database

  16. Mortgage Loan Processing at BANC ONE Closing Loan Input Desk-to-Desk Approach: 17 days Laptop Closing Team Approach: 2 days

  17. Role of Information • Process performance monitoring (quality control) • Process integration (information as process glue) • Process customization (mass customization) • Information rich processes (e.g., financial sector) • Management processes (need external/informal data)

  18. Organizational Enablers Benefits: Wider skill set, Quality of life Structure:Team Criteria: Leadership, Composition, Clarity of goals Empowerment Routines/Culture Participative decision making Lateral communication Incentives, Gain sharing Compensation Career paths: More horizontal, less vertical Work role rotation to create a shared mind set

  19. Why is process re-design difficult? Any major organizational change requires

  20. Strategy Implementation • E-C Value Creation • Process Redesign • Change Management • IT Project Management

  21. What is the new economy? • A loosely defined concept to explain the stock market boom in 90s and Internet explosion! • Earlier uses have described service economy, globalization, and corporate restructuring. • The IT productivity paradox was finally set aside in late 90s. • The longest economic expansion ending in Mar ‘01 was often attributed to the new economy.

  22. Industry Context Low Complexity Static Strategy Formulation Strategy to fit Industry Strategic Lever Plan for competition Basis for Advantage Entry & Exit Barriers Industry Context High Complexity Dynamic Strategy Formulation Innovations Network effects Strategic Lever Speed Basis for Advantage Organizational flexibility Old vs. New Economy?

  23. Change Management • Change is the only certainty in the business world! • Assess the abilities & disabilities of the organization as a whole • The ability of an organization to conceptualize and manage change enables it to compete from the inside out • How can organizations change faster then their environment? • How can mature incumbents effect change?

  24. Organization Life Cycleand Change Challenges Organization Life cycle Change challenges Entrepreneurial Growth Maturity Decline Niche identification (Amazon) Survival shakeout (Dot-coms) Renewal (Whirlpool: Functional to Business units) Open/flexible Closed/inflexible Restructuring Bureaucracy bashing Employee involvement Continuous improvement Cultural change Right work Improved work Reenergizing Open/flexible

  25. Renewal of Organizations • Many cannot renew within, and fall prey to consolidations, acquisitions and mergers. How do organizations overcome the renewal challenge? • By altering their strategy, structure and systems. • By changing the mindset (accepted behavior / attitudes) • By focusing on customer perspective (external / internal customer satisfaction in performance appraisal system) • By reducing cycle time (boundaries inside / outside) • By empowering employees who act as leaders

  26. A Process for Re-energizing Mature Organizations 5. SUSTAINED COMPETITIVE ADVANTAGE (Magnitude of Long-Term Impact) • Mindset • Leadership • Work Employees no longer feel part of mature organization! 4. CONTINUOUS IMPROVEMENT •Simplicity •Speed • Service Focus on “right” work! Supplies Customers Change/Impact 3. EMPLOYEE EMPOWERMENT • Involvement • Job Design • Communication Profit sharing, access to management! 2. BUREAUCRACY “BASHING” • Reports •Meetings • Approvals • Measures Replace low-value work! Right work Improved work 1. RESTRUCTURING • Downsizing • Delayering Be fair yet bold! Time

  27. Incremental Strategic Anticipatory Reactive Tuning Reorientation Adaptation Disruptive Types of Organizational Change High Disruptive Reorientation Intensity of Change Adaptation Tuning Low

  28. What is Disruptive Change? • Sustaining Innovations • Improve product in ways customers value • Disruptive Innovations • A new market for a new product which is worse, not better, than competing products • Incumbents possess capabilities to foster Sustaining Innovations, and disabilities to embrace Disruptive Innovations

  29. How Can Incumbents Manage Disruptive Change? • Creating new capabilities internally: Pull the relevant people out of the existing organization, draw a new boundary around the new group, and create a new process. Examples? • Creating new capabilities thru a spinout: If you need a new cost structure or if the opportunity is small, a spinout may work. No need to compete with mainstream organization for resources. Often used by incumbent companies to deal with the Internet. • Creating new capabilities thru acquisitions: Easier if capabilities stem from resources only.

  30. Common Change Implementation Problems • Longer than anticipated • Major new problem • Coordination not effective • Competing programs and crises • Employee capabilities insufficient • Training and instruction inadequate • Uncontrollable external factors

  31. Strategy Implementation • E-C Value Creation • Process Redesign • Change Management • IT Project Management

  32. Classical Systems Development Life Cycle Investigation: Feasibility (Economic, Technical, Operational) Analysis: Requirements Determination, Logical Design Detailed Design: Technical Design, Coding & Testing, User Training Implementation: File conversion, System Installation

  33. Schematic of Prototyping Identify problem Initial Requirements Develop Prototype Convert to Production System Working Prototype New Requirements If Prototype Inefficient Problems Implement & Use Prototype Revise & Enhance Next Version

  34. Requirements Determination • Information Content, Accuracy, Coverage • System Reliability, Response Time, Transaction Volume, Data Volume • Changes in Input, Output, Processing, Database, Communication

  35. Problems of Requirements Determination • Human Limitations • Variety & Complexity of Requirements • Communication Problem

  36. IT Project Evaluation • Economic Feasibility • Operational Feasibility • Technical Feasibility • Risk Assessment

  37. Economic Feasibility * Development & Operation Costs * Tangible and Intangible Benefits * Cost Benefit Analysis * Payback Period * Return on Investment

  38. Operational Feasibility • Management Support • User Resistance / Involvement / Training • New People Required • Ease of Use

  39. Technical Feasibility • Technology Required • Technology Acquisition • Schedule Feasibility • Resource Requirement • Skills Required • Outside Help

  40. Project Risk Assessment • Project Size • Project Structure • Development Group • User Group

  41. Project Risk Assessment

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