SouthWest Airlines

The Module 5 background materials discussed the importance and process of strategy implementation. Four different organizational components were shown to be critical to successful implementation. With this information, we are now ready to begin completion of the final step of Strategic Planning – that of strategy implementation.
Note: Throughout this course, you should complete the SLP before you undertake the case analysis. Before you begin the SLP, you need to read the background materials thoroughly.
Required Readings
Please refer to the required and optional readings on Strategy Implementation, the theme for Module 5.
Assignment
In this module, we will be completing our strategic toolkit by researching sources of information about these components.
Your assignment is to locate some sources where you could find information about the organizational components discussed in this module. The following list of questions may help you focus your search (Source: Obtaining information about organizational components critical to implementation (adapted from Aaker, D.A. (2001) Developing Business Strategies. Wiley):
Structure
What is the organization’s structure? How decentralized or centralized is it?
What are the lines of authority and communication?
What are the roles of teams, committees, and task forces?
Systems
How are budgets set?
How is planning done?
What measures are used to evaluate performance?
People
What are the skills, experience, and knowledge of the firm’s employees?
What is their depth and quality?
What are their attitudes about the company and their jobs?
Culture
What are the company’s values and are they widely shared and accepted by employees?
What are the key norms of behavior?
What are some significant symbols?
What is the dominant management style?
How is conflict resolved?
Keys to the Assignment
Step One. Review the questions above and do some research to see where you could find answers to them. You may not be able to answer all of the questions, but try to find at least one source per component that addresses most of its characteristics.
Step Two. Create a 1-2 page list of sources and indicate what information each one provides for each component. Evaluate each source in terms of its objectivity, reliability, and truthfulness.
Assignment Expectations
Your paper will be evaluated on the following points:
Precision – Does the paper address the question(s) or task(s)?
Breadth – Is the full breadth of the subject, i.e., all the keys to the assignment, addressed?
Depth – Does the paper address all elements of the topic in sufficient depth? Does it include and apply the background readings and other background resources? Are they included as references?
Application – Are the concepts of the module appropriately applied to the subject organization?
Organization – Is the paper organized in a coherent and systematic manner? Are headings included in all papers greater than 2 pages?
Clarity – Is the writing clear and the concepts articulated properly? Are paraphrasing and synthesis of concepts the primary means of response to the questions, or are thoughts conveyed through excessive use of quotations?
Referencing (citations and references) – Does the paper use citations and quotation marks where appropriate? Are all references listed in the bibliography used and referred to via citation?
Strategy is implemented using organizational design (structure), people, culture, and control systems. Strategy must successfully work through these elements in order to produce performance. No matter how well a strategy is conceived, if an organization’s people cannot implement it, the culture cannot support it, and the structure cannot coordinate it, and the systems cannot measure and control it – the strategy will fail.
We will start here by considering how of each of these components individually link to strategy. By way of the case analysis, we will examine the integration or "fit" between the various components and strategy.
Structure
Organizational structure refers to the manner in which the lines of communication of authority are established, the manner in which work is divided up among organizational members, and the way that communication and work are coordinated. Different types of structures support different types of strategies. The key elements of structure that have the greatest effect on the success or failure of strategy implementation are centralization, boundaries, networks, and virtual organization.
Centralization
Centralization refers to the level of concentration of decision-making. In a highly centralized organization, decisions are made by a relatively small number of people, usually concentrated at the highest levels of the organization. Standardization is common in centralized organizations, thus favoring economies of scale and efficient value chains.
Decentralized organizations are characterized by flexible and autonomous decision making groups at operational levels in the organization. Such groups have the ability to rapidly adjust to changes in the marketplace and are well-suited to strategies that require innovation. However, because of duplication, economies of scale are difficult to achieve.
Emerging Structures
Borderless Organizations. Taking cross-functional teams to a new level, the borderless organization does not just assemble teams with members from different organizational levels and functions. Instead, the borderless organization removes barriers both vertically between levels and horizontally between functions or departments. The implications for strategy implementation include increased information, transparency, and flexibility.
Alliance Networks. These are collections of suppliers, distributors, customers, and even competitors who have the ability to bring needed assets to bear on an urgent problem where there is insufficient time to develop the needed resources and capacities in-house. Organized and coordinated online, these networks can be mobilized and put to work instantaneously.
Virtual Corporations. An extension of Alliance Networks, the virtual corporation is an extra-organizational coalition of people and organizations brought together expressly to work on a specific problem or project. They can be assembled rapidly and dispersed as soon as the project is over, representing the ultimate in flexibility and speed in strategy implementation.
The following reading is an exposition of how various types of teams can be useful in strategy implementation:
Pryor, M.G, Singleton, L.P., Taneja, S. and Toobs, L.A. (2009). Teaming as a strategic and tactical tool: An analysis with recommendations. International Journal of Management, 26 (2), 320-334 Available at http://web.ebscohost.com/ehost/detail?vid=23&hid=113&sid=18d89755-8d24-41a7-ad17-a051c85ff182%40sessionmgr115&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=43465818#db=bth&AN=43465818#db=bth&AN=43465818#db=bth&AN=43465818
Please click here for a presentation on Organizational Design by Professor Anastasia M. Luca, Ph.D. MBA
Strategic Controls (Systems)
Three organizational systems are essential to controlling strategy implementation:
Accounting and budgeting systems. These systems can be complex and not easily adapted. If a new strategy requires data that is not easily accessible through existing accounting systems, implementation can be slowed, and a potentially successful implementation can be jeopardized. If a new proposed strategy does not fit a familiar pattern, decision-making can be become risky and unpredictable.
Information Systems. Information technology is playing an ever-greater role in strategy implementation. IT provides point-of-sale information between retailers and manufacturers, streamlines logistics and distribution, and controls inventories. IT systems must be capable of providing the right information in the right format to the right people at the right time.
Measurement and Reward Systems. Rewards can be used to shape behavior in the direction of meeting strategic objectives. Rewards must be connected to measures of goal attainment (e.g. specific increases in market share), and proper time horizons (future rewards for future goals).
Please click here for a presentation on Strategic Controls by Professor Anastasia M. Luca, PhD MBA
People
Strategies that are based on distinctive competencies or unique capabilities are often dependent on people and their skills to carry them out. Thus, for successful implementation, sufficient numbers of people with the right skill sets are essential.
In-house or Import? Hiring raw talent and growing employees with the needed qualifications maximizes fit, but it can take years. Retraining existing workers with new skills can be problematic when old employees resist "learning new tricks." Hiring needed skills external to the organization is faster, but there is no guarantee that even they will fit well within the organization’s culture.
Motivation. It is not enough to have the right number of people with the right skills; people must also be motivated to work toward successful strategy implementation. Much is known about motivation, and many tools are available; these include including tangible rewards (e.g., bonuses) and intangible rewards such as self-fulfillment. Perhaps the motivator with the most potential for eliciting long-term commitment to fulfilling the firm’s strategic goals is that of empowerment, which gives employees the discretion and autonomy to use their initiative.
The following article highlights the importance of having the right people in place in order that strategic goals can be achieved:
Garrow, V. and Hirsh, W. (2008). Talent management: Issues of focus and fit. Public Personnel Management, 37(4), 389-403. Available at http://web.ebscohost.com/ehost/detail?vid=19&hid=113&sid=18d89755-8d24-41a7-ad17-a051c85ff182%40sessionmgr115&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=rzh&AN=2010154343
Culture
The fit between an organization’s culture and its strategy is critical. If a firm is depending on innovation to achieve differentiation, but the culture is risk averse or has a tendency to punish mistakes, the strategy will in all likelihood fail. Culture can support the strategy when three elements are in alignment:
Shared values that are aligned with the corporate vision and strategic focus. A management style that fosters behavior that will support the competencies that confer competitive advantage.
Norms can act as strong controls for strategic implementation. They encourage behavior that is in alignment with shared values. People can circumvent rules, and they cannot be watched all of the time, but norms can promote the desired behavior even when nobody is watching!
Symbols model for employees what values and norms are important. Some important symbols include the vision and style of the founder of the company and folklore or stories which embody company values, rituals, and routines, and which reinforce the types of events and behaviors that are most desired and celebrated.
The following reading ties together the importance of systems, strategy, structure and culture. It is highly readable and will help you see how all of these elements are interdependent and must align to achieve successful implementation:
Heneman, R.L., Fisher, M.M., and Dixon, K.E. (2001). Reward and organizational systems alignment: An expert system. Compensation & Benefits Review, 33(6), 18-29. Available from http://web.ebscohost.com/ehost/detail?vid=25&hid=113&sid=18d89755-8d24-41a7-ad17-a051c85ff182%40sessionmgr115&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=5926109
Required Readings
Garrow, V. and Hirsh, W. (2008). Talent management: Issues of focus and fit. Public Personnel Management, 37(4), 389-403. Available at http://web.ebscohost.com/ehost/detail?vid=19&hid=113&sid=18d89755-8d24-41a7-ad17-a051c85ff182%40sessionmgr115&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=rzh&AN=2010154343
Heneman, R.L., Fisher, M.M., and Dixon, K.E. (2001). Reward and organizational systems alignment: An expert system. Compensation & Benefits Review, 33(6), 18-29. Available from http://web.ebscohost.com/ehost/detail?vid=25&hid=113&sid=18d89755-8d24-41a7-ad17-a051c85ff182%40sessionmgr115&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=5926109
Pryor, M., Singleton, L., Taneja, S. and Toobs, L.A. (2009). Teaming as a strategic and tactical tool: An analysis with recommendations. International Journal of Management, 26 (2), 320-334 Available at http://web.ebscohost.com/ehost/detail?vid=23&hid=113&sid=18d89755-8d24-41a7-ad17-a051c85ff182%40sessionmgr115&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=43465818
Luca, A., M. (2006). Organizational Design. Power Point Presentation.
Luca, A., M. (2006). Strategic Controls. Power Point Presentation.

 

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