Small Business Blog from Atlantic Canada

I am "CA" Atreya (PMP, MBA), the author of this blog. I help businesses in Atlantic Canada achieve their BHAG successfully. You may subscribe to this blog using a feed reader (RSS).

Note: For the first article in this series please go to Issues in Strategy Implementation.

In the last article we discussed leadership and how important it is for the leader to drive the strategy implementation within the organization. We also briefly looked at some of the traits required from a leader. We now turn our attention to one of the most important facets of strategy implementation - building teams with competencies and capabilities. When looking for a competitive advantage in this area, the best strategy is to build core competencies and organizational capabilities that your competitors cannot easily duplicate.

Successful strategy implementation depends on competent employees and their capabilities. They are important for your organization to develop core competencies. Building a capable organization should be one of the top priorities for your organization. First and foremost, this involves putting together a strong management team. Once you have a management team, you need to attract employees with necessary experience, technical skills and other soft skills. As the CEO, you need to take a very objective view of the existing management team and evaluate if the team is suitable. The skills you need vary depending on the type of strategy you are planning to implement. For example, in turn-around and high growth instances, you may find that the required skills may not be available in-house. Developing such skills takes time. Hence, you may have to recruit new personnel. Putting together a strong management team with the right skills that works cohesively is one of the first tasks in strategy implementation. Let us look at IBM as an example.

When IBM was floundering in the 90s, it had lost over 50% of revenues from its major project line. Margins were shrinking as sales kept falling. In the first months, Gerstner focused on getting the right leadership team, breaking up fiefdoms, aligning compensation with performance, establishing effective internal and external communications. One of Gerstner’s quotes that I particularly like is, “strategy can only take you so far … in the end it comes down to leadership and execution to achieve results.”

The next step is to ensure you have the right mix of employees across all levels. Successful organizations like Nike, GE, Intel, Microsoft and Google ensure they attract and retain the brightest talent they can find. Such employees are also a source of competitive advantage. Your management team needs to take the effort to screen and evaluate potential employees. You must only select those with the suitable skills, energy, initiative, judgment and the right attitude. You need to make sure these recruits can work within your organization’s work environment and culture. You also need to challenge your employees to innovate and be creative, and motive them to upgrade their skills continuously.

Hiring and retaining competent employees can help you develop core competencies. Your organization’s core competency emerges incrementally as you go about your business. It is prudent to be proactive about what your customers will want and build competencies and capabilities that are scalable. Building core competencies is an inter-departmental effort. Each department performs complementary activities across your organization’s value chain. This is important. Your management team’s role is to concentrate enough resources and management attention on activities that strengthen your core competencies.

As a CEO you also need to decide if you are going to outsource capabilities or develop them in-house. Both have their pros and cons. Complex activities like manufacture of an airplane or a PC requires a diverse set of capabilities - all of which may not be available in-house or may take time to develop. It requires inter-disciplinary skills. An alternative to outsourcing is to acquire other organizations across the value chain. The collective capabilities of all stakeholders create your organization’s core competency.

Even after these competencies and capabilities are in place, you cannot afford to let your guard down. Market forces, customer needs, competition make this a very dynamic strategic activity. Dedicated and ongoing management efforts are needed to keep pace with today’s dynamic business environment. Since this is such a dynamic area, if you are successful in fine tuning this process, you have a competitive advantage over your rivals since this process cannot easily be duplicated.

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