7-1

7-2

Chapter 7

Implementation

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

7-3Chapter 7: ImplementationChapter 7: Implementation

• Key questions answered in this chapter:– What factors are involved in successful strategy

implementation?– What are the implementation challenges for online firms?– What human-assets issues must firms be concerned with?– What are the different types of processes that firms must

develop?– What are the advantages of the two types of hybrid

organizational structures?– What systems might online firms be concerned with?– What kind of culture is best for e-commerce companies?– Why are partnerships so prevalent for online firms?

7-4Exhibit 7-1: Framework for ImplementationExhibit 7-1: Framework for Implementation

Business Model

Human Assets

Processes

Organizational Structure

SystemsCulture

Leadership

Partnerships

7-5Why Does Implementation Matter?Why Does Implementation Matter?

• Inappropriate strategy can be partially offset by proper implementation, but poor implementation will usually result in a company performing poorly in the marketplace

7-6Exhibit 7–2: Why Does Implementation Matter?Exhibit 7–2: Why Does Implementation Matter?

Success

All that can be done to assure success has been done.

Success

All that can be done to assure success has been done.

Roulette

Good execution will either mitigate poor strategy or hasten failure because strategy is not sound.

Trouble

Poor execution hampers good strategy. Managers may never become aware of strategic soundness because of execution inadequacies.

Failure

Bad strategy is difficult to diagnose because it is masked by poor execution.

Two things are wrong, making problems more difficult to fix.

Failure

Bad strategy is difficult to diagnose because it is masked by poor execution.

Two things are wrong, making problems more difficult to fix.

Poor

Good

Appropriate Inappropriate

Strategy

Source: Modified version of materials in Thomas V. Bonoma, The Marketing Edge (New York: The Free Press, 1985).

7-7Implementation Challenges for Implementation Challenges for Online FirmsOnline Firms

Six implementation challenges of online firms:1. Higher visibility to errors

– Internet firms are closely monitored by the media, thus mistakes become magnified

2. Lower switching costs– It costs a consumer very little to switch from one site

to another (click of the mouse)

3. More dynamic competitive environment– Low barriers to entry result in opportunities for

competitors and new entrants, when implementation is poorly executed

7-8Implementation Challenges Implementation Challenges for Online Firmsfor Online Firms (cont’d) (cont’d)

4. More fluid organizational boundaries– Increases contact between partnering

organizations, but elevates the complexity of the interactions

5. More dynamic market environment– Companies must implement quickly in order to

adjust to the changing marketplace

6. More complex linkages– Increased linkages result in a more bureaucratic

process, thus slowing the decision process

7-9Exhibit 7-3: Challenges Exhibit 7-3: Challenges of Online Implementationof Online Implementation

Customer Driven

Customer Driven

Organization Driven

Organization Driven

More visibility of errors = Stronger

competitive implications of errors

More visibility of errors = Stronger

competitive implications of errors

Lower switching barriers = Increased importance of good

implementation

Lower switching barriers = Increased importance of good

implementation

More complex linkages = Increased

complexity of implementation

More complex linkages = Increased

complexity of implementation

More fluid organizational boundaries =

Increased complexity of implementation

More fluid organizational boundaries =

Increased complexity of implementation

More dynamic competitive

environment = Increased complexity

of implementation

More dynamic competitive

environment = Increased complexity

of implementation

7-10Implementation Mistakes Implementation Mistakes Made by CompaniesMade by Companies

• Six “silent killers” of implementation– Top-down or laissez-faire senior

management style– Unclear strategy and conflicting priorities– Ineffective senior management team– Poor vertical communication– Poor coordination across functions,

business, or borders– Inadequate down-the-line leadership skills

and development

7-11

Human AssetsHuman Assets

• Recruitment– Refers to the formal task of searching for the right

employees

• Selection– Is the process of making hiring decisions and formal job

offers

• Development– Providing the employee a professional development plan to

accentuate individual strengths and improve on weaknesses

• Retention– Constantly evaluating and “ranking” employees to ensure

the company provides the best work environment and best total compensation packages

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ProcessesProcesses

• Patterns of interaction, coordination, communication, and decision-making that employees use to standardize how work is done.

• These must be configured by online firms

during implementation:– Resource-allocation processes– Human resources management processes– Manufacturing and distribution processes– Payment and billing processes– Customer support/handling processes

7-13Another Definition: What is the Delivery Framework?Another Definition: What is the Delivery Framework?

• The delivery framework translates the resource system from a conceptual structure into a concrete configuration of resources, processes, and supply chains

• The delivery framework has a major impact on the customer retention and on the customer’s views of the brand/product

7-14Five Components of the Delivery FrameworkFive Components of the Delivery Framework

1. People2. Systems3. Assets: physical and information-based4. Processes: patterns of interaction,

coordination, communication, and decision-making that employees use to transform resources into customer value

5. Supply chains

7-15

4

ProcessesProcesses

AssetsAssets

SystemsSystems

PeoplePeople

MAPPING THERESOURCE SYSTEM

DELIVERY SYSTEM

Supply ChainsSupply Chains

Exhibit 8-4: The Delivery System Needs to Support and Reinforce the

Resource System

7-16Online and Offline IntegrationOnline and Offline Integration

• Types of Hybrid organizations:1. Single-Organization: Advantages

– Flexibility between channels– Consistent integration of online and offline

customer service– Managing a consistent brand– People- employees have option of learning

broader set of skills and capabilities– Taxes– Valuation– Systems

7-17Online and Offline IntegrationOnline and Offline Integration (cont’d) (cont’d)

2. Dual-organization: Advantages– Coordination and cooperation processes– License to cannibalize– People- two separate organizations for

recruiting– Allocations– Sales Tax exemption for Online sales

7-18Exhibit 7-4: Single Organization versus Exhibit 7-4: Single Organization versus Dual OrganizationDual Organization

CEO of company

• Company strategy

• Human assets

• Operations

• IT infrastructure

• Processes

• Culture

• Online and offline partnerships

Single Organization

Online CEO

• Online strategy

• Human assets

• Operations

• IT infrastructure

• Processes

• Culture

• Partnerships

Offline CEO

• Offline strategy

• Human assets

• Operations

• IT infrastructure

• Processes

• Culture

• Partnerships

Dual Organization

Company CEO

7-19Four Types of Online Supply ChainsFour Types of Online Supply Chains

1.Business-to-Consumer(B2C)– E-tailer has significant flexibility in its supply

chains

• One advantage is online retailers do not have to have the physical product in stock– Four types of B2C supply-chain models:– A. Stock-it-yourself– B. Outsource warehousing– C. Drop shipping– D. Fulfillment intermediaries

7-20Online Supply ChainsOnline Supply Chains (cont’d) (cont’d)

2. Business-to-Business(B2B)– Estimated to be 3 to 10 times larger than the B2C

market– Advantages include: lower input prices, reduced

inventory, reduced transaction costs, faster delivery, and better customer service

3. Consumer-to-Business(C2B)– Organize consumers together to create group-buying

power in order to reduce costs

4. Consumer-to-Consumer (C2C)– Firm facilitates person-to-person interaction, e.g., Ebay

7-21Exhibit 7-5: Four Types of Supply Exhibit 7-5: Four Types of Supply Chains Found OnlineChains Found Online

B2C - Business to ConsumerB2C - Business to Consumer

Stock it yourself.

Outsource warehousing

Drop shipping

Fulfillment intermediaries

Stock it yourself.

Outsource warehousing

Drop shipping

Fulfillment intermediaries

B2B - Business to BusinessB2B - Business to Business

Customer centric

Vertical hubs

Customer centric

Vertical hubs

C2C - Consumer to ConsumerC2C - Consumer to Consumer Much like a vertical hub (many websites

facilitate customer-to-customer sales)

Provides a forum for buyers and sellers to meet and trade directly

A global marketplace with a large and interested trading company

C2B - Consumer to BusinessC2B - Consumer to Business

Individual consumers place bids with businesses (such as Priceline) and businesses decide whether to sell

Individual consumers place bids with businesses (such as Priceline) and businesses decide whether to sell

7-22Exhibit 7-6Exhibit 7-6: : Generic Organizational Generic Organizational Culture TypesCulture Types

Low HighSpecificity

External

Internal

Entrepreneurial Adaptive

Commitment Bureaucratic

- Proactively identifies issues- Good at planning and setting goals- Responsive to market changes- Outcome oriented

- Emphasizes internal cohesion, participation, teamwork, and loyalty

- Unbounded by rules and precedents- Willing to take risks- Flexible- Innovative

- Emphasizes stability, established routines, and formal authority

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LeadershipLeadership

• The Roles of Company Leadership– Responsible for building the capacities

needed for strategy implementation– Designing structures and systems– Setting roles and responsibilities– Allocating resources– Assigning managers

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Leadership Leadership (cont’d)(cont’d)

• The Role of Top Leadership– Think strategically– Communicate persuasively– Act decisively– Demonstrate ethical behavior and strong

character– Build a sense of momentum for their firm

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Leadership Leadership (cont’d)(cont’d)

• Important Abilities for Management Teams of Online Companies– Ability to keep the CEO in check– Ability to communicate the vision of the

company– Experience in startups, online businesses,

or catalog businesses– Experience in technology roles

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Exhibit 7-7: Partnership AttributesExhibit 7-7: Partnership Attributes

Strategic Functional

Weak

Outsourcing

License Agreements

Cross-Promotion

Link Exchanges

Joint-Product Offerings

Research and Development

7-27Getting Things Done: Getting Things Done: Integrative Resource SystemIntegrative Resource System

• Principle 1: Execution Is Led by Senior Management—Not the Troops

• Principle 2: Hold People Accountable for Meeting the Numbers

• Principle 3: It Is Not Just About the Numbers; It Is Also About the Process

• Principle 4: Continuous Improvement Is Still Relevant and Important

• Principle 5: The Customer Is the Starting Point

• Principle 6: Hire and Develop the “Doers”