26. One Chapter 1 Overview of Strategic Management Practice 5
27. Introduction Strategic Implementation Joseph Mba The overriding argument of this book is that some organizations succeed more than their peers because of their ability to effectively practice strategic management – a well orchestrated strategic planning and a well directed strategic implementation. The first part of strategic management practice has be en comprehensively treated in the Strategic Planning manual. Much of this manual is devoted to describing the processes, tasks and techniques involved in effective Strategic Implementation. DEFINITION OF CONCEPTS The following definitions of terms used in this book is to provide you with a working understanding of concepts in strategic management practice 6 Overview of Strategic Management Practice
28. Introduction CONT’D Strategic Implementation Joseph Mba STRATEGY An orchestrated set of moves (decisions and actions) which are made to enable a strategist address strategic priority issues and achieve strategic results. STRATEGIC MANAGEMENT PROCESS Simply put, it is a process by which managers choose and execute strategies for their organizations in order to address its strategic issues and achieve its strategic goals and objectives more than its peers. Management in which all executives engage in continuous rethinking of themselves, the organization and the environment and in developing, implanting, implementing and controlling organizational directions, strategies and programmes aimed at achieving strategic results (J. Mba, 2005) 7 Overview of Strategic Management Practice
29. Introduction CONT’D Strategic Implementation Joseph Mba STRATEGIC MANAGEMENT PRACTICE The professional application of strategy processes, principles and models in management, aimed at achieving strategic performance outcome. (J. Mba, 2009) STRATEGIC PERFORMANCE OUTCOME SPO is a triangular framework which views organizational performance from the strategic binoculars of values to customers and shareholders, elevated to the degree of super strategic results (J. Mba, 2009) 8 Overview of Strategic Management Practice
30. Introduction CONT’D Strategic Implementation Joseph Mba STRATEGIC RESULTS This represents the degree to which an organization has been able to achieve superiority in major strategic goal areas relative to its peers or rivals. The strategic goal areas are Addressing strategic priority issues Aligning conflicting forces / building strategic relationship Responding to and managing change Building strategic advantage Achieving superior performance and position Achieving sustainable performance STRATEGIC PRIORITY ISSUES These are the outcome of all strategic thinking and analysis process. They identify these issues external conditions, internal abilities , competitive situations or a mix of them which have impacts that are i) Fundamental to the Organization ii) Cross – functional or organization-wide in nature iii) Futuristic Consequences 9 Overview of Strategic Management Practice
31. Introduction CONT’D Strategic Implementation Joseph Mba STRATEGIC RELATIONSHIPS AND COMFLICTS ALIGNMENT Every organization is web of relationship weaved by groups of exert different stakeholders as they promote or destroy organization’s ability to achieve its planned strategic performance outcome. In the fast – evolving, virtual world of today, every organization should divide its relationship not according to the traditional internal and external relationships, but according to the impact and source of the relationship. Therefore, my model of organizational relationships are divided into three SYMBIOTIC RELATIONSHIP Relationships with people, organizations and nations in mutually beneficial interaction and interdependence to the organization’s self, leaders and co-workers. COMPETITIVE RELATIONSHIPS Relationships with competing people, organizations and nations e.g. rivals and enemies AIMS AND OBJECTIVES This course is designed to teach the students the processes and techniques for effectively implementing strategic plans that will produce the desired strategic performance outcome. 10 Overview of Strategic Management Practice
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34. STRATEGIC BUSINESS PLANNING: The strategic planning decisions which are carried out at the business and divisional managers in order to achieve strategic results in the industry or competitive environment12 Overview of Strategic Management Practice
35. Implementation Planning Strategic Implementation Joseph Mba A hybrid of decisions and actions that provide the rationale and details for the effective execution and control of the strategic plan 13 Overview of Strategic Management Practice
41. Overview of Strategic Implementation CONT’D Strategic Implementation Joseph Mba Overview of Strategic Management Practice Strategic Management Practice – J. Mba’s Model 15
42. Tasks in Strategic Implementation Process Strategic Implementation Joseph Mba 16 Overview of Strategic Management Practice
43. Two Chapter 2 Strategic Implementation Planning Envelop 17
44. INTRODUCTION Strategic Implementation Joseph Mba I thank God Almighty for His mercies, grace and loving kindness. It is only you who made today possible. I appreciate the special Guest of Honour, Chief Dr. Felix Ohiwerei (OFR) for the privilege of his presence today. It is a special joy to me to meet you, a great ICON and living legend of Nigeria’s Business Community. To my chairman, life – role model and mentor, Apostle Prof. HayfordAlile (OFR), I can never stop thanking you for believing so much in me and supporting me in all situations. I wonder how the scale of my courage would have read without your inspiration. I appreciate my father in Strategic Management, Dr. Austin Uwandulu. Our meeting in August, 2003 turned me into a strategist. I thank you very much for the light you gave me. I can never forget that special opportunity to learn. I thank all the members of the panel of discussants, many of whom have positively affected me in one time or the other to be here. I thank SBS clients, some of which have given me the opportunity to empirically test and implement and theories and models I have developed. You will also be the first beneficiaries of all SBS innovations 18 Strategic Implementation Planning Envelop
45. INTRODUCTION CONT’D Strategic Implementation Joseph Mba My students occupy a special place in my commitment to the knowledge industry. The testimonies of your championship in offices and careers inspire me a lot. None of you will fail as strategic management professionals, in Jesus Name. SBS Staff, you are the source of my momentum. I appreciate all of you for your faith force. The representatives of the media, especially Guardian, The Sun, Punch, DBN and others. I thank you for your support. Ladies and gentlemen, thank you all for your desire to succeed with Strategic Management. 19 Strategic Implementation Planning Envelop
46. Philosophy Behind This Model Presentation Strategic Implementation Joseph Mba Five beliefs and perspectives crystallized into what will happen today, and with God, what will continue happen for a long time It does not have to be innovated or said or written by the white to be correct or noble. Wole Soyinka, Bartholomew Nnaji, Imegwali, J. J. Okocha, Christ Generals, Musicians, Artists have proved that beyond doubt Imitation is a brain destroyer, innovativeness is the fuel of genius. I will read to update and upgrade my knowledge of Strategic Management literature, but I am more committed to continually innovate new implementable ideas and development of strategic management theories and practices The Spirit of Continuous Improvement and excellence is superior to the Spirit of Perfectionism. Start as you are, finish great. Strategy driven by Strategic intent achieves Superior Winning than Strategy driven by situation I can be, do and have all things because my faith is in God and in my mind (All things are possible to me). 20 Strategic Implementation Planning Envelop
47. Learning Objectives Strategic Implementation Joseph Mba At the end of this presentation, you should be able to Identify the critical phases and stages in effective Strategic Management practice Identify the major reasons why most strategy implementation efforts fail Identify the position of implementation planning in effective strategic planning and implementation tasks Develop skills in the deployment of implementation planning envelop 21 Strategic Implementation Planning Envelop
48. Opening Case Study Strategic Implementation Joseph Mba XEROX: ANNE MULCAHY AND HP: CLARLY FIORNA THE DETAIL IS IN DETAIL Xerox and Hewlett-Packard faced difficult times as this decade began. For Xerox, bankruptcy was a real possibility given $14 billion debt and its serious problems with the U.S. Securities and Exchange Commission. Hewlett-Packard was falling behind in the computer business while living solely on profits from its printer division. Anne Mulcahy became Xerox CEO during this time. ClarlyFiorna became HP’s CEO. Five years later, Anne Mulcahy was celebrated for the success of her strategy at Xerox while Carly Fiona was dismissed for the failure of the path she chose. Two legendary technology companies and two celebrated CEOs who shattered the “glass ceiling” in being selected to lead two legendary companies back to glory: why did one succeed and the other fail? Analysis suggest that the “devil is in detail”. Fiona's strategy was to acquire Compaq, build the size of HP’s PC business, and use profits from HP’s venerable printer business to sustain a reorganisation of the combined companies. Mark Anderson, an investment analyst who has followed HP for more than 20 years, said this about Carly Farina's strategy: “I would say it stinks, but it isn’t even a strategy. A few bullet points don’t make a strategy. Such an approach lacks the technical and market understanding necessary to drive HP”. 22 Strategic Implementation Planning Envelop
49. Opening Case Study CONT’D Strategic Implementation Joseph Mba In other words, Carly Fiona's strategy was a glitzy combination of two large computer companies, but it was less clear exactly what key actions and tactic would bring about a reinvented, “new”, profitable HP. Anne Malcahy took a different approach, in part reflecting her 28 years inside Xerox. She set about to “reinvent” Xerox as well, but made four functional tactics and their respective short-term objectives very clear building blocks for reinventing Xerox: She prioritized aggressive cost cutting- 30 percent- throughout the company to restore profitability. 2. she emphasized a productivity increase in each Xerox division. 3. She quickly settled Xerox's SEC litigation about its accounting practices, and she refinanced Xerox's massive debt. 4. She made a major point of continued heavy R&D funding even as every other part of Xerox suffered through severe cost cutting. This, she felt, sent a message of belief in Xerox's future. It clearly established her priorities. 23 Strategic Implementation Planning Envelop
50. Opening Case Study CONT’D Strategic Implementation Joseph Mba Mulcahy’s articulation of specific tactical efforts, and the short-term objectives they were intended to achieve, turned Xerox around in three short years. As she proudly pointed out: “Probably one of the hardest things was to continue investing in the future, in growth. One of the most controversial decisions we made was to continue our R&D investment. When you’re drastically restructuring in other areas, that’s tough decision. It makes it harder for the other businesses to some extent. But it was important for the Xeror people to believe we were investing in the future. Now two-thirds of our revenue is coming from products and services introduced in the last two years” QUESTIONS What background factors contributed to Anne success in HP and Anne’s failure in Xerox? Both CEOs set out to reinvent and turnaround Xerox and HP. What strategic moves drove the Xerox success and HP failure Analysis suggest that the “Devil is in Details”! Explain 24 Strategic Implementation Planning Envelop
58. Executiveship and Governance PlanningPRACTICE GUIDE Strategic Planning and Organization Role Situation Cycle and Composition of Top Executives and Board Assessment Sheet Submitted Summary Closing Shot 25
59. Ineffective Strategic Management Practice The argument of this presentation is that, while there are other planning and implementation issues that cause the failure of implementation by organizations, the main cause is the gap created by the absence of or poor implementation planning in the equation of strategic planning and implementation. 26 Strategic Implementation Planning Envelop
60. Effective Strategic Management Practice Strategic Implementation Joseph Mba Strategic Implementation Planning Envelop For effectiveness, implementation planning must end the strategic planning process and also begin the strategy implementation phase. Implementation Planning is concerned with well hybrid of designs and actions which provide the rationale and details for the execution and controls of the strategic plans. For effectiveness, the implementation planning must be comprehensive, integrated and dynamic and implement table. 27
61. Tasks in Strategic Implementation Process Strategic Implementation Joseph Mba 28 Strategic Implementation Planning Envelop
62. Overview of Strategic Planning Strategic Implementation Joseph Mba The ultimate, but highly neglected or partially recognized phase in the strategic planning process is implementation planning. Where it is remembered and included, we have seen them to be in form of schedule of activities, schedule of procedural manual and budgets. These are the best we have seen among our clients and many books. The Implementation Planning Envelope is the outcome of Six years of both conceptual and field research. It started in 2004, when I first presented my thought in strategy implantation, under the Institute of Strategic Management, Nigeria. An attempt to develop a Strategic Planning Process that is comprehensive, integrated, dynamic and implementable by all types and ages of organizations. The implementation planning envelop completes the planning process and provides a strong bridge for effective execution of strategic plans 29 Strategic Implementation Planning Envelop
63. Effective Implementation Planning Strategic Implementation Joseph Mba As already stated, implementation planning is concerned with all hybrid of decisions and actions which provide management with the rationale and details for the execution and control of strategic plans. There are many models of Implementation Planning. However, an effective one should fulfill the following requirements LINKAGE: It should be the linking bridge between strategic planning and strategic implementation COMPREHENSIVE: It should cover all dimensions of the organization INTEGRATED: Combine all factors into a consistent and content whole DYNAMIC: Can be adjusted and tailored to meet all environmental and coverage situation IMPLEMENTABLE: Can be turned into concrete actions results 30 Strategic Implementation Planning Envelop
64. Strategic Implementation Planning Envelop Strategic Implementation Joseph Mba Strategic Implementation Planning Envelop Implementation Planning Envelop 31
65. Strategic Implementation Planning Envelop CONT’D Strategic Implementation Joseph Mba In the development of this model, eight strategic planning and implementation questions were asked. In seeking the answers to these questions, we discovered the missing links to effective strategic planning and implementation. The rationale and details are provided by answering the following questions 32 Strategic Implementation Planning Envelop
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70. Strategic Implementation Envelop CONT’D Strategic Implementation Joseph Mba Strategic Implementation Planning Envelop The stand of SBS implementation planning envelop is that certain closing decisions should be made before the actual execution and control of strategy. It also posits that such decisions should cover and link all actions involved. 37
71. Action Planning Strategic Implementation Joseph Mba Once an organization completes the development of its corporate and business plans, it must embark on planning their implementation. The first phase in implementation planning is the development of Action Plans. An Action Plan is a set of focal decisions that enable the organization to translate its longer terms objectives and strategies into concrete operational activities. It identifies the specific steps that will be taken to achieve strategic initiatives and objectives. Therefore, each initiative has a supportive action plan (s) attached to it. The critical questions that Action Plan answers are: What will be done? Who will do them? When will they be completed? How will they be done? 38 Strategic Implementation Planning Envelop
72. Action Planning CONT’D Strategic Implementation Joseph Mba WHAT WILL BE DONE A list of major task areas that should be decided include Deciding short objectives and targets to be achieved Deciding the functional strategies and programmes to support and actualize the business strategies. Deciding Resources allocation and budgeting (A Budget Committee is set up) Deciding organization Systems, policies, internal processes, procedures and internal controls, structures, value chain activities and responsibility assignments (Organization Manual) Deciding Control Systems. Schedule of approval / review meetings, work monitoring and tracking, evaluation and feedback systems. 39 Strategic Implementation Planning Envelop
73. Overview of Strategic Planning Strategic Implementation Joseph Mba The ultimate, but highly neglected or partially recognized phase in the strategic planning process is implementation planning. Where it is remembered and included, we have seen them to be in form of schedule of activities, schedule of procedural manual and budgets. These are the best we have seen among our clients and many books. The Implementation Planning Envelope is the outcome of Six years of both conceptual and field research. It started in 2004, when I first presented my thought in strategy implantation, under the Institute of Strategic Management, Nigeria. An attempt to develop a Strategic Planning Process that is comprehensive, integrated, dynamic and implementable by all types and ages of organizations. The implementation planning envelop completes the planning process and provides a strong bridge for effective execution of strategic plans 40 Strategic Implementation Planning Envelop
74. Action Planning Procedure Strategic Implementation Joseph Mba Generally, action planning process is in the following order Identifying the tactical strategy initiative and action plan area Appointment of a Action Plan Team (both the leader and the team members) The team decides the most important long-term (3 – 5yrs) and short-term (12months) objectives and goals The team decides the activities and tasks that must be achieved to successfully implement the strategy initiative (this is the ‘what to be done’ broken down) in specifics The team then assigns each activity or task to a specifically named person (‘who to do what’) The team also assigns cross-functional leverages and cooperations from other departments or sections (e.g. to pursue approvals or assistance from others) to responsible members of the team The team fixes the date on which the assigned tasks must be completed (‘when to complete’) Team meetings are held periodically to review and report progress during the action planning period 41 Strategic Implementation Planning Envelop
76. Functional Level Strategies Strategic Implementation Joseph Mba Functional Strategy is the managerial game plan or approach which a functional area takes to achieve corporate and business units objectives and strategies. It is focused on and concerned with development and managing superior distinctive competences, capabilities, efficiency, customer responsiveness and quality to provide the company or business unit with strategic advantage. Just as each multi-business organization has many units, each with its business strategies, so also, each business unit has its own set of functional departments, each with its own functional strategies. The crafting of functional strategies is the responsibilities of heads of major functional departments within each business unit and it is internally driven and aligned with the business strategy 43
77. Functional Level Strategies CONT’D Strategic Implementation Joseph Mba The orientation of functional strategies is dictated by its parent’s business units dominant strategy. For example, a business strategy of differentiation will demand a mix of functional strategies as illustrated below 44 Strategic Implementation Planning Envelop
78. Generic Functional Strategies Strategic Implementation Joseph Mba Core or Distinctive Competences or Capabilities Superior Efficiency Superior Quality Superior Innovation Superior Customer Responsiveness The pursuit and achievement of each or a combination of the above functional strategies, requires cooperation from each of the organizations departments such as production, marketing, material management, Research and Development, Information System, Human Resources etc. Let us review the various steps organizations can take to provide each Generic functional Strategies. However, it should also be noted that the achievement of each generic strategy plays a role in achieving superiority in other strategies 45 Strategic Implementation Planning Envelop
79. Achieving Superior Efficiency Strategic Implementation Joseph Mba A company is a device for transforming inputs into outputs. Inputs are basic factors of production such as labor, land, capital, management, technological know-how, and so on. Outputs are the goods and services that a company produces. The simplest measure of efficiency is the quantity of inputs that it takes to produce a given output; that is, Efficiency = outputs/inputs. The more efficient a company is, the fewer the inputs required to produce a given output and, therefore, the lower its cost structure. Put another way, an efficient company has lower wastages, higher productivity than its rivals and, therefore, lower costs. We review here the various steps that companies can take at the functional level to boost their efficiency and thus lower their unit costs. After considering the primary functions of production and marketing, we move on to examine the various support functions of the enterprise. We must stress, however, that achieving superior quality plays a major role in achieving superior efficiency. 46 Strategic Implementation Planning Envelop
80. The Primary Roles of Different Value Creation Functions in Achieving Superior Efficiency Strategic Implementation Joseph Mba 47 Strategic Implementation Planning Envelop
81. Achieving Superior Quality Strategic Implementation Joseph Mba We note that superior quality gives a company two advantages. The enhanced reputation for quality let the company charge a premium price for its product, and the elimination of defects from the production process increases efficiency and hence lowers costs. In this section, we examine the means a company can use to achieve superior quality. The main one is total quality management (TQM), a management philosophy that focuses on improving the quality of a company’s products and services and stresses that all company operations should be oriented towards this goal. A companywide philosophy, its requires the cooperation of all the different functions if it is to be successfully implemented. Let us highlight the roles that different functions must play in providing superior quality. 48 Strategic Implementation Planning Envelop
82. The Role Played by Different Functions in Implementing TQM 49 Strategic Implementation Planning Envelop
83. ACHIEVING SUPERIOR VALUE INNOVATION In many ways innovation is the single most important building block of competitive advantage. Successful innovation of products or processes gives a company something unique that its competitors lack. The uniqueness may allow a company to charge a premium price or lower its cost structure below that of its rivals. Competitors, however, will try to imitate successful innovations. Often they will succeed, although high barriers to imitation can slow down the speed of imitation. Therefore, maintaining a competitive advantage requires a continuing commitment to value innovation. Many companies have established a track record for successful innovation. Among them is Du Pont, which has produced a steady stream of successful innovations such as cell phones, nylon, Freon (used in all air conditioners), and Teflon (nonstick pans), Sony whose success include the Walkman and the compact disk; Merck, the drug company that during the 1980s produced seven major new drugs; 3M, which has applied its core competences in tapes and adhesives to developing a wide range of new products; and Intel, which has consistently managed to lead in the development of innovative new microprocessors to run personal computers. Comprehensive value innovation must seek and exploit opportunities in all the strategic success factors and indicators of the organizations, such as customer values, financial values, tangible resources, intangible resources, business models, quality, leverages and positioning. 50 Strategic Implementation Planning Envelop
84. The Role Played by Functions in Achieving Superior Innovation 51 Strategic Implementation Planning Envelop
85. Achieving Superior Customer Responsiveness To achieve superior customer responsiveness, a company must give customers what they want, how they want it and when they want it – so long as the company’s long-term profitability is not compromised in the process. The more responsive a company is to the needs of its customers, the greater the brand loyalty it can command. In turn, strong brand loyalty may allow a company to charge a premium price for its products or to sell more goods and services to customers. Either way, the company that is responsive to its customers’ needs will have a competitive advantage. Achieving superior customer responsiveness means giving customers value for money and steps taken to improve the efficiency of a company’s production process and the quality of its output should be consistent with this aim. In addition, giving customers what they want may require the development of new products with new features. In other words, achieving superior efficiency, quality, and innovation are all part of achieving superior customer responsiveness. There are two other prerequisites for attaining this goal. The first is to focus on the company’s customers and their needs, and the second, to find ways to better satisfy those needs. 52 Strategic Implementation Planning Envelop
86. The Primary Role of Different Functions in Superior Customer Responsiveness 53 Strategic Implementation Planning Envelop
87. MEANING OF BUDGET Every organization plans to achieve some objectives, goals and policies. But these objectives are limited by many constraints imposed upon the firm – especially financial resources constraints in transaction payments and resources allocation. Accounting information helps the management to plan the accomplishment of both short-term and long-term objectives and goals within the constraints SHORT-TERM (OPERATIONS) PLANNING requires the selection of some set of objectives among alternatives and implementing certain strategies, programmes, policies and procedures LONG-TERM PROJECT PLANNING also requires the selection of some projects among a number of alternatives A formal plan expressing a course or course(s) of actions in quantitative terms. Hence, budget is often said to be a formal quantitative expression of a formal plan. Budgeting and Budgetary Control are integral parts of planning and control 54 Budgeting and Budgetary Control Strategic Implementation Planning Envelop
88. Purpose of Budget To state expectations (objectives, activities and cash flows) in formal term so that most of the underling assumptions may be identified To establish these expectations as a framework for judging performance, so that employees may know what is expected from them, be motivated to accomplish the budgeted expectations, and ultimately be judged according to budgeted criteria To communicate with and inform others about the objectives and strategies, programmes and methods selected for accomplishing them, so that all managers will understand and support the budget To coordinate all factors of production other resources and organic functions so that subordinates can achieve the common objectives 55
91. Front Line ExecutivesParticipatory Budgeting is recommended for all executives at all levels involved in opinions Opinions, budget estimates and data flow from bottom up concerning each department, sections and teams Budget flows from up to down from the budget committee SPECIAL ORGANS INVOLVED Budgeting Committee. Composed of members representing all functional departments and levels. The head of Finance should be the budget Secretary responsible for organizing and administering the budget programme 56
92. Procedure for Budget Preparation Board / Top Executives agree on corporate priority issues, direction, objectives and strategies for accomplishing them Operating Divisions set up data and forecasts and schedules to the budget committee Budget Committee agree and come out with general policies and resources allocation decisions Secretary prepares a draft of budget for committees approval Committee considers and approves final budget Secretary distributes copies of approved budgets to all departments including Top Executives / Board 57
93. Budgeting Cycles and Periods STRATEGIC PLAN FOR FIVE YEARS Annually – Master Budget usually accompanying strategic plan Tactical Budget Plan. Half Yearly and Quarterly plans Operational Planning. Monthly, weekly and daily by departments, sections and teams BUDGETING APPROACH Fixed Budget and Rolling Budget Zero based Budget and Incremental Flexed budgeting or Flexible or activity based budgeting Project / Programme Planning and Budgeting System (PPBS) – for Capital projects 58
95. Example of Budgeting Procedure CONT’D Future Pricing Policies Production Capacities Profit Expectations Internal and External Constraints Top Executives / Board Information IN LIGHT Budget Committee Careful Consideration Budget committees Secretary Prepares draft schedules and draft budget Cross-dept Contributions IN LIGHT Knowledge of their respective departments Other factors known to them All departments and Levels for input into Sales Send back up Secretary and Budget Committee Final Draft to Governing Board 60
96. BUDGET PREPARATION 1 BUDGET PERIOD. Range from daily to annual and over longer years. The budget period increases with increase in level of executives 2 BUDGET DETAILS. Range from very few schedules of data to fully specified and comprehensive budget. The budget details increases as you go down organizational hierarchy Little Long 3 – 5yrs Top Level Length Middle Level 1 – 3yrs 12months Short Details Lower Level Much 61
97. Comprehensive System of Budgeting (Master Budgeting) Master Budgeting consists of at least three types and levels of budgets, depending on the size and volume of the organizations activities. The main advantage of Master Budgeting is the coordination of the budgets and activities of other directions of the organization Operating Budgets Functional Budgets (Divisional budgets. Deals with primary organic activities or functions or divisions Financial Budgets. Budgeted Income statement, Budgeted Balance Sheet, Budgeted Cash Flows Statements Special Division / Department Budgets. Capital Budget 62
99. Comprehensive System of Budgeting (Master Budgeting) CONT’D Each budget computation must recognize the timing of the expectations, especially in cash, stock, debtors and creditors. Where necessary, budgets should be made separate for all physical quantities and values of each OPERATING BUDGETS. Deal with primary activities of the company and other input schedules Material stocks / Material Usage Labour Wages (Quality and cost) Debtors and Creditors Factory Overhead Interest Charges Loan Repayment Schedule FUNCTIONAL BUDGETS Production (manufacturing) Administration Sales ICT Head Office Budget Capital Project 64
100. Comprehensive System of Budgeting (Master Budgeting) CONT’D FINANCIAL BUDGETS Cash Flow. Cash receipt budget, Cash Payments Income Statement (Profit or Loss) Budgeted Balance Sheet Cash Changes Statement The big questions in budget preparation is what schedule or budgets are required as input into another i.e. what budgets should be prepared first before others 65
101. Developing Organization Manual An Organization Manual is the fourth most important task in Action Planning. OM is a table top reference document that contains all that the managers should know about the organization and its systems. A typical OM should contain. 1) Corporate Information 2) Organization Structure 3) Systems 4) Policies 5) Processes 6) Procedures Responsiveness and speed are indispensable for success in today’s global, fast changing and hyper-competitive marketplace. One means of enhancing speed, responsiveness and resilience is to force, allow and empower the lowest level in organization to locate, make decisions and act whenever possible. SYSTEMS One predetermined interconnection, interdependency and interrelations among organizations functions departments in making decisions or solving problems that have intersectional, cross-functional or organization-wide impact. For example, staff employment system, information system, procurement systems, quality systems, product development systems, feedback systems 66
102. Developing Organization Manual CONT’D POLICIES They are broad, precedent-setting management decisions that guide, pre-authorize and substitute the thinking, decisions and actions of operating managers and their subordinates in repetitive or time sensitive managerial decisions areas and issues. Abridged Policies are predetermined decisions that substitute for discretions of operating executives in repetitive decision-making areas (Pierce and Robinson, 2009) Policies improves managerial effectiveness by standardizing routine decisions, empowering operating managers and controlling the operating behaviours and process of the organization in a manner consistent with the organizations strategic objectives PROCEDURES They are step-by-step instructions designed to regulate the conducts of routine decisions and actions, and ensure that they are taken fairly and duly and that tasks are efficiently and consistently performed. For example, Discipline and Complaint Procedures 67
103. Developing Organization Manual CONT’D Procedures are used to control a work process systems and policies PROCESSES They are structured and management of work activities designed to source, create procedure and deliver outputs to internal and external customers. STRUCTURE Defined the areas, decision and work responsibility and how the sections, departments, divisions and their people link together, interject and report 68
115. Control Planning The fifth major task area in the action planning phase is deciding how to supervise, monitor and review the activities of the organization during the plan period. A separate team maybe setup to decide the following action Schedule of approval and review meetings for the teams, department, Top Executives and Board Procedures for monitoring operations, tasks and projects and and feedbacks Procedure for evaluating and reporting the results of operations, projects, tasks as well as corrections, rewards and incentive methods Sometimes these decisions are made at a general assembly of the Strategic Planning team or by the Top Executive team or as stated above, a separate team maybe set up to plan controls 70
122. Leading Implantation and Organizational Congruence This is a great challenge in ensuring successful strategy implementation. The tasks, roles and orientations of the leader in strategy implantation and organizational congruence are captured in a web Strategy Implantation and congruence web shows the network of leadership tasks and orientations that engender strategy understanding, alignment and focus among organizational people, units, systems and processes. Implantation and Congruence web (J. Mba, 2007) 73
149. INSTITUTIONALIZING CHANGE In addition to other challenging factors, differences in the strategic objectives and orientations of administrative and entrepreneurs, organizations and employees constitute the major limitations on achieving organization congruence and implantation change orientated strategies. Challenges and resistance to change are reduced and possibly eliminated through the reinforcement and institutionalization of change. The required machineries are Sustaining Change / Organizational Momentum Instill Continuous Improvement / excellence spirit Instill creativity, value innovation and intrapreneurship culture Keep the light shinning and the fire burning – no time complacency, laxity Reward change facilitators efforts 77
150. Strategic Performance Mapping 78 The third indispensable set of decisions to make in order to achieve effective implementation is to configure and map strategic performance system that will achieve the strategic performance outcome. From recorded survey and consulting for companies of all ages and sizes, many organizations successfully develop many aspects of action plans and often pay attention to one or two implantation factors. And yet they still fail to successfully implement their corporate and business strategies. The reason, most often, is that the value creating resources, capabilities and activities lack alignment, linkage and common focus. Strategic performance system mapping is the linking and tying together of all the value creating resources, capabilities and activities of the organization to ensure that they are moving in the same direction and that they are strategically ready and able to achieve the planned performance outcome. Strategic Performance Systems Mapping requires Deciding the organizations strategic success factors and indicators Grouping the Strategic Success factors into performance outcome factors and value creating sub systems or factors. The factors encompass all string-pulling components of an organization that must be linked and work together as a system to achieve overall strategic performance
151. 79 Strategic Performance Mapping CONT’D I have further divided these factors into three groups, each with a number of sub systems or factors 1 2 OPERATING PERFORMANCE FACTORS Tangible Resources Intangible Resources Business Model Continuous TQM System Synergic Leveraging Factors Strategic Positioning Factors PERFORMANCE OUTCOME FACTORS Strategic Results Customers Values Financial (shareholders) Values 3 CORPORATE PERFORMANCE FACTORS Corporate Destination Corporate Executiveship and Governance These sub systems are linked in a diagram which I have presented as Strategic Performance Systems Mapping
153. Strategic Performance Outcome 81 All Strategic management efforts are focused on and driven by achieving strategic performance outcome. These are divided into three components. Every organization must see and direct all values-creating approaches, strategies and operations from the strategic binoculars of the customers and shareholders, elevated to the degree of strategic results Delivering Superior Shareholders’ Values Delivering Superior Customers Values Achieving Strategic Results
157. Strategic Results 84 The ultimate of strategic performance outcome is the achievement of strategic results. These are indicated by achieving superiority in the following goal areas Addressing of strategic priority issues, following organizational direction and achieving set objectives Alignment of conflicting forces and minimising strategic resistance. Effecting and managing change ( planned & unplanned) Building strategic advantage (competitive, distinctive and monopolistic) Achieving superior performance (in the industry) Achieving organizational Sustainability
158. Operating Success Factors 85 The operating success factors encompass all string-pulling components of an organisation that must be in strategic readiness and work together to create, produce and deliver overall superior performance outcome, (superior customer, superior shareholders value and strategic results). These factors must be mapped together as part of implementation planning functions. SSF have five sub-components Tangible Resources Intangible Resources and Abilities Business Modelling Continuous Total Quality Management System Synergic Leverages Strategic Positioning Strategic Executiveship and Governance
159. How to Identify Resources 86 The process of analyses and identification should be: Capacity Identification: Disaggregation and delineation of Resources – Break down all resources into smaller, more specific, measurable units. Resources Categorization: Disaggregate resources at the different functional areas of the organization into capacity, capital and capabilities to see whether there are further value-building resources, activities or processes that deserve more considerations Capital Identification: Examine the organizations configuration of resources, activities and processes, not as the isolated units of resources, to determine the special competencies the firm possesses or has the potential to possess that might generate strategic advantage. Capabilities Identification: Deploy the value chain analysis to enable the organization uncover its core capabilities, systems, processes and activities that are valuable potential sources of strategic advantage.
160. Searchlight on Key Corporate Resources for Today and Tomorrow 87 TANGIBLE RESOURCES CAPACITY. This refers to an organization’s total stock of which enables it to produce values. They are usually found in an organizations balance sheet. They include: Financial Resources – Cash, Bank balance, Investments, Debtors, Stock, Real estate. Human Resources – Head count of Top executives, Middle executives, Frontline executive, and unskilled labour. Physical Resources – Machine, equipment, Furniture, Fittings, Motor vehicles, Infrastructural Facilities Hard Technology Systems
161. Intangible Resources 88 Intangible resources have two main components – capital and capability CAPITAL. These are the intangible possessions and abilities of the organization that enable an organization to create values for its internal and external customers. Corporate capital enables the organization to create strategic workforce, strategic ICT portfolio, and strategic readiness for learning and change. Human Capital- Competence capital, social capital, spiritual capital (Quality life and Quality living of the workforce) Information Capital – Information systems, Databases, Networks Organizational Capital- Reputation/Brand equity, proprietary rights, teamwork and internal synergy, alignment.
162. Searchlight on Key Corporate Resources for Today and Tomorrow CONT’D 89 CORPORATE CAPABILITIES. These are organizational ability and manner of configuring all resources, activities and processes to transform input into output, utilise resources and deliver values to both internal and external customers more effectively, efficiently and innovatively. It represents the things the organization does well to achieve operational excellence and deliver best value in the best way. Capabilities include: INTERNAL PROCESSES. A process is a group of related activities that deliver specific value to an organizations success and competitive advantage. Operations processes produce and deliver products/services from inputs; Market processes enhance the delivery of greater customer values; intrapreneurial processes create and deliver new products and businesses; synergic leveraging processes improve internal and external synergy, network and ability leveraging. CORE COMPETENCIES. A capability or competence that an organization emphasizes and excels in pursing its overall direction and strategic agenda. A core competence that is innovative and different from those of competing firms become distinctive competence and it is the basis for sustainable competitive advantage.
163. 90 Searchlight on Key Corporate Resources for Today and Tomorrow CONT’D CAPABILITIES CONT’D FUNCTIONAL ABILITIES. The effectiveness of the organic functions – strategic marketing, strategic HR management, strategic financial management, strategic ICT, strategic operations CULTURE. Coarporateculture is the organization’s internalised purpose, core values and belief and the resultant behaviours in executing organizational strategy and creating values. Some positive cultural dimensions are executing strategy: shared understanding of corporate direction, open communication, teamwork and accountability. Creating and delivering values- Customer- driven, Innovative and intrepreneurship, continuous quality improvement and delivering results.
167. Continuous TQM System 93 This is the organization wide practice of focusing on, building and institutionalizing best planning, best products, best processes, best practices to consistently achieve defect free output and meet and exceed value requirements of both internal and external customers. The dimensions and instruments of CTQM system are Best Planning Best Products Attributes Best Processes Best People Best Responsiveness Best Partnering Best Positioning Best Practices These quality components should be evaluated for strategic readiness to deliver superior customer values, financial values and strategic results. It should be linked to other operating success factors and corporate success factors
168. Synergic Leveraging 94 Deciding and implementation the internal organizational congruence, cooperation and synergy as well as the external trans-organizational networking ,cooperation and alliances that will enable the company to leverage its strengths and minimize its weaknesses: INTERNAL SYNERGY Objectives, activities and process linkages Cross-functional integration/co-operation Information and Decision Support Systems EXTERNAL NETWORKING Cross business network infrastructure Ethical and legal perspectives Corporate citizenship and social responsibilities Political Networks and leveraging
169. Strategic P 95 Strategy is fundamental a field tool, and it is deploy to change movement, position and perception in a chosen space. The factors which enhance an organization strategic success in the field include: VISIBILITY. Marketing, promotion, adverts, business, clout, magnetic marketing STRATEGIC ANTENNAE. Market intelligences, business, intelligences DISTINCTIVENESS. Differentiation, branding, inimitability, blue ocean creation PERTUAL STRATEGY. Continuous Strategic thinking, decisions and action, changing the rule of the game. Intrapreneurial savvy and intelligence
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171. Evaluation the Strategic Readiness of Strategic Success Factors 97 The strategic readiness of the organizations operational and corporate factors is evaluated by the five major success criteria, namely FEASIBILITY. It is concerned with whether an organization has or would have resources, competences and capabilities to create, produce and deliver the directions, objectives and strategy. It also evaluates the extent to which these tangible and intangible resources can be changed in terms quantity, quality and time scale. SUITABILITY. Evaluates the overall rational of both the corporate and operational factors to respond to expected changes in the environment, exploit internal strength and addresses the strategic priority issues and objectives. The options are further evaluated in terms of relative suitability, contingency or scenario planning, Tows Matrix etc. FEASIBILITY. Evaluates the readiness of all strategic success factors to deliver the expected strategic performance outcome and also meet the expectations of other stakeholders – in terms of strategic results, value proposition to customers, shareholder value and other stakeholders returns and possible reactions CONSISTENCY. This evaluates whether the component factors are linked, co-ordinated and work together as a package to create, produce and deliver the same performance outcome FLEXIBILITY. This evaluates the readiness of all factors to change individually or collectively in response to changes to emergencies during implementations
172. Change Planning Every strategic planning effort is a change planning process. Therefore, concrete decisions should be made in advance to specify how the organization intends to implement the change process, projects and programmes. This requires a disciplined decision making approach as part of the overall implementation planning. In all cases, effective strategic planning demands changes in organizational dynamics and behaviours for effective implementation. The new strategy may require changes in culture, leadership, staff trainings and competences, performance appraisals, reward system, team working, information management, resources allocation systems, technology and leveraging. These changing issues should be planned ahead of actual execution. Unfortunately, many organizations still operate the new strategies with the old dynamics and behaviours resulting in the inability to effectively implement strategies. People tend to hold on to the existing way of doing things. This tendency has often led to strategic shifts, inertia and resistance to change. 98
173. Specifically, the critical decisions include Deciding and listing specific impetus or reasons for change. This usually will flow from the strategic priority issues and focal areas and strategies e.g. business process Deciding the appropriate change outcome, as well as objectives and targets Decide change intervention and driving projects and programmes to be deployed Decide change implementation procedure Decide the momentum of change required. Incremental improvement, radical transformation flowing directly from the strategic priority issues and focal areas How will the organization cope with and manage envisaged challenges and resistance or counter moves to change Decide change levers to be deployed in managing change Decide the change agents – internal and external Deciding the balance among the needs of the different components of the organization Deciding how to handle contingency challenge and approval 99 Change Planning
174. Change Planning provides a platform for considering and deciding the important change issues, namely DECIDING THE CHANGE SITUATION. This will enable the organization determine the existing magnitude and momentum of change then decide types of change required, the different contextual factors that need to be addressed, the variety of cultural factors, change blockages and facilitators that need to be taken into consideration DECIDING CHANGE LEVERS. Change levers are the organizational aspects to be changed according to the organizational context in order to effectively implement the strategy. Michael Beer and NitinNohria present two groups and approaches, Theory E and Theory O. I think I agree with them, although there exist other levers. Theory E is the top down, economic value hard levers of change, such as restructuring system redesigning, financial incentives that results in portfolio changes and other growth strategies; and turnaround levers 100 Change Planning CONT’D
175. Theory O is change levers that pursue excellence through the development of organizational intangibles of human capital, capabilities such as culture change, organizational learning, employee participation in change programme and experimental challenges taken for granted, challenging operational processes and routines, improving symbiotic systems. DECIDING THE CHANGE AGENTS to be used, their roles and appropriateness of styles of the agents – internal and external DECIDING THE MOST APPROACH CHANGE PROGRAMME to deliver the strategy (growth, turnaround, transformation and incremental strategies. It is the outcome of management conclusions on the organizational change situation, change levers and change agents required that will influence the strategic programme planning. 101 Change Planning CONT’D
177. Implementation Planning Assessment Sheet As a member of the Top Executive team of your organization, list and explain in one sentence each, five steps you have taken to ensure that your organization’s objectives and strategies are achieved 103 Exchange this sheet with your neighbour. At the end of the presentation of SBS Implementation Planning Envelop, compare and assess the completeness of the steps in this sheet with the envelop model presented. Use the summary presented to mark this sheet
183. It is important to note that the importance of details and formality of strategic planning is dependent on the life cycle stage, the size and the type of crises created the combination of the organization’s situation All growth oriented organization should have a Top Executive team and board dominated by members who are entrepreneurial and change leadership role oriented The practical deployment of the planning envelop has been illustrated in decision planning work sheet, and converting business strategy to functional short-term objectives and tactics We welcome your opinion on this model and advise that you begin to deploy it to effectively plan and implement your strategies 105 Summary CONT’D
185. 107 Please feel free to contact us to facilitate its deployment in your organization
186. Four Chapter 4 Effective Leadership Actions Making Things Happen with People, Through People for People 108
187. Learning Objectives Strategic Implementation Joseph Mba At the end of this paper, you should be able to Identify the executive role of leadership in an organization’s success Identify the different dimensions and types of leadership Identify the leadership ecosystem Develop the ability to develop the various instruments of leadership to influence behaviour, mobilize followership and support 109
189. Introduction Strategic Implementation Joseph Mba Leadership is the exercise of influence to shape behaviour or stakeholders to follow and support the leaders decisions and actions. Leadership is exercised in two major dimensions MANAGERIAL LEADERSHIP concerned with influencing subordinates behaviour to achieve managerial tasks with effective teams and satisfied people. There are two types of managerial leadership – Transactional and Transformational Leadership. The aim of these types of leadership is to improve executive performance through improved learning, empowerment, motivation and congruence. It has three focal needs: Achieve Tasks, Develop and Satisfy Individuals and Build Teams STRATEGIC LEADERSHIP Influences and mobilizes all stakeholders to align with, follow direction and support strategic decisions and actions. Strategic Leadership is concerned with stakeholders to align and support it. Strategic Leadership develops and deploys several leadership machines to provide two main types of leadership. Successional Leadership and Change Leadership and Change Leadership. Strategic Leadership machineries are directional, inspirational, implantation, momentum, politics and magnetism 111
203. Effective CommunicationMomentum Momentum represents the magnitude of force or dynamism infused into the organization that keeps it in motion and increases the rate at which moves towards its destination Assembling Critical Mass Team Obeying the Law of Requisite Variety Deliberate Infusion of Tension for Productivity Internal Competition and Entrepreneurial Emotion Institutionalizing Change Managing Present from Invented Future 114
212. Mobilizing Support from Stakeholders Strategic Implementation Joseph Mba MOBILIZING SUPPORT FROM SYMBIOTIC (CORE) STAKEHOLDERS Buyers Shareholders Employees Government Host Community MOBILIZING SUPPORT FROM SUPPORTS Strategic Alliances and Partnership Mergers Partnership and Joint Venture Governance Meaning and Purpose Top Executive Challenges Purpose, Roles and Responsibility of Governance Governance Organs and Instruments Board Involvement Continuum Composition of the Board 116
214. Introduction Strategic Implementation Joseph Mba Two premier and indispensable tasks in achieving sustainable strategic performance outcome are to build capable and congruent organization. A Capable Organization is one that is thoroughly equipped configured, integrated and controlled to create, produce and deliver superior values and results, effectively, efficiently and sustainably. Congruence is an organization-wide alignment and linkage of understanding, direction, values and culture among the organizational members, teams, functional and hierarchies which engender internal team spirit, co-operation and commitment to organization’s destination and strategies. 118
231. Building Blocks for Capable Organizations Strategic Implementation Joseph Mba It is the administrative role dimension of the top executiveship that builds capable organization. It encompasses all administrative decisions and actions that equip, configure, integrate and control the activities, systems and processes (internal complexities) of an organization – to enable it create, produce and deliver superior output and results effectively effectively, efficiently and sustainably. It is the only avenue for achieving administrative and operational excellence at both functional and cross functional levels. The building blocks are Strategic Resourcing (Building the Capacity) Building Corporate Capital Building Organizational Capabilities Building Organizational Structure Establishing Organization System, Policies and Procedures Establishing Effective Control Systems Developing Strategy-focused Budget and Resource Allocation Instituting Continuous Total Quality Improvement Building Core and Distinctive Competencies 123
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233. STRATEGIC STAFFING: B3, psychological fitness, job-of-best-fit, staffing by weakness (strong mix of executive team with background experience, superior competence, styles and personalities) within budgets (needs, demand and supply analysis)
234. PHYSICAL RESOURCING: Physical assets (Land and Building, Plant and Machinery, Furniture and Fittings, Office Equipment, ICT Hard Systems, Other Infrastructure and Utilities124
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236. INFORMATION CAPITAL: Database System, Network Capital, Management Information System, Information and Knowledge Management
237. ORGANIZATION CAPITAL: Reputation, Goodwill, Brand Equity, Corporate Integrity and Responsibility, Proprietary Rights, Team Work and Internal Synergy125
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240. CULTURE. Corporate Culture is the organization’s internalized purpose, core values and beliefs as shown in doing things, workplace behaviour and operation. It is the manifestation of taken for granted paradigms of members of the organization in symbols, power structure, shared direction, communications, team works, stories about the company, etc127
245. Building Organizational Structure Strategic Implementation Joseph Mba Structure defines the areas of decisions and work responsibility and how the sections, departments, divisions and their people link together, integrate and report. Therefore, system is a framework of an organization’s policies, processes, procedures and control which guide behaviour and ensure tasks are completed duly and effectively, hierarchies in making decisions or solving problems that have cross-sectional, cross-functional or organization-wide impact. For example, Staff Employment System, Information System, Procurement System, Quality Control System, Cost Management System. Generally, an organization’s choice of organizational structure and systems is idiosyncratic, reflecting various internal circumstances, value chain activities, decision-making structure , top management posture about reporting relationship, organizational politics and operations. Therefore, there is a need for customized, situation-specific organization structure and systems 129
248. Deciding what value chain or function to out-source or to perform internally
249. Make critical-value chain activities to constitute the centre-piece of your organization structure and system
250. Determine what degree of power to concentrate at the top and those delegate to each business unit, organic functions, teams and employees
251. Make provision for cross-unit, cross-functional decisions, coordination, integration and collaboration
252. Make provision for necessary collaboration and coordination by outsiders, network partners and strategic alliances130
253. Types of Structure Strategic Implementation Joseph Mba Simple Structure Functional Structure Divisional Structure Matrix Structure Project Structure Organization System Organization System is the predetermined, pre-authorised framework (inter-connections, interdependences and interrelations) among the organization’s activities, policies, processes, procedures and controls which guides organization’s behaviours to ensure that all tasks are accomplished duly, effectively and sustainably in cross-functional or time sensitive or repetitive decision areas or issues e.g. Staff employment System Job Specification (Titles, Responsibilities and Reportage) Human Resources Policies Internal Control and Procedures 131
254. Establishing Standards, Policies and Procedures Strategic Implementation Joseph Mba Responsiveness and speed are indispensable for success in today’s global, fast-changing and hyper-competitive marketplace. One way of enhancing speed, responsiveness and resilience is to force, allow and empower the lowest level in an organization to relate, make decisions and act whenever possible. These are achieved through establishing standard policies and operating procedures POLICIES are broad, precedent-setting management decisions that guide, pre-authorize and substitute the thinking, decisions and actions of an operating manager and their subordinates in repetitive or time sensitive managerial decision areas and issues Abridged Policies are predetermined decisions that substitute for discretion of operating executives in repetitive decision-making areas (Pierce and Robinson, 2009) 132
255. Establishing Standards, Policies and Procedures CONT’D Strategic Implementation Joseph Mba Policies improve managerial effectiveness by standardizing routine decisions, empowering operating executives, controlling operating behaviours and processes of the organization in a manner consistent with the organization’s strategic directions and objectives PEOCEDURES are step-by-step instructions designed to regulate the conducts of routine decisions and actions, and ensure that they are taken fairly and duly, and that tasks are efficiently and consistently performed. For example, Discipline and Complain Procedures, Material Issuing Procedures, etc Generally, change in strategy invariably alters work climate, importance of units and decision systems. Therefore, corporate executives need new or revised policies, internal control systems and procedures that can provide vital support to effective Strategy Implementation Control 133
274. Acceptance of the superiority of team work to individual efforts137
275. Leading Strategy Implantation and Organizational Congruence Strategic Implementation Joseph Mba This is a great challenge in ensuring successful strategy implementation. The tasks, roles and orientations of the leader in strategy implantation and organizational congruence is captured in a web. Strategy Implantation and congruence web shows the network of leadership tasks and orientation that engenders strategy understanding, alignment and focus among organizational people, units, systems and processes. STRATEGY IMPLANTATION AND CONGRUENCE WEB OF ORGANIZATION (J.MBA, 2007) 138
314. Strategy implantation and organization congruence represent the human obstacle to effective strategy implementation and is a leadership role and responsibility
315. The seven leadership tasks in achieving strategy implantation and organizational congruence are present as a web143
325. Institutionalize and internalize change throughout the organization – people must be made to see innovation and change as necessities146
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327. Strategy Managers should promote a lot of trial-and-errors and be willing to absorb mistakes and failures
328. Strategy Managers should be wiling and able to deploy all types of organizations forces (venture teams, task forces performance, shootout competitors groups, informal volunteer teams) to support ideation, experimentation and venturing
329. Strategy Managers should ensure that rewards for successful champions are visible and large; and that people who fail are encouraged to try again rather than be punished or sidelined147
330. Keeping the Organization Perpetually Ideative, Innovative and Responsive CONT’D Strategic Implementation Joseph Mba Perpetually Changing the Organization’s Resource Base, Capital, Core Competence and Capabilities in response to changing customer-market requirements and preferences. These efforts typically come from the combined contributio