Chapter 11: Managing Internal Operations - Actions That Promote Good Strategy Execution

Vocabulary flashcards covering resource allocation, operational policies, benchmarking, improvement methodologies, internal information systems, and incentive structures from Chapter 11.

Resource Allocation and Budgeting

The managerial task of aligning budgets with strategic priorities by shifting funds, equipment, and people toward units with larger strategic roles while downsizing units with lesser roles.

Visible Commitment

Demonstrative managerial actions to reallocate funds—such as AT&T prioritizing investments in faster networks—that catalyze strategy implementation and establish credibility.

Role of Policies and Operating Procedures

Mechanisms that facilitate strategy execution by providing top-down guidance, enforcing consistency across critical activities, and directing efforts along a strategy-supportive path.

Best Practice

A method of performing an activity that consistently delivers superior results compared to other approaches and has been demonstrated to work particularly well by at least one company.

Benchmarking

The backbone process for identifying, studying, and implementing best practices by locating top performers of an activity and adapting their methods to one's own business.

Business Process Reengineering

An operational improvement methodology focused on achieving one-time quantum improvement by completely revamping an entire value chain.

TQM & Six Sigma

Improvement programs that focus on continuous, ongoing incremental improvements in activities and processes.

Five Essential Data Areas of Information Systems

The core tracking areas required for operational excellence: Customer data, Operations data, Employee data, Supplier/Partner data, and Financial Performance data (excluding corporate culture data).

Real-Time Monitoring

The immediate tracking and reporting of key strategic performance indicators, enabling managers to identify issues quickly and intervene before operations drift off course.

Reward Structure (Management's 'Power Tool')

Management's single most powerful tool for mobilizing employee commitment to successful strategy execution.

Major Payoff Principle

The guideline that incentive compensation must constitute at least $10\text{--}12\%$ of base salary to have an impact ($>20\%$ being best), whereas incentives below $5\%$ have weak impact.

Incentive Extension Guideline

The principle stating that performance incentives should be extended to all managers and workers, rather than restricted solely to top executives.

Principle of Control (Incentives)

The requirement that performance targets must be tied directly to outcomes that the individual or team can personally affect.

Objectivity and Speed in Incentive Systems

The requirements that incentives must be administered with scrupulous fairness and objectivity, and that the elapsed time between target achievement and reward payout must be as short as possible.

Motivation Strategy Elements

A dual-faceted approach emphasizing positive reinforcement over coercion, threats, or docking pay, and utilizing both monetary and non-monetary rewards (e.g., perks, fringe benefits, safe environments).