Chapter 10: Building an Organization Capable of Good Strategy Execution

Vocabulary flashcards covering the fundamentals of strategy execution, the three components of building a capable organization, organizational structures, capability acquisition approaches, and the Zara case study from Chapter 10.

Strategy Execution Failure

The breakdown that occurs when strategies fail due to poor execution rather than a flaw in the strategy itself.

Imitability of Execution Capabilities

The quality of superior strategy execution capabilities being difficult for competitors to copy because they are socially complex and develop with experience over long periods of time.

Signs of Good Strategy Execution

The two primary indicators managers look for: meeting or beating performance targets, and performing value chain activities in a manner conducive to company-wide operating excellence.

Strategy Execution Process Evolution

The ongoing managerial process of putting resources and capabilities into place, strengthening them as needed, and modifying them as market conditions evolve.

Three Components of Building a Capable Organization

The three paramount actions required to build an execution-capable organization: staffing the workforce, acquiring and developing resources and capabilities, and structuring the organization and work effort.

Staffing

The organizational building component focused on assembling a capable management team and workforce.

Developing Capabilities

The organizational building component centered on acquiring, developing, and strengthening key resources and competitive capabilities.

Structuring the Organization

The formal and informal arrangement of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is administered to match the strategy.

Approaches to Building Capability

The three common methods for capability development: internal development (often the most common), mergers & acquisitions (M&A), and collaborative partnerships (e.g., joint ventures, strategic alliances).

Divesting Underperforming Units

A corporate restructuring move that is explicitly not a method for building organizational capability.

Simple Structure

An organizational structure also known as a line-and-staff or flat structure.

Functional (Unitary) Structure

A structure organized along functional lines (e.g., R&D, engineering, marketing) where managers report to the CEO; most commonly used by companies engaged in a single line of business.

Outsourcing

The decision to assign value chain activities to outside specialists rather than performing them in-house, which can make a positive contribution when outsiders can perform them better or cheaper due to specialized expertise.

Zara's Fast Fashion Strategy

A business model by the world's largest fashion retailer that excels by tightly aligning design, production, advertising, and real estate to be extremely fast and flexible.

Zara's Competitive Advantage

An advantage rooted in execution where every step of the value chain is geared toward putting clothes in stores quickly and driving traffic through small lot sizes and frequent shipments.