Strategy and Performance Excellence Vocabulary

Strategy and Performance Excellence

Strategy and Strategic Planning

• Strategy: The pattern of decisions that determines and reveals a company's goals, policies, and plans to meet the needs of its stakeholders.

• Strategic Planning: The process of envisioning the organization's future and developing the necessary goals, objectives, and action plans to achieve that future.

• An effective strategic planning process should incorporate:

  • Short- and longer-term factors that affect the organization and its marketplace.

  • Customers' expectations.

  • New business and partnering opportunities.

  • Workforce development and hiring needs.

  • The increasingly global marketplace.

  • Technological developments.

  • The evolving e-business environment.

  • Changes in customer and market segments.

  • Evolving regulatory requirements.

  • Changes in community and societal expectations and needs.

  • Strategic moves by competitors.

• The goal of strategy development is envisioning the future for purposes of decision-making and resource allocation.

• Effective strategy development requires a systematic process that:

  • Involves participation by all necessary stakeholders.

  • Ensures that relevant and important data and information are captured and analyzed.

  • Addresses both short- and long-term time horizons.

  • Addresses key strategic challenges.

  • Leads to innovation and sustainability.

• Strategy development begins with determining the organization's mission, vision, and values (guiding principles).

  • Mission: Defines the firm's reason for existence; it answers the question “Why are we in business?”

  • Vision: Describes where the organization is headed and what it intends to be; it is a statement of the future that would not happen by itself.

  • Values (Guiding Principles): Guide the journey to a vision by defining attitudes and policies for all employees, which are reinforced through conscious and subconscious behavior at all levels of the organization.

Environmental Assessment and Strategic Challenges

• A fact-based environmental assessment is needed to support strategy development. This should include:

  • The organization's strengths, weaknesses, opportunities, and threats (SWOT).

  • Early indications of major shifts in technology, markets, customer preferences, competition, or the regulatory environment.

  • Long-term organizational sustainability.

  • The ability to execute the strategic plan.

Baldrige Organizational Profile

• Addresses the basic characteristics of the organization, organizational relationships, the competitive environment, the advantages an organization has and the challenges that it faces, and its approach to performance improvement.

• Provides a frame of reference to help an organization better understand the internal and external factors that shape its operating environment.

• Strategic Challenges: Pressures that exert a decisive influence on an organization's likelihood of future success; frequently driven by an organization's future competitive position relative to other providers of similar products or services.

Strategies, Strategic Objectives, and Action Plans

• Strategic planning results in strategies, strategic objectives, and action plans that set the direction for achieving the mission.

  • Strategies: Broad statements that set the direction for the organization to take in realizing its mission and vision.

  • Strategic Objectives: What an organization must change or improve to remain or become competitive.

  • Action Plans: Things that an organization must do to achieve its strategic objectives.

Strategy Deployment and Hoshin Kanri

• Strategy deployment refers to developing detailed action plans, defining resource requirements and performance measures, and aligning work unit, supplier, and/or partner plans with overall strategic objectives.

• Hoshin Kanri (Policy Deployment): Emphasizes organization-wide planning and setting of priorities, providing resources to meet objectives, and measuring performance as a basis for improving it. It is essentially a total quality approach to executing a strategy.

Impact on Human Resources

• Strategic objectives and action plans often require significant changes in human resource requirements:

  • Redesigning the work organization or jobs to increase employee empowerment and decision-making.

  • Promoting greater labor/management cooperation.

  • Modifying compensation and recognition systems.

  • Developing new education and training initiatives.

Seven Management and Planning Tools

• These tools help managers to implement policy deployment and are useful in other areas of quality planning.

  • Affinity Diagram

  • Interrelationship Digraph

  • Tree Diagram

  • Matrix Diagram

  • Matrix Data Analysis

  • Process Decision Program Chart

  • Arrow Diagram

Organizational Structure and Work Systems

• The effectiveness of an organization depends in part on its organizational structure—the clarification of authority, responsibility, reporting lines, and performance standards among individuals at each level of the organization.

  • Common organizational structures: line, line and staff, and matrix organization.

  • Organizational structure for quality must reflect individual company differences and provide the flexibility and ability to change.

  • Processes, rather than hierarchical reporting relationships, drive quality within the organization.

• Work Systems: How the work of an organization is accomplished; involve the workforce, key suppliers and partners, contractors, collaborators, and other components of the supply chain needed to produce and deliver products, services, and business and support processes.

Core Competencies, Outsourcing, and Vertical Integration

• Core Competencies: An organization's areas of greatest expertise that provide a sustainable competitive advantage in the marketplace or service environment.

• Outsourcing: The practice of transferring the operations of a business function to an outside supplier.

• Vertical Integration: Certain business functions are acquired and consolidated within a firm; the opposite of outsourcing.

• The decision to outsource or vertically integrate should be strategically driven.