Strategic Management in Agribusiness
Session Nine - Execution
Well, we now reach what perhaps is the most important subject of all: execution. All the theory and all the planning and all the great ideas have little impact until they are played out in the marketplace.
This is a pretty good time to admit to the clear benefits derived from basic commonsense, good organization, and, what could be called, an entrepreneurial spirit. People who lack these qualities certainly can find success, but they will find it very difficult to execute a strategy intended to manage a firm in today's competitive marketplace.
Chapter Nine opens with a vignette about the grocer Trader Joe's. This is truly a success story, not just because of growth, but because of the company's dedication to executing its strategy. Take a look at Trader Joe's Fans see the level of customer support.
When we speak of execution, we are trying to align the organization with the intended strategy. Every operation must be in sync, and personnel must have a clear understanding of the firm's goals and ambitions.
- Maintain some flexibility in order to react quickly to changes in the market. More and more, change happens continuously.
- Consider the creation of strategic teams to handle the development of new products, new markets, or new processes. The dynamics associated with a group play an important role in making sure all relevant issues are addressed.
- Part of the strategic process nowadays must include a tough analysis of existing businesses. Competitors will work hard to find ways to create superior products and services, so perhaps you need to do likewise.
Many firms are turning to a network as an organizational structure. A firm decides to outsource any operation that can be performed efficiently outside of the company. As you can imagine, the result is a smaller internal workforce with a high degree of flexibility in choosing the best relationships possible and a renewed focus on strategic decision-making. Of course, the network organization risks a loss of control and coordination. In addition, it is not uncommon for a member of the network to evolve into a competitor.
Three important trends in strategic planning are:
- Less Formality
- Continuous Process
- Employees at all levels are encourages to participate.
Traditional Control Systems
- Financial Measures
- Lagging Indicator
- Focus on Short-Term
- Deficient in Training, R&D, Etc.
Balanced Scorecard
- Financial and More
- Financial Measures
- Customer Satisfaction
- Internal Business Processes
- Learning and Growth
"The balanced scorecard provides an opportunity to move beyond the use of financial measures as a basis for strategic control." We can use the Balanced Scorecard Form, here in pdf format, to relate these ideas to a business of our choosing. And, here is a brief example of a Mobil Oil Application of Balanced Scorecard, also here in pdf format.
One of the biggest problems with control mechanisms is our general failure to understand how to properly assess performance relative to our stated strategic objectives. In other words, firms have a habit of espousing lofty goals while rewarding run-of-the-mill performance.
Here is a classic management article on the very subject: The Folly of Rewards.
Topics for Discussion
Let's take a look at the World's Fifty Largest Companies on the basis of revenue.
The Economist Magazine recently included an article entitled Big is Back. It cites three reasons why large companies are seeing a resurgence:
- Regulation is increasing and taking a disproportionate toll on small companies.
- With recent scandals surrounding the quality of contracted goods, companies are increasingly concerned with protecting their brand image.
- Big companies are learning to be more entrepreneurial.