Indicate how your SSM company strategy integrates key elements of the Formulation and Implementation model (Exhibit 8.1, page 237)

Carpenter and Sanders (2008) point out that good strategies enable organizations to achieve their objectives, where strategy formulation is deciding what to do, while strategy implementation is the process of executing what the firm has planned to do (pp 237). Firm A strategy is to produce the highest quality vehicles by deploying Six Sigma methods, achieve the lowest costs through lean manufacturing, keep overhead costs low by utilizing just-in-time (JIT) inventory methods while gaining the leading market share in the vehicles our customers prefer. Firm A has had significant difficulty successfully implementing above strategy, particularly in terms of reaching desired results. Text lists three questions fo firms that are experimenting difficulty with strategy formulation and implementation: a. Is the strategy flawed?, b. Is the implementation of the strategy flawed?, c. Are both the strategy and implementation flawed? (Carpenter, 2008, pp 237). Firm A stock price has plummeted over last several periods, market share has steeply declined, net income and cumulative net income have similarly trended negative. Inventory for Ace and Alfa is significant, over 100k ea for both models which points to failure to effectively utilize Just-In-Time production. Despite efforts for reduced production costs each period, we are not the leader in terms of lowest Cost of Goods Sold (COGS). Further, even though Firm A had focus on quality from the beginning, we are not the leader in quality vehicles where every competitor has a vehicle with higher quality ratings than we do. My perception is Firm A is a victim of straddling, where we spent significant resources to differentiate with the Apprise (AEV) and Accel (high performance truck), and simultaneously tried to reduce COGS while increasing quality. In this case, do not believe the strategy was flawed, do believe the implementation of strategy was flawed by pursuing too much differentiation resulting in straddling position.

Hansen, Nohria & Tierney (1999) study displays the error in straddling strategy with example of Knowledge Management, key for consulting industries where some firms focus on strategy centers around computers where it knowledge is carefully stored and codified (codification strategy) vs. other firms who focus on the knowledge shared between individuals through direct person-to-person contacts where the chief focus is on communicating knowledge (personalization strategy) as opposed to storing the knowledge (pp 56). This is not unique to consulting where study notes that healthcare and and computer companies operate similarly (Hansen, 1999, pp 56). Some key examples from the case for codification strategy were Earnst and Young and Anderson Consulting who deploy a people-to-documents approach which removes client sensitive information and develops knowledge objects such as interview guides, work schedules, benchmark data, and market segmentation info which is then stored in electronic repository (Hansen, 1999, pp 56). Main advantage of codification strategy is knowledge is stored without need to contact person who originally developed it (Hansen, 1999, pp 56). Case examples of personalization strategy were Bain, Boston Consulting Group and Mckinsey who focus on dialog between individuals rather than information in a database, so they invest heavily and focus on building networks of people (Hansen, 1999, pp 58). Interestingly, both strategies have success and merit and there is some crossover, but in both cases successful firms focus on one strategy or the other to avoid straddling (Hansen, 1999, pp 58). Example is the personalization firms also do not provide knowledge objects but consultants can scan documents to see what work has been previously done on the topic, then approach the individuals directly (Hansen, 1999, pp 58). To avoid straddling firms choose one strategy then use the other second strategy to support the first; they call this the 80-20 split where 80% of knowledge sharing follows one strategy and 20% to the other (Hansen, 1999, pp 63). In the case of our Firm A in SSM simulation, we may have benefited from pursuing an 80-20 strategy in terms of low cost and differentiation, where instead of pursuing two different new models we may have just pursued one and focused the other resources on achieving lowest possible costs in line with our stated strategy.

What causes the Knowing-Doing Gap?

Carpenter and Sanders (2008) describe the Knowledge-doing gap as a phenomenon where firms tend to be better at generating new knowledge than at creating new products based on that knowledge (pp 238). Insightful statistic from the text was study that found 46% of firms survey regarded themselves as good or excellent at generating new knowledge, while only 14% of the same firms reported having launch new products based on the application of new knowledge (Carpenter, 2008, pp 238). In terms of cause for Knowledge-doing gap, text points out that often strategy-formulation process itself is not shared with those stakeholders, including lower-level managers who will be integral in rolling out the strategy (Carpenter, 2008, pp 238). For case example, Grover & Davenport (2001) further investigate knowledge management and show that closing the knowledge doing gap firms should not seek stand alone businesses but should seek to embed knowledge management into other aspects of their business (Grover, 2001, pp 5). Study notes that many firms have repositories of knowledge accumulated since the advent of the computer but in terms of strategically deploying this information in optimal fashion has proved difficult (Grover, 2001, pp 6). Despite the chief importance of knowledge in terms of relevance to decisions and actions, the use of knowledge typically requires the minds of human beings to disseminate and apply in correct way (Grover, 2001, pp 6). Reminds me of my good friend Stephen who works for Tealium whos advanced online data metrics and tools enable them to optimize information in ways that are deemed most useful for executives of client firms. Study found the following key points with regards to storage and use of key industry knowledge: a. Personalization vs. codification (see above), b. Knowledge markets (folks capitalizing on their personal knowledge, c. communities of practice ie. networks of people with same work interests, and d. Intangible assets, such as valuable knowledge and intellectual capital (Grover, 2001, pp 8). Knowledge managers are proposed who perform the following tasks 1. Facilitate knowledge-sharing networks and communities of practice, 2. Creation, editing, and pruning of knowledge objects in repositories, 3. Incorporating knowledge oriented job descriptions, motivational approaches, and evaluation/reward systems into Human Resource Mgt. processes, 4. Redesigning knowledge work processes and incorporating knowledge tasks and activities into them (Grover, 2001, pp 10). Seems the key to successful deployment of knowledge to action involves continuous effort, systems, processes and roles to ensure that knowledge acquired is transferred into actionable items and results.

References:

Carpenter, M. A., & Sanders, W. G. (2008). Strategic Management: A Dynamic Perspective. Upper Saddle River, NJ: Pearson Prentice Hall.
Integrated StratSim Simulation Experience

Hansen, M. T., Nohria, N., & Tierney, T. (1999). What’s Your Strategy For Managing Knowledge? Harvard Business Review, 77(2), 55-69. Retrieved from http://link.galegroup.com.library2.csumb.edu:2048/apps/doc/A54077794/AONE?u=csumb_main&sid=AONE&xid=dcb50466

Grover, V., & Davenport, T. (2001). General Perspectives on Knowledge Management: Fostering a Research Agenda.
Journal of Management Information Systems,
18(1), 5-21. Retrieved from
http://www.jstor.org/stable/40398515