Womack Report

Don’t have the assignment due today done yet.  There was an extension of the due date to midnight.  This is a good thing for me.  Chapter 2 today.CEOs ultimately have a few characteristics that are always present.

Characteristics of Reality:

• All managers are responsible for the performance of the business unit they manage
• Execution of various tasks in the unit comes from other people.  Any manager must oversee other people doing their work.  A manager who does all the work for the people under him is a bad manager.  You have to find the right people to do the job, and then let them do the job.
• Managers have the authority to enforce their decisions, but using coercive power on people has diminishing returns and unintended consequences.  There are times when coercive exercise of power is the correct choice, but it is not by any means always or even usually the correct choice.

Characteristics of Personality

• Good managers will have a high tolerance for ambiguity
• Good managers tend to have a high need for achievement
• Good managers tend to have a high emotional intelligence, in the sense of recognizing and being able to influence people’s emotional states.
• Good managers tend to have in internal locus of control, meaning they generally believe they are in control of their own success and failure.

Characteristics of Effective Executive Teams

• Must scan the external environment in dynamic contexts/situations
• Must be able to build and leverage effective social networks.  Research shows that beyond the obvious, diverse social networks are hugely valuable for advice networks.  Diverse advice networks will offer varying solutions to problems.  Homogeneous advice networks will tend to offer similar solutions which are conventional wisdom for the field.  Homogeneous networks, then, tend to be of limited use in unusual situations.
• The team must be able to manage the needs of interdependent but varied/diverse business units.
• Must have a coherent plan for executive succession.

Executives have relatively little ability to actually make things happen personally.  They have to rely on the other people in the company.  Execution comes from someone else.

Stakeholder Analysis

Stakeholders are people or groups who have an interest in the success or failure of the organization.  People who have a stake in the business.  This includes employees, customers, stockholders, people in the surrounding community, and so forth.

Managers will rely on stakeholders for execution.

When evaluating a stakeholder, there are a few questions to ask.

1. Who are the key stakeholders?
2. What impact do they, individually and collectively, have on strategy formulation?
3. To what extent will the strategy implementation affect this stakeholder?
4. How much power and influence does the stakeholder have with regard to the decision processes?

Building a stakeholder plan of action:

1. Which stakeholder am I addressing?
2. How much time and energy will this stakeholder receive?
3. What outcomes do I want from this stakeholder?
4. What messages should you send to this stakeholder?
5. What actions will you use to manage this stakeholder?

Chapter 3

Resources are the inputs used to create goods and services.  Resources can be either specialized or commoditized.

Capabilities are a firm’s skill in using its resources.  Capabilities are the transformation abilities of the company.

The VRINE model is a test to determine whether something is a resource upon which sustainable competitive advantage can be built.  It asks five questions:

1. Is the resource Valuable?  Does it allow the firm to take advantage of external opportunities or fend off threats?
2. Is the resource Rare relative to demand?
3. Is the resource Inimitable?  Are competitors unable to acquire the resource without significant cost disadvantage?
4. Is the resource Non-Substitutable?  Are customers unable to achieve the same or equivalent advantage using a different combination of resources and capabilities?
5. Is the resource Exploitable?  Can the company capture the full value of the resources or capabilities generated?

Originally, the model was the VRIN model, because the exploitability test was not integrated in.  The model is a hierarchical test; only if the answer to every question is “yes” will the resource be useful for creating a sustainable competitive advantage.

New assignment for next week.  Start earlier on this one.  See WebCT.