Lesson 13: Gate 3 Execution Machinery, Methods and Management Skills Learning Outcomes: At the end of this module, you are expected to: 1. Stimulate creativity and critical thinking in identifying opportunities and apply innovative approaches in envisioning one's entrepreneurial career. 2. Formulate business strategies to create value. 3. Gain knowledge in handling people, handling rewards and acquire leadership skills. LEARNING CONTENT Introduction: It is only alter all the tasks behind the four \"gates" are accomplished that prosperity and success can be attained. We are already done with the rst two gates; we are now going to proceed to the next gate. The third gate is the execution gate, composed of machinery, methods and management skills. Value is actually created when formulated strategies are executed. Machinery is having an organization that can deliver its intended value. Methods, on the other hand, are processes that institutionalize what needs to be done efciently and effectively, while management skills entail knowledge of people handling and reward handling, and having leadership skills. The entrepreneur needs emotional quotient, or E0 to build the right culture to get things done. Lesson Proper: GATE 3 Execution: Machinery, Methods, and Management Skills \"A mind that creates. A will that excels. A heart that cares. A team that wins. An institution that lasts. All for the Glory of God.\" - Abenson Group Execution is the practice side of managing activities, makes strategy come alive. A great combination of strategy and execution can reduce uncertainty, lower cost, meet targets faster and can be a source of advantage. Good execution softens poor strategy and gives time for the management to see and correct its strategy. It is therefore important to think of execution dun'ng strategy formulation and involve key people in execution from the beginning. Machinery is an organization structure that can deliver the value planned. Machinery or organization can only be articulated alter the value proposition in the offering model is dened. This means strategy is the key driver of structure and value is created only if the structure is in harmony with strategy. This also means a change in strategy will necessitate a review of its organization design to avoid any contradictions. Structure must support growth strategy; hence if market segment growth mandate, different market segments must get sufficient attention. 0n the other hand, if geographicai expansion is the mandate, organization must provide sufficient attention to geographicai focus to attain competitive advantage. B. Methods are about systems and processes that allow the entrepreneur information and control. 1. A value chain is a way to look at two different types of business activities: the rst action that creates value for a customer and the following action that supports the execution of the rst action. For instance, a grocery store may determine that offering grocery delivery is the rst action that will create value for the customer. The following actions that support the grocery delivery may include online ordering, same-day delivery, and scheduling automatic weekly delivery. These multiple activities are linked together to create value for the customer. Entrepreneurs should ask themselves two related questions: 1. What functions or business processes have to be done excellently to achieve sustainable competitive advantage? (a value creation approach) 2. In what value chain activities would poor execution seriously weaken strategic success? (a problem-solving approach) -is the strategic linkage or a series of value-adding individual Vaiue chain actIVltIes required to create, produce and deliver products and services to the customer that is the total business plan to create profit for the rm. The value chain helps employees visualize and understand the role each department of an organization plays meeting the needs of other departments. In short, the value chain describes the primary activities needed to accomplish a rm's task and asks the question \"What's the most efcient way to do what needs to be done?" - It is an expanded supply chain. Exampfe of the Vafue Chain ofa Manufacturing Company mmmmmm - The value chain above shows the ow from design to manufacturing as part of the pre-transaction cluster; from marketing to channel as part of the transaction cluster before the end customers are reached. Another channel can be created for after sales service as part of the post-transaction cluster. The value chain is important especially for start-ups as it denes the time and effort required in each stage of the value chain before products can be sold to a paying customer. The time and effort needed also to estimate the cash ow required to get things going in the start-up. The value chain of a company's strategy that is differentiated will differ from the value chain it the strategy is low cost. Differentiated versus low cost activities would be different in value and cost, hence, can drive competitive advantage. Materials suppliers delivering orders is the most fundamental part in a value chain. 2. Value network f Ecosystem o The value chain is an expanded supply chain. Value network, on the other hand, is an expanded value chain that shows the involvement of other stakeholders in each value chain stage to co- create value. It is also called the ecosystem. With an online business model, members of the value chain need not have ownership of goods before they can resell, unlike the old manufacturing model where goods are passed on from one party to another. Resources a. Hard assets are physical (channel, infrastructure, technology), nancial and intangible assets (brand, IP, customer info) b. Soft assets are human assets like relationships, skills, and knowledge. 3. Processes - transform inputs into outputs. - Processes are critical repetitive tasks that are routinized to foster good strategy execution. It includes managerial processes, operational processes and support processes. They support the value chain for better efciency and effectiveness. a. Managerial processes govern the operation of a system such as corporate governance (norms, metrics). b. Operational processes are the sequence of value-adding activities that function together (known as value stream) that adds value to the core process. c. Support processes are procedures that support the core process, and these are purchasing, accounting, technical and recruitment. Process can be improved with productivity tools whenever available. Entrepreneurs must involve their team for inputs, must listen and be open-rninded with feedback because team members who are intimate or directly interacting with customers usually know the customersr pain points than their superiors, being the 'sensors' of the company. Ensuring the employees have a voice is a great way to bond and identify talents within the company as well. Team members with sense making skills will be useful as your company grows. Begin with strategycritical processes and ensure they are aligned with your value creation strategy. Critical processes are the processes with the biggest effect on the attainment of goals, impact key factors for success and business strategy, solve problems encountered from a customer's perspective or offer greater value for the rm. While two different items, resources and processes are treated together in the business model because they repeatedly deliver the value proposition and the value capture. They more focused the value proposition, the better for resources and processes to execute. Key processes rely on resources to get things done. a. Capabilities As mentioned, structure comes after strategy. While the offering model answers where the rm will win, the operating model completes the picture by answering how the rm wiil win, identify capabilities needed to create an advantage. b. Complementors Companies cannot do everything alone. They need other people to help them deliver the value proposition. Other items, companies may want to do something fast but lacks the capabilities to do so. Other times, outsourcing some functions appears to make more nancial sense. c. Configuration and Cost Entrepreneurs are always reconguring how to grow revenues, increase differentiation, improve cash position while reducing cost. . Management skills Execution can be built via building infrastructure to increase capabilities, which are composed of coordination, commitment and competencies. a. People sharing meaningfulness and pride in their work while accomplishing required tasks. b. Rewards - attaining a sense of identity with nancial blessings while accomplishing required tasks. c. Leadership having a sincere sense of mission and purpose while practicing good governance. We will discuss more about Management Skills on the next chapter Q *** END of LESSON 13*" Think of a past project you have planned that has failed or wasn't as successful as you had hoped. 1. Identify.r the barriers of the execution. (Why it failed} 2. HOW would you address these barriers\"? {Solution} 3. What have you learned from those mistakes\