Case Study Description of Strategy Execution Module 12: Aligning Performance Goals and Incentives
This module reading explains how managers use performance goals and incentives to ensure that employee actions align with the overall business strategy of the organization. The module begins by discussing how managers use goals to communicate business strategy, the importance of targets and benchmarks for motivation, and the multiple purposes for which goals are used, including planning, coordination, motivation, and evaluation. Three tests are offered to evaluate the effectiveness of performance goals: alignment with strategy, measurability, and linkage to economic value creation. The discussion then turns to intrinsic and extrinsic rewards and examines short-term incentives such as bonuses and recognition as well as long-term incentives such as deferred payments and stock options. Because performance goals and incentives define success (and failure) for individuals, this module also explores the interaction of goals and incentives with human behavior. While this module is designed to be used alone, it is part of the Strategy Execution series. Taken together, the series forms a complete course that teaches the latest techniques for using performance measurement and control systems to implement strategy. Modules 1 - 4 set out the foundations for strategy implementation. Modules 5 - 10 teach quantitative tools for performance measurement and control. Modules 11 - 15 illustrate the use of these techniques by managers to achieve profit goals and strategies. View the full Strategy Execution series at: hbsp.harvard.edu/strategyexecution.
Swot Analysis of "Strategy Execution Module 12: Aligning Performance Goals and Incentives" written by Robert L. Simons includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Goals Incentives facing as an external strategic factors. Some of the topics covered in Strategy Execution Module 12: Aligning Performance Goals and Incentives case study are - Strategic Management Strategies, Assessing performance, Compensation, Corporate governance, Motivating people, Performance measurement, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Strategy Execution Module 12: Aligning Performance Goals and Incentives casestudy better are - – cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, increasing transportation and logistics costs, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies,
geopolitical disruptions, increasing energy prices, etc
Introduction to SWOT Analysis of Strategy Execution Module 12: Aligning Performance Goals and Incentives
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Strategy Execution Module 12: Aligning Performance Goals and Incentives case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Goals Incentives, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Goals Incentives operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Strategy Execution Module 12: Aligning Performance Goals and Incentives can be done for the following purposes –
1. Strategic planning using facts provided in Strategy Execution Module 12: Aligning Performance Goals and Incentives case study
2. Improving business portfolio management of Goals Incentives
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Goals Incentives
Strengths Strategy Execution Module 12: Aligning Performance Goals and Incentives | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Goals Incentives in Strategy Execution Module 12: Aligning Performance Goals and Incentives Harvard Business Review case study are -
Diverse revenue streams
– Goals Incentives is present in almost all the verticals within the industry. This has provided firm in Strategy Execution Module 12: Aligning Performance Goals and Incentives case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– Goals Incentives has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Goals Incentives has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High switching costs
– The high switching costs that Goals Incentives has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Goals Incentives in the sector have low bargaining power. Strategy Execution Module 12: Aligning Performance Goals and Incentives has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Goals Incentives to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Goals Incentives is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Goals Incentives is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Strategy Execution Module 12: Aligning Performance Goals and Incentives Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Goals Incentives has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Goals Incentives to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Goals Incentives in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Goals Incentives is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Robert L. Simons can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Effective Research and Development (R&D)
– Goals Incentives has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Strategy Execution Module 12: Aligning Performance Goals and Incentives - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Goals Incentives is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Strategy & Execution field
– Goals Incentives is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Goals Incentives in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Goals Incentives is one of the leading recruiters in the industry. Managers in the Strategy Execution Module 12: Aligning Performance Goals and Incentives are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Strategy Execution Module 12: Aligning Performance Goals and Incentives | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Strategy Execution Module 12: Aligning Performance Goals and Incentives are -
Workers concerns about automation
– As automation is fast increasing in the segment, Goals Incentives needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Skills based hiring
– The stress on hiring functional specialists at Goals Incentives has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Strategy Execution Module 12: Aligning Performance Goals and Incentives, it seems that the employees of Goals Incentives don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Goals Incentives is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Strategy Execution Module 12: Aligning Performance Goals and Incentives can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Goals Incentives has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Goals Incentives has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert L. Simons suggests that, Goals Incentives is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Lack of clear differentiation of Goals Incentives products
– To increase the profitability and margins on the products, Goals Incentives needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Strategy Execution Module 12: Aligning Performance Goals and Incentives has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Goals Incentives 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Strategy Execution Module 12: Aligning Performance Goals and Incentives, is just above the industry average. Goals Incentives needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to strategic competitive environment developments
– As Strategy Execution Module 12: Aligning Performance Goals and Incentives HBR case study mentions - Goals Incentives takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Strategy Execution Module 12: Aligning Performance Goals and Incentives | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Strategy Execution Module 12: Aligning Performance Goals and Incentives are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Goals Incentives is facing challenges because of the dominance of functional experts in the organization. Strategy Execution Module 12: Aligning Performance Goals and Incentives case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Goals Incentives in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Goals Incentives can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Learning at scale
– Online learning technologies has now opened space for Goals Incentives to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Manufacturing automation
– Goals Incentives can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Goals Incentives in the consumer business. Now Goals Incentives can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Goals Incentives can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Goals Incentives can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Goals Incentives can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Goals Incentives has opened avenues for new revenue streams for the organization in the industry. This can help Goals Incentives to build a more holistic ecosystem as suggested in the Strategy Execution Module 12: Aligning Performance Goals and Incentives case study. Goals Incentives can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Goals Incentives can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Strategy Execution Module 12: Aligning Performance Goals and Incentives, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Goals Incentives to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Loyalty marketing
– Goals Incentives has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Using analytics as competitive advantage
– Goals Incentives has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Strategy Execution Module 12: Aligning Performance Goals and Incentives - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Goals Incentives to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Strategy Execution Module 12: Aligning Performance Goals and Incentives External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Strategy Execution Module 12: Aligning Performance Goals and Incentives are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Goals Incentives with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Goals Incentives can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Strategy Execution Module 12: Aligning Performance Goals and Incentives .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Technology acceleration in Forth Industrial Revolution
– Goals Incentives has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Goals Incentives needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Goals Incentives will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Regulatory challenges
– Goals Incentives needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Stagnating economy with rate increase
– Goals Incentives can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Goals Incentives can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Goals Incentives demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Goals Incentives needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Environmental challenges
– Goals Incentives needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Goals Incentives can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Goals Incentives in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Strategy Execution Module 12: Aligning Performance Goals and Incentives Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Strategy Execution Module 12: Aligning Performance Goals and Incentives needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Strategy Execution Module 12: Aligning Performance Goals and Incentives is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Strategy Execution Module 12: Aligning Performance Goals and Incentives is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Strategy Execution Module 12: Aligning Performance Goals and Incentives is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Goals Incentives needs to make to build a sustainable competitive advantage.