MSU Extension Product Center

Business strategy must be communicated to frontline workers. They are the ones implementing business decisions, day-in and day-out. If their behavior doesn’t reflect strategy, it’s not being implemented. This is not necessarily a simple job. In one study by Donald Sull et al. for MITSloan, only 28% of executives and middle managers could name three of their company’s strategic priorities. Strategic implementation is the art of emphasizing to employees, through incentives, the right things to do. Boundaries, rewards and culture are the key levers in this job.

Boundaries

Boundaries distill strategy into straightforward expectations for workers. They work best for simple, measurable, and accomplishable tasks. For example, McDonald’s deploys straightforward rules to ensure quality control. According to Dess et al in the tenth edition of the textbook “Strategic Management: Text and Cases,” burgers must be thrown out within ten minutes of being made. French fries must be discarded after seven minutes. In these instances, McDonald’s workers don’t need to independently determine acceptable product quality because management sets clear standards and boundaries.

Another example comes from Zingerman’s Delicatessen in Ann Arbor, Michigan. The company maintains a zealous focus on customer service in everything it does, partly through clear boundaries. One example, as reported by Myron Kukla for MLive, is the 10-4 rule. Employees are expected to smile at a customer when they are ten feet away and greet them when they are four feet away. Customer service is more thoroughly demonstrated with the company’s green card and red card rule. An employee must fill out a red card when a customer service problem occurs, detailing the problem, what they did to fix the problem and recommendations to the company going forward. A green card is used to document customer service successes.

Boundaries, like these, are a means of activating a company’s strategic priorities. However, they are not perfect in every situation. Boundaries often work poorly for amorphous, long-term work. The rules that boundaries create are not good for creative work either. Boundaries should be used with a mix of rewards and culture to get the job done. The ideal mix will change by job description and company.  

Rewards

Rewards motivate employees by giving more of what they like or less of what they dislike. Financial rewards, like bonuses or raises, are a powerful tool. However, these are not the only tools. According to Dess et al., some studies have shown that workers who are satisfied with their pay respond better to non-financial incentives than financial incentives. Informal recognition, praise from a supervisor and access to exciting opportunities are all effective, non-financial incentive options.

A unique example of rewards comes from Not Your Average Joe’s, a restaurant chain in Massachusetts. This company, according to Dess et al., tracks server performance in tips and customer satisfaction. High performing servers are then given more tables or better schedules. Rewards, though, can have unintended consequences. Workers who don’t see the reward system as logical are demotivated. It can also incentivize individual behavior that is bad for organizations. For example, a customer service agent who is paid by the number of calls managed may try to pass off long and demanding calls. It’s essential that rewards act as a coherent system that is understandable to all employees.  

Culture

Business culture encompasses all the behaviors, norms, ethics and values of employees. It’s the shared understanding of “how things are done here,” according to Dess et al. Culture can be quite powerful. Peter Drucker, Austrian-American management consultant, educator and author, is famous for his quote, “culture eats strategy for breakfast.” No strategy, however well designed, will be well implemented if it conflicts with the facts on the ground of a company’s culture. After all, as noted by Stephen Conmy in an article for the Corporate Governance Institute, employees are unlikely to put effort into implementing strategy if they’re not motivated by a company’s vision.  

Entrepreneurs must design and implement strategy with culture in mind. One means is through the strategic use of symbols. Trader Joe’s maintains its quirky, fun culture in its work titles. According to Marc Emmer’s “How Trader Joe’s Built an Iconic Brand Through Employee Engagement” article for Inc., each store is run by a “captain” who is supported by “merchants, mates and crew.” Stories matter, too. A hospital system, according to Dess et al, wanted to improve their x-ray interpretation service. The one change they decided to make was including a photo of each patient with x-ray records. This change increased the time technicians spent interpreting an x-ray by 29% and increased the accuracy of readings by 46%. Culture has many benefits. A huge one, though, is that less time and energy needs to be put towards monitoring employee behavior.

MSU Product Center

Strategy development and implementation is crucial to business’s long-term success. In communicating strategy to workers, consider partnering with Michigan State University (MSU) Extension’s Product Center. The MSU Product Center is an organization that brings together on-campus expertise in the sectors of food, agriculture, and natural resources to help entrepreneurs define and launch innovative products. Field-based innovation counselors advise entrepreneurs on business planning, regulatory requirements, and product development needs. To access business development assistance, select the request counseling tab on the MSU Product Center website or call 517-432-8750.