Lesson: Gate 3 – Execution

Topic: 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 after all the tasks behind the four “gates” are accomplished that prosperity and success can be
attained. We are already done with the first 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 efficiently and effectively, while management skills
entail knowledge of people handling and reward handling, and having leadership skills.

The entrepreneur needs emotional quotient, or EQ to build the right culture to get things done.

The Entrepreneurial Mind

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 during strategy formulation and involve key people in
execution from the beginning.

A. Machinery – is an organization structure that can deliver the value planned.

- Machinery or organization can only be articulated after the value proposition in the offering model is
defined.
- 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. On the other hand, if geographical expansion is the mandate,
organization must provide sufficient attention to geographical 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 first action that
creates value for a customer and the following action that supports the execution of the first action.
For instance, a grocery store may determine that offering grocery delivery is the first 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 activities

required to create, produce and deliver products and services to the
Value chain customer that is the total business plan to create profit for the firm.
 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 firm’s task and asks the question “What’s the most efficient way to do what
needs to be done?”
- It is an expanded supply chain.

Example of the Value Chain of a Manufacturing Company

Distribu Supply End

Design Sourcing R&D Mfg Mktg Channel
tion Chain users

- The value chain above shows the flow 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 defines 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 flow 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 if 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 / 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), financial 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 efficiency 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-minded with feedback because team members who are
intimate or directly interacting with customers usually know the customers’ 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 strategy-critical 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 firm.

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 firm will win, the operating model completes the picture by answering how
the firm will 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 financial sense.

c. Configuration and Cost

Entrepreneurs are always reconfiguring how to grow revenues, increase
differentiation, improve cash position while reducing cost.

C. 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 financial blessings while
accomplishing required tasks.
c. Leadership – having a sincere sense of mission and purpose while practicing
good governance.