Title: Strategy a View from the Top Chapter 2: How Strategy and Performance are Linked
1 Strategy a View from the TopChapter 2How Strategy and Performance are Linked
2 Level 5 Leadership
Top Leadership defines a significant difference between good and great companies
Common characteristic of the great companies assessed in Good to Great displays an unusual mix of intense determination and profound humility
3 Nature of the Leadership Team
The process of securing individuals with level 5 leadership abilities must be undertaken BEFORE a strategy should be developed
Worthwhile for firms to spend extra time and energy on personnel searchers because with the right people in the right positions many companies problems dissipate.
Must have a willingness to identify and assess defining facts in a company and its larger business environment
4 Metaphor of the Hedgehog
Simplicity can sometimes lead to greatness
When confronted by predators the hedgehogs simple but effective response of rolling into a ball can rarely be overcome by its more clever predators such as a fox
Being Good to Great is not doing many things well but instead doing ONE thing better than anyone else
5 Criteria to Achieve Hedgehog Concept
Determine what the company can and cannot be the best at
Determine what drives the companys economic engine
Determine what the companys people are deeply passionate about
6 The Flywheel Effect
Advantageous business cycle by making decisions that reinforce the companys hedgehog competencies execs initiate positive momentum results in positive outcomes which serve to energize investment/loyalty of the staff
The Doom Loop reactive decision making an overextension into too many diverse areas of concentration following short lived trends frequent changes in leadership and personnel loss of moral and disappointing results.
7 Other Items of Importance
Have an overarching organizational culture of discipline
Businesses should not depend on technology alone
Companies need a set of core values
8 The 42 Formula
A study aimed at identifying the must have management practices concluded companies that outperformed their industry peers excelled at 4 primary management practices
These strengths were augmented with at least 2 of the 4 secondary management practices
9 Strategy and Performance A Conceptual Framework Purpose Leadership Strategy Structure Processes Systems People Culture Performance/Control 10 Strategy Purpose and Leadership
Strategy-structure-systems paradigm dominated the 20th century
The principal strength was that it minimized human initiative with disciplined planning and control systems
Lost effectiveness with the rise of global competition
Move from chief strategist to chief facilitator
Sought ways to involve employees at all levels in the strategic management process
Strategic discipline and control secured through commitment
11 Strategy and Organizational Change
Keys to effective organizational change
Successful implementation of a new strategy requires change in all of these.
Also style skills and superordinate goals are as important as strategy or structure when bringing about change.
Choosing structure involves identifying dimensions that allow the organization adapt and evolve strategically.
Goal is to create an environment that
Allocates resources effectively
Is naturally self correcting as strategic changes need to be made
No matter which form is used transparency is critical
Lines of authority need to be clear
Responsibilities must be clearly defined
Types of Structure
Functional particular task requires many specialists
Geographic company operates in a diverse set of regions
Decentralized reduce complexity in multibusiness environment
Strategic business- defines grouping businesses that share key strategic elements
Matrix structures- allow multiple channels of authority
14 Systems and Processes
The right systems and processes can enhance an organizations effectiveness and ability to cope with change
Supporting Systems Planning Budgeting Accounting Information Reward and Incentive
Systematic way of doing things
Formal or informal
Elements of Strong Culture
Leaders who demonstrate strong values that align with competitive conditions
Company commitment to operating under pervasive principles not easily abandoned
Concern for employees customers and shareholders
Elements of Weak Culture
Employees report experiencing separateness from the organization
Prevalence of political maneuvering
Hostility toward change
A companys corporate culture is a shared system of values assumptions and beliefs among a firms employees that provides guidance on how to think perceive and act.
17 The Balanced Scorecard
A set of measures designed to provide strategists with a quick comprehensive view of the business.
It helps to answer four basic questions
How do customers see us
At what must we excel
Can we continue to improve and create value
How do we look to our companys shareholders
18 The Balanced Scorecard(cont.)
The scorecard uses four management processes
Translating a vision
Improving business planning
Gathering feedback and learning
19 Performance and Control
Most methods for measuring and evaluating performance are focused on outcome control.
The company directly monitors specific business units through behavior control to maximize performance.
20 The Role of the Board
Fundamentals of board revolve around creating a culture of high performance
To direct the company and determine and prioritize what they should focus its attention and focus on.
Six specific tasks
21 The Role of the Board
In order to create a high performance culture a board should complete these 6 tasks
Define its role agenda and information needs
Ensure that management not only performs but performs with integrity
Set expectations about the tone and culture
Formulate corporate strategy with management
Ensure that the corporate culture aligns
Help management understand expectations
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