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Strategic Leadership

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Title: Strategic Leadership


1
Topic 17
  • Strategic Leadership

2
The Nature of Strategic Leadership
Strategic leadership is the process of providing
the direction and inspiration necessary to create
or sustain an organization
3
Figure 13-1 Components of Strategic Leadership
4
Guidelines for Formulating Strategy
  • Determine long-term objectives and priorities
  • Assess current strengths and weaknesses
  • Identify core competencies
  • Evaluate the need for a major change in strategy
  • Identify promising strategies
  • Evaluate the likely outcomes of a strategy
  • Involve other executives in selecting a strategy

5
Systems Thinking
The ability to process information and understand
its consequences for the organization in its
interaction with the environment
6
Strategic Planning
  • Strategic planning encompasses those activities
    that lead to the statement of goals and
    objectives and the choice of strategy
  • Strategic planning often takes the form of a SWOT
    analysis, a method of considering strengths,
    weaknesses, opportunities, and threats in a
    particular situation

7
SWOT Analysis
  • Represents an effort to examine the interaction
    between the particular characteristics of an
    organization or organizational unit and the
    external environment

8
Examples of SWOT Elements
  • Strengths Favorable location, talented workers,
    state-of-the-art equipment
  • Weaknesses Unfavorable location, outdated
    equipment, limited capital
  • Opportunities Culturally diverse customer base,
    changes in technology, deregulation
  • Threats Ecommerce, declining market, new
    competitors

9
Business Strategy Levels
  • Corporate-level strategy asks, What business are
    we in?
  • Business-level strategy asks, How do we
    compete?
  • Functional-level strategy asks, How do we
    support the business-level strategy?

10
Sample Strategies
  • Differentiation
  • Cost leadership
  • Focus
  • High quality
  • Imitation
  • Strategic alliances
  • Growth through acquisition

11
Sample Strategies (contd)
  • High speed and first-mover strategy
  • Product and global diversification
  • Sticking to core competencies
  • Brand leadership
  • Creating demand by solving problems
  • Conducting business on the Internet
  • Peoplepalooza (competitive advantage through
    hiring talented people)

12
Differences Between Lower Level and Upper Echelon
Leaders
  • Who the leader is
  • Scope of responsibility
  • Focus
  • Effectiveness criteria

13
Strategic Forces
14
Dual Role of Upper Echelon Leaders
15
External Moderators of Executive Discretion
  • Environmental uncertainty
  • Type of industry
  • Market growth
  • Legal constraints

16
Internal Moderators of Executive Discretion
  • Stability
  • Size and structure
  • Organizational culture
  • Stage of organizational growth
  • Presence, power, and makeup of TMT

17
Themes in Upper Echelon Style
  • Challenge Seeking
  • Risk taking
  • Openness to change
  • Willingness to innovate
  • Future orientation
  • Need for Control
  • Delegation
  • Centralization
  • Uniformity of practices
  • Focus on process

18
Strategic Leadership Dimensions
HIGH-CONTROL INNOVATOR (HCI) Challenge-seeker
who maintains tight control over organization
PARTICIPATIVE INNOVATOR (PI) Challenge-seeker
who delegates control of organization
STATUS QUO GUARDIAN (SQG) Challenge-averse
who maintains tight control over organization
PROCESS MANAGER (PM) Challenge-averse
who delegates control of organization
19
Processes Leaders Use to Impact Their
Organization
20
Direct Decisions
  • Vision
  • Mission
  • Strategy
  • Structure
  • Organizational culture
  • Selection of other leaders

21
Allocation of Resourcesand Reward System
  • Decisions regarding funding and budgets
  • Allocation of resources to support goals
  • Formal rewards such as salary and bonuses
  • Informal rewards such as recognition
  • Promotion of other leaders and managers

22
Setting the Norms and Role Modeling
  • Setting decision criteria and rules by which
    others make decisions
  • Active or subtle role modeling of behaviors and
    styles

23
Responsibility of Upper Echelon Leaders
  • Organizational performance
  • Accountability to various internal and external
    constituents
  • Ethical behavior and role-modeling

24
Factors That Affect Executive Salaries
  • Firm size
  • Industry competition
  • CEO power and discretion
  • Internationalization
  • High stress and instability

25
Constraints on Leaders
  • Internal Constraints
  • Coalitions in the organization
  • Strong organizational culture
  • External Constraints
  • Organizations primary products and services
  • Powerful external stakeholders
  • Perception of the organizations performance
  • Constraints and Leader Traits as Joint
    Determinants

26
Strategic Leadership
  • Political Power and Strategic Leadership
  • Executive Tenure and Strategic Leadership
  • Executive Teams
  • Potential advantages of strategic teams
  • Executive teams and organizational effectiveness

27
How Leaders Influence Organizational Performance
  • Efficiency and Process Reliability
  • Innovation and Adaptation
  • Human Resources and Relations
  • Leader Influence on Performance Determinants

28
Efficiency and Process Reliability
  • Performance management and goal setting programs
    (e.g.,MBO, zero defects)
  • Process and quality improvement programs (quality
    circles,TQM, Six Sigma)
  • Cost reduction programs (downsizing, outsourcing,
    just-in-time inventory)
  • Structural forms (functional specialization,
    formalization, standardization)
  • Appraisal, recognition, and reward systems
    focused on efficiency and process reliability

29
Human Resources and Relations
  • Quality of worklife programs (flextime, job
    sharing, child care, fitness center)
  • Employee benefit programs (health care,
    vacations, retirement, sabbaticals)
  • Socialization and team building (orientation
    programs, ceremonies and rituals, social events
    and celebrations)
  • Employee development programs (training,
    mentoring, 360 feedback, education subsidies)

30
Human Resources and Relations
  • Human resource planning (succession planning,
    assessment centers, recruiting programs)
  • Empowerment programs (self-managed teams,
    employee ownership, industrial democracy)
  • Recognition and reward programs focused on
    loyalty, service, or skill acquisition

31
Innovation and Adaptation
  • Competitor and market analysis programs (market
    surveys, focus groups, consumer panels,
    comparative product testing, benchmarking
    competitor products and processes)
  • Innovation programs (intrapreneurship, quality
    circles, innovation goals)
  • Knowledge acquisition (consultants, joint
    ventures, import best practices from outside)
  • Organizational learning (knowledge management
    systems, postmortums, joint ventures)

32
Innovation and Adaptation
  • Temporary structural forms for implementing
    change (steering committee, task forces)
  • Growth and diversification programs (mergers and
    acquisitions, franchises, joint ventures)
  • Structural forms (research departments, small
    product divisions, product managers
    crossfunctional product development teams,
    facilities designed to encourage innovation)
  • Appraisal, recognition, and reward systems
    focused on innovation and customer satisfaction

33
Questions for External Monitoring
  • What do clients and customers need and want?
  • What is the reaction of clients and customers to
    the organizations current products and services?
  • Who are the primary competitors?
  • What strategies are they pursuing (e.g., pricing,
    advertising and promotions, new products,
    customer service, etc.)?
  • How do competitors products and services compare
    to those of the managers organization?
  • What events affect the acquisition of materials,
    energy, information, and other inputs used by the
    organization to conduct its operations?

34
Questions for External Monitoring
  • How will the organization be affected by new
    legislation and by government agencies that
    regulate its activities (e.g., labor laws,
    environmental regulations, safety standards, tax
    policies, etc.)?
  • How will new technologies affect the
    organizations products, services, and
    operations?
  • How will the organization be affected by changes
    in the economy (employment level, interest rates,
    growth rates)?
  • How will the organization be affected by changing
    population demographics (e.g., aging, diversity)?
  • How will the organization be affected by
    international events (e.g., trade agreements,
    import restrictions, currency changes, wars and
    revolutions)?

35
Guidelines for External Monitoring
  • Identify relevant information to gather
  • Use multiple sources of relevant information
  • Learn what clients and customers need and want
  • Learn about the products and activities of
    competitors
  • Relate environmental information to strategic
    plans

36
Knowledge Management andthe Learning Organization
  • Knowledge management is the systematic sharing of
    information to achieve such goals as innovation,
    nonduplication of effort, and competitive
    advantage
  • A learning organization is one that is skilled at
    creating, acquiring, and transferring knowledge,
    and at modifying behavior to reflect new
    knowledge and insights

37
Where Corporate Knowledge Lives
38
Initiatives to Enhance Organizational Learning
  • Create a strategic intent to learn
  • Create a shared vision
  • Empower employees to make decisions and seek
    continuous improvement
  • Develop systems thinking
  • Encourage personal mastery of the job

39
Initiatives to Enhance Organizational Learning
(contd)
  • Encourage team learning
  • Encourage action learning
  • Learn from failure
  • Encourage continuous experimentation
  • Develop political skills to make connections with
    and influence others
  • Encourage creative thinking

40
Summary
  • Strategic leadership deals with the major
    purposes of an organization or organizational
    unit
  • Five important components of strategic leadership
    include high-level cognitive ability, multiple
    inputs to strategy formulation, anticipating and
    creating a future, revolutionary thinking, and
    creation of a vision

41
Summary (contd)
  • Strategic planning often takes the form of a SWOT
    analysis
  • Strategic leaders use many different types of
    business strategies
  • Leaders must help their organizations adapt to
    the environment by taking initiatives to create a
    learning organization

42
Leading ChangeAnne Mulcahy
  • In charge of turning Xerox around
  • Focus on giving stakeholders hope and confidence
  • Role model desired behaviors
  • Leading by example

43
Leadership In ActionA.G. Lafley
  • Soft-spoken and understated
  • Careful listener
  • Focus on customer
  • Repeat simple messages
  • Change culture through communication and symbols
  • Openness and focus on people

44
The Leadership Challenge
  • CEO involvement in nomination of board members
    helps assure that members with the right skills
    and expertise are selected
  • Those nominated by CEO may have a conflict of
    interest and a positive bias towards the CEO
  • Creation of a balance of members nominated by
    different stakeholders is essential
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