McGraw-Hill/Irwin Strategic Management, 10/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Leadership and Culture Session 20

12-2 Learning Objectives 1.Explain the relevance of vision and performance in helping leaders clarify their strategic intent 2.Define and illustrate the value of passion and selection/development of new leaders as means to shape their organization’s culture 3.Define and explain what is meant by organizational culture, and how it is created, influenced, and changed 4.Explain two roles organizational leaders have in an organizational culture 5.Describe ways leaders influence organizational culture

12-3 Strategic Leadership: Embracing Change The leadership challenge is to galvanize commitment among people within an organization as well as stakeholders outside the organization to embrace change and implement strategies intended to position the organization to succeed in a vastly different future

12-4 Clarifying Strategic Intent Leaders help their company embrace change by charting strategic intent—a clear sense of where they want to lead the company and what results they expect to achieve Leader’s vision—an articulation of a simple criterion or characterization of what the leader sees the company must become to establish and sustain global leadership

12-5 “I have vision and the rest of the west wears bifocals” Butch Cassidy circa 1870

12-6 “By the end of this decade I commit this nation to putting a man on the moon” John F. Kennedy 1961

12-7 “By the turn of the century there will be more computers than televisions in the U.S.” ????

12-8 Recruiting and Developing Talented Operational Leadership New leaders will each be global managers, change agents, strategists, motivators, strategic decision makers, innovators, and collaborators if the business is to survive and prosper Today’s need for fluid, learning organizations capable of rapid response, sharing, and cross-cultural synergy place incredible demands on young managers to bring important competencies to the organization

12-9 Organizational Culture Organizational culture is the set of important assumptions (often unstated) that members of an organization share in common Every organization has its own culture Assumptions become shared assumptions through internalization among an organization’s individual members

12-10 Characteristics Describing Culture Individual autonomy Structure Support Identification Performance reward Conflict tolerance Risk tolerance

12-11 Origins of Culture History Environment Staffing Socialization

12-12 Culture and Competitive Advantage Culture Must: Generate Specific Value for the Firm Be Rare Not easily imitable

12-13 Shaping Organizational Culture Passion, in a leadership sense, is a highly motivated sense of commitment to what you do and want to do Leaders also use reward systems, symbols, and structure among other means to shape the organization’s culture Leaders look to managers they need to execute strategy as another source of leadership to accept risk and cope with the complexity that change brings about

12-14 Shaping Organizational Culture Emphasize key themes or dominant values Encourage dissemination of stories and legends about core values Institutionalize practices that systematically reinforce desired beliefs and values Adapt some very common themes in their own unique ways Manage organizational culture in a global organization: –Social norms –Values and attitudes –Religion –Education

12-15 Primary Embedding Mechanisms What leaders pay attention to, measure and control Leaders reactions to critical incidents/organzational crises Mentoring - Deliberate role modeling, teaching, coaching Criteria for the allocation of rewards and status Criteria for recruitment, selection, promotion, retirement and excommunication

12-16 Secondary Embedding Mechanisms Organizational design and structure Organizational systems and procedures Design of physical space, facades, buildings Stories about the important events and people Formal statements of organizational philosophy, creeds, charters

12-17 McKinsey 7-S Framework Shared Values (culture) Strategy Staff Systems Style Structure Skills (management)(leadership) (management)

12-18 The Role of the Organizational Leader The leader is the standard bearer, the personification, the ongoing embodiment of the culture, or the new example of what it should become How the leader behaves and emphasizes those aspects of being a leader become what all the organization sees are “the important things to do and value.”

12-19 Ethics Ethical standards are a person’s basis for differentiating right from wrong The culture of an organization, and particularly the link between the leader and the culture’s very nature, is inextricably tied to the ethical standards of behavior, actions, decisions, and norms that leader personifies

12-20 Manage the Strategy-Culture Relationship Link to mission Maximize synergy Manage around the culture Reformulate strategy or culture

12-21 Remember: Culture Eats Strategy for Breakfast!

12-22 Culture, Structure, Leadership and Reward Systems should be Strategy Based

12-23 celebrate, point out, document, ritualize, measure and reward behaviors/skills/actions that achieve efficiency, innovation, product quality or customer responsiveness.