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Weaknesses: Unfavorable location, outdated equipment, limited capital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 (cont’d)
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 ORGANIZATIONS Strategy Culture Technology Structure
Environment
Leadership
ORGANIZATIONS

14. Dual Role of Upper Echelon Leaders
Moderating
Factors
Leadership
Characteristics
Strategy
Formulation
Implementation
Performance

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 challenge-
seeking
Low challenge-
CHALLENGE-
SEEKING
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
NEED FOR CONTROL
High control Low control

19. LEADER Processes Leaders Use to Impact Their Organization Environment
Direct decisions
Allocation of resources
Reward system
Selection of other leaders
Promotions
Role-modeling
Strategy
Culture
LEADER
Structure
Leadership
Technology

20. Direct Decisions Vision Mission Strategy Structure
Organizational culture
Selection of other leaders

21. Allocation of Resources and 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 organization’s 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 organization’s 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 manager’s 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 organization’s 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 and the 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 (cont’d)
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 (cont’d)
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 Change: Anne Mulcahy
In charge of turning Xerox around
Focus on giving stakeholders hope and confidence
Role model desired behaviors
Leading by example

43. Leadership In Action: A.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