Topic 17

Strategic Leadership

The Nature of Strategic

Leadership

Strategic leadership is the process

of providing the direction and
inspiration necessary to create or
sustain an organization

Figure 13-1 Components of

Strategic Leadership

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

Systems Thinking
The ability to process information
and understand its consequences
for the organization in its
interaction with the environment

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

SWOT Analysis

Represents an effort to examine the

interaction between the particular
characteristics of an organization or
organizational unit and the external
environment

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Weaknesses: Unfavorable location, outdated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

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?

Sample Strategies

Differentiation
Cost leadership
Focus
High quality
Imitation
Strategic alliances
Growth through acquisition

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)

Differences Between Lower Level and

Upper Echelon Leaders

Who the leader is

Scope of responsibility
Focus
Effectiveness criteria

Strategic Forces

Strategy

Culture

Structure

Technology

Leadership

Environment

ORGANIZATIONS

Dual Role of
Upper Echelon Leaders
Moderating
Factors

Leadership
Characteristics

Strategy
Formulation

Strategy
Implementation

Performance

External Moderators of
Executive Discretion
Environmental
uncertainty

Type of industry
Market growth

Legal constraints

Internal Moderators of
Executive Discretion

Stability

Size and structure

Organizational culture

Stage of organizational growth

Presence, power, and makeup of TMT

Themes in Upper Echelon Style

Challenge Seeking

Need for Control

Risk taking

Delegation

Openness to change

Centralization

Willingness to

Uniformity of

innovate

Future orientation

practices

Focus on process

Strategic Leadership Dimensions

High challengeseeking

CHALLENGESEEKING

Low challengeseeking

HIGH-CONTROL
INNOVATOR (HCI)
Challenge-seeker who
maintains tight control
over organization

PARTICIPATIVE
INNOVATOR (PI)
Challenge-seeker who
delegates control
of organization

STATUS QUO
PROCESS
GUARDIAN (SQG)
MANAGER (PM)
Challenge-averse who Challenge-averse who
maintains tight control
delegates control
over organization
of organization
High control

Low control

NEED FOR CONTROL

Processes Leaders Use to

Impact Their Organization
Environment

LEADER

Direct decisions
Allocation of resources
Reward system
Selection of other
leaders
Promotions
Role-modeling

Strategy
Culture
Structure

Leadership
Technology

Direct Decisions

Vision

Mission

Strategy

Structure

Organizational culture

Selection of other leaders

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

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

Responsibility of
Upper Echelon Leaders

Organizational performance

Accountability to various

internal and external

constituents

Ethical behavior and rolemodeling

Factors That Affect

Executive Salaries

Firm size
Industry competition
CEO power and discretion
Internationalization
High stress and instability

Constraints on Leaders

Internal Constraints

External Constraints

Coalitions in the organization

Strong organizational culture
Organizations primary products and services
Powerful external stakeholders
Perception of the organizations performance

Constraints and Leader Traits as Joint

Determinants

Strategic Leadership

Political Power and Strategic Leadership

Executive Tenure and Strategic Leadership
Executive Teams

Potential advantages of strategic teams

Executive teams and organizational effectiveness

How Leaders Influence

Organizational Performance

Efficiency and Process Reliability

Innovation and Adaptation
Human Resources and Relations
Leader Influence on Performance
Determinants

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

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)

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

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)

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

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?

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)?

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

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

Where
Corporate
Knowledge
Lives

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

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

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

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

Leading Change:
Anne Mulcahy

In charge of turning Xerox around

Focus on giving stakeholders hope and

confidence

Role model desired behaviors

Leading by example

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

The Leadership Challenge

o

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