positive aspects of strategic leadership

1. Choose a CEO of a prominent firm that you believe exemplifies the positive aspects of strategic leadership. What actions does this CEO take that demonstrate effective strategic leadership? What are the effects of those actions on the firm’s performance?2. Select a CEO of a prominent firm that you believe does not exemplify the positive aspects of strategic leadership. What actions did this CEO take that are inconsistent with effective strategic leadership? How have those ineffective actions affected the firm’s performance?3. Select an organization that has a unique organizational culture. What characteristics of that culture make it unique? Has the culture had a significant effect on the organization’s performance? If so, what is that effect?
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Chapter 12
Strategic Leadership
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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Strategic Leadership and Style
• Strategic leadership requires the ability to:
– anticipate and envision.
– maintain flexibility.
– empower others to create strategic change through
selecting and implementing a firm’s strategies as
necessary.
• Strategic leadership is:
– multi-functional work involving working through others.
– consideration of the entire enterprise rather than just a
sub-unit.
– a managerial frame of reference.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–2
Strategic Leadership (cont’d)
• Effective strategic leaders:
– manage the firm’s operations effectively.
– sustain a high performance over time.
– make better decisions than their competitors.
– make candid, courageous, pragmatic decisions.
– understand how their decisions affect the internal
systems in use by the firm.
– solicit feedback from peers, superiors and employees
about their decisions and visions.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–3
The Role of Top-Level Managers
• Managers often use their discretion when
making strategic decisions and implementing
strategies.
• Factors affecting the amount of decision-making
discretion
– External environmental sources
– Characteristics of the organization
– Characteristics of the manager
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–4
Factors Affecting Managerial Discretion
External
Environment
• Industry structure
• Rate of market growth
• Number and type of
competitors
• Nature and degree of
political/legal constraints
• Degree to which products can
be differentiated
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–5
Factors Affecting Managerial Discretion
External
Environment
Characteristics
of the Organization
•
•
•
•
•
Size
Age
Culture
Availability of resources
Patterns of interaction among
employees
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–6
Factors Affecting Managerial Discretion
External
Environment
Characteristics
of the Organization
Characteristics
of the Organization
• Tolerance for ambiguity
• Commitment to the firm and its
desired strategic outcomes
• Interpersonal skills
• Aspiration level
• Degree of self-confidence
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–7
Factors Affecting Managerial Discretion
External
Environment
Characteristics
of the Organization
Characteristics
of the Organization
Managerial
Discretion
• The degree of latitude for action
when making strategic decisions,
especially those concerned with
effective implementation of
strategies.
• How managers exercise
discretion when determining
appropriate strategic actions is
critical to the firm’s success.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–8
Factors Affecting Managerial Discretion
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–9
Top Management Teams
• Composed of the key managers who are
responsible for selecting and implementing the
firm’s strategies.
• A heterogeneous top management team:
–
–
–
–
has varied expertise and knowledge.
can draw on multiple perspectives.
will evaluate alternative strategies.
builds consensus.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–10
Top Management Teams, Firm Performance,
and Strategic Change
• Heterogeneous top management teams:
– have difficulty functioning effectively as a team.
– require effective management of the team to
facilitate the process of decision making, but …
– are associated positively with innovation and
strategic change.
– may force the team or members to “think outside
of the box” and be more creative.
– have greater capacity to provide effective
strategic leadership in formulating strategy.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–11
CEO and Top Management Team Power
• Higher performance is achieved when board of
directors are more directly involved in shaping
strategic direction.
• A powerful CEO may:
–
–
–
–
appoint sympathetic outside board members.
have inside board members who report to the CEO.
have significant control over the board’s actions.
may also hold the position of chairman of the board
(CEO duality).
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–12
CEO and Top Management Power
• Duality often relates to poor performance and
slow response to change.
– CEOs of long tenure can also wield substantial power.
– CEOs can gain so much power that they are virtually
independent of oversight by the board of directors.
• The most effective forms of governance share
power and influence among the CEO and board
of directors.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–13
Managerial Succession
• Organizations select managers and strategic
leaders from two types of managerial labor
markets
– Internal managerial labor market
• Advancement opportunities related to managerial
positions within a firm.
– External managerial labor market
• Career opportunities for managers in organizations
other than the one for which they currently work.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–14
Managerial Labor Markets
• Advantages of internal managerial labor market
include:
– experience with the firm and industry environment.
– familiarity with company products, markets,
technologies, and operating procedures.
– lower turnover among existing personnel.
• Advantages of the external managerial labor
market include:
– long-tenured insiders may be “stale in the saddle”—
outsiders may bring fresh perspectives.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–15
Effects of CEO Succession and Top
Management Team Composition on Strategy
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–16
Exercise of Effective Strategic Leadership
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–17
Key Strategic Leadership Actions:
Determining Strategic Direction
• Determining strategic direction involves
developing a long-term vision of the firm’s
strategic intent.
– Five to ten years into the future
– Philosophy with goals
– The image and character the firm seeks
• Ideal long-term vision has two parts
– Core ideology
– Envisioned future
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–18
Effectively Managing the Resource Portfolio:
Exploiting and Maintaining Core Competencies
• Core competencies
– Resources and capabilities of a firm that serve as a
source of competitive advantage over its rivals.
– Leadership must verify that the firm’s competencies
are emphasized in strategy implementation efforts.
– Firms must continuously develop or even change
their core competencies to stay ahead of competitors.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–19
Effectively Managing the Resource Portfolio:
Developing Human Capital and Social Capital
• Human capital
– The knowledge and skills of the firm’s entire
workforce are a capital resource that requires
investment in training and development.
• Social capital
– Relationships inside and outside the firm that help it
accomplish tasks and create value for customers and
shareholders.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–20
Sustaining an Effective
Organizational Culture
• Organizational Culture
– The complex set of ideologies, symbols and core
values shared through the firm, that influences the
way business is conducted.
• Entrepreneurial Mind-set (Orientation)
– Personal characteristics that encourage or discourage
entrepreneurial opportunities.
•
•
•
•
Autonomy
Proactiveness
Innovativeness
Risk taking
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–21
Sustaining an Effective
Organizational Culture (cont’d)
• Changing a firm’s organizational culture is more
difficult than maintaining it.
– Effective strategic leaders recognize when change in
culture is needed.
• Shaping and reinforcing culture requires:
–
–
–
–
–
effective communication
problem solving skills
selection of the right people
effective performance appraisals
appropriate reward systems
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–22
Emphasizing Ethical Practices
• Effectiveness of processes used to implement
the firm’s strategies increases when based on
ethical practices.
• Ethical practices create social capital and
goodwill for the firm.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–23
Emphasizing Ethical Practices (cont’d)
• Actions that develop an ethical organizational
culture include:
– establishing and communicating specific goals to
describe the firm’s ethical standards.
– continuously revising and updating the code of
conduct.
– disseminating the code of conduct to all stakeholders
to inform them of the firm’s ethical standards and
practices.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–24
Emphasizing Ethical Practices (cont’d)
• Actions that develop an ethical organizational
culture include:
– developing and implementing methods and
procedures to use in achieving the firm’s ethical
standards.
– creating and using explicit reward systems that
recognize acts of courage.
– creating a work environment in which all people are
treated with dignity.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–25
Establishing Balanced
Organizational Controls
• Controls
– Formal, information-based procedures used by
managers to maintain or alter patterns in
organizational activities.
• Controls help strategic leaders to:
– build credibility
– demonstrate the value of strategies to the firm’s
stakeholders
– promote and support strategic change
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–26
Establishing Balanced
Organizational Controls (cont’d)
• The Balanced Scorecard
– A framework used to verify that the firm has
established both strategic and financial controls to
assess its performance.
– Prevents overemphasis of financial controls at the
expense of strategic controls
• Four perspectives of the balanced scorecard
–
–
–
–
Financial
Internal business processes
Learning and growth
Customer
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–27
Establishing Balanced
Organizational Controls (cont’d)
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–28
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