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Chapter 13 Chapter 13 Presentation Transcript

  • Strategic Leadership Chapter 13© 2006 by Nelson, a division of Thomson Canada Limited. 13-1
  • Chapter 3 External The Strategic Strategic . Inputs Environment The Strategic Management Strat. Intent Management Process . Chapter 4 Strat. Mission Internal Environment Process Strategy Formulation Strategy ImplementationStrategic Actions Chapter 5 Chapter 6 Chapter 7 Chapter 11 Chapter 12 Bus. - Level Competitive Corp. - Level Corporate Structure Strategy Dynamics Strategy Governance & Control Chapter 8 Chapter 9 Chapter 10 Chapter 13 Chapter 14 Acquisitions & International Cooperative Strategic Entrepreneurship Restructuring Strategy Strategies Leadership & Innovation Outcomes Strategic Chapter 2 Chapter 1 Feedback Above Average Strategic Returns Competitiveness © 2006 by Nelson, a division of Thomson Canada Limited. 13-2
  • Strategic LeadershipKnowledge Objectives2. Define strategic leadership & describe top-level managers’ importance as a resource.3. Differentiate between the concepts of strategic, visionary, and managerial leadership.4. Define top management teams & explain their efforts on firm performance & their ability to innovate & make appropriate strategic changes.5. Discuss the value of strategic leadership in determining the firm’s strategic direction.6. Explain strategic leaders’ role in exploiting & maintaining core competencies. © 2006 by Nelson, a division of Thomson Canada Limited. 13-3
  • Strategic LeadershipKnowledge Objectives (continued)6. Describe the importance of strategic leaders in developing human capital.7. Define organizational culture & explain what must be done to sustain an effective culture.8. Explain what strategic leaders can do to establish & emphasize ethical practice.9. Discuss the importance & use of organizational controls. © 2006 by Nelson, a division of Thomson Canada Limited. 13-4
  • Strategic Leadership Presumes• An ability to influence those with whom one works.• The leader understands the emergent strategy process.• A shared vision of what the organization is to be.• Agreement among senior manger & board members of opportunities and threats.• Visionary leadership that entails many characteristics such as a willingness to take risks.• Managerial leadership that includes an intended rational way of looking at the world. © 2006 by Nelson, a division of Thomson Canada Limited. 13-5
  • Strategic Leadership and the Strategic Management Process Effective Strategic Leadership Shapes the formation of and Strategic Intent Strategic Mission Influences Successful Strategic ActionsFormulation of Strategies Implementation of Strategies Yields Strategic Competitiveness Above Average Returns © 2006 by Nelson, a division of Thomson Canada Limited. 13-6
  • Managerial Leaders• Adopt impersonal, passive attitudes towards goals.• View work as enabling process that involves some combination of ideas & people interacting to establish strategies & make decisions.• Relate to other people according to their role in the decision making process.• Maintain a low level of emotional involvement in these relationships.• Influence only the actions & decisions of those with whom they work.• Want stability & order and strive to preserve the existing order. © 2006 by Nelson, a division of Thomson Canada Limited. 13-7
  • Visionary Leadership• Shape ideas as opposed to reacting to them.• Influence changes in the way people think about what is possible, desirable and necessary.• Are concerned with ideas & relate to people in intuitive & empathetic ways.• Are more likely to make decisions that are based on values.• Are willing to invest in human capital & creating & maintaining as effective culture to ensure long term viability.• Is future-oriented & concerned with risk taking.• Want creativity, innovation and chaos. * Strive to change the existing order. © 2006 by Nelson, a division of Thomson Canada Limited. 13-8
  • Strategic Leadership• A synergistic combination of managerial & visionary leadership.• Manages the paradox created by the use of managerial & visionary models.• Establishes the context through which stakeholders are able to perform at peak efficiency.• Willing to make candid, courageous & yet pragmatic decisions.• Solicits corrective feedback from their peers, superiors and employees about the value of their difficult decisions. © 2006 by Nelson, a division of Thomson Canada Limited. 13-9
  • Managerial Leaders Strategic Leaders, Visionary Leaders Manage the paradox created Want stability & to Are future-oriented by use of managerial & preserve the visionary leadership models concerned with risk- existing order taking Are comfortable Define boundaries by use Are not dependent on handling Short- of metaphors, analogies & the organisation for term day-to-day models to allow for a mix of their sense of who activities contradictory concepts they are Guide without a Guide knowledge creation by Control by social- strategic vision. encouraging contradictory ization & sharing Constrained by values capabilities (e.g. individual, & by using explicit group, and organizational tacit common norms, knowledge & explicit knowledge) values & beliefs © 2006 by Nelson, a division of Thomson Canada Limited. 13-10
  • Factors Affecting Managerial Decisions © 2006 by Nelson, a division of Thomson Canada Limited. 13-11
  • Top Management TeamsTop management teams arecomprised of the key managers who areresponsible for formulating and implementing theorganization’s strategies.A heterogeneous top management team withvaried expertise and knowledge can draw onmultiple perspectives when evaluating alternativestrategies and building consensus.A top management team must also be able tofunction effectively as a team in order toimplement strategies.A heterogeneous team makes this more difficult. © 2006 by Nelson, a division of Thomson Canada Limited. 13-12
  • Strategic Leadership• Chief executive officers can gain so much power that they are virtually independent of oversight by the board of directors.• This is especially true when the CEO is also chairman of the board of directors.• CEOs of long tenure can also wield substantial power.• The most effective forms of governance share power and influence among the CEO and board of directors. © 2006 by Nelson, a division of Thomson Canada Limited. 13-13
  • CEO / Board Chair Duality Has been blamed for poor performance & slow response to change. Occurs most commonly on the largest firms. © 2006 by Nelson, a division of Thomson Canada Limited. 13-14
  • Exercise of Effective Strategic Leadership © 2006 by Nelson, a division of Thomson Canada Limited. 13-15
  • Effective Strategic Leadership Determines Developing a long-term vision of the Strategic firm’s Strategic Intent Direction Maintains Leaders must ensure that the firm’sExploits & Maintains Core Core core competencies are emphasized in Competencies strategic implementation efforts Develops No strategy can be effective unless Human the firm is able to develop & retain Capital good staff to carry it outSustains an Effective Leaders play a critical role in shapingOrganizational Culture and reinforcing the firm’s culture © 2006 by Nelson, a division of Thomson Canada Limited. 13-16
  • Effective Strategic LeadershipEmphasizaingEthicalEmphasizing Ethical Encourage & enable people at all Practices organization levels to act ethically when doing what is necessary to implement the firms strategies.Establishing Balanced To create controls which are balancedOrganizational controls between financial and strategic measurements. © 2006 by Nelson, a division of Thomson Canada Limited. 13-17
  • Determining Strategic Direction• Strategic direction means the development of a long-term vision of a firm’s strategic intent.• A charismatic leader can help achieve strategic intent.• It is important not to lose sight of the strengths of the organization when making changes required by a new strategic direction.• Executives must structure the firm effectively to help achieve the vision. © 2006 by Nelson, a division of Thomson Canada Limited. 13-18
  • Determining Strategic ActionsDeveloping a long term vision of the firm’s strategic intentThe ideal long term vision has two parts: • Core ideology • An envisioned future. © 2006 by Nelson, a division of Thomson Canada Limited. 13-19
  • Exploiting and Maintaining Core Competencies• In many large firms, and certainly in related- diversified ones, core competencies are exploited effectively when they are developed and applied across different organizational units.• Core competencies cannot be developed or exploited effectively without developing the capabilities of human capital. © 2006 by Nelson, a division of Thomson Canada Limited. 13-20
  • Sustaining an Effective Organizational Culture Changing Culture and Business Reengineering • Constant learning is a vital part of every person’s job. • Teamwork is essential to successful implementation. • Problems are solved only when teams accept the responsibility for the solution. © 2006 by Nelson, a division of Thomson Canada Limited. 13-21
  • Organizational ControlsCommon Strategic Controls  High level of interaction  High level of interaction between corporate headquarters and divisions  Ability to share resources and capabilities among divisions  Open communication between corporate and divisional managers © 2006 by Nelson, a division of Thomson Canada Limited. 13-22
  • Ethical PracticesDeveloping an ethical organizational culture: Establish & transmit specific goals describing the firm’s ethical standards (e.g., develop / disseminate a code of conduct). Continuously revise & update the code of conduct, based on inputs from stakeholders. Disseminate a code of conduct to all stakeholders to inform them of the firm’s ethical standard / practices. Develop & implement methods / procedures to use in achieving the firm’s ethical standards. Have explicit rewards to recognize acts of courage (e.g., using proper channels / procedures to report wrongdoing). Create a work environment in which all people are treated with dignity. © 2006 by Nelson, a division of Thomson Canada Limited. 13-23
  • The Balanced Scorecard• Complements financial measures of past performance with measures of the drivers of future performance.• It should translate a business unit’s mission & strategy into tangible objectives & measures.• The objectives and measures view organizational performance from four perspectives. 1.Financial 2.Business Process 3.Internal Business Process 4.Learning & GrowthSource: “The Balanced Scorecard” by Robert S. Kaplan, David P. Norton © 2006 by Nelson, a division of Thomson Canada Limited. 13-24
  • The Balanced Scorecard Matrix Internal Learning Financial Customer Business & Growth ProcessObjectivesMeasuresTargetsInitiatives © 2006 by Nelson, a division of Thomson Canada Limited. 13-25
  • Strategic and Financial Controls in a Balanced Scorecard Framework Perspectives CriteriaFinancial • Cash flow • Return on equity • Return on assetsCustomer • Assessment of ability to anticipate customers needs • Effectiveness of customer service practices • Percentage of repeat business • Quality of communications with customers © 2006 by Nelson, a division of Thomson Canada Limited. 13-26
  • Strategic and Financial Controls in a Balanced Scorecard Framework Perspectives CriteriaInternal Business • Asset utilization improvementsProcess • Improvements in employee morale • Changes in turnover ratesLearning and • Improvements in innovation abilityGrowth • Number of new products compared to competitors • Increases in employees’ skills © 2006 by Nelson, a division of Thomson Canada Limited. 13-27