Strategic Leadership Guide

Strategic Leadership
Strategic leadership

 The word strategy comes from the Greek strategos, which refers to a military general and combines
stratos (the army) and ago (to lead).
 The history of strategic planning began in the military. A key aim of both business and military
strategy is “to gain competitive advantage.”
 Strategy is about achieving competitive advantage through being different– delivering a unique
value added to the customer, having a clear and enact able view of how to position yourself
uniquely in your industry.
 Strategy is a choice. More specifically, strategy is an integrated set of choices that uniquely
positions the firm in its industry so as to create sustainable advantage and superior value relative to
the competition.

Is the ability to anticipate, envision, maintain flexibility, and empower others to
create strategic change as necessary.
Is ability to influence others to voluntarily make day to day decisions that enhance
the long-term viability of the organization while maintaining its short term financial
stability. Rowe (2001)
Strategic leadership makes a major difference in how well a firm performs:
1. Managing through others,
2. Managing an entire enterprise rather than a functional unit,
3. Managing and international strategies,
4. Coping with change from internal and external environments and
5. attracting and managing human (includes intellectual) capital, being able to meaningfully influence others.

Definition and focus of strategic leadership
 The focus of strategic leadership is sustainable competitive advantage, or the enduring
success of the organization.
 The three critical elements of Strategic leadership are
1. Strategic thinking,
2. Strategic acting and
3. Strategic influence
 Individuals and teams enact strategic leadership when they think, act, and influence in
ways that promote the sustainable competitive advantage of the organization.

What Makes Strategic Leadership Different?
 Strategic leadership is exerted when the decisions and actions of leaders have strategic
implications for the organization.
1. Strategic leadership is broad in scope.
• The broad scope of strategic leadership means that it impacts areas outside the leader’s own
functional area and business unit—and even outside the organization
2. The impact of strategic leadership is felt over long periods of time(Duration).
• The strategic leader must keep long-term goals in mind while working to achieve short-term
objectives.
• “In strategy, it is important to see distant things as if they were close and to take a distanced view of
close things” Japanese military leader Miyamoto
3. Strategic leadership often involves significant organizational change.
• A third way strategic leadership differs from leadership in general is that it results in significant
change that touches all parts of the organization.

What Makes Strategic Leadership Different?
Strategic leadership mainly concerned with the higher levels of the organization
The difference can also be thought of as leadership “in” organizations (leadership) versus leadership “of”
organizations (strategic leadership).
The focus of strategic leadership is often on top-level executives such as CEOs because they tend to have
more power and are given responsibility for the overall performance of the firm.
Strategic leaders who have overall responsibility for the firm (such as a CEO) articulate a vision that will
provide the organization’s members with meaning and guidance.
They are also in a position to influence external constituents, such as suppliers, unions, and government
agencies.
Strategic leaders who incorporate these important activities can help ensure the future competitiveness of
the firm.
Strategic leaders work towards creating sustainable competitive advantage - a future state of enhanced
vitality for their organization so that it will endure in the long term.
It involves bridging the gap between internal complexity and interdependence on one hand and the need for
flexibility and resilience on the other. Balancing this tension is the work of the strategic leader.

Strategic management, Strategic decision making and
 Strategic Management:-
 Is the art and science of formulating, implementing, and evaluating cross-functional decisions that enable
an organization to achieve its objectives.
 Strategic management can also be defined as a set of managerial decisions and actions that determines
the long-run performance of a corporation.
 Strategic Management includes:
 Environment scanning (both external and internal environment)
 Strategy formulation (strategic or long range planning)
 Strategy implementation
 Evaluation and control
 Thus, the study of strategic management emphasizes the monitoring and evaluating of
external opportunities and threats in light of a corporation’s strengths and weaknesses.
“Know your enemy and know yourself, and in a hundred battles you will never be defeated”
Sun Tzu

 Strategic Management

 Environmental scanning Environmental scanning is the monitoring, evaluating and
disseminating of information from the external and internal environments to key people
within the corporation.
 Its purpose is to identify strategic factors—those external and internal elements that will assist in the
analysis in deciding the strategic decisions of the corporation.
 The simplest way to conduct environmental scanning is through SWOT analysis.
 Strategy formulation Strategy formulation is the process of investigation, analysis and
decision making that provides the company with the criteria for attaining a competitive
advantage.
 It includes defining the competitive advantages of the business (Strategy), crafting the corporate mission,
specifying achievable objectives and setting policy guidelines.
 An organization’s mission is the purpose or reason for the organization’s existence.
 Mission describes what the organization is now; vision describes what the organization would like to
become.
 Objectives are the end results of planned activity.

 An organization’s mission is the purpose or reason for the organization’s existence.
 It tells what the company is providing to society
 A well-conceived mission statement defines the fundamental, unique purpose that sets a company apart
from other firms of its type and identifies the scope or domain of the company’s operations in terms of
products (including services) offered and markets served.
 A mission statement may also include the firm’s values and philosophy about how it does business and
treats its employees.
 It puts into words not only what the company is now but what it wants to become—management’s
strategic vision of the firm’s future.
 The mission statement promotes a sense of shared expectations in employees and communicates a public
image to important stakeholder groups in the company’s task environment.

 Strategy of a corporation forms a comprehensive master approach that states how the
corporation will achieve its mission and objectives.
 It maximizes competitive advantage and minimizes competitive disadvantage.
 Policy is a broad guideline for decision making that links the formulation of a strategy with
its implementation.
 Companies use policies to make sure that employees throughout the firm make decisions and take
actions that support the corporation’s mission, objectives, and strategies.

 Strategy implementation It is a process by which strategies and policies are put into action
through the development of programs, budgets and procedures.
 A program is a statement of the activities or steps needed to accomplish a single-use plan.
o It makes a strategy action oriented. It may involve restructuring the corporation, changing the company’s internal culture, or
beginning a new research effort.
 A budget is a statement of a corporation’s programs in terms of dollars.
o Used in planning and control, a budget lists the detailed cost of each program.
 Procedures, sometimes termed Standard Operating Procedures (SOP), are a system of sequential steps or
techniques that describe in detail how a particular task or job is to be done.
o They typically detail the various activities that must be carried out in order to complete the corporation’s program.

Strategic Decision Making
 The distinguishing characteristic of strategic leadership is its emphasis on strategic decision making.
 However, it is important to understand that all effective decisions are not necessarily strategic.
 What makes a decision strategic?
 Strategic decisions are related to organizational assessments and environmental assessments.
 It includes elements of organizational assessments such as management style, technology, policies, and
resources.
 Strategic decisions have three characteristics:
1. Rare: Strategic decisions are unusual and typically have no precedent to follow.
2. Consequential: Strategic decisions commit substantial resources and demand a great deal of commitment from people at all levels.
3. Directive: Strategic decisions set precedents for lesser decisions and future actions throughout an organization

Linkage between strategic management and strategic leadership
 Strategic leaders:
o Shape the formation of vision and mission
o Facilitate strategy formulation and strategy implementation
o Are needed for the achievement of strategic competitiveness and above-average returns
 Effective strategic leadership shapes the formulation of strategic intent and strategic mission and further
influences successful strategic actions.
 Strategic leaders should consider the following criteria in their strategic decision making process: -
1. Setting the organizational goals, mission and vision clearly;
2. Performing analyses such as SWOT analysis, pest analysis, gap analysis, and statistical analyses using relevant
management tools;
3. Determining standardized performance measures;
4. Attaining and allocating appropriate financial and nonfinancial resources to perform the decision;
5. Evaluating the results of the strategic decision and controlling whether or not the desired targets are achieved.

 Strategic leadership, has become more important than ever before due to five trends we see in the markets
in which many firms now operate.
1. Companies are more globally interdependent and competitive, and shortcomings in either their strategy or their leadership are likely
to have greater downsides than in a less connected world.
2. The contracting lifecycles for products and the expanding change rates for markets have placed a greater premium on having a
competitive strategy in place and an executive team than can execute it in a timely fashion.
3. Firms are increasingly contending with not just their direct competitors but also disruptive innovators and changeable customers,
and that too has placed a greater premium on more vigilant company leaders and a greater readiness to redirect their strategies.
4. New markets in developing economies and growing markets at the bottom of the pyramid in advanced economics are attracting
fast-acting and frugal competitors, and the agile exercise of strategic leadership has become critical for reaching and prospering in
those leaner and faster moving markets.
5. Investors are placing greater pressure on company executives and directors to exercise active strategic leadership of their enterprise.

Linkage between strategic management and strategic leadership

1.4 Characteristics of strategic leader
 six abilities that strategic leader have: their ability to anticipate changes, challenge status quo, interpret the
data they obtain from environment, make important decisions during uncertain times, align views of
different stakeholders and learn as they make progresses.
1. Anticipate :- Strategic leaders, in contrast, are constantly vigilant, honing their ability to anticipate by
scanning the environment for signals of change.
 To improve your ability to anticipate:
1. Talk to your customers, suppliers, and other partners to understand their challenges.
2. Conduct market research and business simulations to understand competitors’ perspectives,
gauge their likely reactions to new initiatives or products, and predict potential disruptive
offerings.
3. Use scenario planning to imagine various futures and prepare for the unexpected.
4. Look at a fast-growing rival and examine actions it has taken that puzzle you.
5. List customers you have lost recently and try to figure out why.
6. Attend conferences and events in other industries or functions.

2. Challenge:- Strategic thinkers, question the status quo. They challenge their own and others’
assumptions and encourage divergent points of view. Only after careful reflection and examination of a
problem through many lenses do they take decisive action. This requires patience, courage, and an open
mind.
 To improve your ability to challenge:
1. Focus on the root causes of a problem rather than the symptoms. Apply the “five whys” of
Sakichi Toyoda, Toyota’s founder. (“Product returns increased 5% this month.” “Why?” “Because
the product intermittently malfunctions.” “Why?” And so on.)
2. List long-standing assumptions about an aspect of your business (“High switching costs prevent
our customers from defecting”) and ask a diverse group if they hold true.
3. Encourage debate by holding “safe zone” meetings where open dialogue and conflict are
expected and welcomed.
4. Create a rotating position for the express purpose of questioning the status quo.
5. Include naysayers in a decision process to surface challenges early.
6. Capture input from people not directly affected by a decision who may have a good perspective
on the repercussions.

3. Interpret Leaders who challenge in the right way invariably elicit complex and conflicting information.
That’s why the best ones are also able to interpret. Instead of reflexively seeing or hearing what you
expect, you should synthesize all the input you have. You’ll need to recognize patterns, push through
ambiguity, and seek new insights.
 To improve your ability to interpret:
1. When analyzing ambiguous data, list at least three possible explanations for what you’re
observing and invite perspectives from diverse stakeholders.
2. Force yourself to zoom in on the details and out to see the big picture.
3. Actively look for missing information and evidence that disconfirms your hypothesis.
4. Supplement observation with quantitative analysis.
5. Step away—go for a walk, look at art, put on nontraditional music, play Ping-Pong— to promote
an open mind.

3. Decide: strategic thinkers insist on multiple options at the outset and don’t get prematurely locked into
simplistic go/no-go choices.
o They don’t shoot from the hip but follow a disciplined process that balances rigor with speed,
considers the trade-offs involved, and takes both short- and long-term goals into account. In the
end, strategic leaders must have the courage of their convictions—informed by a robust decision
process.
 To improve your ability to decide:
1. Reframe binary decisions by explicitly asking your team, “What other options do we have?”
2. Divide big decisions into pieces to understand component parts and better see unintended
consequences.
3. Tailor your decision criteria to long-term versus short-term projects.
4. Let others know where you are in your decision process. Are you still seeking divergent ideas
and debate, or are you moving toward closure and choice?
5. Determine who needs to be directly involved and who can influence the success of your
decision.
6. Consider pilots or experiments instead of big bets, and make staged commitments.

3. Align: Strategic leaders must be adept at finding common ground and achieving buy-in among
stakeholders who have disparate views and agendas.
o This requires active outreach. Success depends on proactive communication, trust building, and frequent engagement.
 To improve your ability to align:
1. Communicate early and often to combat the two most common complaints in organizations:
“No one ever asked me” and “No one ever told me.”
2. Identify key internal and external stakeholders, mapping their positions on your initiative and
pinpointing any misalignment of interests. Look for hidden agendas and coalitions.
3. Use structured and facilitated conversations to expose areas of misunderstanding or resistance.
4. Reach out to resisters directly to understand their concerns and then address them.
5. Be vigilant in monitoring stakeholders’ positions during the rollout of your initiative or strategy.
6. Recognize and otherwise reward colleagues who support team alignment.

3. Learn: Strategic leaders are the focal point for organizational learning.
o They promote a culture of inquiry, and they search for the lessons in both successful and unsuccessful outcomes.
o They study failures—their own and their teams’—in an open, constructive way to find the hidden lessons.
 To improve your ability to learn:
1. Institute after-action reviews, document lessons learned from major decisions or milestones
(including the termination of a failing project), and broadly communicate the resulting insights.
2. Reward managers who try something laudable but fail in terms of outcomes.
3. Conduct annual learning audits to see where decisions and team interactions may have fallen
short.
4. Identify initiatives that are not producing as expected and examine the root causes.
5. Create a culture in which inquiry is valued and mistakes are viewed as learning opportunities.
Becoming a strategic leader means identifying weaknesses in the six skills discussed above and
correcting them.

1.5 Challenges of Strategic Leadership
What keeps organizations and their leaders from being successfully strategic?
Frequently, the obstacles fall into three categories:
1. Lack of focus: Organizations and the leaders in them try to be all things to all people, and they fail to
make the tough decisions that provide a strategic focus.
o An ill-defined or undefined strategy indicates that an organization has not made difficult but necessary choices. Avoiding difficult
choices and refusing to discriminate can lead to a kitchen sink strategy—one that includes a little bit of everything, the opposite of
focus. As Michael Porter says Strategy renders choices about what not to do as important as choices about what to do.
2. Loose tactics: The things that people, departments, and functional areas actually do are not aligned with
the organization’s strategy.
o A strategic plan itself is only a plan; an organization’s actual strategy lies in the decisions and choices its members make as
they enact, or fail to enact, the plan. Tactics may be misaligned because people throughout the organization don’t really
understand what the strategy means for them on a day-to-day basis.
3. Limited range: Leaders focus on short-term success at the expense of long-term viability.
o Clearly the line between meeting short-term operational pressures and long-term success is a difficult one to walk. When an
organization consistently favors the short term over the long term by, for example, neglecting to make investments to keep
resources and technology up-to-date, the organization will suffer in the end.

1.6 Managerial Leadership, Visionary Leadership and
 Strategic Leadership is not an organizational position, it is an approach, or style that
senior management may employ. Unfortunately, according to Rowe, the ability to
deploy this style is comparatively rare
1. The Visionary Leader: are dreamers. They create excitement in the organization.
o They are able to connect with people in an intuitive and empathic way, and can change how people think about what is possible.
o They understand the importance of organizational culture to the success and long-term viability of the organization.
o They are proactive and creative: they believe their decisions will make a difference in their organizations and in the environment.
o Ultimately, they seek to shape the future and will invest in human capital and in innovation to achieve this.
 Downsides of Visionary Leader
• focuses so much on the future; they do not pay close enough attention to the operational and shorter term buss.
• Tends to create turbulence and uncertainty in the organization, which can be energizing, but which can alternatively
confuse.
• Takes significant risks; when the risk works out, the business performs exceptionally, but when the risk does not work
out, the business can be badly undermined.
• To ensure that there is a level of consistency, Visionary Leaders need to be supported by a strong team of Managerial
Leaders. If they are not, Visionary Leaders can even jeopardize the very existence of the firm.
• A dominant visionary may lead to overly risky strategic decision-making

2. The Managerial Leader: do not have time to dream, they just tend to react to situations
o They are critical to the effective running of the organization.
o The Managerial Leaders focuses more on the day-to-day and operational side of the business.
o They tend to see themselves as implementers of procedures, policies and budgets, rather than providing
creative energy or vision.
o They tend to interact with people in a formalized impersonal way, where the role is more relevant than the
person filling it.
 Downsides of Managerial Leader
• Give less attention to personal filling.
• insufficient investment and focus on innovation and creativity.
• This means that over time, the competitiveness of the organization erodes.
• A conservative managerial style will likely result in cautious decisions that lead to organizational competitive decline
over time.

2. The Strategic Leader According to Rowe, the Strategic Leaders are relatively rare.
o They are a synergistic combination of what is best about both the Visionary Leaders and the Managerial
Leaders.
o They integrate the vision, creativity and innovation necessary for long term success with the operational focus
and understanding that maintains organizational stability.
o The Strategic Leader is able to connect with the people around them and has strong performance expectations.
o They can balance the more short term financial and operational needs of the organization with the longer term
strategic opportunities that may become available.
o As a result of their ability to balance the short and long term strategic requirements of the organization, over
the longer term, Strategic Leaders create the most wealth in organizations.
 Downsides of Managerial Leader
• Give less attention to personal filling.
• insufficient investment and focus on innovation and creativity.
• This means that over time, the competitiveness of the organization erodes.

1. STRATEGIC LEADER
o Displays a synergistic combination of managerial and visionary leadership.
o Emphasize ethical behavior and value-based decision making.
o Oversees operating (day-to-day) and strategic (long-term) responsibilities.
o Formulate sand implements strategies for immediate impact and preservation of long-term goals to enhance
Organizational survival, growth, and long-term viability.
o Has strong, positive expectations of the performance they expect from superiors, peers, subordinates, and themselves.
o Believes in strategic choice, i.e., their choices make a difference in their organization and environment.
2. VISIONARY LEADER
o Is proactive, shapes ideas, changes the way people think
about what is desirable, possible, and necessary.
o Works to develop choices, fresh approaches to long standing
problems; works from high-risk positions.
o Is concerned with ideas; relate to people in Intuitive and
empathetic ways.
o Feels separate from their environment; work in, but do not
belong to, their organization.
o Knows less than his/her functional area experts.
o Is more likely to make decisions based on values.
o Is more willing to invest in innovation, human capital, and
creating and maintaining an effective culture to ensure long-
term viability.
3. MANAGERIAL LEADER
o Is reactive; adopts passive attitudes towards goals.
o Goals arise out of necessities, not desires and dreams; goals
are based on past.
o Views work as enabling process involving some combination
of ideas & people interacting to establish strategies.
o Relates to people according to their roles in the decision-
making process.
o Influences actions and decisions of others whom they work.
o Is expert in his/her functional area.
o Is less likely to make value-based decisions.
o Is more likely to engage in, and support, short-term, least-cost
behavior to enhance financial performance figures.
o Believes their choices are determined by their Internal and
external environments.

 Strategic leaders must balance the short-term needs of their organizations while
ensuring a future competitive position.
 Rowe (2001) defines strategic leadership as “the ability to influence others to
voluntarily make day-to-day decisions that enhance the long-term viability of the
organization, while at the same time maintaining its short-term financial stability”.
 This type of leadership is a synergistic combination of visionary leadership, which
emphasizes investing in the future, and managerial leadership, which emphasizes
preserving the existing order.
 Strategic leaders focus on both the day-to-day operations and the long-term strategic
orientation of the firm, recognizing that neither can be ignored if a firm is to be
successful.

1.7 The Role of Top Management
 Top-level managers play a critical role in firms as they are charged with formulating and implementing
strategies effectively.
 A critical element of organizational success is having a top management team with superior managerial skills since their they are
the one who made strategic decisions.
 Managers often use their discretion (or latitude for action) when making strategic decisions, including those concerned with the
effective implementation of strategies.
 Managerial discretion differs significantly across industries. (Managerial discretion can be defined as the latitude of managerial action available to a
decision maker (e.g., a top manager) in a given situation. Higher discretion enables leaders with a wider range of options and a greater latitude of action. Because top
managers are appointed to executive positions with the goals of sustaining and improving organizational performance and effectiveness, it is critical to understand what
constrains leaders and, alternatively, to understand what enables them to influence organizational outcomes.)
 The primary factors that determine the amount of decision-making discretion (factors affect managerial discretion)
1. External environmental sources such as the industry structure, the rate of market growth, and the degree to which products
can be differentiated;
2. Characteristics of the organization, including its size, age, resources, and culture; and
3. Characteristics of the manager, including commitment to the firm and its strategic outcomes, tolerance for ambiguity, skills in
working with different people, and aspiration levels.

Components of Strategic leadership decisions and actions
Six components of strategic leadership that will lead to enhanced organizational performance:
1. Determining the Firm’s Purpose or Vision/Set strategic direction:
o Strategic leaders must articulate a clear and realistic statement about why the firm exists and what is distinctive
about it.
o The development, articulation and communication of an exciting vision are critical tasks of the strategic
leadership of the organization.
o They need to “paint a picture” of where the organization will be in 5-10 years and get staff to buy into and
commit to this future. The vision will seek to push and stretch employees beyond their current expectations.
o The vision serves as a destination for the organization and therefore as a guide for strategy formulation and
implementation.
o In addition, the vision propounded by the senior management team should outline the core values and
ideology that the organization intends to “live by”.
2. Exploiting and Maintaining Core Competencies:
o Core competencies are resources and capabilities that give firms an edge over their rivals.
o Strategic leaders need to understand which combinations of resources and capabilities are valuable, rare, costly
to imitate, and difficult to substitute for, as these will allow the firm to gain a competitive advantage.

3. Developing Human Capital:
o Human capital refers to the knowledge, skills, and abilities of the firm’s employees.
o Because these employees are critical to the success of the organization, strategic leaders invest in them.
o “people are perhaps the only truly sustainable source of competitive advantage”.
4. Sustaining an Effective Organizational Culture
o An organization’s culture is a complex combination of ideologies, symbols, and values that are shared by
employees of the firm.
o Organizational culture is the personality of the organization.
o Culture is seen as “the character of a company’s internal work climate and personality – as shaped by its core values,
beliefs, business principles, traditions, ingrained behaviors, work practices, and styles of operating.”
o More simply, culture is “the way we do things around here…”
o Strategic leaders sustain an effective organizational culture.
o Organizational culture can be a source of competitive advantage.

5. Emphasizing Ethical Practices:
o Top managers who use honesty, trust, and integrity in their decision making are able to inspire their employees and
create an organizational culture that encourages the use of ethical practices in day-to- day organizational activities.
o Implementation of a firm’s strategies improves when it is based on strong ethical foundations
o In the absence of such an ethical culture staff and management may act opportunistically, taking advantage of their
positions to benefit themselves.
6. Establishing Balanced Organizational Controls
o Organizational controls refer to the formal procedures that are used in organizations to influence and
guide work.
o These controls act as limits on what employees can and cannot do.
 There are two types of internal controls: Strategic and financial.
1. Strategic controls are accomplished through information exchanges that help to develop strategies, and it emphasize actions
2. Financial controls are accomplished through setting objective criteria such as performance targets. it emphasize outcomes.
o Strategic leaders must establish balanced organizational controls by incorporating the two types in order
to allow employees to remain flexible and innovative.

Strategic thinking, Strategic acting & Strategic influence
 All in all, individuals and teams enact strategic leadership when they think, act, and
influence in ways that promote the sustainable competitive advantage of the
organization. I
 The three critical elements of Strategic leadership are:
1. Strategic thinking
2. Strategic acting
3. Strategic influence

Strategic thinking
 Strategic thinking
o As a cognitive activity, it produces thought.
o It is defined as a mental or thinking process applied by an individual in the context of achieving
success in a game or other endeavor.
o Strategic thinking is systematic way of looking at forces in the environment (trends, events,
circumstances and information) to determine implications for the institution, parts of the
institution, and one’s work within the institution.
o Strategic thinking is the ability to see both what is and what could be – and then make choices that
lead to desired outcomes.
 Strategic thinking could be boiled down to just three components:
1. It is first and foremost future oriented and focused on achieving long-term vision and goals.
2. It is the ability to see entire systems –including underlying causes, interrelationships and leverage points
within a system
3. It involves the careful analysis and interpretation of data.

Strategic thinking
 Strategic thinking is about:-
1. Imagining a future world and
2. Taking a sequence of short-term tactical actions to achieve it.
 It requires both an idealism (to imagine a better world) and a realism (to acquire the resources, skills,
and organization to get there).
 One of the primary responsibilities of leaders is to formulate strategy; only the leader has the power to
implement strategic change.
 Thus, in organizations strategic thinking is necessary at every level of an organization, and not just at the
top.
 Strategic thinking involves
1. Thinking more deeply to distinguish underlying causes and issues from symptoms
2. Thinking more broadly to recognize systemic linkages, interactions, and patterns
3. Thinking long-term as well as short-term about implications and consequences

Strategic thinking
 The following are key questions of strategic thinking
1. What is our goal/purpose?
2. What key problems, causes and solutions do we exist to address?
3. What are past, current and possible future trends?
4. What are the key opportunities and threats we face? (Where is greatest leverage? Where is greatest
risk?)
5. What will it take? What are possible courses of action?
6. What are the implications of these choices?
7. What criteria will we use to choose and evaluate a course of action?
8. How does our plan intersect with other goals/plans?

Strategic thinking
 Liedtka, proposes a strategic thinking model of interrelated attributes or elements such as these:
1. Systems Perspective: strategic thinking reflects a systems or holistic view that recognizes how the different
parts of the organization influence each other;
2. Intent-focused: strategic thinking conveys a sense of direction and is driven by the continuous shaping and re-
shaping of intent;
3. Intelligent Opportunism: strategic thinking invokes the capacity to be intelligently opportunistic, or open to
new experience, allowing one to take advantage of alternative strategies that may emerge in a rapidly changing
environment.
4. Thinking in Time: strategic thinking is not solely driven by the future, but by the gap between the current
reality and the intent for the future;
5. Hypothesis Driven: hypothesis generation and testing is central to strategic thinking activities. It asks the
creative question “What if?” followed by the critical question “If … then?”

Strategic thinking
 Strategic thinking requires synthesis as well as analysis.
o Analysis involves the breaking down of something into its constituent elements whereas synthesisrefers to the
combination of separate elements into a more complex whole.
 Strategic thinking is nonlinear as well as linear.
o Linear thinking involves looking for (or assuming) cause-and-effect or sequential relationships
between things, as in the form “A follows B.” Linear thinking is basing future plans and actions on
past experience linear thinking cannot solve challenges in a nonlinear world.
o The world of business is increasingly defined by surprise and uncertainty. Succeeding in such
environments requires nonlinear as well as linear thinking.
 Strategic thinking is visual as well as verbal.
o Many people associate the word vision with strategic leadership. Less frequently do people fully
appreciate the essential meaning of the word itself: having a vision is about seeing something.
o The greatest visionaries are those who are able to paint a picture of a more desirable future.
Therefore, the vision should be communicated in words. Vivid words and phrases rich in imagery
help them convey that picture.

Strategic thinking
 Strategic thinking is implicit as well as explicit.
o We all know more than we are able to put into words. Whether they call it intuition, instinct, or “trusting your
gut,” effective leaders have learned to trust their judgment even when they are not able to make their rationale
explicit.
o This ability becomes particularly important as leaders move into roles and positions of strategic responsibility in
their organizations.
 Strategic thinking engages the heart as well as the head.
o It is important to emphasize the value of developing and communicating a vision that people can see A vivid
vision can touch hearts as well as heads.
o When an activity has personal significance, we throw ourselves into it more completely than when it’s “just a job.”
o Articulating organizational aspirations that inspire members to higher levels and quality of effort is one of the
key tasks of strategic leadership.

Strategic Acting
 Strategic Acting
 Strategic Acting is committing resources to build sustainable competitive advantage.
 This is the kind of decisive action that is consistent with the strategic direction of the organization
that leaders carry out despite the ambiguity, complexity, and chaos inherent in organizational life.
 To transform thinking into action, strategic leaders must be ready to act in the face of uncertainty.
They must set clear priorities, act with short- and long-term interests in mind, and allocate
resources that match the strategic choices the organization makes.
 It’s one thing to have a strategically compelling idea. It’s quite another to take action based on that
idea.
 “If I had to sum up in one word what makes a good manager, I’d say decisiveness.” Lee lacooca
 Strategic acting: committing resources to build sustainable competitive advantage.
 Acting is the major job of strategic leader. Prolonged thinking delays action, Acting is integral to
strategy.

Strategic Acting
 Strategic acting involves asking and dealing with the following questions:
1. Which of several new product possibilities should receive the greatest share of development
resources?
2. Where should you place your marketing emphasis—on developing existing markets or new ones?
3. Which new project will offer the greater long-term advantage?
4. Whom do you appoint to lead the new corporate innovation team?
5. What stand should your company take with regard to questions being raised about its
environmental impact?
 To begin the implementation process, strategy makers must consider these questions:
1. Who are the people to carry out the strategic plan?
2. What must be done to align company operations in the intended direction?
3. How is everyone going to work together to do what is needed?

Strategic Influence
 Strategic Influnce
 Strategic influence is how leaders create commitment to the organization’s strategic direction and
learning.
 Strategic leaders share the realization that they can’t achieve success all by themselves; success
requires the committed efforts of many.
 Because strategic work operates between individuals and groups and crosses functional lines,
influence skills become even more important.
 Influence is strategic when it is exercised in service of the long-term success of the organization.
 That is, it is strategic influence when it is exercised in service of the strategy-making and
implementation efforts.
o Eg., the strategic leader may exert influence to achieve the following types of outcomes:
 Get people on the same page regarding a long-term strategic direction.
 Engender buy-in from people for a strategic venture so that there will be true commitment
to it, not mere compliance (or worse, active or passive resistance).

Strategic Influence
 Strategic Influence
 Strategic influence must be exercised in multiple directions: as each of these stakeholders is
essential to the strategic success of the organization.
o up toward more senior executives,
o laterally toward peers in the organization,
o down to direct reports, and
o Even outside the organization toward customers, analysts, suppliers, and others.

Beyond Vision; Strategy Leadership
 What is strategy? Strategy is a choice
 Everyone throws around the word strategy, but what does it really mean?
 Freedman defines it as the framework of choices that determine the nature and direction of an
organization.
 The Choices are about:-
o the products and services provided,
o the markets served, and
o the key capabilities needed.
 The Nature of the organization is what exemplifies it and describes its character.
 Direction is the organization’s future course determined by choices about future products and
services, future customers and future markets.
o Also understand what strategy is not. A decision is not strategic simply because it is long-term, or
involves a multi-million dollar expenditure. These decisions can be made within the strategic
framework, but only decisions that change the framework are strategic.

Strategy Leadership; Critical Aspects
 There are three critical aspects to a strategy:
1. A strategic vision must be based on facts, informed assumptions and the best-possible what-if
thinking.
2. The vision must be communicated throughout the organization to clarify and align the role of
every strategically critical player and process.
3. The vision must be monitored to ensure continued strength, agility and relevance.
o Strategy requires the art of creativity to fashion a vision and the discipline to direct thought
processes and execution.
o Discipline turns vision into reality.
o Executives must proactively create a strategy instead of succumbing to a default strategy that
was inherited, stumbled into, or borrowed from a competitor.
o Lack of a clear strategy subjects your organization to competitor, shareholder and employee
threats.

The Strategy Process
 To formulate strategy, a CEO should concentrate on the following issues:
1. Strategy is built around the answers to a few vital and specific questions, not from the masses
2. Process-based questions yield better strategy than narrow, content-driven questions.
3. The skill and commitment of the top team is key to the success of strategy formulation and
implementation.
 The Five Phases for strategy formulation and implementation:
1. Strategic Intelligence Gathering and Analysis.
2. Strategy Formulation.
3. Strategic Master Project Planning.
4. Strategy Implementation.
5. Strategy Monitoring, Reviewing and Updating.

 Phase 1: Strategic Intelligence Gathering and Analysis
o You only need enough data to find implications of trends and assumptions for your own business.
o Ask universal questions that explain the past and present and look to the future.
o Examine broad areas of your external environment that are out of the organization’s control: trends
in the economy, society, government, politics and technology that could affect your business.
o Then identify key players in your value chain: your major customers, purchasers and end users.
• What trends are likely in your supplier base?
• What is the overall competitive scenario in the structure of the industry’s value chain?
• What are the essential requirements for success for any organization in the industry, and how
do you measure up?
• What basic beliefs or values affect organizational culture and strategic behavior?
• What is your strategic history?
• What are the expectations of your various stakeholders?
• What are expectations for growth and return?

 Phase 2: Strategy Formulation
o Strategy formulation begins with the company’s strategic time frame and basic beliefs.
o All goals must have an endpoint to create a sense of urgency for accomplishment.
o Your time frame should be determined by your individual organization and the forces that affect it.
o Basic beliefs are deeply held tenets, creeds, convictions or persuasions that provide the social
cohesion of organizations. They set boundaries for day-to-day decision-making, reinforce strategic
unity, and set a standard for performance and accountability
o Basic beliefs explain how an organization conducts its everyday business, and they align
communications, culture and practices with strategic vision.
o Driving Force Driving force is “the primary determinant of the products and services an organization
will and will not offer and the markets (customers, consumers and geographies) it will and will not
serve.” It expresses the essence of what your business is about.

• Your driving forces are those critical factors that will affect the future of your business over the next three to five years. This is happening by design, with purpose or by
hap – n – stance without a true clarity. Although there are innumerable driving forces, following George L. Morrisey model and focus on SIX critical factors:
• Product Driven
– A product driven business is one that produces specific classes of products or services and whose focus is on producing those product/services for markets it already serves. Consider, for
example, the automotive industry, which manufactures a specialized product created to fill a specific and known consumer need in the long-entrenched market.
• Market Driven
– A market-driven business is one that has established or is establishing strong relationships with specific markets and customer groupings. Such a Business focuses most of its effort on
determining how to best serve these markets and / or customers and then developing products to accomplish this objective. An excellent example of a market-driven business is one engaged
in systems development. Its focus is not on the off-the-shelf products, although these may represent a portion of its business, but rather on assessing client’s unique challenge and then
develop a system or systems to overcome those challenges of the client.
• ROI / Profit Driven
– All Businesses must make a profit merely to stay alive, but this does not mean that profits are the PRIMARY driving force of every business. a business that is ROI (Return on Investment) or
profit driven is one that will engage in any undertaking within it are of expertise with the condition that such an undertaking will produce a minimum strategically predetermined return. Large
diverse companies in multiple businesses or that Entrepreneur that seems to be in everything and changes what they do or deliver is an excellent example of a profit / ROI driven business.
• Size / Growth Driven
– A Business driven by size or growth is one whose objective is to reach a predetermined size or achieve a specific rate of growth. Such a business may be seeking market dominance or might
perhaps be positioning itself for an acquisition, merger or sale. In the 90’s the dot.coms were mostly driven by Growth and made their business decisions driven by size / growth.
• Technology Driven
– A Technology driven business bases its future on its ability to create or perhaps to respond to major technological changes. Such a business must typically be in a position to invest significant
dollars in high-risk environment and be able to achieve / sustain market dominance. High R & D costs and marketing costs are typical of such businesses. Great examples are Pharmaceutical or
Software Companies.
• Human Resource Driven
– It has been a cliché to say people are a business’s most important asset. This is a true statement as talent to drive your business Vision, Mission, Purpose and Processes is critical for
success. However top Talent of your employees are critical for professional services firms, Law firms, etc.
•
• So as a Business Owner what is your driving forces for your business? Are you making decisions day to day with a focus / clarity on a specific driven force? Are you just
doing your business because there is so much to do? Basically are you Working ON your Business of IN your business?
• Is it time for you to define your Business? Determine your driving forces? and establish a GOSPA (Goals / Objectives / Strategy / Plans and Actions) to run your business.
• For more information reach out to www.businesscoachingofpa.com

 Phase 3: Strategic Master Project Planning
o The Strategic Master Project Plan has the following distinguishing characteristics:
1. All projects in the Plan flow directly from the strategy.
2. Plan includes a considerable number of diverse projects.
3. Plan requires the disciplined prioritization of initiatives.
4. There is enterprise-wide adoption of common project management language and methodology.
5. Plan includes disciplined approach to project management methodology.
6. Success depends on discipline, commitment and active support of entire top team.
o Every corner of the organization must change, so strategy implementation should be built into the
work of the entire organization.

 Phase 4: Strategy Implementation
o Aligning the Infrastructure
1. Organization Structure: When approaching implementation, first examine the current structure.
 If it promotes implementation, leave it alone. If it doesn’t, use the Driving Force to suggest
a different structure.
 A Products Offered company will most likely consider a structure reflecting its major
product categories.
 Most importantly, the selection criteria for structure must be rooted in the strategic vision.
2. Strategic Information Management: the analysis and dissemination of critical strategic
information must be built into the implementation plan. The Driving Force will determine the
most important strategic information needs, such as a Markets Served Driving Force company
that will need data on demographics and related trends.
3. Complexity: Because CEOs don’t like to say no and companies try to be all things to all people,
there is a lot of unnecessary complexity in companies. Strategy teams must ferret out any
organizational complexity that will cripple implementation.

BUSINESS ENVIRONMENT
CHAPTER THREE

Importance of environment analysis
 Environmental analysis is the process by which strategic leaders monitor the environment to determine
opportunities for and threats to their organization.
 Environmental analysis also uncovers strengths and weaknesses of a given firm.
 Success goes to those companies which are able to adjust themselves with the forces that operate in
their environment.
 Environment literally means the surroundings, external objects, influences or circumstances under which
someone or something exists. The environment of any organization is “the aggregate of all conditions,
events and influences that surround and affect it”.

Why Environmental Analysis?
 An organization cannot keep itself insulated from the environment.
 It cannot take decisions on policies and performance independent of the happenings in the environment
around it, as it affects the strategic decisions required to be taken by a company.
 Scan the environment in order to know:
1. The various factors and their interactions taking place in the environment, which would be
conducive to the strategies of the company and to know how far they would be helpful in
accomplishing the objectives set for company.
2. The various factors and their interactions that would threaten the survival and growth of a company
and evolution of alternatives that would possibly turn threats into opportunities.
3. The various factors and their interactions that would generate new opportunities for the company
to grow and accomplish stretched goals.
4. Targets that a company would like to formulate for itself which would be not only realistic but would
also pose a challenge to motivate the workforce.

Characteristics of Environment
1. Environment is complex: environment has many dimensions for a particular business.
o Events, conditions, and influences arise from various sources present in the environment.
o It is quite difficult to understand interactions of all the factors present in the environment. However, strategic
leaders try to comprehend the various factors and their influences.
2. Environment has multi-dimensions: when a change is triggered off in a business
environment, it may influence some factors and may not influence some others.
3. Environment is not static: around a business world changes occur continuously.
o Changes may occur in any scope of the environment and consequently affect other factors.
o The dynamism of the environment brings in many threats as well as opportunities for an
organization. Hence, organizations should be more alert to changes and be more adaptable for this
is necessary for its survival.

Characteristics of Environment
4. Environment affects business strategies:
o Since the environment has a direct effect on the companies, organizations have to formulate their
objectives keeping environment in focus.
o Hence, the formulation of policies should essentially be in tune with these objectives. A strategy
that is adopted by a company may fail miserably if environmental factors are not correctly perceived
and addressed while formulating the strategies.
5. Environment is partially controllable:
o The environment within a company can be controlled to some extent whereas the environment
outside an organization is not under control and hence has to be assessed.
o The environment can only be partially influenced by one company since there are other companies
in the environment. These companies have varying interests which may clash with the interest of
the company attempting to influence the environment.

Influence of Environment
 The environment in which an organization exists can be described in terms of the opportunities and
threats operating in the external environment apart from the strengths and weaknesses existing in the
internal environment.
1. Opportunity: an opportunity is a favorable condition in the organization’s external environment which
enables it to consolidate and strengthen its position.
 Eg; A growing demand for the products or services that a company provides.
2. Threat: a threat is an unfavorable condition in the organization’s environment which creates a
risk for, or causes damage to the organization.
 Eg; The emergence of strong new competitors with better products or services who are likely to offer stiff
competition to the existing companies in an industry.
3. Strength: is an inherent capacity which an organization can use to gain strategic advantage.
 Eg; superior research and development skills which can be used for new product development so that the
company can gain a strategic advantage.
4. Weakness: A weakness is an inherent limitation or constraint which creates strategic
disadvantages.
 Eg; Overdependence on a single product line, which is potentially risky for a company in times of crises.

Environmental Scanning
 The process by which an organization monitors its relevant environment to identify opportunities and
threats affecting its business is known as environmental scanning.
 The external environment in which an organization exists consists of variety of factors. These factors
(influences) are events, trends, issues and expectations of different interest groups.
1. Events are important and specific occurrences taking place in different environmental sectors.
2. Trends: are the general tendencies or the courses of action along which events takes place.
3. Issues: are the current concerns that arise in response to events and trends.
4. Expectations: are the demands made by interested groups in the light of their concern for issues.
 Eg; consider gas leakage accident at a factory “event”. The “trend” that arose is a general tendency on the
part of the regulatory authorities and organizations to be conscious about safety from hazardous exposure
to chemicals. The “issue” is a rising concern about environmental pollution. The “expectation” of the
general public from the government is to introduce changes in rules and regulations pertaining
to safety measures and stricter enforcement through various mechanisms.
 By monitoring the environment through environmental scanning, an organization can consider the
impact of the different events, trends, issues and expectation on its strategic management process.

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