2. The Nature of Strategic Leadership
◦ Strategic leadership deals with the major purposes of an
organization or an organizational unit, and therefore has a
different focus than leadership in general:
◦ Strategic leadership emphasizes balancing the short- and
long-term needs of the organization to ensure the
enduring success of the organization, yet the emphasis is
on the future.
◦ Leaders engage in strategic leadership when they act, think,
and influence in ways that promote the competitive
advantage of their organization.
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4. High-Level Cognitive Activity of the Leader
◦ Thinking strategically requires high-level cognitive skills,
such as the ability to think conceptually, absorb and make
sense of multiple trends, and condense all of this
information into a straightforward plan of action.
◦ Suppose a company leader decides to reduce expenditures
for research and development. He or she should analyze
how the cutback will affect marketing and sales in the next
several years. Long-term thinking is a key part of strategy.
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5. Maintaining a Human and Emotional Aspect
◦ As implied by the creative component to strategy, strategic leaders rely
heavily on intuition as to what direction the organization should take.
◦ To illustrate the human touch in strategy, Montgomery a strategy professor
gives the example of Gucci. The brand had become trashed and of low value
because the name appeared on 22,000 products including cigarette lighters and
tennis balls.
◦ A new CEO revamped the Gucci strategy. He decided the brand should be
attractive , at the leading edge of fashion, and a good value.
◦ The original Gucci market niche was high-fashion appealing to an older
audience. The new CEO turned the company around to meet the new strategy,
leading to survival and good profits.
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6. Gathering Multiple Inputs to Formulate Strategy
◦ Many strategic leaders arrive at their ideas for the organization’s future by
consulting with a wide range of interested parties, in a process similar to
conducting research to create a vision.
◦ Customers are a natural source of inputs for formulating strategy, often by
simply asking them what new products, services, or features they would want.
◦ A few years ago, Coastal Contacts, a large online contact lens retailer, was
searching for a way to enhance growth. During a six-month period, the CEO
and the senior team phoned customers to see if they had any ideas. A surprise
finding was that many customers wanted to receive their lenses the next day.
When Coastal Contacts began using overnight delivery, sales surged.
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7. Anticipating and Creating a Future
◦ To set a productive direction for the future, the leader must accurately
forecast or anticipate that future.
◦ Insight into tomorrow can take many forms, such as a leader’s making
accurate forecasts about consumer preferences, customer demands,
and the skill mix needed to operate tomorrow’s organization.
◦ The head of a government agency might visualize what services will be
the most important to the population in the future.
◦ A truly visionary leader anticipates a future that many people do not
think will come to pass.
◦ A classic example is that in the early days of computers few people
predicted that anyone would want to use a computer while not in the
office or at home. Creating the future is a more forceful approach than
anticipating the future.
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8. Revolutionary and Contrarian Thinking
◦ Gary Hamel characterizes strategy as being revolutionary. According to Hamel,
corporations are reaching the limits of incrementalism.
◦ Incremental improvements include squeezing costs, introducing a new product a
few weeks earlier, enhancing quality a notch, and capturing another point of
market share.
◦ These continual improvements enhance an organization’s efficiency and are
therefore vital to a firm’s success, but they are not strategic breakthroughs or
radical innovations.
◦ To be an industry leader, a company’s leaders must think in revolutionary terms.
Revolutionary companies such as Amazon.com and Netflix create the rules for
others to follow. According to Hamel, any strategy that does not seriously
challenge the status quo is not actually a strategy.
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9. Conducting a SWOT Analysis
◦ Strategic planning helps a manager lead strategically.
Strategic planning encompasses those activities that lead to the
statement of goals and objectives and the choice of strategy.
◦ Quite often, strategic planning takes the form of a SWOT
analysis, a long-standing method of considering internal
strengths and weaknesses as well as external opportunities and
threats in a particular situation. A SWOT analysis represents an
effort to examine the interaction between the particular
characteristics of your organization or organizational unit and the
external environment, or marketplace, in which you compete.
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10. Internal Strengths
◦ The emphasis in this step is assessing factors within the
organization that will have a positive impact on implementing
the plan.
◦ What are the good points about a particular alternative?
◦ What do you do well?
◦ Use your own judgment and intuition, and also ask
knowledgeable people.
◦ As a business owner, you may have a favorable geographic
location that makes you more accessible to customers than
your competitor is.
◦ Another strength is that you may have invested in state-of-the art
equipment that became available only recently.
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11. Internal Weaknesses
◦ What could be improved?
◦ What is done badly?
◦ What should be avoided?
◦ Are there products, services, or work processes your competitors perform better
than you do?
◦ You are advised to be realistic now and face any unpleasant truths as soon as
possible.
◦ Again, use your judgment and ask knowledgeable people. As a manager or
business owner, you may have problems managing your inventory, or you may
have employees who are not up to the task of implementing a new plan or venture.
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12. External Opportunities
◦ The purpose of this step is to assess socioeconomic, political,
environmental, and demographic factors among others to estimate what
benefits they may bring to the organization. Think of the opportunities
that await you if you choose a promising strategic alternative, such as
creating a culturally diverse customer base. Use your imagination,
and visualize the possibilities. Look for interesting trends. Useful
opportunities can derive from such events as the following:
◦ • Changes in technology and markets on both a broad an narrow scale
◦ • Changes in government policy related to your field
◦ • Changes in social patterns, population profiles, lifestyles etc.
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13. External Threats
◦ The purpose of this step is to assess what possible negative impact
socioeconomic, political, environmental, and demographic factors may
have on the organization. There is a downside to every alternative, so
think ahead, and do contingency planning. Ask people who may have
tried in the past what you are attempting now. Answer questions such
as:
◦ • What obstacles do you face?
◦ • What is your competition doing?
◦ • Are the required specifications for your job, products, or services
changing?
◦ • Is changing technology changing your ability to compete
successfully?
◦ Despite a careful analysis of threats, do not be discouraged.
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14. Knowledge Management and the Learning
Organization
◦ Knowledge management (KM) is a focused effort to
improve how knowledge is created, delivered, and applied.
When knowledge is managed effectively, information is
shared as needed, whether it be printed, stored
electronically, or rests in the brains of workers.
◦ Managing knowledge helps create a learning
organization—one that is skilled at creating, acquiring,
and transferring knowledge and at modifying behavior to
reflect new knowledge and insights.
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15. Knowledge Management
◦ Another strategic thrust of leaders is to help their
organizations adapt to the environment by assisting workers
and the organization to become better learners.
◦ To accomplish this feat, the leader manages knowledge and
cultivates a learning organization. Knowledge management
focuses on the systematic sharing of information, including
being able to deliver information just in time. Knowledge
management consists of knowledge creation, dissemination,
and application.
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16. The Learning Organization
◦ A learning organization can be viewed as a group of people
working together to enhance their capacities to create the
results they value.
◦ Organizational leadership, however, must usually take the
initiative to create the conditions whereby such
enhancement of capacities, or learning, takes place.
◦ Such leaders promote a culture of inquiry, and they search
for the lessons to be learned in both successful and
unsuccessful outcomes. Strategic leaders also study their
own failures and those of the team to find hidden lessons.
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