Chapter 12: Strategic Leadership (SL)

25 pages

Please download to get full document.

View again

of 25
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Chapter 12: Strategic Leadership (SL). Overview: Strategic leadership & top-level managers importance Top management teams and effects on firm performance Managerial succession process Value of strategic leadership in determining firm’s strategic direction
Chapter 12: Strategic Leadership (SL)
  • Overview:
  • Strategic leadership & top-level managers importance
  • Top management teams and effects on firm performance
  • Managerial succession process
  • Value of strategic leadership in determining firm’s strategic direction
  • Importance of strategic leaders in managing firm’s resources
  • Organizational culture and actions to sustain it
  • Ethical practices: establishment and emphasis
  • Importance and use of organizational controls
  • The Strategic Management ProcessStrategic Leadership and Style
  • Strategic leadership: the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary
  • Multifunctional task that involves
  • Managing through others
  • Managing an entire enterprise rather than a functional subunit
  • Coping with change
  • Attracting and managing human (includes intellectual) capital
  • Being able to meaningfully influence others
  • Strategic leaders make a major difference in how well a firm performs
  • Strategic Leadership and the Strategic Management Process
  • Effective strategic leadership is the foundation for successfully using the strategic management process
  • Strategic leaders:
  • Shape the formation of vision and mission
  • Facilitate strategy formulation and strategy implementation
  • Are needed for the achievement of strategic competitiveness and above-average returns.
  • The Role of Top-Level Managers
  • Top level managers play a critical role in strategy formulation and implementation
  • Their strategic decisions influence how an organization is designed and how goals are achieved
  • Top managers also develop structure, culture, reward systems, and policies/SOPs
  • Having a top management team with superior managerial skills is critical (and can be a source of CA and AAR)
  • Managers use their discretion when making strategic decisions and this discretion influences firm performance
  • Several factors determine the amount of manager’s decision-making discretion including:
  • External environmental sources
  • Organizational characteristics
  • Characteristics of the manager
  • Factors Affecting Managerial DiscretionThe Role of Top-Level Managers
  • Top Management Teams (TMT)
  • In most firms there is a team of strategic leaders called the top management team
  • A team is needed to deal with the complexity of challenges and the need for substantial amounts of information and knowledge to make strategic decisions
  • TMT composed of key individuals who are responsible for selecting and implementing firm’s strategies
  • Usually includes officers of the corporation (VP and above) and members of BOD
  • TMT characteristics must fit strategy and strategy implementation
  • TMTs affect firm performance and strategic change
  • The Role of Top-Level Managers
  • TMTs, Firm Performance & Strategic Change
  • Top managers need to operate the internal organization and deal with the external environment and stakeholders groups
  • A heterogeneous TMT can facilitate this
  • Managerial group of individuals with different functional backgrounds, experiences, and education
  • Introduce a variety of perspectives and can lead to better decisions
  • Tend to "think outside of the box," leading to more creative decision making, innovation, and strategic change
  • Offers various areas of expertise and promotes debate
  • Having a top management team that functions cohesively and having members with expertise in the firms core functions and businesses is also important
  • The Role of Top-Level Managers
  • The CEO & TMT Power
  • TMT characteristics can give the CEO’s team power relative to the board of directors and can influence the amount of strategic leadership the board provides
  • Can affect CEO discretion and the ability to appoint board members
  • CEO Duality and longer tenure can also lead to greater CEO power
  • The relative degrees of power held by the board and TMT should be appropriate for the organization
  • TMT characteristics must fit strategy and strategy implementation
  • Managerial Succession
  • The choice of executives is a critical decision with important implications for the firm’s performance
  • Organizations select managers and strategic leaders from two types of managerial labor markets
  • Internal Managerial Labor Market – opportunities for managerial positions to be filled from within the firm
  • External Managerial Labor Market – opportunities for managerial positions to be filled by candidates from outside of the firm
  • Impacts company performance and the ability to embrace change in today's competitive landscape
  • Succession, top management team composition and strategy are related
  • Effects of CEO Succession and Top Management Team Composition on StrategyManagerial Succession
  • Benefits of Internal Managerial Labor Market
  • Leads to continuity and continued commitment to firm’s vision, mission, and strategies
  • Insiders are familiar with company products, markets, technologies, and operating procedures
  • Reduces turnover of existing personnel many of whom possess valuable firm-specific knowledge
  • Favored when the firm is performing well
  • Benefits of External Managerial Labor Market
  • Long tenure with the same firm is thought to reduce innovation
  • Outsiders bring diverse knowledge bases and social networks, which offer the potential for synergy and new competitive advantage
  • Exercise of Effective Strategic Leadership:Key Strategic Leadership ActionsKey Strategic Leadership Actions
  • Determining Strategic Direction
  • Involves specifying the vision and the strategy to achieve this vision over time
  • Vision is a picture of what the firm wants to be and in broad terms what it wants to ultimately achieve
  • Strategic direction is framed within the context of the opportunities and threats over next 3-5 years
  • Includes a core ideology and an envisioned future
  • Should serve to motivate, “push”, and guide the organization
  • Key Strategic Leadership Actions
  • Effectively Managing the Firm’s Resource Portfolio
  • Includes financial, organizational (competencies and capabilities) and human capital
  • Firms resources must be managed in a way that is consistent and supportive of strategy
  • They also must be allocated as efficiently and effectively as possible so that each area or part of the firm has what it needs for strategy implementation
  • Changing strategy will likely call for the reallocation of resources and the movement of people and other resources from one area to another
  • Financial resources are managed through the budgeting and resource allocation process
  • Key Strategic Leadership Actions
  • Effectively Managing the Firm’s Resource Portfolio
  • Core competencies and competitive capabilities should be developed in a strategy supportive fashion
  • Firms should build their strategy around things they are good at doing and/or become good at doing things that are supportive of strategy
  • A firm’s human capital, which refers to the knowledge and skills of a firm’s entire workforce, should also fit its strategy.
  • This can be accomplished by:
  • Hiring people who fit the organization and its strategy
  • An effective training and development program
  • Investments should be made to acquire and develop the firm’s human capital
  • Key Strategic Leadership Actions
  • Sustaining an Effective Organizational Culture
  • Organizational culture: consists of a complex set of ideologies, symbols, and core values shared throughout the firm and influence the way business is conducted
  • Shapes the context within which the firm formulates and implements it's strategies.
  • Also helps to regulate and control employees’ behavior
  • There are many things that make up a company’s culture and many places that is comes from
  • Once developed, a company’s culture tends to last because:
  • Organizations hire people who fit the firm and its culture
  • Employees learn by observing the behavior of others and through socialization and systematic indoctrination of cultural values
  • Storytelling of company legends and ceremonies that honor employees who display cultural ideals
  • Visibly rewarding those who follow cultural norms
  • Key Strategic Leadership Actions
  • Sustaining an Effective Organizational Culture
  • Cultures can vary in strength depending on the degree to which they are imbedded in company practices and norms.
  • Firms must match culture to strategy, as a culture that promotes attitudes and behaviors that are well-suited to strategy will help in the achievement of strategic competitiveness and above average returns.
  • Related firms develop cooperative cultures
  • Unrelated firms develop competitive cultures
  • Cost leaders value economy, frugality and efficiency
  • Differentiators value innovation, quality, and excellence
  • Changing culture can be difficult but can be accomplished if the appropriate strategic leadership is in place
  • Key Strategic Leadership Actions
  • Emphasizing Ethical Practices
  • Ethical practices can be used control employee judgment and behavior
  • They should shape the firms decisions making process and are an integral part of organizational culture
  •  Strategic leaders should:
  • Establish and communicate ethics related goals
  • Continuously revise, update, and disseminate the firm’s code of conduct
  • Develop and implement ethical policies and procedures
  • Use rewards to recognize ethical behavior
  • Create an appropriate work environment
  • Ethical practices can be used to control ethical behavior to make sure people are behaving in the "right" way
  • Key Strategic Leadership Actions
  • Establishing Balanced Organizational Controls
  • Strategic leaders are responsible for the development and effective use of strategic and financial controls
  • Controls provide the parameters for implementing strategies as well as the corrective actions to be taken when implementation related adjustments are required
  • The challenge is to achieve an appropriate balance of financial and strategic controls
  • The Balanced Scorecard
  • Framework that allows strategic leaders to verify that they have established both financial and strategic controls to assess firm performance
  • Underlying premise is that firms jeopardize their future performance possibilities when financial controls are emphasized at the expense of strategic controls
  • An appropriate balance of strategic and financial controls allows firms to achieve higher level of performance.
  • Uses multiple perspectives
  • Strategic Controls and Financial Controls in a Balanced Scorecard FrameworkKey Strategic Leadership Actions
  • Developing Policies and Procedures
  • Policies and procedures - are written or unwritten standards or styles of behavior that govern how people act and lead people to behave in predictable ways
  • Can facilitate good strategy implementation:
  • Can increase efficiency because they standardize work behavior and specify the best way to accomplish a task
  • Provide top down guidance about how certain things need to be done
  • They help ensure consistency in how strategy critical activities are performed
  • Different types of firms make use of different types and numbers of policies and procedures
  • Firms need to create a strong supportive fit between policies and procedures and strategy
  • Key Strategic Leadership Actions
  • Developing Reward Systems
  • It can be argued that rewards are the single most powerful tool for winning the commitment of employees to effective strategy implementation
  • Rewards are an important tool used to achieve behavioral control.
  • Firms should create a results oriented system in which those achieving objectives are generously rewarded and those not achieving objectives are not rewarded
  • Rewards and incentives should also be tied to strategy:
  • Cost leaders should reward people for being efficient and for identifying ways to reduce costs
  • Differentiators should reward people for being innovative
  • The bottom line is that firms need to reward and motivate people in ways that are supportive of strategy and strategy implementation
  • Key Strategic Leadership Actions
  • McKinsey 7-S Strategy Implementation Framework
  • Basic Premise: there are seven internal aspects of an organization that need to be aligned if the organization is to be successful.
  • These seven elements are interdependent and can be categorized as either "hard" or "soft" elements.
  • They are interdependent to the extent that making changes to one affects all of the others.
  • For an organization to perform well each of these elements must fit with and be consistent with one another.
  • These elements include:
  • Strategy, Structure, Systems, Shared Values, Style, Staff , and Skills
  • (source:
  • Key Strategic Leadership Actions
    Related Search
    We Need Your Support
    Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

    Thanks to everyone for your continued support.

    No, Thanks

    We need your sign to support Project to invent "SMART AND CONTROLLABLE REFLECTIVE BALLOONS" to cover the Sun and Save Our Earth.

    More details...

    Sign Now!

    We are very appreciated for your Prompt Action!