Do you Know Leadership?
Strategic Leadership and Change Management
Chapter 11 Part Three: Organizational Leadership
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Learning Outcomes
Discuss the role of strategic leadership in the strategic management process.
Identify the five major decision categories in the strategic management process.
Explain the relationship between objectives and strategies.
Describe the relevance of analyzing an organization’s internal and external environment as part of strategy formulation.
Explain the importance of strategy evaluation in the strategic management process.
Describe the change management process using Kurt Lewin’s force-field model of change.
Identify the major reasons for resisting change.
Discuss some of the recommendations for minimizing resistance to change.
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Strategic Leadership
Strategic leadership revolves around:
vision, change, people, and performance.
Top leaders craft the:
vision, mission, core values, objectives and strategies.
Strategic leadership is a leader’s ability to anticipate, envision, maintain flexibility, think strategically, and work with others to initiate changes that will create a viable future for an organization.
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Globalization and Environmental Sustainability
Globalization.
Leaders should cultivate a global mind-set among managers and their followers.
Environmental Sustainability.
Concerns conservation of natural resources.
Minimization of waste in operation.
Pro-environment is good for business.
“green marketing”.
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Strategic Leadership and the Strategic Management Process
The link between leadership and strategy was established, and broken, in the 1960s.
Today, consensus view is that leadership and the strategic management process are inter-connected.
Leaders use strategic thinking while answering key questions, such as:
What is our vision? What is our mission?
See Exhibit 11.1 for a list of important questions at each step.
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So, what is the strategic management process?
Crafting a Strategic Vision and Mission Statement.
Setting Objectives.
Strategy Formulation.
Strategy Execution.
Strategy Evaluation and Control.
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Step 1
Step 2
Step 3
Step 5
Step 4
The Strategic Management Process
The strategic management process consists of the set of decisions and actions used to formulate and implement specific strategies that are aligned with the organization’s capabilities and its environment, to achieve organizational goals.
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Crafting a Vision and Mission Statement
Strategic leadership starts with communicating organizational direction.
A leader’s inspiring vision motivates followers.
A mission statement specifies present purpose.
vision statements represent a future aspiration.
Strategic leadership ensures the best vision and mission statements are put forth, shared and embraced.
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Crafting a Strategic Vision
A strategic vision is an ambitious view of the future that everyone in the organization can believe in and that is not readily attainable, yet offers a future that is better in important ways than what now exists.
Must be expressed in ideological terms.
Vision creation must be a shared experience.
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Crafting a Mission Statement
A mission statement is an enduring statement of purpose that distinguishes one organization from other similar enterprises.
It is the organization’s core purpose and reason for existence.
Should be broad but able to distinguish the organization from its competitors.
Should be specific but not to create rigidity.
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Crafting a Values Statement
A values statement is the set of beliefs, traits, and behavioral norms that management has determined should guide the pursuit of its vision and mission.
Also known as core values.
They outline guiding principles and ethical standards.
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Setting Organizational Objectives
Commitment to organizational outcomes is achieved when there is broad participation in goal setting, and rewards are linked to goal achievement.
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Financial objectives
Return on investment
Sales or Profits
Strategic objectives
Acquiring new customers
Opening new markets
Earnings per share
Return on equity
Creating new products
Strategy Formulation
Strategy formulation is about selecting appropriate strategies for achieving organizational objectives.
A strategy is an organization’s chosen plan of action for outperforming its competitors and achieving superior outcomes.
Before formulating a core strategy:
complete a situation analysis.
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Environmental or Situation Analysis
Internal environment
For Strengths and Weaknesses.
Determines industry attractiveness.
External environment
For Opportunities and Threats.
Focuses on the industry and general environments.
Internal and external trends provide critical input for selecting an appropriate strategy or strategies.
The combined analysis is commonly referred to as SWOT analysis.
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Selecting from Alternative Strategies
An organization’s core strategy is
The source of its competitive advantage.
There are three generic core strategies:
Broad or niche differentiation strategy,
Broad or niche low-cost strategy, and
Best-cost or value-based strategy.
Customer value is the perceived benefits received to the perceived price paid by the customer.
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Discussion Question
As leaders make strategic decisions, they must balance the interests of various stakeholders – employees, customers, shareholders, suppliers, unions/activists, and the community.
Describe the best approach for doing this.
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Strategy Execution
Strategy execution is the domain of operational leaders.
For successful strategy execution, have:
Strong leadership and competent managers,
Appropriate policies and procedure,
Adequate organizational capabilities,
The right corporate culture, and
Appropriate rewards and incentives programs.
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Strong Leadership and Competent Managers
Be a good coach,
Empower your team – don’t micromanage,
Express interest in members’ success,
Be productive and results-oriented,
Be a good communicator and listen to your team,
Help your employees with career development,
Have a clear vision and strategy for the team, and
Have technical skills so you can advise the team.
Leadership makes a difference.
For effective strategy execution, organizations should look for these desired leader/manager qualities:
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Appropriate Policies and Procedure
Policies and procedures:
Regulate behavior and help set the tone of the work climate,
They insure consistency,
They standardize the way specific strategy-execution tasks are performed, and
They insure the quality and reliability of the strategy execution process.
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Adequate Organizational Capabilities
Resources are the foundation of capabilities and core competencies.
A key responsibility of strategic leadership:
furthering core competencies into distinctive core competencies.
A distinctive core competence is a capability that allows an organization to perform extremely well in comparison to competitors and is the basis for a competitive advantage.
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Having the Right Corporate Culture
An organization’s culture is the aggregate of beliefs, norms, attitudes, values, assumptions, and ways of doing things that is shared by members of an organization and taught to new members.
Organizational identity is the members’ consensual understanding of “who we are as an organization” that emerges from that which is central, distinctive, and enduring to the organization as a whole.
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Appropriate Rewards and Incentives
Rewards and incentives are powerful motivating tools, enhancing strategy execution.
The right incentives package:
Drive up employee commitment, hard work, speed, quality, and satisfaction.
Leading to greater output and profitability.
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Strategy Evaluation and Control
Strategy evaluation and control:
Compares actual results (outcomes)
With expected results (stated objectives).
Effective strategy evaluation is a three step process:
Review internal and external factors – bases for current strategy,
Measure actual performance against stated objectives, and
Take corrective action.
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Discussion Question
Many decisions made by strategic leaders benefit some people at the expense of others, thus raising ethical issues.
Give specific examples for each of the following categories of unethical behavior:
Breaking laws or evading regulations,
Legal but unethical behavior, and
Acts of omission rather than commission.
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Leading Organizational Change
Organizational change alters cognitive leadership reorientation.
Can re-energize an organization.
Can be transformational or incremental.
It is about changes in human behavior.
Re-engineering business practices.
Learning new processes or systems.
Adopting new technologies.
Acquiring new skills and capabilities.
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The Need for Organizational Change
External threats
Direct competition.
New technologies.
Weakness in the economy.
New regulations.
Changes in consumer attitudes.
Internal environment
A leadership change.
Weaknesses in capabilities.
Survival anxiety is the feeling that unless an organization makes a change, it is going to be out of business or fail to achieve some important goals.
“learning anxiety” comes with learning new skills.
Learning anxiety can create strong resistance.
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Role of Top Leaders in Managing Change
Effective leaders stay engaged, they:
Continue articulating the reason for change,
Eliminate things that undermine change,
Maintain adequate resources,
Form a coalition to counter opposition,
Celebrate milestones,
Stay the course,
Motivate with recognition and rewards, and
Keep the process transparent.
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Discussion Question
For CEOs and many other senior executives, strategic leadership is an important role they must perform well.
Briefly describe some of the specific actions or responsibilities of the CEO that strategic leadership entails.
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The Change Management Process
One of the most widely used change management process theories is Kurt Lewin’s classic theory of planned change.
Also known as the force-field model of change.
Identify threats then convince people change is needed.
People look to the leader for a plan of action
Using new rules, attitudes, traditions, regulations, and reward schemes
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Step 1 Unfreeze
Step 2 Change
Step 3 Refreeze
Reasons for Resisting Change
Exhibit 2.5
Effective leaders will not only follow the steps in the model but also employ the best strategies to minimize employee resistance.
Exhibit 11.2
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Recommendations for Minimizing Resistance
Exhibit 11.3
Effective leaders do not downplay resistance.
Effective change agents are also good listeners.
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Discussion Question
Resistance to change is more likely to succeed if the forces resisting the change are stronger than the forces driving the need for change.
Describe some of the specific tactics that resisters could employ to thwart change efforts.
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Minimizing Resistance to Change
Resistance can have one of three dimensions:
Cognitive,
A rational calculation from both sides.
Emotional,
Fear of loss and the unknown drive resistance.
Behavioral,
Sabotage and intentional work slowdowns.
Change agents must monitor the “5-Ps”:
Purpose, priorities, people, process, and proof.
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Key Terms
change leadership
core competence
culture
customer value
mission statement
organizational identity
strategy
strategic leadership
strategic management process
strategic vision
survival anxiety
values statement
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© 2016 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.
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