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Strategic Leadership: Managing the Strategy Process

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©McGraw-Hill Education.

Learning Objectives

Describe the roles of vision, mission, and values in strategic leadership.

Explain why anchoring a firm in ethical core values is essential for long-term success.

And we’ll add to this next lesson with ethical Leadership

Outline how managers become strategic leaders.

©McGraw-Hill Education.

Light Brain Stretching…

  • Where is the largest desert in the world?
  • What percentage of people on the planet live in the northern hemisphere?
  • What continent exists in all four hemispheres?
  • How many times zone does Russia have?

Cogitate the following…

If you cut me in half I am nothing, if you turn me on my side, I am everything…what am I?

Why don’t I trust stairs?

Antarctica

90%

Africa

11

The number 8

They are always up to something

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©McGraw-Hill Education.

What Is “Strategic” Leadership?

  • Successful use of power and influence
  • Directing the activities of others
  • Pursuing an organization’s goals
  • Enabling organizational competitive advantage

Marissa Mayer demonstrated strategic leadership in defining a new vision and mission for Yahoo. To put Yahoo’s new vision and mission into action, she worked to rejuvenate Yahoo’s bureaucratic culture and engaged in more open and frequent communication, with weekly FYI town hall meetings where she and other executives provide updates and field questions. All employees are expected to attend and encouraged to participate in the Q&A. Questions are submitted online during the week, and the employees vote which questions executives should respond to.

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©McGraw-Hill Education.

Vision, Mission, and Values

  • Vision:
  • What do we want to accomplish?
  • Mission:
  • How do we accomplish our goals?
  • Values:
  • What commitments do we make?
  • What guardrails do we put in place?
  • How can we act legally and ethically in pursuit of the vision and mission?

A Baseline for Strategic Leadership

(3 Things all Firms should have)

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Vision

8/15/2014

The U.S. Air Force is the world’s preeminent force in air, space and cyberspace.

We maintain that distinction by maintaining our objective of global vigilance, reach and power and remaining true to our vision statement: The World’s Greatest Air Force—Powered by Airmen, Fueled by Innovation. Through shared values, key capabilities and upholding our Airman’s Creed, we continue to achieve our mission and aim high in all we do.

Mission

8/15/2014

The mission of the United States Air Force is to fly, fight and win in air, space and cyberspace.

Our rich history and our vision guide our Airmen as we pursue our mission with excellence and integrity to become leaders, innovators and warriors.

Core Values

8/15/2014

Integrity first, Service before self, and Excellence in all we do.

The Air Force bases its core competencies and distinctive capabilities on a shared commitment to these three values

Competencies and Capabilities

8/15/2014

Core competencies make our six distinctive capabilities possible.

Air and Space Superiority

With it, joint forces can dominate enemy operations in all dimensions: land, sea, air and space.

Global Attack

Because of technological advances, the Air Force can attack anywhere, anytime and do so quickly and with greater precision than ever before.

Rapid Global Mobility

Being able to respond quickly and decisively anywhere we're needed is key to maintaining rapid global mobility.

Precision Engagement

The essence lies in the ability to apply selective force against specific targets because the nature and variety of future contingencies demand both precise and reliable use of military power with minimal risk and collateral damage.

Information Superiority

The ability of joint force commanders to keep pace with information and incorporate it into a campaign plan is crucial.

Agile Combat Support

Deployment and sustainment are keys to successful operations and cannot be separated. Agile combat support applies to all forces, from those permanently based to contingency buildups to expeditionary forces.

Strategic Leadership:
Levels/Growing in Leadership

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Strategic Leadership Process

Exhibit 1.2 Realized Strategy and Intended Strategy: Usually Not the Same

Source: Mintzberg, H. & Waters, J.A., “Of Strategies: Deliberate and Emergent,” Strategic Management Journal, Vol. 6, 1985, pp. 257-272. Copyright © John Wiley & Sons Limited. Reproduced with permission.

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The final realized strategy of any firm is a combination of deliberate and emergent strategies.

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Strategic Leadership

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©McGraw-Hill Education.

Readings for Today

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  • Why we love to hate HR and what HR can do about it

  • How Netflix Reinvented HR

  • Why Chief of Human Resources Officers Make Great CEOs

Why we love to hate HR and what HR can do about it

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  • Do the times matter?
  • ”The Personnel Pendulum”
  • Plentiful versus non-plentiful labor markets
  • Rise in external hiring
  • Changes in view on “human capital”
  • Are HR professionals/managers always behind the times?
  • Are they fixing yesterday’s or yesteryear’s problems?
  • How do we fix this notion/reality?

Why we love to hate HR and what HR can do about it

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  • Are these fair criticisms?
  • Frontline managers, “Too much busy work from HR”…“We just want to do our jobs, not so mu HR-related stuff”
  • HR isn’t that important because employees are replaceable
  • And employees know they are replaceable
  • Employees were/aren’t getting the investment and attention they need to grow
  • What should HR be doing now?
  • Focus on strategy and strategic goals

How Netflix Reinvented HR

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  • Is Netflix HR really innovative? How so / Why not?

  • Are your firms equally innovative? Why / Why not?

  • Is the Netflix model usable for all firms in all industries? Why / Why not?

Why Chief of Human Resources Officers Make Great CEOs

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  • Would CHROs really make great CEOs? Why / Why not?

  • What makes them so good/not so good?

For next time…

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Ethical Leadership

Guest Speaker

Jim Savina, VP, Windham Destinations

Readings

A New Model for Ethical Leadership

Why good companies go bad

Honor and Deception

Our Buggy Moral Code (Video)

Giving Voice to Values (Optional)

Nortel Networks (Optional)

Chap 3 External Analysis

  • Read Chap 3
  • Prepare slides for your company for Ch 3
  • Take Chap 3 quiz (before class)

©McGraw-Hill Education.

Strategic Leadership

  • Strategic Leadership
  • Use of power and influence
  • Direct the activities of others
  • Pursue organizational goals

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©McGraw-Hill Education.

Key Aspects of an Effective Vision

Captures an organization’s aspiration

Identifies what it ultimately wants to accomplish

Motivates employees to aim for a target

Leaves room for contributions

Marissa Mayer developed a new vision for Yahoo—to make the world’s daily habits more inspiring and entertaining—to help reinvigorate Yahoo’s employees and get its customers excited again. Mayer’s vision attempts to inspire Yahoo’s employees to resume leadership in online advertising.

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©McGraw-Hill Education.

Why Is a Vision Important?

  • Employees tend to feel part of something bigger than themselves
  • Helps employees find meaning in their work
  • Allows employees to experience a greater sense of purpose

©McGraw-Hill Education.

Mission Statements

  • Describe what an organization does
  • The products and services it provides
  • The markets in which it competes
  • Strategic Commitments:
  • Actions to achieve the mission that are:
  • Costly
  • Long-term oriented
  • Difficult to reverse.

Consider the strategic commitments made by Mayer to help turn Yahoo around. Its sale of Alibaba holdings and purchases of various startups show the kind of bold commitment required of strategic leaders. To retain existing talent and restore morale, she also had to sell her workers on the new vision and mission. She did so by sharing this mantra with them via tweets and other means: People then products then traffic then revenue. Employees understood they were the start of the transformation.

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©McGraw-Hill Education.

Values

  • Principles to guide behavior
  • Employees at all levels can use them
  • Helps deal with complexity and conflict
  • Provides employees with a moral compass

©McGraw-Hill Education.

Core Values Statements

  • Guide an organization to achieve its vision and fulfill its mission
  • Applies to internal conduct and external interaction
  • Can include ethical considerations

©McGraw-Hill Education.

Product-Oriented Vision Statements

  • Defines a business in terms of a good or service provided
  • Example: “We are in the typewriter business”
  • Less flexible
  • Is not needs-based
  • Can lead to a myopic view
  • Railroads:
  • Saw themselves in the railroad business
  • Cars & jets: redefined long-distance transportation
  • Rail companies slow to respond

Railroads are in the business of moving goods and people from point A to point B by rail. When they started in the 1850s, their short-distance competition was the horse or horse-drawn carriage. Because of their monopoly, especially in long-distance travel, these companies were initially extremely profitable. Not surprisingly, the early U.S. railroad companies saw their vision as being in the railroad business, clearly a product-based definition.

However, the railroad companies’ monopoly did not last. Technological innovations changed the transportation industry dramatically. After the introduction of the automobile in the early 1900s and the commercial jet in the 1950s, consumers had a wider range of choices to meet their long-distance transportation needs. Rail companies were slow to respond; they failed to redefine their business in terms of services provided to the consumer. Had they envisioned themselves as serving the full range of transportation and logistics needs of people and businesses across America (a customer-oriented vision), they might have become successful forerunners of modern logistics companies such as FedEx or UPS.

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©McGraw-Hill Education.

Customer-Oriented Vision Statements

  • Defines a business in terms of providing solutions to customer needs
  • Examples:
  • Google: “To organize the world’s information and make it universally accessible and useful.”
  • Nike: “To bring inspiration and innovation to every athlete in the world.”
  • Yahoo: “To make the world’s daily habits more inspiring and entertaining.”

©McGraw-Hill Education.

Visions Can Help Create Competitive Advantage

  • Vision statements and firm performance can be positively associated if:
  • The vision is customer-oriented
  • Internal stakeholders help define the vision
  • Organizational structures align with the vision statement

Example of an organizational structure: compensation systems

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©McGraw-Hill Education.

Organizational Core Values

“How do we accomplish our goals?”

  • Ethical standards and norms
  • Govern the behavior of individuals
  • Have two important functions:
  • Form the groundwork for long-term success
  • Help keep the company on track

Strong ethical values have two important functions. First, they form a solid foundation on which a firm can build its vision and mission, and thus lay the groundwork for long-term success. Second, values serve as the guardrails put in place to keep the company on track when pursuing its vision and mission in its quest for competitive advantage.

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©McGraw-Hill Education.

Strategic Leadership Exercise/Homework

In one page (definitely no more than two pages), briefly answer the following questions:

  • How Much Are Your Values Worth to You?
  • How much are you willing to pay for the job you want? This may sound like a strange question, since your employer pays you to work…but think again. Consider how much you value a specific type of work, or how much you would want to work for a specific organization because of its values.
  • What effect does industry/company growth/stability (realized or potential) play in your career choices?
  • Identify your personal values. How do you expect these values to affect your work life or your career choices?
  • How much less salary would (did) you accept to find employment with a company that is aligned with your values?

©McGraw-Hill Education.

Strategic Leadership

©McGraw-Hill Education.

Exhibit 2.3: How CEOs Spend Their Days

SOURCE: Data from O. Bandiera, A. Prat, and R. Sadun (2012), “Management capital at the top: evidence from the time use of CEOs,” London School of Economics and Harvard Business School Working Paper.

©McGraw-Hill Education.

Upper Echelon’s Theory

  • Organizational outcomes reflect the values of the top management team.
  • Outcomes include strategic choices & performance levels.
  • Leadership actions reflect:
  • Age, education, and career experiences
  • Personal interpretations of situations
  • Strong leadership: innate abilities and learning

©McGraw-Hill Education.

Strategic Leadership Video

©McGraw-Hill Education.

Scenario Planning

  • Uses a top-down approach
  • Asks “what if” questions
  • Top management envisions different scenarios.
  • Then they derive strategic responses.
  • Consider optimistic and pessimistic futures
  • Examples:
  • New laws restrict carbon emissions
  • Demographic shifts
  • Changing economic conditions
  • Technological advances

©McGraw-Hill Education.

©McGraw-Hill Education.

Strategy as Planned Emergence

  • Top Down and Bottom Up
  • Bottom-up strategic initiatives emerge
  • Evaluated & coordinated by management
  • Relies on data, plus:
  • Personal experience
  • Deep domain expertise
  • Front line employee insights

Instructors:

The digital companion to this book McGraw-Hill Connect has an interactive case exercise on this section of the textbook. It builds student confidence on emergent strategy using a short case about 3M (LO 2-6).

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Strategic Leadership Process

Exhibit 1.2 Realized Strategy and Intended Strategy: Usually Not the Same

Source: Mintzberg, H. & Waters, J.A., “Of Strategies: Deliberate and Emergent,” Strategic Management Journal, Vol. 6, 1985, pp. 257-272. Copyright © John Wiley & Sons Limited. Reproduced with permission.

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The final realized strategy of any firm is a combination of deliberate and emergent strategies.

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Strategic Leadership Process

11-*

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©McGraw-Hill Education.

Key Points About Strategy

  • Intended strategy
  • The outcome of a rational and structured top-down strategic plan
  • Realized strategy
  • Combination of intended and emergent strategy
  • Emergent strategy
  • Any unplanned strategic initiative
  • Bubbles up from the bottom of the organization
  • Can influence and shape a firm’s overall strategy