The ability to influence a

group toward the

achievement of goals

Authoritarian-high task, low relationship

Team Leader- high task, high relationship

Country Club- low task, high relationship

Impoverished- low task, low relationship

Manager Characteristics

Administers

A copy

Maintains

Focuses on systems and structures

Relies on control

Short range view

Asks how and when

Eye on bottom line

Imitates

Accepts the status quo

Classic good soldiers

Does things right

Leader Characteristics

• Innovates

• An original

• Develops

• Focuses on people

• Inspires trust

• Long range perspective

• Asks what and why

• Eye on horizon

• Originates

• Challenges the status quo

• Own person

• Does the right thing

Strategic leadership: the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.

Strategic leadership is the process of providing the direction andinspiration necessary to create or sustain an organization.

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

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Strategic leaders make a major difference inhow well a firm performs.

Strategic leadership deals with the major purposesof an organization or organizational unit

Five important components of strategic leadershipinclude

high-level cognitive ability

multiple inputs to strategy formulation

anticipating and creating a future

revolutionary thinking, and

creation of a vision

Strategic Leadership Dimensions

NEED FOR CONTROL

High control Low control

High challenge-

seeking

Low challenge-

seeking

CHALLENGE-

SEEKING

HIGH-CONTROL

INNOVATOR (HCI)

Challenge-seeker who

maintains tight control

over organization

STATUS QUO

GUARDIAN (SQG)

Challenge-averse who

maintains tight control

over organization

PARTICIPATIVE

INNOVATOR (PI)

Challenge-seeker who

delegates control

of organization

PROCESS

MANAGER (PM)

Challenge-averse who

delegates control

of organization

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.

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Top level managers play a critical role in strategyformulation and implementation. Their strategic decisions influence how an organization is designed

and how goals are achieved.

Top managers also develop structure, culture, reward systems, andpolicies.

Having a top management team with superior managerialskills is critical (and can be a source of CA)

Managers use their discretion when making strategicdecisions and this discretion influences firm performance.

Several factors determine the amount of manager’sdecision-making discretion including: External environmental sources

Organizational characteristics

Characteristics of the manager

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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 strategic

implementation.

TMTs affect firm performance and strategic change.

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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

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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

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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

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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.

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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.

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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.

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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.

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Sustaining an Effective Organizational Culture Organizational culture: consists of a complex set of

ideologies, symbols, and core values shared throughout thefirm 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 andmany 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 throughsocialization and systematic indoctrination of cultural values

Storytelling of company legends and ceremonies that honor employeeswho display cultural ideals

Visibly rewarding those who follow cultural norms

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Sustaining an Effective Organizational Culture

Cultures can vary in strength depending on the degree to whichthey are imbedded in company practices and norms.

Firms must match culture to strategy, as a culture that promotesattitudes and behaviors that are well-suited to strategy will help inthe achievement of strategic competitiveness and above averagereturns. 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.

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Emphasizing Ethical Practices Ethical practices can be used control employee judgment and

behavior.

They should shape the firms decisions making process and are anintegral part of organizational culture.

Strategic leaders should:

Establish and communicate ethics related goals.

Continuously revise, update, and disseminate the firm’s codeof 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 makesure people are behaving in the "right" way.

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Establishing Balanced Organizational Controls

Strategic leaders are responsible for the development andeffective use of strategic and financial controls

Controls provide the parameters for implementing strategies aswell as the corrective actions to be taken when implementationrelated adjustments are required

The challenge is to achieve an appropriate balance of financialand strategic controls The Balanced Scorecard

Framework that allows strategic leaders to verify that they haveestablished both financial and strategic controls to assess firmperformance

Underlying premise is that firms jeopardize their futureperformance possibilities when financial controls are emphasizedat the expense of strategic controls

An appropriate balance of strategic and financial controls allowsfirms to achieve higher level of performance.

Uses multiple perspectives

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Developing Policies and Procedures Policies and procedures - are written or unwritten standards or

styles of behavior that govern how people act and lead people tobehave in predictable ways.

Can facilitate good strategy implementation.

Can increase efficiency because they standardize work behaviorand specify the best way to accomplish a task.

Provide top down guidance about how certain things need to bedone.

They help ensure consistency in how strategy critical activities areperformed.

Different types of firms make use of different types and numbers ofpolicies and procedures.

Firms need to create a strong supportive fit between policies andprocedures and strategy.

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Developing Reward Systems

It can be argued that rewards are the single most powerful tool forwinning the commitment of employees to effective strategyimplementation.

Rewards are an important tool used to achieve behavioral control.

Firms should create a results oriented system in which thoseachieving objectives are generously rewarded and those notachieving objectives are not rewarded.

Rewards and incentives should also be tied to strategy:

Cost leaders should reward people for being efficient and foridentifying ways to reduce costs.

Differentiators should reward people for being innovative.

The bottom line is that firms need to reward and motivate peoplein ways that are supportive of strategy and strategyimplementation.

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McKinsey 7-S Strategy ImplementationFramework

Basic Premise: there are seven internal aspects of anorganization that need to be aligned if the organization is tobe successful.

These seven elements are interdependent and can becategorized as either "hard" or "soft" elements.

They are interdependent to the extent that making changesto one affects all of the others.

For an organization to perform well each of these elementsmust fit with and be consistent with one another.

These elements include:

Strategy, Structure, Systems, Shared Values, Style, Staff , andSkills

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The chief executive is the executive head of the organization. He

represents the management.

The chief executive's principle duty is to define long-term

direction and scope of the organization.

He has ultimate responsibility for its success.

He leads the formulation and implementation of the strategy. He

guided by the board of directors.

Formulation of strategy

Implementation of strategy

Formulation of strategies :Strategy provides future direction and

scope to the organization for gaining competitive advantage. The

roles of chief executive in strategic formulation are :

Key strategic role :The chief executive plays the role of chiefarchitect in defining vision, mission, and objective of theorganization. He conceptualizes and crafts strategic to achieveobjectives.

Decision making role :The chief executive makes strategicdecisions related to strategy formulation .He makes strategicchoice from among strategic options for achieving objectives. Thisrole involves risk-taking.

Resources planning role :This role of chief executive involvescoordinated allocation of significant resources to planes. Suchplans can be organization wide or related to strategic businessunits or function. Resources can be people, money, technology,time and information.

Negotiator role :Strategic must fulfill the expectation of variousstakeholders of the organization. The chief executive balance thereconflicting interest by negotiating disputes. The stakeholder canbe owners, customers, employees, suppliers, government, labourunions, and financial institution.

Implementation of strategy: Implementation is putting strategy into action. The

chief information about strategy to the implementers within the organization. He

serve as a spokesperson for strategic implementation.

Leadership role :The chief executive assumes overall leadership for the

implementation of strategy. He inspire trust and self-confidence among

implements of strategy. He ensures there participation. He motivates them for

higher productivity. He provides direction for implementation of strategy.

Organizer role :The chief executive is an organization builder. He determines the

structure for strategy implementation. He establishes reporting relationship and

span of control. He assigns authority and responsibility for petitions and people in

the organization for key result areas.

Resource manager role :The chief executive ensures officiated and effective

mobilization, allocation and utilization of resources for implementation strategy.

Budgets are prepare for management or resources.

Monitoring :The chief executive monitors and evaluates the performance results

of strategy implementation. He takes corrective actions to resolve performance

problems. He handles unexpected distributors and crisis situation.

Middle management is the intermediate management level,

accountable to top management and responsible for leading lower

level managers.

Middle management is the intermediate management of a

hierarchical organization, subordinate to the senior management

but above the lowest levels of operational staff.

They are accountable to the top management for their

department's function. They provide guidance to lower level

managers and inspire them towards better performance.

Middle management may be reduced in organizations as a result

of reorganization. Such changes include downsizing, delayering,

and outsourcing.

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Strategy – exploitation of signals from environment

Environmental dynamism

Shift in basis for strategy-- position based to capability based

Increased importance of role of middle level managers

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Traditional orientation Present orientation

Developing coordination within

functional boundaries

Boundary spanning (relationships

across boundaries)

Controlling growth Finding innovation (championing)

Executing plans Synthesizing information

Applying new technologies to

production

Facilitate learning (transferring

technology).

Changing orientation of middle management work

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Role of middle level managers in strategy formation:

Idea generation: centre of information network

Strategic initiatives: creation of social networks, knowledge creation, understanding of organization processes

Capability set: develop new capabilities

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Three crucial requirements for success of middle

managers—

Access to knowledge

Dynamic and flexible leadership

Integration of new initiatives and new routines

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Four roles of middle managers

Synthesizing(sense making)--attend, frame and diagnose issues

Facilitation (sense making and sense giving)--generation of variant behavior, cooperation and experimentation

Championing (issue selling)--bring entrepreneurial and innovative proposals to the notice of the top management

Implementation (sense giving)--translate strategic plans into operational plans

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Sense making -way managers understand, interpretand make sense out of information .

Sense giving-attempts to influence outcomes throughcommunication of thoughts and gain support.

Issue selling - process by which individuals affectothers attention, understanding of events,developments and trends that impact organizationalperformance

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