Strategic Management & Leadership - V1

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STRATEGIC STRATEGIC MANAGEMENT MANAGEMENT

& & LEADERSHIP:LEADERSHIP:

Theory, Application, Skill Theory, Application, Skill DevelopmentDevelopment

By RAJ VIJAYASIRIBy RAJ VIJAYASIRI

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Learning OutcomesLearning Outcomes

• LO 1: Understand the relationship between strategic management and leadership

– Explain the link between strategic management and leadership

– Analyze the impact of management and leadership styles on strategic decisions

– Evaluate how leadership styles can be adapted to different situations

• LO 2: Be able to apply management and leadership theory to support organizational direction

– Review the impact that selected theories of management and leadership have on organizational strategy

– Create a leadership strategy that supports organizational direction

Copyright (c) 2007 by Thomson South-Western. All rights reserved. 11-3

• LO 3: Be able to assess leadership requirements

– Use appropriate methods to review current leadership requirements

– Plan for the development of future situations requiring leadership


• LO 4: Be able to plan the development of leadership skills

– Plan the development of leadership skills for a specific requirement

– Report on the usefulness of methods used to plan the development of leadership skills


LEADERSHIPLEADERSHIP

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Who Is a Who Is a Leader?Leader?

What is Leadership?

• No universal definitionNo universal definition• Leadership is complex and thus Leadership is complex and thus

hard to definehard to define• Many different definitionsMany different definitions

Why Leadership is Important

• For crisis situationsFor crisis situations• For organizational performanceFor organizational performance• For employee job satisfactionFor employee job satisfaction• For successful managementFor successful management

Why Leadership is Important (cont.)

• ““--- the performance of the --- the performance of the managerial leadership managerial leadership determines the success or determines the success or failure of the organization.” failure of the organization.”

Peter DruckerPeter Drucker• Poor leadership leads to failure, Poor leadership leads to failure,

and good leadership to success.and good leadership to success.

Textbook’s Definition of Leadership

Leadership is the influencing process of leaders and followers to achieve organizational objectives through change

A Manager’s Job Includes

• Planning• Organizing• Leading

– Thus, leadership is part of every manager’s job

• Controlling

Are All Leaders Managers?

• Manager = formal title and authority

• Leader = person (manager or nonmanager) with influence

• Follower = person influenced by a leader

Influence• Is the process of a leader Is the process of a leader

communicating ideas, gaining communicating ideas, gaining acceptance of them, and acceptance of them, and motivating followers to support motivating followers to support and implement the ideas through and implement the ideas through changechange

• It is the essence of leadershipIt is the essence of leadership

Influence (cont.)• Managers may influence through Managers may influence through

coercioncoercion• LeadersLeaders influence by gaining influence by gaining

followers’ commitment and followers’ commitment and enthusiasmenthusiasm

Effective Leaders• Know when to lead, when to followKnow when to lead, when to follow• Influence followers to support Influence followers to support

organizational interestsorganizational interests• Provide directionProvide direction

Effective Leaders (cont.)

• Set challenging objectives and lead Set challenging objectives and lead the charge to achieve themthe charge to achieve them

• Influence change for continual Influence change for continual improvementimprovement

• Enjoy working with peopleEnjoy working with people

Key Elements of Leadership

LeadershipLeadership

InfluenceInfluence

Organizational Organizational ObjectivesObjectives

PeoplePeopleChangeChange

LeadersLeaders––FollowersFollowers

Managerial Roles

InterpersonalInterpersonalInterpersonalInterpersonal

InformationalInformationalInformationalInformational

DecisionalDecisionalDecisionalDecisional

1. Figurehead2. Leader3. Liaison

4. Monitor5. Disseminator6. Spokesperson

7. Entrepreneur8. Disturbance handler9. Resource allocator10. Negotiator

Figurehead Role• Represent the organization in legal, Represent the organization in legal,

social, ceremonial, or symbolic activities.social, ceremonial, or symbolic activities.• Generally considered a top management Generally considered a top management

functionfunction• However, leaders throughout However, leaders throughout

organization can perform this roleorganization can perform this role• Includes:Includes:

– Signing official documentsSigning official documents– Entertaining clients and official visitorsEntertaining clients and official visitors– Speaking engagements (formal and informal)Speaking engagements (formal and informal)– Presiding at meetings and ceremoniesPresiding at meetings and ceremonies

Leader Role

• Pervades all managerial Pervades all managerial behaviorbehavior

• Influences how leaders perform Influences how leaders perform other rolesother roles

• Includes:Includes:– Hiring and trainingHiring and training– Giving instructions and coachingGiving instructions and coaching– Evaluating performanceEvaluating performance

Liaison Role• Interacting with people outside Interacting with people outside

the organizational unitthe organizational unit• Includes:Includes:

– NetworkingNetworking– Developing relationshipsDeveloping relationships– Gaining information and favorsGaining information and favors– Serving on committeesServing on committees– Attending professional meetingsAttending professional meetings– Keeping in touch with other Keeping in touch with other

people and organizationspeople and organizations

Monitor Role• Gathers informationGathers information• Analyzes the information to Analyzes the information to

discover problems and discover problems and opportunitiesopportunities

• Includes:Includes:– Reading memos, reports, and Reading memos, reports, and

publicationspublications– Talking to othersTalking to others– Attending meetingsAttending meetings– Observing competitorsObserving competitors

Disseminator Role• Sends information to othersSends information to others• Information passed via:Information passed via:

Oral meansOral means– Telephone or voice mailTelephone or voice mail– One-on-one discussionsOne-on-one discussions– MeetingsMeetings

Written mediaWritten media– E-mailE-mail– Printed documentsPrinted documents– Handwritten notesHandwritten notes

Spokesperson Role• Provides information to people Provides information to people

outside the organizational unitoutside the organizational unit• Examples:Examples:

– Meeting with the boss to discuss Meeting with the boss to discuss unit’s performanceunit’s performance

– Presenting budget needs to the Presenting budget needs to the financial officerfinancial officer

– Answering correspondenceAnswering correspondence– Reporting to the governmentReporting to the government

Entrepreneur Role• InnovativeInnovative• Initiation of improvementsInitiation of improvements• Examples:Examples:

– Developing new or improved Developing new or improved products/servicesproducts/services

– Developing new ways to process Developing new ways to process products/servicesproducts/services

– Purchasing new equipmentPurchasing new equipment

Disturbance-Handler Role• Takes corrective action during Takes corrective action during

crisis or conflictcrisis or conflict• Involves reactions to unexpected Involves reactions to unexpected

eventsevents• Leaders typically give this role Leaders typically give this role

prioritypriority• ExamplesExamples

– A union goes on strikeA union goes on strike– Equipment breakdownEquipment breakdown– Needed material not arriving on timeNeeded material not arriving on time– Tight schedulesTight schedules

Resource-Allocator Role• Involves scheduling, requesting Involves scheduling, requesting

authorization, and budgeting authorization, and budgeting activitiesactivities

• Examples:Examples:– Deciding what is done now, later, or Deciding what is done now, later, or

not at allnot at all– Setting priorities and time Setting priorities and time

managementmanagement– Allocating raises, overtime, and Allocating raises, overtime, and

bonusesbonuses– Scheduling employee, equipment, Scheduling employee, equipment,

and material useand material use

Negotiator Role• Represents organizational unit in Represents organizational unit in

transactions without set transactions without set boundariesboundaries

• Examples:Examples:– Setting pay and benefits for a new Setting pay and benefits for a new

professional employee or managerprofessional employee or manager– Reaching agreement on a labor union Reaching agreement on a labor union

contractcontract– Contracting with customers or Contracting with customers or

suppliers suppliers

IndividualIndividual

Gro

up

Gro

upO

rganizational

Organizational

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LevelsLevels

OfOf

LeadershipLeadership

AnalysisAnalysis

Individual Level

• Focuses on the individual leader Focuses on the individual leader and the relationship with individual and the relationship with individual followersfollowers

• Called the “dyadic process”Called the “dyadic process”• Reciprocal influenceReciprocal influence

Group Level

• Focuses on the individual Focuses on the individual leader and the collective leader and the collective group of followersgroup of followers

• Called the “group process”Called the “group process”• An important part is meetingsAn important part is meetings• How leader contributes to How leader contributes to

group effectivenessgroup effectiveness

Organizational Level

• Focuses on how the top Focuses on how the top management influences management influences organizational performanceorganizational performance

• Called the “organizational Called the “organizational process”process”

• Deals with organizational Deals with organizational adaptability and transformationadaptability and transformation

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STRATEGIC STRATEGIC MANAGEMENT MANAGEMENT

& & LEADERSHIP:LEADERSHIP:

Theory, Application, Skill Theory, Application, Skill DevelopmentDevelopment


Strategic Leadership• A person’s ability to anticipate,

envision, maintain flexibility, think strategically, and work with others to initiate changes that will create a viable future for the organization

• Ensures that the strategic management process is successfully carried out and yield the desired results


Four Responsibilities of Strategic Leadership

• Conceptualize the organization’s vision, mission, and core values

• Oversee the formulation of objectives, strategies, policies, and structures that translate vision, mission, and core values into decisions

• Create an environment and culture for organizational learning and mutual exchange between individuals and groups

• Serve as steward and role model for the rest


Strategic ManagementThe set of decisions and actions used to formulate and implement specific strategies that will achieve a competitively superior fit between the organization and its environment, so as to achieve organizational goals


Upper Management• Most important supporter of

strategic management and leadership

• Usually held responsible for the organization’s current performance

• Also responsible for creating conditions to ensure the organization’s survival


Strategic Decision Blunders• When decision makers rush to judgment• When decision makers use too much

intuition and too little rational analysis• When decision makers use failure-prone

practices• When decision makers engage in or

condone unethical conduct• When decision makers allocate time and

money unwisely


Strategic Management Framework

Analyze internal environment

Analyze externalenvironment

Vision/Mission

Strategic Goals

Formulate Strategy

Implement Strategy

Evaluate Strategy

Strategic CompetitivenessStrategic Competitivenessand Above-Average Returnsand Above-Average Returns

FeedbackFeedback


The Strategic Leadership/ Management Process

• Internal to focus on– Market position– Financial position– Capabilities– Core competencies– Culture– Structure

• Use SWOT analysis– Strengths– Weaknesses– Opportunities– Threats

• External to identify and interpret emerging trends before they become evident to others

• Strategies quickly become outdated and ineffective

• Use SWOT analysis– Strengths– Weaknesses– Opportunities– Threats

Analyze the Analyze the EnvironmentEnvironment



(cont.)Develop a strategic vision

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



(cont.)Write a meaningful vision statement

• Answers the question, “What does the organization want to or aspire to become?”

• Lays the foundation for development of a mission statement



(cont.)Clear Strategic Vision

• Facilitates decision making• Helps determine what is good, bad,

trivial, or important• Inspires followers by making them feel

important• Links the present to the past• Gives meaning to work by explaining

why something is done• Establishes a standard of excellence

Inspiring Vision Statements

• Coca-Cola – “People, Planet, Portfolio, Partners and Profit – the five Ps”

• Nike: “To crush the enemy”• American Express: To be the world’s

most respected service brand”• Komatsu: Encircle Caterpillar”


VISIONS OF SL COMPANIES

• John Keels:Building businesses that are leaders

in the region

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(cont.)Write a meaningful mission statement

• An enduring statement of purpose that distinguishes one organization from other similar enterprises.

• Defines the core purpose and reasons for organizational existence

• Should be both broad and precise• Not easy

– Can take months and years• Must change as organization changes


The Strategic Leadership/ Management Process (cont.)

Formulate Strategy• Strategy is an integrated, overarching

concept of how an organization will achieve its objectives

• Represents decisions for exploiting environmental opportunities

• Use SWOT analysis• Must reflect core mission and objectives Must reflect core mission and objectives

of the organizationof the organization

Examples of Missions

• 3M: “To solve unsolved problems innovatively”

• US Army: To be all that you can be”• Ford: “Quality job one”• Motorola: “Applying the technology

to benefit the public”


Mission Statement Examples- JOHN DEERE

• John Deere has prospered through a long standing partnership with the world’s most productive farmers. Today John Deere is a global company with several equipment operations and complementary service businesses. These businesses are closely interrelated, providing the company with significant growth opportunities and other synergistic benefits;


Mission Statement Examples- PepsiCo

• PepsiCo’s Mission is to increase the value of our shareholders investment . We do this through sales growth, cost controls and wise investment resources. We believe our commercial success depends upon offering quality and value to our consumers and customers ; providing products that are safe, wholesome, economically efficient and environmentally sound: and providing a fair return to our investors, whilst adhering to the highest standards of integrity.



The Strategic Leadership/ Management Process (cont.)Create Corporate-Level

Objectives• Desired outcomes that an

organization seeks to achieve for stakeholders

• Include both financial and strategic objectives

• Help everyone to focus in same direction

• Targets against which performance is compared


The Strategic Leadership/ Management Process (cont.)

SMARTSMART Corporate-Level Objectives

SSpecific MMeasurable

AAchievablechievable

RResults-Based

TTime-Specific


The Strategic Leadership/ Management Process (cont.)Formulate Strategy that:• Enhances value to customers

– Ratio of benefits to cost

• Creates synergistic opportunities– Whole is greater than the sum of the parts

• Builds on company core Builds on company core competenciescompetencies– Those items that the organization performs Those items that the organization performs

extremely well in comparison to competitorsextremely well in comparison to competitors


5 Elements of Good Strategy Development

• Arena: Where the organization will focus its resources

• Vehicles: How the organization will get there

• Differentiators: How the organization will stand out in the marketplace

• Staging: What the speed and sequence of moves will be

• Economic logic: How the organization will obtain its returns


The Strategic Leadership/Management Process (cont.)

Implement Strategy• Most difficult part of strategic Most difficult part of strategic

managementmanagement– Also the most important

• Without appropriate implementation, the best of strategies can fail– Must be integrated and coordinated– Must overcome resistance to change


The Strategic Leadership/Management Process (cont.)

Evaluate Strategy• To determine the effectiveness

of strategic choices• Three fundamental activities:

– Review internal and external factors– Measure performance against

objectives– Corrective actionCorrective action

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