Strategic leadership

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 and
inspiration 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 in
how well a firm performs.
 Strategic leadership deals with the major purposes
of an organization or organizational unit
 Five important components of strategic leadership
include
 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.
9

 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.
 Having a top management team with superior managerial
skills is critical (and can be a source of CA)
 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
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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 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
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 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.
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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 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.
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 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
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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 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.
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 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.
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 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
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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 chief
architect in defining vision, mission, and objective of the
organization. He conceptualizes and crafts strategic to achieve
objectives.
 Decision making role :The chief executive makes strategic
decisions related to strategy formulation .He makes strategic
choice from among strategic options for achieving objectives. This
role involves risk-taking.
 Resources planning role :This role of chief executive involves
coordinated allocation of significant resources to planes. Such
plans can be organization wide or related to strategic business
units or function. Resources can be people, money, technology,
time and information.
 Negotiator role :Strategic must fulfill the expectation of various
stakeholders of the organization. The chief executive balance there
conflicting interest by negotiating disputes. The stakeholder can
be owners, customers, employees, suppliers, government, labour
unions, 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, interpret
and make sense out of information .
 Sense giving-attempts to influence outcomes through
communication of thoughts and gain support.
 Issue selling - process by which individuals affect
others attention, understanding of events,
developments and trends that impact organizational
performance

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