Chapter 2: Leading the

Process of Crafting and

Executing Strategy

Screen graphics created by:

Jana F. Kuzmicki, Ph.D.
Troy University

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
“If you don’t know where
you are going, any road
will take you there.”

Cheshire Cat to Alice

Lewis Carroll, Alice in Wonderland
 “If you articulate a vision
that makes people passionate,
there are so many amazing
things you can do.”

Dr. Sophie Vandebroek

Xerox Corporation
Chapter Learning Objectives
1. Grasp why it is critical for company managers to think long and
hard about where a company needs to head and why.
2. Understand the importance of setting both strategic and financial
objectives.
3. Recognize that the task of crafting a company strategy draws on
the entrepreneurial talents of managers at all organizational
levels.
4. Understand why the strategic initiatives taken at various
organizational levels must be tightly coordinated to achieve
companywide performance targets.
5. Become aware of what a company must do to achieve operating
excellence and to execute its strategy proficiently.
6. Understand why the strategic management process is ongoing,
not an every-now-and-then task.
7. Learn what leadership skills management must exhibit to drive
strategy execution forward.
8. Become aware of the role and responsibility of a company’s
board of directors in overseeing the strategic management
process.
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 Chapter Roadmap
 What Does the Strategy-Making, Strategy-Executing
process Entail?
 Phase 1: Developing a Strategic Vision
 Phase 2: Setting Objectives
 Phase 3: Crafting a Strategy
 Phase 4: Implementing and Executing the Strategy
 Phase 5: Evaluating Performance and Initiating
Corrective Adjustments
 Leading the Strategic Management Process
 Corporate Governance: The Role of the Board of
Directors in the Strategy-Making, Strategy-Executing
Process
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Figure 2.1: The Strategy-Making, Strategy-Executing Process

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Developing a Strategic Vision
Phase 1
 Involves thinking strategically about
 Future direction of company
 Changes in company’s
product/market/customer technology to improve
 Current market position
 Future prospects

A strategic vision describes the route a company

intends to take in developing and strengthening
its business. It lays out the company’s strategic
course in preparing for the future.
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Table 2.1: Factors to Consider in Deciding on a Company’s Future Direction

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Key Elements of a Strategic Vision
 Delineates management’s aspirations for the
business
 Provides a panoramic view of “where we are going”
 Charts a strategic path
 Is distinctive and specific to
a particular organization
 Avoids use of generic language that
is dull and boring and that could
apply to most any company
 Captures the emotions of
employees and steers them
in a common direction
 Is challenging and a bit beyond a
company’s immediate reach
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 Role of a Strategic Vision

 A well-conceived, well-communicated vision

functions as a valuable managerial tool to
 Give the organization a sense of direction, mold
organizational identity, and create a committed
enterprise
 Illuminate the company’s directional path
 Provide managers with a reference point to
 Make strategic decisions
 Translate the vision into hard-edged
objectives and strategies
 Prepare the company for the future
A strategic vision exists only as words and has no
organizational impact unless and until it wins the commitment
of company personnel and energizes them to act in ways that
move the company along the intended strategic path!
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Table 2.2: Characteristics of an Effectively Worded Vision Statement

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Table 2.3: Common Shortcomings in Company Vision Statements

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Example of Strategic Vision

Red Hat
To extend our position as the most trusted
Linux and open source provider to the
enterprise. We intend to grow the market
for Linux through a complete range of
enterprise Red Hat Linux software, a
powerful Internet management platform,
and associated support and services.

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 Example of Strategic Vision

UBS
 We are determined to be the best global financial services company.
 We focus on wealth and asset management, and on investment
banking and securities businesses.
 We continually earn recognition and trust from clients, shareholders,
and staff through our ability to anticipate, learn and shape our future.
 We share a common ambition to succeed by delivering quality in what
we do.
 Our purpose is to help our clients make financial decisions with
confidence.
 We use our resources to develop effective solutions and services for
our clients.
 We foster a distinctive, meritocratic culture of ambition, performance
and learning as this attracts, retains and develops the best talent for
our company.
 By growing both our client and our talent franchises, we add
sustainable value for our shareholders.
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Examples of Strategic Visions

Caterpillar
Be the global leader in customer value.

eBay
Provide a global trading
platform where practically anyone
can trade practically anything.
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 Strategic Vision vs. Mission
 A strategic vision
concerns a firm’s future
business path - “where
we are going”
 Markets to be pursued
 Future product/market/
customer/technology focus
 Kind of company
management is
trying to create
 A company’s mission
statement typically
focuses on its present
business purpose - “who
we are and what we do”
 Current product and
service offerings
 Customer needs and
customer groups being
served
 Geographic
coverage
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Characteristics of a Mission Statement

 Identifies boundaries of a company’s current

business and says something about
 Present products and services
 Types of customers served
 Geographic coverage
 Conveys
 Who we are,
 What we do, and
 Why we are here
A good mission statement describes a company’s business
makeup and purpose in language specific enough to give
the company its own identity and distinguish it from
other enterprises in the same or other industries!
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 Key Elements of a
Mission Statement
 A complete mission statement should cover three
things:
 Customer needs being met –
What is being satisfied
 Customer groups or markets being served –
Who is being satisfied
 What the organization does (in terms of business
approaches, technologies used, and activities
performed) to satisfy the targeted needs of the
targeted customer groups –
How customer needs are satisfied
A company’s mission is not to make a profit! Its true
mission is its answer to “What will we do to make a profit?”
Making a profit is an objective or intended outcome!
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 Mission Statement: Trader Joe’s

(a unique grocery store chain)

To give our customers the best food and beverage

values that they can find anywhere and to provide
them with the information required for informed
buying decisions. We provide these with a dedication
to the highest quality of customer satisfaction
delivered with a sense of warmth, friendliness, fun,
individual pride, and company spirit.
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 Mission Statement: OSHA

Occupational Safety and Health Administration

 To promote the safety and health of America’s

workers by setting and enforcing standards;
 Providing training, outreach, and education;
 Establishing partnerships;
 Encouraging continual process improvement in
workplace safety and health.

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 Linking the Vision
with Company Values
 Companies often develop a statement of values to guide a
company’s pursuit of its vision and strategy and paint the white
lines for how a company’s business is to be conducted
 Company values statements typically
contain four to eight beliefs, traits, and
behaviors relating to such things as
 Fair treatment, integrity, ethical behavior,
innovation, teamwork, product quality, customer satisfaction,
social responsibility, community citizenship
 But values statements remain a bunch of nice words until
espoused beliefs, traits, and behaviors are
 Incorporated into company’s operations and work practices
 Used as benchmarks for job appraisal, promotions, and
rewards
If company personnel are not held accountable
for displaying company values in doing their jobs, then the
company values statement is a bunch of empty words!
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 Example: American Express’
Company Values

Customer Quality and

commitment Integrity

Respect
Teamwork
for people

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 Example: Toyota’s Company Values

Respect for and development of employees

Teamwork

Getting quality right the first time

Learning

Continuous improvement

Embracing change in pursuit of low-cost, top-notch

manufacturing excellence in motor vehicles
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Example: DuPont’s Company Values

Safety Ethics

Respect Environmental
for people stewardship

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 Example: Abbott Laboratories’
Company Values

Pioneering Achieving

Caring Enduring

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 Example: Yahoo’s Core Values

Excellence – Committed to winning with integrity.

Innovation – Thrive on creativity an ingenuity.

Customer Fixation – Respect our customers above all else.

Teamwork – Treat one another with respect and communicate openly.

Community – Share an infectious sense of mission to make an impact on

society.

Fun – Believe humor is essential to success.

What Yahoo Doesn’t Value – Singles out 54 things it does not value – losing,
bureaucracy, “good enough,” arrogance, status quo, formality, quick fixes …
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Communicating the Strategic Vision

 Winning support for the vision involves

 Putting “where we are going and why” in writing
 Distributing the statement organization-wide
 Having executives explain vision to employees
 An engaging, inspirational vision
 Challenges and motivates workforce
 Articulates a compelling case
for where company is headed
 Evokes positive support and excitement
 Arouses a committed organizational
effort to move in a common direction
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Capturing the Vision in a Slogan

FedEx
“Satisfying worldwide demand for fast,
time-definite, reliable distribution.”

Home Depot
“Helping people improve the
places where they live and work.”

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Capturing the Vision in a Slogan

Scotland Yard
“To make London the safest
major city in the world.”

Charles Schwab
“To provide customers with
the most useful and ethical financial
services in the world.”
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Recognizing Strategic Inflection Points

 Sometimes an order-of-magnitude change occurs in

a company’s environment that
 Dramatically alters its future prospects
 Mandates radical revision of its strategic course
 Critical decisions have to be made about where to
go from here
 A major new directional path may have to be taken
 A major new strategy may be needed
 Responding quickly to unfolding changes in the
marketplace lessons a company’s chances of
 Becoming trapped in a stagnant business or
 Letting attractive new growth opportunities slip away
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Intel’s “Strategic
Inflection Points”
 Prior to mid-1980s
 Focus on memory chips
 Starting in mid-1980s
 Abandon memory chip business (due to lower-cost
Japanese companies taking over the market) and
 Become preeminent supplier of microprocessors to PC
industry
 Be undisputed leader in driving
PC technology forward

 1998
 Shift focus from PC technology to becoming the
preeminent building block supplier to Internet
economy
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 Overcoming Resistance to
a New Strategic Vision
 Mobilizing support for a new vision entails

 Reiterating basis for the new direction

 Addressing employee concerns head-on

 Calming fears

 Lifting spirits

 Providing updates and progress

reports as events unfold

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 Test Your Knowledge
The difference between a company's mission statement and
the concept of a strategic vision is that
A. the mission statement lays out the desire to make a profit,
whereas the strategic vision addresses what strategy the
company will employ in trying to make a profit.
B. a mission statement deals with “where we are headed ”
whereas a strategic vision provides the critical answer to
“how will we get there?”
C. a mission deals with what a company is trying to do and a
vision concerns what a company ought to do.
D. a mission statement typically concerns an enterprise’s
present business scope and purpose—“who we are, what we
do, and why we are here”—whereas the focus of a strategic
vision is on the direction the company is headed and what
its future product-customer-market-technology focus will be.
E. a mission is about what to accomplish for shareholders
whereas a strategic vision concerns what to accomplish for
customers.
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Payoffs of a Clear Strategic Vision

 Crystallizes an organization’s long-term

direction

 Reduces risk of rudderless decision-making

 Creates a committed enterprise

where organizational members
enthusiastically pursue efforts to
make the vision a reality

 Provides a beacon to keep strategy-related

actions of all managers on common path

 Helps an organization prepare for the future

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 Setting Objectives
Phase 2
 Purpose of setting objectives
 Converts vision into specific performance targets
 Creates yardsticks to track performance
 Well-stated objectives are
 Quantifiable
 Measurable
 Contain a deadline for achievement
 Spell-out how much of what kind
of performance by when
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 Importance of Setting
Stretch Objectives
 Objectives should be set at levels that
stretch an organization to
 Perform at its full potential,
delivering the best possible results
 Push firm to be more inventive
 Exhibit more urgency to improve its business
position
 Be intentional and focused in its actions

There’s no better way to avoid ho-hum results than

by setting stretch objectives and using compensation
incentives to motivate organization members to
achieve the stretch performance targets!
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 Types of Objectives Required

Financial Objectives Strategic Objectives

Outcomes focused Outcomes focused on

on improving financial improving competitive
strength and market
performance
standing

2-37
Examples: Financial Objectives
 Annual revenue growth of X%
 X % increase in after-tax profits annual
 Earnings per share growth of X% annually
 Annual dividend increases of X%
 Profit margins of X%
 X% return on capital employed (ROCE)
 Annual stock price increases that average X% over
time
 Strong bond and credit ratings
 Sufficient internal cash flows to fund 100% of new
capital investment
 Stable earnings during periods of recession
2-38
Examples: Strategic Objectives
 Winning an X% market share within 3 years
 Achieving lower overall costs than rivals
 Overtaking key competitors on product performance
or quality or customer service within 2 years
 Deriving X% of revenues from sale of new products
introduced in past 5 years
 Being the recognized industry leader in product
innovation and/or technological know-how
 Having a wider product line than rivals
 Consistently getting new or improved products to
market ahead of rivals
 Having stronger national or global sales and
distribution capabilities than rivals
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Good Strategic Performance Is the Key
to Better Financial Performance
 Achieving good financial performance is not enough
 Current financial results are “lagging indicators” reflecting
results of past decisions and actions — good profitability now
does not translate into stronger capability for delivering even
better financial results later
 However, setting well-chosen strategic
objectives and achieving them signals
 Growing competitiveness
 Growing strength in the marketplace
 A company that is growing competitively stronger is
developing the capability for better financial performance
in the years ahead
 Good strategic performance is thus a “leading indicator” of a
company’s capability to deliver improved
future financial performance
Unless a company sets and achieves stretch strategic objectives
it is not developing the competitive muscle to deliver even
better financial results in the years ahead!
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 A Balanced Scorecard Approach –
Setting Strategic and Financial Objectives
 A balanced scorecard for measuring
company performance is optimal; it entails
 Setting financial and strategic objectives
 Placing balanced emphasis on achieving
both types of objectives
(However, if a company’s financial performance is dismal or if its very
survival is in doubt because of poor financial results, then stressing
the achievement of the financial objectives and temporarily de-
emphasizing the strategic objectives may have merit)
 Just tracking financial performance overlooks the
importance of measuring whether a company is
strengthening its competitiveness and market
position
The surest path to sustained future profitability year after
year is to relentlessly pursue strategic outcomes that
strengthen a company’s business position and give it a
growing competitive advantage over rivals!
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General Motors’ Objectives

 Reduce the percentage of automobiles

using conventional internal combustion
engines (ICE) through the development
of hybrid ICEs, plug-in hybrid ICEs,
range-extended electric vehicles, and
hydrogen fuel cell electric engines
 Reduce automotive structural costs to
benchmark levels of 23 percent of
revenue by 2012 from 34 percent in 2005
 Reduce annual U.S. labor costs by an
additional $5 billion by 2011
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The Home Depot’s Objectives

 Be the number one destination for professional

contractors, whose business accounted for
roughly 30 percent of 2006 sales
 Improve in-stock positions so customers can find
and buy exactly what they need
 Deliver differentiated customer service and the
know-how that our customers have come to
expect from The Home Depot
 Repurchase $22.5 billion of outstanding shares
during 2008
 Open 55 new store locations with 5 store
relocations in 2008
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The Objectives at Yum! Brands
(KFC, Pizza Hut, Taco Bell)

 Open 100 KFC restaurants in Vietnam by 2010

 Expand Taco Bell restaurant concept to Dubai, India,
Spain and Japan during 2008 and 2009
 Increase number of international restaurant locations
from 12,000 in 2007 to 15,000 in 2012
 Increase operating profit from international operations
from $480 million in 2007 to $770 million in 2012
 Expand Pizza Hut’s menu to include pasta and chicken
dishes
 Decrease the number of company owned restaurant
units in U.S. from 20% of units in 2007 to less than 10%
of units by 2010
 Increase the number of Taco Bell units in the U.S. by
2%–3% annually between 2008 and 2010
2-44
 Avon’s Objectives

 Increase our beauty sales and market

share
 Strengthen our brand image
 Enhance the representative experience
 Realize annualized cost savings of $430
million through improvements in
marketing processes, sales model and
organizational activities
 Achieve annualized cost savings of $200
million through a strategic sourcing
initiative
2-45
 Test Your Knowledge
Which of the following represents the best
example of a well-stated strategic objective (as
opposed to a well-stated financial objective)?
A. Achieve revenue growth of 150% annually
B. Achieve a AA bond rating within 3 years and an
annual cash flow of $750 million
C. Invest more money in R&D to enable the company to
offer customers the widest selection of products in
the industry
D. Increase market share from 15% to 20% and achieve
the lowest overall costs of any producer in the
industry, both within three years
E. Pay more attention to reducing costs over the next
two years

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For Discussion: Your Opinion

Which matters most to a company’s future

financial performance — setting and pursuing
financial performance targets or setting and
pursuing strategic performance targets?

What arguments support your answer?

2-47
Both Short-Term and Long-Term
Objectives Are Needed
 Short-term objectives

 Targets to be achieved soon

 Milestones or stair steps for reaching long-range
performance targets

 Long-term objectives

 Targets to be achieved within

3 to 5 years

 Calls for actions now that will

permit reaching targeted
long-range performance later
2-48
Concept of Strategic Intent

A company exhibits strategic intent

when it relentlessly pursues an
ambitious strategic objective,
concentrating the full force of its
resources and competitive actions on
achieving that objective!

2-49
Characteristics of Strategic Intent

 Indicates firm’s intent to making quantum

gains in competing against key rivals and to
establishing itself as a winner in the
marketplace, often against long odds
 Involves establishing a grandiose
performance target out of proportion to
immediate capabilities and market position but
then devoting the firm’s full resources and
energies to achieving the target over time
 Entails sustained, aggressive actions to take
market share away from rivals and achieve a
much stronger market position
2-50
 Test Your Knowledge

A company pursues strategic intent when

A. it pursues its strategic vision.
B. it crafts a strategy and proceeds to
implement it.
C. it adopts a strategic plan and tries to
execute it.
D. it sets objectives and pursues their
achievement.
E. it relentlessly pursues an ambitious
strategic objective and concentrates its full
resources and competitive actions on
achieving that objective.
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Objectives Are Needed at All Levels

The objective-setting process is more top-

down than bottom up
1. First, set organization-wide objectives
and performance targets

2. Next, set business and

product line objectives

3. Then, establish functional

and departmental objectives

4. Individual objectives are established last

2-52
Importance of Top-Down Objectives
 Provides guidelines for objective-setting and
strategy-making in lower-level organizational
units
 Helps ensure that performance targets set by
business units, divisions, and departments are
directly connected to achieving
company-wide objectives
 Top-down objective-setting has
two advantages
 Leads to cohesive and compatible objectives
and strategies up and down the organization
 Helps unify internal efforts to move
company along the chosen strategic path
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 Crafting a Strategy
Phase 3
 Strategy-making involves astute
entrepreneurship
 Actively searching for opportunities
to do new things
or
 Actively searching for opportunities to do
existing things in new or better ways
 Strategizing involves
 Developing timely responses to happenings
in the external environment
and
 Steering company activities in new directions
dictated by shifting market conditions
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Crafting a Good Strategy Requires
Good Business Entrepreneurship
 Developing a winning strategy involves

 Diagnosing the direction and force of

the market changes underway and making
timely strategic adjustments
 Spotting new or better ways
to satisfy customer needs
 Figuring out how to outwit and
outmaneuver competitors
 Pursuing ways to strengthen the
firm’s competitive capabilities
 Proactively trying to out-innovate rivals
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The Role of Astute Entrepreneurship in
Crafting a Company’s Strategy

Masterful strategies come partly (maybe

mostly) by doing things differently from
competitors where it counts
 Innovating more creatively
 Being more efficient
 Being more imaginative
 Adapting faster
Rather than running with the herd!
Good strategy-making is therefore
inseparable from good entrepreneurship—
one cannot exist without the other!
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 The Hows That Define
a Firm's Strategy
 How to grow the business
 How to please customers
 How to outcompete rivals
 How to respond to changing market
conditions
 How to manage each functional
piece of the business (R&D, production,
marketing, HR, finance, and so on)
 How to achieve targeted levels of
performance
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Who Is Involved in Strategy Making?

 CEO (chief executive officer)

 Has ultimate responsibility for leading
the strategy-making process
 Functions as strategic visionary and
chief architect of strategy
 Senior executives
 Typically have influential roles in fashioning those strategy
components involving their areas of responsibility
 Managers of subsidiaries, divisions, geographic
regions, plants, and other important operating units
(and, often, key employees with specialized expertise)
 Some pieces of the strategy are best orchestrated by on-
the-scene company personnel with detailed familiarity of
the piece of the business they are in charge of running
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Why Is Strategy-Making Nearly Always
a Collaborative Process?
 The job is often way too big for one person or a
small executive group—many strategic issues are
complex or cut across multiple areas of expertise
 The more a company’s operations cut across
different products, industries and geographic areas,
the more that headquarters executives
must delegate strategy-making authority
to down-the-line managers in charge
of particular functions and
operating units

In today’s companies every manager typically

has a strategy-making role—ranging from
major to minor—for the area he or she heads!
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For Discussion: Your Opinion

Crafting a company’s strategy is really a job for

senior executives and the company’s board of
directors.

True or false? Discuss and explain.

2-60
Figure 2.2: A Company’s Strategy-Making Hierarchy

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 Corporate Strategy

Orchestrated by headquarters executives

and involves
 Moves to diversify into different industries

 Actions to boost the combined performance

of the company’s different businesses

 Actions to capture cross-business synergies

 Establishing investment
priorities and steering
corporate resources into the
most attractive businesses
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 Business Strategy
Concerns the actions and approaches crafted
to produce successful performance in one
specific line of business. Is usually the
responsibility of the manager in charge of the
business and involves
 Crafting competitive moves to build
sustainable competitive advantage
 Seeing that lower-level strategies within
the business are well-matched to the
overall business strategy
 Gaining approval of business-level strategic
moves by corporate-level officers and directors
2-63
 Functional Strategies

Concerns the game plan for a function,

activity, or process within a business; is
usually orchestrated by the functional head
and involves
 Crafting functional strategic initiatives
that will support the overall
business strategy

 Adding function-related
strategic details to the
overall business strategy

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 Operating Strategies

 Are generally crafted by frontline managers

(subject to review and approval by higher-
ranking managers)
 Concern the relatively narrow strategic
initiatives and approaches for managing key
operating units (geographic regions,
distribution centers, plants) and strategically-
relevant operating activities (advertising,
supply chain activities, Internet sales)
 Add further detail and
completeness to functional
and business strategies
2-65
 Levels of Strategy-Making
in a Diversified Company

Corporate-Level Corporate
Managers Strategy
Two-Way Influence

Business-Level
Managers Business Strategies

Two-Way Influence

Functional
Functional Strategies
Managers
Two-Way Influence

Operating
Managers Operating Strategies

2-66
 Levels of Strategy-Making in
a Single-Business Company

Business-Level
Business
Managers
Strategy
Two-Way Influence

Functional
Functional Strategies
Managers

Two-Way Influence

Operating
Managers Operating Strategies

2-67
 Test Your Knowledge
The strategy-making hierarchy in a single business
company consists of
A. it pursues business strategy, divisional strategies,
and departmental strategies.
B. business strategy, functional strategies, and
operating strategies, whereas in a diversified
company it consists of corporate strategy, business
strategies (one for each business the diversified
company is in), functional strategies, and operating
strategies.
C. business strategy and operating strategy.
D. company strategy, divisional strategies, and
functional strategies.
E. corporate strategy, divisional strategies, and
departmental strategies.
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 Uniting the Company’s
Strategy-Making Effort
 A firm’s strategy is a collection of initiatives
undertaken by managers at all levels in the
organizational hierarchy
 Pieces of strategy should fit
together like the pieces of a puzzle
 Key approaches used to unify
all strategic initiatives into a
cohesive, company-wide action plan
 Effectively communicate company’s vision,
objectives, and major strategies to all personnel
 Diligently review lower-level strategies for
consistency and support of higher-level
strategies—revise as needed
2-69
 What Is a Strategic Plan?

Its strategic vision

and business mission
A
Company’s Its strategic and
financial objectives
Strategic Plan
Consists of
Its strategy

2-70
Implementing and Executing Strategy
Phase 4
 Operations-oriented activity aimed at
performing core business activities in a
strategy-supportive manner
 Tougher and more time-consuming
than crafting strategy
 Key tasks include
 Improving the efficiency with which
the strategy is being executed
 Showing measurable progress in achieving
both operating excellence and targeted results
2-71
What Does Implementing and Executing
the Strategy Involve?
 Building a capable organization
 Allocating resources to strategy-critical activities
 Establishing strategy-supportive policies
 Instituting best practices and programs
for continuous improvement
 Installing information, communication,
and operating systems
 Motivating people to pursue the target objectives
 Tying rewards to achievement of results
 Creating a strategy-supportive corporate culture
 Exerting the leadership necessary to drive the
process forward and keep improving
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Organizational Characteristics of
Good Strategy Execution
 Requires a concerted effort to achieve
operating excellence
 Involves a company’s entire management
team
 Hinges on skills and cooperation
of operating mangers who can
 Push needed changes in their
organizational units
 Consistently deliver good results
 Success is best indicated by
 Meeting or beating performance targets
 Progress in achieving the strategic vision
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 Evaluating Performance and
Making Corrective Adjustments
Phase 5
 Crafting and implementing a strategy is not a
one-time exercise
 Customer needs and competitive conditions change
 New opportunities appear; technology
advances; any number of other
outside developments occur
 One or more aspects of executing the
strategy may not be going well
 New managers with different ideas take over
 Organizational learning occurs
 All these trigger a need for corrective actions
and adjustments on an as-needed basis
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 Monitoring, Evaluating, and
Adjusting as Needed
 Taking actions to adjust to the march of
events tends to result in one or more of the
following

 Altering long-term direction and/or

redefining the mission/vision

 Raising, lowering, or changing

performance objectives

 Modifying the strategy

 Improving strategy execution

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 Leading the Strategic
Management Process
 Diverse leadership challenges include
 Exerting take-charge leadership
 Being a spark plug for change and action
 Ramrodding things through
 Achieving results
 Leading the strategic management
process can involve various styles
and approaches
 Being a hard-nosed authoritarian
 Being a perceptive listener
 Being a compromising decision maker
 Delegating authority to people closest to the action
 Being a coach
 Assuming a highly visible role in guiding the process
 Making brief ceremonial appearances
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Numerous Roles of Strategic Leaders

Culture
Taskmaster Mentor
Visionary Builder

Negotiator Process Coach

Chief Integrator
Entrepreneur
& Strategist Capabilities
Head
Builder
Cheerleader
Resource Acquirer &
Allocator Spokesperson
Arbitrator

Crisis Motivator Consensus

Builder Chief
Solver Administrator
Policy & Strategy
Enforcer Policymaker Implementer

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Things a Chief Strategy Implementer
Must Do to Be Successful
1. Stay on top of what’s happening
2. Make sure company has a
good strategic plan
3. Put constructive pressure on
company to achieve good results
4. Push corrective actions to improve overall
strategic performance
5. Lead development of stronger core
competencies and competitive capabilities
6. Display ethical integrity and lead social
responsibility initiatives
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 Role #1: Stay on Top
of What’s Happening
 Develop a broad network of formal
and informal sources of information

 Talk with many people at all levels

 Be an avid practitioner of MBWA

 Observe situation firsthand

 Monitor operating results regularly

 Get feedback from customers

 Watch competitive reactions of rivals

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Role #2: Make Sure Company
Has a Good Strategic Plan
 Two key responsibilities of CEO and top-
level executives
 Effectively communicate company’s vision,
objectives, and major strategy components to
down-the-line managers and key personnel

 Exercise due diligence in reviewing lower-level

strategies for consistency and support of higher-
level strategies

 Effective leadership minimizes

potential for conflict between
different levels in the strategy hierarchy
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Stimulate Corporate Intrapreneurship

 Encourage individuals and teams to develop

and champion proposals for
 New technologies or technological
applications
 New products or product lines
 New business ventures
 New strategic initiatives
 Requires senior executives to
 Judge which proposals merit support
 Provide organizational and budgetary support
for worthwhile proposals
 Create an organizational climate where free-
thinking and new ideas are welcome
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Approaches to Promoting Innovation
 Encourage individuals and groups to brainstorm
proposals for new business ventures or
improving existing products
 Take special pains to nourish and support
people eager to test new business ventures and
explore adding new or improved products
 Ensure
 Rewards for successful champions
are large and visible
 People are not punished when their ideas are
not pursued and are encouraged to try again
 Use various kinds of ad hoc organizational
forms to support ideas and experimentation
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Role #3: Put Constructive Pressure on
Company to Achieve Good Results
 Successful leaders spend time
 Mobilizing organizational energy behind
 Good strategy execution and
 Operating excellence
 Nurturing a results-oriented work climate
 Promoting enabling cultural drivers
 Strong sense of involvement on part of company
personnel
 Emphasis on individual initiative and creativity
 Respect for contributions of individuals and
groups
 Pride in doing things right
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Role #4: Push Corrective Actions to Improve
Strategy-Making and Strategy-Execution

 Requires deciding
 When adjustments are needed
 What adjustments to make
 Involves
 Adjusting long-term direction, objectives, and
strategy on an as-needed basis in response to
unfolding events and changing circumstances
 Promoting fresh initiatives to bring internal
activities and behavior into better alignment with
strategy
 Making changes to pick up the pace when
results fall short of performance targets
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 Steps Involved in Making
Corrective Adjustments
 Sensing needs

 Gathering information

 Developing options and

exploring their pros and cons
 Putting forth action proposals
and partial solutions
 Striving for a consensus

 Formally adopting an agreed-on course of

action
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Role #5: Promote Stronger Core
Competencies and Capabilities
 Top management intervention is
required to establish better or new
 Resource strengths and competencies
 Competitive capabilities
 Senior managers must
lead the effort because
 Competencies reside in combined
efforts of different work groups and
departments, thus requiring
cross-functional collaboration
 Stronger competencies and capabilities
can lead to a competitive edge over rivals
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Role #6: Display Ethics Leadership and
Lead Social Responsibility Initiatives
Our ethics
 Set an excellent example in code is . . .

 Displaying ethical behaviors

 Demonstrating character and

personal integrity in actions and decisions

 Declare unequivocal support for high ethical

standards and expect all employees to
conduct themselves in an ethical fashion

 Encourage compliance and establish tough

consequences for unethical behavior
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 Key Approaches to
Enforcing Ethical Behavior
 Have mandatory ethics training for employees
 Openly encourage employees to
report possible infractions via
 Anonymous calls to a hotline or
 Posting to a special company Web site
 Conduct an annual audit to assess
 Each manager’s efforts to uphold ethical standards
 Actions taken by managers to remedy deficient conduct
 Require all employees to sign a statement annually
certifying they have complied with the ethics code
 Make sure ethical violations carry appropriate
punishment, including dismissal for egregious
violations
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 Test Your Knowledge
Assuming that a company’s senior executives are really serious
about enforcing high standards of ethical behavior, then they
probably need to consider doing all but which one of the
following?
A. Appointing a committee of high-profile employees to serve on a committee
or task force that is charged with (a) being champions of high ethical
standards, (b) finding ways to ingrain high ethical standards as a cultural
norm, and (3) heading up the company’s ethics enforcement process
B. Having mandatory ethics training programs for employees
C. Conducting an annual audit of each manager’s efforts to uphold ethical
standards and requiring formal reports on the actions taken by managers
to remedy deficient conduct
D. Requiring all employees to sign a statement annually certifying that they
have complied with the company’s code of ethics and making sure that
ethical violations carry appropriate punishment, including dismissal if the
violation is sufficiently egregious
E. Openly encouraging company personnel to report possible infractions via
anonymous calls to a hotline or e-mails sent to a designated address

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For Discussion: Your Opinion

What would your reaction be if your employer

required you to sign a statement annually
certifying that you have complied with the
company’s code of ethics?

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 Actions Demonstrating Commitment
to a Strategy of Social Responsibility
 Craft a strategy that positively improves
well-being of employees, environment,
communities, and society
 Use social and environmental metrics
to evaluate company performance
 Tie social and environmental performance
to executive compensation
 Take special pains to protect environment
 Take an active role in community affairs
 Generously support charitable causes and
projects benefiting society
 Support workforce diversity and commit to
improving the overall well-being of employees
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 Corporate Governance:
Strategic Role of a Board of Directors

 Exercise strong oversight to ensure five

tasks of strategic management are executed
to benefit

 Shareholders or

 Stakeholders

 Make sure executive actions are not only

proper but also aligned with interests of
stakeholders
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Obligations of a Board of Directors

 Be inquiring critics and overseers

 Evaluate caliber of senior executives’
strategy-making and strategy-executing
skills
 Institute a compensation plan for
top executives rewarding them for
results that serve interests of
 Stakeholders and
 Shareholders
 Oversee a company’s
financial accounting
and reporting practices
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Key Responsibilities of Board
Members
 Be well informed about a company’s performance
 Guide and judge CEO and other top executives
 Exhibit courage to curb inappropriate or unduly
risky management actions
 Confirm that CEO is doing what
board expects
 Provide insight and advice to management
 Be intensely involved in debating pros and cons
of key actions and decisions

Board members have a very important oversight role in

the strategy-making, strategy-executing process!
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