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Chapter 2 Leading Strategically Through Effective Vision and Mission. OBJECTIVES . Explain how strategic leadership is essential to strategy formulation and implementation. 1. Understand the relationships among vision, mission, values and strategy. 2. 3.

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objectives
OBJECTIVES
  • Explain how strategic leadership is essential to strategy formulation and implementation

1

  • Understand the relationships among vision, mission, values and strategy

2

3

  • Understand the roles of vision and mission in deter-mining strategic purpose and strategic coherence

4

  • Identify a firm’s stakeholders and explain why such identification is critical to effective strategy formula-tion and implementation
  • Explain how ethics and biases may affect strategic decision-making

5

pulling a usd 15 billion cow out of a ditch
PULLING A USD 15 BILLION COW OUT OF A DITCH
  • Xerox reaches profitability
  • Mulcahy takes
  • over
  • The fall from the nifty 50
  • She lends a turnaround
  • Xerox introduces the Xerox 914 copier in 1959. This copier transformed the work place
  • Xerox was charter member of the “nifty 50”-50 stocks most favored by institutional investors
  • Since 1970s, however, Xerox has been crippled by competition (mostly Japanese)
  • October 2001, Xerox reports first quarterly loss in16 years. Mulcahy is not obvious choice for top position
  • She lacks product development and financial expertise
  • She gets it because the board has confidence in her “strategic mind”.
  • Refines Xerox vision and reminds people of core values
  • Aligns operation with the refined mission and values
  • Sells Xerox’s China and Hong Kong operations and half of a stake in a joint venture with Fuji
  • Closes down inkjet business
  • Annual expenses cut by USD 1.7 billion
  • Sold USD 2.3 billion worth of non-core assets
  • Reduced long-term debt to USD 9.2 billion from USD 15.6 billion
  • Xerox returns to profitability in 2002, generating USD 1.9 billion in operating cash flow and USD 91 million in net income on USD 15.8 billion in sales
strategic leadership
STRATEGIC LEADERSHIP
  • Leadership:
  • Strategic leadership:
  • The task of exerting influence on other people’s pursuit of goals in an organizational context
  • Managing an overall enterprise and influencing key organizational out-comes, such as company wide performance, competitive superiority, innovation, strategic change, and survival
executive roles

Interpersonal roles

  • Figure head
  • Leader
  • Liaison
  • Informational roles
  • Monitor
  • Disseminator
  • Spokesperson
  • Decision roles
  • Entrepreneur
  • Disturbance handler
  • Resource allocator
  • Negotiator
EXECUTIVE ROLES
  • Formal authority and status
level 5 leaders
LEVEL 5 LEADERS
  • Capabilities
  • Build greatness through combination of will and humility
  • Level 5leaders
  • Can lead a group to superior levels of performance
  • Level 4 leaders
  • Organize people resources to accomplish predetermined objectives
  • Level 3 leaders
  • Work effectively with others as a member of a team to achieve group objectives
  • Level 2 leaders
  • Make individual contributions through talent and work ethic
  • Level 1 leaders
two attributes of level 5 leaders
TWO ATTRIBUTES OF LEVEL 5 LEADERS
  • Being someone
  • who prefers to share credit rather than hog it
  • who tends to shun public attention,
  • act with calm determination, and
  • exercise ambitions on the company’s behalf rather than one’s own
  • The ability to translate strategic intent into the resolve needed to pursue a strategy
  • and usually to make hard choices over a period of time
  • Professional will
  • Professional modesty
what does it take to be a ceo
WHAT DOES IT TAKE TO BE A CEO?
  • An Ivy league MBA?
  • Charisma?
  • There is little consensuson whether personality or background matters more
  • International management experience?
  • Integrity
criteria of an effective top management team
CRITERIA OF AN EFFECTIVE TOP-MANAGEMENT TEAM
  • The team responds to a complex and changing environment.
  • 2. The team can manage the needs of interdependent but often diverse units, arenas, or functional areas.
  • 3. The team has a valuable and effective social network.
  • 4. The team is able to develop a coherent plan for executive succession.
vision mission and strategy
VISION, MISSION AND STRATEGY
  • Strategy
  • The central, integrated, externally-oriented concept of how the firm will achieve its objectives. Consists of 5 elements: arenas, vehicles, differentiators, staging, and economic logic
  • Vision and Mission
  • Strategic Goals and objectives
  • Fundamental purpose
  • Values
  • View of future
  • Specific targets
  • Measurable outcomes
vision uses of ambition and ambiguity
VISION – USES OF AMBITION AND AMBIGUITY
  • Sony’s vision in early 1950’s:
  • “becoming the company that most changes the worldwide image of Japanese products as being of poor quality.”
  • Vision statements
  • generally express long-term action horizons,
  • are ambitious and force the firm to stretch.
  • their ambiguity allows flexibility for changing strategy or implementation tactics
  • CitiBank’s vision in 1915:
  • “the most powerful, the most serviceable, the most far reaching world financial institution the world has ever seen.”
vision anchored in goals and objectives

Wal-Mart

  • Grow sales and profits by 70% per year
  • Ryanair
  • Be Europe’s largest airline in 7 years
  • Matsushita
  • To become a “super manufacturing company”
VISION ANCHORED IN GOALS AND OBJECTIVES
  • Vision
  • Examples
  • Goalsand objectives
strategy coherence

Arenas

  • Strategic coherence is
  • The symmetrical co-alignment of the five elements of a firm’s strategy
  • The congruence of policies in functions (e.g., finance, production, marketing) with these elements
  • The overarching fit of various businesses under the corporate umbrella
  • Economic logic
  • Staging
  • Vehicles
  • Differentiators
STRATEGY COHERENCE
  • Congruence
benefits of using stakeholder analysis
BENEFITS OF USING STAKEHOLDER ANALYSIS
  • Can use the opinions of the most powerful stakeholders to shape your strategy and tactics at an early stage.
  • Gain support from powerful stakeholders to help win more resources.
  • Can ensure that stakeholders fully understand what you are doing and understand the benefits of your project.
  • Can anticipate what people’s reactions to your project may be and build actions into the plan that will win people’s support.
stak e holder analysis

After identifying stakeholders ask

  • Have I identified any vulnerable points in either the strategy or its potential implementation?
  • Which groups are mobilized and active in promoting their interests?
  • Have I identified supporters and opponents of the strategy?
  • Which groups will benefit from successful execution of the strategy and which may be adversely affected?
  • Where are various groups located? Who belong to them, and who represents them?
  • Steps in identifyingstakeholders
  • Determine influences on strategy formulation decisions
  • Determine stake-holders power and influence over strategy execution decisions
  • Determine the effects of strategic decisions
STAKEHOLDER ANALYSIS
  • Stakeholders: Individuals or groups who have an interest in an organization’s ability to deliver intended results and maintain the viability of its products and services
mapping stakeholder influence and importance
MAPPING STAKEHOLDER INFLUENCE AND IMPORTANCE
  • Importance of Stakeholder
  • Influence ofstakeholder
  • Little/Noimportance
  • Moderateimportance
  • Significant importance
  • Unknown
  • Unknown
  • Little/Noimportance
  • Moderateimportance
  • Significant importance
ethics and biases

New strategy –A new means to accomplish goals

  • Implementation –Executing new strategy to realize goals
ETHICS AND BIASES
  • Have any potential biases clouded our decision-making process?
  • Is the decisionethical?
  • Authority structures
  • Incentive systems
  • Role of corporate governance
  • Common illusions about ourselves (e.g., favorability optimism , control)
  • Escalating commitments
  • Self-serving fairness bias
  • Overconfidence bias
  • Ethnocentrism and stereotyping
  • Risk assessment