LO 2-1 Explain the role of vision, mission, and values in the strategic management process. LO 2-2 Describe and evaluate the role of strategic intent in achieving long-term goals. LO 2-3 Distinguish between customer-oriented and product-oriented missions and identify strategic implications. LO 2-4 Critically evaluate the relationship between mission statements and competitive advantage. LO 2-5 Explain why anchoring a firm in ethical values is essential for long-term success. LO 2-6 Compare and contrast strategic planning, scenario planning, and strategy as planned emergence, and discuss strategic implications.
ChapterCase2 Teach For America: Inspiring Future Leaders • TFA Mission: Eliminate educational inequality • Started by an undergraduate student • Inspiring mission • Provide a meaningful service option for bright young people • Make teaching to the neediest high prestige • Over 40,000 applicants for 4,500 jobs TFA Video
VISION, MISSION, AND VALUES • What are visionary organizations? • Begin with the end in mind • Similar to designing & building a home • Vision – what to ultimately accomplish? • Mission – what is the firm about? • Values – how to accomplish goals?
VISION, MISSION, AND VALUES • What is forming strategic intent? • Staking out a desired leadership position in the long term that far exceeds a company's current situation • Often used in Japanese corporate settings • Canon will "beat Xerox" • Effective use of stretch goals • Competitive advantage for tomorrow
VISION, MISSION, AND VALUES • CUSTOMER-ORIENTED MISSIONS • Define the firm in terms of solutions for customers • Disney: "Make People Happy" • Enhanced strategic flexibility • NOT the same as listening to customers • PRODUCT-ORIENTED MISSIONS • Define the firm in terms of products or services • U.S. Railroads: "Safest… N. American railroad” • Missed the chance to move into delivery before UPS & Federal Express
MISSION STATEMENTS ANDCOMPETITIVE ADVANTAGE • Do mission statements help gain & sustain competitive advantage? • Results are inconclusive • Need strategic commitments to succeed • Positive associations – Visionary firms • Negative associations – Better World Books • No associations – Intel
Living the Values • Ethical standards and norms that govern behavior. • How do we accomplish our goals? • McKesson – ICARE • Shared principles a framework for daily interactions • Dark side of values • Bernard Madoff • Ponzi scheme estimated at $65 billion in fraud • Enron • One of the largest bankruptcies in U.S. history • Over 50,000 jobs lost (Enron & Arthur Anderson)
The Strategic Management Process • Strategic Planning • Scenario Planning • Strategy as Planned Emergence
Strategy as Strategic Planning • Top-down rational planning • Define mission, vision, & goal (strategic intent) • External analysis of opportunities and threats • Internal analysis of strengths and weaknesses • Create strategic fit through SWOT • Formulate appropriate strategy • Implement chosen strategy • Monitor performance & modify if necessary
Strategy as Scenario Planning • Scenario planning • Envision different "what-if" plans • Generates a dominant plan • Must implement the most probable option • Keeps other scenarios in the event of changes… • "Arab Spring" impact on the oil industry? • Good example of the AFI framework
Strategy as Planned Emergence • Strategic Initiative • Google 50% from the "20% rule" • Enron wind investment… • Mintzberg Planned Emergence • Strategy can come from top or bottom • Some intended strategies drop off in the process • Allows for new emerging ideas to become realized • Resource allocation process (RAP) • Serendipity can have dramatic effects
Bottom-up Strategic Initiatives / Autonomous Actions • Microsoft • Internet Explorer • Xbox • Intel • DRAM exit and entry into semiconductors • Starbucks • Frappuccino • Google • 50% of new products come from 20% autonomous time
STRATEGY HIGHLIGHT 2.3 ”It’s Not What We Do!” • Starbucks • Autonomous action of mid-level manager • Tenacity and persistence of a store manager • Risk of failure • Possible career-limiting action • Organization must be willing to accept new ideas • Frappuccino was born! • Contributing 20% of revenues for Starbucks recently
CHAPTERCASE 2 /Consider This… • Teach For America is TWENTY years old! • A $200 million dollar organization • Teacher effectiveness improves with… • Student–oriented achievement course objectives • What role did TFA’s vision statement have? • How have they recruited so many into teaching? • Could it have worked as a for-profit firm? 1–15