What Is Strategy and

Why Is It Important?
Chapter 1

Chapter Roadmap
What Do We Mean by Strategy?
Strategy and the Quest for Competitive
Advantage
Identifying a Companys Strategy
Why a Companys Strategy Evolves Over Time
A Companys Strategy Is Partly Proactive and
Partly Reactive
The Relationship Between a Companys
Strategy and Its Business Model
What Makes a Strategy a Winner?
Why Are Crafting and Executing Strategy
Important?

Why to Craft a Strategy?

Strategy is, often, the difference
between a high performing and
underperforming business.
Its a managements prescription of
doing business.
Game plan for pleasing customers.
Path to achieve Competitive
Advantage.

Thinking Strategically:
The Three Big Strategic
Questions

1. Whats the companys present situation?

2. Where does the company need to go from
here?
Business(es) to be in and market positions to
stake out
Buyer needs and groups to serve
Direction to head

3. How should it get there?

A companys answer to how
will we get there? is its strategy

So what is a strategy?
In businesses a strategy is the
central, integrated and externally
orientated concept of how a firm will
achieve its objectives-how it will
compete against rivals.

Long-term plan vs. Strategy

How are these two different?
Long-term plan is a sequence of
steps and moves to reach a goal.
(inward looking)
Strategy entails competitive moves,
positions, marketing conditions to
guide a long term plan.

What Do We Mean By
Strategy?
Consists of competitive moves and
business approaches used by
managers to run the company
Managements action plan to
Grow the business
Attract and please customers
Compete successfully
Conduct operations
Achieve the targeted levels of
organizational performance

The Hows That Define a

Firm's Strategy
How to grow the business
How to please customers

Strategy
is HOW
to . . .

How to outcompete rivals

How to manage each functional
piece of the business (R&D, production,
marketing, HR, finance, and so on)
How to respond to changing market conditions
How to achieve targeted levels of performance

Choosing the Hows of

Strategy
Strategic choices about how are based on
Trial-and-error organizational learning about what has worked
and what has not worked
Managements appetite for taking risks
Managerial analysis and strategic thinking about how best to
proceed, given market conditions and a companys
circumstances

In choosing a strategy, management is saying,

Among all the many different ways of competing we could
have chosen, we have decided to employ this combination of
competitive and operating approaches to move the company
in the intended direction, strengthen its market position and
competitiveness, and boost performance.

Choosing the Hows of

Strategy
A strategy has a better chance of
succeeding when its predicted on actions,
business approaches and competitive
moves aimed at:
1: appealing to buyers in ways that set
company apart from rivals.
2: carving out its own market position
Carbon-copy strategies among companies in
the same industry is exception than a rule.

Strategy and the Quest for

Competitive Advantage
The heart and soul of any strategy are actions a company
makes to
Improve its financial performance,
Strengthen its competitive position, and
Gain a competitive advantage over rivals.

A creative, distinctive strategy that sets a company

apart from rivals and yields a competitive advantage is a
companys most reliable ticket to above average profitability
Operating with a competitive advantage is more profitable than
operating without one
Operating with a competitive disadvantage nearly always results
in below-average profitability

What is a Competitive
Advantage?
To be specific: a firms ability to create
value in a way its rivals cannot.
Put it in another way: firms prefer to be
winner in their respective industries rather
than subpar or even average performers.
Without a strategy that leads to
competitive advantage, companies risk to
be outcompeted by rivals or locked in
mediocre financial performance.

A Powerful Strategy Leads to

Sustainable Competitive
Advantage

A company achieves sustainable

competitive advantage when

An attractive number of buyers prefer its

products/services over those of rivals and
The basis for this preference is durable

Its nice when a strategy produces

A temporary competitive edge but
A sustainable edge over rivals greatly enhances a
companys prospects for above-average
profitability
What separates a powerful strategy from an ordinary
strategy is managements ability to forge a series of
moves, both in the marketplace and internally, that
! produces sustainable competitive advantage

Strategic Approaches to
Building Sustainable
Competitive Advantage

Be the industrys low-cost provider

Achieve a cost-based competitive advantage

Incorporate differentiating features

Superior product/service keyed to higher quality, better
performance, wider selection, value-added services, or
some other attribute

Focus on a narrow market niche

Win a competitive edge by doing a
better job than rivals of serving the
needs and preferences of buyers in the niche

Develop expertise and resource strengths

not easily imitated or matched by rivals
Achieve a capabilities-based competitive

Figure 1.1: Identifying a Companys Strategy

1-15

Why Do Strategies
Evolve?

A companys strategy is a work in progress

Changes may be necessary to react to

Financial crisis

Fresh moves of competitors

Evolving customer preferences

Technological breakthroughs

Emerging market opportunities

Changing political or economic climate

New ideas to improve strategy

A companys strategy at any given point is fluid.

Figure 1.2: A Companys Strategy Is a Blend of

Proactive Initiatives and Reactive Adjustments

1-17

What Is a Business Model?

A business model addresses How do we make
money in this business?
Is the companys strategy capable of delivering
good bottom-line results?

Do the revenue-cost-profit economics

of the strategy make good business sense?
Look at revenue streams the
strategy is expected to produce
Look at associated cost structure
and potential profit margins
Do resulting earnings streams and ROI indicate the
strategy has good potential to deliver acceptable
profitability?

Relationship Between
Strategy and Business Model
Strategy . . .

Business Model . . .

Deals with a companys

competitive initiatives and
business approaches

Concerns whether
revenues and costs
flowing from the strategy
demonstrate a business
can be profitable and
viable

ra
St

gy
e
t

s
es
n
si el
Bu od
M

1-19

Sequential Phases of
Strategic Planning
1. Basic Financial Planning
2. Forecast-Based Planning
3. Externally-Oriented Planning
(Strategic Planning)
4. Strategic Management

Dimensions Of Strategic
Decisions
1.

2.

3.

Strategic issues require Top-Management Decisions

Top management has the perspective need to understand the broad implications
of such decision and power to authorize the necessary resource allocation
Strategic Issues Require Large Amounts of the firms Resources
Involve substantial allocation of people, physical assets, or money that either
must be redirected from internal sources or outside the firm
Commit the firm to action for an extended period
Strategic issues often affect the firms long-term prosperity
Strategic decisions commit the firm for a long time, the impact of such decisions
lasts much longer
Once a firm has committed itself to a particular strategy, its image and
competitive advantage are tied to that strategy
Firms become known in certain markets for certain products , with certain
technologies
They would jeopardize their previous gains if they shifted from these markets,
markets, products, or technology

Dimensions Of Strategic
Decisions
4. Strategic decisions are future oriented

Strategic decisions are based on what managers forecast, rather than on what they
know
In such decisions, emphasis is on the development of projections that will enable
the firm to select the most promising strategic option.
In a turbulent and competitive free enterprise environment, a firm will succeed only
if it takes proactive (anticipatory) stance towards change.
5. Strategic issues usually have multifunctional or multi-business consequences
Complex implication for most areas of the firm. Decisions about matters as:
Customer mix
Competitive emphasis
Organizational structure
Involve a number of firms SBUs, divisions, or program units
All of these areas will be affected by allocation or reallocation of responsibilities and
resources that result from these decisions
6. Strategic issues require considering the firms external environment

The Strategy Diamond and

the Five Elements of
Strategy
1. Arenas: where will we be active

Decisions about a firms arenas may encompass its

products, channels, market segments, geographic
areas, technologies, and even stages in the value
creation process.
2. Vehicles: how will we get there?
provide the means for participating in the targeted
arenas (acquisitions, internal development, joint
ventures, etc.)
Wal-Mart is an example of a firm that has used
different vehicles for expanding internationally

In some markets, they have chosen to grow

organically (such as Argentina), while in others they
have used acquisitions of existing retailers (such as in
England and Germany).

The Strategy Diamond

and the Five Elements of
Strategy
3. Differentiators: how will we win in the
marketplace?
are features and attributes of a companys product or
services that help it beat its competitors in the
marketplace.

Two critical factors in selecting differentiators are:

(1) Make decisions early
(2) Identifying and executing successful differentiators
means making tough choices namely tradeoffs

The earlier and more consistent the firm is at

defining and driving these differentiators, the greater
the likelihood that customers will recognize them.

The Strategy Diamond

and the Five Elements of
Strategy
4. Staging: what will be our speed and sequence of

moves?
These staging choices depend on available resources,
including cash, human capital, and knowledge
Staging decisions should be driven by several factors:
resources, urgency, credibility, and need for early wins.
Opportunities must be matched with available resources.
In addition, not all opportunities to enter new arenas are
permanent; some have only brief windows.
In these cases, early wins and the credibility of certain
key stakeholders may be necessary to implement a
strategy.

The Strategy Diamond

and the Five Elements of
Strategy
5. Economic logic: how will we obtain our returns?

This reflects the firms ability to generate positive

returns above the firms cost of capital.
Both costs and revenues are considered. Sometimes
economic logic resides primarily on the cost side of
the equation. (?)
Other times, economic logic may rest on the firms
ability to increase the customers willingness to pay
premium prices for products.

BUSINESS STRATEGY
DIAMOND

Staging

What will be our speed

and sequence of moves?
Speed of expansion?
Sequence of initiatives

Staging

Economic logic

How will returns be obtained?

Lowest costs through scale

advantages?
Lowest costs through scope and
replication advantages
Premium prices due to
unmatchable service?
Premium prices due to proprietary
product features?

Arenas
Where will we be active? ( and
with how much emphasis?)
Which product categories?
Which channels?
Which market segments?
Arenas
Which geographic areas?
Which core technologies
Which value-creation
strategies?
Vehicles
Economic
Vehicles
logic
How will we get there?
Internal development?
Joint ventures?
Licensing/franchising?
Experimentation?
Differentiators
Acquisitions?
Differentiators

How will we win?

27

Image?
Customization?
Price?
Styling?
Product reliability?
Speed to market?

Why Crafting and Executing

Strategy is Important?

Leading the Process of

Crafting and Executing
Strategy
Chapter 2:

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

Figure 2.1: The Strategy-Making, Strategy-Executing Process

2-31

Developing a Strategic Vision

Phase 1
Involves thinking strategically about
Future direction of company
Changes in companys 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
companys strategic course in preparing for
the future.

Key Elements of a Strategic

Vision
Delineates managements
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
companys immediate reach

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 companys directional path
Provide managers with a reference point to

Make strategic decisions

Translate the vision into hard-edged
objectives and strategies
A
Prepare
the vision
company
for the
strategic
exists
onlyfuture
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

Table 2.2: Characteristics of an Effectively Worded Vision

Statement

2-35

Table 2.3: Common Shortcomings in Company Vision Statements

2-36

Expressing the Essence of

the vision in a slogan
effectively conveying the vision to
company personnel is assisted when
management can capture the vision
of where to head in a catchy or
easily remembered slogan.

Strategic Vision vs. Mission

A strategic vision

concerns a firms
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 companys 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
2-42

Characteristics of a Mission
Statement
Identifies boundaries of a companys current
business and says something about

Present products and services

Types of customers served
Geographic coverage
Conveys

Who we are,
What we do, and
A good
Whymission
we are
here describes a companys
statement
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!

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 mission
the targeted
How
A companys
is notcustomer
to make agroups
profit! Its
true

customer
needs
are will
satisfied
mission
is its answer
to What
we do to make a
profit? Making a profit is an objective or intended
outcome!

Linking the Vision

with Company Values
Companies often develop a statement of
values to guide a companys pursuit of its vision
and strategy and paint the white lines for how a
companys 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

Linking the Vision

with Company Values
es
lu
Va

But values statements remain a bunch of

nice words until
espoused beliefs, traits, and behaviors are
Incorporated into companys 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!

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

Recognizing Strategic
Inflection Points

Sometimes an order-of-magnitude change occurs in a

companys 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 companys chances of
Becoming trapped in a stagnant business or
Letting attractive new growth opportunities slip away

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

Payoffs of a Clear Strategic

Vision
Crystallizes an organizations 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

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

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

Theres no better way to avoid ho-hum results

than
by setting stretch objectives and using
compensation incentives to motivate

Types of Objectives Required

Financial Objectives Strategic Objectives
Outcomes focused
on improving financial
performance

Outcomes focused on improving

competitive strength and
market standing

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

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

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
Unless
a strategic
company
performance
sets andisachieves
thus a leading
stretch
indicator
strategic
of
a companys capability to deliver improved
objectives
future financial performance
it is not developing the competitive muscle to deliver
even
better financial results in the years ahead!

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 companys 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
The surest path to sustained future profitability year
and market position
after year is to relentlessly pursue strategic outcomes
that strengthen a companys business position and give
it a growing competitive advantage over rivals!

Both Short-Term and LongTerm Objectives Are Needed

Short-term objectives
Targets to be achieved soon
Milestones or stair steps for reaching longrange 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

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!

Characteristics of Strategic
Intent
Indicates firms 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 firms
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

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

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

The Role of Astute

Entrepreneurship in Crafting a
Companys 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 entrepreneurshipone cannot exist
without the other!

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

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 onthe-scene company personnel with detailed familiarity of
the piece of the business they are in charge of running

Why Is Strategy-Making Nearly

Always
a Collaborative Process
The job is often way too big for one person or
a small executive groupmany strategic
issues are complex or cut across multiple
areas of expertise
The more a companys 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

Figure 2.2: A Companys Strategy-Making Hierarchy

2-68

Three Levels of Strategy

Corporate Level
Composed principally of Board of Directors, CEO and
Administrative officers
Responsible for firms Financial Performance and Non
Financial Goals
To large extent, attitudes at the corporate level reflect the
concerns of stock holders and society at large
In multi business firms:
Determine what business to be involved
What markets to enter
How to grow the business:
- Vertical Integration
- Horizontal integration
- Diversification
- Develop synergies between the various units ( economies of
scope)
Set objectives for various business units
Determine investment priorities using portfolio models for
various units

Three Levels of Strategy

Business Level Strategies
Composed principally of business and corporate managers
Translate the statements of direction and intent generated
at corporate level into concrete objectives and strategies
for individual divisions or SBUs
Determine how the division or SBU will compete in the
product- market arena
Strive to identify and secure the most promising market
segment within that arena
Common business level strategies are:
Overall low cost leadership
Differentiation
Focus
a. Low cost focus
b. Focus differentiation

Three Levels of Strategy

Functional Level Strategies
Develop annual objectives and short-term
strategies in functional areas
Their principal responsibility is to
implement or execute the firms strategic
plans
They a address issues relating to
efficiency and effectiveness of their
functional activities in increasing the firms

Single-business Firms

C o rp o ra te /
b u s in e s s le v e l
F i n a n c i a l/
a c c o u n t in g
s t r a te g ie s

M a r k e t in g
s t r a te g ie s

H um an
r e la t io n s
s t r a te g ie s

Functional

P O M /R & D
s t r a te g ie s

72

Business
Business11
POM/R&D
POM/R&D
strategies
strategies

Business
Business22
Financial/
Financial/
accounting
accounting
strategies
strategies

Business
Business33

Marketing
Marketing
strategies
strategies

Human
Human
relations
relations
strategies
strategies

Functional
Level

Corporate
Corporate
strategies
strategies

Business
Level

Multiple business Firms

73

What Is a Strategic Plan?

A
Companys
Strategic Plan

Its strategic vision

and business
mission
Its strategic and
financial
objectives

Consists of
Its strategy
2-74

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

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

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

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

Things a Chief Strategy

Implementer Must Do to Be
Successful

1. Stay on top of whats 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

Role #1: Stay on Top

of Whats 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

Role #2: Make Sure

Company
Has a Good Strategic Plan

Two key responsibilities of CEO and toplevel executives

Effectively communicate companys 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

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

Role #4: Push Corrective

Actions to Improve StrategyMaking 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

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