Strategic Leadership

Strategic Leadership involves: The ability to anticipate, envision, maintain flexibility and empower others to create strategic change Multi-functional work that involves working through others

Consideration of the entire enterprise rather than just a sub-unit

A managerial frame of reference

Strategic Leadership and the Strategic Management Process

Effective Strategic Leadership shapes the formulation of and

Strategic Intent

Strategic Mission

influence
Successful Strategic Actions

Formulation of Strategies

Implementation of Strategies

Strategic Competitiveness Above-Average Returns

Factors Affecting Managerial Discretion

External Environment
Industry Structure Rate of market growth # and type of competitors Political/Legal constraints Product differentiation

Organizational Characteristics
Size and age Culture Resource availability Employee interaction

Managerial Discretion
Characteristics of the Manager
Tolerance for ambiguity Commitment to the firm Interpersonal skills Aspiration level Self-confidence

Exercise of Effective Strategic Leadership

Establishing balanced organizational controls
Determining strategic direction Exploiting and maintaining core competencies

Effective Strategic Leadership Emphasizing ethical practice

Sustaining an effective organizational culture

Developing human capital

Determining Strategic Direction

Strategic direction means the development of a long-term vision of a firms strategic intent A charismatic leader can help achieve strategic intent It is important not to lose sight of the strengths of the organization when making changes required by a new strategic direction Executives must structure the firm effectively to help achieve the vision

Exploiting and Maintaining Core Competencies

Core competencies are resources and capabilities that serve as a source of competitive advantage for a firm over its rivals Strategic leaders must verify that the firms competencies are emphasized in strategy implementation efforts

Exploiting and Maintaining Core Competencies

In many large firms, and certainly in relateddiversified ones, core competencies are exploited effectively when they are developed and applied across different organizational units Core competencies cannot be developed or exploited effectively without developing the capabilities of human capital

Developing Human Capital

Human capital refers to the knowledge and skills of the firms entire workforce Employees are viewed as a capital resource that requires investment No strategy can be effective unless the firm is able to develop and retain good people to carry it out The effective development and management of the firms human capital may be the primary determinant of a firms ability to formulate and implement strategies successfully

Sustaining an Effective Organizational Culture

An organizational culture consists of a complex set of ideologies, symbols, and core values that is shared throughout the firm and influences the way it conducts business Shaping the firms culture is a central task of effective strategic leadership

Sustaining an Effective Organizational Culture

An appropriate organizational culture encourages the development of an entrepreneurial orientation among employees and an ability to change the culture as necessary Reengineering can facilitate this process

Changing Culture and Reengineering

The benefits of business reengineering are maximized when employees believe that:

Every job in the company is essential and important All employees must create value through their work Constant learning is a vital part of every persons job Teamwork is essential to implementation success Problems are solved only when teams accept the responsibility for the solution.

Emphasizing Ethical Practices

Ethical practices increase the effectiveness of strategy implementation processes Ethical companies encourage and enable people at all organizational levels to exercise ethical judgment

Emphasizing Ethical Practices

To properly influence employee judgment and behavior, ethical practices must shape the firms decision-making process and be an integral part of an organizations culture Leaders set the tone for creating an environment of mutual respect, honesty and ethical practices among employees

Establishing Balanced Organizational Controls

Organizational controls provide the parameters within which strategies are to be implemented and corrective actions taken Financial controls are often emphasized in large corporations and focus on short-term financial outcomes Strategic control focuses on the content of strategic actions, rather than their outcomes

Establishing Balanced Organizational Controls

Successful strategic leaders balance strategic control and financial control (they do not eliminate financial control) with the intent of achieving more positive long-term returns

Why do a situation analysis?

Situation analysis concentrates on generating solid answers to a welldefined set of strategic questions and using these answers to:
Appraise the companys strategic situation and business position Craft a suitable strategy

Situation analysis focuses on:

EXTERNAL FACTORS the firms MACRO-environment (industry and competitive conditions) INTERNAL FACTORS the firms immediate MICRO-environment (its own internal situation and competitive position)