IMPORTANT:
Strategic Leadership
An executive whose vision and decisions enable their
organization to achieve competitive advantage demonstrates
strategic leadership.
Strategic Leadership:
- Pertains to executives' use of power and influence to direct
the activities of others when pursuing an organization’s
goals.
Spanish:
- Se refiere al uso que hacen los direcivos del poder y la
influencia para dirigir las actividades de otros en la
consecución de los objetivos de una organización.
o Power: Strategic leaders’ ability to influence the behavior
of other organizational members to do things, including
things they would not do otherwise.
HOW DO YOU BECOME A STRATEGIC LEADER?
Upper-echelons theory
- organizational outcomes including strategic choices and
performance levels reflect the values of the management
team.
- Leadership actions reflect the character of age, education,
and career experiences.
- Favors: The idea of effective strategic leadership is the
result of both innate abilities and learning.
Good to Great:
- Great companies: As those that transitioned from average
performance to sustained competitive advantage
- Competitive Advantage: Is hard to achieve and even harder
to sustain.
Strategic Leaders: The levels 5 Pyramid - Areas of growth
required. Effective strategic leaders go through a natural
progression of five levels. Each levels builds upons the
previous one. The models is valuable as well to the individual
looking to develop the capacity for greater professional
success.
 Level 1 – High Capable Individual: Makes productive
contributions through her motivations, knowledge and
skills.
 Level 2 – Contributing Team Member: Becoming an
effective team player; i.e, she works effectively with
others to achieve common objectives.
 Level 3 – Competent Manager: The team player with a
high individual skill set becomes an effective manager
who can organize the necessary resources necessary to
accomplish the organization’s goals.
 Level 4 – Effective Leader: The effective professional
has learned to do the right things. I.e, she does only not
only command a high individual skill set and is an
effective team player and manager. But she also knows
the right actions in any situation to pursue an
organization’s strategy.
 Level 5 – Executive: Strategic leader builds enduring
greatness by combining willpower and humility.
Spanish: El líder estratégico construye una grandeza
duradera combinando fuerza de voluntad y humildad.
 Areas of strategy formulation:
- Corporate Strategy: Concerns questions relating to where to
compete as to industry, markets, and geography.
- Business Strategy: Concerns about the question of how
compete. Generic strategies:
 Cost leadership
 Differentiation
 Value Innovation
- Functional Strategy: Concerns about the question of how to
implement a chosen business strategy. Different corporate
and business strategies will require different activities
across various functions.

THE STRATEGY PROCESS ACROSS LEVELS : CORPORATE,

BUSINESS, AND FUNCTIONAL MANAGERS
Strategic leaders primarily determine a firm’s ability to gain
and sustain a competitive advantage through the strategies they
pursue.

Strategy process (parts):

- Strategy formulation: Concerns about the choice of
strategy in terms of where and how to compete.
- Strategy implementation: Concerns about the Important: The objective of the corporate–level strategy is to
organization, coordination, integration, and how work gets increase overall corporate value so that it is higher than the sum
done. of the individual business units.

Business Strategy: Occurs within strategic business units

(SBUs). Must answer the business manager related to their
business strategy us “How to compete” in order to achieve TOP–DOWN STRATEGIC PLANNING: A rati onal data-driven
superior performance. strategy process through which top management att empts
to program future success.
Important: All strategic intelligence and decision-making
responsibilities are concentrated in the office of the CEO.
Each functional manager is responsible for decisions and
actions within a single functional area (Debate in class) / The
Top–Down Strategy Plannings: Three steps of analysis,
professor said that is important to have a leader that leads the
formulation, and implementation.
group to a common goal. I.e, an enterprise can have a leader
per area that communicates to a general leader.

THE STRATETEGIC PROCESS

Strategic management process: A method put in place by
strategic leaders to formulate and implement the strategy,
which can lay the foundation for a sustainable competitive
advantage.

Strategic leaders: Design a process to formulate and implement

a strategy

Three approaches to the strategic process:

1. Strategic planning
2. Scenario planning
Strategic planners provide detailed analyses of internal and
3. Strategy as planned emergence
external data and apply it to all quantifiable areas: prices, costs,
margins, market demand, headcount, and production runs.
Important:
- The first two are relatively formal, top-down planning
Characteristics:
approaches.
- The approach works reasonably well when the environment
- The third one begins with a strategic plan but offers a less
does not change much.
formal and stylized approach.
- The formulation of strategy is separated from Place the elements in the AFI strategy framework in a
implementation and thinking about strategy is separate from continuous feedback loop.
doing it.
- Information flows one way only: from the top down.
- We simply cannot know the future (There’s any data)
- Strategic leaders impose their visions onto a company’s
strategy, structure, and culture from the top down to create
and enact a desired future state 1. Analysis:

SCENARIO PLANNING: Strategy planning acti vity in which
top management envisions diff erent what-if scenarios to
anti cipate plausible futures in order to derive strategic
responses
Strategic planning: In a fast-changing environment happens in
a similar fashion to do planning in a fire department. We don’t
know when or where is going to be the next fire, but we can
make contingency plans.
Scenario planning:
- Asks those “what if” questions
- Starts with a top-down approach to the strategy process
- Top management envisions different scenarios to anticipate
plausible futures in order to derive strategic responses.
Examples:
o New laws  might  restrict carbon emission
o Demographic shifts  may alter  the ethnic diversity of
a nation
Typical scenario planning: optimistic and pessimistic
Model a scenario planning:
Managers brainstorm to identify possible future scenarios.
Although managers often tend to overlook pessimistic future
scenarios, it’s imperative to consider negative scenarios
carefully.
Managers need to consider the existence of black swans events.
I.e, incidents that describe highly improbable but high-impact
events.
2. Formulation Stage:
Teams develop different strategic plans to address possible
future scenarios. These what-if question force managers to
create contingency detail plans before the events occur. Finally,
managers transform the most viable options into full-fledge
detailed strategic plans that can activate and executed as
needed.
Scenario planning gives the enterprise flexibility because if a
new scenario should emerge, the firm won't lose any time
coming up with a new strategy.
3. Implementation Stage:
Managers execute the dominant strategic plan, the option that
top managers decide most closely matches the current reality.
Dominant strategic plan: The strategic option top managers
decide most closely matches the current reality and which is
then executed.
The circular nature of scenario planning highlights the constant
interactions between analysis, formulation, and
implementation. In fact, managers can adjust and modify their
actions as new realities emerge. The interdependence among
analysis, formulation, and implementation also enhances
organizational learning.
STRATEGY AS PLANNED EMERGES: TOP-DOWN AND
BOTTOM-UP
Strategic planning is not the same as strategic thinking
according to the critics of top-bottom and scenario planning.
Strategic planning process: These are too regimented and
confining. Also has a lack of flexibility needed for quick and
effective responses. Managers with a more formalized
approach to the strategy process may also fall prey to an
illusion of control, which describes a tendency by managers to
overestimate their ability to control events.
Spanish:
Proceso de planificación estratégica: Son demasiado
regimentados y confinados. Además, carecen de la flexibilidad
necesaria para dar respuestas rápidas y eficaces. Los directivos
con un enfoque más formalizado del proceso de estrategia
también pueden ser presa de una ilusión de control, que
describe una tendencia de los directivos a sobrestimar su
capacidad para controlar los acontecimientos.
The illusion of control: A tendency by people to overestimate
their ability to control events.
Advise: Strategic leaders should focus on all types of
information sources, including soft sources – personal
experience, deep domain of expertise – (that can generate new
insights)
Intended Strategy: The outcome of a rational and structured
top-down strategic plan.
Realized Strategy: Combination of intended and emergent
strategy.
Emergent Strategy: Describes any unplanned strategic
initiative bubbling up (burbujeando) from deep within the
organization. I.e, any unplanned strategic initiatives bubbling
up from the bottom of the organization.
Strategic initiative: Any activity pursued to explore and
develop new products and processes, new markets, and new
ventures.
Represent different strategic initiatives. In particular, strategic
initiatives can bubble up from deep within a firm through.
- Autonomous actions: Strategic initiatives undertaken by
the lower lever of employees of their own volition and
often in response to unexpected situations.
- Serendipity: Any random events pleasant surprises, and
accidental happenstances that can have a profound impact
on a firm’s strategic initiatives.
- Resources allocation process (RAP): The way a firm
allocates its resources based on predetermined policies
which can be critical in shaping its realized strategy.
- Planned Emergence: Strategy process in which
organizational structure and system allow the bottom-up
strategic initiative to emerge and be evaluated and
coordinated by top management.
Spanish:
- Acciones autónomas: Iniciativas estratégicas emprendidas
por la palanca inferior de empleados por voluntad propia y a
menudo en respuesta a situaciones inesperadas.
- Serendipia: Cualquier acontecimiento aleatorio, sorpresas
agradables y sucesos accidentales que pueden tener un
profundo impacto en las iniciativas estratégicas de una
empresa.
- Proceso de asignación de recursos (PAR): La forma en que
una empresa asigna sus recursos basándose en políticas
predeterminadas que pueden ser fundamentales para dar forma
a su estrategia realizada.
- Emergencia planificada: Proceso estratégico en el que la
estructura y el sistema organizativos permiten que la iniciativa
estratégica ascendente surja y sea evaluada y coordinada por la
alta dirección