STRATEGIC

LEADERSHIP
 LEADERSHIP

The ability to influence a

group toward the
achievement of goals
 TYPES OF LEADERSHIP
 Authoritarian-high task, low relationship

 Team Leader- high task, high relationship

 Country Club- low task, high relationship

 Impoverished- low task, low relationship

 MANAGERS VS LEADERS
Manager Characteristics Leader Characteristics
 Administers • Innovates
 A copy • An original
 Maintains • Develops
 Focuses on systems and structures • Focuses on people
• Inspires trust
 Relies on control
• Long range perspective
 Short range view
• Asks what and why
 Asks how and when • Eye on horizon
 Eye on bottom line • Originates
 Imitates • Challenges the status quo
 Accepts the status quo • Own person
 Classic good soldiers • Does the right thing
 Does things right
 STRATEGIC LEADERSHIP
 Strategic leadership: the ability to anticipate, envision, maintain
flexibility, and empower others to create strategic change as
necessary.
 Strategic leadership is the process of providing the direction and
inspiration necessary to create or sustain an organization.
 Multifunctional task that involves
 Managing through others
 Managing an entire enterprise rather than a functional subunit
 Coping with change
 Attracting and managing human (includes intellectual) capital
 Being able to meaningfully influence others

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 STRATEGIC LEADERSHIP
 Strategic leaders make a major difference in how
well a firm performs.
 Strategic leadership deals with the major purposes of
an organization or organizational unit
 Five important components of strategic leadership
include
 high-level cognitive ability
 multiple inputs to strategy formulation
 anticipating and creating a future
 revolutionary thinking, and
 creation of a vision
COMPONENTS OF STRATEGIC LEADERSHIP
Strategic Leadership Dimensions

High challenge-
seeking HIGH-CONTROL PARTICIPATIVE
INNOVATOR (HCI) INNOVATOR (PI)
Challenge-seeker who Challenge-seeker who
maintains tight control delegates control
over organization of organization
CHALLENGE-
SEEKING STATUS QUO PROCESS
GUARDIAN (SQG) MANAGER (PM)
Challenge-averse who Challenge-averse who
maintains tight control delegates control
Low challenge- over organization of organization
seeking
High control Low control

NEED FOR CONTROL

 STRATEGIC LEADERSHIP & STRATEGIC MANAGEMENT PROCESS

 Effective strategic leadership is

the foundation for successfully
using the strategic management
process
 Strategic leaders:
 Shape the formation of vision and
mission
 Facilitate strategy formulation and
strategy implementation
 Are needed for the achievement of
strategic competitiveness and
above-average returns.

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 THE ROLE OF TOP-LEVEL MANAGERS
 Top level managers play a critical role in strategy
formulation and implementation.
 Their strategic decisions influence how an organization is
designed and how goals are achieved.
 Top managers also develop structure, culture, reward systems, and
policies.
 Having a top management team with superior managerial
skills is critical (and can be a source of CA)
 Managers use their discretion when making strategic
decisions and this discretion influences firm performance.
 Several factors determine the amount of manager’s
decision-making discretion including:
 External environmental sources
 Organizational characteristics
 Characteristics of the manager

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FACTORS AFFECTING MANAGERIAL DISCRETION

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 THE ROLE OF TOP-LEVEL MANAGERS
Top Management Teams (TMT)
 In most firms there is a team of strategic leaders called
the top management team.
 A team is needed to deal with the complexity of
challenges and the need for substantial amounts of
information and knowledge to make strategic decisions
 TMT composed of key individuals who are responsible
for selecting and implementing firm’s strategies.
 Usually includes officers of the corporation (VP and above)
and members of BOD.
 TMT characteristics must fit strategy and strategic
implementation.
 TMTs affect firm performance and strategic change.

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 THE ROLE OF TOP-LEVEL MANAGERS

 TMTs, Firm Performance & Strategic Change

 Top managers need to operate the internal organization and deal with the
external environment and stakeholders groups
 A heterogeneous TMT can facilitate this
 Managerial group of individuals with different functional backgrounds,

experiences, and education

 Introduce a variety of perspectives and can lead to better decisions

 Tend to "think outside of the box," leading to more creative decision

making, innovation, and strategic change

 Offers various areas of expertise and promotes debate

 Having a top management team that functions cohesively and having

members with expertise in the firms core functions and businesses is also
important

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 THE ROLE OF TOP-LEVEL MANAGERS

 The CEO & TMT Power

 TMT characteristics can give the CEO’s team power relative to the
board of directors and can influence the amount of strategic leadership
the board provides
 Can affect CEO discretion and the ability to appoint board members
 CEO Duality and longer tenure can also lead to greater CEO power
 The relative degrees of power held by the board and TMT should be
appropriate for the organization
 TMT characteristics must fit strategy and strategy implementation

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 MANAGERIAL SUCCESSION
 The choice of executives is a critical decision with
important implications for the firm’s performance
 Organizations select managers and strategic leaders from
two types of managerial labor markets
 Internal Managerial Labor Market – opportunities for managerial
positions to be filled from within the firm
 External Managerial Labor Market – opportunities for managerial
positions to be filled by candidates from outside of the firm
 Impacts company performance and the ability to embrace
change in today's competitive landscape
 Succession, top management team composition and
strategy are related

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EFFECTS OF CEO SUCCESSION AND TOP MANAGEMENT TEAM
COMPOSITION ON STRATEGY

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 MANAGERIAL SUCCESSION

 Benefits of Internal Managerial Labor Market

 Leads to continuity and continued commitment to firm’s vision,
mission, and strategies.
 Insiders are familiar with company products, markets,
technologies, and operating procedures.
 Reduces turnover of existing personnel many of whom possess
valuable firm-specific knowledge.
 Favored when the firm is performing well.

 Benefits of External Managerial Labor Market

 Long tenure with the same firm is thought to reduce innovation.
 Outsiders bring diverse knowledge bases and social networks,
which offer the potential for synergy and new competitive
advantage.
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EXERCISE OF EFFECTIVE STRATEGIC LEADERSHIP

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 KEY STRATEGIC LEADERSHIP ACTIONS
 Determining Strategic Direction
 Involves specifying the vision and the strategy to
achieve this vision over time.
 Vision is a picture of what the firm wants to be and in broad
terms what it wants to ultimately achieve.
 Strategic direction is framed within the context of the
opportunities and threats over next 3-5 years.
 Includes a core ideology and an envisioned future
 Should serve to motivate, “push”, and guide the
organization.

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 KEY STRATEGIC LEADERSHIP ACTIONS
 Effectively Managing the Firm’s Resource Portfolio
 Includes financial, organizational (competencies and capabilities)
and human capital.
 Firms resources must be managed in a way that is consistent and
supportive of strategy.
 They also must be allocated as efficiently and effectively as
possible so that each area or part of the firm has what it needs for
strategy implementation.
 Changing strategy will likely call for the reallocation of resources
and the movement of people and other resources from one area to
another.
 Financial resources are managed through the budgeting and
resource allocation process.

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 KEY STRATEGIC LEADERSHIP ACTIONS

 Effectively Managing the Firm’s Resource Portfolio

 Core competencies and competitive capabilities should be
developed in a strategy supportive fashion.
 Firms should build their strategy around things they are good at doing
and/or become good at doing things that are supportive of strategy.
 A firm’s human capital, which refers to the knowledge and skills of
a firm’s entire workforce, should also fit its strategy.
 This can be accomplished by:
 Hiring people who fit the organization and its strategy.
 An effective training and development program.
 Investments should be made to acquire and develop the firm’s human
capital.

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 KEY STRATEGIC LEADERSHIP ACTIONS
 Sustaining an Effective Organizational Culture
 Organizational culture: consists of a complex set of
ideologies, symbols, and core values shared throughout the firm
and influence the way business is conducted
 Shapes the context within which the firm formulates and implements
it's strategies.
 Also helps to regulate and control employees’ behavior
 There are many things that make up a company’s culture and
many places that is comes from
 Once developed, a company’s culture tends to last because:
 Organizations hire people who fit the firm and its culture
 Employees learn by observing the behavior of others and through
socialization and systematic indoctrination of cultural values
 Storytelling of company legends and ceremonies that honor employees
who display cultural ideals
 Visibly rewarding those who follow cultural norms
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 KEY STRATEGIC LEADERSHIP ACTIONS

 Sustaining an Effective Organizational Culture

 Cultures can vary in strength depending on the degree to which they are
imbedded in company practices and norms.
 Firms must match culture to strategy, as a culture that promotes attitudes
and behaviors that are well-suited to strategy will help in the achievement
of strategic competitiveness and above average returns.
 Related firms develop cooperative cultures
 Unrelated firms develop competitive cultures
 Cost leaders value economy, frugality and efficiency
 Differentiators value innovation, quality, and excellence
 Changing culture can be difficult but can be accomplished if the
appropriate strategic leadership is in place.

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 KEY STRATEGIC LEADERSHIP ACTIONS
 Emphasizing Ethical Practices
 Ethical practices can be used control employee judgment and
behavior.
 They should shape the firms decisions making process and are an
integral part of organizational culture.
  Strategic leaders should:
 Establish and communicate ethics related goals.

 Continuously revise, update, and disseminate the firm’s code of

conduct.
 Develop and implement ethical policies and procedures.

 Use rewards to recognize ethical behavior.

 Create an appropriate work environment.

 Ethical practices can be used to control ethical behavior to make

sure people are behaving in the "right" way.
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 KEY STRATEGIC LEADERSHIP ACTIONS
 Establishing Balanced Organizational Controls
 Strategic leaders are responsible for the development and effective
use of strategic and financial controls
 Controls provide the parameters for implementing strategies as well
as the corrective actions to be taken when implementation related
adjustments are required
 The challenge is to achieve an appropriate balance of financial and
strategic controls
 The Balanced Scorecard
 Framework that allows strategic leaders to verify that they have
established both financial and strategic controls to assess firm
performance
 Underlying premise is that firms jeopardize their future performance
possibilities when financial controls are emphasized at the expense of
strategic controls
 An appropriate balance of strategic and financial controls allows firms
to achieve higher level of performance.
 Uses multiple perspectives

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STRATEGIC CONTROLS AND FINANCIAL CONTROLS IN A
BALANCED SCORECARD FRAMEWORK

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KEY STRATEGIC LEADERSHIP ACTIONS
 Developing Policies and Procedures
 Policies and procedures - are written or unwritten standards or
styles of behavior that govern how people act and lead people to
behave in predictable ways.
 Can facilitate good strategy implementation.
 Can increase efficiency because they standardize work behavior
and specify the best way to accomplish a task.
 Provide top down guidance about how certain things need to be
done.
 They help ensure consistency in how strategy critical activities are
performed.
 Different types of firms make use of different types and numbers of
policies and procedures.
 Firms need to create a strong supportive fit between policies and
procedures and strategy.

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 KEY STRATEGIC LEADERSHIP ACTIONS
 Developing Reward Systems
 It can be argued that rewards are the single most powerful tool for
winning the commitment of employees to effective strategy
implementation.
 Rewards are an important tool used to achieve behavioral control.
 Firms should create a results oriented system in which those
achieving objectives are generously rewarded and those not
achieving objectives are not rewarded.
 Rewards and incentives should also be tied to strategy:
 Cost leaders should reward people for being efficient and for

identifying ways to reduce costs.

 Differentiators should reward people for being innovative.

 The bottom line is that firms need to reward and motivate people in
ways that are supportive of strategy and strategy implementation.
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 KEY STRATEGIC LEADERSHIP ACTIONS
 McKinsey 7-S Strategy Implementation Framework
 Basic Premise: there are seven internal aspects of an
organization that need to be aligned if the organization is to
be successful.
 These seven elements are interdependent and can be
categorized as either "hard" or "soft" elements.
 They are interdependent to the extent that making changes to
one affects all of the others.
 For an organization to perform well each of these elements
must fit with and be consistent with one another.
 These elements include:
 Strategy, Structure, Systems, Shared Values, Style, Staff , and Skills

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KEY STRATEGIC LEADERSHIP ACTIONS

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 ROLE OF CEO
 The chief executive is the executive head of the organization. He
represents the management.
 The chief executive's principle duty is to define long-term
direction and scope of the organization.
 He has ultimate responsibility for its success.
 He leads the formulation and implementation of the strategy. He
guided by the board of directors.
 Formulation of strategy
 Implementation of strategy
 Formulation of strategies :Strategy provides future direction and
scope to the organization for gaining competitive advantage. The
roles of chief executive in strategic formulation are :
 FORMULATION OF STRATEGIES
 Key strategic role :The chief executive plays the role of chief architect
in defining vision, mission, and objective of the organization. He
conceptualizes and crafts strategic to achieve objectives.
 Decision making role :The chief executive makes strategic decisions
related to strategy formulation .He makes strategic choice from among
strategic options for achieving objectives. This role involves risk-taking.
 Resources planning role :This role of chief executive involves
coordinated allocation of significant resources to planes. Such plans can
be organization wide or related to strategic business units or function.
Resources can be people, money, technology, time and information.
 Negotiator role :Strategic must fulfill the expectation of various
stakeholders of the organization. The chief executive balance there
conflicting interest by negotiating disputes. The stakeholder can be
owners, customers, employees, suppliers, government, labour unions,
and financial institution.
 IMPLEMENTATION OF STRATEGY

 Implementation of strategy: Implementation is putting strategy into action. The

chief information about strategy to the implementers within the organization. He
serve as a spokesperson for strategic implementation.
 Leadership role :The chief executive assumes overall leadership for the
implementation of strategy. He inspire trust and self-confidence among implements
of strategy. He ensures there participation. He motivates them for higher
productivity. He provides direction for implementation of strategy.
 Organizer role :The chief executive is an organization builder. He determines the
structure for strategy implementation. He establishes reporting relationship and
span of control. He assigns authority and responsibility for petitions and people in
the organization for key result areas.
 Resource manager role :The chief executive ensures officiated and effective
mobilization, allocation and utilization of resources for implementation strategy.
Budgets are prepare for management or resources.
 Monitoring :The chief executive monitors and evaluates the performance results
of strategy implementation. He takes corrective actions to resolve performance
problems. He handles unexpected distributors and crisis situation.
 ROLE OF MIDDLE LEVEL MANAGERS IN STRATEGIC MANAGEMENT

 Middle management is the intermediate management level,

accountable to top management and responsible for leading lower
level managers.
 Middle management is the intermediate management of a
hierarchical organization, subordinate to the senior management
but above the lowest levels of operational staff.
 They are accountable to the top management for their
department's function. They provide guidance to lower level
managers and inspire them towards better performance.
 Middle management may be reduced in organizations as a result
of reorganization. Such changes include downsizing, delayering,
and outsourcing.
 MOTIVATION
 Strategy – exploitation of signals from environment

 Environmental dynamism

 Shift in basis for strategy-- position based to capability

based

 Increased importance of role of middle level managers

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 MOTIVATION
Changing orientation of middle management work

Traditional orientation Present orientation

Developing coordination within Boundary spanning (relationships

functional boundaries across boundaries)

Controlling growth Finding innovation (championing)

Executing plans Synthesizing information

Applying new technologies to Facilitate learning (transferring

production technology).

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 THEORETICAL BASIS
Role of middle level managers in strategy formation:

 Idea generation: centre of information network

 Strategic initiatives: creation of social networks, knowledge

creation, understanding of organization processes

 Capability set: develop new capabilities

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 THEORETICAL BASIS
 Three crucial requirements for success of middle managers
—

 Access to knowledge

 Dynamic and flexible leadership

 Integration of new initiatives and new routines

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 THEORETICAL BASIS

Four roles of middle managers

 Synthesizing(sense making)--attend, frame and diagnose
issues
 Facilitation (sense making and sense giving)--generation of
variant behavior, cooperation and experimentation
 Championing (issue selling)--bring entrepreneurial and
innovative proposals to the notice of the top
management
 Implementation (sense giving)--translate strategic plans
into operational plans

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 THEORETICAL BASIS
 Sense making -way managers understand, interpret
and make sense out of information .
 Sense giving-attempts to influence outcomes through
communication of thoughts and gain support.
 Issue selling - process by which individuals affect
others attention, understanding of events,
developments and trends that impact organizational
performance

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MODEL

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STRATEGIC
CONTROL AND
OPERATION
CONTROL
STRATEGIC CONTROL
 It takes into account the changing
assumptions that determine a strategy,
continually evaluate the strategy as it is
being implemented, and take the necessary
steps to adjust the strategy to the new
requirement.
 It is early warning systems and differ from
post action controls which evaluate only
after the implementation has been
completed.
TYPES OF STRATEGIC CONTROL
1. Premise control
2. Implementation control
3. Strategic surveillance
4. Special control

The basic theme of strategic control is to

continually assess the changing
environment to uncover events that may
significantly affect the course of an
organization’s strategy.
PREMISE CONTROL
 Premise control is necessary to identify the
key assumptions, and keep track of any
change in them so as to assess their impact
on strategy and its implementation.
 Premise control serves the purpose of
continually testing the assumptions to find
out whether they are still valid or not. It
helps in the strategists to take corrective
action at right time.
 Premise control responsibility can be
assigned to corporate planning staff.
IMPLEMENTATION CONTROL
 The implementation of a strategy results in a
series of plans, programmes, and projects.
 Resource allocation plays important role.
 Implementation control may leads into
strategic rethinking.
 Implementation control can be implemented
by identifying and monitoring strategic
requirement with respect to market success.
It also helps in determining whether to go for
diversification or not.
 It can also be carried out through identifying
critical points in terms of events, substantial
resource allocation, or significant end-time.
STRATEGIC SURVEILLANCE
 It is generalized aimed at designed to
monitor a board range of events inside and
outside the company that are likely to
threaten the course of firm’s strategy.
 It can be done through a broad based,
general monitoring on the basis of selected
information sources to uncover that are
likely to affect the strategy of an
organization.
SPECIAL CONTROL
 It is based on trigger mechanism for rapid
response and immediate reassessment of
strategy in the light of sudden and
unexpected events.
 Crises and critical situations that occur
unexpectedly and threaten the course of a
strategy
OPERATION CONTROL
 It is aimed at the allocation and use of
organizational resources through an
evaluation of the performance of
organizational units.
 It is concerned with action or performance.
 The evaluation process for operation control
deals with –
a. Setting standards for performance
b. Measurement of performance
c. Analysis variances
d. Taking corrective action