Leadership in strategic

management
 Strategy
• A comprehensive action plan that
identifies long-term direction for an
organization and guides resource
utilization to accomplish organizational
goals with sustainable competitive
advantage
– Sustainable competitive advantage – the
advantage that is difficult for competitors to
imitate.
 Strategic Management
The process of formulating and
implementing strategies to accomplish
long-term goals and sustain competitive
advantage
– Strategy formulation
– Strategy implementation
– Strategy evaluation
 Strategic Leadership
• The ability to anticipate, envision, maintain
flexibility, and empower others to create
strategic change as necessary.
• The process of providing the direction and
inspiration necessary to create or sustain an
organization
• Strategic leadership deals with the major
purposes of an organization or organizational
unit.
 Components of Strategic Leadership

 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
Creating a vision
(Come share my
dream.)

High-level cognitive
Revolutionary thinking
activity
(Nothing like this has
ever been done before.)
(Strategy is hare
mental work.)

Anticipating and Gathering multiple

creating a future inputs
(Let’s invent a new (Strategic formulation
world.) is democratic.)
 Tasks in strategic leadership
Multifunctional tasks such as
• Managing through others
• Managing an entire enterprise rather than a
functional subunit
• Coping with change
• Attracting and managing human capital
• Being able to meaningfully influence others
 Effective strategic leadership
• 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.
 Effective strategic leadership
• Determining Strategic Direction
• Establishing Balanced Organizational Controls
• Effectively Managing the Firm’s Resource
Portfolio
• Sustaining an Effective Organizational Culture
• Emphasizing Ethical Practices
• Developing Policies and Procedures
• Developing Reward Systems
 Key Strategic Leadership Actions

• Determining Strategic Direction

– Involves specifying the vision and the strategy to
achieve this vision over time
– Includes a core ideology and an envisioned future
– Should serve to motivate, “push”, and guide the
organization.
 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
– Using Balance Scorecard
Balance Scorecard
 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.
 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.
– Changing culture can be difficult but can be
accomplished if the appropriate strategic
leadership is in place.
 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.
– Ethical practices can be used to control ethical
behavior to make sure people are behaving in the
"right" way.
 Key Strategic Leadership Actions
• Developing Policies and Procedures
– Policies and Procedures:
– Can facilitate good strategy implementation
– Can increase efficiency because they standardize
work behavior and specify the best way to
accomplish a task
– Help ensure consistency in how critical activities in
strategy are performed
 Key Strategic Leadership Actions
• Developing Reward Systems
– Rewards are an important tool used to achieve
behavioral control.
– Firms should create a results oriented system.
– Firms need to reward and motivate people in ways
that are supportive of strategy and strategy
implementation.