Download - Balanced Scorecard Above Average Returns Leaders & the Mgmt. Process Situational Leadership Leadership Types What impacts decisions? Strategic Leadership

Balanced Scorecard

Above Average Returns

Leaders & the Mgmt. Process

Situational Leadership

Leadership Types

What impacts decisions?

Strategic Leadership

Implementing 124

Chapter Three:

The External Environment

Chapter Three:

The External Environment

© 2 0 0 9

Hitt, Ireland, Hoskission, Rowe & Sheppard

Strategic Management

N o

t e sChapter Thirteen:


Competitiveness & Globalization

Balanced Scorecard




Leadership Types



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The Strategic Management Process

Chapter 5: Bus.-Level Strategy

Chapter 6:Competitive Dynamics

Chapter 7:Corp.-Level

Strategy

Chapter 8:Acquisition & Restructuring

Chapter 9:International

Strategy

Chapter 10:Cooperative

Strategy

Strategy Formulation

Chapter 11:Corporate

Governance

Ch. 12: Org. Structure & Controls

Chapter 13:Strategic

Leadership

Chapter 14:Org. Renewal & Innovation

Strategy Implementation

StrategicActions

Ch. 1: Strat. Mgmt. & Com-petitiveness

Ch. 2: Strat. Mgmt . &

Performance

Chapter 3:The External Environment

Chapter 4:The Internal Environment

Strategic Competitiveness

Strategic Mission & Strategic Intent

Strategic Objectives & Inputs


Leadership

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Strategic LeadershipKnowledge Objectives1. Describe strategic leadership & differentiate

between strategic, visionary & managerial leadership.2. Define top management teams & explain their efforts

on firm performance, innovation & strategic change.3. Note the value of strategic leadership in deciding a

firm’s strategic direction.4. Explain the strategic leaders’ role in exploiting core

competencies, notably in developing human capital. 5. Note the importance & use of organizational controls.6. Define & explain how to sustain an effective ethical

organizational culture.

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A Word on Situational Leadership

Low

High

HighDIRECTIVE BEHAVIOUR

SU

PP

OR

TT

IVE

BE

HA

VIO

UR

Four Leadership Styles

Staff Development Level

Lowest: Highly Leader Directed

Low: Leader directed

High: Self directed

Highest: Highly Self directed

Low

High

HighDIRECTIVE BEHAVIOUR

SU

PP

OR

TT

IVE

BE

HA

VIO

UR

B

O

N

U

S

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Managerial Leaders Strategic Leaders Visionary Leaders

Want stability & to preserve the existing order

Are comfortable handling short-term day-to-day activities

Guide without strategic vision. Constrained by

values & by use explicit knowledge

Manage the paradox created by use of managerial & visionary

leadership models

Define boundaries by use of metaphors, analogies & models

to allow for a mix of contradictory concepts

Encourage opposing capabilities to guide knowledge creation (e.g. individual, group, & firm

tacit & explicit knowledge)

Are future-oriented concerned with

risk-taking

Are not dependent on the firm for their sense

of who they are

Control by social-ization & sharing

common norms, values & beliefs

Leadership Types

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Implementing 624

G. Richard Wagoner, Jr.

GM CEO 2000-2008

A period when GM lost $85 bilion.

Managerial Leaders• Adopt impersonal, passive

attitudes towards goals.• View work as enabling process that involves

some combination of ideas & people interacting to establish strategies & make decisions.

• Relate to other people according to their role in the decision making process.

• Maintain a low level of emotional involvement in these relationships.

• Influence only the actions & decisions of those with whom they work.

• Want stability & strive to preserve existing order.

I don’t know how we lost $85 billion

G. Richard Wagoner, Jr.GM CEO 2000-2008

Leadership Types

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Visionary Leaders

• Shape ideas versus reacting to them.• Influence changes in the way people think

about what is possible, desirable and necessary.• Are concerned with ideas & relate to people in

intuitive & empathetic ways.• More likely to make decisions based on values.• Willing to invest in human capital & creating & main-

taining effective culture to ensure long term viability• Are future-oriented & concerned with risk taking.• Want creativity, innovation and chaos.• Strive to change the existing order.

Leadership Types

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Implementing 824

Strategic Leaders• A synergistic combination of

managerial & visionary leadership.

• Manages the paradox created by the use of managerial & visionary models.

• Establishes the context through which stakeholders are able to perform at peak efficiency.

• Willing to make candid, courageous & yet pragmatic decisions.

• Solicits corrective feedback from peers, superiors & employees about the value of their difficult decisions.

Leadership Types

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Implementing 924

Managerial Discretion

External EnvironmentIndustry StructureRate of market growthNumber & type of competitorsPolitical/Legal constraintsProduct differentiation

Organizational CharacteristicsSize and age CultureResource availabilityEmployee interaction

Factors Affecting Managerial Decisions

Interpersonal skills

Tolerance for ambiguityCommitment to the firm

Aspiration levelSelf-confidence

Characteristics of the Manager


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Are teams comprised of key managers responsible for formulating & implementing a firm’s strategies.

Heterogeneous teams with varied knowledge & expertise can draw on multiple perspectives to evaluate alternative strategies & build consensus.• However, these teams must be able to function

effectively as a team in order to implement strategies.• A heterogeneous team makes this more difficult.

Top Management Teams

Factors Affecting Managerial Decisions


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Implementing 1124

Strategic Leadership Presumes• An ability to influence

those with whom one works.

• The leader understands the emergent strategy process.

• A shared vision of what the organization is to be.

• Agreement among senior manger & board members of opportunities and threats.

• Visionary leadership that entails many characteristics such as a willingness to take risks.

• Managerial leadership that includes an intended rational way of looking at the world.


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Determines Strategic Direction

Developing a long-term vision of the firm’s Strategic Intent

Exploits & Maintains Core Competencies

Ensure firm’s core competencies are emphasized in strategic implementation

Develops Human Capital

No strategy is effective unless a firm develops & retains staff to execute it

Sustains an Effective Organizational Culture

Leaders play a critical role in shaping and reinforcing the firm’s culture

Effective Strategic

Establishing Balanced Organizational controls

To create controls balanced between financial and strategic measurements

Emphasizing Ethical Practices

Enable all levels to act ethically when do-ing what’s needed to implement strategy

Determines Strategic Direction

Exploits & Maintains Core Competencies

Develops Human Capital

Sustains an Effective Organizational Culture

Establishing Balanced Organizational controls

Emphasizing Ethical Practices


Leadership

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Implementing 1324

andInfluences

Strategic Leadership and the Strategic Management Process

Strategic Vision / Intent Strategic Mission

Shapes the formation of

Formulation of Strategies Implementation of Strategies

Strategic Competitiveness / Above Average Returns

Yields

Successful Strategic Actions

Effective Strategic Leadership


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Implementing 1424


Determining Strategic Direction• Strategic direction means the development of a long-term

vision of a firm’s strategic intent.• Charismatic leaders can help achieve a well accepted vision.• It’s vital not to lose sight of the strengths of a firm when

making changes required by new strategic directions.• Leaders must structure a firm effectively to achieve the vision.





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Determining Strategic Actions Develop a long term vision of the firm The ideal long term vision has 2 parts:

- Core ideology- An envisioned future.

andInfluences






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• Core competencies In large firms are exploited effectively when they’re developed & applied across different units.

• Core competencies cannot be developed effectively without developing the capabilities of human capital.

Exploiting & Maintaining Core Competencies

andInfluences






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• Constant learning is a vital part of every person’s job.• Teamwork is essential to successful implementation. • Solving problems means teams take responsibility 4 solutions.



Changing Culture & Business ReengineeringSustaining an Effective Organizational Culture

andInfluences





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Implementing: Governance Issues

Chief Executive Officers' & their power:• CEOs can gain so much power that they are virtually

independent of the board of directors oversight .• This is especially true when the CEO is also chair

of the board of directors (CEO / Board Chair Duality).• The most effective forms of governance share power

& influence among the CEO & board of directors.• CEOs of long tenure can wield great power.

CEO / Board Chair DualityHas been blamed for poor performance & slow response to change.

Occurs most commonly at large firms.

Implementing

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Implementing: Ethical Practices

Establish & transmit specific goals noting the organization’s ethical standards.

Developing an ethical organizational culture:

Continuously revise & update the code of conduct, based on inputs from stakeholders.

Disseminate a code of conduct to all stakeholders to inform them of the firm’s ethical standard / practices.

Develop & implement methods / procedures to use in achieving the firm’s ethical standards.

Have explicit rewards to recognize acts of courage (e.g. proper channels / wrongdoing report procedures).

Create a work environment where all are treated with dignity.

Implementing

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Implementing 2024

Implementing: Organizational ControlsCommon Strategic Controls

High level of interaction.

High level of interaction between corporate headquarters and divisions.

Ability to share resources and capabilities among divisions.

Open communication between corporate and divisional managers.

Implementing

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andInfluences

Above Average Returns:





Yields


Effective Strategic Leadership Formulation of Strategies Implementation of Strategies


Yields

• Complements financial measures of past performance with measures of the drivers of future performance.

• It should translate a business unit’s mission & strategy into tangible objectives & measures.

• The objectives & measures view organizational performance from the perspectives of Finance, Customer, Business Process and Learning & Growth.

Above Average Returns & the Balanced Scorecard


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Strategic & Financial Controls in a Balanced Scorecard FrameworkPerspectives Criteria

Internal Business Process

• Asset utilization improvements.• Improvements in employee morale.• Changes in turnover rates.

Learning & Growth

• Improvements in innovation ability.• Number of new products versus competitors.• Increases in employees’ skills.

Financial • Cash flow.

Customer • Assess ability to anticipate customers needs.• Effectiveness of customer service practices.• Percentage of repeat business.• Quality of communications with customers.

• Return on: equity or assets.

Balanced Scorecard

Balanced Scorecard




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Implementing 2324

Implementing: The Balanced Scorecard Matrix

New Training

Knowledge Library

90%Cross-TrainDevelop Strategic Skills

R&D Prog. Customer Mailing

2006 – 15%2007 – 50%2008 – 60%

% Revenue from new Products

Develop New Products

Frequent Buyers Club

95%Customer Retention

Increased Customer

Satisfaction

Sales Promo New

Channel Marketing

10% Product A40% Product B50% Product C

Revenue Mix

Broaden Revenue Mix

Learning & Growth

Internal Business Processes

Financial

Customer

InitiativesTargetsMeasuresObjectivesQuestion

How do we sustain ability to change & improve?

What bus. processes must we excel at to satisfy stakeholders?

How do we appear to shareholders to succeed financially?

How do we appear to our customers to achieve our vision?

What is critical to success?

How is it measured?

Performance expectation?

Key action Programs?

What is critical to ask?

© 1996 HBR Publishing

Balanced Scorecard

Balanced Scorecard




Leadership Types



Implementing 2424

The Strategic Management Process

Chapter 5: Bus.-Level Strategy

Chapter 6:Competitive Dynamics

Chapter 7:Corp.-Level

Strategy

Chapter 8:Acquisition & Restructuring

Chapter 9:International

Strategy

Chapter 10:Cooperative

Strategy

Strategy Formulation

Chapter 11:Corporate

Governance

Ch. 12: Org. Structure & Controls


Leadership

Chapter 14:Org. Renewal & Innovation

Strategy Implementation

StrategicActions

Ch. 1: Strat. Mgmt. & Com-petitiveness

Ch. 2: Strat. Mgmt . &

Performance

Chapter 3:The External Environment

Chapter 4:The Internal Environment

Strategic Competitiveness

Strategic Mission & Strategic Intent

Strategic Objectives & Inputs


Leadership

Download - Balanced Scorecard Above Average Returns Leaders & the Mgmt. Process Situational Leadership Leadership Types What impacts decisions? Strategic Leadership

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