leadership and coaching executive education seminar end of competitive advantage: how strategic...
TRANSCRIPT
Leadership and CoachingExecutive Education Seminar
End of Competitive Advantage: How Strategic Leadership is ChangingHugh Sherman, PhDSeptember 2015
Seminar Objectives
1. Review the concept of strategy and strategic leadership
2. Using the General Electric experience, examine how context impacted the strategic leaders’ approach to managing the corporation.
3. Conclude with how today’s context is shaping the approach of strategic leaders.
Top Performing CEO’s
Embraer – Maurício Novis Botelho• The world's third-largest maker of commercial
aircraft. The company has dominated recent orders for regional jets seating 70 to 120 passengers, especially in fast-growing Asian markets.
• Total Shareholder Return - Industry Adjusted 2,895%
Worst Performing CEO
Eike Batista, Chairman and CEO, EBX Group• Destroyed tens of billions of dollars in shareholder
value. Blamed the CEOs of each of his companies for the problems he created
• Oil company OGX filed for bankruptcy and a week later shipbuilder OSX, whose fortunes depended on OGX, also went bankrupt. Stock prices dropped 95%
• Batista lost most of his personal wealth, once worth $30 billion and now less than $400 million
Definition: Means by which obtain objectives– Strategy is about doing things differently –
making choices– Requires allocation of resources
Two Basic Questions–Where to compete– How to compete
What is Strategy?
Performance of Firm Determined by:
Corporate Strategy(where to compete)
Choice of Industries in which we will compete
Issues include types of diversification, acquisitions, allocation of resources between industries
Business Level Strategy(how to compete)
How to establish a competitive advantage in a specific market
Examples include low cost, differentiated, niche strategies
What is Strategy?
• http://www.youtube.com/watch?v=ibrxIP0H84M
Berlitz Example
• Positioning worldwide was as a Language Company –Proven business model (in person classes)
• Marcos Justus Brazil GM – became CEO• In U.S. language training is “nice to do” not a
necessity• New positioning a global cultural training
organization – can help your company develop a global team
STRATEGIC LEADERSHIP
Definition: Ability to anticipate, envision, maintain flexibility and empower others to create strategic change
Long term competitiveness -Need to respond quickly & appropriately to environmental change
Requires continually changing set of assumptions and accepted wisdom as to how industry operates
Ireland & Hitt (1999) AME
Leadership is Contextual
Environment• Market Demand, growth• Quasi-legal constraints• Powerful outside forces (suppliers, customers,
competitors)Organization • Skills, knowledge of employees• Inertial forces – culture• Resources available
Discussion of GE Case
1. What are Jack Welch’s the key strategic initiatives?
2. What are Jeff Immelt’s the key strategic initiatives?
Who had the Right Strategy?
1980-2001: Welch focused on developing a cost advantage as his strategy. Welch was focused on high performance culture, by using benchmarking, best practices, and Six Sigma.
2001-Present: Immelt focus on creating a high growth technology, innovative strategy.
Strategy Change Requires Change in all Organizational Dimensions
Welch’s ApproachFocus on Performance and Efficiency- Culture -Competitive, confrontational- Managers were financially oriented, generalists- Focused on efficiency, process improvement, - Promoted from within
Immelt’s Approach
Focus on Technology Growth - Culture – team, collaborative- In depth industry, specialized managers- Focused on innovation, increasing organic growth- Investment in R&D- Recruited industry experts- Marketing focus
Jeff Immelt
• http://www.youtube.com/watch?v=oN_iSHcbyYI
• (Listen to minute 3- 15)
• http://www.youtube.com/watch?v=PHZ9i5Z8RQs
• (Listen to 15 minutes – third point on leadership 4th is simplify. 5th systems thinker)
Today’s Environment: Accelerating Technological Change
• Unprecedented amounts of information in hands of consumers/buyers
• Increasing pace of technological adoption & innovation shortening the life cycle of products and firms
The New Strategy Playbook
Competitive Advantage is Transient• One of purposes of strategy is to achieve a
sustainable competitive advantage• However, today change is the norm not stability• Key is to build temporary advantages ,
innovation becomes continuous and become core to how the business operates
• Prediction and being right less important than reacting quickly and taking corrective action
The New Strategy Playbook
Organizational learning Approach: • Set off in a direction and adjust in real time.
Listen/learn -find response from competitors, customers and learn and adapt.
• Strategic Leaders need to focus on not just on core business but equally building options –continuous renewal and innovation
New Strategic MindsetFrom• Assumption existing
advantages will persist• Few & homogeneous
people involved in strategy
• Internally focused on optimization
• Talent directed at solving problems
To• Assumption existing
advantages will be eroded
• Broader involvement with diverse inputs
• Aggressively focused on external world
• Talent directed at identifying & seizing opportunities
Rita McGrath, The End of Competitive Advantage (2013)
New Strategic MindsetFrom• Resources devoted
primarily to exploitation
• People work on innovation in addition to their day jobs
• Failure to test assumptions, little learning
• Planning orientation
To• Balanced portfolio of
initiatives, core, new platforms and options
• Resources dedicated to innovation
• Assumptions continually tested
• Experimental orientation
Rita McGrath, The End of Competitive Advantage (2013)
Conclusion – Strategy TodayCompetitive Advantage is Transient:• Competitive advantage embedded in people and
the relationships between people• People are the key to innovation and innovation is
the requisite for future success.Requires a Leadership Style which:• Leads with purpose and meaning • Build enduring relationships with people• People to feel empowered to be innovative and
entrepreneurial, to share their learning
The Rules for Personal Success Have ChangedFrom• Hired for Existing
Skills & knowledge• Stable career path• Hierarchies and
teams• Infrequent job
changes• Careers managed by
organization
To• Hiring for ability to
acquire new skills (learnability)
• A series of engagements
• Teams & Superstars• Permanent career
campaigns• Careers managed by
Individual
Rita McGrath, The End of Competitive Advantage (2013)