Competing For Advantage

Part I – Strategic Thinking

Chapter 2 – Leading Strategically

Individual Strategic Leaders and Influences on Their Decisions

Key Terms Strategic Leadership策略領導– the

ability to anticipate預測 , envision預想 , maintain flexibility, and empower授權 others to create strategic change as necessary

Qualities of Legendary CEOs傳奇品質

Visionary有遠見 have a clear view of what they want to accomplish

Transformational轉型 act as agents代理 of change

Strategic Leadership策略領導力

Multifunctional多功能Managerial管理 InfluentialChange tolerant變化容忍Uncertainty tolerantMotivational動機

Skill Hierarchy技能等級

Capable能力

Contributing

Competent能幹

Effective

Executive執行Transformational轉型

Strategic Leadership Style策略領導力風格

Directive approach指導的做法 a traditional "commander" style that might be most

appropriate when rapid decisions need to be made

Collaborative approach合作的方式 in general, usually yields better results when managers

share and evaluate a greater amount of relevant information in their decision making.

Delegation授權 effective style when implementation of strategy can be

improved by independent manager decision making

Managerial Discretion and Decision Biases經理自主權和決策偏差

Key TermsDiscretion – latitude緯度 for actionHeuristics啟發– rules of thumb經驗法則 used in decision making

Hubris 傲慢自大– excessive pride, leading to a feeling of invincibility無敵

Constraints on Decision Making

tolerance for ambiguity, commitment to the firm, interpersonal skills容忍模糊性，致力於企業，人際交往能力

industry structure行業結構 , rate of market growth市場增長速度 , degree of product differentiation產品差異化程度

Decision-Making Biases偏見

Reliance on a limited set of heuristics經驗法則 Reliance on previously formed beliefs先前形成的信念

Focus on limited objectives目標 Exposure to limited decision alternatives決定選擇 Insensitivity to outcome probabilities結果可能性 Illusion of control控制假象

Top Management Teams高層管理團隊

Key Term Top Management Team – group

composed of the CEO行政總裁 and key managers who are responsible for setting the direction of the firm and formulating and implementing制定和實施 its strategies

Factors that Influence the Effectiveness of Top Management Teams

Top management team heterogeneity 異Yì質性

The CEO and top management team power

Executive succession processes繼承高管的過程

Top Management Team Heterogeneity

Key Term

Heterogeneous異質性 Top Management Team – managerial group composed of individuals with different functional不同職能backgrounds, experiences, and educations

Heterogeneous Top Management Team Challenges

Cohesion凝聚力 - integrating diverse opinions and behavior

Communication - can inhibit comprehensive and long-term strategic planning

Comprehensive examination檢查 of threats and opportunities

Effect of CEO Succession and Top Management Team on Strategy

Key Strategic Leadership Responsibilities and Actions

Positioning

Key Terms Scope – breadth of a firm's activities

across products, markets, geographic regions, core technologies, and value creation stages

Five Elements of Strategy

Acquire, Develop, and Manage Key Resources

Key Terms Organizational Culture – complex set

of ideologies, symbols, and core values that are shared throughout the firm and influence the way business is conducted

HR Practices Linked to Strategic Success

Managing intellectual capital Investing in capital resourcesBuilding effective commitments to

organizational goals Incorporating international experience

into the skill sets of employees

HR Practices Linked to Strategic Success (cont.)

Employing effective training and development programs to promote strategic vision and cohesion

Establishing effective reward plans Instituting continuous learningLeveraging the firm's expanding

knowledge base

Effective Cultural Qualities

Entrepreneurial opportunism Employee autonomy Innovativeness Risk taking Proactiveness Competitive aggressiveness

Overcoming Cultural Difficulties

Effective communication

Effective problem solving

Effective staffing

Effective performance appraisals

Effective reward systems

Mintzberg’s Managerial Roles

Determine and Communicate Strategic Direction

Key Terms Strategic Direction – definition of a firm's

image and character over time, framed within the context of the conditions in which the company operates

Sustainable Development – concept that a firm can and should operate without adversely influencing its environment

Novartis’ Mission Statement

Novartis Stakeholders

Customers

Employees

Shareholders

Society

Long-Term Vision

A core ideology to motivate employees through the company's heritage

An envisioned future to encourage employees to stretch beyond their comfort zones

Guiding Employee Decision Making

Strategic direction

Values and ethical practices

Actions for an Ethical Culture

Employ ethical strategic leaders Establish and communicate specific goals to describe the

firm's ethical standards Continuously revise and update the code of conduct based

on stakeholder input Disseminate the code of conduct to all stakeholders to inform

them of ethical standards and practices Develop and implement methods and procedures to use in

achieving the firm's ethical standards Create and use explicit reward systems to recognize bold

acts that demonstrate ethical behavior and decision making Create a work environment in which all people are treated

with dignity

Strategy Implementation

I/O economics framework – develops structures, systems, and programs to reinforce the external positioning of the business

Resource model – makes optimal use of and supports the resources and capabilities that provide a competitive advantage

Stakeholder perspective – includes activities such as collecting information from stakeholders, assessing their needs and desires, integrating this knowledge into strategic decisions, effectively managing internal stakeholders, and forming interorganizational relationships with external stakeholders

Balanced Controls

Key Terms Controls – formal, information-based

procedures used by managers to maintain or alter patterns in organizational activities

Balanced Scorecard – framework that allows strategic leaders to verify that they have established both financial and strategic controls to assess firm performance

Control Systems

Financial Controls focus on short-term financial outcomes produce risk-averse managerial decisions

Strategic Controls focus on the content of strategic actions encourage decisions that incorporate

moderate and acceptable levels of risk

Controls in Balanced Scorecard Framework

Ethical Questions

What are the ethical issues influencing managerial discretion? Has the current business environment changed the influence of ethics on managerial discretion? If so, how?

Ethical Questions

Is there a difference between stakeholders’ current view of an ethical strategic leader and the early 1990s perspective of an ethical strategic leader? If so, describe the differences between the two views.

Ethical Questions

What should a newly appointed CEO from the external managerial labor market do to understand a firm’s ethical climate? How important are the CEO’s efforts to understand this climate?

Ethical Questions

Are ethical strategic leaders more effective than unethical strategic leaders? If so, why? If not, why not?

Ethical Questions

Assume that you are working in an organization that you believe has an unethical culture. What actions could you take to change that culture to make it more ethical?

Ethical Questions

Is corporate downsizing ethical? If not, why not? If corporate downsizing is ethical, what can strategic leaders do to mitigate the negative effects associated with reducing the size of their firm’s labor force?