Chapter 2 Leading Strategically Through Effective Vision and Mission

1. Chapter 2Leading Strategically Through Effective Vision and Mission

2. OBJECTIVES • Explain how strategic leadership is essential to strategy formulation and implementation 1 • Understand the relationships among vision, mission, values and strategy 2 3 • Understand the roles of vision and mission in deter-mining strategic purpose and strategic coherence 4 • Identify a firm’s stakeholders and explain why such identification is critical to effective strategy formula-tion and implementation • Explain how ethics and biases may affect strategic decision-making 5

3. PULLING A USD 15 BILLION COW OUT OF A DITCH • Xerox reaches profitability • Mulcahy takes • over • The fall from the nifty 50 • She lends a turnaround • Xerox introduces the Xerox 914 copier in 1959. This copier transformed the work place • Xerox was charter member of the “nifty 50”-50 stocks most favored by institutional investors • Since 1970s, however, Xerox has been crippled by competition (mostly Japanese) • October 2001, Xerox reports first quarterly loss in16 years. Mulcahy is not obvious choice for top position • She lacks product development and financial expertise • She gets it because the board has confidence in her “strategic mind”. • Refines Xerox vision and reminds people of core values • Aligns operation with the refined mission and values • Sells Xerox’s China and Hong Kong operations and half of a stake in a joint venture with Fuji • Closes down inkjet business • Annual expenses cut by USD 1.7 billion • Sold USD 2.3 billion worth of non-core assets • Reduced long-term debt to USD 9.2 billion from USD 15.6 billion • Xerox returns to profitability in 2002, generating USD 1.9 billion in operating cash flow and USD 91 million in net income on USD 15.8 billion in sales

4. STRATEGIC LEADERSHIP • Leadership: • Strategic leadership: • The task of exerting influence on other people’s pursuit of goals in an organizational context • Managing an overall enterprise and influencing key organizational out-comes, such as company wide performance, competitive superiority, innovation, strategic change, and survival

5. Interpersonal roles • Figure head • Leader • Liaison • Informational roles • Monitor • Disseminator • Spokesperson • Decision roles • Entrepreneur • Disturbance handler • Resource allocator • Negotiator EXECUTIVE ROLES • Formal authority and status

6. LEVEL 5 LEADERS • Capabilities • Build greatness through combination of will and humility • Level 5leaders • Can lead a group to superior levels of performance • Level 4 leaders • Organize people resources to accomplish predetermined objectives • Level 3 leaders • Work effectively with others as a member of a team to achieve group objectives • Level 2 leaders • Make individual contributions through talent and work ethic • Level 1 leaders

7. TWO ATTRIBUTES OF LEVEL 5 LEADERS • Being someone • who prefers to share credit rather than hog it • who tends to shun public attention, • act with calm determination, and • exercise ambitions on the company’s behalf rather than one’s own • The ability to translate strategic intent into the resolve needed to pursue a strategy • and usually to make hard choices over a period of time • Professional will • Professional modesty

8. WHAT DOES IT TAKE TO BE A CEO? • An Ivy league MBA? • Charisma? • There is little consensuson whether personality or background matters more • International management experience? • Integrity

9. CRITERIA OF AN EFFECTIVE TOP-MANAGEMENT TEAM • The team responds to a complex and changing environment. • 2. The team can manage the needs of interdependent but often diverse units, arenas, or functional areas. • 3. The team has a valuable and effective social network. • 4. The team is able to develop a coherent plan for executive succession.

10. VISION, MISSION AND STRATEGY • Strategy • The central, integrated, externally-oriented concept of how the firm will achieve its objectives. Consists of 5 elements: arenas, vehicles, differentiators, staging, and economic logic • Vision and Mission • Strategic Goals and objectives • Fundamental purpose • Values • View of future • Specific targets • Measurable outcomes

11. VISION – USES OF AMBITION AND AMBIGUITY • Sony’s vision in early 1950’s: • “becoming the company that most changes the worldwide image of Japanese products as being of poor quality.” • Vision statements • generally express long-term action horizons, • are ambitious and force the firm to stretch. • their ambiguity allows flexibility for changing strategy or implementation tactics • CitiBank’s vision in 1915: • “the most powerful, the most serviceable, the most far reaching world financial institution the world has ever seen.”

12. Wal-Mart • Grow sales and profits by 70% per year • Ryanair • Be Europe’s largest airline in 7 years • Matsushita • To become a “super manufacturing company” VISION ANCHORED IN GOALS AND OBJECTIVES • Vision • Examples • Goalsand objectives

13. Arenas • Strategic coherence is • The symmetrical co-alignment of the five elements of a firm’s strategy • The congruence of policies in functions (e.g., finance, production, marketing) with these elements • The overarching fit of various businesses under the corporate umbrella • Economic logic • Staging • Vehicles • Differentiators STRATEGY COHERENCE • Congruence

14. BENEFITS OF USING STAKEHOLDER ANALYSIS • Can use the opinions of the most powerful stakeholders to shape your strategy and tactics at an early stage. • Gain support from powerful stakeholders to help win more resources. • Can ensure that stakeholders fully understand what you are doing and understand the benefits of your project. • Can anticipate what people’s reactions to your project may be and build actions into the plan that will win people’s support.

15. After identifying stakeholders ask • Have I identified any vulnerable points in either the strategy or its potential implementation? • Which groups are mobilized and active in promoting their interests? • Have I identified supporters and opponents of the strategy? • Which groups will benefit from successful execution of the strategy and which may be adversely affected? • Where are various groups located? Who belong to them, and who represents them? • Steps in identifyingstakeholders • Determine influences on strategy formulation decisions • Determine stake-holders power and influence over strategy execution decisions • Determine the effects of strategic decisions STAKEHOLDER ANALYSIS • Stakeholders: Individuals or groups who have an interest in an organization’s ability to deliver intended results and maintain the viability of its products and services

16. MAPPING STAKEHOLDER INFLUENCE AND IMPORTANCE • Importance of Stakeholder • Influence ofstakeholder • Little/Noimportance • Moderateimportance • Significant importance • Unknown • Unknown • Little/Noimportance • Moderateimportance • Significant importance

17. New strategy –A new means to accomplish goals • Implementation –Executing new strategy to realize goals ETHICS AND BIASES • Have any potential biases clouded our decision-making process? • Is the decisionethical? • Authority structures • Incentive systems • Role of corporate governance • Common illusions about ourselves (e.g., favorability optimism , control) • Escalating commitments • Self-serving fairness bias • Overconfidence bias • Ethnocentrism and stereotyping • Risk assessment