Ch12-1 Chapter 12 Strategic Leadership Michael A. Hitt R. Duane Ireland Robert E. Hoskisson ©2000 South-Western College Publishing Ch12-2 Competitiveness Chapter 3 Internal Environment Chapter 2 External Environment The Strategic The Strategic Management Management Process Process The Strategic The Strategic Management Management Process Process Strategic Intent Strategic Mission Strategic Competitiveness Above Average Returns Feedback Strategy Formulation Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 6 Corporate-Level Strategy Chapter 8 International Strategy Chapter 9 Cooperative Strategies Chapter 7 Acquisitions & Restructuring Strategy Implementation Chapter 10 Corporate Governance Chapter 11 Structure & Control Chapter 12 Strategic Leadership Chapter 13 Entrepreneurship & Innovation Strategic Inputs Strategic Actions Strategic Outcomes Ch12-3 Strategic Leadership involves: Strategic Leadership involves: Strategic Leadership Strategic Leadership The ability to anticipate, envision, maintain flexibility The ability to anticipate, envision, maintain flexibility and empower others to create strategic change and empower others to create strategic change Multi-functional work that involves working Multi-functional work that involves working through others through others Consideration of the entire enterprise rather than Consideration of the entire enterprise rather than just a sub-unit just a sub-unit A managerial frame of reference A managerial frame of reference Ch12-4 Strategic Competitiveness Strategic Competitiveness Above-Average Returns Above-Average Returns Strategic Competitiveness Strategic Competitiveness Above-Average Returns Above-Average Returns Effective Effective Strategic Leadership Strategic Leadership Effective Effective Strategic Leadership Strategic Leadership influence influence shapes the formulation of and and Strategic Intent Strategic Intent Strategic Intent Strategic Intent Strategic Mission Strategic Mission Strategic Mission Strategic Mission Successful Successful Strategic Actions Strategic Actions Successful Successful Strategic Actions Strategic Actions Formulation Formulation of Strategies of Strategies Formulation Formulation of Strategies of Strategies Implementation Implementation of Strategies of Strategies Implementation Implementation of Strategies of Strategies Strategic Leadership Strategic Leadership and the Strategic and the Strategic Management Process Management Process Ch12-5 Managerial Discretion Managerial Discretion Managerial Discretion Managerial Discretion External Environment External Environment Industry Structure Industry Structure Rate of market growth Rate of market growth # and type of competitors # and type of competitors Political/Legal constraints Political/Legal constraints Product differentiation Product differentiation Factors Affecting Managerial Discretion Factors Affecting Managerial Discretion Interpersonal skills Interpersonal skills Tolerance for ambiguity Tolerance for ambiguity Commitment to the firm Commitment to the firm Aspiration level Aspiration level Self-confidence Self-confidence Characteristics of the Manager Characteristics of the Manager Employee interaction Employee interaction Organizational Organizational Characteristics Characteristics Resource availability Resource availability Size and age Size and age Culture Culture Ch12-6 Top Management Teams Top Management Teams Top management teams are comprised of the key Top management teams are comprised of the key managers who are responsible for formulating and managers who are responsible for formulating and implementing the organization’s strategies implementing the organization’s strategies A heterogeneous top management team with varied A heterogeneous top management team with varied expertise and knowledge can draw on multiple expertise and knowledge can draw on multiple perspectives when evaluating alternative strategies perspectives when evaluating alternative strategies and building consensus and building consensus A top management team must also be able to function A top management team must also be able to function effectively as a team in order to implement strategies. effectively as a team in order to implement strategies. A heterogeneous team makes this more difficult. A heterogeneous team makes this more difficult. Ch12-7 Strategic Leadership Strategic Leadership Chief Executive Officers can gain so much power that Chief Executive Officers can gain so much power that they are virtually independent of oversight by the Board of they are virtually independent of oversight by the Board of Directors Directors This is especially true when the CEO is also Chairman of This is especially true when the CEO is also Chairman of the Board of Directors the Board of Directors CEOs of long tenure can also wield substantial power CEOs of long tenure can also wield substantial power The most effective forms of governance share power and The most effective forms of governance share power and influence among the CEO and Board of Directors influence among the CEO and Board of Directors Ch12-8 The internal labor market is comprised of the career The internal labor market is comprised of the career path alternatives available to a firm’s managers path alternatives available to a firm’s managers Selecting internal candidates for management positions Selecting internal candidates for management positions helps to build on valuable firm-specific knowledge helps to build on valuable firm-specific knowledge The external labor market includes the collection of The external labor market includes the collection of career opportunities for managers outside their firm career opportunities for managers outside their firm Selecting an outsider often brings fresh insights and Selecting an outsider often brings fresh insights and may energize the firm with innovative new ideas may energize the firm with innovative new ideas Managerial Labor Markets Managerial Labor Markets Ch12-9 Effects of CEO Succession and Top Management Team Composition on Strategy Top Top Management Management Team Team Composition Composition Managerial Labor Market: Managerial Labor Market: CEO Succession CEO Succession Heterogeneous Heterogeneous Homogeneous Homogeneous Internal Internal CEO Succession CEO Succession Stable Strategy External External CEO Succession CEO Succession Ch12-10 Ambiguous: Possible change in Top Management Team and Strategy Stable Strategy Top Top Management Management Team Team Composition Composition Managerial Labor Market: Managerial Labor Market: CEO Succession CEO Succession Heterogeneous Heterogeneous Homogeneous Homogeneous Internal Internal CEO Succession CEO Succession External External CEO Succession CEO Succession Effects of CEO Succession and Top Management Team Composition on Strategy [...]... Team and Strategy Heterogeneous Stable Strategy with Innovation Strategic Change Top Management Team Composition Ch12- Exercise of Effective Leadership Effective Strategic Leadership Effective Strategic Leadership Establishing Establishing Balanced Balanced Organizational Organizational Controls Controls Determining Determining Strategic Strategic Direction Direction Exploiting & Exploiting & Maintaining... Organizational Culture Culture Emphasizing Emphasizing Ethical Ethical Practices Practices Ch12- Determining Strategic Direction Effective Strategic Leadership Effective Strategic Leadership Establishing Establishing Balanced Balanced Organizational Organizational Controls Controls Determining Determining Strategic Strategic Direction Direction Exploiting & Exploiting & Maintaining Maintaining Core Core Competencies... structure the firm effectively to help achieve the vision Ch12- Exploiting & Maintaining Core Competencies Effective Strategic Leadership Effective Strategic Leadership Establishing Establishing Balanced Balanced Organizational Organizational Controls Controls Determining Determining Strategic Strategic Direction Direction Exploiting & Exploiting & Maintaining Maintaining Core Core Competencies Competencies... exploited effectively without developing the capabilities of human capital Ch12- Developing Human Capital Effective Strategic Leadership Effective Strategic Leadership Establishing Establishing Balanced Balanced Organizational Organizational Controls Controls Determining Determining Strategic Strategic Direction Direction Exploiting & Exploiting & Maintaining Maintaining Core Core Competencies Competencies... formulate and implement strategies successfully Ch12- Sustaining an Effective Organizational Culture Effective Strategic Leadership Effective Strategic Leadership Establishing Establishing Balanced Balanced Organizational Organizational Controls Controls Determining Determining Strategic Strategic Direction Direction Exploiting & Exploiting & Maintaining Maintaining Core Core Competencies Competencies... solved only when teams accept the responsibility for the solution Ch12- Emphasizing Ethical Practices Effective Strategic Leadership Effective Strategic Leadership Establishing Establishing Balanced Balanced Organizational Organizational Controls Controls Determining Determining Strategic Strategic Direction Direction Exploiting & Exploiting & Maintaining Maintaining Core Core Competencies Competencies... respect, honesty and ethical practices among employees Ch12- Establishing Balanced Organizational Controls Effective Strategic Leadership Effective Strategic Leadership Establishing Establishing Balanced Balanced Organizational Organizational Controls Controls Determining Determining Strategic Strategic Direction Direction Exploiting & Exploiting & Maintaining Maintaining Core Core Competencies Competencies... Culture Emphasizing Emphasizing Ethical Ethical Practices Practices • Strategic direction means the development of a long-term vision of a firm’s strategic intent • A charismatic leader can help achieve strategic intent • It is important not to lose sight of the strengths of the organization when making changes required by a new strategic direction • Executives must structure the firm effectively to... and corrective actions taken • Financial controls are often emphasized in large corporations and focus on short-term financial outcomes • Strategic control focuses on the content of strategic actions, rather than their outcomes • Successful strategic leaders balance strategic control and financial control (they do not eliminate financial control) with the intent of achieving more positive long-term returns... of a complex set of ideologies, symbols, and core values that is shared throughout the firm and influences the way it conducts business • Shaping the firm’s culture is a central task of effective strategic leadership • An appropriate organizational culture encourages the development of an entrepreneurial orientation among employees and an ability to change the culture as necessary Ch12- Changing Culture . Effective Leadership Exercise of Effective Leadership Effective Strategic Leadership Effective Strategic Leadership Effective Strategic Leadership Effective Strategic Leadership Ch12-14 • Strategic. Returns Effective Effective Strategic Leadership Strategic Leadership Effective Effective Strategic Leadership Strategic Leadership influence influence shapes the formulation of and and Strategic Intent Strategic. Intent Strategic Intent Strategic Intent Strategic Mission Strategic Mission Strategic Mission Strategic Mission Successful Successful Strategic Actions Strategic Actions Successful Successful Strategic