Part I: Vision
Chapter 2: Leading Strategically
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Strategic leadership involves developing a
vision for the firm, designing strategic actions to
achieve this vision, and empowering others to
carry out those strategic actions.
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A top management team is the group of
managers charged with the responsibility to
develop and implement the firm’s strategies.
Generally, the top management team is
composed of officers of the company with the
title of vice president and higher.
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Homogeneous team
Heterogeneous team
Hetero or Homogeneity for TMTs:
Does TMT Diversity = Performance
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Hiring from within = keeping talent
Most new CEOs selected for the job in an inside
succession are unlikely to change in any drastic
way the strategies designed under the
leadership of the former CEO.
However, when the firm is performing poorly,
it is more common to select an outside
successor.
Or as in the case of Boeing’s Jim McNerney,
there was a firm image problem with the
government and customers.
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Remember the RBV?
Resources are the basis for a firm’s competitive
advantages and strategies.
Tangible resources
 Intangible resources
 Financial capital
 Example: TiVo and intellectual property
 Example: What if Walmart’s frozen pizza suppliers
attempted to “organize” and set prices? How should
Walmart respond?
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Human Capital as a resource
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Employee KSAs
Manager’s ability to execute strategy
Social Capital as a resource
Internal social capital
 External social capital
 Social capital is most effective when partners
trust each other (strong ties).
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Leaders of today need the essential qualities of what we now call a
Cross-Enterprise Leader—a leader adept at building, fostering and
influencing a complex web of relationships across all levels—from
employees, partners and suppliers to customers, citizens, and even
competitors.
Scott Washburn (VP at TreeTop)- “fostering effective relationships
at all levels”
Access to information first
 Access to powerful “informal” leaders
 Catch 22 with being “buddies” with direct reports.
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MBWA, assess social networks, timed deposits and withdrawals
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An entrepreneurial culture encourages employees
to identify and exploit new opportunities.
encourages creativity and risk taking
tolerates failure
championing innovation is rewarded
Examples: Steve Jobs & Apple
 3M
 Google Engineers with 20% “me time”.
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Strategic leaders should determine the boundaries of acceptable
behavior; establish the tone for organizational actions; and
ensure that ethical behaviors are expected, praised, and
rewarded and the opposite for unethical behavior
Exec vs. hourly punishment….equivalent?
Recently, cases in which strategic leaders acted opportunistically
in managing their firms have been a major concern: Enron &
Tyco.
SOX requires massive confidence in your team.
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Most effective: balanced strategic and financial
controls for long term evaluation of strategy
content.
What get’s talked about gets done, what gets
measured gets done right.
Balanced Scorecard
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Financial (profit, growth, and shareholder risk)
Customers (valued received from products)
Internal business processes (asset use)
Learning & growth (culture of innovation/change)
Human Capital (KPIs  $$$)
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SLs have to lead through people and consider
the cascading effect; they can’t be in front of
everyone all the time.
SLs must manage the social network
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Unsolicited deposits of information
Strategic withdrawals of information
People lead like they are led; SLs set the tone.
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Modeling and reinforcement
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How to SLs build it?
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Competence
 Get on the winning side
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Integrity
 Especially the little things, be above reproach- be moral
(Global phenomenon but largely U.S. centric)
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Benevolence
 If you have the option, give people what they don’t
deserve, go out of your way obviously and rules of
social transactions kick in.
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What is the result?
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Access to information
Fast decisions based on candor
Better business deals based on anticipated
reciprocity
From economic ONLY to include social transactions
Globally, the difference in success and failure
 E.g., Jim Clifton and the Gallup Path on global contract
law and enforcement
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How the Great Fall