Chapter 12 Strategic Leadership
by Executives
Group members:
Aw Hoay Hoay
Fatin Shafina Binti Mahadi
Nurulain Binti Zakaria
Tan Mei Yee
Abstract
This chapter study about the importance of strategic
leadership by executives and is supported by three types of
research which are studies of CEO succession, case studies
of strategic leaders and survey field studies on CEO
behavior and firm performance. Executives need
understand the constraint and take appropriate action to
influence performance determinants such as efficiency and
process reliability, human relations and resources and
adaptation to the environment in order to reach
organizational effectiveness. Besides single leadership by
executive, shared leadership by an executive team are also
likely to be effective. In addition, monitor the environment
and formulate a good competitive strategy is important for
the executive to achieve organizational effectiveness.
Efficiency
and Process
Reliability
Adaptation
to the
Environment
Human
Resources
and Relations
Organizational
Performance
Adaptation to the Environment
 Responding in appropriate ways
 Important when volatile and
uncertain
 More likely to be successful with a
relevant competitive strategy
 Can be enhanced
Efficiency and Process
Reliability
 Efficiency = Minimize costs and avoid wasted
effort and resources
 Important when offer lower price or financial
crisis
 Process Reliability = Avoiding delays, errors,
quality defects or accidents
 Important component for efficiency
 Improve by using extra resources to produce
quality and standard product or services
 Improve when saving > cost
Human Resources and Relations
 Human capital = Quality of organization’s
human resources
 Related to efficiency and adaptation
 Eg: Talented, dedicated employees often
instrumental for the achievement of both
efficiency and adaption
Leadership
Behaviors
WAYS TO INFLUENCE
THE PERFORMANCE
DETERMINANTS
Decisions about
Competitive
Strategy
Programs,
Systems, and
Structure
Leadership Behaviors





Three general types
Task oriented behaviors
Change oriented behaviors
Relations oriented behaviors
Effectiveness is depends on particular
situation
 Eg: Change oriented behaviors relevant in
rapidly changing environment and used more
by top executives
Programs, Systems, and
Structure
 Implementing or modifying formal programs,




management systems and aspect of formal
structure
An indirect leadership and is complementary
with direct leadership
More likely to accept or success if explain by,
how will benefit, encourage to participate
Can enhance or limit the leadership behavior
Serve as substitutes for some types of direct
behaviors
Decisions about Competitive
Strategy
 Decisions about competitive strategy are
important source of influence
 Primary focus on adaption but is difficult
improves unless consistence changes are
made in efficiency and human capital
 Required some modification of
management program and may involve
negotiation
Need for Flexible, Adaptive
Leadership
 Focus on multiple performance
determinants
 One cannot be improved without
consistent changes in other
 Need to find a balance between
priorities
Coordinating Leadership Across
Levels and Subunits
 Decisions cant implemented successfully
without support from all level leader
 Conflict and resistance will cause drop in
performance
 Difficult to achieve cooperation and
coordination across levels and subunits
 Can coordinate or minimize by have a relevant
core ideology or increase involvement of
different leader in strategic decisions making
Constraints on Executives
CONSTRAINTS
INTERNAL
EXTERNAL
Constraints on Executives
 Internal
 Coalitions in the organizations
 Bernard (2007) Agency theory &
behavioral model
 Organization culture
 Resistance to change
Constraints on Executives
 External
 Products & services, market
 External stakeholders
 Perceive of organization
performance
Constraints on Executives
 Constraints and executive traits as
Joint Determinants
 Interaction
 Situation and different traits of leader
Constraints on Executives
• Constraints and executive traits as Joint
Determinants
External
Constraints
Internal
Constraints
Leader’s
Behavior
Leader’s
Personality
& Skills
Situation and different
traits of leader
▪CEO=figurehead
▪more freedom
▪consevative,
risk-adverse,
compliant
▪ambitous,
dynamic,
innovative
LEAST CONSTRAINTS
SEVERE CONSTRAINTS
Constraints on Executives
Conditions Affecting the Need
for Strategic Leadership
 Periods of Reorientation
 Periods of Convergence
 Influence of Top Management
Conditions Affecting the Need
for Strategic Leadership
Role of top management
Convergence
Periods
Reorientation
Periods
TIME
Conditions Affecting the Need
for Strategic Leadership
 Periods of Reorientation
 Intense activity due to major changes in




organization
Whole organization will be affected
Concurrent changes in interrelated aspects of
strategy, structure, processes and people are
required
Resistances are unavoidable
Guidance and coordination is necessary
Conditions Affecting the Need
for Strategic Leadership
 Periods of Convergence
 Relatively longer periods compared to
reorientation
 Small incremental changes occur for
better adaption to environment
 Pros & cons
Conditions Affecting the Need
for Strategic Leadership
 Influence of Top Management
 Tushman & Romanelli (1985)
Forces for
Forces for
Top management
stability Mechanism for mediating change
Less
Potential
impact
Convergence
Periods
Reorientation
Periods
Larger
Potential
impact
Conditions Affecting the Need
for Strategic Leadership
 Influence of Top Management
 When strategy is already not relevant,
executive often try to improve the
existing strategy rather than introduce a
new one.
 Major changes are hard to implement
since support are difficult to get.
 Majority of reorientation are initiated by
new leadership
Political Power and Strategic
Leadership
 Power of coalitions also influence change
 Hickson et al. (1971) stated more power
goes to subunits with distinct expertise
who can solve critical problems
 Salancik & Pfeffer (1977) highlighted that
political tactics is used to increase or
protect their power even after their
expertise is no longer critical
Executive Tenure and Strategic
Leadership
 Hambrick & Fukutomi life cycle model
Greatly
Influenced By
Implicit Mandate
Experiment with
different
approaches
Narrow
minded and
inflexible
RESEARCH ON EFFECT OF CEO
LEADERSHIP
Succession study
Case study
Survey field study
STUDIES OF CEO SUCCESSION
 “succession studies” attempt to determine how
a change in top leadership affects indicators of
organizational performances.
 Problem:
 Erroneously interpreted result.
 There is three failure:
 To correct org size
 To correct dollar-denominated
 To allow enough time for new leaders to influences
quantitative performances outcomes.
 Researcher do not take account the effects of CEO
skill.
HOW TO SOLVE THE PROBLEM?
 Need to consider internal and external
constraints on a successor CEO.
 Company financial condition.
 Changing economic.
 Timing of succession and timing of the
performances outcomes also important.
 Succession on the important of CEO have
no conclusion because of the many
methodological problem.
CASE STUDY OF STRATEGIC
LEADERSHIP
 Study the influences of the CEO on the
performances.
 Sources info :
 Interview, questionnaires, company record,
annual report, financial database.
 Biographies, autobiographies, magazine article
 Case studies of chief executive:
 Examine type of decision and action that account
for success or failure.
INTENSIVE CASE METHOD
 Involved analysis of the decision and
action.
 Involved the chief executive of a large
company in times of uncertainty.
 Provide alternative way to explore the
effect of CEO succession.
COMPARATIVE CASE
 To see similar pattern of strategic
decision and behavior.
 To compare more or less successful
CEOs in similar companies.
 Examine CEOs who initially successful
but latter experiences failure
LIMITATION OF CASE STUDY
 Difficult to get accurate information
 Information given is biased
 Close with CEO.
 Fear of their reputation.
 Non-disclosed agreement
 Even when accurate info can be obtained, it
maybe difficult to asses the influences of single
CEO.
 Suggestion:
 Researchers make a systematic effort to gather
the relevant information.
SURVEY FIELD STUDY
 CEO behavior and firm performances.
 Examines the relationship between CEO
charismatic leadership and organizational
performances.
 Data:
 Questionnaire
 Archival data.
 Subordinate were ask to rate the charismatic
leadership of their boss.
EFFECTIVENESS is depend on:
 Correlated with corporate financial performances
 Environmental uncertainty
Theories of transformational and charismatic
leadership are focused primarily on the way leaders
influences relations.
PROBLEM:
Do not explain a chief executive’s impact on other
organizational-level determinant.
Strategic leadership- “managing” rather than
“leading”
STRATEGIC LEADERSHIP BY EXECUTIVE
TEAMS.
 Potential advantages of executive teams:
 Better strategic decisions when members have
relevant skills and knowledge that the CEO lacks.
 Members have relevant skills and knowledge that CEO
lack.
 Decision made. (interest of the member/quality)
 Important task become easy (share burden)
 Communication and cooperative among executives
from diff subunit is improved (meeting)
Depends on:
 Situation
 Important in Complex
 Rapidly changing environment that places
many external demand on CEO.
 Teams member (diverse)
 Attitude, personality and skill of the CEO.
It is more difficult to
develop mutual trust and
cooperation when team members
represent subunits with
different objectives or
members are competing to
become the successor to
current CEO.
Executive teams and organization
effectiveness
 Emphasis on decision making
 Important element to ensure the effective of the
decision-organization member
 Find out-by using simultaneous evaluation and
related other strategic decision + consider about
technical planning = effective of decision
making
Two Key Responsibilities For
Top Executive
 Responsible that usually important compare
to lower-level leader
 Offer guideline to ensure that
the responsibilities undertaken are effectively
Monitoring
the
environment
Developing
competitive
strategy
Monitoring the Environment
 External environment & identify
threats and opportunities for org.provide information that need for
strategic planning.
Guidelines
 Identify relevant information to gather
 Use multiple source of relevant
information
 Learn what client and supplier need &
want
 Learn about the product and activities of
competitors
 Relate environmental information to
strategic plan
Developing Competitive
Strategy
 Compete effectively in the
marketplace and remain profitable.
 Competitive strategy-different, lowcost, well-knowledge
Guidelines




Determine long term objectives and priorities
Assess current strengths and weaknesses
Identify core competencies
Evaluate the need for major change in
strategy
 Identify promising strategies
 Evaluate the likely key outcomes of strategy
 Involves others executive in selecting
strategy
Reference
 Gary Yukl. (2010). Leadership in
Organizations Seventh Edition. Selangor:
Prentice Hall.