Chapter 12
Strategic Leadership
Michael A. Hitt
R. Duane Ireland
Robert E. Hoskisson
Transparency 12-1
©1999 South-Western College Publishing
Strategic
Inputs
Chapter 2
External
Environment
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
Strategy Implementation
Chapter 4
Business-Level
Strategy
Chapter 5
Competitive
Dynamics
Chapter 6
Corporate-Level
Strategy
Chapter 10
Corporate
Governance
Chapter 11
Structure
& Control
Chapter 7
Acquisitions &
Restructuring
Chapter 8
International
Strategy
Chapter 9
Cooperative
Strategies
Chapter 12
Strategic
Leadership
Chapter 13
Outcomes
Strategic
Strategic
Actions
Strategy Formulation
The Strategic
Management
Process
Feedback
Transparency 12-2
Strategic
Competitiveness
Above Average
Returns
Entrepreneurship
& Innovation
Strategic Leadership
Strategic Leadership involves:
The ability to anticipate, envision, maintain flexibility
and empower others to create strategic change
Multi-functional work that involves working through
others
Consideration of the entire enterprise rather than just
a subunit
Requires a Managerial frame of reference
Transparency 12-3
Effective
Strategic
Leadership
shapes the development of
Strategic
Intent
and
Strategic
Mission
influence
Successful
Strategic
Actions
Formulation
of Strategies
Transparency 12-4
Implementation
of Strategies
External Environment
Industry Structure
Rate of market growth
# and type of competitors
Political/Legal constraints
Organizational
Product differentiation
Factors which affect...
Characteristics
Size and age
Culture
Resource availability
EmployeeCharacteristics
interaction
of the Manager
Transparency 12-5
Tolerance for ambiguity
Commitment to the firm
Interpersonal skills
Aspiration level
Self-confidence
Managerial
Discretion
Top Management Teams
Top management teams are comprised of the key
managers who are responsible for formulating and
implementing the organization’s strategies
A heterogeneous top management team with varied
expertise and knowledge can draw on multiple
perspectives when evaluating alternative strategies and
building consensus
A top management team must also be able to function
effectively as a team in order to implement strategies.
A heterogeneous team makes this more difficult.
Transparency 12-6
Strategic Leadership
Chief Executive Officers can gain so much power that
they are virtually independent of oversight by the
Board of Directors
This is especially true when the CEO is also Chairman
of the Board of Directors
CEOs of long tenure can also wield substantial power
The most effective forms of governance share power
and influence among the CEO and Board of Directors
Transparency 12-7
Managerial Labor Markets
The internal labor market is comprised of the career
path alternatives available to a firm’s managers
Selecting internal candidates for management positions
helps to build on valuable firm-specific knowledge
The external labor market includes the collection of
career opportunities for managers outside their firm
Selecting an outsider often brings fresh insights and
may energize the firm with innovative new ideas
Transparency 12-8
Effects of CEO Succession and Top
Management Team Composition on Strategy
Managerial Labor Market:
CEO Succession
Homogeneous
Top
Management
Team
Composition
Heterogeneous
Transparency 12-9
Internal
CEO Succession
External
CEO Succession
Stable
Strategy
Ambiguous:
Possible change in
Top Management
Team and Strategy
Stable
Strategy with
Innovation
Strategic
Change
Exercise of Effective Leadership
Determining
Strategic
Direction
Developing a
long-term vision
of the firm’s
Strategic Intent
Transparency 12-10
Effective
Strategic
Leadership
Exercise of Effective Leadership
Determining
Strategic
Exploiting &
Direction
Maintaining
Core
Competencies
Transparency 12-11
Effective
Strategic
Leadership
Leaders must ensure
that the firm’s core
competencies are
emphasized in strategic
implementation efforts
Exercise of Effective Leadership
Determining
Strategic
Exploiting &
Direction
Maintaining
Core
Developing
Competencies
Human
Capital
Effective
Strategic
Leadership
No strategy can be
effective unless the
firm is able to develop
and retain good people
to carry it out
Transparency 12-12
Exercise of Effective Leadership
Determining
Strategic
Exploiting &
Direction
Maintaining
Core
Developing
Competencies
Human
CapitalSustaining
an Effective
Organizational
Culture
Transparency 12-13
Effective
Strategic
Leadership
Leaders play a
critical role in
shaping and
reinforcing the
firm’s culture
Changing Culture and Reengineering
The benefits of Business Reengineering are
maximized when employees believe that:
Every job in the company is essential and important
All employees must create value through their work
Constant learning is a vital part of every person’s job
Teamwork is essential to implementation success
Problems are solved only when teams accept the
responsibility for the solution
Transparency 12-14
Exercise of Effective Leadership
Determining
Strategic
Exploiting &
Direction
Maintaining
Core
Developing
Competencies
Human
CapitalSustaining
an Effective
Organizational
Emphasizing
Culture
Ethical
Practices
Transparency 12-15
Effective
Strategic
Leadership
Leaders set the
tone for creating
an environment of
mutual respect,
honesty and
ethical practices
among employees
Exercise of Effective Leadership
Determining
Effective
Strategic
Strategic
Exploiting &
Direction
Leadership
Maintaining
Core
Developing
Competencies
Human
Controls set the
CapitalSustaining
an Effective
parameters for
Organizational
strategic
Emphasizing
Culture
Ethical
implementation
Establishing
Practices
and for taking
Balanced
corrective
Organizational
action
Controls
Transparency 12-16