Chapter 2
Leading Strategically Through
Effective Vision and Mission
OBJECTIVES
1 Explain how strategic leadership is essential to
strategy formulation and implementation
2 Understand the relationships among vision, mission,
values and strategy
3 Understand the roles of vision and mission in determining strategic purpose and strategic coherence
4 Identify a firm’s stakeholders and explain why such
identification is critical to effective strategy formulation and implementation
5 Explain how ethics and biases may affect strategic
decision-making
1
PULLING A USD 15 BILLION COW OUT OF A DITCH
The fall from
the nifty 50
• 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)
Mulcahy takes
over
She lends a
turnaround
Xerox
reaches
profitability
• October 2001, Xerox • Refines Xerox vision • Annual expenses cut
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”.
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
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
2
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 outcomes, such as company
wide performance,
competitive superiority,
innovation, strategic
change, and survival
3
EXECUTIVE ROLES
Interpersonal roles
• Figure head
• Leader
• Liaison
Informational roles
• Monitor
• Disseminator
• Spokesperson
Formal authority
and status
Decision roles
• Entrepreneur
• Disturbance handler
• Resource allocator
• Negotiator
4
LEVEL 5 LEADERS
Capabilities
Level 5
leaders
Build greatness through
combination of will and humility
Level 4 leaders
Can lead a group to superior
levels of performance
Level 3 leaders
Organize people resources to
accomplish predetermined
objectives
Level 2 leaders
Work effectively with others as a
member of a team to achieve group
objectives
Level 1 leaders
Make individual contributions
through talent and work ethic
5
TWO ATTRIBUTES OF LEVEL 5 LEADERS
Being someone
• 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
• who prefers to
share credit rather
than hog it
Professional
will
Professional
modesty
• who tends to shun
public attention,
• act with calm
determination, and
• exercise ambitions
on the company’s
behalf rather than
one’s own
6
WHAT DOES IT TAKE TO BE A CEO?
Charisma?
Integrity
An Ivy league
MBA?
International
management
experience?
There is little
consensus
on whether
personality or
background
matters more
7
CRITERIA OF AN EFFECTIVE TOP-MANAGEMENT TEAM
1.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.
8
VISION, MISSION AND STRATEGY
Vision and Mission
• Fundamental purpose
• Values
• View of future
Strategic Goals
and objectives
• Specific targets
• Measurable
outcomes
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
9
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.”
CitiBank’s vision in 1915:
“the most powerful, the most
serviceable, the most far reaching
world financial institution the world
has ever seen.”
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
10
VISION ANCHORED IN GOALS AND OBJECTIVES
Vision
Examples
Goals
and
objectives
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”
11
STRATEGY COHERENCE
Strategic coherence is
Arenas
• The symmetrical co-alignment
of the five elements of a firm’s
strategy
Staging
Economic
logic
Vehicles
• The congruence of policies in
functions (e.g., finance,
production, marketing) with
these elements
• The overarching fit of various
Differentiators
businesses under the corporate
umbrella
12
BENEFITS OF USING STAKEHOLDER ANALYSIS
1.Can use the opinions of the most powerful stakeholders to
shape your strategy and tactics at an early stage.
2.Gain support from powerful stakeholders to help win more
resources.
3.Can ensure that stakeholders fully understand what you
are doing and understand the benefits of your project.
4.Can anticipate what people’s reactions to your project
may be and build actions into the plan that will win
people’s support.
13
STAKEHOLDER ANALYSIS
After identifying stakeholders ask
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
Steps in identifying
stakeholders
1. Determine influences
on strategy
formulation decisions
2. Determine stakeholders power and
influence over
strategy execution
decisions
3. Determine the effects
of strategic decisions
• 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?
14
MAPPING STAKEHOLDER INFLUENCE AND IMPORTANCE
Importance of Stakeholder
Influence of
stakeholder
Unknown
Little/No
importance
Moderate
importance
Significant
importance
Unknown
Little/No
importance
Moderate
importance
Significant
importance
15
ETHICS AND BIASES
Is the decision
ethical?
Have any potential biases
clouded our decision-making
process?
New strategy –
A new means to
accomplish
goals
Implementation –
Executing new
strategy to realize
goals
• 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
16