The Scope and Language of Operations Management

Chapter 5
Leadership and
Strategic Planning
The ability to positively influence
people and systems under one’s
authority to have a meaningful
impact and achieve important
Strategic Planning
The process of envisioning an
organization’s future and
developing the necessary goals,
objectives, and action plans to
achieve that future.
The Baldrige “Leadership
Customer and
Market Focus
Executive Leadership
Defining and communicating business directions
Ensuring that goals and expectations are met
Reviewing business performance and taking
appropriate action
Creating an enjoyable work environment
Soliciting input and feedback from customers
Ensuring that employees are effective contributors
Motivating, inspiring, and energizing employees
Recognizing employee contributions
Providing honest feedback
Key Idea
Effective leadership requires five core
leadership skills: vision, empowerment,
intuition, self-understanding, and value
Dale Crownover, President, Texas Nameplate Co.
Leading Practices – Leadership
(1 of 2)
Create a customer-focused strategic vision
and clear quality values
Create and sustain leadership system and
environment for empowerment,
innovation, and organizational learning
Set high expectations and demonstrate
personal commitment and involvement in
Integrate quality values into daily
leadership and management and
communicate extensively
Leading Practices – Leadership
(2 of 2)
Review organizational performance
Create an environment and governance
system that fosters legal and ethical
Integrate public responsibilities and
community support into business
Leadership Theories
Trait approach
Behavioral approach
Contingency (situational) approach
Role approach
Emerging theories:
Attributional theory
Transactional theory
Transformational leadership theory
Substitutes for leadership theory
Emotional intelligence theory
Key Idea
Some of the newer theories, such as
attributional, transactional, and emotional
intelligence theories, enter the realm of
human emotions to explain how good
leaders seem to succeed, and where
mediocre ones show mixed results or fail
to accomplish their goals.
Leadership System
Leadership system – how decisions are
made, communicated, and carried out
at all levels; mechanisms for
leadership development, selfexamination, and improvement
Effectiveness of leadership system
depends in part on its organizational
Key Idea
An effective leadership system respects
the capabilities and requirements of
employees and other stakeholders, and
sets high expectations for performance
and performance improvements.
Governance – the system of management
and controls exercised in the stewardship of
an organization.
Approving strategic direction
Monitoring and evaluating CEO performance
Succession planning
Financial auditing
Executive compensation
Shareholder reporting
Leadership and Social
Health, safety, and environment
Community support
Key Idea
Practicing good citizenship refers to
leadership and support—within the limits
of an organization’s resources—of publicly
important purposes, including improving
education, community health,
environmental excellence, resource
conservation, community service, and
professional practices.
Strategic Planning
“A strategy is a pattern or plan that integrates
an organization’s major goals, policies, and
action sequences into a cohesive whole.”
Formal strategy includes:
Goals to be achieved
Policies to guide or limit action
Action sequences, or programs, that
accomplish the goals
Leading Practices - Strategic
Active participation of top management,
employees, customers, suppliers
Systematic planning systems for strategy
development and deployment
Use of a variety of external and internal data
Align short-term action plans with long-term
strategic objectives, communicate them, and
track progress
Derive human resource plans from strategic
objectives and action plans
Strategic Planning Process
Reason for existence Future intent
Attitudes and policies
Guiding Principles
Environmental assessment
Broad statements of direction
Strategic Objectives
Action Plans
Capabilities and risks
Things to change or
Definition of products and services,
markets, customer needs, and distinctive
Solectron: “…to provide worldwide
responsiveness to our customers by
offering the highest quality, lowest total
cost, customized, integrated, design,
supply chain, and manufacturing solutions
through long-term partnerships based on
integrity and ethical business practices.”
Where the organization is headed and what
it intends to be
Brief and memorable - grab attention
Inspiring and challenging - creates excitement
Descriptive of an ideal state - provides guidance
Appealing to all stakeholders - employees can
identify with
Solectron: “Be the best and continuously
Values (Guiding Principles)
Define attitudes and policies for all
employees, which are reinforced
through conscious and subconscious
behavior at all levels of the
Pepsico: integrity, honesty, teamwork,
accountability, balance
Environmental Assessment
Customer and market requirements,
expectations, and opportunities
Technological and other innovations
Organizational strengths and weaknesses
Financial, societal, ethical, regulatory and
other potential risks
Changes in global or national economy
Factors unique to the organization, such as
partner and supply chain needs
Key Idea
Strategies are broad statements that set the
direction for the organization to take in
realizing its mission and vision.
Strategic objectives are what an organization
must change or improve to remain or
become competitive.
Action plans are things that an organization
must do to achieve its strategic objectives.
Strategy Deployment
Developing detailed action plans,
defining resource requirements and
performance measures, and aligning
work unit, supplier, or partner plans
with overall strategic objectives.
Policy Deployment
(Hoshin Kanri)
Top management vision leading to longterm objectives
Deployment through annual objectives
and action plans
Negotiation for short-term objectives and
resources (catchball)
Periodic reviews
See Figure 5.6!
Key Idea
Strategic objectives and action plans often
require significant changes in human resource
requirements, such as redesigning the work
organization or jobs to increase employee
empowerment and decision making,
promoting greater labor/management
cooperation, modifying compensation and
recognition systems, or developing new
education and training initiatives.
The Seven Management and
Planning Tools
Affinity diagrams
Interrelationship digraphs
Tree diagrams
Matrix diagrams
Matrix data analysis
Process decision program charts
Arrow diagrams
Leadership and
Organizational Structure
Basic types of organizational structures
– Line organization
– Line and staff organization
– Matrix organization
Key Idea
As more and more companies accept the
process view of organizations, they are
structuring the quality organization around
functional or cross-functional teams.
Leadership in the Baldrige
The Leadership Category examines how an organization’s
senior leaders address values, directions, and performance
expectations, as well as a focus on customers and other
stakeholders, empowerment, innovation, and learning. Also
examined is the organization’s governance and how the
organization addresses its public and community
1.1 Organizational Leadership
a. Senior Leadership Direction
b. Organizational Governance
b. Organizational Performance Review
1.2 Social Responsibility
a. Responsibilities to the Public
b. Ethical Behavior
c. Support of Key Communities
Strategic Planning in the
Baldrige Criteria
The Strategic Planning Category examines how an
organization develops strategic objectives and action
plans. Also examined are how chosen strategic objectives
and action plans are deployed and how progress is
2.1 Strategy Development
a. Strategy Development Process
b. Strategic Objectives
2.2 Strategy Deployment
a. Action Plan Development and Deployment
b. Performance Projection
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