Chapter 2 Leading Strategically Through Effective Vision and Mission

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Chapter 2Leading Strategically Through Effective
Vision and Mission
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OBJECTIVES
Explain how strategic leadership is essential to
strategy formulation and implementation
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Understand the relationships among vision,
mission, values and strategy
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Understand the roles of vision and mission in
deter-mining strategic purpose and strategic
coherence
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Identify a firms stakeholders and explain why
such identification is critical to effective
strategy formula-tion and implementation
Explain how ethics and biases may affect
strategic decision-making
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PULLING A USD 15 BILLION COW OUT OF A DITCH
Xerox reaches profitability
Mulcahy takes over
The fall from the nifty 50
She lends a turnaround

• 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)

• October 2001, Xerox 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.

• Refines Xerox vision and reminds people of core
  values
• Aligns operation with the refined mission and
  values
• Sells Xeroxs China and Hong Kong operations and
  half of a stake in a joint venture with Fuji
• Closes down inkjet business

• Annual expenses cut 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

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STRATEGIC LEADERSHIP
Leadership
Strategic leadership
The task of exerting influence on other peoples
pursuit of goals in an organizational context
Managing an overall enterprise and influencing
key organizational out-comes, such as company
wide performance, competitive superiority,
innovation, strategic change, and survival
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EXECUTIVE ROLES
Formal authority and status
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LEVEL 5 LEADERS
Capabilities
Build greatness through combination of will and
humility
Level 5leaders
Can lead a group to superior levels of performance
Level 4 leaders
Organize people resources to accomplish
predetermined objectives
Level 3 leaders
Work effectively with others as a member of a
team to achieve group objectives
Level 2 leaders
Make individual contributions through talent and
work ethic
Level 1 leaders
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TWO ATTRIBUTES OF LEVEL 5 LEADERS

• Being someone
• who prefers to share credit rather than hog it
• who tends to shun public attention,
• act with calm determination, and
• exercise ambitions on the companys behalf rather
  than ones own

• 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

Professional modesty
Professional will
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WHAT DOES IT TAKE TO BE A CEO?
An Ivy league MBA?
Charisma?
There is little consensuson whether personality
or background matters more
International management experience?
Integrity
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CRITERIA OF AN EFFECTIVE TOP-MANAGEMENT TEAM

• 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.

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VISION, MISSION AND STRATEGY
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
Vision and Mission
Strategic Goals and objectives

• Fundamental purpose
• Values
• View of future

• Specific targets
• Measurable outcomes

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VISION USES OF AMBITION AND AMBIGUITY
Sonys vision in early 1950s becoming the
company that most changes the worldwide image of
Japanese products as being of poor quality.

• 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

CitiBanks vision in 1915 the most powerful,
the most serviceable, the most far reaching
world financial institution the world has ever
seen.
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VISION ANCHORED IN GOALS AND OBJECTIVES
Vision
Examples
Goalsand objectives
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STRATEGY COHERENCE
Congruence
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BENEFITS OF USING STAKEHOLDER ANALYSIS

• Can use the opinions of the most powerful
  stakeholders to shape your strategy and tactics
  at an early stage.
• Gain support from powerful stakeholders to help
  win more resources.
• Can ensure that stakeholders fully understand
  what you are doing and understand the benefits of
  your project.
• Can anticipate what peoples reactions to your
  project may be and build actions into the plan
  that will win peoples support.

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STAKEHOLDER ANALYSIS
Stakeholders Individuals or groups who have an
interest in an organizations ability to deliver
intended results and maintain the viability of
its products and services
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MAPPING STAKEHOLDER INFLUENCE AND IMPORTANCE
Importance of Stakeholder
Little/Noimportance
Moderateimportance
Significant importance
Influence ofstakeholder
Unknown
Unknown
Little/Noimportance
Moderateimportance
Significant importance
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ETHICS AND BIASES
Have any potential biases clouded our
decision-making process?
Is the decisionethical?

• Common illusions about ourselves (e.g.,
  favorability optimism , control)
• Escalating commitments
• Self-serving fairness bias
• Overconfidence bias
• Ethnocentrism and stereotyping
• Risk assessment

• Authority structures
• Incentive systems
• Role of corporate governance