CH2: Managing the Strategy Process Flashcards
Strategic Leadership
Executives’ use of power and influence to direct the activities of others when pursuing an org. goals
Power
strategic leader’s ability to influence the behavior of other org. members to do things, including things they would not do otherwise
upper-echelons theory
a conceptual framework that views org. outcomes - strategic choices and performance levels - as reflections of the values of the members of the top management team .
What is the Level-5 leadership pyramid?
A conceptual framework that shows leadership progression through five distinct, sequential levels.
What did Collins find out about the companies he identified as great?
They were led by Level-5 executives.
How does the Level-5 leadership pyramid work?
An effective strategic leader goes through a natural progression of five level. Each level builds upon the previous one and an individual can move on to the next level of leadership only when the current level has been mastered.
Level1:
Highly Capable individual: make productive contributions through motivation, talent knowledge, and skills.
Level2:
Contributing Team Member:
Uses high level of individual capability to work effectively with others in order to achieve team objectives.
Level3:
Competent Manager:
Is efficient and effective in organizing resources to accomplish stated goals and objectives. Does things right.
Level4:
Effective Leader:
Presents compelling vision and mission to guide groups toward superior performance.
Level5:
Executive:
Build enduring greatness through a combination of willpower and humility.
Strategy formulation
concerns the choice of strategy in terms of where and how to compete
strategy implementation
concerns the organization, coordination, and integration of how work gets done, or strategy execution
In what areas can strategy formulation be broken down?
Corporate strategy
Business strategy
Functional strategy
Corporate strategy
concerns questions relating to where to compete as to industry, markets, geography
Business strategy
concerns the question of how to compete. (cost leadership, differentiation, value innovation)
Functional strategy
how to implement a chosen business strategy. Different corporate and business strategies will require different activities across various functions
Who formulates the corporate strategy?
Corporate executives
Where does business strategy occur in?
Occurs within strategic business unity (SBUs)
SBUs
standalone divisions of a larger conglomerate, each with their own profit-and-loss responsibility
Where are the business functions?
They are within each strategic business unit (accounting, finance, HR, manufacturing)
strategic management process
method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage
Which three approaches do strategic leaders rely on when setting the strategy process?
- Strategic planning (Top-down)
- Scenario planning
- Strategy as planned emergence
Top-down strategic planning
A rational, data-driven strategy process through which top management attempts to program future success
When does the top-down approach work well?
When the environment doesn’t change that much. Top-down strategic planning rests on the assumption that we can predict the future from the past.
Scenario planning
strategy planning activity in which top management envisions different what-if scenarios to anticipate plausibel futures in order to derive strategic responses.
(it results in a feedback loop of the AFI strategy elements because of constant revision)
black swan events
Incidents that describe highly improbable but high-impact events
dominant strategic plan
the strategic option that top managers decide most closely matches the current reality and which is then executed
illusion of control
a tendency by people to overestimate their ability to control events
Strategy as planned emergence (Henry Mintzberg)
Realized strategy is a combination of top-down intended strategy and bottom-up emergent strategy
What exactly happens in the strategy as planned emergence?
The strategy process begins with a top-down strategic plan based on an analysis of external and internal env. Parts of the intended strategy are likely to fall by the wayside because of unpredictable events and turn to unrealized strategy. The realized strategy is formulated through a combination of top-down and bottom-up emergent strategy.
realized strategy
formulated through a combination of top-down intentions and bottom-up emergent strategy.
emergent strategy
describes any unplanned strategic initiative bubbling up from deep within the organization
What is a key feature in the strategy as a planned emergence model?
strategic initiative, which is any activity a firm pursues to explore and develop new products and processes, new markets…
Strategic initiatives can bubble up from deep within a firm through:
- Autonomous action
- Serendipity
- Resource-allocation process (RAP)
Autonomous actions
strategic initiatives undertaken by lower-level employees on their own volition and often in response to unexpected situations
Serendipity
describes random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm’s strategic initiatives
Resource-Allocation process (RAP)
determines the way it allocates its resources and can be critical in shaping its realized strategy.
planned emergence
Strategy process in which org. structure and systems allow bottom-up strategic initiatives to emerge and be evaluated and coordinated by top-management
stakeholder strategy
integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage
stakeholder impact analysis
decision tool with which strategic leaders can recognize, prioritize, and address the needs of different stakeholders
When does a stakeholder have power over a company?
When it can get the company to do something that it would not otherwise do
When does a stakeholder have a legitimate claim?
When it is perceived to be legally valid or otherwise appropriate
When does a stakeholder have an urgent claim?
When it required a company’s immediate attention and response
Stakeholder Impact analysis 5 steps
1: Who are our stakeholders?
2: What are our stakeholders interests and claims?
3. What opportunities and threats do our stakeholders present?
4: What economic, legal.. responsibilities do we have to our stakeholders?
5: What should we do to effectively address the stakeholder concerns?
