Developing strategy Flashcards
STRATEGIC LEADERSHIP - THE MEANING OF, AND NEED FOR, LEADERSHIP
What is leadership according to Johnson et al (2017)?
What is a leader according to Maccoby (2017)?
To be effective, leaders need to have the ability to do what?
What does Adair (1979) suggest effective leadership comes from and what is this known as? (3)
Adair (1979) suggests every leadership decision emanates from what and what will an effective leader be able to do?
Johnson et al (2017) = Leadership is the process of influencing an organisation (or group within an organisation) in its efforts towards achieving an aim or goal’
Maccoby (2017) = a leader is someone with followers
the ability to change how people think, as well as to influence what they do
Adair (1979) = ‘action centred leadership’ = suggests that effective leadership comes at the centre of the recognition of:
(1) individual = the need of each person
(2) group = the aligned needs of the mixture of different people within a team
(3) task = the requirements for the team of individuals to fulfil the strategic task
Every leadership decision will emanate from 1 of these 3 aspects, and the effective leader will be able to take decisions to ensure that all 3 perspectives are satisfied appropriately
STRATEGIC LEADERSHIP - THE MEANING OF, AND NEED FOR, LEADERSHIP
What is am autocratic leader?
What is a participative leader?
Johnson et al (2017) note that the many leadership styles may be fitted into two general types: transformational and transactional.
What is a transformational leader?
Name an example.
What is a transactional leader?
Name an example.
What does successful strategic leadership require?
Autocratic leader = will dictate and drive the strategic direction
Participative leader = will work with others for a combined decision on direction
Transformational leader = will focus on the building of the strategic vision, the creation of identity and empowerment, and the development of an appropriate culture
E.g., Steve Jobs = original inspiring entrepreneur behind an organisation
Transactional leader = concerned with making sure that the operational flow is appropriate to enable the strategy to be achieved
= term ‘transaction’ refers to the motivation of followers by the exchange of reward for performance
E.g., Fred Goodwin at RBS plc before the 2007 financial crisis
Requires a combination of both transformational and transactional leadership and autocratic and participative leadership
STRATEGIC LEADERSHIP - MODELS OF LEADERSHIP AND ORGANISATION - ESSENTIAL SKILLS
What are the 6 key skills that Schoemaker suggests are required for a successful strategic leader?
Leaders should (as and where appropriate):
- Anticipate = show constant vigilance to consider potential changes within the business and ambiguous threats and opportunities
- Challenge = have a perpetual questioning of the status quo
- Interpret = assimilate complex and conflicting information viewed in the context of previous strategic decision
- Decide = drive strategic action after a robust and appropriate consideration process
- Align = bring together differing stakeholder expectations
- Learn = the promotion of a culture of organisational enquiry to ensure that all participants in the strategy process understand why some strategies succeed and some fail
STRATEGIC LEADERSHIP - MODELS OF LEADERSHIP AND ORGANISATION - PRINCIPLE CENTRED LEADERSHIP
What does Covey (1989) suggest is the basic task of leadership?
What are Covey (1992)’s 4 core dimensions that are required to be an effective leader?
Cover (1989) = ‘The basic task of leadership is to increase the standard of living and the quality of life for all stakeholders’
- Security = a strategic leader must maintain their own professional ability and integrity through relevant continual learning
- Guidance = a strategic leader must develop the ability to communicate with different parties who will be looking to them for guidance
- Power = a strategic leader must learn how to use their power over the lives/paths of other people for the benefit of the individual, the group/team and the task (linked to Adair concept)
- Wisdom = a strategic leader must find the time to think before acting
STRATEGIC LEADERSHIP - MODELS OF LEADERSHIP AND ORGANISATION - THE LEARNING ORGANISATION
How is a learning organisation possible?
What is Senge’s fivefold approach to achieve systemic thinking?
What are the 2 benefits of creating a shared vision (step 3)?
How will the strategic leader facilitate this?
Learning organisation is only possible because of the people within, each on their own personal strategic journey
The learning organisation is built from 5 cumulative stages, and is best viewed as an increasing model:
- Personal mastery = the strategic leader should encourage each individual to utilise and develop their own particular, unique skill set to master their area of expertise
- Mental models = the strategic leader will then encourage each individual to explore anything that is remotely practical to stretch the mind of the induvial and the potential of the organisation
- Shared vision = the strategic leader will then encourage each individual to develop their communication ability to share their vision and mental models to a wider group of people
- Team learning = once visions have been shared a natural process of team learning will emerge = people act together to create shared desired results
- Systemic thinking = in the emergence of systems thinking, the strategic leader will need to bring together the individual, team, and task to focus on strategic outcomes
Benefits = (1) will embed the mental models within a wider reality, (2) will encourage others to also begin to develop their own mastery and mental models
The strategic leader will facilitate the sharing process through workshops and other such events, and ensuring the involvement of all appropriate stakeholders
SYSTEMS AND STRATEGY - BUILDING A SWOT ANALYSIS OF TODAY
By identifying, considering and challenging the interaction of strengths, weaknesses, opportunities and threats we are able to achieve what?
What are the strengths, weaknesses, opportunities and threats predominantly based on?
How do strengths, weaknesses, opportunities and threats fit together?
What is the advantage of developing a comprehensive and vibrant SWOT approach to business analysis and review? (3)
A comprehensive understanding of why today looks like today, why the business is performing in the way that it is performing, and why people behave in the way they behave
strengths and weaknesses of an organisation are predominantly based around the internal drivers (easier to control than external aspects)
opportunities and threats are predominantly based around external drivers
If an opportunity is taken it can become a strength, if a weakness is not resolved it can become a threat
To understand:
(1) how the strengths are able to combat the weaknesses and avoid them becoming threats
(2) how the optimal strategic opportunities can be identified and be turned into strengths within the organisation
(3) how the strengths, either existing or through realisation of opportunity, can be used to mitigate the threats
SYSTEMS AND STRATEGY - BUILDING A SWOT ANALYSIS OF TODAY
To compile and effectively use a SWOT analysis, what are the 6 simple rules?
- Ensure that the analysis is focused and brief (good to restrict each segment to equal max. no. of aspects - 5 or 9 are good benchmarks)
- Each point should be restricted to a relatively small number of words
- Relative positioning within the matrix, particularly with regard to strength and weakness, can be important
- The completed analysis should be used for debate, challenge and brainstorming within the organisation
- There is a need for timely and recent data and information
- There should be a consistent approach each time the SWOT analysis is undertaken and communicated
SYSTEMS AND STRATEGY - BASIC ENVIRONMENTAL CONSIDERATIONS
What is the micro-environment?
Name an example.
What is the macro-environment?
Name an example.
Micro-environment (near environment) = is external to the organisation but is relatively close
E.g., if organisation needs cash and interest rates are low, the company should be able to negotiate an appropriate loan with the bank = this is an external structure and force, but the basic dynamics will be within the organisation’s negotiating control
Macro-environment (far environment) = is external to the organisation but is much further away than the micro-environment, and usually outside organisation’s direct control
E.g., a major financial crisis, increase interest rates, the increasing of taxation on customers, all would be outside organisation’s control but could have a significant impact on the business
SYSTEMS AND STRATEGY - RESOURCE CONSIDERATION
What is meant by determining an operational fit?
SYSTEMS AND STRATEGY - SUPPLY CHAIN THINKING
What are the 3 underpinning aspects of an organisational supply chain?
What are the 4 categories of inputs?
What is transformation?
= It is important to ensure that strategic thinking is based around reality rather than an unachievable vision = need to take a realistic position on resources that are currently available, or those that are believed to be obtainable
SUPPLY CHAIN THINKING
To think strategically, must be able to understand and assess the strategic significance of the 3 underpinning aspects of an organisational supply chain: (1) inputs, (2) transformation (USP), and (3) outputs (goods/services)
- People = Who are the key decision-makers?
- Capital = Is the short-term financial position sustainable? Is the longer-term strategic financial structure appropriate?
- Material = Which suppliers are fundamental to the existence as a viable organisation?
- Knowledge = who are the real thinkers?
Transformation = the point of strategic differentiation from the competition = every successful organisation has its USP
SYSTEMS AND STRATEGY - SYSTEMS THINKING
O’Connor and McDermott (1997) suggest that a system is what?
What are the 3 core constituents to a system?
What comprehension does this lead to?
a system is an entity that maintains its existence and functions as a whole through the interaction of its parts
(1) the whole, (2) the parts, (3) the connections between the parts
= a system as an entity must, in some way, rely upon the way that the parts work together (one of the differentiators of a systems thinking approach)
SYSTEMS AND STRATEGY - SYSTEMS THINKING
What is ‘management by exception’ and ‘gap analysis’? (Need to understand what?)
What are the 3 stages?
What is the purpose of a systems diagram?
Name the relevant case study.
Need to understand how the system is working to better understand why the system goes wrong, when it inevitably does
Stage 1: draw the boundary = the boundary represents the extremities of the system or structure to be considered
Stage 2: identify the elements = the core facets within any system boundary = may be people, documents, processes, or questions that need answering before continuing
Stage 3: establish the relationships = important to consider the positioning of, and the linkages between, the elements
Purpose = to allow systemic analysis when ‘things go wrong’ = it is possible to use the systems diagram to consider which of the relationships is failing
UK rail service disruption = those involved in the planning of the timetable changes caused severe distribution to service as engineering was placed ahead of serving passengers
PEOPLE AND STRATEGY - STRATEGY FROM THE TOP
How does the CA2006 show directors’ role in strategy?
How are governance and operation differentiated?
What role does the CEO have?
What danger can this lead to?
Why?
How do Cancer Research UK manage this danger?
What is meant by ‘the fish rots from the head’?
s.172 = director duty to strive towards ‘success’ of the company = means each director is in some way involved with the establishment and oversight of strategy within the organisation
Governance = establishment and oversight of strategy
Operation = day-to-day delivery of the strategic objectives
CEO will have dual accountability for governance and operation within the organisation = seen as chief strategist with ultimate responsibility and ownership of all strategic decisions, and full accountability for its success or failure
significant danger when organisation’s strategy is too closely aligned, on a personal level, with the character and work of the CEO
Investors may be led to buy or sell shares based around the character of the CEO rather than the successful operation of the organisation
Cancer Research UK = provide leaders with regular feedback through Manager Insight Survey
The fish rots from the head = ultimately the success or failure of strategy will depend upon the performance and/or leadership of the board and SM
PEOPLE AND STRATEGY - STRATEGY FROM WITHIN
Throughout an organisation, many people with management responsibility will also contribute to the development of strategy. Explain how.
What are the 5 advantages of allowing strategic involvement from within the organisation?
What are the 3 disadvantages of allowing too much strategic involvement from within the organisation?
decisions taken on a daily basis by management will inevitably influence strategic outcome and strategic direction
Advantages:
1. people working within the organisation have a much greater knowledge of the day-to-day pressures of the operation
2. people will find workable solutions to ensure a task is achieved
3. people are always working at the latest ‘today’ position as opposed to the point where an original strategy was established
4. people will bring momentum to the strategic success of an operational activity
5. people will be more motivated to help when they recognise that the development of the strategy has involved others who are directly involved in and understand the requirements
Disadvantages:
(1) a lack of understanding of a wider strategic vision from within the organisation
(2) a lack of confidential information that is required to understand the longer-term vision
(3) the risk of negative and inappropriate reaction to short-term operational and task failure
PEOPLE AND STRATEGY - STRATEGY FROM WITHIN
Different departments and influencers within an organisation will be able to contribute at particular points to the effective development of strategy.
Explain how so for the:
Finance department
Human resources
External consultants/experts
Company secretary (4)
Finance department = ensure the appropriateness of required funding, act as a sense check as strategy evolves and provide a financial measurement of success based around KPI
Human resources = ensure appropriate people and succession plans are in place throughout the life of the strategy
External consultants/experts = may be required on an ad-hoc basis to supplement existing employees to satisfy requirements in the initial formulation of strategy and at key points throughout its evolution
Company secretary = key roles:
1. the provision of an independent link between directors, chair and the CEO
2. the objective facilitation of information gathering and the alignment of different interests
3. the observation of directors and others within meetings, identifying areas of weakness and training needed
4. the building of an independent oversight and history of strategic successes and failures
PEOPLE AND STRATEGY - CONFLICTS OF INTEREST
There are a range of different personalities involved in the formulation of strategy so it is understandable that there will often be conflicts of interest within an organisation.
Name an example of conflicts of interest.
How are conflicts of interest dealt with in the CA2006?
Can someone with a conflict of interest be involved in the development of strategy?
E.g., an individual seeking to gain personally from influencing a strategic decision in a particular direction
S.177 and 182 = directors required to declare conflicts of interest
= declared conflicts are usually managed using a control mechanism such as a register of conflicts, and by managing the conflict itself
Yes, but the conflict itself has to be managed = the person with the conflict is usually not permitted to be involved in the decision-making of that particular aspect
PEOPLE AND STRATEGY - CONFLICTS OF INTEREST - THE AGENCY PROBLEM
What is the agency problem?
How can this be managed?
PEOPLE AND STRATEGY - CONFLICTS OF INTEREST - INFORMATION ASYMMETRY
What is information asymmetry?
Expand on this from the board and shift leader perspectives.
Agency problem = derives from the separation in many cases between ownership (shareholders) and day-to-day control (managers) = managers are required to act in the best interests of shareholders but may in fact act in their own best interests if they can
= ensure that remuneration is more closely aligned with longer-term strategic objectives
information asymmetry = reflects the differing levels of information, and therefore knowledge, that are available to different players within the development of strategy
Board will have a wide knowledge and awareness of ultimate strategic objectives but lack awareness of short-term day-to-day decisions that are required for progression of an operational activity
Shift leader will have a keen awareness of what is required to fulfil the expectations of the operational output from the shift but unlikely that they will be able to place the direct operational objective of an individual shift within the context of the wider strategic objectives of the organisation
PEOPLE AND STRATEGY - INITIAL STAKHOLDER CONSIDERATIONS
What does it mean to be a stakeholder in an organisation?
What influences will be brought by the following core stakeholder groups upon the strategic development process:
Owners (3)
Employees (2)
Customers (2)
Other supply-chain stakeholders (2)
Stakeholder = the input of a ‘stake’ (an interest, an investment, an involvement of some sort) into the organisation with the expectation of some sort of return or counter-action from the organisation in return
Owners = (1) expect the organisation to fulfil their ownership objectives (profit or market-share), (2) may expect a financial return (dividend or increase in share price); (3) may have other expected success factors (environmental or societal benefit)
Employees = (1) expect remuneration; (2) the diversity of employees will significantly influence strategic planning and development
Customers = (1) expect their product or service requirements to be fulfilled; (2) the need to fulfil customer expectations has to form a core part of strategic planning = without a customer there is no organisational purpose
Other supply-chain stakeholders:
(1) expect satisfaction from the organisation based around the differing input = suppliers expect payment, bank expect interest, gov expect tax
(2) will have a different stake within the organisation = the ability to satisfy each of these stakes must taken into consideration as the strategy is developed
STRATEGIC ACTIONS
What is the phrase ‘strategic action’ used to broadly define?
As with the development of the strategic plan, at each stage of action, clarity is needed as to what it is we hope to achieve. What 3 headings could this be defined under?
What are the 4 core strategic actions?
What is the role of the comapny secretary in relation to the mapping of strategy, route, and resource?
Strategic actions = used to define any and all activities that follow from the planning and development of strategy
(a) Improvement = something that we intend to do more effectively
(b) Innovation = something different that we need to do, usually involving an improvement in technology or systems.
(c) Improvisation = something where we need to interpret what is happening and react accordingly
- analysis
- determining strategic direction
- mapping of strategy, route and resource = as leave ‘today’ and head into unknown territory of ‘future’, need to have a map of the route intended to take
Cosec = be ready to map the route, identify the resource, understand the anticipated destination, anticipate risks along the route, and then to be prepared to alter everything based upon the impact of external and internal forces - optimising communication
STRATEGIC ACTIONS - ANALYSIS
How can analysis be formal and informal?
Provide an example for each.
In any organisation many strategic analyses are required on an ongoing basis, both formal and informal. What is a core part of the strategic plan and what can happen if there is too much or too little?
Analysis can be formal and part of a defined process within the development of strategy
E.g., might need to understand the full extent of a current marketplace before deciding whether it is a realistic opportunity for the organisation
Analysis can also be informal and require immediate attention
E.g., yesterday’s output was 10% below expectations – what has been the cause of this
Core part = the process of deciding how to allocate appropriate resources to such analytical activities
Too little time and resources = likely to cause long-term damage to the strategic development of the organisation
Too much = opportunities can be lost, and unrecoverable costs incurred
STRATEGIC ACTIONS - DETERMINING STRATEGIC DIRECTION
The long-term strategic direction of any organisation will consist of a number of related parts, including what 6 things?
- the vision of the future
- the limitations and opportunities offered by the external environment in alignment with the internal capabilities
- the culture, ideology and governance of the organisation
- the ability to choose alternative routes
- the control and management of the strategic direction
- the management and implementation of change
STRATEGIC ACTIONS - DETERMINING STRATEGIC DIRECTION
The strategic direction taken by an organisation will involve what?
How does a short-term or long-term vision affect the strategic direction?
The strategic direction will be based around what?
Involve a wide range of decisions about how the organisation wishes to develop over time
If strategic vision is short-term (<5 years) the direction is likely to be reasonably visualised at the outset
In a longer-term vision anything other than long-term contractual performance criteria will be very hard to define with any precision
The strategic direction will be based around a number of different criteria and measures that will determine the success or failure of the vision
STRATEGIC ACTIONS - DETERMINING STRATEGIC DIRECTION
Eisenhardt (1990) suggested that there are a 4 helpful guidelines for managers with regard to their strategic direction. What are these?
- Managers should always consider building a number of simultaneous alternatives to enable both contrast and criticism = there should always be at least 2 alternatives to consider
- In a fast-moving environment, it is important that real-time information is captured and its impact upon the strategic direction is considered, monitored and recorded
- The strategic leaders need to look for the views of advisers and specialists – this will bring an external unbiased consideration of the situation
- The objective should be consensus, but at times it is necessary for those who have ultimate responsibility to take decisions to enable the strategic direction to be maintained; and for those decision-makers to take accountability for the strategic impact
STRATEGIC ACTIONS - OPTIMISING COMMUNICATION - THE INDIVIDUAL
What is left-brain thinking?
What is right-brain thinking?
What influences individuals’ behaviour?
Left-brain thinking = the normal day-to-day logical, subconscious reactions that allow us to function in our day-to-day lives
E.g., someone who tends to just accept things as they are
Right-brain thinking = the lateral, creative abilities that lie within each of us
E.g., someone always challenging
NB: humans regularly use both otherwise we would never be able to deal with the unexpected
The way in which we are perceived by others as using our brains will influence our behaviour, and therefore we move into a constant iteration = we behave in a certain way, that behaviour is perceived in a certain way, we react and therefore behave in a slightly different way, and this continues (Argyris (1990) ‘ladder of inference’)
STRATEGIC ACTIONS - OPTIMISING COMMUNICATION - THE ORGANISATION
As soon as we move away from a single brain, we have to deal with a multiplicity of different ‘ladders of inference’ and of differing left-brain/right-brain approaches.
Consideration of strategy, planning, strategic management and the process of developing strategy becomes a futile individual act unless what happens?
What are the 2 stages?
Unless communicate the vision, the starting point and the route = unless people understand the strategy, it is unlikely that it will ever be achieved
Stage 1 = Reality: Every human being will interpret received communication in their own unique manner - established behaviour is hard to change
Stage 2 = Core elements: It is necessary for an organisation to develop a strategy towards the communication process itself
