DIRECTION SETTING: VISIONS, MISSIONS, VALUES, AND OBJECTIVES Payne (2)

Strategic Leadership Strategic Leadership is: “the ability to anticipate, envision, maintain flexibility and empower others to create strategic change as necessary” or “the process of transforming organizations from what they are to what the leader would have them become.”

Primary Tasks of Strategic Leaders (4+2 Formula) Leaders (top managers) have four Primary tasks: Strategy Culture Structure Execution Secondary tasks (do 2 of 4) include: Finding and Retaining Talent Innovate Ensure Adaptive Leadership Develop Useful Partnerships (Mergers/Alliances)

Strategic Leadership and the Strategic Management Process shapes the formulation of Strategic Intent Strategic Mission and influences Strategic Actions

Determining Strategic Direction Strategic direction setting refers to the development of roadmap or set of guidelines that help strategists make key organizational decisions. Generally, there are four types: Vision Mission Values Goals / Objectives

What is a Vision? “An articulation of what the company wishes to become or where it seeks to go” or, “the firm’s aspirations of what it really wants to be…designed to capture the imagination of the firm’s people and galvanize their efforts to achieve a higher purpose.” Visions often describe organizations in a lofty, even romantic or mystical tone – and “expression of hope”. Four attributes of “good” visions: Idealism Uniqueness Future Orientation Imagery A well-conceived strategic vision: Guides managerial decision-making Arouses employee buy-in and commitment Prepares a company for the future

What is a Mission? “A mission statement is more a statement of corporate purpose, and often defines the area of business in which it competes.” “Captures the organization’s distinctive purpose or reason for being.” Or, “Describes the firm or organization in terms of its business. Mission statements answer the questions, ‘What business are we in?’ and ‘What do we intend to do to succeed?’ …[they] are more concrete than visions, but still do not specify the goals and objectives necessary to translate the mission into reality.”

Mission Statements Encompasses both the purpose of the company as well as the basis of competition and competitive advantage. Should answer, “What is unique about our organization?” More specific, focused, and concrete than the vision. Employees are usually the most important audience for mission statements. Components: Should explicitly target customers and market. Should indicate the principal products and/or services provided by the organization. Should specify the geographical area of concentration. “Writing a mission statement is important; however, living it is more important.”

Value Statements Values are the things organizations and people stand for or the fundamental principles that, along with the mission, make an organization unique. Usually associated with ethical behavior and social responsibility. Questions for discussion: Why are value statements important (or not)? Are value statements (or codes of ethics) simply impression management devices? How do you get employees to exhibit behaviors that reflect the stated values of the organization? Can creating organizational virtue (i.e., integrity, courage, empathy, conscientiousness, warmth, and zeal) create a competitive advantage for your organization?

Goals & Objectives Follows Vision & Mission to more specifically give direction and goals for the organization. These also serve to determine if appropriate control is been set for strategic decisions: Represent commitment to achieve specific performance targets by a certain time. Must be stated in quantifiable terms and contain a deadline for achievement. Spell-out how much of what kind of performance by when.

Every company needs both strategic and financial objectives! Types of Objectives (Controls) Required Financial Objectives Strategic Objectives Outcomes focused on improving a firm’s financial performance. Outcomes focused on improving a firm’s competitiveness and its long-term business position. Every company needs both strategic and financial objectives!

Strategic vs Financial Objectives Pressures for better short-term (~1 yr) financial performance become pronounced when Firm is struggling financially Resource commitments for new strategic initiatives may hurt bottom-line for several years Proposed strategic moves are risky A firm that consistently passes up opportunities to strengthen its long-term (3-5 yrs) competitive position Risks diluting its competitiveness Risks losing momentum in its markets Can hurt its ability to fend off rivals’ challenges

Objectives Are Needed at All Levels Process is top-down, not bottom-up! 1. First, establish organization-wide objectives 2. Next, set business and product line objectives 3. Then, establish functional and departmental objectives 4. Individual objectives come last Objective-setting needs to be more of a top-down than a bottom-up process in order to guide lower-level managers and organizational units toward outcomes that support the achievement of overall business and company objectives.