Miles A. Zachary MGT 4380 Strategic Management

“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” – Jack Welch, former GE CEO A vision is one key aspect of an organization a leader may use to inspire employees It describes what an organization hopes to become in the future Clear Brief Empowering

In a survey of 1,500 top firm executives, 98% reported that a leaders must first and foremost have “a strong sense of vision.” 90% reported that they have questioned their own ability to be visionary leaders Many firms do not articulate a vision Of the firms that do have vision statements, many fail to empower employees appropriately Thus, a strong vision embraced by employees is a powerful competitive advantage

An organization’s mission statement attempts to capture the organization’s identity; it answers the question “Who are we?” While vision statements focus on the future, mission statements should be written around the past and present Strong mission statements suggest why organizational stakeholders (e.g. employees, suppliers, customers, community) why they should support the organization and ensure it’s success

While mission and vision statements are different, they should pursue similar goals Organizations are often troubled by divergent mission statements and vision statements Example: Universities established with mission statements focusing solely on educating citizens v. pursuing lofty research goals inline with the university’s vision Organizations may accomplish this by focusing on developing and pursuing narrower objectives—goals

Goals are smaller-scoped objectives that provide clear and tangible to employees in their day-to-day work The most effective goals are: Specific Measurable Aggressive Realistic Time-bound

Specific goals are explicit and direct people’s energy; often times they require articulated steps to achieve them Measurable goals are quantifiable; useful because success can be clearly determined Aggressive goals are challenging; require people test and extend their limits Realistic goals are achievable; while goals should be lofty, they should be reasonable Time-bound goals are finite; there is a delineated time horizon

The period of time after a goal is achieved is important, but often overlooked An organization should determine whether to accept it’s new position or reformulate and pursue a new goal Example: After achieving their goal of landing on the moon, NASA failed to articulate their next goal

Organizational performance is a broad term that encompasses how well an organization is pursuing their mission, vision, and goals A vital aspect of strategic management The ultimate dependent variable in strategic management research Organizational performance is subjective and depends upon how it is defined

Two important considerations: 1. Performance measures—a metric with which performance can be gauged (e.g. ROA, Tobin’s q, stock price, earnings per share) 2. Performance referents—a standard that can be held against a measure to determine an organization’s relative performance (e.g. industry standards, competitor performance, social norms) Different measures and referents communicate different information; suggests the importance of multiple measures of performance

Many measures and referents exist, so it’s important to identify rich yet manageable objectives The balanced scorecard approach was developed by Harvard professors Robert Kaplan and David Norton to help managers diversify performance analysis Recommends that managers focus on a few key measures reflecting four (4) dimensions 1. Financial 2. Customer 3. Internal business process 4. Learning and growth

The triple bottom line approach to reflects a more holistic view of performance than the balanced scorecard approach Focuses on three (3) bases: 1. People (society) 2. Planet (environment) 3. Profit (financial) Developed in the 1980’s, but gained popularity in the late 1990’s Many firms are finding social cache by emphasizing social and environmental values

Many CEOs are thrust into the public spotlight Firm Advantages Enhance corporate image Increase stock price Improve stakeholder morale Firm Disadvantages Gaps in actual and expected performance may be magnified Unethical or illegal behavior attracts negative publicity

Individual CEOs are presented with both benefits and costs Individual Benefits High compensation/benefits Prestige-based power Elite network opportunities Individual Costs Face bad reputation with negative performance Increased media scrutiny Friends and family forced into the spotlight

While entrepreneurship is traditionally thought of as a person starting a new venture, corporate entrepreneurship describes entrepreneurial activity in an existing organization Organizations failing to continually innovate fall into the trap of creative destruction (Schumpeter, 1934) Corporate entrepreneurs innovate new products and services and find/develop resources to support it Successful corporate innovators are valuable organizational assets and can benefit from this value However, some risks still exist…

Entrepreneurial orientation (EO) refers to the processes, practices, and decision-making styles of organizations that act entrepreneurially Firm-level concept Essential part of crafting an entrepreneurial strategy A firm’s EO is determined by aggregating 5 dimensions: Autonomy Competitive Aggressiveness Innovativeness Proactiveness Risk-taking

Autonomy Generally refers to the freedom that individuals and groups/teams have to introduce and develop new ideas Reflects a lack of hindrances associated with organizational bureaucracies Structure is key Competitive Aggressiveness Tendency for a firm to intensely engage competitors rather than avoid them Includes strategic ploys to gain favorable industry positions Competitive action is powerful and executives must consider the short and long-run consequences

Innovativeness The tendency to pursue creativity and experimentation Innovativeness is aimed at creating new products, services, processes, and/or skills to increase a firms advantage(s) Innovations may build on an existing advantage or introduce a radically different advantage Firms should assess how new innovations impact existing advantages (cannibalization) Firms with strong innovative abilities tend to enjoy better firm performance than others

Proactiveness The tendency to anticipate and act on future needs rather than waiting to react Adopts an opportunity-seeking perspective Typically first or early to enter a market Can often capitalize on first-mover advantages, but is also subject to first-mover disadvantages Risk-taking Tendency to engage in risky or bold actions as opposed to cautious Different people perceive risk and uncertainty differently Some industries reward/punish risk-taking differently

Steps can be taken to increase a firm’s EO Executives should design an organization’s structure to promote and enhance the five dimensions of EO Leverage power/influence Ecological design Additionally, executives should properly monitor the EO level of a firm Gauge employee satisfaction Examine key entrepreneurial performance measures Slack capital/resources R&D expenditures

Executives (namely the CEO) are responsible for establishing a firm’s mission, vision, and goals They should also work to encourage the necessary culture to accomplish their objectives Performance metrics and referents are important when determining a firm’s relative and absolute position, but must be chosen carefully Executives should determine a firm’s appropriate level of EO and work to encourage responsible levels of EO