Leadership and Strategic Planning Chapter 5 Leadership and Strategic Planning

Leadership The ability to positively influence people and systems under one’s authority to have a meaningful impact and achieve important results

Strategic Planning The process of envisioning an organization’s future and developing the necessary goals, objectives, and action plans to achieve that future.

The Baldrige “Leadership Triad” Strategic Planning Operations Leadership Customer and Market Focus

Executive Leadership Defining and communicating business directions Ensuring that goals and expectations are met Reviewing business performance and taking appropriate action Creating an enjoyable work environment Soliciting input and feedback from customers Ensuring that employees are effective contributors Motivating, inspiring, and energizing employees Recognizing employee contributions Providing honest feedback

Key Idea Effective leadership requires five core leadership skills: vision, empowerment, intuition, self-understanding, and value congruence. Dale Crownover, President, Texas Nameplate Co.

Leading Practices – Leadership (1 of 2) Create a customer-focused strategic vision and clear quality values Create and sustain leadership system and environment for empowerment, innovation, and organizational learning Set high expectations and demonstrate personal commitment and involvement in quality Integrate quality values into daily leadership and management and communicate extensively

Leading Practices – Leadership (2 of 2) Review organizational performance Create an environment and governance system that fosters legal and ethical behavior Integrate public responsibilities and community support into business practices

Leadership Theories Trait approach Behavioral approach Contingency (situational) approach Role approach Emerging theories: Attributional theory Transactional theory Transformational leadership theory Substitutes for leadership theory Emotional intelligence theory

Key Idea Some of the newer theories, such as attributional, transactional, and emotional intelligence theories, enter the realm of human emotions to explain how good leaders seem to succeed, and where mediocre ones show mixed results or fail to accomplish their goals.

Leadership System Leadership system – how decisions are made, communicated, and carried out at all levels; mechanisms for leadership development, self-examination, and improvement Effectiveness of leadership system depends in part on its organizational structure CRI Steering committee of 4 sets directions, frequent interaction with employees, review performance daily, formal monthly evaluations and OFIs

Key Idea An effective leadership system respects the capabilities and requirements of employees and other stakeholders, and sets high expectations for performance and performance improvements.

Governance Governance – the system of management and controls exercised in the stewardship of an organization. Approving strategic direction Monitoring and evaluating CEO performance Succession planning Financial auditing Executive compensation Disclosure Shareholder reporting

Leadership and Social Responsibilities Ethics Health, safety, and environment Community support

Key Idea Practicing good citizenship refers to leadership and support—within the limits of an organization’s resources—of publicly important purposes, including improving education, community health, environmental excellence, resource conservation, community service, and professional practices.

Strategic Planning “A strategy is a pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole.” Formal strategy includes: Do the “point north” thing Goals to be achieved Policies to guide or limit action Action sequences, or programs, that accomplish the goals

Leading Practices - Strategic Planning Active participation of top management, employees, customers, suppliers Systematic planning systems for strategy development and deployment Use of a variety of external and internal data Align short-term action plans with long-term strategic objectives, communicate them, and track progress Derive human resource plans from strategic objectives and action plans

Strategic Planning Process Reason for existence Future intent Attitudes and policies Mission Vision Guiding Principles Environmental assessment Capabilities and risks Broad statements of direction Strategies Strategic Objectives Things to change or improve Action Plans Implementation

Mission Definition of products and services, markets, customer needs, and distinctive competencies Solectron: “…to provide worldwide responsiveness to our customers by offering the highest quality, lowest total cost, customized, integrated, design, supply chain, and manufacturing solutions through long-term partnerships based on integrity and ethical business practices.”

Vision Where the organization is headed and what it intends to be Brief and memorable - grab attention Inspiring and challenging - creates excitement Descriptive of an ideal state - provides guidance Appealing to all stakeholders - employees can identify with Solectron: “Be the best and continuously improve”

Values (Guiding Principles) Define attitudes and policies for all employees, which are reinforced through conscious and subconscious behavior at all levels of the organization. Pepsico: integrity, honesty, teamwork, accountability, balance

Environmental Assessment Customer and market requirements, expectations, and opportunities Technological and other innovations Organizational strengths and weaknesses Financial, societal, ethical, regulatory and other potential risks Changes in global or national economy Factors unique to the organization, such as partner and supply chain needs

Key Idea Strategies are broad statements that set the direction for the organization to take in realizing its mission and vision. Strategic objectives are what an organization must change or improve to remain or become competitive. Action plans are things that an organization must do to achieve its strategic objectives.

Strategy Deployment Developing detailed action plans, defining resource requirements and performance measures, and aligning work unit, supplier, or partner plans with overall strategic objectives.

Policy Deployment (Hoshin Kanri) Top management vision leading to long-term objectives Deployment through annual objectives and action plans Negotiation for short-term objectives and resources (catchball) Periodic reviews See Figure 5.6!

Key Idea Strategic objectives and action plans often require significant changes in human resource requirements, such as redesigning the work organization or jobs to increase employee empowerment and decision making, promoting greater labor/management cooperation, modifying compensation and recognition systems, or developing new education and training initiatives.

The Seven Management and Planning Tools Affinity diagrams Interrelationship digraphs Tree diagrams Matrix diagrams Matrix data analysis Process decision program charts Arrow diagrams

Leadership and Organizational Structure Basic types of organizational structures Line organization Line and staff organization Matrix organization

Key Idea As more and more companies accept the process view of organizations, they are structuring the quality organization around functional or cross-functional teams.

Leadership in the Baldrige Criteria The Leadership Category examines how an organization’s senior leaders address values, directions, and performance expectations, as well as a focus on customers and other stakeholders, empowerment, innovation, and learning. Also examined is the organization’s governance and how the organization addresses its public and community responsibilities. 1.1 Organizational Leadership a. Senior Leadership Direction b. Organizational Governance b. Organizational Performance Review 1.2 Social Responsibility a. Responsibilities to the Public b. Ethical Behavior c. Support of Key Communities

Strategic Planning in the Baldrige Criteria The Strategic Planning Category examines how an organization develops strategic objectives and action plans. Also examined are how chosen strategic objectives and action plans are deployed and how progress is measured. 2.1 Strategy Development a. Strategy Development Process b. Strategic Objectives 2.2 Strategy Deployment a. Action Plan Development and Deployment b. Performance Projection