Strategic Leadership and Managing Crises and Change Chapter 11 Strategic Leadership and Managing Crises and Change Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Summary of Lecture 18 and 19 Max Weber on charismatic leadership. Argument for and against the locus of charismatic leadership. How one can acquire charismatic qualities. Socialized VS personalized charismatic leaders. Charismatic VS transformational leadership. Phases of the transformation process. Transformational VS Transactional leadership Stewardship and servant leadership Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Learning Objectives Role of leadership in strategic management process Relevance of internal and external environment Importance of a vision and mission statement Relationship between corporate objectives and strategies Importance of strategy evaluation Risk Assessment Process Crises Leadership and Management In Next Lecture - Crises Leadership and Management - Need for Change - Phases of the change process - Major reasons for resisting change - People and task-oriented techniques for overcoming resistance to change Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning 3

Strategic Leadership Success is not by chance depend on decisions made by strategic leaders Leader is responsible to analyze company Environment “Strategic leadership is a person's ability to anticipate, envision, maintain, flexibility, think strategically, and work with others to initiate changes that will create a viable future for the organization” Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

STRATEGIC MANAGEMENT Strategic leader can be from top, middle and front line Top managers are responsible for company success and failure Strategic management is the set of decisions and actions used to formulate and implement specific strategies that will achieve a competitively superior fit between the organization and its environment so as to achieve organizational goals Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

STRATEGIC LEADERSHIP The process of providing the direction and inspiration necessary to create and implement a vision, mission, and strategies to achieve and sustain organizational objectives The purpose of strategic leadership is to effectively implement and guide the process of strategic management Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Strategic Leaders Strategic leaders choose appropriate strategy, create effective and supportive team, identify and focus on potential markets and customers, sustain competitive advantage, maintain ethical standards, and have excellent customers relationships Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Strategic Leaders Strategic leaders perform following responsibilities 1 Conceptualize organization vision, mission and core values 2 Assist to formulate objectives, strategies, policies and structures that translate vision and mission into business decisions 3 create culture and communication structure to facilitate organizational learning and coordination among employees and customers 4 Act as a leader and role model for others Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Strategic Leaders Strategic decisions at time destroy company because they are made on only judgment Executive intuition at time bring innovation or may cause blunders Strategic Management Process 1) Strategy Formulation 2) Strategy Implementation 3) Strategy Evaluation Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

The Strategic Leadership/ Management Process Analyze the environment Internal (Strengths and Weaknesses) External (Opportunities and threats) Strategic flexibility: In order to survive manage environment Know customers, market trends, competitors, suppliers, economic condition, technological advances and government policies Strategic fit Environmental changes are uncertain, strategic leaders must rely on intuition and rational analysis Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Strategic Management Before starting strategic planning think of 1) Who are we (core ideology)? 2) Why do we exist (core purpose)? 3) What do we believe in (core values)? 4) What inspires us (envisioned vision)? 5) Where we want to go (vision statement)? 6) What future look like when we go there (vivid description) Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Strategic Management Develop a strategic vision An ambitious view of the future that everyone in the organization can believe in, that is reasonably attainable, and which offers a future that is better in important ways than what now exists Strategic Vision answers What does organization aspire? What Strategic Vision do? - Facilitate decision making - Inspires - Link past, present and future - Give meaning to work (what and why people do it?) - Establishes standard of excellence Microsoft: “ A personal computer on every desk in every home” American Express: “To be the world's most respected service brand” Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Strategic Management Strategic Mission What is the organization's purpose? What business we are in? Two main components: core values and core purpose Identifies scope of organization operations in service/product and market terms “Mission statement is an enduring statement of purpose that distinguishes one organization from other similar organization” 3M: “To solve unsolved problems innovatively” Merck: “To preserve and improve human life” Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Strategic Management Analyze the mission statements and identify Zenith: making television sets Analyze the mission statements and identify What's Wrong Motorola: applying technology to benefit the public The March of Dimes : To Cure Polio Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

The Strategic Leadership/ Management Process Write a meaningful mission statement Defines the core purpose and reasons for organizational existence Should be both broad and precise Not easy Can take months and years Must change as organization changes Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

The Strategic Leadership/ Management Process Create Corporate Level Objectives Desired outcomes that an organization seeks to achieve for stakeholders Include both financial (return on investment, sales, profits) and strategic objectives (new customers, market, or product types) Help everyone to focus in same direction Targets against which performance is compared Encourage broader participation Link rewards to goal achievement Help to evaluate performance and strategy Set priorities Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

The Strategic Leadership/ Management Process Develop SMART Corporate Level Objectives Specific Measurable Achievable Relevant Time bound Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

The Strategic Leadership/ Management Process Formulate Strategy Strategy is the general plan of action that describes resource allocation and other activities for exploiting environmental opportunities and helping the organization attain its goals Means to end (How) Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

The Strategic Leadership/ Management Process Formulate Strategy that: Enhances value to customers Ratio of benefits to cost Creates synergistic opportunities Whole is greater than the sum of the parts (2+2=5) Builds on company core competencies Performs extremely well in comparison to competitors Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

5 Elements of Good Strategy Development Arena: Where the organization will focus its resources Vehicles: How the organization will get there Differentiators: How the organization will stand out in the market place Staging: What will be the speed and sequence of moves Economic logic: How the organization will obtain its returns Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

The Strategic Leadership/ Implementation Most difficult part of strategic management - Also the most important - Action Plan Without appropriate implementation, the best of strategies can fail Must be integrated and coordinated Must overcome resistance to change Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

The Strategic Leadership/ Implementation Effective leader require to execute strategy Decisions regarding structure, culture, reward, budget allocation, rules and policies must match requirements of chosen strategy Mismatch: Differentiation through innovation within hierarchical and bureaucratic structure Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Strategy Evaluation -Review internal and external factors To determine the effectiveness of strategic choices Fundamental activities: -Review internal and external factors Measure performance against objectives Take Corrective action Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Crisis Leadership Leaders need skills and competence to lead during crises To provide stability, reassurance, confidence, and a sense of control “…tough times won’t create leaders, … they show you what kind of leaders you already have.” Larry Barton Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Crises What is Crises Sudden change or incident that disrupt operations or put threats to company survival and reputation Natural disaster Product failure Human errors (accidents) System failure unexpected death of CEO (Owner) Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Preparing for Crisis We cannot foresee future crises, but we can prepare in a general manner Pre-Crisis Planning Do not want to start from zero when crisis occurs Crisis Team Good mix of organizational skill sets (include members from all departments, select calm and strong nerves employees) Crisis Leader duties Requires logs Monitors complaints and behaviors Identifies patterns or trends Coordinates team activities Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Risk Assessment Used to anticipate crises What could happen? Tries to identify weaknesses and threats Where are we vulnerable? Identify potential incidents Common tool in crisis planning What is the worst-case scenario? Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Risk Assessment Model Risk Identification (Risk Chart) S W O T 2 Risk Assessment & Ranking 1 S W O T 3 Risk Reduction Strategies 4 Crisis Prevention Simulations 5 Crisis Management Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning

Discussion Questions Discussion Question 1: List key elements of strategic management process? Question 2: Elaborate difference between mission and objectives? Discussion Question 3: How strategic leadership contribute towards achieving organization strategy and objectives? Discussion Question 4: Describe role of leader in crises?

Summary Role of leadership in strategic management process Relevance of internal and external environment Importance of a vision and mission statement Relationship between corporate objectives and strategies Importance of strategy evaluation Risk Assessment Process Crises Leadership and Management Lussier, R. and Achau, C. (2007): Effective Leadership, 3rd Edition, South-Western, Cangage Learning 30