1. Strategy Formulation, Change Management, & its Unintended Consequences
Dinesh Iyer
Ohio University

2. Strategic Leadership

3. Sources of Variation in Business Unit Profitability
Year Effect
2.39%
Unexplained
Variation 42.89%
Industry Effect
18.68%
This represents the
variation in profitability
across business units,
across time
that cannot be
accounted for
by the identity
of the business unit,
its industry,
its corporate
parent, or the particular
year.
Corporate
Parent
Effect
4.33%
Business Unit Effect
31.71%
From: Anita McGahan and Michael Porter, “How Much Does
Industry Matter, Really?” Strategic Management Journal (1987).

4. What about Leadership? Leadership Makes a difference!!!
Analysis of 200 management techniques employed by 150 companies over ten years:
CEO’s influence 15 percent of the total variance in a company’s profitability or total return to shareholders.
Also, found that the industry in which a company operates accounts for 15 percent of the variance in profitability.

5. What about Leadership? Formal leadership does not make a difference!!!
Three major arguments
Substitutes for leadership
Leadership irrelevance
Complexity theory

6. Substitutes for leadership
Closely knit teams of highly trained individuals
Intrinsic satisfaction
Computer technology
Professional norms
Substitutes for leadership and leadership function
Recent research suggests that the theory of substitutes for leadership may be flawed and found that “leadership matters”. Specifically, they found that the likeability of the leader and whether the leader provides rewards for performance were found to be major correlates of performance!

7. Research on leadership…
Leadership irrelevance
Pfeffer argues that factors outside the leader’s control have a larger impact on business outcomes that do leadership actions.
High-level leaders have unilateral control over only a few resources. And this control is limited by obligations to stakeholders.
Firms tend to choose new organizational leaders whose values are compatible with those of the firm.
Collins suggests that corporate leaders are slaves of much larger organizational forces.
It is not the leaders personality that makes a difference; more important is the organization’s personality.
Above arguments have been recast as a leader constraint theory i.e. leaders are constrained in what they can do but still have plenty of room to influence others!!!

8. Research on leadership…
Complexity theory
Organizations are complex systems that cannot be explained by the usual rules of nature.
Managers cannot predict which business strategies or product mixes will survive.
Ultimately, all companies will die but at different times, because it is the system, not the leadership and management, that dominates!

9. Research on Leadership…
Transactional (routine) and Charismatic (inspirational) leadership
Transactional leadership was not significantly related to performance.
Charismatic leadership showed a slight positive relationship with performance.
When the environment is uncertain, CL is more strongly related to performance.

10. A framework for understanding leadership
L = f (l, gm, s)
Leader
Group members
Situational factors

11. Leadership framework Leader characteristics and traits
Internal and external environment
Leader behavior and style
Leadership effectiveness
Group member characteristics
Managing Today! By Stephen P Robbins 1997

12. Leadership or Management
What’s the difference?
Management
Planning, Organizing, Leading, Controlling etc.
Management produces order, consistency, and predictability.
Leadership
Deals with change, inspiration, motivation, influence etc.
Leadership produces change and adaptability.

13. Leadership and Management!
A leader creates a vision (Lofty goal!?!) to direct the organization.
In contrast, the key function of the manager is to implement the vision.
The manager and his/her team thus choose the means to achieve the end that the leader formulates.

14. But, remember…
The difference between leadership and management is one of emphasis: Effective leaders also manage, and effective managers also lead.

15. Strategic Leadership

16. Lewin’s Freeze Phase Unfreezing-Realizing change needs to occur
Change/Transition-Making the changes happen
Freezing-Changes become the norm

17. Kotter’s 8 Step Model Step 1- Create urgency
Everyone must want the change
to occur
Step 2-Form a powerful coalition
Managers must convince everyone
Step 3-Create vision for change
Easier for company to grasp
Step 4-Communicate the vision
Ensure the company is on track

18. Kotter’s 8 Step Model Step 5-Remove obstacles
Fix anything that could prevent
change from happening
Step 6- Create short term wins
Showed how profitable the
changes were
Step 7-Building on change
Provide more products to
become more successful
Step 8- Anchor the changes in
corporate culture
It should then become part
of company’s core

19. MCKINSEY’S 7S FRAMEWORK

21. Saturn: A different Kind of Company
What are Saturn’s key resources and capabilities (technology-based, knowledge-based, market-based, etc.)?
How do these resources and capabilities result in a sustainable competitive advantage for Saturn?
What are the major strategic challenges facing Saturn?
What has been the relationship between Saturn’s strategy and General Motors’ strategy?
How does Saturn help create new capabilities for General Motors?

22. Saturn History Spring Hill Manufacturing Ad Alaska Ad Homecoming
Homecoming event
Homecoming based Ad
Other
Other sad Ad
Recent news link
Saturn-Penske Deal falls through 10/1/2009
Chevrolet refund offer 7/11/12

23. General Motors’ Organization Structure, 1921
Board of Directors
President
Executive Committee
Financial Staff
GM Acceptance Corporation
Legal Department
General Advisory Staff
Chevrolet Division
Sheridan
Division
Canadian Division
Oldsmobile Division
Buick Division
Cadillac Division
GM Export Company
GM Truck Division
Samson Tractor Division
Oakland Division
Inter-company Parts Division
Scripps Booth Corp.
Source: A.P. Sloan, My Years with General Motors, Orbit Publishing, 1972, p. 57.

24. General Motors’ Organization Structure, 1997
Board of Directors
Corporate Functions
President’s Council
North American Operations
Delphi Automotive Systems
GM Acceptance Corporation
International Operations
Hughes Electronics
GM Europe
Midsize & Luxury Car Group
Small Car Group
GM Power Train Group
Vehicle Sales, & Marketing Group
Development & Technical Cooperation Group
Asian & Pacific Operations
Latin American, African, & Middle East Operation

25. General Electric’s Organization Structure, 2002
Corporate Executive Office
Chairman & CEO
Corporate Staff
Finance Business R&D Human Legal
Development Resources
Service Divisions
GE Aircraft
Engines
GE Trans-
portation GE
Industrial
Systems GE
Plastics GE
Appliances GE
Supply
GE Power
Systems
GE Medical
Systems GE
Lighting GE
Specialty
Materials
NBC GE
Capital
26 businesses organized into 5 segments:
Consumer Mid-market Specialized Specialty Equipment
Services Financing Financing Insurance Management
General Electric’s Organization Structure, 2002

26. General Electric’s Organizational Structure, January 2009
Corporate Executive Office
Chairman & CEO
Corporate Staff
Business Development Legal
Commercial & Communications Global Research
Corporate Initiatives Group Human Resources
Finance International
Technology
Infrastructure
Aviation
Enterprise Solutions
Healthcare
Transportation
Industrial & Commercial
Appliances
Consumer Electronics
Electrical Distribution
Lighting
Energy Infrastructure
Energy
Oil & Gas
Water & Process
Technologies GE
Capital
Aviation Financial
Services
Commercial
Finance
Energy Financial
GE Money
Treasury
NBC Universal
Cable
Film
International
Network
Sports &
Olympics
© 2010 Robert M. Grant 12