Strategic Leadership by

Executives

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-1
 Learning Objectives
 Understand what organizational processes determine an
organization’s performance.
 Understand how top executives can influence
organizational processes and improve organizational
performance.
 Understand the conditions that make strategic leadership
especially important.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-2
 Learning Objectives
 Understand how personal traits and tenure in office are
related to a chief executive’s leadership behavior.
 Understand the potential advantages of executive teams
and the conditions that increase their effectiveness.
 Understand the procedures that can be used to monitor
the environment and formulate a good competitive
strategy.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-3
 Purpose of discussion.
 How much influence top executives are likely to
have on the organization.
 Constraints on executive action.
 External conditions that determine the need for
strategic change, political processes that
determines the relative influence of difference
parties on strategic decisions.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-4
 Flexible Leadership Theory @ FLT.
 Organizational Performance.
 Performance determinant.
 Leadership Process.
 Situational Variables.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-5
 How Leaders Influence Organizational
Performance: Performance Determinants.
 Adaptation to the Environment
 Efficiency and Process Reliability
 Human Resources and Relations

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-6
 Adaptation to the Environment

 More important when external environment is volatile and

uncertain (rapid technological change, political and
economic turmoil, threats from competitors).
 Successful adaptation requires major changes in the
organization’s products and services, procedures of
marketing and supplying.
 Adaptation is enhanced by accurate interpretation of
information about the environment: collective learning by
members, effective knowledge management, flexibility of
work process, innovation of products.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-7
 Innovation and Adaptation
 Competitor and market analysis programs (market
surveys, focus groups, consumer panels,
comparative product testing, benchmarking
competitor products and processes)
 Innovation programs (intrapreneurship, quality
circles, innovation goals)
 Knowledge acquisition (consultants, joint ventures,
import best practices from outside)
 Organizational learning (knowledge management
systems, postmortems, joint ventures)
Copyright © 2010 Pearson Education, Inc. Leadership in Organizations
publishing as Prentice Hall 12-8
 Innovation and Adaptation
 Temporary structural forms for implementing
change (steering committee, task forces)
 Growth and diversification programs (mergers and
acquisitions, franchises, joint ventures)
 Structural forms (research departments, small
product divisions, product managers, cross-
functional product development teams, facilities
designed to encourage innovation)
 Appraisal, recognition, and reward systems
focused on innovation and customer satisfaction
Copyright © 2010 Pearson Education, Inc. Leadership in Organizations
publishing as Prentice Hall 12-9
 Efficiency and Process Reliability
 Efficiency is the use of people and resources to carry out
essential operations in a way that minimizes costs and
avoids wasted efforts and resources (important when
offer its products and services at a lower price than
competitors).
 Process reliability means avoiding unnecessary delays,
errors, quality defects or accident.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-10
 Efficiency and Process Reliability
 Performance management and goal setting
programs (e.g., MBO, zero defects)
 Process and quality improvement programs
(quality circles, TQM, Six Sigma)
 Cost reduction programs (downsizing,
outsourcing, just-in-time inventory)
 Structural forms (functional specialization,
formalization, standardization)
 Appraisal, recognition, and reward systems
focused on efficiency and process reliability
Copyright © 2010 Pearson Education, Inc. Leadership in Organizations
publishing as Prentice Hall 12-11
 Human Resources and Relations
 More important when the work is complex and
difficult to learn, new members require extensive
training.
 Successful performance requires a high level of
skill and motivation.
 The important of HR&R increase by a competitive
strategy that relies on services delivered by unique
experts.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-12
 Human Resources and Relations
 Quality of worklife programs (flextime, job sharing,
child care, fitness center)
 Employee benefit programs (health care,
vacations, retirement, sabbaticals)
 Socialization and team building (orientation
programs, ceremonies and rituals, social events
and celebrations)
 Employee development programs (training,
mentoring, 360 feedback, education subsidies)
Copyright © 2010 Pearson Education, Inc. Leadership in Organizations
publishing as Prentice Hall 12-13
 Human Resources and Relations
 Human resource planning (succession planning,
assessment centers, recruiting programs)
 Empowerment programs (self-managed teams,
employee ownership, industrial democracy)
 Recognition and reward programs focused on
loyalty, service, or skill acquisition

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-14
 Ways to Influence the Performance
Determinants
 Leadership Behaviors
 Programs, Systems, and Structure
 Competitive Strategy

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-15
 Leadership Behaviors: Three Types.
 Task oriented behavior are used primarily to
improve efficiency and process reliability.
 Changed oriented behavior are used primarily to
improve adaption to the external environment.
 Relations oriented are used primarily to improve
human relations and human resources.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-16
 Programs, Systems, and Structure
 Other way for leaders to influence performance
determinants is by implementing or modifying
formal programs, management systems, and
aspects of formal structure.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-17
 Competitive Strategy
 Competitive strategy includes decisions about the
types of products or services to offer, the basis of
appealing to potential customers (prices, quality,
customer service, uniqueness) and the methods
used to influence potential customers
(advertising, promotions, discounts). The strategy
may also involve decisions about ways to obtain
necessary financial sources.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-18
 Competitive Strategy
 Decisions about competitive strategy affect the
relative importance of the performance
determinants and their optimal level. Focus of
strategy is on adaptation, but the interdependence
among performance determinants makes it difficult
to improve adaptation unless consistent changes
are made in efficiency and human capital.

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-19
 Competitive Strategy
 Decision to offer lower prices as the primary basis
for increasing sales and profits may require a
reduction in the cost of operations (by using
improved technology, by using less expensive
materials, by reducing the pay and benefits of
current employees).
 the decision to provide more unique products or
improve customer service may takes it necessary
to retrain current employees or to recruit more
skilled employees.
Copyright © 2010 Pearson Education, Inc. Leadership in Organizations
publishing as Prentice Hall 12-20
 Constraints on Executives
 Internal Constraints
 Coalitions in the organization
 Strong organizational culture
 External Constraints
 Organization’s primary products and services
 Powerful external stakeholders
 Perception of the organization’s performance

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-21
 Conditions Affecting the Need for
Strategic Leadership
 Periods of Reorientation
 Periods of Convergence
 Influence of Top Management

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-22
 Strategic Leadership
 Political Power and Strategic Leadership
 Executive Tenure and Strategic Leadership
 Research on the Effects of CEO Leadership
 Studies of CEO Succession
 Case Studies of Strategic Leaders
 Survey Field Studies on CEO Behavior and Firm
Performance

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-23
 Strategic Leadership by Executive
Teams
 Potential Advantages of Executive Teams
 Potential to make better strategic decisions
 Team members can compensate for weaknesses in the
CEO
 More likely to represent diverse interests
 Important tasks are less likely to be neglected
 Executive Teams and Organizational Effectiveness

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-24
 Key Responsibilities for Top
Executives
 Monitoring the Environment
 Developing Competitive Strategy

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-25
 Guidelines for Formulating Strategy
 Determine long-term objectives and priorities
 Assess current strengths and weaknesses
 Identify core competencies
 Evaluate the need for a major change in strategy
 Identify promising strategies
 Evaluate the likely outcomes of a strategy
 Involve other executives in selecting a strategy

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-26
 Guidelines for External Monitoring
 Identify relevant information to gather
 Use multiple sources of relevant information
 Learn what clients and customers need and want
 Learn about the products and activities of competitors
 Relate environmental information to strategic plans

Copyright © 2010 Pearson Education, Inc. Leadership in Organizations

publishing as Prentice Hall 12-27