Strategic Leadership and Direction Setting (2) Fall 2009

DIRECTION SETTING:
VISIONS, MISSIONS, VALUES,

AND OBJECTIVES
Payne
(2)
Strategic Leadership
Strategic Leadership is:
the ability to anticipate, envision, maintain flexibility

and empower others to create strategic change as
necessary or
the process of transforming organizations from what
they are to what the leader would have them become.
Leaders (top managers) have four main tasks:

Define the vision/mission or role of the organization.
Develop the organizations integrity (ethics, culture & values).
Designing the appropriate strategy and structure (the content)
to achieve success, and
Oversee the implementation process for bringing about change
in the organization (the process).
2
Strategic Leadership and the Strategic

Management Process
Strategic
Leadership
shapes the formulation of
Strategic Intent
Strategic Mission
and
influences
Strategic Actions
3
Determining Strategic Direction

Strategic direction setting refers to the
development of roadmap or set of guidelines that
help strategists make key organizational
decisions.
Generally, there are four types of guiding
statements or ideals these lead to decisions and
actions.
Vision
Mission
Values
Goals / Objectives
4
What is a Vision?
An articulation of what the company wishes to become

or where it seeks to go or, the firms aspirations of
what it really wants to bedesigned to capture the
imagination of the firms people and galvanize their
efforts to achieve a higher purpose.
Visions often describe organizations in a lofty, even
romantic or mystical tone and expression of hope.
Four attributes of good visions:
1) Idealism
2) Uniqueness
A well-conceived strategic vision:
3) Future Orientation Guides managerial decision-making
Arouses employee buy-in and commitment
4) Imagery
Prepares a company for the future
5
Examples: Strategic Visions

BIOGEN: We dedicate ourselves daily to improving
the lives of people around the world.
Disneyland: To be the happiest place on earth.
Wells Fargo: We want to satisfy all of our customers
financial needs and help them succeed financially.
TENET will distinguish itself as a leader in
redefining health care delivery and will be recognized
for the passion of its people and partners in providing
quality, innovative care to the patients it serves in each
community.
6
What is a Mission?
A mission statement is more a statement of corporate
purpose, and often defines the area of business in which
it competes.
Captures the organizations distinctive purpose or
reason for being.
Or, Describes the firm or organization in terms of its
business. Mission statements answer the questions,
What business are we in? and What do we intend to do
to succeed? [they] are more concrete than visions, but
still do not specify the goals and objectives necessary to
translate the mission into reality.
7
Mission Statements
Encompasses both the purpose of the company as well as the basis of competition and
competitive advantage. Should answer, What is unique about our organization?
More specific, focused, and concrete than the vision.
Employees are usually the most important audience for mission statements.
Components:
1) Should explicitly target customers and market.
2) Should indicate the principal products and/or services provided by the organization.
3) Should specify the geographical area of concentration.
Writing a mission statement is important;

however, living it is more important.
8
Mission Statements
Example: Anheuser-Busch
Our vision: Through all of our products, services and
relationships, we will add to life's enjoyment.
Our mission:
Be the world's beer company
Enrich and entertain a global audience
Deliver superior returns to our shareholders
Core Value Proposition (CVP) (Hardy, 2005)

Provides a starting point for business planning and/or
innovative business development.
Developed through 5 Value Drivers and related questions:
1. IDEA: What does your service or product do for customers?
2. BENEFIT: What benefit does your product or service
provide to customers (above and beyond competitors or
substitutes)?
3. TARGET: Who are your key customers? How can they be
identified and reached?
4. PERCEPTION: How do you want to be perceived by
customers, employees and other stakeholders?
5. REWARD: What is in it for you, your employees, and
stockholders?
10
Value Statements
Values are the things organizations and people stand for or the
fundamental principles that, along with the mission, make an
organization unique. Usually associated with ethical behavior and
social responsibility.
Questions for discussion:
1)Why are value statements important (or not)?
2)Are value statements (or codes of ethics) simply impression
management devices?
3)How do you get employees to exhibit behaviors that reflect
the stated values of the organization?
4)Can creating organizational virtue (i.e., integrity, courage,
empathy, conscientiousness, warmth, and zeal) create a competitive
advantage for your organization?
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Values:
Our business is preserving and improving human life. All of our actions must be
measured by our success in achieving this goal. We value, above all, our ability to serve
everyone who can benefit from the appropriate use of our products and services, thereby
providing lasting consumer satisfaction.
We are committed to the highest standards of ethics and integrity. We are responsible
to our customers, to Merck employees and their families, to the environments we inhabit,
and to the societies we serve worldwide. In discharging our responsibilities, we do not
take professional or ethical shortcuts. Our interactions with all segments of society must
reflect the high standards we profess.
We are dedicated to the highest level of scientific excellence and commit our
research to improving human and animal health and the quality of life. We strive to
identify the most critical needs of consumers and customers, and we devote our resources
to meeting those needs.
We expect profits, but only from work that satisfies customer needs and benefits
humanity. Our ability to meet our responsibilities depends on maintaining a financial
position that invites investment in leading-edge research and that makes possible
effective delivery of research results.
We recognize that the ability to excel -- to most competitively meet society's and
customers' needs -- depends on the integrity, knowledge, imagination, skill,
diversity and teamwork of our employees, and we value these qualities most
highly. To this end, we strive to create an environment of mutual respect, encouragement
and teamwork -- an environment that rewards commitment and performance and is
responsive to the needs of our employees and their families.
12
Goals & Objectives

Follows Vision & Mission to more specifically give
direction and goals for the organization. These also

serve to determine if appropriate control is been set
for strategic decisions:
Represent
commitment to achieve specific

performance targets by a certain time.
Must
be stated in quantifiable terms and contain a

deadline for achievement.
Spell-out
how much of what kind of performance
by when.
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Types of Objectives (Controls) Required

Financial Objectives
Strategic Objectives
Outcomes focused on
Outcomes focused on
improving a firms
improving a firms
financial performance. competitiveness and its
long-term business
position.
Every company needs both strategic and
financial objectives!
14
Examples: Financial Objectives

Increase sales growth 6 to 8 percent and accelerate core net
earnings per share growth to 13 to 15 percent in each of the next
five years (P&G)
Generate Internet-related revenue of $1.5 billion (Automation)
Cut overhead costs by $30 million per year (Fortune Brands)
Examples: Strategic (Non-financial) Objectives

Capitalize on e-commerce (FedEx)
We want a majority of our customers,when surveyed, to say they
consider us the best financial institution in the community (Wells
Fargo)
We want to operate 6,000 stores by 2010up from 3000 in the
year 2000 (Walgreens)
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Strategic vs Financial Objectives
Pressures for better short-term (~1 yr) financial

performance become pronounced when
Firm is struggling financially

Resource commitments for new strategic initiatives may
hurt bottom-line for several years
Proposed strategic moves are risky
A firm that consistently passes up opportunities

to strengthen its long-term (3-5 yrs) competitive
position
Risks diluting its competitiveness

Risks losing momentum in its markets
Can hurt its ability to fend off rivals challenges
16
Setting Objectives
Birnbaum (2004) suggests a 3-step process:
1. Decide
on the essence of the objective (e.g.,

profitability, product quality, absenteeism).
- These should be specific to the organization...the
Key Performance Indicators and tied to Key Success
Factors
2. Decide
on the formula to measure the objective (e.g.,

annual profit as % of sales, # of product defects, ratio
of hours missed to total employee hours).
3. Quantify
(outcome and timeframe) the objectives.
(Ask yourself what matters most? How do we track it?)
17
Objectives Are Needed at All Levels

Process is top-down, not bottom-up!
1. First, establish organization-wide objectives
2. Next, set business and product line objectives
3. Then, establish functional and departmental
objectives
4. Individual objectives come last
Objective-setting needs to be more of a top-down than a bottomup process in order to guide lower-level managers and
organizational units toward outcomes that support the
achievement of overall business and company objectives.
18

Strategic Leadership and Direction Setting (2) Fall 2009

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DIRECTION SETTING:

VISIONS, MISSIONS, VALUES,

the ability to anticipate, envision, maintain flexibility

Leaders (top managers) have four main tasks:

Strategic Leadership and the Strategic

Determining Strategic Direction

An articulation of what the company wishes to become

Examples: Strategic Visions

Writing a mission statement is important;

Core Value Proposition (CVP) (Hardy, 2005)

Goals & Objectives

direction and goals for the organization. These also

commitment to achieve specific

be stated in quantifiable terms and contain a

how much of what kind of performance

Types of Objectives (Controls) Required

Examples: Financial Objectives

Examples: Strategic (Non-financial) Objectives

Strategic vs Financial Objectives

Pressures for better short-term (~1 yr) financial

Firm is struggling financially

A firm that consistently passes up opportunities

Risks diluting its competitiveness

on the essence of the objective (e.g.,

on the formula to measure the objective (e.g.,

(outcome and timeframe) the objectives.

(Ask yourself what matters most? How do we track it?)

Objectives Are Needed at All Levels

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