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Putting Leadership Back Into Strategy

The document summarizes an article about putting leadership back into strategy. It discusses how the CEO plays a vital role as the authority and steward of strategy. Strategy is about defining the company's purpose and guiding its development over time. However, firms often focus more on initial strategy formulation than long-term implementation. To address this, strategists must be open-minded and ready to adapt strategy based on changes in the internal and external environment. Effective leadership is also needed to execute strategic plans through allocating resources, building organizational capabilities, and establishing supportive policies and culture.

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Tanu Arumugam
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882 views28 pages

Putting Leadership Back Into Strategy

The document summarizes an article about putting leadership back into strategy. It discusses how the CEO plays a vital role as the authority and steward of strategy. Strategy is about defining the company's purpose and guiding its development over time. However, firms often focus more on initial strategy formulation than long-term implementation. To address this, strategists must be open-minded and ready to adapt strategy based on changes in the internal and external environment. Effective leadership is also needed to execute strategic plans through allocating resources, building organizational capabilities, and establishing supportive policies and culture.

Uploaded by

Tanu Arumugam
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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BSM 7054 : STRATEGIC MANAGEMENT INSTRUCTOR : DR.

YEAP PEIK FOONG

ARTICLE : PUTTING LEADERSHIP BACK INTO STRATEGY BY CYNTHIA A. MONTGOMERY TAKEN FROM HARVARD BUSINESS REVIEW
BY GROUP 4 :
1. GHAZALEH SHENYARI 2. SAMIN REZVANI 3. TANUSIA A/P C. ARUMUGAM 4. SOROUSH BOROUMAND 5. NUR AZHANI BINTI MOHAMAD ANIL SHAH 6. GOODARZ JAVADIAN DEHKORDI
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INTRODUCTION
Main focus of this article The adaptive nature of strategy

The vital role of the CEO (leader)


About Leadership
CEOs unique role as the authority and steward of strategy

About Strategy
Strategy is about the being of a company

Definition

INTRODUCTION (cont.)

What is Leadership?
Leadership is the ability to motivate a group of people to act towards achieving a common goal

What is Strategy?
Strategy is integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage Strategist is the person who defines strategy
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STRATEGY IMPLEMENTATION
What kind of company do you want yours to be? Process of activating the strategy Sum of all the activities and choices required for execution of a strategic plan

Process by which strategies & policies are put into action through the
development of programs, budgets and procedures. Consist of securing resources, organizing these resources and directing the use of these resources within and outside the organization

PROCESS OF IMPLEMENTING STRATEGY


Allocating Resources Building a Capable Organization Establishing StrategySupportive Policies

The Big 8
Exercising Strategic Leadership

Components of Strategic Implementation

Instituting Best Practices for Continuous Improvement

Shaping Corporate Culture to Fit Strategy Tying Rewards to Achievement of Key Strategic Targets

Installing Support Systems

PROBLEMS IN IMPLEMENTING STRATEGY


The demanding variety of managerial activities that have to be performed and ways to tackle each activity

Lost in the company purpose of existence


The exaggerated emphasis on sustainable competitive advantage has drawn attention from the fact that strategy must be a dynamic tool for guiding the development of a company over time Strategy become more about formulation than implementation Nowadays, firms focus more about getting the idea right at the outset than living with the strategy over the time People management skills required

SOLUTION FOR STRATEGY ISSUES


Strategy should be not only as a mean to better compete, it should also answer the purpose of the company existence

Creativity and insight should be taken into account when planning a


strategy Giving greater importance to strategy implementation

Strategist must be open-minded and ready for changes

STRATEGY FRAMEWORK BCG MATRIX


STRENGTHS Encourage strategist to view diversified firm as collection of cash flow and cash requirement Demonstrate progression of SBU Explain priorities for corporate resource allocation

WEAKNESSES Over simplified market growth and market share issues 4 simple quadrants are neat but trends are more valuable
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MCKINSEYs 7s Framework
STRENGTHS Acts as a guide for organizational change Combination of both rational and emotional constituents i.e. dual emphasis on hard and soft skills All parts are interrelated so all parts are addressed and focused upon WEAKNESSES When one part is changed, all parts change as they are interrelated Tendency to focus on similarities between Ss and not differences

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THE IMPACT OF STRATEGY

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BARRIERS OF LEADERSHIP
Lack Lack of Vision
In dark times, vision is at a premium. Without a clear organizational vision: Leaders would function in a world with a lot of uncertainties and fluctuations

Leaders are not able to foresee problems and opportunities around the company
Leaders who fail to learn from the past would have problem to prepare for the future.

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BARRIERS OF LEADERSHIP (cont.)


Lack Lack of Communication One of the responsibilities of a leader is to share and explain the exact vision and mission of the organization to employees. Failing to do so increases the risk of confusion, conflict and other productivity breakdowns

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BARRIERS OF LEADERSHIP (cont.) Uncertainties in the Environment (Adaptability to changes)


Changes in company are very important and leaders should be ever ready to adapt to the changes in the internal and external environment The key drivers of adaptation and potential rewards include:
Competitive advantage Cost savings Regulation and community resilience

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BARRIERS OF LEADERSHIP (cont.)


Business Crisis A crisis will hit companys facility and causes to stop leaders strategy. When a crisis hits, leader has to handle conflict calmly, resiliently and without being overwhelmed by stress

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BARRIERS OF LEADERSHIP (cont.)


Continuous Improvement No matter how good your organization gets, it can do better.

Theres always some type of improvement that can be made:


Change in a process Better working environment Better employee motivation Focus on the essentials

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TRAITS of INCOMPETENT LEADERS and HOW to REACT WHEN FACED WITH ONE
TRAITS
Lack Self-Awareness; Lack the Confidence to Change; Lack the Means to Change; are Unable to Admit Weakness and Faults; Plain Stubborn. Avoiding Taking Action, Avoiding Blame, or Avoiding change. Unwillingness to Take Risks, Poor communication, Lack of Accountability, Loves Big Strategies but No Thought for Implementation.
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HOW to REACT
Collaboration is a win-win for the follower and the leader, but it requires open communication and willingness to change There is no universal solution. If efforts fail, accept it or continue to fight. Fighting involves using outside forces to influence a bad leaders willingness to change

TRAITS of AN EFFECTIVE LEADER


TRAITS
Able to Identify Opportunities -Any opportunities, missed by the competitors, and bring benefit to the organization. Optimism Problems are challenges and an opportunity to make new directions and seek pasture grounds Courageous - Take challenges and go where no one has gone before. Strong Self Esteem, the Desire for Achievement and Goal Oriented Able to face tough challenges and complex situation
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IMPLICATION
A good is able to impart this goals to the employees and commit them to work hard and intelligently to achieve the desired organizational goals. The key to successful leadership today is influence, not authority. Kenneth Blanchard

Real Life Example


Ryanair initial strategy: Serving the U.K Airline Market
Ryanair direct competition with British Airways & Aer Lingus cost 20m pounds of loss to the company in just 3 years

Ryanair new strategy : Low-Cost Carrier


Micheal O'Leary decided to use new strategy based on Southwest Airlines company.
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Real Life Example (cont.)


Implementation of Low-Cost Strategy:
Outsourcing Jobs Jobs are outsourced to reduced overhead cost
Reducing Number of Routes

Routes were reduced from 19 to 6 routes. The new routes were direct toward regional airports.
Taking Advantage of Changes

Ryanair replaced Aer Lingus for the Dublin


London route.
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Real Life Example (cont.)


Steady Growth
Additional routes were added only when the company was able to properly serve it's U.K market.

Leveraging on Ancillary Revenue


Extra revenues were created by charging extra fees for on-board food services and other services. In 2009, 598m Euro were made from ancillary revenue

Standardize Fleet & No-Frills


-Aircrafts seats are made of non-recyclable synthetic leather. -The company does not offer connecting flights.
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Real Life Example (cont.)


IBM Had the Best Year in its History Until
Then in 1990 (Sales $69 billion, Net Income $ 6 billion)
In 1992, IBM Suffered its Worst Year Ever, Losing $ 5 billion; Akers Removed as CEO by Board of Directors. 1st April 1993, Lou Gerstner Hired From Outside (Services unit was 27 % of revenues and the software unit didnt even exist) In 2001, services and software combined represented 58% of total revenues In 2005, major restructuring process took place
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Real Life Example (cont.)


IBM was initially unable to adapt to the paradigm shift from mainframe computers to network computing; they were aware of the changes, but could not leave behind profitable installed base of legacy systems Gerstner moved IBM away from a highly vertically integrated company by divesting many divisions; then he refocused the company by concentrating on the customers; It is now a total solution for IBM

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Real Life Example (cont.)


IBMs Strategies Focus on total and partner solutions for complex, heterogeneous enterprise requirements Focus on three primary growth areas: - Services - Cross-platform Software - Unix & Intel-based Servers

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Real Life Example (cont.)


Apple computer was caught in such trap in 1990.
By the summer of 1997 Apple`s share was at a 10-year low Only after Steve job returned as CEO, reclaimed the best of what Apple once was (a passionate design company that believed technology could change the world) He took the firm into new business (digital audio players, cell phones, and retailing).
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Real Life Example (cont.)


With this strategy , Apple could :

Attract a new mass of passionately loyal customer


Generate handsome returns

Increase Apple`s share price in the market In January 2007 it dropped computer from its name and became simply Apple Inc.

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Conclusion
A CEO must be the steward of living strategy that defines what the firm is and what it will become Necessity of leadership implementing strategies during

Leadership role will never end; Modifying strategy is always in need of leaders
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THANK YOU

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