Strategic Thinking and Strategic Leadership
Table of Contents
1 Introduction………………………………………………………………………………………………. 2
2 Literature Review……………………………………………………………………………………… 3
2.1 The Purpose of Strategy…………………………………………………………………………………………………….. 3
2.2 The Development of Strategy……………………………………………………………………………………………. 3
2.2.1 Corporate Strategy………………………………………………………………………………………………………. 3
2.2.2 Strategy Related to Innovation and Change……………………………………………………………… 4
2.3 Strategic Thinking………………………………………………………………………………………………………………. 5
2.3.1 Cognitive Activities and Abilities………………………………………………………………………………… 6
2.3.2 Logic and Creative Thinking……………………………………………………………………………………….. 7
2.3.3 Sustainability Thinking……………………………………………………………………………………………….. 8
3 Strategic Analysis………………………………………………………………………………………. 8
3.1 Case Study – ICT Company………………………………………………………………………………………………… 8
4 Engagement and Contribution to the Strategy………………………………………… 10
4.1 Strategic Leadership………………………………………………………………………………………………………… 10
4.1.1 Executive Leadership…………………………………………………………………………………………………. 11
4.1.2 Support Innovation and Change via Strategy…………………………………………………………. 12
4.2 Organizational Structure & Design………………………………………………………………………………… 13
4.2.1 Learning Organization……………………………………………………………………………………………… 13
4.3 Strategy Implementation………………………………………………………………………………………………… 13
4.3.1 Assessment Tools……………………………………………………………………………………………………….. 14
5 Conclusion & Recommendation…………………………………………………………………… 14
6 Biography………………………………………………………………………………………………… 15
7 Appendix………………………………………………………………………………………………….. 17
7.1 Corporate strategy seen as a whole organization………………………………………………………… 17
7.2 Effective habits…………………………………………………………………………………………………………………. 17
7.3 Learning Board model…………………………………………………………………………………………………….. 18
7.4 Strategic Thinking by Liedtka…………………………………………………………………………………………. 18
7.5 Analysis of the best use of strategies for the case study……………………………………………… 18
7.6 Mintzberg and Waters definitions of strategies……………………………………………………………. 19
7.7 Organizational Strategic Analysis – Identifying tensions…………………………………………….. 20
7.8 Organizational Strategic Analysis – Identifying leadership and cultural perspectives……………………………………………………………………………………………………………………………….. 20
1 Introduction
”There is no one best way to make strategy,” argued Mintzberg et al (2003:144), even though many types of research have tried to define strategy in different ways and models.
A Chinese called Sun Tzu who wrote his Art of War in the 14th century BC invented strategy (Mintzberg et al, 1998). Later on, strategy also used by the Greek military higher officers to have control over their soldiers (Mintzberg et al, 2003). Even today we use strategy for the same purpose, only in addition to a more complex business view.
Strategic thinking and strategic leadership is the skeleton of the business that could be built upon to create the future success, however, in today’s rapidly changing environment, strategies need to be flexible (Grant, 2010). Hence, according to Darwin, it is neither the strongest nor the most intelligent that survives; rather it is the one that is most adaptable to change that will be successful.
This paper describes the strategic development and reviews theories of strategic thinking and strategic leadership. It further explores the relationship between strategy, innovation and change and investigates the importance of leadership’s innovative contribution to a successful strategic management in business organizations.
In addition, it also contains the review and reflections from the author’s own experience and knowledge as a leader in regards to strategies in business organizations. The lesson learnt indicates that the difficult part is to get the majority on board for the new or changed strategy.
Finally, it summarizes some strategies and actions that could be implemented via leadership in order to achieve their goals and desired behaviours in the organisation.
2 Literature Review
2.1 The Purpose of Strategy
Strategy often defined as the plan in which people or organizations use to achieving their goals (Grant, 2010:16). The plan is for the future but it also reflects learning from the past. Also, according to Mintzberg (2003) strategy sometimes emerges by itself intentionally or non-intentionally. In conclusion, strategies should include previous success stories, the actual situation today as well as a trend in the future.
The reason corporate strategy exists is to secure that the full potential of the organization will be used in business. This means that the organization will produce the right type of services or products to serve a market hopefully over a long period of time. The managers have a crucial part in this process, as they should make strategy a vital part of their daily life and believe in them. Furthermore, successful strategies are made of simple long-term goals, deep understanding of the competitive market and objective appraisal of internal strengths and weakness (Grant, 2010:10).
2.2 The Development of Strategy
Over time, the strategy itself has an emerging process. The strategy needs to be tested, evaluated, learned and changed, in order to become even better (Mintzberg et al, 2003).
The learning process for an organization is to have control of the emerging process of the strategy. This is although very difficult and sometime even unwanted, as the organization could by itself change the strategy maybe into an even better way.
Strategies could be made by the so-called Design School view and done by gathering and analyzing information of the company strengths, weaknesses and performance. Then the top management looks into what choices they have, create future plans and implement them in the organization. The challenge is the implementation part, i.e. that all employees want to follow the strategy everyday.
2.2.1 Corporate Strategy
One of the basic level strategies in an organization is a corporate strategy. Johnson (et al 2005:9) defines corporate strategy more as a whole operation bringing together resources to meet the needs of a number of different complex stakeholders (see appendix 7.1). However, Grant (2010:19) states it is more focused on customers and competitors, as in his strategy view that is “the scope of the firm in terms of the industries and markets in which it competes”.
Furthermore, strategic decisions revise the external strategies such as the purpose of the organisation, decision to get in or out of certain markets, changing the product or services the company offers etc., and internal strategies such as changing the organisation’s structure and systems, changing the way resources are used, getting into or out of relationships with partners, suppliers etc.
Therefore, firstly strategies should be based on the vision and mission statement, as they should clarify the reason for existents of the organisation, the expected behaviours of the staff and the values that the company cherish. Strategy will then support and move department together to work towards the same goal, because strategy drives alignment. Strategy will clearly outline the prioritised activities that must be completed to give success. When priorities are clear, it is much easier to filter out potential initiatives that could get the business out of focus.
Secondly, to create strategies that will take the company forward, one needs to review both larger environment stakeholders such as economic, politic, legal, social, and inner environment stakeholders, which includes suppliers, customers and competitors (see appendix 7.1). All those stakeholders will influence (enhance or prohibit) the company’s business activities. Hence, in order to perform excellently, the company must, as Mintzberg et al (2003) suggested considering all those stakeholders and their interests when forming their corporate strategies.
Thirdly, a larger company would have difficulties to see the whole strategic pattern in each separate department. At the same time each department has a valid view over their part of the organisation, i.e. they need to break down the corporate strategies into business level strategies or functional and operational strategies. When strategies are made for different levels it could be implemented in a faster way, because it is easier to understand those strategies in different organizational levels if they could relate to their own day to day business.
2.2.2 Strategy Related to Innovation and Change
The current economical circle with its crisis, as well as the fundamental changes in the capitalist system and the leadership styles for fostering creativity, are enforcing the development of new conceptual thinking in strategic management (Grant, 2010:474). Activities such as cost cutting are often combined with change and innovation nowadays. Instead of only survival, organizations are now focusing more on long-term success and to match their strategies to enhance the among of the talented work force.
A traditional way of develop a strategy is often showed through a CEO’s announcement of a new strategy. However, behind that statement, which was invisible, there would be a longer process with a lot of meetings and debates. This masculine approach, i.e. “strong decision-making, leading the troops, driving strategy, waging competitive battle” (Grant, 2008:459) needs to be changed to emphasize more feminine qualities where you build relationships, listen to and foster the organization.
Today, businesses are transforming in a rapid pace and new innovations within product and services coming to the market all the time. So the strategist in the companies need to think more innovative and the leaders need to be masters in leadership innovation and change management (Grant, 2008). This will only work out good if the leader or strategist is interdependent. For example to think that we could manage obstacles together, use our skills together to create something bigger than one and each of us could do by ourselves (Covey, 2004).
If the CEO is independent and just looks at their previous solutions, habits, and has selfish reasons for the strategy, he/she would not develop/obtain long-term strategy the company looks for and needs (Covey, 2004). Independent people could be a good contributor, but they would not be good to lead a future strategy for the whole company.
The strategies in the future need to think differently than those previously theories (Grant, 2008). Firstly, three areas: finance, political and technology are undergoing rapid change today. These in turn demand the companies to be more flexible and adaptive to the changes, as the “Knowledge revolution” (Grant, 2008:445) has broadened the information access and speeded up communication.
So same processes that took a longer time before, become much shorter today. In this new economy, the deregulation has also made an impact on the business strategies. Hence, old rules are not valid any more. For example, the Scandinavians Niklas Zennstrom and Janus Friis, have changed the whole telecom operating market by launching Skype and made it successful in just 5 years. Hence, communication is one of the key areas that will have an impact on future strategies, as the social legitimacy and consumer power will need to be taken as an important part of the organisations success or failure. If companies do not consider these value-driven powers, they would struggle in the future (Grant, 2008).
Secondly, the global trend due to the outsourcing of business services to India and production to China changes the market playground to a much broader perspective (Grant, 2008). Hence, strategic development needs to adapt to the new market scope and cultural differences, as well as to seek new sources of value, competitive advantages, in order to achieve the desired goals. A dimension that needs to be added to Johnson et al (2005) model (appendix 7.1) is the globalization, e.g. impact of outsourcing as it needs to be carefully managed, otherwise, the business will lose “the capability to evolve and adapt to changing circumstances” (Grant, 2010:365).
Finally, to cope with the new realities “new thinking about the nature of strategy, the responsibilities of the corporation, and the role of management” (Grant, 2008:444) would be needed. One could argue that strategist need to look more into behaviours such as what habits we have created and we should questioned them to create even smarter and better strategies. Human brain tends to remember the old useful path and it create a strong belief that the path we have created is correct and functional (Covey, 2004). To change the habit demands a very strong commitment and determinate process. One needs to think outside the box and as habits are a mixture of knowledge, skill and the desire (see appendix 7.2), the strategists need therefore to be equipped with the right portion of these elements.
In summary, strategies need to mature and be aligned with visions, plans and communication. Strategies also need to come out of the learning process (Mintzberg et al, 1998). We need to cope with todays fast-changing world, the strategist should strive to adapt, change old habit and apply new thinking as well as being interdependent.
2.3 Strategic Thinking
Strategic framework includes both strategic planning, which is a summary of several strategic analyses, and strategic thinking that reflects intuition and creativity (Mintzberg et al, 2003). Liedtka (1998) built a model (appendix 7.4) that includes five factors from Mintzberg’s theories. The model uses to enable strategic thinking and it has the following five elements.
The first is Systems Perspective: the whole process is taken into account and also the dependences in-between the different parts of the organization. It enables individuals to sort out their part in the larger perspective and the effect their behaviours has on the whole organization.
Strategist need to look on the vertical perspective to see the effect of the strategy will have from the corporate level to the business level and functional levels, even down to personal choice they make in the daily activities. The horizontal perspective is to understand the cross-functional connections between functions and departments (Liedtka, 1998).
This approach is in line with Covey’s (2004) theory that emphasizes the interdependence in an organization. Therefore, the collaboration of the whole organization is one of the key elements in order to applying strategic thinking.
The second called Intent-focused: the focus is on leveraging energy from the staff, prioritizing and achieving goals. This allows staff in the organisation to get a direction to focus on, and to resist distractions, until they have reached the goals. In other words, people in the organization will need leaders who could inspire and enhance their potentials and motivation (Liedtka, 1998).
The third is Intelligent Opportunism: the openness and willingness from the top management to include all people in the company in the emerging strategy, to include staff in the strategy to be creative and interaction with the employees. For example, a well functional suggestion box process would give the input to the management in a good way (Liedtka, 1998). Covey (2004) and Grant (2008) both also pointed out the importance of being open-minded and applying a new way of thinking.
The fourth called Thinking in Time: have a vision, i.e. where the company should be in the future, what people should learn and remember respective lose from the past times and what people should do daily to get to the vision (Liedtka, 1998). As the business environment is rapid changing nowadays, Thinking in Time is more important than ever.
The last is Hypothesis-driven: a scientific way for analytic thinking as well as creative thinking. The organisation needs to think in a hypothetic way to see what could be tested. If the hypothesis works, the organisation needs to look into what to do next and also evaluates that outcome (Liedtka, 1998). This is part of a learning organisation and also something Collins (2001) noted in the companies they researched, i.e. that companies with a strong focus on their strategy and had a level 5 managers as CEO, hence had a great success in their business.
In conclusion, the way of thinking will affect the strategies one is going to make. Hence, in order to create successful strategies, one must apply strategic thinking. Strategic thinking is going to need collaboration, motivation, openness, vision, logic and creativity as well as excellent leadership. Moreover, as Mintzberg et al (2003) pointed out, a strategy needs to become a continuously pattern in the organisation. Therefore, it is crucial to have a close connection between the strategic thinking and activities to make it into day-to-day actions.
2.3.1 Cognitive Activities and Abilities
In applying strategic thinking and leadership, one shall use cognitive components such as thinking, abilities and maps (De Wit et al, 2005).
For example, when a strategic person got a problem, he/she would firstly identify the problem, understand it fully so it makes sense. Then he/she will try to find out where it comes from and do an analysis or reflect on the nature of the problem. After that he/she will imagine the wished situation one would have liked to been instead and finally take action in real life to solve the issue.
Human’s cognitive maps are where people store their knowledge and are also based upon how they reflect on other people’s thoughts and what they believe in. We use our lessons learnt we gain during our way throw life in the cognitive maps (McCaskey, 1982).
Humans could see patterns in the problem and solve it by using previous experiences and outcomes. If one do things repeatedly one could transfer that knowledge intuitively, as people play an instrument, drive a car or motorcycle without really thinking about the mechanics behind it (Starbuck & Milliken, 1998).
The problem with this is that we follow previous patterns and seldom take in new ideas. So the cognitive maps filter out the things that not fit, parts that maybe could solve the strategies problem. The challenge for a strategic leader is to challenge those cognitive maps that created over the years (McCaskey, 1982).
2.3.2 Logic and Creative Thinking
It is a paradox between creative and logical strategic thinking, i.e. to be creative and innovative while at the same time influencing by things one already know, indicates that one shall not only react as one has done before, but also reflect on new inputs and data.
A strategy needs to make sense, e.g. to be logic in order to get the employees aboard and stand behind it. The strategist needs to also take into account that information that they receive from the organization, could be an organizational folklore or assumptions, and not based on for example scientific fact. In applying logic thinking, the strategist needs therefore to be careful, so they do not get into the trap to work with assumptions. To minimize assumptions you could reflect on previous experiences and through the process when people have found really good solutions.
At the same time, the strategist also need to understand that the creative side would most probably hold the solution in its hand (De Bono, 1970). One should emphasize leaps of faith and imagination rather than trust only on previously believes. As Albert Einstein said: “Imagination is more important than knowledge”.
Strategists need to be aware of their cognitive part of minds. If one gets dropped into the middle of the jungle that one never has been before and needs to find one’s way out. One would probably take the same path if the same thing happens again. But if one would try a new path, one might be able to find a better way to get out. In order to be creative and think in new ways one should not use the previous path, rather, one shall create a completely new way (Enhager & Kull, 2014).
This means that one needs to use a lot of more efforts and energy to change the way of thinking. The reward is that in the end, new interesting things would happen. This is also described by Covey (2001) as a moon rocket that uses a lot of power to get away from the earth gravity (habits), but later on don’t need to use almost any power to navigate in the space.
2.3.3 Sustainability Thinking
Bonn (2001) has included sustainability into strategy, which is a holistic approach that pays attention to creativity and value-system of the sustainable organization. A sustainability initiative includes three parts: economic, environment and social. In a study, it was found that most of the companies in the research had a corporate sustainability strategy, but only 11% did implement them.
There are several elements according to Bonn (2001) that are important for understanding and improving strategic sustainable thinking. First of all is to have a holistic understanding of the organization and its environment – formed in a vision statement that could be used as a guideline for the board.
A vision for the future of the organization should be based on a clear understanding of the organization’s purpose and values. In order to really implement this strategy into the organization, one needs to pervade even down to the details of i.e. role descriptions, recruitments, educations etc. in the company.
The problem is that not enough boardrooms have this on the top of their agendas (Garrett, 2010). The executives has not been able to cope with the fast moving discussions of sustainability that need to take place in all the decisions as well as policies, plans and behaviors for the company. Also, the selection criteria and job description of the board members should also be changed accordingly (Garrett, 2010).
3 Strategic Analysis
Through strategic analysis (see appendix 7.7 and 7.8), one could understand the source or root cause of a problem, which would help to create a better competitive strategy (Grant, 2008). The Beer (et al, 2000) model of create a competitive strategy starts in the top management team. An advisory and taskforce team of manager close to the operation could be used to gather information from the organisation and identify strengths and hinders.
Via the following case study, the author wants to shed some light on the problems of getting the majority to accept the new or future strategy. Moreover, the author also wishes to highlight how a leader should act in order to ensure that as many people as possible in the organization following a new strategy.
3.1 Case Study – ICT Company
This ICT Company is based in Sweden with over 130 000 employee’s and a strong global market share. The company has a strong engineer mind-set and therefore it focuses on creativity, analysis, and problem solving. However, the business side has not always been performing well. The company was profitable during many years and their high-tech products were sold by its reputation more or less. Hence, the employees became a little complacent and counted always that there was scope for spending on new projects. They did not do a deep business analysis of these projects and therefore unfortunately launched many unprofitable projects. Here one could see that new strategic analyses that consider both past and present as well as future need to be made.
The company’s strategic focus is on controlling over the organization. The leaders in the company are mainly specialist (engineers). Even though the current CEO has a modern leadership approach; the company had a conformance-oriented board that applied micromanagement down into the organisation (became a part of the organizational culture). The executives lost sight, as they engaged in operational questions instead of looking into the vision and direction of the future (Garrett, 2010). No one was allowed to criticise his/her behaviour, because it would be seen as a threat to the management. This approach kills organizational effectiveness and empowerment. The organizational structure inhibits cross-functional collaboration. Hence, its best performance is merely mediocre.
As mentioned by Yukl (2006), the CEOs had many various parameters to depend on his success or failure. For example, the CEO could not be successful if members in the executive team interfere with the company’s strategy negatively (Collins, 2001). One of the company’s visions was to bringing in external companies to benchmark the organisation towards the market, and to elevate the internal support service to a world-class level. However, the CEO and CFO had different views about how to select those external companies. Hence, strategies made by the CEO were not followed by the CFO. What should have been done strategically was that the CEO should encourage openness and to include the CFO in the emerging strategy. Also, the CEO should get the right people on the bus (Collins, 2001) and especially in the executive team.
Because strategy needs to be carried by exemplary leadership, the backbone of the company with components as organisational structure, culture, policies, values and processes. It is very important to listen to people that bring bad news to your table, speaks open-minded without fear of reprimands and have a deep interest of the company’s well being. Control and micromanagement do not encourage engagement and creativity in this company.
The selection criteria of the executive team and board members should include excellent leadership skills such as level 5 leaders (Collins, 2001) and leaders job description should emphasize on strategic thinking. The CEO’s executive team had at the most 2 transformational leaders of 10 managers. Therefore, the change should start with the company’s leadership and top-management. Especially today, when a majority of employees are high educated, the role of leadership is also undergoing change. Leadership needs to emphasize motivation, empowerment, openness and interdependence. The top-management’s strategies should be based on the mission statement and aligned with visions, plans and communication. Top-management needs also to create a less detailed strategy and be more transparent towards the organisation, to make people more flexible for changes (Garratt, 2010).
The company did notice the ineffectiveness of the leadership and started an executive program for all managers in order to bring about change. However, the strategies seem quit unknown to those leaders and people in the organization, as they are not communicated. This so called Umbrella strategy (Mintzberg & Waters, 1985) includes when the senior management set up broad guidelines without any specifics to be defined by the organisation.
Beer & Eisenstat (2000) argued that it is unfortunately very often to see a senior management try to incorrectly communicate an unstructured strategy that neither has a vision nor address any problem. The ICT Company does communicate its strategy and does have a vision. But their messages were neither clear nor structured. The key element is to create organizational interdependence and to involve all employees to develop and implement their strategies as well as use open-discussions to start the learning process (Mintzberg et al, 1998). These strategies should also be broken down into department levels. Look into the ICT Company’s organization, one could hardly find any interdependence, as people in different departments has their own agenda and goals.
Since the company culture is among others to be proud of the products that created by the company and to be a loyal employee. Many employees stayed with the company over a long time, sometimes up to 20 years and above. This would give the company stability, but not well in flexibility, as the company didn’t get new fresh views (thinking) from the outsides and younger people. Rather, in order to cope with today’s fast moving business environment, leadership needs to enhance change and innovation as well as challenge people’s cognitive maps. New talents should be employed frequently and organizational culture and structures need to be changed to boost and nurture creativity. New ways of thinking and solving problems should be encouraged. Mintzberg (2003) write about the ”Quantum Leaps”, which means that when the company face larger shifts in their business environment they need to take a new and fresh view of the strategy.
Furthermore, this culture encourages attitudes/behaviors such as taking things for granted and low change ability. Hence, in order to achieve change, the top management should use a more Cultural (Johnson et al, 2005) or Consensus (Mintzberg & Waters, 1985) Strategy (see appendix 7.5).
In order to secure quality in the deliveries, the CEO and top-management decided to ISO-certify the company, not only the quality certification i.e. ISO9001, but also the certification of ISO14001, which is sustainability adherence. However, the effort of sustainability thinking did not go any further than that. The basic reason was that the top-management did not have enough knowledge and understanding about sustainability concept. Also, sustainability was neither included in the vision statement nor company value. Strategic thinking such as sustainability must be tailored into the overall system and process as well as culture of the company. Otherwise, it would only be an empty slogan.
In sum, this company needs to lead by an executive team with modern leadership views that encourage empowerment and trust within the organization. Leaders should have excellent leadership skills and can lead by example. They will then create organizational interdependence, which will act as a glue to link all the people in the organization together toward a common goal. In addition, leaders must ensure that organizational culture reflects the value of this excellent leadership.
4 Engagement and Contribution to the Strategy
In making strategies it would be a good way of getting an iterative process in carving out the strategy via the feedback from the organisation and also include previous activates that are aligned with the strategic thinking.
The progresses need to be monitored and reviewed to ensure that the organization is on track. The feedback to the top management team would make it possible to refine the strategy plan and also do reality checks against the strategy. Usage of the taskforce could be a good way of implementing the strategy as this is an on going and seen as a long-term activity.
4.1 Strategic Leadership
Mintzberg et al (2003) pointed out that strategy has more to do with vision and involvement than analysis. Boal & Hooijberg (2001) defined strategic leadership as a leadership that includes the ability to learn and to change as well as “managerial wisdom”. Ability to learn means to be able to build and maintain the capability to learn, to recognize and assimilate new information and to keep internal and external fit. The ability to change refers to be able to adept and being flexible. Managerial wisdom includes an ability to note changes, to handle conflict, to have social and interpersonal intelligence and empathy as well as the willingness to continually develop and grow in order to get wisdom (Gardner, 1985).
Strategic leadership according to Boal and Hooijberg (2000) ”focuses on the people who have overall responsibility for the organization.” Pfeffer & Sutton (2006) described the top-leaders role is to focus on building an effective team more than to be the CEO that fix everything when the fire starts. This means that the CEO should apply a more indirect leadership and asked the organisation for advice. Especially, in larger organisations with many departments and functions, indirect leadership become even more important (Pfeffer & Sutton, 2006). Leadership of the new age should not anymore apply micro-management or personal control, as well-educated people are capable to take responsibility and use collaboration to achieve their goals. Leader’s job is to provide reliable systems to support and guide the people in the organization. In this way, people will learn and sometimes better themselves via their mistakes.
4.1.1 Executive Leadership
Strategic talk and discussion need to be made as a routine in the organization. This will help the organisation to take care of unexpected events that are flagging in the environment when strategic targets are not meet and to adjusted strategies accordingly. At the case study company, strategies often communicate by the leaders several times during staff meetings. Afterwards, it is all up to people in the organization to choose what they really want to do or follow. Hence, it is not really surprising that leaders find themselves wondering later why strategic targets are difficult to meet.
Beer et al (2000) argued that there are “Six silent killers” in organizations. In his study of 12 companies with 150 different departments, he found out that 100% had ineffective senior management team, 75% had a top-down management style, 65% had a down-the-line management style, 75% had low quality of vertical communication, 83% had bad coordination cross-functional communication and 75% had unclear strategies and conflicting management. Those six “Silent killers” often block the correct organizational strategic implementation and prohibit learning and growth. The case study company has all “Six silent killers”.
In addition, Collins (2001) also identified the problems with the ineffective executive management team. It is important to encourage the executive team to actively involve and carry out the new strategies, and to displace the old culture and cognitive maps. In order to be successful, the case study company must firstly build an effective top management team and apply new thinking.
In conclusion, leadership, especially top management is an essential element of a successful strategic management. Leadership style of the senior management should be close to or better than a transformational style that for example inspires and motivate people. Management team should involve themselves in all stages of the strategic plan, change and implementation. They need to mobilise all people in the organization via effective and honest communication; to encourage people’s involvement, creativity via discussion (such as using suggestion box) and empowerment. Finally, they need to facilitate organizational wide collaboration and interdependence.
4.1.2 Support Innovation and Change via Strategy
To manage strategy, then, is to craft thought and action, control and learning, stability and change (Mintzberg et al, 2003), and to see the corporate strategy as a whole (Garratt, 2010) (see appendix 7.1 and 7.3).
In order to bring about change, leaders have to facing the brutal facts of the current situation without loosing any hope; rather they should be sure that they would be successful. They were never over-optimistic although, but need to look at the situation in the company in a very sound and reality based view (Collins, 2001).
Collins (2001) has a very interesting research around the corporate strategy and leading change. His findings are clearly connected to strategy, innovation and change. In the sense of strategy, he found that the average companies that made the leap had CEO’s that was level 5 leaders. Level 5 leaders are unpretentious, headstrong and have braveness (Collins, 2001). They also have an interdependence personality, as they think in terms of “we”, i.e. collective instead of own agenda (Covey, 2004).
To enhance innovation the CEO’s didn’t take the ordinary route to create the vision and mission. Instead, they first made sure that the right people were in the right position in the company and the wrong people left the company. Afterward, they started to figure out the mission and vision for the organization (Collins, 2001). Appling this on the case study company, one could noticed that their focus was on a mixed up version of vision/mission and the selection of the leaders were not done through a valuation of performance or leadership skills.
In those great companies, strategies were created on the basis of their strengths. Sometimes very tuff decisions such as to amend their core business need to be made. When those decisions have been made. They focused on the strategy and follow it as a law.
Everyone in the company worked very hard and was very strict on following their business strategies, and not because of the control by the management, rather because of the management has created a culture of discipline. The focus on a very few limited priorities was a big part of their successes. Collins’ (2001) findings matches Beer’s (2000) conclusion in the “six silent killers” that 75% of the companies has “unclear strategy and conflicting priorities”. The case study company has not established this discipline; therefore people in the organization do not follow the management’s strategies willingly.
As a good strategy creates a momentum, as Collins (2001) describes it, it was a very strong force within the company and small parts are put in a systematic way that made them to go from merely or good companies into great companies. If the companies have strong values, joint forces in passionate employees and momentum they will continue to be great. The passion in employees could never be neglected, as it is a strong and needed force within the organisation (Collins, 2001).
In conclusion, also in line with the author’s own experience, great leaders such as level 5 leaders have the ability to support organizational change and innovation via optimal strategic management. In addition, leadership has a crucial role in strategic management. As Collins (2001) has argued that one of the most important tasks of strategic leadership is to construct the organisational capabilities. A capable organization will need empowered talented people as well as a suitable system and structure.
4.2 Organizational Structure & Design
The excellent executive teams (with excellent leadership styles and skills), supportive system (e.g. service, education, supply chain etc.), effective processes and procedures (process optimization, outsourcing, sustainability thinking etc.) together with suitable HR management (clear employee role description, performance expectation and responsibility allocation) are basic conditions that enable a successful organizational performance. Look at the case study company; one could see that due to the lack of the excellent executive team, the organizational performance is just mediocre.
In order to cope with change, leadership needs to build a more organic organization, which is a more flexible organization where knowledge and information are easily accessed and shared, people are empowered and autonomic, cross-functional collaborations are basic work methods and creativity is appreciated.
In sum, it is again leadership’s responsibility to build and maintain a successful organization such as a learning organization with effective knowledge management; to design and implement supportive systems and structures in order to optimize the organizational performance (appendix 7.3).
4.2.1 Learning Organization
Pedler et al (1991) introduced the concept of a learning organization, which is the organization that facilitates continuously learning and growth for its people. The characteristics of a learning organisation often include strategies that encourage experimentation, creativity, information sharing, collaboration and learning from others; structures that are more flexible, flat with control systems that are designed to support rather than control, in other words, to balance autonomy and control.
Knowledge management is to distributing the organizational collective knowledge within the organization to the right people in the right time (Robbins & Judge, 2009). Knowledge management has two main strategies (Hansen & Nohria, 1999): codification and personalisation. Codification means to turn the organizations knowledge into codes, so the principles, algorithms that then could be distributed via IT solutions into the organization. In this way, employees could learn from each other by electronically distribute media. Personalization refer to knowledge that could only be express and exchanged between people such as face-to-face; meetings, conversation.
The challenge for the strategic managers is to communicate in a good understandable way and also to secure that the information is easy accessible and could be shared. As information is in some sense a power, which could make individuals or sections of an organisation neglect the benefit of knowledge sharing.
4.3 Strategy Implementation
Successful strategies need effective implementation (Grant, 2010:10) and the implementation is the most difficult element of strategic management (Kaplan & Norton, 2001).
The case study company implements its strategy by broadcasting the strategy during a special all-employee-meeting. Senior management has a tendency to think that if they just communicate a good strategy, it will be implemented by itself. But in reality, this is hardly the fact. Rather, leaders need to communicate the strategy so it makes sense and would be clear to as many as possible. Moreover, leaders need to engage people into the strategy via for example an honest and open dialog about the problems, its source and purpose.
Another important step for strategic implementation, as described by Garrett (2010) is that each part needed to consider their own resources and how they best could be used. In other words, the management and people need to implement the strategy together and have the same blue print in mind (see appendix 7.3). Again, people in the organization must be engaged to the strategic implementation.
4.3.1 Assessment Tools
An assessment tool called Balanced Score Card (BSC) has been used to measure the organisational strategic performance and to assist the strategic development. Kaplan & Norton (2001) advocated that BSC should be designed with four levels: financial, customers’ expectations, business processes and capacity, learning and growth. Hence these measurements should tell the company if they are on the right track and fulfilling the strategy, such as taking market shares, increase customer value etc.
To mobilize the whole organization to implement the strategy, the management could use BSC to align the organisation to the chosen strategy and coordinate different parts of the organisation through strategy themes. Strategic themes show different parts of the organisation how to coordinated their efforts, in order to achieve a specific strategy. Working across the boundaries of departments in organisations and ensuring the contribution of each department to a strategic theme is clearly specified.
In order to be successful in using BSC as a tool, it is important to use scores in different areas of the organisation and levels. When one has collected measurements over time one will be able to create a road map, i.e. to use these measurements to adjust existing strategies or even creates new ones.
5 Conclusion & Recommendation
In conclusion, the strategist is often seen in some heroic shimmer that predicts the future and gives the organisation directions to follow. However a better strategist would be a person that could see patterns and learn from this data, and to create the best strategies accordingly. Good strategists are networking and learning about the company business by listen to the people and collect information from all kind of parts of the organisation. They include and empower people into the strategic process.
This paper has via theoretical framework and case study pointed out the important role of leadership capability in strategic management and organizational performance. Beer et al (2000) suggests that the top-leaders such as CEO could have an effect on the strategy, but only if they do the correct actions. That could be to define the vision and mission statement, take strategically decisions, enable strategic thinking, secure the important competence, future leaders and effective organizational culture, system and design.
6 Biography
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7 Appendix
7.1 Corporate strategy seen as a whole organization
Johnson, G., Scholes, K. & Whittington, R (2005:9). Exploring Corporate Strategy. 7th ed. New Jersey: Financial Times/Prentice Hall
7.2 Effective habits
Covey, S. (2004:48). ’The 7 habits of highly effective people: powerful lessons in personal change’. Simon & Schuster Ltd.
7.3 Learning Board model
Garratt, B. (2010). ‘The Learning Board’ from The Fish Rots from the Head’. London: Profile Books. pp.82
7.4 Strategic Thinking by Liedtka
Liedtka, J. (1998:122). ‘Strategic Thinking: Can it be taught?’. Long Range Planning 31/1.
7.5 Analysis of the best use of strategies for the case study
| Mintzberg & Waters | Johnson et al | Advantages | Disadvantages |
| Planned | Planning | Structured way | If it don’t fit the culture it will not work |
| Umbrella | Framework to work within | Less control over the strategy development | |
| Ideological & Consensus | Culture | Pursue the vision | Sub-cultures emerging? |
| Incremental | Logical incremental | Take time | |
| Entrepreneurial | Command | Adaptable and easily to change | Impose the CEO vision, individual approach |
| Imposed | Imposed | Strong decision | Not empowering |
| Process | Senior management control the process | Low empowerment and flexibility | |
| Unconnected | High empowerment | Less control over the development | |
| Political | Well worked through | Compromises and bargain may not make the best strategy |
Mintzberg, H. & Waters, J (1985). ‘Of strategies, deliberate and emergent’. Strategic Management Journal, July-Sept. pp.257-272.
Johnson, G., Whittington R. & Scholes K. (2011). ‘The Practice of Strategy’ from Exploring Strategy. Harlow: Pearson Education Ltd.
7.6 Mintzberg and Waters definitions of strategies
Boak, G (2010). ‘How are strategies made?’. pp 20. York St John University, UK.
7.7 Organizational Strategic Analysis – Identifying tensions
| Strategy process | Strategic thinking
Strategic formation |
Logic Vs. Creativity
Deliberate Vs. Emergent |
| Strategy content | Business level
Corporate level Network level |
Market Vs. Resource
Responsive Vs. Synergy Competition Vs. Cooperation |
| Strategy context | Organisational context
International context |
Control Vs. Chaos
Global Vs. Local |
| Purpose | Organisational purpose | Profit Vs. Responsibility |
Mortimer, C (2010). ‘Introduction to Strategy’. pp.7. York St John University, UK.
7.8 Organizational Strategic Analysis – Identifying leadership and cultural perspectives
| Strategic thinking | Logic
Creativity |
Rational reasoning
Generative reasoning |
| Strategic formation | Deliberateness
Emergence |
Strategic planning
Strategic incrementally |
| Business level strategy | Markets
Resources |
Outside – in
Inside – out |
| Organisational Context | Control
Chaos |
Organisational leadership
Organisational dynamics |
| International Context | Globalisation
Localisation |
Global convergence
International diversity |
| Organisational purpose | Profitability
Responsibility |
Shareholder value
Stakeholder value |
Mortimer, C (2010). ‘Introduction to Strategy’. pp 10. York St John University, UK.
