Chapter 2
The Process of Strategic
Leadership
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LEARNING OBJECTIVES
1. Explain how strategic leadership is essential to strategy formulation and
implementation.
2. Understand the planned approach to strategic leadership.
3. Understand the visioned approach to strategic leadership.
4. Understand the discovered approach to strategic leadership.
5. Understand the relationship among the three processes of strategic leadership.
6. Understand the importance of fit and misfit.
7. Explain how cognition, power and politics, and values and ethics affect
strategic decision making.
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Top Management
Strategic Leadership
• Managing an overall enterprise and influencing key
organizational outcomes.
• The top management team, typically led by the chief
executive officer (CEO or president), is responsible for
managing the strategy of the business.
• Failure to use this authority can lead to lack of direction and
internal conflict.
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Fit
• Condition in which all decisions made by management may
support each other but at a minimum do not contradict each
other.
• An implicit assumption of top management is that when
various decisions “fit together,” the organization will perform
better.
• The idea of fit has also been called alignment and coherence.
• Without fit, decisions contradict each other, causing
confusion, ineffectiveness, and inefficiency.
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Fit
Misfits
• A business always has a strategy because strategy is defined in
terms of the decisions that management has made about the arena,
differentiators, economic logic, staging, and vehicles.
• However, the strategy might not be a good one because it does not
fit with the environment or because decisions about the resources
and organization of the business do not fit with the strategy.
• Misfits that are strategically important will cause poor
performance of the business now or in future.
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Processes for Leading
Three leadership approaches that top management can use to
develop and administer strategy:
1. The Planned Process
2. The Visioned Process
3. The Discovered Process
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Processes for Leading
THE PLANNED PROCESS
• With the planned process, top management assumes that it can determine
through keen analysis what will happen in the future and then design a
strategy that will produce the best performance.
• It leads management in drawing up a plan of action that puts the strategy in
place by moving the business from where it is in terms of resources and
organization to where it needs to be.
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Processes for Leading
Planned Process Steps:
1.
2.
3.
4.
5.
6.
7.
8.
Assess performance
Describe the current strategy
Analyse the internal environment
Analyse the external environment
Assess fit
Provide alternative strategic solutions
Select a strategic solution
Implement the strategic solution
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Processes for Leading
Value of the Planned Process
• The planned process implies relatively high certainty about
what needs to be done so it works well in static and stable
situations such as those found in mature industries.
• It can also be called the designed approach because
management has crafted a strategic approach to the situation
facing the business.
• Keen analysis is able to identify where problems lie and what
actions need to be taken.
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Processes for Leading
How the Planned Process Works
1. Assess Performance
The first step in any strategic analysis is always to determine
how well the business has been performing.
2. Describe the Current Strategy
The essential decisions about strategy are described in terms
of the business strategy diamond presented in Chapter 1:
arenas, vehicles, differentiators, staging and pacing, and
economic logic.
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Processes for Leading
3. Analyze the Internal Environment
Its resources and capabilities are what the business has to
work with. These are combined in the functional activities
of the value chain.
4. Analyze the External Environment
The business operates in an evolving industry that is subject
to competitive forces. The driving forces of evolution include
politics, the economy, society, and technology.
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Processes for Leading
5. Assess Fit
Management has made many decisions about how certain
resources and capabilities will be combined to satisfy a
business strategy chosen to position a business in a selected
environment.
6 . Provide Alternative Strategic Solutions
Sometimes the strategic alternatives that the business can
pursue are clear to top management because it has spent a
lot of time thinking about the situation and what might be done.
Other times the management team has to design alternative
solutions.
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Processes for Leading
7. Select a Strategic Solution
Typically, selecting one strategic alternative over others is an
exercise in judgment because the criteria used to assess each
one differs. From an analytical perspective, the right answer
is based on the strength of the argument given the underlying
facts and analysis.
8 . Implement the Strategic Solution
The final step is putting the solution in place, which starts with
the preparation of a plan of action. In this plan, the necessary
strategic, organizational, and resource changes are identified.
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Processes for Leading
Weaknesses of the Planned Process
• The planned/ designed process assumes that the information
needed is available for analysis and can be used to produce a
rational decision.
• But the necessary tools, concepts, and information are not
always available to do complete analysis.
• And it gets worse when one recognizes that uncertainty,
complexity, and ambiguity are common when dealing with
strategic situations.
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Processes for Leading
THE VISIONED PROCESS
• A vision of where strategy will be taking the company is
provided by top management.
• In practice, the vision statement ranges from a word, to a
statement three pages long, or even a picture.
• Better statements are usually simple and brief, thus easily
understood and remembered.
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Processes for Leading
Value of the Visioned Process
• The visioned process provides a strategic intent that calls for
managers to set ambitious goals and then to develop the
resources and capabilities needed to achieve those goals.
• The tension between where the business wants to be and
where it is both energizes people and encourages their
creativity.
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Processes for Leading
Visioned Process Steps:
1.
2.
3.
4.
Establish pre-conditions
Create the vision
Sell the vision
Enact the vision
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Processes for Leading
1. Establish Pre-Conditions
Six conditions need to be achieved before visioning can be conducted
successfully:
First, the organization has to have top managers who feel responsible for
the direction of the company.
Second, those members engaged in visioning need the relevant information
to construct the vision.
Third, members need to understand why the vision is being created.
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Processes for Leading
Fourth, open and clear communication is needed so that creative ideas and
individual differences can be discussed.
Fifth, the key stakeholders in the business need to be identified so that their
interests are considered when setting the vision.
Sixth and finally, all members need to understand that the vision is a
prediction and that conditions may require changes to the vision.
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Processes for Leading
2. Create the Vision
Creating the vision starts with a lot of analysis, thinking, and
discussion and typically culminates with a seemingly sudden
crystallization of a vision in one “eureka-like” flash.
3. Sell the Vision
Those involved in creating the vision can be excited about it,
but it will not have much meaning to other stakeholders until
the vision is sold to them.
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Processes for Leading
4. Enact the Vision
Leaders demonstrate their commitment to the vision by
behaving in ways consistent with the vision and the values
associated with it.
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Processes for Leading
Weaknesses of the Visioned Process
• A weakness to this approach is that the vision is an
abstraction that may not be concrete enough
to be useful by itself.
• Translating it into behaviours for workers at all levels of the
organization is hard work.
• Furthermore, even an abstract vision is not always possible
when the future is unknowable. But a concrete vision can be a
problem when management gets caught in the “tunnel vision
trap.”
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Processes for Leading
THE DISCOVERED PROCESS
• People throughout the company have generated strategic
ideas from which top management has selected some to
further.
• The discovered process assumes that the environment is too
complex and/ or rapidly changing for consensus about the
strategy to be reached.
• When this is the case, strategy needs to emerge through an
iterative and evolutionary process that is continually
redefining the strategy.
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Processes for Leading
The Value of the Discovered Process
• The discovered process produces a business strategy that
evolves over time as the business adapts to changes in
society, technology, and politics.
• The business that adapts quickly is able to “beat” other
businesses to opportunities as they appear.
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Processes for Leading
Discovered Process Steps:
1.
2.
3.
4.
Establish preconditions
Find ideas
Develop ideas
Prune/fertilize innovations
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Processes for Leading
1. Establish Pre-Conditions
For the discovered process to work, top management needs to
establish a culture that supports innovation.
2. Find Ideas
Ideas that contribute to the development of strategy can come
from anywhere in the organization as individuals see the need
to do something different or differently.
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Processes for Leading
3 . Develop Ideas
Initially, ideas may not be well formed or well informed. They
have to be refined and improved.
4 . Prune/ Fertilize Innovations
Management imposes some rationale on the innovations the
business accepts and builds.
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Processes for Leading
Weaknesses of the Discovered Process
Innovation can be stymied in at least four different ways:
• First, a strong hierarchy working with an elaborate and
bureaucratic (top-down) control system gives managers
greater ability to block ideas and innovations that do not fit
with their own views.
• Second, a strong organizational culture that prefers stability
can limit innovation by challenging new ideas and demeaning
them based on previous experience.
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Processes for Leading
• Third, individuals in the organization may not have the
necessary mindset for innovation.
• Fourth, championing an idea requires individuals with certain
talents. They have to overcome cultural inertia and political
barriers by inspiring others to support their new ideas.
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The Human Influence on Strategic Leadership Processes
The three major aspects of human behaviour affecting
the processes are:
1. Cognitive biases
2. Power and politics
3. Values and ethics
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