CHAPTER
2
Strategic Leadership:
Managing the Strategy
Process
Chapter Outline
Learning Objectives
2.1
After studying this chapter, you should be able to:
Strategic Leadership
What Do Strategic Leaders Do?
How Do You Become a Strategic Leader?
The Strategy Process across Levels: Corporate, Business,
and Functional Managers
2.2
LO 2-1
Explain the role of strategic leaders and
what they do.
LO 2-2
Outline how you can become a strategic
leader.
LO 2-3
Top-Down Strategic Planning
Scenario Planning
Strategy as Planned Emergence: Top-Down and
Bottom-Up
Compare and contrast the roles of
corporate, business, and functional
managers in strategy formulation and
implementation.
LO 2-4
Describe the roles of vision, mission,
and values in a firm’s strategy.
Strategic Decision Making
LO 2-5
Evaluate the strategic implications of
product-oriented and customer-oriented
vision statements.
LO 2-6
Justify why anchoring a firm in ethical
core values is essential for long-term
success.
LO 2-7
Evaluate top-down strategic planning,
scenario planning, and strategy as
planned emergence.
LO 2-8
Describe and evaluate the two distinct
modes of decision making.
LO 2-9
Compare and contrast devil’s advocacy
and dialectic inquiry as frameworks to
improve strategic decision making.
Vision, Mission, and Values
Vision
Mission
Values
2.3
2.4
The Strategic Management Process
Two Distinct Modes of Decision Making
Cognitive Biases and Decision Making
How to Improve Strategic Decision Making
2.5
Implications for Strategic Leaders
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CHAPTERCASE 2 Part I
Leadership Crisis at Facebook?
WITHIN A MERE SIX MONTHS, in the latter half of 2018,
Facebook’s share price dropped by more than 30 percent, wiping out over $200 billion in shareholder value. Making matters
worse was a seeming crisis of leadership swirling around Facebook’s two top executives: founder and Chief Executive Officer Mark Zuckerberg and Chief Operating Officer Sheryl
Sandberg. After a decade of exponential growth and unabated
success, the global social network with its more than 2 billion
monthly active users found itself in serious trouble.
The Zuckerberg–Sandberg leadership duo would turn
out to be pure dynamite. It led to exponential growth—from
100 million users in 2008 to 1 billion users in 2012—a feat
that no other firm has ever accomplished. Just five years
later, in 2017, Facebook crossed the 2 billion users mark. By
the summer of 2018, Facebook’s market capitalization stood
at more than $600 billion, up over 630 percent since its initial public offering (IPO) in 2012—a mere six years earlier.
THE END OF THE ZUCKERBERG–SANDBERG ERA?
By 2019, Facebook found itself caught in a perfect storm,
and many were demanding that Zuckerberg and Sandberg
step down. What had happened? Due to its lenient privacy
controls, third parties were able to siphon off the personal
FACEBOOK’S LEADERSHIP DUO
data of tens of millions of Facebook users; lax data overAs depicted in the Hollywood movie The Social Network
sight also led to other alleged misdeeds, including the en(2010), Facebook began as a startup in 2004 in the Harvard
abling of foreign interference during the 2016 U.S.
dorm room of then 19-year-old Mark Zuckerberg with the suppresidential elections. Critics assert that because of its
port of three college pals. At the time, Myspace was the leadsingle-minded pursuit of
ing social networking site,
exponential g rowth,
and in 2005, it was acquired
Facebook’s leadership
by News Corp. for close to
failed to consider the po$600 million. For several
tentiality and gravity of
years, Facebook lagged benegative side effects on
hind Myspace in both inthe firm, its stakeholders,
vestments and users, but it
and its reputation.
stayed alive thanks to cash
Facebook’s exclusive
injections from Microsoft,
focus on user growth beYahoo, and a Russian ingan in 2012 shortly before
vestment group.
its IPO. In a fateful meetIn 2008 Mark Zuckering of top executives and
berg made a genius move:
lead product developers,
He persuaded Sheryl Sand- Facebook’s dynamite leadership duo: CEO Mark Zuckerberg and COO
Sandberg showed that
berg, at the time the vice Sheryl Sandberg
(left): David Ramos/Getty Images, (right): Justin Sullivan/Getty Images.
Facebook’s revenues were
president of global online
flat and user growth was
sales and operations at
slowing considerably. For a social media company to grow,
Google, to leave Google and join Facebook as the new secshe said, it must pursue a business model that provides free
ond in command. Zuckerberg was a computer hacker at
services to the end user but that charges advertisers for placheart. He opted to spend his energy on fulfilling his vision of
ing online ads. Sandberg admonished the lead product deFacebook—to turn it into a tool that would “make a more
velopers, saying “things had to change” and “we have to do
open and connected world.”1 He preferred coding to busisomething.”2 This meant, as one of the software engineers
ness deals and freely admitted that he did not have the skills
present at the meeting recalls, that “we needed to pull out all
to run a business successfully. Sandberg did. She brought
of the stops and to experiment way more aggressively with
with her all the business skills that Zuckerberg lacked. She
user engagement with the goal to make money.”3 The marchhad demonstrated her superb leadership capabilities at
ing orders were clear: Drive exponential growth and user
Google and was recognized for her sales, business developengagement, while keeping costs down. Very quickly, softment, public policy, and communications prowess. Put simware engineers and product developers learned that four
ply, and partially, Zuckerberg saw his role as bringing in the
features could serve as the keys to increasing user
users; he saw Sandberg’s role as bringing in the money.
33
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01/11/19 1:55 PM
engagement and driving future growth: News Feed, Likes, polarizing news, and microtargeting.
Facebook’s News Feed is akin to a personalized newspaper and gossip page. A proprietary algorithm identifies the
content that will be most interesting to each unique user and
accordingly compiles a customized News Feed for that user.
Meanwhile, the Like button, internally described as a “social
lubricant and social flywheel by which users [feel] they [are]
heard,”4 has helped Facebook to better understand its users.
Product developers noticed that polarizing news and messages
were often the most liked. Note that Facebook’s algorithm
doesn’t know which content is good or bad, polarizing or nonpolarizing, fake or real. It only knows to which content users
most respond. About two-thirds of all Americans get their
news from social media sites such as Facebook, and over time,
hyped-up and outrageous content increasingly made its way
into users’ personal News Feeds, creating a much more polarized and tribal user base. Further compounding this situation
is the fact that Facebook does not engage in any editorial review of the content that surfaces on its site. Rather, it relies on
its algorithm, fine-tuned to maximize user engagement, to
LO 2.1
Explain the role of
strategic leaders and
what they do.
strategic leadership
Executives’ use of
power and influence to
direct the activities of
others when pursuing
an organization’s
goals.
serve as its editor. On top of the data breaches and privacy issues, this polarization of Facebook’s users has only exacerbated matters for the firm.
Facebook and Google have captured most of the astronomical growth in online advertising spending over the past
few years, reaching $100 billion in 2018.5 A massive base of
more than 2 billion users, combined with high user engagement, has enabled Facebook to place and sell ads with extreme accuracy—what is known as microtargeting. For
microtargeting to work effectively, it relies on accurate user
profiles. Now that Facebook owns the photo-sharing app Instagram and the messaging service WhatsApp, it has additional
data sources at its disposal to help it to create even more accurate user profiles. All these data are combined with a user’s
“shadow profile,” which enables Facebook to not only track
each of its user’s activities, but the activities of his or her
friends as well, even as they move across the web visiting other
non-Facebook sites. As a result, Facebook can offer the most
detailed, accurate, and targeted data to advertisers.
Part II of this ChapterCase appears in Section 2.5.
HOW DO STRATEGIC LEADERS like Sheryl Sandberg guide their companies to
gain and sustain a competitive advantage? How do they make strategic decisions?
How do strategic leaders formulate and implement their companies’ strategies? How
do they lead and motivate employees?
In Chapter 2, we move from thinking about why strategy is important to what role strategic leaders play, specifically how strategic leaders select, guide, and manage the strategy
process across different levels in the organization. One of the first things a strategic leader
must do is to shape an organization’s vision, mission, and values, as each of these plays an
important role in anchoring a winning strategy. We then explore some of the frameworks
strategic leaders use to develop strategy and maintain an effective strategic management
process. Next we delve deeper into strategic decision making, in particular how biases, even
those that strategic leaders and groups may not be consciously aware of, can impact the ability to make rational decisions. Lastly, we summarize some of the most important practical
insights in our Implications for Strategic Leaders.
2.1 Strategic Leadership
Executives whose vision and decisions enable their organizations to achieve competitive advantage demonstrate strategic leadership.6 Strategic leadership pertains to executives’ use of power
and influence to direct the activities of others when pursuing an organization’s goals.7 Power is
defined as the strategic leader’s ability to influence the behavior of other organizational members to do things, including things they would not do otherwise.8 Strategic leaders can draw on
position power as vested in their authority, for example as chief executive officer (CEO), as well
as informal power, such as persuasion to influence others when implementing strategy.
In leading Facebook to become the most successful social network and one of the most
valuable companies worldwide, Sheryl Sandberg has clearly demonstrated effective strategic
34
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CHAPTER 2
Strategic Leadership: Managing the Strategy Process
leadership. As chief operating officer (COO), Sandberg has tremendous position power because she is the second in command at Facebook and reports only to CEO Mark Zuckerberg. Sandberg’s business
development skills are legendary: She transformed a money-losing outfit into a titan of online advertising, with over $65 billion in annual
revenues. She designed and implemented Facebook’s business model
(how it makes money). In particular, Sandberg attracted high-profile
advertisers by demonstrating how Facebook can place precisely targeted and timed ads when it matches what it knows about each user,
based on that person’s social network, with the advertisers’ targets.
Less quantifiable, but perhaps an even more valuable contribution,
Sandberg provides “adult supervision and a professional face” for a
firm populated by socially awkward computer geeks.9
While the effect of strategic leaders may vary, they clearly matter
to firm performance.10 Think of great business founders and their impact on the companies they built—Mark Zuckerberg at Facebook, Phil Knight at Nike, Elon Musk at Tesla
and SpaceX, Jack Ma at Alibaba, Oprah Winfrey with her media empire, and Jeff Bezos at
Amazon. Many strategic leaders also have shaped and revitalized existing businesses. In
addition to Sheryl Sandberg at Facebook, we have Angela Ahrendts at Apple (left in 2019),
Sundar Pichai at Google, Mary Barra at GM, Indra Nooyi at PepsiCo (left in 2018), Howard Schultz at Starbucks, and Satya Nadella at Microsoft.11
At the other end of the spectrum, some CEOs have massively destroyed shareholder
value: Ken Lay at Enron, John Sculley at Apple, Bernard Ebbers at WorldCom, Charles
Prince at Citigroup, Richard Fuld at Lehman Brothers, Richard Wagoner at GM, Robert
Nardelli at The Home Depot and later Chrysler, Martin Winterkorn at VW, and Ron
Johnson at JCPenney, among many others.
Why do some leaders create great companies or manage them to greatness, while others
lead them into decline and sometimes even demise? To answer that question, let’s first consider what strategic leaders actually do.
35
Indra Nooyi, PepsiCo
CEO, 2006–2018. Nooyi
is a transformational strategic leader who guided
PepsiCo with a powerful
vision of “performance
with purpose.” Under
Nooyi’s leadership,
PepsiCo transformed
itself into a company
offering more healthy
snack and beverage
choices, while its revenues grew by 80 percent. Moreover, Nooyi’s
12-year tenure as CEO is
more than double the
length of the average
Fortune 500 CEO.
Alex Goodlett/Getty Images
WHAT DO STRATEGIC LEADERS DO?
What do strategic leaders do that makes some more effective than others? In a study of more
than 350 CEOs, strategy scholars found that they spend, on average, roughly two-thirds of
their time in meetings, 13 percent working alone, 7 percent on e-mail, 6 percent on phone
calls, 5 percent on business meals, and 2 percent on public events such as ribbon-cutting for
a new factory (see Exhibit 2.1).12 Other studies have also found that most managers prefer
oral communication: CEOs spend most of their time “interacting—talking, cajoling, soothing,
selling, listening, and nodding—with a wide array of parties inside and outside the organization.”13 Surprisingly given the advances in information technology, CEOs today spend most
of their time in face-to-face meetings. They consider face-to-face meetings most effective in
getting their message across and obtaining the information they need. Not only do meetings
present data through presentations and verbal communications, but they also enable CEOs
to pick up on rich nonverbal cues such as facial expressions, body language, and mood, that
are not apparent to them if they use e-mail or even Skype, for example.14
HOW DO YOU BECOME A STRATEGIC LEADER?
Is becoming an ethical and effective strategic leader innate? Can it be learned? According to
the upper-echelons theory, organizational outcomes including strategic choices and performance levels reflect the values of the top management team.15 These are the individuals at
rot6128x_ch02_032-071.indd 35
LO 2-2
Outline how you can
become a strategic
leader.
upper-echelons
theory A conceptual
framework that views
organizational outcomes—strategic
choices and performance levels—as reflections of the values
of the members of the
top management team.
12/5/19 7:54 AM
36
CHAPTER 2
Strategic Leadership: Managing the Strategy Process
the upper levels of an organization. The theory states
that strategic leaders interpret situations through the
Business Meals
lens of their unique perspectives, shaped by personal cirPublic Events
5%
2%
cumstances, values, and experiences. Their leadership
actions reflect characteristics of age, education, and
career experiences, filtered through personal interpretaCalls
tions of the situations they face. The upper-echelons
6%
theory favors the idea that effective strategic leadership
is the result of both innate abilities and learning.
E-mail
In the bestseller Good to Great, Jim Collins explored
7%
over 1,000 good companies to find 11 great ones. He
identified great companies as those that transitioned
from
average performance to sustained competitive
Working Alone
advantage. He measured that transition as “cumulative
13%
Face-to-Face Meetings
stock returns of almost seven times the general market
67%
in the 15 years following their transition points.”16 A lot
has happened since the book was published almost two
decades ago. Today only a few of the original 11 stayed
all that great, including Kimberly-Clark and Walgreens.
Some fell back to mediocrity; a few no longer exist in
their earlier form. Anyone remember Circuit City or
Fannie Mae? Let’s agree that competitive advantage is
Source: Data from O. Bandiera, A. Prat, and R. Sadun (2012), “Management
hard to achieve and even harder to sustain. But his
capital at the top: Evidence from the time use of CEOs,” London School of
Economics and Harvard Business School Working Paper.
study remains valuable for its thought-provoking observations. Studying these large corporations, Collins
found consistent patterns of leadership among the top
companies, as pictured in the Level-5 leadership pyramid in Exhibit 2.2. The pyramid is a
Level-5 leadership
conceptual framework that shows leadership progression through five distinct, sequential
pyramid A conceptual
levels. Collins found that all the companies he identified as great were led by Level-5
framework of leadership progression with
executives. So if you are interested in becoming an ethical and effective strategic leader,
five distinct, sequential
the leadership pyramid suggests the areas of growth required.
levels.
According to the Level-5 leadership pyramid, effective strategic leaders go through a
natural progression of five levels. Each level builds upon the previous one; the individual
can move on to the next level of leadership only when the current level has been mastered. On the left in Exhibit 2.2 are the capabilities associated with each level. But not all
companies are Fortune 500 behemoths. On the right-hand side we suggest that the model
is also valuable to the individual looking to develop the capacity for greater professional
success.
At Level 1, we find the highly capable individual who makes productive contributions
through her motivation, talent, knowledge, and skills. These traits are a necessary but not
sufficient condition to move on to Level 2, where the individual attains the next level of
strategic leadership by becoming an effective team player. As a contributing team member, she works effectively with others to achieve common objectives. In Level 3, the team
player with a high individual skill set turns into an effective manager who is able to organize the resources necessary to accomplish the organization’s goals. Once these three
levels are mastered, in Level 4, the effective professional has learned to do the right
things, meaning she does not only command a high individual skill set and is an effective
team player and manager, but she also knows what actions are the right ones in any given
situation to pursue an organization’s strategy. Combining all four prior levels, at Level 5,
the strategic leader builds enduring greatness by combining willpower and humility. This
EXHIBIT 2.1
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How CEOs Spend Their Days
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CHAPTER 2
EXHIBIT 2.2
Strategic Leadership: Managing the Strategy Process
37
Strategic Leaders: The Level-5 Pyramid
Adapted to compare corporations and entrepreneurs
Capabilities
Corporation
Is efficient and effective in organizing
resources to accomplish stated goals
and objectives. Does things right.
Level 4:
Effective Leader
Level 3:
Competent Manager
Uses high level of individual
capability to work effectively
with others in order to
achieve team objectives.
Level 2:
Contributing Team Member
Makes productive
contributions through
motivation, talent,
knowledge, and skills.
Level 1:
Highly Capable Individual
Personal growth in response to business needs
Presents compelling vision and mission to
guide groups toward superior performance.
Does the right things.
Level 5:
Executive
Distinct positions within corporate structure
Builds enduring greatness through a combination of
willpower and humility.
Entrepreneur
Source: Adapted from J. Collins (2001), Good to Great: Why Some Companies Make the Leap . . . And Others Don’t (New York: HarperCollins), 20.
implies that a Level-5 executive works to help the organization succeed and others to
reach their full potential.
As detailed in the ChapterCase, Facebook CEO Mark Zuckerberg highly values
COO Sheryl Sandberg. Here he says why: “She could go be the CEO of any company
that she wanted, but I think the fact that she really wants to get her hands dirty and
work, and doesn’t need to be the front person all the time, is the amazing thing about
her. It’s that low-ego element, where you can help the people around you and not need
to be the face of all the stuff.”17 Clearly, Sandberg appears to be a Level-5 executive:
She built enduring greatness at Facebook through a combination of skill, willpower,
and humility. After a highly successful decade, however, by early 2019 many critics
questioned Sandberg and Zuckerberg’s leadership skills (see the ChapterCase at the
beginning of this chapter).
THE STRATEGY PROCESS ACROSS
LEVELS: CORPORATE, BUSINESS, AND
FUNCTIONAL MANAGERS
According to the upper-echelons theory, strategic leaders primarily determine a firm’s ability to gain and sustain a competitive advantage through the strategies they pursue. Given the
importance of such strategies, we need to gain a deeper understanding of how they are created. The strategy process consists of two parts: strategy formulation (which results from
strategy analysis) and strategy implementation.
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LO 2-3
Compare and contrast
the roles of corporate,
business, and
functional managers in
strategy formulation
and implementation.
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CHAPTER 2
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EXHIBIT 2.3
Strategic Formulation and Implementation across Levels: Corporate, Business, and
Functional Strategy
Headquarters
Where to compete?
Corporate
Strategy
Business
Strategy
Functional
Strategy
strategy formulation
The part of the strategic management process that concerns the
choice of strategy in
terms of where and
how to compete.
SBU 1
How to compete?
SBU 2
How to compete?
SBU 3
How to compete?
Business Function 1
How to implement
business strategy?
Business Function 2
How to implement
business strategy?
Business Function 3
How to implement
business strategy?
Strategy formulation concerns the choice of strategy in terms of where and how to compete. In contrast, strategy implementation concerns the organization, coordination, and
integration of how work gets done. In short, it concerns the execution of strategy. It is helpful
to break down strategy formulation and implementation into three distinct areas—corporate,
business, and functional.
■
■
strategy implementation The part of the
strategic management
process that concerns
the organization, coordination, and integration of how work gets
done, or strategy
execution.
rot6128x_ch02_032-071.indd 38
Business Function 4
How to implement
business strategy?
■
Corporate strategy concerns questions relating to where to compete as to industry,
markets, and geography.
Business strategy concerns the question of how to compete. Three generic business strategies are available: cost leadership, differentiation, or value innovation.
Functional strategy concerns the question of how to implement a chosen business strategy. Different corporate and business strategies will require different activities across the
various functions.
Exhibit 2.3 shows the three areas of strategy formulation and implementation.
Although we generally speak of the firm in an abstract form, individual employees
make strategic decisions—whether at the corporate, business, or functional levels. Corporate executives at headquarters formulate corporate strategy, such as Sheryl Sandberg
(Facebook), Mukesh Ambani (Reliance Industries), Rosalind Brewer (Starbucks), Mary
Barra (GM), Larry Page (Alphabet), or Marillyn Hewson (Lockheed Martin). Corporate executives need to decide in which industries, markets, and geographies their companies should compete. They need to formulate a strategy that can create synergies
across business units that may be quite different, and determine the boundaries of the
firm by deciding whether to enter certain industries and markets and whether to sell
certain divisions. They are responsible for setting overarching strategic objectives and
allocating scarce resources among different business divisions, monitoring performance,
and making adjustments to the overall portfolio of businesses as needed. The objective of
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CHAPTER 2
Strategic Leadership: Managing the Strategy Process
corporate-level strategy is to increase overall corporate value so that
it is higher than the sum of the individual business units.
Business strategy occurs within strategic business units (SBUs), the
standalone divisions of a larger conglomerate, each with its own
profit-and-loss responsibility. General managers in SBUs must answer
business strategy questions relating to how to compete in order to
achieve superior performance. Within the guidelines received from
corporate headquarters, they formulate an appropriate generic business strategy, including cost leadership, differentiation, or value innovation, in their quest for competitive advantage.
Rosalind Brewer, while president and CEO of Sam’s Club, pursued
a somewhat different business strategy from that of parent company
Walmart. By offering higher-quality products and brand names with
bulk offerings and by prescreening customers via required Sam’s Club
memberships to establish creditworthiness, Brewer achieved annual revenues of roughly $60
billion. This would place Sam’s Club in the top 50 in the Fortune 500 list. Although as CEO
of Sam’s Club, Brewer was responsible for the performance of this strategic business unit,
she reported to Walmart’s CEO, Doug McMillon, who as corporate executive oversees
Walmart’s entire operations, with over $500 billion in annual revenues and 12,000 stores
globally.18
In 2017, Brewer was appointed COO of Starbucks, the leading coffeehouse chain globally
with $25 billion in annual revenues and some 300,000 employees. Brewer is in charge of all
Starbucks operations in the Americas (Canada, the United States, and Latin America) as
well as the company’s global supply chain, product innovation, and store development,
which includes 15,000 stores globally. As second in command at Starbucks, Brewer reports
directly (and only) to Kevin Johnson, Starbucks CEO. Many observers believe that Brewer
is being groomed to become the next CEO of Starbucks.
Within each strategic business unit are various business functions: accounting, finance,
human resources, product development, operations, manufacturing, marketing, and customer service. Each functional manager is responsible for decisions and actions within a
single functional area. These decisions aid in the implementation of the business-level strategy, made at the level above (see Exhibit 2.3).
Returning to our ChapterCase, COO Sheryl Sandberg determines Facebook’s corporate
strategy jointly with CEO Mark Zuckerberg. Facebook, with some 35,000 employees, is a
far-flung internet firm—its various services are available in more than 100 languages and it
has offices in more than 30 countries.19 Together, they are responsible for the performance
of the entire organization, and decide
■
■
■
39
Rosalind Brewer is chief
operating officer of
Starbucks and thus second in command, reporting directly to CEO Kevin
Johnson. Previously,
Brewer served as Sam’s
Club president and CEO
(2012–2017).
Phelan M. Ebenhack/
AP Images
strategic business
units (SBUs) Standalone divisions of a
larger conglomerate,
each with their
own profit-and-loss
responsibility.
What types of products and services to offer.
Which industries to compete in.
Where in the world to compete.
One example of Sandberg’s effective strategic leadership is Facebook’s turnaround
beginning in 2013 when it did not have much of a mobile presence. Part of the problem
was the inferior quality of the mobile app; Zuckerberg had initially built Facebook for
the desktop personal computer, not for mobile devices. Sandberg initiated a companywide “mobile first” initiative focusing its engineers and marketers on mobile. The success of this turnaround strategy is stunning: Today Facebook is a mobile advertising
powerhouse, generating over 80 percent of its revenues of more than $65 billion annually
from mobile advertising.20
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LO 2-4
2.2 Vision, Mission, and Values
Describe the roles of
vision, mission, and
values in a firm’s
strategy.
The first step in the strategic management process is to define an organization’s vision, mission, and values by asking the following questions:
■
■
■
Vision. What do we want to accomplish ultimately?
Mission. How do we accomplish our goals?
Values. What commitments do we make, and what safe guards do we put in place, to act
both legally and ethically as we pursue our vision and mission?
The vision is the first principle that needs to be defined because it succinctly identifies
the primary long-term objective of the organization. Strategic leaders need to begin with the
end in mind.21 In other words, strategic success begins when a vision is formulated; that success continues when that vision is implemented. This process of creating and implementing
a vision begins with the formulation of (both business and corporate) strategies that
enhance the chances of gaining and sustaining competitive advantage. It ends with the creation of a strategy that enables a firm to implement its vision. This is an iterative process
that can be compared to designing and building a house. You need an approved blueprint in
place before construction can even begin. The same holds for strategic success; it is first
created through strategy formulation based on careful analysis before any actions are taken.
Let’s look at this process in more detail.
VISION
vision A statement
about what an organization ultimately wants
to accomplish; it captures the company’s
aspiration.
strategic intent A
stretch goal that pervades the organization
with a sense of winning, which it aims to
achieve by building the
necessary resources
and capabilities
through continuous
learning.
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A vision captures an organization’s aspiration and spells out what it ultimately wants to
accomplish. An effective vision pervades the organization with a sense of winning and motivates employees at all levels to aim for the same target, while leaving room for individual and
team contributions.
Tesla’s vision is to accelerate the world’s transition to sustainable transport. The goal is to
provide affordable zero-emission mass-market cars that are the best in class. SpaceX is a
spacecraft manufacturer and space transport services company, also founded by Elon
Musk, whose inspirational vision is to make human life multi planetary. To achieve this
goal, SpaceX aims to make human travel to Mars not only possible but also affordable.
Moreover, SpaceX also sees a role in helping establish a self-sustainable human colony on
Mars.22
Employees in visionary companies tend to feel part of something bigger than themselves. An inspiring vision helps employees find meaning in their work and value
beyond monetary rewards. It gives them a greater sense of purpose. People have an
intrinsic motivation to make the world a better place through their work activities. 23
In turn, this motivation, which inspires individual purpose, can lead to higher organizational performance. 24 Using the vision as its foundation, a firm will build the necessary resources and capabilities to translate a stretch goal or strategic intent into a
reality, usually through continuous organizational learning, including learning from
failure.25
A firm’s vision is expressed as a statement, and this statement should be forwardlooking and inspiring to ensure it provides meaning for employees in pursuit of the
organization’s ultimate goals. Strategy Highlight 2.1 shows how at the heart of Teach
for America’s (TFA) vision statement is an inspiring vision. This statement effectively
and clearly communicates TFA’s stretch goal, as well as what it ultimately seeks to
accomplish.
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41
Strategy Highlight 2.1
Teach for America: How Wendy Kopp
Inspires Future Leaders
Teach for America (TFA) is a nonprofit organization of future leaders that works to ensure that underprivileged
youth get an excellent education. TFA corp members
spend two years teaching in economically disadvantaged
communities across the United States. Although TFA initially targeted college seniors, today it recruits both graduates and professionals to help achieve the following TFA
vision: One day, all children in this nation will have the
opportunity to attain an excellent education.
TFA began as a college senior thesis written in 1989 by
a then-21-year-old Wendy Kopp. Kopp was convinced that
young people generally sought for meaning in their lives,
and that they could create meaning by making a positive
contribution to society. Kopp’s genius was that she flipped
on its head the social perception of teaching—she turned
a seemingly unattractive, low-status job into a highprestige, professional opportunity.
In the first four months after creating TFA, Kopp received more than 2,500 applicants. She marketed the
idea by passing out and posting flyers in college dorms.
During its first academic year (1990–91), TFA served five
states and changed the lives of 36,000 students. By 2018,
TFA had some 60,000 corps members and alumni, more
than 2,500 school partnerships, and impacted millions of
students.
To be chosen for TFA is considered an honor. Of the
total number of applicants that TFA receives annually, approximately 15 percent are accepted; this is roughly equivalent to the admission rate of highly selective universities
such as Northwestern, Cornell, and University of California, Berkeley. Compared to the national average of people
of color in teaching positions (20 percent), 50 percent of
TFA corps members are people of color—a more accurate
reflection of the population they teach. TFA corps members receive the same pay as other first-year teachers in
their respective local school districts.
In an effort to eliminate educational inequity, Kopp deliberately enlists the nation’s most promising future leaders; this conscious decision to recruit only the best has
rot6128x_ch02_032-071.indd 41
Wendy Kopp, Teach for America founder.
Astrid Stawiarz/Getty Images
had a hugely positive impact on students. Approximately
95 percent of all school principals working with TFA members say they have made significant strides with their students. Furthermore, a study commissioned by the U.S.
Department of Education found that students being taught
by TFA corps members showed significantly higher
achievement, especially in math and science.
TFA CEO Elisa Villanueva Beard was inspired to sign up
for TFA when she was a college student at DePauw
University. She recalls that what inspired her most was
Wendy Kopp’s “audacity to believe young people could
make a profound difference in the face of intractable
problems standing between the ideals of a nation I loved
and a starkly disappointing reality; who were bound by a
fierce belief that all children, from American Indian reservations in South Dakota to Oakland to the Rio Grande
Valley to the Bronx, should have the opportunity to write
their own stories and fulfill their true potential.”26
Yet, despite all its remarkable success, TFA finds itself
wrestling with several challenges. For instance, applications in the last few years have dropped (an estimated
35 percent over three years), causing TFA to fail to meet
its recruiting target. Second, the short but intensive fiveweek summer boot camp intended to ready new recruits
for teaching in some of the toughest schools in United
States is increasingly criticized as insufficient.27
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That vision statements can inspire and motivate employees in the nonprofit sector comes
as no surprise. Who wouldn’t find wanting to help children attain an excellent education, the
vision of TFA, meaningful? Likewise, who wouldn’t be moved by the promise to always be
there in times of need, the vision of the American Red Cross? But can for-profit firms inspire
and motivate just as well? The answer is yes; a truly meaningful and inspiring vision—no
matter if of a nonprofit or for-profit firm—makes employees feel they are part of something
bigger, which can be highly motivating. When employees are highly motivated, firm financial performance can also improve. For example, visionary for-profit companies such as 3M
and Walmart provide aspirational ideas that are not exclusively financial; as such, they tend
to outperform their competitors over the long run. Tracking the stock market performance
of companies over several decades, strategy scholars found that visionary companies outperformed their peers by a wide margin.28
However, as the ChapterCase on Facebook warns, single-mindedly pursuing a vision can
also be detrimental, even if that vision inspires and motivates. When followed too strictly, it
can generate unexpected challenges that can be difficult to overcome. Critics assert that
Facebook’s leadership failed to consider the potential for serious negative side-effects, such
as the mass-manipulation of users by nefarious actors, or the large-scale breach of user privacy that resulted in the siphoning off of personal data by mal-intent third parties.
LO 2-5
Evaluate the strategic
implications of productoriented and customeroriented vision
statements.
VISION STATEMENTS AND COMPETITIVE ADVANTAGE. Do vision statements help firms
gain and sustain competitive advantage? It depends. The effectiveness of vision statements
differs by type. Customer-oriented vision statements allow companies to adapt to changing
environments. Product-oriented vision statements often constrain this ability. This is because
customer-oriented vision statements focus employees to think about how best to solve a
problem for a consumer.29
Clayton Christensen shares how a customer focus let him help a fast food chain increase
sales of milkshakes. The company approached Christensen after it had made several changes
to its milkshake offerings based on extensive customer feedback but sales failed to improve.
Rather than asking customers what kind of milkshake they wanted, he thought of the problem in a different way. He observed customer behavior and then asked customers, “What
job were you trying to do that caused you to hire that milkshake?”30 He wanted to know
what problem the customers were trying to solve. Surprisingly he found that roughly half of
the shakes were purchased in the mornings, because customers wanted an easy breakfast to
eat in the car and a diversion on long commutes. Based on the insights gained from this
problem-solving perspective, the company expanded its shake offerings to include healthier
options with fruit chunks and provided a prepaid dispensing machine to speed up the drivethrough, and thus improve customers’ morning commute. A customer focus made finding a
solution much easier.
You could say that the restaurant company had a product orientation that prevented its
executives from seeing unmet customer needs. Product-oriented vision statements focus
employees on improving existing products and services without consideration of underlying
customer problems to be solved. Our environments are ever-changing and sometimes seem
chaotic. The increased strategic flexibility afforded by customer-oriented vision statements
can provide a basis on which companies can build competitive advantage.31 Let’s look at
both types of vision statements in more detail.
PRODUCT-ORIENTED VISION STATEMENTS. A product-oriented vision defines a business
in terms of a good or service provided. Product-oriented visions tend to force managers to
take a more myopic view of the competitive landscape. Consider the strategic decisions of
U.S. railroad companies. Railroads are in the business of moving goods and people from
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point A to point B by rail. When they started in the 1850s, their short-distance competition
was the horse or horse-drawn carriage. There was little long-distance competition (e.g., ship
canals or good roads) to cover the United States from coast to coast. Because of their
monopoly, especially in long-distance travel, these companies were initially extremely profitable. Not surprisingly, the early U.S. railroad companies saw their vision as being in the
railroad business, clearly a product-based definition.
However, the railroad companies’ monopoly did not last. Technological innovations
changed the transportation industry dramatically. After the introduction of the automobile
in the early 1900s and the commercial jet in the 1950s, consumers had a wider range of
choices to meet their long-distance transportation needs. Rail companies were slow to
respond; they failed to redefine their business in terms of services provided to the consumer.
Had they envisioned themselves as serving the full range of transportation and logistics
needs of people and businesses across America (a customer-oriented vision), they might
have become successful forerunners of modern logistics companies such as FedEx or UPS.
Recently, the railroad companies seem to be learning some lessons: CSX Railroad is now
redefining itself as a green-transportation alternative. It claims it can move one ton of freight
423 miles on one gallon of fuel. However, its vision remains product-oriented: to be the
safest, most progressive North American railroad.
CUSTOMER-ORIENTED VISION STATEMENTS. A customer-oriented vision defines a business in terms of providing solutions to customer needs. For example, “We provide solutions
to professional communication needs.” Companies with customer-oriented visions can
more easily adapt to changing environments. Exhibit 2.4 provides additional examples of
companies with customer-oriented vision statements. In contrast, companies that define
themselves based on product-oriented statements (e.g., “We are in the typewriter business”)
tend to be less flexible and thus more likely to fail. The lack of an inspiring needs-based
vision can cause the long-range problem of failing to adapt to a changing environment.
Customer-oriented visions identify a critical need but leave open the means of how to
meet that need. Customer needs may change, and the means of meeting those needs may
change with it. The future is unknowable, and innovation is likely to provide new ways to
meet needs that we cannot fathom today.32 For example, consider the need to transmit information over long distances. Communication needs have persisted throughout the millennia,
Alibaba: To make it easy to do business anywhere.
Amazon: To be Earth’s most customer-centric company, where customers can find and discover
anything they might want to buy online.
Better World Books: To harness the power of capitalism to bring literacy and opportunity to
people around the world.
EXHIBIT 2.4
Companies with
Customer-Oriented
Vision Statements
Facebook: To make the world more open and connected.
GE: To move, cure, build, and power the world.
Google: To organize the world’s information and make it universally accessible and useful.
Nike: To bring inspiration and innovation to every athlete in the world.
SpaceX: To make human life multi planetary.
Tesla: To accelerate the world’s transition to sustainable energy.
Walmart: To be the best retailer in the hearts and minds of consumers and employees.
Warby Parker: To offer designer eyewear at a revolutionary price, while leading the way for
socially conscious businesses.
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but the technology to solve this problem has changed drastically over time.33 During the
reign of Julius Caesar, moving information over long distances required papyrus, ink, a
chariot, a horse, and a driver. During Abraham Lincoln’s time, the telegraph was used for
short messages while railroads handled larger documents, and an airplane transported letters when Franklin Delano Roosevelt was president. Today, we use connected mobile
devices to move information over long distances at the speed of light. The problem to be
solved—moving information over long distance—has remained the same, but the technology
employed to do this job has changed quite drastically. Christensen recommends that strategic leaders think hard about how the means of getting a job done have changed over time
and ask themselves, “Is there an even better way to get this job done?”
It is critical that an organization’s vision should be flexible to allow for change and adaptation. Consider how Ford Motor Co. has addressed the problem of personal mobility over
the past 100 years. Before Ford entered the market in the early 1900s, people traveled long
distances by horse-drawn buggy, horseback, boat, or train. But Henry Ford had a different
idea. In fact, he famously said, “If I had listened to my customers, I would have built a better
horse and buggy.”34 Instead, Henry Ford’s original vision was to make the automobile accessible to every American. He succeeded, and the automobile dramatically changed how mobility was achieved.
Fast-forward to today: Ford Motor Co.’s vision is to provide personal mobility for people
around the world. Note that it does not even mention the automobile. By focusing on the
consumer need for personal mobility, Ford is leaving the door open for exactly how it will
fulfill that need. Today, it’s mostly with traditional cars and trucks propelled by gas-powered
internal combustion engines, with some hybrid electric vehicles in its lineup. In the near
future, Ford is likely to provide vehicles powered by alternative energy sources such as electric power or hydrogen. Moreover, vehicles will be driven autonomously, and thus a human
driver is no longer needed. With this expected shift to arrive in the near future, automobiles
will unlikely be owned personally but rather rides will be provided on demand by ride hailing services such as Uber or Lyft. In the far-reaching future, perhaps Ford will get into the
business of individual flying devices. Throughout all of this, its vision would still be relevant
and compel its managers to engage in future markets. In contrast, a product-oriented vision
would greatly constrain Ford’s degree of strategic flexibility.
MOVING FROM PRODUCT-ORIENTED TO CUSTOMER-ORIENTED VISION STATEMENTS.
In some cases, product-oriented vision statements do not interfere with the firm’s success in
achieving superior performance and competitive advantage. Consider Intel Corp., one of
the world’s leading silicon innovators. Intel’s early vision was to be the preeminent buildingblock supplier of the PC industry. Intel designed the first commercial microprocessor chip in
1971 and set the standard for microprocessors in 1978. During the personal computer (PC)
revolution in the 1980s, microprocessors became Intel’s main line of business. Intel’s customers were original equipment manufacturers that produced consumer end-products, such
as computer manufacturers HP, IBM, Dell, and Compaq.
In the internet age, though, the standalone PC as the end-product has become less important. Customers want to stream video and share selfies and other pictures online. These
activities consume a tremendous amount of computing power. To reflect this shift, Intel in
1999 changed its vision to focus on being the preeminent building-block supplier to the internet
economy. Although its product-oriented vision statements did not impede performance or
competitive advantage, in 2008 Intel fully made the shift to a customer-oriented vision: to
delight our customers, employees, and shareholders by relentlessly delivering the platform and
technology advancements that become essential to the way we work and live. Part of this shift
was reflected by the hugely successful “Intel Inside” advertising campaign in the 1990s that
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made Intel a household name worldwide. Yet, even more than a decade later, this is still
Intel’s vision statement.
Intel accomplished superior firm performance over decades through continuous adaptations to changing market realities. Its formal vision statement lagged behind the firm’s strategic transformations. Intel regularly changed its vision statement after it had accomplished
each successful transformation.35 In such a case, vision statements and firm performance
are clearly not related to one another.
It is also interesting to note that customer-oriented visions also frequently change over
time. When Tesla was founded in 2003, its vision was to accelerate the world’s transition to
sustainable transport. Over the last decade or so, Tesla completed several steps of its initial
master plan (as detailed in ChapterCase 1), including providing zero-emission electric
power generation options (Step 4), through the acquisition of the SolarCity. Tesla, therefore, no longer views itself as a car company but as a fully integrated clean-tech company. To
capture this ambition more accurately Tesla changed its vision: to accelerate the world’s transition to sustainable energy. To reposition Tesla as an integrated clean-tech energy company,
in 2017 Tesla changed its official name from Tesla Motors to simply Tesla, Inc.
Taken together, empirical research shows that sometimes vision statements and firm
performance are associated with one another. A positive relationship between vision statements and firm performance is more likely to exist under certain circumstances:
■
■
■
The visions are customer-oriented.
Internal stakeholders are invested in defining the vision.
Organizational structures such as compensation systems align with the firm’s vision
statement.36
The upshot is that an effective vision statement can lay the foundation upon which to
craft a strategy that creates competitive advantage.
MISSION
Building on the vision, organizations establish a mission, which describes what an organization actually does—that is, the products and services it plans to provide, and the markets in
which it will compete. People sometimes use the terms vision and mission interchangeably,
but in the strategy process they differ.
■
■
A vision defines what an organization wants to be, and what it wants to accomplish ultimately. A vision begins with the infinitive form of a verb (starting with to). As discussed
in Strategy Highlight 2.1, TFA’s vision is to attain an excellent education for all children.
A mission describes what an organization does and how it proposes to accomplish its
vision. The mission is often introduced with the preposition by. Thus, we can cast a mission statement for TFA that reads: To attain an excellent education for all children by
enlisting, developing, and mobilizing as many as possible of our nation’s most promising
future leaders to grow and strengthen the movement for educational equity and excellence.
mission Description of
what an organization
actually does—the
products and services
it plans to provide, and
the markets in which it
will compete.
To be effective, firms need to back up their visions and missions with strategic commitments, in which the enterprise undertakes credible actions. Such commitments are costly,
long-term oriented, and difficult to reverse.37 However noble the mission statement, to
achieve competitive advantage companies need to make strategic commitments informed by
economic fundamentals of value creation.
As mentioned in ChapterCase 1, Tesla is investing billions of dollars to equip its car factory in California with cutting-edge robotics and to build the Gigafactory producing lithiumion batteries in Nevada. These investments by Tesla are examples of strategic commitments
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because they are costly, long-term, and difficult to reverse. They are clearly supporting
Tesla’s vision to accelerate the world’s transition to sustainable transport. Tesla hopes to translate this vision into reality by providing affordable zero-emission mass-market cars that are the
best in class, which captures Tesla’s mission.
LO 2-6
Justify why anchoring a
firm in ethical core
values is essential for
long-term success.
core values
statement Statement
of principles to guide
an organization as it
works to achieve its
vision and fulfill its mission, for both internal
conduct and external
interactions; it often
includes explicit ethical
considerations.
organizational core
values Ethical standards and norms that
govern the behavior of
individuals within a
firm or organization.
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VALUES
While many companies have powerful vision and mission statements, they are not enough.
An organization’s values also need to be clearly articulated in the strategy process. A core
values statement matters because it provides touchstones for employees to understand the
company culture. It offers bedrock principles that employees at all levels can use to manage
complexity and to resolve conflict. Such statements can help provide the organization’s
employees with a moral compass.
Consider that much of unethical behavior, while repugnant, may not be illegal. Often we
read the defensive comment from a company under investigation or fighting a civil suit that
“we have broken no laws.” However, any firm that fails to establish extra-legal, ethical standards will be more prone to behaviors that can threaten its very existence. A company
whose culture is silent on moral lapses breeds further moral lapses. Over time such a culture
could result in a preponderance of behaviors that cause the company to ruin its reputation,
at the least, or slide into outright legal violations with resultant penalties and punishment, at
the worst.
Organizational core values are the ethical standards and norms that govern the behavior
of individuals within a firm or organization. Strong ethical values have two important functions. First, ethical standards and norms underlay the vision statement and provide stability
to the strategy, thus laying the groundwork for long-term success. Second, once the company is pursuing its vision and mission in its quest for competitive advantage, they serve as
guardrails to keep the company on track.
The values espoused by a company provide answers to the question, how do we accomplish our goals? They help individuals make choices that are both ethical and effective in
advancing the company’s goals. For instance, Teach for America (TFA) has a set of core
values that focus on transformational change through team-based leadership, diversity,
respect, and humility. These values guide TFA corp members in their day-to-day decision
making. It aids each corp member in making ethical and value-based decisions in teaching
environments that can often be quite stressful.
One last point about organizational values: Without commitment and involvement from
top managers, any statement of values remains merely a public relations exercise. Employees tend to follow values practiced by strategic leaders. They observe the day-to-day decisions of top managers and quickly decide whether managers are merely paying lip service to
the company’s stated values. Organizational core values must be lived with integrity, especially by the top management team. Unethical behavior by top managers is like a virus that
spreads quickly throughout an entire organization.
Take, for example, Volkswagen (VW), the largest carmaker by volume worldwide.
Although one of its long-time marketing slogans was Truth in Engineering, this did not prevent the forced resignation of VW CEO Martin Winterkorn in the fall of 2015—a consequence of an emissions cheating scandal dubbed Dieselgate. Moreover, in 2018, Winterkorn
was indicted on fraud and conspiracy charges. What had happened? VW had illegally
installed so-called “defeat devices” in some 11 million vehicles. When programmed and
installed, the software for these devices enabled emissions controls when the vehicle was on
a test stand. However, the device disabled emissions controls when the vehicle was in daily
driving mode on public roads. These defeat devices helped VW diesel cars pass stringent
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emissions tests, even though in reality they were emitting up to 40 times the allowed level of
pollutants. In the end, Volkswagen paid more than $22 billion in fines and damaged its stellar reputation. Ironically, the fines alone were much higher than the cost of equipping the
diesel engines with the appropriate pollution controls.38
As the VW example demonstrates, it is imperative that strategic leaders set the example
of ethical behavior by living their firm’s core values. Strategic leaders have a strong influence in setting their organization’s vision, mission, and values—the first step of the strategic
management process, which we turn to next.
2.3 The Strategic Management Process
An effective strategic management process lays the foundation for sustainable competitive
advantage. Strategic leaders design a process to formulate and implement strategy. In the
Strategic Leadership section, we gained insight into the corporate, business, and functional
levels of strategy. Here we turn to the process or method by which strategic leaders formulate and implement strategy. When setting the strategy process, strategic leaders rely on
three approaches:
1. Strategic planning.
2. Scenario planning.
3. Strategy as planned emergence.
This order also reflects the sequence of development of these approaches: We begin with
strategic planning, followed by scenario planning, and then strategy as planned emergence.
The first two are relatively formal, top-down planning approaches. The third begins with a
strategic plan but offers a less formal and less stylized approach. Each approach has its
strengths and weaknesses, depending on the circumstances under which it is employed.
47
LO 2-7
Evaluate top-down
strategic planning,
scenario planning,
and strategy as
planned emergence.
strategic management
process Method put in
place by strategic leaders to formulate and
implement a strategy,
which can lay the foundation for a sustainable
competitive advantage.
top-down strategic
planning A rational,
data-driven strategy
process through which
top management
attempts to program
future success.
TOP-DOWN STRATEGIC PLANNING
The prosperous decades after World War II
resulted in tremendous growth of corporations.
As company executives needed a way to manage ever more complex firms more effectively,
they began to use strategic planning.39 Top-down
strategic planning, derived from military strategy, is a rational process through which executives attempt to program future success.40 In
this approach, all strategic intelligence and
decision-making responsibilities are concentrated in the office of the CEO. The CEO,
much like a military general, leads the company strategically through competitive battles.
Exhibit 2.5 shows the three steps of strategic management: analysis, formulation, and
implementation in a traditional top-down strategic planning process. Strategic planners provide detailed analyses of internal and external
data and apply them to all quantifiable areas:
prices, costs, margins, market demand, head
count, and production runs. Five-year plans,
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EXHIBIT 2.5
Analysis
Formulation
Implementation
Top-Down Strategic Planning in the AFI
Strategy Framework
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revisited regularly, predict future sales based on anticipated growth. Top executives tie the
allocation of the annual corporate budget to the strategic plan and monitor ongoing performance accordingly. Based on a careful analysis of these data, top managers reconfirm or
adjust the company’s vision, mission, and values before formulating corporate, business,
and functional strategies. Appropriate organizational structures and controls as well as governance mechanisms aid in effective implementation.
Top-down strategic planning more often rests on the assumption that we can predict the
future from the past. The approach works reasonably well when the environment does not
change much. One major shortcoming of the top-down strategic planning approach is that
the formulation of strategy is separate from implementation, and thinking about strategy is
separate from doing it. Information flows one way only: from the top down. Another shortcoming of the strategic planning approach is that we simply cannot know the future. There
are no data. Unforeseen events can make even the most scientifically developed and formalized plans obsolete. Moreover, strategic leaders’ visions of the future can be downright
wrong, save for a few notable exceptions.
At times, strategic leaders impose their visions onto a company’s strategy, structure, and
culture from the top down to create and enact a desired future state. Under its co-founder
and long-time CEO Steve Jobs, Apple was one of the few successful tech companies using a
top-down strategic planning process.41 Jobs felt that he knew best what the next big thing
should be. Under his top-down, autocratic leadership, Apple did not engage in market
research because Jobs firmly believed that “people don’t know what they want until you
show it to them.”42 In his well-researched, 700-page biography on Steve Jobs, Walter Isaacson presents to readers Jobs’ lessons in strategic leadership in 14 memorable aphorisms,
including push for perfection, tolerate only “A” players, and bend reality, among others.43
The traditional top-down strategy process served Apple well in its journey to becoming the
world’s first company to be valued above $1 trillion. Under Tim Cook, Jobs’ successor as
CEO, Apple’s strategy process has become more flexible. The company is now trying to
incorporate the possibilities of different future scenarios and bottom-up strategic initiatives.44
SCENARIO PLANNING
scenario planning
Strategy planning
activity in which top
management envisions
different what-if
scenarios to anticipate
plausible futures in
order to derive
strategic responses.
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Given that the only constant is change, should managers even try to strategically plan for
the future? The answer is yes—but they also need to expect that unpredictable events will
happen. Strategic planning in a fast-changing environment happens in a fashion similar to
the way a fire department plans for a fire.45 There is no way to know in advance where and
when the next emergency will arise; neither we can know in advance its magnitude. Nonetheless, fire chiefs always consider the “what-if” scenarios; they put contingency plans in
place that address a wide range of emergencies and their different dimensions.
When scenario planning, managers also ask those what-if questions. Similar to topdown strategic planning, scenario planning also starts with a top-down approach to the
strategy process. In addition, in scenario planning, top management envisions different
scenarios, to anticipate plausible futures in order to derive strategic responses. For example, new laws might restrict carbon emissions or expand employee health care. Demographic shifts may alter the ethnic diversity of a nation; changing tastes or economic
conditions will affect consumer behavior. Technological advances may provide completely
new products, processes, and services. How would any of these changes affect a firm, and
how should it respond? Scenario planning takes place at both the corporate and business
levels of strategy.
Typical scenario planning addresses both optimistic and pessimistic futures. For instance,
strategy executives at UPS identified a number of issues as critical to shaping its future
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49
EXHIBIT 2.6
Scenario Planning
within the AFI
Strategy Framework
Analysis
Mon
it
ori
ng
mance
rfor
Pe
Identify Multiple
Future Scenarios
F ormulation
Feed
Develop Strategic
Plans to Address
Future Scenarios
bac
I mplementation
kL
oo
p
Execute Dominant
Strategic Plan
t
va
A c ti w Pl
Ne
nt
na
mi sary
o
D es
ard ec
si c if N
D an
Pl
e
an and
if N E xecu
te
ece
ssary
Create Strategic
Options
Through Developing
Alternative Plan(s)
competitive scenarios: (1) big data analytics; (2) being the target of a terrorist attack, or
having a security breach or IT system disruption; (3) large swings in energy prices, including
gasoline, diesel and jet fuel, and interruptions in supplies of these commodities; (4) fluctuations in exchange rates or interest rates; and (5) climate change.46 Managers then formulate
strategic plans they could activate and implement should the envisioned optimistic or pessimistic scenarios begin to appear.
To model the scenario-planning approach, place the elements in the Analysis, Formulation, Implementation (AFI) strategy framework in a continuous feedback loop, where analysis leads to formulation to implementation and back to analysis. Exhibit 2.6 elaborates on
this simple feedback loop to show the dynamic and iterative method of scenario planning.
The goal is to create a number of detailed and executable strategic plans. This allows the
strategic management process to be more flexible and more effective than the more static
strategic planning approach with one master plan. In the analysis stage, managers brainstorm to identify possible future scenarios. Input from several levels within the organization and from different functional areas such as R&D, manufacturing, and marketing and
sales is critical. UPS executives considered, for example, how they would compete if the
price of a barrel of oil was $35, or $100, or even $200. Strategic leaders may also attach
probabilities (highly likely versus unlikely, or 85 percent likely versus 2 percent likely) to
different future states.
Although strategic leaders often tend to overlook pessimistic future scenarios, it is imperative to consider negative scenarios carefully. Exporters such as Boeing, Harley-Davidson,
or John Deere would want to analyze the impact of shifts in exchange rates on profit
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Bernd Wolter/
Shutterstock
black swan events
Incidents that describe
highly improbable but
high-impact events.
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margins. They might go through an exercise to derive different
strategic plans based on large exchange rate fluctuations of the
U.S. dollar against major foreign currencies such as the euro,
Japanese yen, or Chinese yuan. What if the euro depreciated to
below $1 per euro, or the Chinese yuan depreciated rather than
appreciated? How would Disney compete if the dollar were to
appreciate so much as to make visits by foreign tourists to its
California and Florida theme parks prohibitively expensive? Or,
they might consider the implications of tariffs being levied in
the trade war between the U.S. and China.
The metaphor of a black swan, therefore, describes the high
impact of a highly improbable event. In the past, most people
assumed that all swans are white, so when they first encountered swans that were black, they were surprised.47 Strategic
leaders need also consider how black swan events might affect
their strategic planning. In the UPS scenario planning exercise, a terrorist attack or a
complete security breach of its IT system are examples of possible black swan events.
Looking at highly improbable but high-impact events allows UPS executives to be less
surprised and more prepared should they indeed occur. Other examples of black swan
events include the 9/11 terrorist attacks, the British exit from the European Union
(Brexit), and the European refugee and migrant crisis. Such black swan events are considered to be highly improbable and thus unexpected, but when they do occur, each has a
profound impact.
For instance, the BP oil spill was a black swan for many businesses on the Gulf Coast,
including the tourism, fishing, and energy industries. In 2010, an explosion occurred on
BP’s Deepwater Horizon oil drilling rig off the Louisiana coastline, killing 11 workers. The
subsequent oil spill continued unabated for over three months. It released an estimated
5 million barrels of crude oil into the Gulf of Mexico, causing the largest environmental
disaster in U.S. history. Two BP employees even faced manslaughter charges. The cleanup
alone cost BP $14 billion. Because of the company’s haphazard handling of the crisis, Tony
Hayward, BP’s CEO at the time, was fired.
In the aftermath of the oil spill, BP faced thousands of claims by many small-business
owners in the tourism and seafood industries. These business owners were not powerful
individually, and pursuing valid legal claims meant facing protracted and expensive court
proceedings. As a collective organized in a class-action lawsuit, however, they were powerful. Moreover, their claims were backed by the U.S. government, which has the power to
withdraw BP’s business license or cancel current permits and withhold future ones. Collectively, the small-business owners along the Gulf Coast became powerful BP stakeholders,
with a legitimate and urgent claim that needed to be addressed. In response, BP agreed to
pay over $25 billion to settle their claims and cover other litigation costs.
Even so, this was not the end of the story for BP. The oil company was found to have
committed “gross negligence” (reckless and extreme behavior) by a federal court. Additional fines and other environmental costs added another $8.5 billion. BP’s total tab for the
Gulf of Mexico disaster was $56 billion! BP CEO Bob Dudley sold about $40 billion in
assets, turning BP into a smaller company that aims to become more profitable.
What should strategy leaders do about possible future black swan and other unexpected
circumstances? In the formulation stage in scenario planning, management teams develop
different strategic plans to address possible future scenarios. This kind of what-if exercise
forces managers to develop detailed contingency plans before events occur. Each plan
relies on an entire set of analytical tools, which we will introduce in upcoming chapters.
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They capture the firm’s internal and external environments when answering several key
questions:
■
■
■
What resources and capabilities do we need to compete successfully in each future
scenario?
What strategic initiatives should we put in place to respond to each respective scenario?
How can we shape our expected future environment?
By formulating responses to the varying scenarios, managers build a portfolio of future
options. They then continue to integrate additional information over time, which in turn
influences future decisions. Finally, managers transform the most viable options into fullfledged, detailed strategic plans that can be activated and executed as needed. The scenarios
and planned responses promote strategic flexibility for the organization. If a new scenario
should emerge, the company won’t lose any time coming up with a new strategic plan. It can
activate a better suited plan quickly based on careful scenario analysis done earlier.
In the implementation stage, managers execute the dominant strategic plan, the option
that top managers decide most closely matches the current reality. If the situation changes,
managers can quickly retrieve and implement any of the alternate plans developed in the
formulation stage. The firm’s subsequent performance in the marketplace gives managers
real-time feedback about the effectiveness of the dominant strategic plan. If performance
feedback is positive, managers continue to pursue the dominant strategic plan, fine-tuning it
in the process. If performance feedback is negative, or if reality changes, managers consider
whether to modify further the dominant strategic plan in order to enhance firm performance or to activate an alternative strategic plan.
The circular nature of the scenario-planning model in Exhibit 2.6 highlights the continuous interaction among analysis, formulation, and implementation. Through this interactive
process, managers can adjust and modify their actions as new realities emerge. The interdependence among analysis, formulation, and implementation also enhances organizational
learning and flexibility.
dominant strategic
plan The strategic
option that top
managers decide most
closely matches the
current reality and
which is then executed.
STRATEGY AS PLANNED EMERGENCE:
TOP-DOWN AND BOTTOM-UP
Critics of top-down and scenario planning argue that strategic planning is not the same as
strategic thinking.48
In fact, they argue that strategic planning processes are often too regimented and confining. As such, they lack the flexibility needed for quick and effective response. Managers
engaged in a more formalized approach to the strategy process may also fall prey to an illusion of control, which describes an inclination by managers to overestimate their ability to
control events.49 Hard numbers in a strategic plan can convey a false sense of security.
According to critics of strategic planning, to be successful, a strategy should be based on an
inspiring vision and not on hard data alone. They advise that strategic leaders should focus
on all types of information sources, including soft sources that can generate new insights,
such as personal experience, deep domain expertise, or the insights of front-line employees.
The important work, according to this viewpoint, is to synthesize all available input from
different internal and external sources into an overall strategic vision. An inspiring vision in
turn should then guide the firm’s strategy (as discussed in the previous section).
In today’s complex and uncertain world, the future cannot be predicted from the past
with any degree of certainty. Black swan events can profoundly disrupt businesses and society. Moreover, the other two approaches to planning just discussed do not account sufficiently for the role employees at all levels of the organization may play. This is because
rot6128x_ch02_032-071.indd 51
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lower-level employees not only implement the given strategy, but they also frequently come
up with initiatives on their own that may alter a firm’s strategy. In many instances, front-line
employees have unique insights based on constant and unfiltered customer feedback that
may elude the more removed executives. Moreover, hugely successful strategic initiatives are
occasionally the result of serendipity, or unexpected but pleasant surprises.
In 1990, for example, online retailing was nonexistent. Today, almost all internet users
have purchased goods and services online. As a total of all sales, online retailing was about
15 percent in 2018 and is expected to double by 2030.50 Given the success of Amazon as the
world’s leading online retailer, brick-and-mortar companies such as Best Buy, The Home
Depot, JCPenney, and even Walmart have all been forced to respond and adjust their strategies. Others such as Kmart, Radio Shack, and even the venerable Sears filed for Chapter 11
bankruptcy (a provision of the U.S. bankruptcy code, which allows reorganization and
restructuring of debts owed), while Circuit City, Borders, and others went out of business
altogether (liquidation bankruptcy). Given the more or less instant global presence of online
retailers,51 Alibaba is emerging as the leading internet-based wholesaler connecting manufacturers in China to retailers in the West, as well as a direct online retailer. In a similar
fashion, the ride-hailing services Uber, Lyft, Didi Chuxing, and Grab are disrupting the
existing taxi and limousine businesses in many metropolitan areas around the world. Having
been protected by decades of regulations, existing taxi and limo services scramble to deal
with the unforeseen competition. Many try through the courts or legislative system to block
the new entrants, alleging the ride-sharing services violate safety and other regulations.
Another new sharing economy venture, Airbnb, is facing a similar situation. Airbnb is an
online platform that allows users to list or rent lodging of residential properties.
The critics of more formalized approaches to strategic planning, most notably Henry
Mintzberg, propose a third approach to the strategic management process. In contrast to
the two top-down strategy processes discussed above, this one is a less formal and less stylized approach to the development of strategy. To reflect the reality that strategy can be
planned or emerge from the bottom up, Exhibit 2.7 shows a more integrative approach to
EXHIBIT 2.7
Realized Strategy Is
a Combination of
Top-Down Intended
Strategy and
Bottom-Up Emergent
Strategy
Analysis
Formulation
Intended Strategy
Implementation
Realized
Strategy
Unrealized Strategy
Bottom-Up
Emergent Strategy
y
rot6128x_ch02_032-071.indd 52
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Strategic Leadership: Managing the Strategy Process
managing the strategy process. Please note that even in strategy as planned emergence, the overall strategy process still unfolds along the AFI framework of analysis, formulation, and implementation.
According to this more holistic model, the strategy process also begins with a
top-down strategic plan based on analysis of external and internal environments.
Top-level executives then design an intended strategy—the outcome of a rational
and structured, top-down strategic plan. Exhibit 2.7 illustrates how parts of a
firm’s intended strategy are likely to fall by the wayside because of unpredictable
events and turn into unrealized strategy.
A firm’s realized strategy is generally formulated through a combination of its
top-down strategic intentions and bottom-up emergent strategy. An emergent
strategy describes any unplanned strategic initiative bubbling up from deep
within the organization. If successful, emergent strategies have the potential to
influence and shape a firm’s overall strategy.
The strategic initiative is a key feature in the strategy as a planned emergence model. A
strategic initiative is any activity a firm pursues to explore and develop new products and
processes, new markets, or new ventures. Strategic initiatives can come from anywhere.
They could emerge as a response to external trends or come from internal sources. As such,
strategic initiatives can be the result of top-down planning by executives, or they can also
emerge through a bottom-up process. Many high-tech companies employ the planned emergence approach to formulate strategy. For example, the delivery-by-drone project at Amazon
was conceived of and invented by a lower-level engineer. Even relatively junior employees
can come up with strategic initiatives that can make major contributions if the strategy process is sufficiently open and flexible.52
The arrows in Exhibit 2.7 represent different strategic initiatives. In particular, strategic
initiatives can bubble up from deep within a firm through
■
■
■
53
Amazon Prime Air is a
future service that will
deliver packages up to
five pounds in 30 minutes
or less using small
drones. This strategic
initiative was conceived
of and invented by a
lower-level engineer.
Johannes Schmitt-Tegge/
dpa/Alamy Stock Photo
intended strategy The
outcome of a rational
and structured topdown strategic plan.
Autonomous actions.
Serendipity.
Resource-allocation process (RAP).53
AUTONOMOUS ACTIONS. Autonomous actions are strategic initiatives undertaken by
lower-level employees on their own volition and often in response to unexpected situations.
Strategy Highlight 2.2 illustrates that successful emergent strategies are sometimes the result
of autonomous actions by lower-level employees.
Functional managers such as Diana, the Starbucks store manager featured in Strategy
Highlight 2.2 , are much closer to the final products, services, and customers than are the
more removed corporate- or business-level managers. They also receive much more direct
customer feedback. As a result, functional managers may start strategic initiatives based on
autonomous actions that can influence the direction of the company. To be successful, however, top-level executives need to support emergent strategies that they believe fit with the
firm’s vision and mission. Diana’s autonomous actions might not have succeeded or might
have got her in trouble if she did not garner the support of a senior Starbucks executive. This
realized strategy Combination of intended and emergent
strategy.
rot6128x_ch02_032-071.indd 53
emergent strategy Any
unplanned strategic initiative
bubbling up from the bottom of
the organization.
strategic initiative Any activity a firm pursues to explore
and develop new products and
processes, new markets, or
new ventures.
autonomous actions Strategic
initiatives undertaken by lowerlevel employees on their own
volition and often in response
to unexpected situations.
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Strategic Leadership: Managing the Strategy Process
Strategy Highlight 2.2
Starbucks CEO: “It’s Not Whatt We Do”
Starbucks stores were supposed to
offer only company-approved drinks.
Diana, a Starbucks store manager in Southern
But Diana told him the new drink was
California, received several requests a day
selling well.
cal
for an iced beverage offered by a local
Behar flew Diana’s team to Starbucks
competitor. After receiving more than
headquarters in Seattle to serve the
30 requests one day, she tried the
iced-coffee drink to the executive
beverage herself. Thinking it might
committee. They liked its taste, but
be a good idea for Starbucks to ofstill said no. Then Behar pulled out the
fer a similar iced beverage, she resales numbers that Diana had carefully
quested that headquarters consider
kept. The drink was selling like crazy:
adding it to the product lineup. Diana
40 drinks a day the first week, 50 drinks
had an internal champion in Howard
a day the next week, and then 70 drinks
Behar, then a top Starbucks executive.
a day in the third week after introduction.
Behar presented this strategic initiaTThey had never seen such growth numtive to the Starbucks executive commitbbers. These results persuaded the executee. The committee voted down thee
ti
tive team to give reluctant approval to
idea in a 7:1 vote. Starbucks CEO How-in
introduce the drink in all Starbucks stores.
ard Schultz commented, “We do coffee;;
You’ve probably guessed by now that
we don’t do iced drinks.”
we
we’re talking about Starbucks Frappuccino.
he
Diana, however, was undeterred. She
Frap
Frappuccino is now a multibillion-dollar busiexperimented until she created the
ness ffor Starbucks. At one point, this iced drink
M. Unal Ozmen/Shutterstock
iced drink, and then she began to ofbrought in more than 20 percent of Starbucks’s total
fer it in her store. When Behar visited Diana’s store, he
revenues, which were over $26 billion in 2019.54
was shocked to see this new drink on the menu—all
serendipity Any random events, pleasant
surprises, and accidental happenstances that
can have a profound
impact on a firm’s strategic initiatives.
rot6128x_ch02_032-071.indd 54
executive championed her initiative and helped persuade other top executives. Internal
champions, therefore, are often needed for autonomous actions to be successful.
Although emergent strategies can arise in the most unusual circumstances, it is important to emphasize the role that top management teams play in this type of strategy process.
In the strategy-as-planned-emergence approach, executives need to decide which of the
bottom-up initiatives to pursue and which to shut down. This critical decision is made on
the basis of whether the strategic initiative fits with the company’s vision and mission, and
whether it provides an opportunity worth exploiting. Executives, therefore, continue to
play a critical role in the potential success or failure of emergent strategies because they
determine how limited resources are allocated. After initial resistance, as detailed in Strategy Highlight 2.2, the Starbucks executive team around CEO Howard Schultz fully supported the Frappuccino strategic initiative, providing the resources and personnel to help
it succeed.
SERENDIPITY. Serendipity describes random events, pleasant surprises, and accidental
happenstances that can have a profound impact on a firm’s strategic initiatives.
There are dozens of examples where serendipity had a crucial influence on the course of
business and entire industries. The discovery of 3M’s Post-it Notes or Pfizer’s Viagra, first
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55
intended as a drug to treat hypertension, are well known. Less well known is the discovery
of potato chips.55 The story goes that in the summer of 1853, George Crum was working as
a cook at the Moon Lake Lodge resort in Saratoga Springs, New York. A grumpy patron
ordered Moon resort’s signature fried potatoes. These potatoes were served in thick slices
and eaten with a fork as was in the French tradition. When the patron received the fries, he
immediately returned them to the kitchen, asking for them to be cut thinner. Crum prepared
a second plate in order to please the patron, but this attempt was returned as well. The third
plate was prepared by an annoyed Crum who, trying to mock the patron, sliced the potatoes
sidewise as thin as he could and fried them. Instead of being offended, the patron was
ecstatic with the new fries and suddenly other patrons wanted to try them as well. Crum
later opened his own restaurant and offered the famous “Saratoga Chips,” which he set up
in a box and some customers simply took home as a snack to be eaten later. Today, PepsiCo’s
line of Frito-Lay’s chips are a multibillion-dollar business.
How do strategic leaders create a work environment in which autonomous actions and serendipity can flourish? One approach is to provide time and resources for employees to pursue
other interests. Google, the online search and advertising subsidiary of Alphabet, for example, organizes the work of its engineers according to a 70-20-10 rule. The majority of the
engineers’ work time (70 percent) is focused on its main business (search and ads).56
Google also allows its engineers to spend one day a week (20 percent) on ideas of their own
choosing, and the remainder (10 percent) on total wild cards such as Project Loon, which
places high-altitude balloons into the stratosphere to create a high-speed wireless network
with global coverage. Google reports that half of its new products and services came from
the 20 percent rule, including Gmail, Google Maps, Google News, and Orkut.57 With the
restructuring of Google into a corporation with multiple strategic business units, engineers
spending their 10 percent time on total wild cards do so within Google X, its research and
development unit.58
RESOURCE-ALLOCATION PROCESS. A firm’s resource-allocation process (RAP) determines the way it allocates its resources and can be critical in shaping its realized strategy.59
Emergent strategies can result from a firm’s resource-allocation process (RAP).60 Intel
Corp. illustrates this concept.61 Intel was created to produce DRAM (dynamic randomaccess memory) chips. From the start, producing these chips was the firm’s top-down strategic plan, and initially it worked well. In the 1980s, Japanese competitors brought
better-quality chips to the market at lower cost, threatening Intel’s position and obsoleting
its top-down strategic plan. However, Intel was able to pursue a strategic transformation
because of the way it set up its resource-allocation process. In a sense, Intel was using
functional-level managers to drive business and corporate strategy in a bottom-up fashion.
In particular, during this time Intel had only a few fabrication plants (called “fabs”) to produce silicon-based products. It would have taken several years and billions of dollars to build
additional capacity by bringing new fabs online.
With constrained capacity, Intel had implemented the production-decision rule to maximize margin-per-wafer-start. Each time functional managers initiated a new production run,
they were to consider the profit margins for DRAM chips and for microprocessors, the
“brains” of personal computers. The operations managers then could produce whichever
product delivered the higher margin. By following this simple rule, front-line managers
shifted Intel’s production capacity away from the lower-margin DRAM business to the
higher-margin microprocessors business. The firm’s focus on microprocessors emerged
from the bottom up, based on resource allocation. Indeed, by the time top management
finally approved the de facto strategic switch, the company’s market share in DRAM had
dwindled to less than 3 percent.62
rot6128x_ch02_032-071.indd 55
resource-allocation
process (RAP) The
way a firm allocates its
resources based on
predetermined
policies, which can be
critical in shaping its
realized strategy.
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CHAPTER 2
Strategic Leadership: Managing the Strategy Process
planned emergence
Strategy process in
which organizational
structure and systems
allow bottom-up
strategic initiatives to
emerge and be evaluated and coordinated
by top management.
EXHIBIT 2.8
Strategy
Process
Taken together, a firm’s realized strategy is frequently a combination of top-down strategic intent and bottom-up emergent strategies, as Exhibit 2.7 shows. This type of strategy
process is called planned emergence. In that process, organizational structure and systems
allow bottom-up strategic initiatives to emerge and be evaluated and coordinated by top
management.63 These bottom-up strategic initiatives can be the result of autonomous
actions, serendipity, or the resource allocation process.
Exhibit 2.8 compares and contrasts the three different approaches to the strategic management process: top-down strategic planning, scenario planning, and strategy as planned
emergence.
Comparing and Contrasting Top-Down Strategic Planning, Scenario Planning, and Strategy as
Planned Emergence
Description
Pros
Top-Down
Strategic
Planning
A rational strategy
process through
which top
management
attempts to
program future
success; typically
concentrates
strategic
intelligence and
decision-making
responsibilities in
the office of the
CEO.
Ψ Cb_fXRScNQ[SNbcdbNdSVi`b_QScc Ψ 8NXb[ibXVXRN^RX^WXPXdc Ψ ;XVW[ibSVe[NdSRN^R
and lines of communication.
flexibility.
stable industries such
as utilities, e.g.,
Ψ 3TT_bRcQ__bRX^NdX_^N^RQ_^db_[ Ψ G_`ΝR_g^_^SΝgNi
Georgia Power in
of various business activities.
communication limits
Southeast United
Ψ ESNRX[iNQQS`dSRN^Re^RSbcd__R feedback.
States or Framatome,
as process is well established
Ψ 3cce]ScdWNddWS
state-owned nuclear
and widely used.
future can usually be
operator in France.
predicted based on
Ψ J_bZcbS[NdXfS[igS[[X^cdNP[S
Ψ
9_fSb^]S^d
past data.
environments.
Ψ FS`NbNdScS[S]S^dc_T Ψ @X[XdNbi
AFI framework so that
top management
(analysis & formulation)
are removed from line
employees
(implementation).
Scenario
Planning
Strategy-planning
activity in which
top management
envisions different
what-if scenarios to
anticipate plausible
futures in order to
plan optimal
strategic
responses.
Ψ Cb_fXRScNQ[SNbcdbNdSVi`b_QScc Ψ G_`ΝR_g^_^SΝgNi
and lines of communication.
communication limits
feedback.
Ψ 3TT_bRcQ__bRX^NdX_^N^RQ_^db_[
rot6128x_ch02_032-071.indd 56
Cons
Where Best Used
Ψ 8NXb[icdNP[S
industries, often
characterized by
some degree of
of various business activities.
Ψ FS`NbNdScS[S]S^dc_T
regulation such as
AFI
framework
so
that
Ψ ESNRX[iNQQS`dSRN^Re^RSbcd__R
airlines, logistics, or
top management
as process is well established
medical devices, e.g.,
(analysis
&
formulation)
and widely used.
American Airlines,
are removed from line
6S[dN3Xb?X^ScN^R
Ψ Cb_fXRScc_]ScdbNdSVXQ
employees
United Airlines; FedEx
flexibility.
(implementation).
and UPS; Medtronic.
Ψ 3cdWSTedebSXc
unknown, responses to Ψ ?NbVSbTXb]cX^
industries with a
all possible events
small number of other
cannot be planned.
large competitors
Ψ ?SNRSbcdS^Rd_Nf_XR
(oligopoly).
planning for
pessimistic scenarios.
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CHAPTER 2
Strategy
Process
Strategy
as Planned
Emergence
Strategic Leadership: Managing the Strategy Process
Description
Pros
Cons
Where Best Used
Blended strategy
process in which
organizational
structure and
systems allow
both top-down
vision and
bottom-up
strategic
initiatives to
emerge for
evaluation and
coordination by
top management.
Ψ 5_]PX^ScN[[S[S]S^dc_TdWS
AFI framework in a holistic and
flexible fashion.
Ψ H^Q[SNbcdbNdSVi
process and lines of
communication can
lead to employee
confusion and lack of
focus.
Ψ ASgfS^debScN^R
smaller firms.
Ψ @N^iXRSNcdWNd
bubble up from the
bottom may not be
worth pursuing.
Ψ
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