Strategic Management:
Theory and Practice
Chapter 11
Strategy Execution:
Strategic Change, Culture,
& Leadership
Strategic Management, 5e. © 2017 Academic Media
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Chapter 11: Key Issues
Organizational Culture
The Role of Strategic Leadership
Executing Strategic Change
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Strategic Management, 5e. © 2017 Academic Media
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Introduction: Reminders about
Strategy Execution
Consider the plan for implementation before
adopting a strategic alternative.
The greater the strategic change, the more
complex the implementation.
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Organizational culture refers to the shared values and
patterns of belief and behavior that are accepted and
practiced by the members of a particular organization.
An organization’s culture and its strategies should be in
alignment.
Subcultures represent “cultures within a culture.”
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Organizational Culture
and Strategy
Adaptive and Inert Cultures
Adaptive cultures exist when members of an
organization are willing and eager to embrace any
change that it consistent with the core values.
Adaptive cultures emphasize innovation—
developing something new—and encourage
initiative.
Inert cultures are conservative and encourage
maintenance of existing resources.
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Cultural Strength
A strong culture is characterized by deeply rooted
values and ways of thinking that regulate firm
behavior.
A weak culture lacks values and ways of thinking
that are widely accepted by members of the
organization.
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Diversity
Diversity refers to the extent to which individuals
within an organization are different, but can be defined
in many ways. Research linking diversity to firm
performance is inconclusive.
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Shaping the Culture
Cultural change is a complex process. Cultures do
not develop overnight and are rarely changed in a
short period of time.
Culture change is possible but efforts often fail,
due primarily to a lack of understanding about how
a culture can be changed and how long it is likely
to take .
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5 Ways to Shape the Culture
#1- Systematically pay attention to areas of the business
believed to be linked to the success of the strategy.
This goal can be accomplished formally by measuring
and controlling the activities of those areas, or less
formally by making specific comments or questions at
meetings. These areas should be ones identified as
critical to the firm’s long-term performance and
survival, such as customer service, new product
development, or quality control.
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5 Ways to Shape the Culture
#2- React strategically to critical incidents and
organizational crises.
The way a CEO deals with a crisis, such as declining
sales or technological obsolescence, can emphasize
norms, values, and working procedures, or even
create new ones.
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5 Ways to Shape the Culture
#3- Serve as a deliberate role model, teacher, or
coach.
When a CEO models certain behavior, others in the
organization are likely to adopt it as well.
Example: Executives who give up their reserved
parking place in favor of the general parking lot
send a message about the importance of status in
the organization.
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5 Ways to Shape the Culture
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#4- Strategically allocate rewards and status.
Leaders communicate their priorities by
consistently linking pay raises and promotions, or
the lack thereof, to particular behaviors.
Rewarded behavior tends to continue and become
ingrained in the fabric of
the organization.
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5 Ways to Shape the Culture
#5- Modify the procedures through which an organization
recruits, selects, promotes, and terminates
employees.
Hire and promote individuals whose values are similar
to those of the firm and whose beliefs and behaviors
more closely fit the organization’s changing value
system.
The easiest way to affect culture over the long term is
to hire individuals who possess the desired cultural
attributes.
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Global Concerns
The self-reference criterion (introduced in a previous
chapter) presents a potential problem. Managers
often believe that the leadership styles and
organizational culture that work in their home
country should work elsewhere. However, each
nation—like each organization—has its own unique
culture, traditions, values, and beliefs.
Organizational values and norms must be tailored to
fit the unique culture of each country in which the
organization operates, at least to some extent.
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A manager exhibits (managerial)
leadership when he or she secures
the cooperation of others in
accomplishing a goal.
Strategic leadership is more than managerial
leadership. It involves creating the vision for the
firm, developing strategies, and empowering
individuals throughout the organization to put
those strategies into action.
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Strategic Leadership
Leadership Style
Every leader has a distinctive leadership style—a
consistent pattern of behavior when governing and
making decisions.
Transactional Leaders use the authority of their office to
exchange rewards such as pay and status for employees’
work efforts and generally seek to enhance an
organization’s performance steadily, but not dramatically.
Transformational Leaders inspire involvement in a
mission, giving followers a “dream” or “vision” of a higher
calling, thereby seeking more dramatic changes in
organizational performance.
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Transformational Leadership
& Innovation
Transformational leadership is often associated
with innovation.
Austrian economist Joseph Schumpeter identified
five types of innovation: (1) new products, (2) new
materials or resources, (3) new markets, (4) new
production processes, and (5) new forms of
organization.
Innovation often occurs through a process
Schumpeter called creative destruction, whereby
managers consciously and constantly destroy the
old by recombining its elements into new forms.
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Leadership Style in Practice
Most effective leaders employ some of both
extremes.
The best style depends on the situation,
although many scholars and leaders are
beginning to prefer a transformational style in
most instances.
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Leadership & Emotional Intelligence
Regardless of leadership style, a leader’s likelihood of
success has also been tied to emotional intelligence,
one’s collection of psychological attributes, such as
motivation, empathy, self-awareness, and social skills.
Executives who possess a passion for their work, are
socially oriented, and understand their own needs, as
well as those of their subordinates, are more likely to
gain the trust, confidence, and support necessary to
lead their organizations.
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Executing Strategic Change: A 3-Step Process
Step 1: Recognize the need for change.
Poor performing firms are usually first to recognize
the need for change, and often replace their CEOs
with outsiders. New leaders can sometimes make
the decisions that an insider might be reluctant to
make, while bringing a fresh perspective to the
firm and its problems.
Strategic Management, 5e. © 2017 Academic Media
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Executing Strategic Change: A 3-Step Process
Step 2: Create a shared vision of what the change
will “look like.”
The vision might be one of excellent customer
service, industry leadership, or a leaner firm
following a restructuring. The change effort is likely
to be successful if members of the firm share a
common vision for the company’s future.
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Executing Strategic Change: A 3-Step Process
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Step 3: Institutionalize the change
“Change starts at the top.” Without a strong
commitment from the top executive and his or her
top management team, strategic change efforts are
less likely to succeed.
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Case Analysis Step 23:
Strategy Execution
How will the recommended strategic
alternatives be implemented?
Be specific. Identify foreseeable problems and
actions that might be considered to address
them.
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