Chapter 2 MAZ
Download
Report
Transcript Chapter 2 MAZ
Miles A. Zachary
MGT 4380
Strategic Management
“Good business leaders create a vision, articulate the
vision, passionately own the vision, and relentlessly
drive it to completion.” – Jack Welch, former GE CEO
A vision is one key aspect of an organization a leader
may use to inspire employees
It describes what an organization hopes to become in
the future
Clear
Brief
Empowering
In a survey of 1,500 top firm executives, 98% reported
that a leaders must first and foremost have “a strong
sense of vision.”
90% reported that they have questioned their own
ability to be visionary leaders
Many firms do not articulate a vision
Of the firms that do have vision statements, many fail
to empower employees appropriately
Thus, a strong vision embraced by employees is a
powerful competitive advantage
An organization’s mission statement attempts to
capture the organization’s identity; it answers the
question “Who are we?”
While vision statements focus on the future, mission
statements should be written around the past and
present
Strong mission statements suggest why organizational
stakeholders (e.g. employees, suppliers, customers,
community) why they should support the organization
and ensure it’s success
While mission and vision statements are different,
they should pursue similar goals
Organizations are often troubled by divergent mission
statements and vision statements
Example: Universities established with mission
statements focusing solely on educating citizens v.
pursuing lofty research goals inline with the university’s
vision
Organizations may accomplish this by focusing on
developing and pursuing narrower objectives—goals
Goals are smaller-scoped objectives that provide clear
and tangible to employees in their day-to-day work
The most effective goals are:
Specific
Measurable
Aggressive
Realistic
Time-bound
Specific goals are explicit and direct people’s energy;
often times they require articulated steps to achieve
them
Measurable goals are quantifiable; useful because
success can be clearly determined
Aggressive goals are challenging; require people test
and extend their limits
Realistic goals are achievable; while goals should be
lofty, they should be reasonable
Time-bound goals are finite; there is a delineated
time horizon
The period of time after a goal is achieved is
important, but often overlooked
An organization should determine whether to accept
it’s new position or reformulate and pursue a new goal
Example: After achieving their goal of landing on the
moon, NASA failed to articulate their next goal
Organizational performance is a broad term that
encompasses how well an organization is pursuing
their mission, vision, and goals
A vital aspect of strategic management
The ultimate dependent variable in strategic
management research
Organizational performance is subjective and depends
upon how it is defined
Two important considerations:
1.
2.
Performance measures—a metric with which
performance can be gauged (e.g. ROA, Tobin’s q, stock
price, earnings per share)
Performance referents—a standard that can be held
against a measure to determine an organization’s
relative performance (e.g. industry standards,
competitor performance, social norms)
Different measures and referents communicate
different information; suggests the importance of
multiple measures of performance
Many measures and referents exist, so it’s important to
identify rich yet manageable objectives
The balanced scorecard approach was developed by
Harvard professors Robert Kaplan and David Norton
to help managers diversify performance analysis
Recommends that managers focus on a few key
measures reflecting four (4) dimensions
1.
2.
3.
4.
Financial
Customer
Internal business process
Learning and growth
The triple bottom line approach to reflects a more
holistic view of performance than the balanced
scorecard approach
Focuses on three (3) bases:
1.
2.
3.
People (society)
Planet (environment)
Profit (financial)
Developed in the 1980’s, but gained popularity in the
late 1990’s
Many firms are finding social cache by emphasizing
social and environmental values
Many CEOs are thrust into the public spotlight
Firm Advantages
Enhance corporate image
Increase stock price
Improve stakeholder morale
Firm Disadvantages
Gaps in actual and expected performance may be magnified
Unethical or illegal behavior attracts negative publicity
Individual CEOs are presented with both benefits and
costs
Individual Benefits
High compensation/benefits
Prestige-based power
Elite network opportunities
Individual Costs
Face bad reputation with negative performance
Increased media scrutiny
Friends and family forced into the spotlight
While entrepreneurship is traditionally thought of as a
person starting a new venture, corporate
entrepreneurship describes entrepreneurial activity
in an existing organization
Organizations failing to continually innovate fall into
the trap of creative destruction (Schumpeter, 1934)
Corporate entrepreneurs innovate new products and
services and find/develop resources to support it
Successful corporate innovators are valuable
organizational assets and can benefit from this value
However, some risks still exist…
Entrepreneurial orientation (EO) refers to the processes,
practices, and decision-making styles of organizations that
act entrepreneurially
Firm-level concept
Essential part of crafting an entrepreneurial strategy
A firm’s EO is determined by aggregating 5 dimensions:
Autonomy
Competitive Aggressiveness
Innovativeness
Proactiveness
Risk-taking
Autonomy
Generally refers to the freedom that individuals and
groups/teams have to introduce and develop new ideas
Reflects a lack of hindrances associated with organizational
bureaucracies
Structure is key
Competitive Aggressiveness
Tendency for a firm to intensely engage competitors rather
than avoid them
Includes strategic ploys to gain favorable industry positions
Competitive action is powerful and executives must consider
the short and long-run consequences
Innovativeness
The tendency to pursue creativity and experimentation
Innovativeness is aimed at creating new products,
services, processes, and/or skills to increase a firms
advantage(s)
Innovations may build on an existing advantage or
introduce a radically different advantage
Firms should assess how new innovations impact
existing advantages (cannibalization)
Firms with strong innovative abilities tend to enjoy
better firm performance than others
Proactiveness
The tendency to anticipate and act on future needs rather
than waiting to react
Adopts an opportunity-seeking perspective
Typically first or early to enter a market
Can often capitalize on first-mover advantages, but is also
subject to first-mover disadvantages
Risk-taking
Tendency to engage in risky or bold actions as opposed to
cautious
Different people perceive risk and uncertainty differently
Some industries reward/punish risk-taking differently
Steps can be taken to increase a firm’s EO
Executives should design an organization’s structure to
promote and enhance the five dimensions of EO
Leverage power/influence
Ecological design
Additionally, executives should properly monitor the
EO level of a firm
Gauge employee satisfaction
Examine key entrepreneurial performance measures
Slack capital/resources
R&D expenditures
Executives (namely the CEO) are responsible for
establishing a firm’s mission, vision, and goals
They should also work to encourage the necessary
culture to accomplish their objectives
Performance metrics and referents are important
when determining a firm’s relative and absolute
position, but must be chosen carefully
Executives should determine a firm’s appropriate level
of EO and work to encourage responsible levels of EO