Chapter 12 Summary - book \"Crafting and Executing Strategy\" PDF

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Download Chapter 12 Summary - book "Crafting and Executing Strategy" PDF

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Chapter 12: Corporate Culture and Leadership Instilling a Corporate Culture conducive To Good Strategy Execution  Corporate culture refers to the shared values, ingrained attitudes, core beliefs, and company traditions that determine norms of behavior, accepted work practices, and styles of operating. o Is important because it influences the firm’s actions and approaches to conducting business  Identifying The Key Feature of a Company’s Corporate Culture o The values, business principles, and ethical standards that management preaches and practices—these are the key to a company's culture, but actions speak much louder than words here. o The company's approach to people management and the official policies, procedures, and operating practices that provide guidelines for the behavior of company personnel. o The atmosphere and spirit that pervades the work climate—whether the workplace is competitive or cooperative, innovative or resistant to change, political or collegial, all business or fun-loving, and the like. o The way managers and employees interact and relate to one another— whether and to what extent good camaraderie exists, whether people tend to work independently or collaboratively, whether communications among employees are free-flowing or infrequent, whether people are called by their first names, whether co-workers spend little or lots of time together outside the workplace, and so on. o The strength of peer pressure to do things in particular ways and conform to expected norms. o The actions and behaviors that management explicitly encourages and rewards and those that are frowned upon. o The company's revered traditions and oft-repeated stories about “heroic acts” and “how we do things around here.” o

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The manner in which the company deals with external stakeholders— whether it treats suppliers as business partners or prefers hard-nosed, arm's-length business arrangements and whether its commitment to corporate citizenship and environmental sustainability is strong and genuine.

Forces that Cause a Firm’s Culture to Evolve

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New or revolutionary technologies

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New challenges in the marketplace

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Shifting internal conditions

o Diversification into new businesses o Rapid growth of the firm o Merger or acquisitions of another firm  Strong vs. Weak Cultures o In a strong-culture company, deeply rooted values and norms of behavior are widely shared and regulate the conduct of the company's business. 

Has deeply rooted widely-shared values, behavioral norms, and operating approaches.

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Insists that its values and principles be reflected in the decisions and actions taken by all company personnel.

o Weak-Culture Companies 

Lacks values and principles that are consistently preached or widely shared.

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Has few or no traditions, beliefs, values, common bonds, or behavioral norms.

 Healthy Cultures that Aid Good Strategy Execution o Higher performance cultures 

Some companies have so-called “high- performance” cultures where the standout traits are a “can-do” spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate in which people go all out to meet or beat stretch objectives

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String sense of involvement on the part o the company personnel

o Adaptive Cultures 

The hallmark of adaptive corporate cultures is willingness on the part of organization members to accept change and take on the challenge of introducing and executing new strategies.

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Company personnel share a feeling of confidence that the organization can deal with whatever threats and opportunities arise; they are receptive to risk taking, experimentation, innovation, and changing strategies and practices. T

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The work climate is supportive of managers and employees who propose or initiate useful change.

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As a company's strategy evolves, an adaptive culture is a definite ally in the strategy-implementing, strategy-executing process as compared to cultures that are resistant to change.

 Unhealthy cultures that Impede Good Strategy Execution o Change resistant cultures 

Change-resistant cultures—where skepticism about the importance of new developments and a fear of change are the norm—place a premium on not making mistakes, prompting managers to lean toward safe, conservative options intended to maintain the status quo, protect their power base, and guard their immediate interests.

o Politicized cultures 

What makes a politicized internal environment so unhealthy is that political infighting consumes a great deal of organizational energy, often with the result that what's best for the company takes a backseat to political maneuvering. In companies where internal politics pervades the work climate, empire-building managers pursue their own agendas and operate the work units under their supervision as autonomous “fiefdoms.

o Insular, Inwardly Focused Cultures 

Sometimes a company reigns as an industry leader or enjoys great market success for so long that its personnel start to believe they have all the answers or can develop them on their own. There is a strong tendency to neglect what customers are saying and how their needs and expectations are changing. Such confidence in the correctness of how the company does things and an unflinching belief in its competitive superiority breed arrogance, prompting company personnel to discount the merits of what outsiders are doing and to see little payoff from studying best-in-class performers.

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Insular thinking, internally driven solutions, and a must-be-inventedhere mindset come to permeate the corporate culture.

o Unethical and Greed-Driven Cultures 

Executives exude the negatives of arrogance, ego, greed, and an “ends-justify-the-means” mentality in pursuing overambitious revenue and profitability target

o Incompatible Subcultures 

As long as the subcultures are compatible with the overarching corporate culture and are supportive of the strategy execution efforts, this is not problematic.

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Multiple cultures pose an unhealthy situation when they are composed of incompatible subcultures that embrace conflicting business philosophies, support inconsistent approaches to strategy execution, and encourage incompatible methods of people management

 Changing a Problem Culture o When a strong culture is unhealthy or otherwise out of sync with the actions and behaviors needed to execute the strategy successfully, the culture must be changed as rapidly as can be managed. o A strong, out of sync, or unhealthy culture must be changed in order to execute strategy successfully o Competent leadership at the top is necessary for culture-change efforts to succeed o Step 1: Identify facets of the present culture that re dysfunctional and impede good strategy execution o Step 2: specify clearly what new actions, behaviors and work practices should characterize the new culture o Step 3: talk opening about problems with current culture and make persuasive case for cultural reform o Step 4: follow visible, forceful actions-both substantive and symbolic- to ingrain a new set of behaviors, practices and norms  Symbolic Culture-Changing Actions o The most important symbolic actions are those that top executives take to lead by example

o Another category of symbolic actions includes holding ceremonial events to single out and honor people whose actions and performance exemplify what is called for in the new culture. Such events also provide an opportunity to celebrate each culture-change success. Executives sensitive to their role in promoting strategy–culture fit make a habit of appearing at ceremonial functions to praise individuals and groups that exemplify the desired behaviors. o Use of symbols in culture building is widespread. Numerous businesses have employee-of-the-month awards. Leading the Strategy Execution Process  Leading Strategy Exection Requires o Staying on top of what is happening and closely monitoring progress o Putting constructive pressure on the organization to execute the strategy well and achieve operating excellence o Initiating corrective actions to improve strategy execution and achieve the targeted performance results o Senior executives to be out in front personally leading strategy execution and driving progress  Management by walking around (MBWA) is one of the techniques that effective leaders use to stay informed about how well the strategy execution process is progressing. o Involves spending time with people at company facilities, asking questions, listening to their opinions and concerns, and gathering firsthand information about how well aspects of the strategy execution process are going  Leading the Process of Making Corrective Adjustments o Success in making corrective actions hinges on (1) a thorough analysis of the situation, (2) the exercise of good business judgment in deciding what actions to take, and (3) good implementation of the corrective actions that are initiated. o

Successful managers are skilled in getting an organization back on track rather quickly. They (and their staffs) are good at discerning what actions to take and in bringing them to a successful conclusion.

o Managers who struggle to show measurable progress in implementing corrective actions in a timely fashion are candidates for being replaced. A Final Word on Leading the Process of Crafting and Executing Strategy  It is difficult to separate leading the process of executing strategy from leading the strategy process  Crafting, implementing, and executing strategy is a continuous process that requires much adjusting and fine-tuning of the strategy to fit changing circumstances  The tests of strategic leadership are whether the firm has a good strategy and business model, whether its strategy is competently executed, and whether the firm is achieving its performance targets  If these three conditions exist, then the firm has good strategic leadership and is a well-managed enterprise

Leadership Styles  Autocratic/participative  Task/relationship  Charismatic  Transactional  Situational (see The Leadership Journey)  Servant  Transformational Leadership vs. Management  Leadership o Directing o Aligning

o Communicating o Motivating o Inspiring o Innovating  Management o Planning o Budgeting o Organizing o Staffing o Monitoring o Controlling Followership  Bystanders – observe, but don’t participate  Participants – partially engaged  Activists – heavily engaged  Diehards – radical devotion or opposition  Isolates – completely detached, indirectly reinforce leaders Types of Teams  Traditional o Choose members on availability o Emphasize collective o Focus on tasks o Work individually and remotely

o Address the average customer o Minimize risks o Form committees  Virtuoso” o Choose members for skills o Emphasize the individual o Focus on ideas o Work together and intensely o Address the sophisticated customer o Embrace risks o Form tiger teams...