Strategic Leadership Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be a minimum of 300 words in length and,you should res
Strategic Leadership
Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be a minimum of 300 words in length and,you should respond to two additional posts from your peers. If you have not done so lately, please review the Rules of Discussion.
Choose a CEO from a prominent firm that you believe exemplifies the positive aspects of strategic leadership. What actions does this CEO take that demonstrate effective strategic leadership? What are the effects of those actions on the firm's performance? Your initial post should focus on the key components of strategy execution.
chapter 12 Corporate Culture and Leadership—Keys to Good Strategy Execution
Arthur A. Thompson The University of Alabama
Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
All rights reserved. Not for distribution to non-registrants without permission.
An e-book published and distributed by McGraw Hill Education
Sixth Edition of Strategy: Core Concepts and Analytical Approaches (2020-2021). Arthur A. Thompson, The University of Alabama. Published and distributed by McGraw Hill Education. Image of globe comprised of puzzle pieces with several pieces dislodged and scattered below the globe. Chapter 5 The Five Generic Competitive Strategy Options: Which One to Employ
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“The biggest levers you’ve got to change a company are strategy, structure, and culture. If I could pick two, I’d pick strategy and culture.”
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Wayne Leonard former CEO, Entergy
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“Weak leadership can wreck the soundest strategy; forceful execution of even a poor plan can often bring victory.”
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Sun Zi ancient Chinese general and philosopher
“Leadership is accomplishing something through other people that wouldn’t have happened if you weren’t there… Leadership is being able to mobilize ideas and values that energize other people… Leaders develop a story line that engages other people.”
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Noel Tichy,
Professor
“You’ve got to have a vision. You’ve got to have a plan to implement it. Then you’ve got to set the example, develop the principles and values that are important, and get people to buy into it.”
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Nick Saban, Head Football Coach, The University of Alabama
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Be able to identify the key features of a company’s corporate culture and appreciate the role of a company’s core values and ethical standards in shaping the corporate culture.
Understand how and why a company’s culture can aid or block the drive for good strategy execution and operating excellence.
Learn the kinds of actions management can take to change a problem corporate culture.
Understand what constitutes effective managerial leadership in achieving superior strategy execution and operating excellence.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Chapter 12 Learning Objectives
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Instilling a Corporate Culture that Promotes Good Strategy Execution
Identifying the Key Features of a Corporate Culture
Cultures Are Often Grounded in Core Value and Ethics
Strong vs. Weak Cultures
Why Cultures Matter to the Strategy Execution Process
Healthy Cultures That Aid Good Strategy Execution
Unhealthy Cultures Impede Good Strategy Execution
Changing a Problem Culture
Leading the Strategy Execution Process
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Chapter 12 Roadmap
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Every firm has its own unique culture that is a product of:
The core values and business principles articulated by executives
Its standards of what is ethically acceptable and what is not
The ingrained work practices, beliefs, and behaviors that define “how we do things around here”
Its approach to people management and its style of operating
The “chemistry” and the “personality” that permeates its work environment
Stories told repeatedly to reinforce its values, business practices, and traditions
The specific cultural traits that emerge from a firm’s meshing of these culture-determining factors define its corporate culture
A firm’s culture is its psyche or organizational DNA
A firm’s culture is important because it influences its actions and approaches to conducting its business
There are large variations in the character of company cultures
Instilling a Corporate Culture That Promotes Good Strategy Execution
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Core Concept
Corporate culture refers to the character of a firm’s internal work climate and psyche—as shaped by its core values, business principles, ethical standards, ingrained beliefs and behaviors, approach to people management, style of operating, and traditions.
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Identifying the Key Features of a Company’s Corporate Culture
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Strength of peer pressure to conform and observe norms
Actions and behaviors encouraged and rewarded
Traditions and stories and “how we do things around here”
How the firm treats its stakeholders
A Company’s Corporate Culture
Values, principles, and ethical standards in actual use
Approach to people management and key policies and procedures
Atmosphere and spirit that pervades the firm’s work climate
How managers and employees interact and relate to one another
The values, beliefs, and practices that undergird a firm’s culture can have any of several origins:
A founder or strong executive leaders who articulated them as a set of business principles, the firm’s policies and ways of operating
Exemplary actions of personnel viewed as role models
Evolving consensus about “how we ought to do things around here.”
Over time, these cultural underpinnings take root, become embedded in how the firm conducts its business, and gain widespread acceptance among both managers and employees
Identifying the Key Features of a Company’s Corporate Culture
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Zealous pursuit of low costs and frugal operating practices
A strong work ethic
Ritualistic headquarters meetings to exchange ideas and review problems
Executives’ commitment to visiting stores, listening to customers, and soliciting suggestions from employees.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Example: Corporate Culture at Wal-Mart
Share a common customer-centered goal of developing the best consumer products that make users feel delight, surprise, and connection to each Apple device
Secretive, and highly protective of company-developed technology and know-how.
Creative thinking and inspired solutions are expected from everyone—perfectionists always on the lookout for better ideas.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Example: Cultural Traits at Apple
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Delivering exceptional service to an out-of-the-ordinary customer request is a “heroic” act
Promoting employees noted for their heroic acts and dedication to outstanding service
Motivating salespeople with a commission-based compensation system that enables Nordstrom’s best salespeople to earn more than double what other stores pay
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Example: Cultural Traits at Nordstrom
Corporate culture is strongly influenced by its dedication to its core values and the bar it sets for ethical behavior.
Accounts for why so many firms have developed a formal values statement and a code of ethics
At some firms stated values/ethics are cosmetic, existing mainly to impress outsiders and help create a positive image.
Stated core values and ethical principles have two culture-building roles:
Fostering a work climate where personnel share common and strongly held convictions about how the firm’s business is to be conducted
Providing personnel with guidance about the manner in which they are to do their jobs
Cultures Are Often Grounded in Core Values and Ethics
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Strategic Insight
A company’s values statement and code of ethics communicate expectations of how all company personnel should conduct themselves in the workplace.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
FIGURE 12.1 The Two Culture-Building Roles of a Company’s Core Values and Ethical Standards
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Access text alternative for slide image.
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Screening and selecting new employees that will mesh well with the culture.
Incorporating discussions of the firm’s culture and desired cultural behaviors into employee orientation programs and training courses for managers and employees.
Having senior managers frequently reiterate core values, ethical standards, and the desired cultural behaviors in daily conversations, at company events, and internal communications to employees.
Stressing that line-managers all the way down to first-level supervisors give ongoing attention to explaining the desired cultural traits and behaviors in their areas and why they are important.
Expecting managers at all levels to be cultural role models and exhibit the advocated cultural norms in their own behavior.
Encouraging company personnel to exert strong peer pressure on coworkers to conform to expected cultural norms.
Making the display of cultural norms a factor in evaluating each person’s job performance, granting compensation increases, and deciding who to promote.
Holding periodic ceremonies to honor people who excel in exhibiting and role modeling the desired cultural behaviors.
Ways That Companies Ingrain Cultural Norms and Perpetuate the Culture
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Cultures evolve because a variety of factors breed a new work climate and new ways of doing things:
Diversification into new businesses
Expansion into foreign countries
Rapid growth that brings an influx of new employees
Merger with or acquisition of another firm
A new CEO who opts to shake things up
A significant change in the company’s direction and/or a big strategy change and/or a sudden decline in sales/profits
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
The Forces That Cause a Company’s Culture to Evolve
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Why a Company’s Culture Evolves
Causes of Cultural Change
A new CEO that shakes things up.
Expansion into foreign countries
Diversification into new businesses
Eroding business prospects or big internal changes
Merger or acquisition of another firm
Rapid growth that causes an influx of new employees
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
It is not unusual for firm to have multiple cultures (or subcultures) with their own values, beliefs, and practices:
Departments
Geographic locations
Business units
Global and multinational firms tend to be multicultural because cross-country organization units have different operating histories and work climates, members who speak different languages, have grown up under different customs and traditions, and have different sets of values and beliefs
Subcultures can clash if:
They embrace conflicting business philosophies
Key executives use different approaches to people management
Differences between a firm’s culture and recently-acquired businesses have not been ironed out
Existence of subcultures does not preclude important areas of commonality and compatibility being established in different countries (or within a subculture)
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
The Presence of Company Subcultures
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Strong-Culture Firm
Has deeply rooted widely-shared values, behavioral norms, and operating approaches.
Insists that its values and principles be reflected in the decisions and actions taken by all company personnel.
Weak-Culture Firm
Lacks values and principles that are consistently preached or widely shared.
Has few or no widely-shared traditions, principles, beliefs, values, or behavioral norms.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Strong vs. Weak Cultures
Core Concept
In a strong-culture company, culturally approved behaviors and ways of doing things flourish, while culturally disapproved behaviors and work practices get squashed.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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The dominating presence of deeply-rooted values and operating approaches “regulate” conduct of a firm’s business and its workplace.
In strong culture firms, senior managers
Reiterate business principles and core values to organization members and explain how they relate to its business environment.
Make a conscious effort to display these principles in their own actions and behavior—they walk the talk
Insist that those values and business principles are reflected in the decisions and actions taken by all personnel
Over time, the strong values are widely shared by rank-and-file employees—people who dislike the culture tend to leave
Individuals encounter strong peer pressures from co-workers to observe culturally approved norms and behaviors
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Strong-Culture Companies
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A strong corporate culture has a powerful influence on strategy execution (“how we do things around here”) because:
Many personnel are accepting of cultural traditions
There are strong management expectations and co-worker peer pressure to conform to cultural norms
Managers use traditions, beliefs, values, common bonds, and behavioral norms as levers to mobilize commitment to executing the chosen strategy.
Caution: Strong cultures can create a HUGE OBSTACLE to good strategy execution if its behavioral norms conflict with the needed kinds of execution-supportive behaviors.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Strong-Culture Companies (continued)
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A Weak-Culture Firm
Lacks values and principles consistently preached or widely shared
Has few widely revered traditions and evidences few culture-induced norms in its operating practices
Top executives not committed to culture-building, no commitment to particular values and behavioral norms and/or efforts to paint white lines for actions, decisions, and behavior of company personnel
Has a working environment where its personnel feel little co-worker peer pressure to do the right things in particular ways
Breeds no strong allegiance to what the firm stands for or to operating the business in well-defined ways
Cultural weakness can result from entrenched subcultures that block the emergence of a well-defined work climate
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Weak-Culture Companies
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When a firm’s culture promotes attitudes, behaviors, and ways of doing things conducive to first-rate strategy execution, the culture
Functions as a valuable ally in the strategy execution process
Adds formidable power to management’s strategy execution efforts
Why so?
Execution-supportive cultural norms, actions, behaviors, and work practices make it easier for managers to win support for doing the things needed to execute strategy proficiently
Culture-induced peer pressures steer personnel into actions and behaviors that aid the cause of good strategy execution
Execution-supportive cultural influences rally personnel to implement needed internal changes by exerting their best efforts to attain execution-critical performance
Why Corporate Cultures Matter to the Strategy Execution Process
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Core Concept
A culture that encourages actions, behaviors, and work practices conducive to good strategy execution adds significantly to the power and effectiveness of a firm’s strategy execution effort.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Strategic Insight
In companies with execution-supportive cultural influences, managers can use the ingrained values, business principles, behavioral norms, and established ways of doing things as levers to mobilize the energy and actions of company personnel squarely behind the drive for good strategy execution.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
A culture that clashes with execution-supportive behaviors and work practices poses a dilemma for the firm’s personnel:
Should they be loyal to the culture and traditions of the firm and resist or be indifferent to behaviors and practices that promote better strategy execution?
Should they go along with the strategy execution effort and engage in actions and behaviors that run counter to the culture?
Why Corporate Cultures Matter to the Strategy Execution Process (continued)
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Strategic Insight
It is in management’s best interest to dedicate considerable effort to establishing a corporate culture that encourages behaviors and work practices conducive to good strategy execution and that marshals organizational energy behind the drive for good strategy execution.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Closely aligning culture with requirements for strategy execution merits the full attention of senior executives
Their culture-building objective is to create a work climate and style of operating that mobilizes their personnel squarely behind efforts to execute the firm’s strategy competently.
The more that execution-supportive ways are embedded in the culture, the more the culture automatically steers its members toward execution-supportive behaviors and work practices
Why Corporate Cultures Matter to the Strategy Execution Process (concluded)
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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Strategy execution in a weak culture firm poses big top management challenges because:
There are no ingrained traditions, values, peer pressures, or behavioral norms for managers to rely on in helping align the actions and behavior of employees with the requirements for good strategy execution.
Managers have no strong internal cultural support for their attempts to implement strategic change.
Managers are left with the options of urging employee support for needed changes and using compensation incentives and rules-driven directives to induce execution-supportive actions and behaviors.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Trying to Execute Strategy in a Weak-Culture Company
A strong, healthy culture embraces execution-supportive attitudes, behaviors, and work practices.
Two types of cultures that are healthy and supportive of good strategy execution are:
High-performance cultures
Adaptive cultures
Healthy Cultures That Aid Good Strategy Execution
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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The standout traits:
A “can-do” spirit of results-oriented work climate where people do more than is expected to meet or beat stretch objectives
Pride in doing things right
No-excuses accountability
A strong sense of involvement on the part of all personnel
An emphasis on individual initiative and creativity
ALL personnel display high-performance behaviors and a passion for making the firm successful
Such a culture—permeated by a spirit of achievement and constructive pressure to achieve good results—is a valuable contributor to strategy execution and operating excellence
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
High-Performance Cultures
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A willingness to accept change, introduce and execute new strategies, and adopt new work practices
Confidence that the firm can deal with new threats and opportunities
A proactive approach to identifying issues, evaluating implications and options, and quickly moving ahead with workable solutions
Receptiveness to risk taking, experimentation, and innovation
Supportive of managers and employees who advocate useful change
Seek out, support, and promote individuals who exercise initiative, spot opportunities, and display the skills to implement them.
Openly evaluate ideas and suggestions, fund initiatives to develop new or better products, and take prudent risks to pursue opportunities
Firms with adaptive cultures thrive on change— driving it, leading it, and capitalizing on it .
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
Traits of Adaptive Cultures
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Why is change willingly embraced in an adaptive culture as opposed to a condition where organization members are fearful of how change will affect them and thus change-resistant?
Answers lie in the traits of an adaptive culture:
Managers are careful to make sure that any changes in operating practices and behaviors do not compromise core values and long-standing business principles
Managers are careful to make sure that any changes they institute are consistent with the legitimate and best interests of all stakeholders—customers, employees, shareowners, suppliers, and the communities where the company operates
Changes are readily accepted so long as the changes are viewed as fair to all stakeholders and management exhibits a commitment to doing the right thing
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Change in Adaptive Cultures
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Strategic Insight
As a firm’s strategy evolves, both a high performance culture and an adaptive culture are valuable allies in the strategy-implementing, strategy-executing process, as compared to cultures that have to be coaxed and cajoled to change.
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Copyright © 2020 by Arthur A. Thompson and Glo-Bus Software, Inc.
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The distinctive characteristic of an unhealthy corporate culture is the presence of counterproductive cultural traits that adversely impact the work climate, company performance, and the success of strategy execution initiatives
Five particularly unhealthy cultural traits are:
Hostility to change
Heavily politicized decision-making
Insular, inwardly-focused thinking
Unethical and greed-driven behaviors
The presence of incompatible subcultures
Unhealthy Cultures That Impede Good Strategy Execution
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