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Chapter 2
Strategic Leadership
| Question | Answer |
|---|---|
| Strategy Formulation | Where and how to compete |
| Strategy Implementation | Execution of Strategy how the work gets done concerns the organization, coordination, and integration |
| How many areas are strategy formulation and implementation split into? | 3 Areas - Corporate --> where to compete - Business --> How to Compete - Functional --> how to implement business strategy |
| Corporate Strategy | Where to compete Industry, markets, and geography |
| Business Strategy | How to compete Cost leadership, differentiation, value innovation Split within Strategic Business Units (SBUs) of a single business |
| Strategic Business Units (SBU) | Standalone division of a larger conglomerate, each with their own profit and loss responsibility Each SBU has its own functional strategy |
| Functional Strategy | How to implement a business strategy Each SBU has business functions like accy, HR, finance, customer service with its own functional manager |
| Strategic Management Planning | Method put in place by strategic leaders to form and implement a strategy, which lays foundation for sustainable competitive advantage |
| 3 Common Approaches to Strategic Management Planning | - Strategic Planning - Scenic Planning - Strategy as Planned Emergence |
| Strategic Planning | Top-Down Approach Rational, data-driven strategy where top management tries to program future success Cons: Strategy formulation and implementation are separate Info ONLY flows in a straight, top to bottom line Illusion of Control |
| Scenic Planning | Top-down Top management envisions different what-if scenarios to anticipate plausible futures to derive strategic responses Creates multiple detailed, executable strategic plans --> go with dominant executable plan (most likely to happen) |
| Scenic Planning - AFI | AFI loop into each other A - Identify Mult. Scenarios F - Develop plans for scenarios --> Alt. Plans I - Execute Dominant Plan - (-) feedback/reality changes --> switch plan - (+) feedback --> stick to plan, fine tune |
| Scenic Planning - Black Swan Events | Incidents that describe highly improbable but high-impact events Ask for each scenario: What resources & capabilities needed to be successful? What strategic initiatives do we need respond? How to shape expected future environment? |
| Strategy as Planned Emergence | Combines Top-down & bottom up approach Less formal and stylized Takes into account bottom employee initiatives |
| Strategy as Planned Emergence - AFI | More like a free way w/ exits and entrances A - Execs analyze Ex/Internal environments --> Intended Strategy (like strategic) F - Additional Strategies --> Unrealized (black swan events) --> Bottom-Up Emergent I - Realized Strategy |
| Strategy as Planned Emergence - Bottom-Up Emergent Strategy | - Unplanned strategic initiative from non-top management parts of the organization --> autonomous actions --> serendipity --> Resource Allocation Process (RAP) ==> leads to strategic initiatives |
| Strategy as Planned Emergence - Strategic Initiatives | Any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures |
| Strategy as Planned Emergence - Realized Strategy | Combination of top-down strategic intentions and bottom-up emergent strategy |
| Strategy as Planned Emergence - Where to emergent strategies come from? | Autonomous actions SI made by lower-level employees for unexpected situations Serendipity Random events that have a big impact on a firm’s SI Resource-allocation process (RAP) Resource Allocation can be critical in shaping realized strategy |
| Strategy as Planned Emergence - Planned Emergence | Comes from strategic initiatives When a bottom-up emergent strategic initiative emerges, evaluated, approved, and coordinated by top-management |
| Cognitive Biases | Thinking obstacles to clear to systematic errors in decision making and interfere with our rational thinking |
| Types of Cognitive Biases | - Illusion of Control - Escalating Commitment - Confirmation Bias - Reason by Analogy - Representativeness - Groupthink |
| Cognitive Biases: Illusion of Control | Thinking you can control or predict the future Pitfall of strategic planning |
| Cognitive Biases: Escalating Commitment | Continuing to invest money, time, and resources into a project despite receiving negative feedback on the "outcome" |
| Cognitive Biases: Confirmation Bias | Looking for facts to support your belief or opinion |
| Cognitive Biases: Reason by Analogy | Assuming that if something worked in one place, it will work in another |
| Cognitive Biases: Representativeness | Assuming a strategy will work based off a small sample |
| Cognitive Biases: Groupthink | A team deferring to the leader's opinion without evaluating or challenging or considering alt. ideas |
| Two Methods to Improve Strategic Decision Making | - Devil's Advocacy Team 1 makes a plan, Team 2 pokes holes. Repeat until both teams can agree on a plan. Supervised by execs - Dialectic Inquiry Team 1 Thesis, Team 2 Antithesis Both present to execs Execs pick 1, 2, or combo |
Created by:
opon12
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