McGraw-Hill/IrwinMcGraw-Hill/IrwinStrategic Management, 10/eStrategic Management, 10/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Leadership and Culture

Session 20Session 20

12-2

Learning Objectives1. Explain the relevance of vision and performance in

helping leaders clarify their strategic intent2. Define and illustrate the value of passion and

selection/development of new leaders as means to shape their organization’s culture

3. Define and explain what is meant by organizational culture, and how it is created, influenced, and changed

4. Explain two roles organizational leaders have in an organizational culture

5. Describe ways leaders influence organizational culture

12-3Strategic Leadership:Embracing Change

• The leadership challenge is to galvanize commitment among people within an organization as well as stakeholders outside the organization to embrace change and implement strategies intended to position the organization to succeed in a vastly different future

12-4

Clarifying Strategic Intent• Leaders help their company embrace change by

charting strategic intent—a clear sense of where they want to lead the company and what results they expect to achieve

• Leader’s vision—an articulation of a simple criterion or characterization of what the leader sees the company must become to establish and sustain global leadership

12-5

“I have vision and the rest of the west wears

bifocals”

Butch Cassidy circa 1870

12-6

“By the end of this decade I commit this nation to

putting a man on the moon”

John F. Kennedy 1961

12-7

“By the turn of the century there will be more computers than

televisions in the U.S.”

????

12-8Recruiting and Developing Talented Operational Leadership

• New leaders will each be global managers, change agents, strategists, motivators, strategic decision makers, innovators, and collaborators if the business is to survive and prosper

• Today’s need for fluid, learning organizations capable of rapid response, sharing, and cross-cultural synergy place incredible demands on young managers to bring important competencies to the organization

12-9

Organizational Culture• Organizational culture is the set of important

assumptions (often unstated) that members of an organization share in common

• Every organization has its own culture • Assumptions become shared assumptions through

internalization among an organization’s individual members

12-10

Characteristics Describing Culture

• Individual autonomy• Structure• Support• Identification• Performance reward• Conflict tolerance• Risk tolerance

12-11

Origins of Culture

• History

• Environment

• Staffing

• Socialization

12-12Culture and Competitive Advantage

Culture Must:

Generate Specific Value for the Firm

Be Rare

Not easily imitable

12-13

Shaping Organizational Culture• Passion, in a leadership sense, is a highly

motivated sense of commitment to what you do and want to do

• Leaders also use reward systems, symbols, and structure among other means to shape the organization’s culture

• Leaders look to managers they need to execute strategy as another source of leadership to accept risk and cope with the complexity that change brings about

12-14

Shaping Organizational Culture• Emphasize key themes or dominant values• Encourage dissemination of stories and legends about core

values• Institutionalize practices that systematically reinforce

desired beliefs and values• Adapt some very common themes in their own unique

ways• Manage organizational culture in a global organization:

– Social norms– Values and attitudes– Religion– Education

12-15

Primary Embedding Mechanisms

• What leaders pay attention to, measure and control• Leaders reactions to critical incidents/organzational crises• Mentoring - Deliberate role modeling, teaching, coaching• Criteria for the allocation of rewards and status• Criteria for recruitment, selection, promotion, retirement

and excommunication

12-16

Secondary Embedding Mechanisms

• Organizational design and structure• Organizational systems and procedures• Design of physical space, facades, buildings• Stories about the important events and people• Formal statements of organizational philosophy,

creeds, charters

12-17

McKinsey 7-S Framework

Shared Values (culture)

Strategy

Staff

Systems

Style

Structure

Skills(management) (leadership)

(management)

12-18

The Role of the Organizational Leader

• The leader is the standard bearer, the personification, the ongoing embodiment of the culture, or the new example of what it should become

• How the leader behaves and emphasizes those aspects of being a leader become what all the organization sees are “the important things to do and value.”

12-19

Ethics• Ethical standards are a person’s basis for

differentiating right from wrong • The culture of an organization, and particularly the

link between the leader and the culture’s very nature, is inextricably tied to the ethical standards of behavior, actions, decisions, and norms that leader personifies

12-20Manage the Strategy-Culture Relationship

• Link to mission

• Maximize synergy

• Manage around the culture

• Reformulate strategy or culture

12-21

Remember: Culture Eats Strategy for

Breakfast!

12-22

Culture, Structure, Leadership and Reward

Systems should be Strategy Based

12-23

celebrate, point out, document, ritualize, measure and reward

behaviors/skills/actions that achieve efficiency, innovation,

product quality or customer responsiveness.