STRATEGIC LEADERSHIP
Written on 15.04 by Dimas Sugeng Rachmadi
STRATEGIC LEADERSHIP
(REF : Strategic Management ,Competitiveness & Globalization , by Michael A.Hitt, R.Duane Ireland , Robert E Hoskisson. 1995)
Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.
Effective strategic leadership is a prerequisite to successfully using the strategic management process. Strategic leadership entails the ability to anticipate events, envision possibilities, maintain flexibility, and empower others to create strategic change.
Effective strategic leadership has five major components :
1. Determining the firm’s strategic direction
2. Effectively managing the firm’s resource portfolio ( including exploiting and maintaining core competencies and managing human capital and social capital )
3. Sustaining an effective organizational culture
4. Emphasizing ethical practices
5. Establishing balanced organizational controls
Strategic leaders must develop the firm’s startegic direction. The strategic direction specifies the image and character the firm wants to develop over time. To form the strategic direction, strategic leaders evaluate the conditions (e.g., opportunities and threats in the external environment ) they expect their firm to face over the next three to five years.
Strategic leaders must ensure that their firm exploits its core competencies, which are used to produce and deliver products that create value for customers, when implementing its strategies. In related diversified and large firms in particular, core competencies are exploited by sharing them across units and products.
Top-level managers are an important resource for firms to develop and exploit competitive advantages. In addition, when they and their work are valuable, rare, imperfectly imitable, and nonsubstituable, strategic leaders can themselves be a source of competitive advantage.
The top management team’s characteristics, a firm’s strategies, and its performance are all interrelated. For example, a top management team with significant marketing and R&D knowledge positively contributes to the firm’s use of growth strategies. Overall, having diverse skills increases most top management teams effectiveness.
In managerial succesion, strategic leaders are selected from either the internal or the external managerial labor market. Because of the effect on performance, selection of strategic leaders has implications for a firm’s effectiveness. Companies use a variety of reasons for looking either internally or externally when choosing the firm’s strategic leaders. In most instances, the internal market is used to select the CEO; but the number of outsiders chosen is increasing. Outsiders often are selected to initiate changes.
The balanced scorecard is a framework firms can use to verify that they have established both strategic and financial controls to assess their performance.
Developing and using balanced organizational controls is the final component of effective strategic leadership. The balanced scorecard is a tool that measures the effectiveness of the firm’s strategic and financial controls. An effective balance between strategic and financial controls allows for flexible use of core competencies, but within the parameters of the firm’s financial position.
