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Chapter 5Chapter 5Chapter 5Chapter 5

Leadership andLeadership and

Strategic PlanningStrategic Planning

LeadershipLeadership

The ability to positively The ability to positively influence people and systems influence people and systems under one’s authority to have under one’s authority to have a meaningful impact and a meaningful impact and achieve important resultsachieve important results

Strategic PlanningStrategic Planning

The process of envisioning The process of envisioning an organization’s future and an organization’s future and developing the necessary developing the necessary goals, objectives, and action goals, objectives, and action plans to achieve that future.plans to achieve that future.

The Baldrige “Leadership The Baldrige “Leadership Triad”Triad”

Leadership

Strategic Planning

Customer andMarket Focus

Operations

Executive LeadershipExecutive Leadership

Defining and communicating business directionsDefining and communicating business directions Ensuring that goals and expectations are metEnsuring that goals and expectations are met Reviewing business performance and taking Reviewing business performance and taking

appropriate actionappropriate action Creating an enjoyable work environmentCreating an enjoyable work environment Soliciting input and feedback from customersSoliciting input and feedback from customers Ensuring that employees are effective Ensuring that employees are effective

contributorscontributors Motivating, inspiring, and energizing employeesMotivating, inspiring, and energizing employees Recognizing employee contributionsRecognizing employee contributions Providing honest feedbackProviding honest feedback

Key IdeaKey Idea

Effective leadership requires five core leadership skills: vision, empowerment, intuition, self-understanding, and value congruence.

Dale Crownover, President, Texas Nameplate Co.

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Leading Practices – Leading Practices – Leadership Leadership (1 of 2)(1 of 2)

Leading Practices – Leading Practices – Leadership Leadership (1 of 2)(1 of 2)

Create a customer-focused strategic Create a customer-focused strategic vision and clear quality valuesvision and clear quality values

Create and sustain leadership system Create and sustain leadership system and environment for empowerment, and environment for empowerment, innovation, and organizational learninginnovation, and organizational learning

Set high expectations and Set high expectations and demonstrate personal commitment demonstrate personal commitment and involvement in qualityand involvement in quality

Integrate quality values into daily Integrate quality values into daily leadership and management and leadership and management and communicate extensivelycommunicate extensively

Leading Practices – Leading Practices – Leadership Leadership (2 of 2)(2 of 2)

Review organizational performanceReview organizational performance Create an environment and Create an environment and

governance system that fosters governance system that fosters legal and ethical behaviorlegal and ethical behavior

Integrate public responsibilities and Integrate public responsibilities and community support into business community support into business practicespractices

Leadership TheoriesLeadership Theories

Trait approachTrait approach Behavioral approachBehavioral approach Contingency (situational) approachContingency (situational) approach Role approachRole approach Emerging theories: Emerging theories:

– Attributional theory Attributional theory – Transactional theory Transactional theory – Transformational leadership theoryTransformational leadership theory– Substitutes for leadership theorySubstitutes for leadership theory– Emotional intelligence theoryEmotional intelligence theory

Key IdeaKey Idea

Some of the newer theories, such as attributional, transactional, and emotional intelligence theories, enter the realm of human emotions to explain how good leaders seem to succeed, and where mediocre ones show mixed results or fail to accomplish their goals.

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Leadership SystemLeadership SystemLeadership SystemLeadership System

Leadership systemLeadership system – how decisions – how decisions are made, communicated, and are made, communicated, and carried out at all levels; mechanisms carried out at all levels; mechanisms for leadership development, self-for leadership development, self-examination, and improvementexamination, and improvement

Effectiveness of leadership system Effectiveness of leadership system depends in part on its organizational depends in part on its organizational structurestructure

Key IdeaKey Idea

An effective leadership system respects the capabilities and requirements of employees and other stakeholders, and sets high expectations for performance and performance improvements.

GovernanceGovernance

Governance – the system of management and controls exercised in the stewardship of an organization.– Approving strategic direction– Monitoring and evaluating CEO

performance– Succession planning– Financial auditing– Executive compensation– Disclosure– Shareholder reporting

Leadership and Social Leadership and Social Responsibilities Responsibilities

EthicsEthics Health, safety, and environmentHealth, safety, and environment Community supportCommunity support

Key IdeaKey Idea

Practicing good citizenship refers to leadership and support—within the limits of an organization’s resources—of publicly important purposes, including improving education, community health, environmental excellence, resource conservation, community service, and professional practices.

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Strategic PlanningStrategic PlanningStrategic PlanningStrategic Planning

Goals to be achievedGoals to be achieved Policies to guide or limit actionPolicies to guide or limit action Action sequences, or programs, that Action sequences, or programs, that

accomplish the goalsaccomplish the goals

““A strategy is a pattern or plan that integrates A strategy is a pattern or plan that integrates an organization’s major goals, policies, and an organization’s major goals, policies, and action sequences into a cohesive whole.”action sequences into a cohesive whole.”

FormalFormal strategy includes:strategy includes:

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Leading Practices - Leading Practices - Strategic PlanningStrategic PlanningLeading Practices - Leading Practices - Strategic PlanningStrategic Planning

Active participation of top management, Active participation of top management, employees, customers, suppliersemployees, customers, suppliers

Systematic planning systems for strategy Systematic planning systems for strategy development and deploymentdevelopment and deployment

Use of a variety of external and internal Use of a variety of external and internal datadata

Align short-term action plans with long-Align short-term action plans with long-term strategic objectives, communicate term strategic objectives, communicate them, and track progressthem, and track progress

Derive human resource plans from Derive human resource plans from strategic objectives and action plansstrategic objectives and action plans

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Strategic Planning ProcessStrategic Planning ProcessStrategic Planning ProcessStrategic Planning Process

Mission Vision Guiding Principles

Environmental assessment

Strategies

Strategic Objectives

Action Plans

Broad statements of direction

Capabilities and risks

Things to change or improve

Implementation

Reason for existence Future intent Attitudes and policies

MissionMission

Definition of products and services, Definition of products and services, markets, customer needs, and markets, customer needs, and distinctive competenciesdistinctive competencies

SolectronSolectron: “…to provide worldwide : “…to provide worldwide responsiveness to our customers by responsiveness to our customers by offering the highest quality, lowest offering the highest quality, lowest total cost, customized, integrated, total cost, customized, integrated, design, supply chain, and design, supply chain, and manufacturing solutions through long-manufacturing solutions through long-term partnerships based on integrity term partnerships based on integrity and ethical business practices.”and ethical business practices.”

VisionVision

Where the organization is headed and Where the organization is headed and what it intends to bewhat it intends to be– Brief and memorable - grab attentionBrief and memorable - grab attention– Inspiring and challenging - creates excitementInspiring and challenging - creates excitement– Descriptive of an ideal state - provides Descriptive of an ideal state - provides

guidanceguidance– Appealing to all stakeholders - employees can Appealing to all stakeholders - employees can

identify withidentify with SolectronSolectron: “Be the best and continuously : “Be the best and continuously

improve”improve”

Values (Guiding Values (Guiding Principles)Principles)

Define attitudes and policies for Define attitudes and policies for all employees, which are all employees, which are reinforced through conscious and reinforced through conscious and subconscious behavior at all subconscious behavior at all levels of the organization.levels of the organization.

PepsicoPepsico: integrity, honesty, : integrity, honesty, teamwork, accountability, teamwork, accountability, balancebalance

Environmental Environmental AssessmentAssessment

Customer and market requirements, Customer and market requirements, expectations, and opportunitiesexpectations, and opportunities

Technological and other innovationsTechnological and other innovations Organizational strengths and weaknessesOrganizational strengths and weaknesses Financial, societal, ethical, regulatory and Financial, societal, ethical, regulatory and

other potential risksother potential risks Changes in global or national economyChanges in global or national economy Factors unique to the organization, such Factors unique to the organization, such

as partner and supply chain needs as partner and supply chain needs

Key IdeaKey Idea

Strategies are broad statements that set the direction for the organization to take in realizing its mission and vision.

Strategic objectives are what an organization must change or improve to remain or become competitive.

Action plans are things that an organization must do to achieve its strategic objectives.

Strategy DeploymentStrategy Deployment

Developing detailed action plans, defining resource requirements and performance measures, and aligning work unit, supplier, or partner plans with overall strategic objectives.

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Policy Deployment Policy Deployment (Hoshin Kanri)(Hoshin Kanri)Policy Deployment Policy Deployment (Hoshin Kanri)(Hoshin Kanri)

Top management vision leading to Top management vision leading to long-term objectiveslong-term objectives

Deployment through annual Deployment through annual objectives and action plansobjectives and action plans

Negotiation for short-term objectives Negotiation for short-term objectives and resources (catchball)and resources (catchball)

Periodic reviewsPeriodic reviews

See Figure 5.6!See Figure 5.6!

Key IdeaKey Idea

Strategic objectives and action plans often require significant changes in human resource requirements, such as redesigning the work organization or jobs to increase employee empowerment and decision making, promoting greater labor/management cooperation, modifying compensation and recognition systems, or developing new education and training initiatives.

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The Seven Management The Seven Management and and Planning ToolsPlanning Tools

The Seven Management The Seven Management and and Planning ToolsPlanning Tools

Affinity diagramsAffinity diagrams Interrelationship digraphsInterrelationship digraphs Tree diagramsTree diagrams Matrix diagramsMatrix diagrams Matrix data analysisMatrix data analysis Process decision program chartsProcess decision program charts Arrow diagramsArrow diagrams

Leadership and Leadership and Organizational StructureOrganizational Structure

Basic types of organizational Basic types of organizational structuresstructures– Line organizationLine organization– Line and staff organizationLine and staff organization– Matrix organizationMatrix organization

Key IdeaKey Idea

As more and more companies accept the process view of organizations, they are structuring the quality organization around functional or cross-functional teams.

Leadership in the Baldrige Leadership in the Baldrige CriteriaCriteria

The LeadershipThe Leadership Category examines how an organization’s Category examines how an organization’s senior leaders address values, directions, and performance senior leaders address values, directions, and performance expectations, as well as a focus on customers and other expectations, as well as a focus on customers and other stakeholders, empowerment, innovation, and learning. Also stakeholders, empowerment, innovation, and learning. Also examined is the organization’s governance and how the examined is the organization’s governance and how the organization addresses its public and community organization addresses its public and community responsibilities.responsibilities.

1.1 Organizational Leadership1.1 Organizational Leadershipa. Senior Leadership Directiona. Senior Leadership Directionb. Organizational Governanceb. Organizational Governanceb. Organizational Performance Reviewb. Organizational Performance Review

1.2 Social Responsibility1.2 Social Responsibilitya. Responsibilities to the Publica. Responsibilities to the Publicb. Ethical Behaviorb. Ethical Behaviorc. Support of Key Communitiesc. Support of Key Communities

Strategic Planning in the Strategic Planning in the Baldrige CriteriaBaldrige Criteria

The Strategic PlanningThe Strategic Planning Category examines how an Category examines how an organization develops strategic objectives and action organization develops strategic objectives and action plans. Also examined are how chosen strategic plans. Also examined are how chosen strategic objectives and action plans are deployed and how objectives and action plans are deployed and how progress is measured.progress is measured.

2.1 Strategy Development2.1 Strategy Developmenta. Strategy Development Processa. Strategy Development Processb. Strategic Objectivesb. Strategic Objectives

2.2 Strategy Deployment2.2 Strategy Deploymenta. Action Plan Development and a. Action Plan Development and

DeploymentDeploymentb. Performance Projectionb. Performance Projection