Ch12 Corporate Culture and Leadership: Keys To Good Strategy Execution

CH12 CORPORATE CULTURE AND LEADERSHIP: KEYS TO GOOD
STRATEGY EXECUTION
1. Be able to identify the key features of a companys corporate
culture and appreciate the role of a companys core values and
ethical standards in building corporate culture.
2. Gain an understanding of how and why a companys culture
can aid the drive for proficient strategy execution.
3. Learn the kinds of actions management can take to change a
problem corporate culture.
4. Understand what constitutes effective managerial leadership in
achieving superior strategy execution.
121
INSTILLING A CORPORATE CULTURE

CONDUCIVE TO GOOD STRATEGY
EXECUTION
Corporate Culture
Is the meshing of shared values, beliefs, business

principles, and traditions that imbues a firms
operating style, behavioral norms, ingrained attitudes,
and work atmosphere.
Is important because it influences the firms actions

and approaches to conducting business.
122
KEY FEATURES OF A FIRMS

CORPORATE CULTURE
Values, principles,
and ethical
standards
in actual use
Management
practices and
organizational
polices
Atmosphere and
spirit embodied
in the firms work
climate
How managers and

employees interact
and relate to one
another
Features of a Corporate Culture
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
123
FIGURE 12.1 The Two Culture-Building Roles of a Companys Core Values

and Ethical Standards
124
TRANSFORMING CORE VALUES AND ETHICAL

STANDARDS INTO CULTURAL NORMS
Recruit and hire applicants with values and

ethics compatible to those of the firm.
Incorporate the values statement and the code

of ethics into orientation and training programs.
Have senior executives frequently reiterate and

stress the firms values and ethical principles.
Use values statements and codes of ethics as

benchmarks for the firms polices and practices.
125
TRANSFORMING CORE VALUES AND ETHICAL

STANDARDS INTO CULTURAL NORMS (CONTD)
Use core values and ethical principles when

evaluating each persons job performance.
Encourage all employees to help enforce the

observance of core values and ethical
standards.
Periodically have ceremonial occasions to

recognize individuals and groups who display
the firms values and ethical principles.
Institute strict ethics enforcement procedures.

126
PERPETUATING THE CULTURE

Systematic
indoctrination of
new members
Screening and
selecting new
employees
Vocal support by
senior managers
Perpetuating
the Culture
Telling and
retelling of the
firms legends
Rewarding those
who display
cultural norms
Ceremonies
honoring
employees
127
FORCES THAT CAUSE A FIRMS

CULTURE TO EVOLVE
New or revolutionary
technologies
Diversification into
new businesses
New challenges in
the marketplace
Causes of
Cultural
Change
Shifting internal
conditions
Rapid growth
of the firm
Merger or acquisition
of another firm
128
COMPANY CULTURES CAN BE

STRONGLY OR WEAKLY EMBEDDED
Strong-Culture Firm
Weak-Culture Firm
Has deeply rooted

widely-shared values,
behavioral norms, and
operating approaches.
Lacks values and

principles that are
consistently preached
or widely shared.
Insists that its values

and principles be
reflected in the
decisions and actions
taken by all company
personnel.
Has few or no
traditions, beliefs,
values, common
bonds, or behavioral
norms.
129
DEVELOPMENT OF
A STRONG CULTURE
Founder or
strong leader
with strong
values
Strong
Culture
Commitment
by the firm to
ethical
behavior
Closely aligning corporate culture with the requirements

for proficient strategy execution merits the full attention
of senior executives.
1210
WHY CORPORATE CULTURES MATTER TO

THE STRATEGY EXECUTION PROCESS
A culture well matched to the requirements of the

strategy execution effort focuses the attention of
employees on what is most important to this effort.
Culture-induced peer pressure induces personnel to do

things in a manner that aids good strategy execution.
A culture consistent with the requirements for good

strategy execution can energize employees, deepen
their commitment to execute the strategy, and enhance
worker productivity.
1211
HEALTHY CULTURES THAT AID

GOOD STRATEGY EXECUTION
Performance
Good Strategy
Execution
High-Performance
Cultures
Adaptive
Cultures
Commitment to
achieving stretch
objectives and
accountability
Willingness to accept
change and take on
challenges
1212
UNHEALTHY CULTURES THAT IMPEDE

GOOD STRATEGY EXECUTION
Incompatible
Subcultures
Change-resistant
cultures
Politicized
cultures
Unhealthy
Cultures
Insular, inwardly
focused cultures
Unethical and greeddriven cultures
Poor Strategy
Execution
Poor Performance
1213
CHANGING A PROBLEM CULTURE:

THE ROLE OF LEADERSHIP
A strong, out of sync, or unhealthy culture

must be changed in order to execute strategy
successfully.
Competent leadership at the top is necessary

for culture-change efforts to succeed.
1214
FIGURE 12.2
Changing a Problem Culture
1215
MAKING A COMPELLING CASE

FOR CULTURE CHANGE
Selling the Change
Explain why and how certain behavioral norms and

work practices are obstacles to good execution of
strategic initiatives.
Explain how new behaviors and work practices will be

produce better results.
Cite reasons why the current strategy has to be

modified, if the need for cultural change is due to a
change in strategy.
1216
SUBSTANTIVE CULTURE-CHANGING
ACTIONS
Replace key executives who are stonewalling needed

organizational and cultural changes.
Promote individuals who advocate for cultural shifts and

can serve as a role model for the cultural behavior.
Appoint outsiders with the desired cultural attributes to

high-profile positions.
Screening candidates for positions carefully, hiring only

those who appear to fit in with the new culture.
Mandate that all personnel attend culture-training.
Design compensation incentives that boost the pay of

teams and individuals.
1217
SYMBOLIC CULTURE-CHANGING
ACTIONS
Changing the culture
of an organization
Top executive
and upper
management
behaviors
Ceremonial
events to honor
exemplary
employees
Physical symbols
that represent
the new culture
1218
HOW LONG DOES IT TAKE TO CHANGE

A PROBLEM CULTURE?
Changing a problem culture is never a short-term

exercise.
A sustained and persistent effort to reinforce the culture

at every opportunity through word and deed is required.
It takes time for a new culture to emerge and prevail; it

takes even longer for it to become deeply embedded.
Fixing a problem culture and instilling a new set of

attitudes and behaviors can take two to five years.
1219
LEADING THE STRATEGY EXECUTION

PROCESS
Leading Strategy Execution Requires:
Staying on top of what is happening and closely

monitoring progress.
Putting constructive pressure on the organization

to execute the strategy well and achieve operating
excellence.
Initiating corrective actions to improve strategy

execution and achieve the targeted performance
results.
1220
STAYING ON TOP OF HOW

THINGS ARE GOING
Management by Walking Around (MBWA)
Is used by leaders to stay informed about how well

the strategy execution process is progressing.
Involves spending time with people at company

facilities, asking questions, listening to their opinions
and concerns, and gathering firsthand information
about how well aspects of the strategy execution
process are going.
1221
MOBILIZING THE EFFORT FOR

EXCELLENCE IN STRATEGY EXECUTION
Treat employees as valued partners.
Foster an esprit de corps that

energizes members.
Use empowerment to create a fully

engaged workforce.
Make champions out of the people

who spearhead new ideas and/or
turn in winning performances.
1222
MOBILIZING THE EFFORT FOR

EXCELLENCE IN STRATEGY EXECUTION
(CONTD)
Set stretch objectives that require personnel to

give their best in achieving performance targets.
Use benchmarking, reengineering, TQM, and

Six Sigma to focus attention on continuous
improvement.
Use motivational techniques and compensation

incentives to inspire, nurture a results-oriented
work climate, and enforce high standards.
Celebrate individual, group, company successes.

1223
LEADING THE PROCESS OF

MAKING CORRECTIVE
ADJUSTMENTS
Making corrective actions
successfully requires:
A thorough
analysis of the
situation
Good business
judgment in
deciding what
actions to take
Good
implementation
of the corrective
actions
1224
A FINAL WORD ON LEADING

THE PROCESS OF CRAFTING
AND EXECUTING STRATEGY
It is difficult to separate leading the process of executing

strategy from leading the strategy process.
Crafting, implementing, and executing strategy is a

continuous process that requires much adjusting and
fine-tuning of the strategy to fit changing circumstances.
The tests of strategic leadership are whether the firm

has a good strategy and business model, whether its
strategy is competently executed, and whether the firm is
achieving its performance targets.
If these three conditions exist, then the firm has good

strategic leadership and is a well-managed enterprise.
1225

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CH12 CORPORATE CULTURE AND LEADERSHIP: KEYS TO GOOD

INSTILLING A CORPORATE CULTURE

Is the meshing of shared values, beliefs, business

Is important because it influences the firms actions

KEY FEATURES OF A FIRMS

How managers and

Features of a Corporate Culture

How the firm

FIGURE 12.1 The Two Culture-Building Roles of a Companys Core Values

TRANSFORMING CORE VALUES AND ETHICAL

Recruit and hire applicants with values and

Incorporate the values statement and the code

Have senior executives frequently reiterate and

Use values statements and codes of ethics as

TRANSFORMING CORE VALUES AND ETHICAL

Use core values and ethical principles when

Encourage all employees to help enforce the

Periodically have ceremonial occasions to

Institute strict ethics enforcement procedures.

PERPETUATING THE CULTURE

FORCES THAT CAUSE A FIRMS

COMPANY CULTURES CAN BE

Has deeply rooted

Lacks values and

Insists that its values

Closely aligning corporate culture with the requirements

WHY CORPORATE CULTURES MATTER TO

A culture well matched to the requirements of the

Culture-induced peer pressure induces personnel to do

A culture consistent with the requirements for good

HEALTHY CULTURES THAT AID

UNHEALTHY CULTURES THAT IMPEDE

CHANGING A PROBLEM CULTURE:

A strong, out of sync, or unhealthy culture

Competent leadership at the top is necessary

Changing a Problem Culture

MAKING A COMPELLING CASE

Selling the Change

Explain why and how certain behavioral norms and

Explain how new behaviors and work practices will be

Cite reasons why the current strategy has to be

Replace key executives who are stonewalling needed

Promote individuals who advocate for cultural shifts and

Appoint outsiders with the desired cultural attributes to

Screening candidates for positions carefully, hiring only

Mandate that all personnel attend culture-training.

Design compensation incentives that boost the pay of

HOW LONG DOES IT TAKE TO CHANGE

Changing a problem culture is never a short-term

A sustained and persistent effort to reinforce the culture

It takes time for a new culture to emerge and prevail; it

Fixing a problem culture and instilling a new set of

LEADING THE STRATEGY EXECUTION

Leading Strategy Execution Requires:

Staying on top of what is happening and closely

Putting constructive pressure on the organization

Initiating corrective actions to improve strategy

STAYING ON TOP OF HOW