26 Part 1: Strategic Management Inputs
leaders are chosen on the basis of their capabilities (their accumulation of human cap-
ital and skills over time). Effective top management teams (those with better human
capital, management skills, and cognitive abilities) make better strategic decisions.^132
In addition, strategic leaders must have a strong strategic orientation while simultane-
ously embracing change in the dynamic competitive landscape we have discussed.^133 In
order to deal with this change effectively, strategic leaders must be innovative think-
ers and promote innovation in their organization.^134 Promoting innovation is facil-
itated by a diverse top management team representing different types of expertise
and leveraging relationships with external parties.^135 Strategic leaders can best lever-
age partnerships with external parties and organizations when their organizations are
ambidextrous, both innovative and good at execution.^136 In addition, strategic leaders
need to have a global mind-set, or sometimes referred to as an ambicultural approach
to management.^137
Strategic leaders, regardless of their location in the organization, often work
long hours, and their work is filled with ambiguous decision situations. However,
the opportunities afforded by this work are appealing and offer exciting chances to
dream and to act. The following words, given as advice to the late Time Warner chair
and co-CEO Steven J. Ross by his father, describe the opportunities in a strategic
leader’s work:
There are three categories of people—the person who goes into the office, puts his feet up on
his desk, and dreams for 12 hours; the person who arrives at 5 a.m. and works for 16 hours,
never once stopping to dream; and the person who puts his feet up, dreams for one hour, then
does something about those dreams.^138
The operational term used for a dream that challenges and energizes a company is
vision. The most effective strategic leaders provide a vision as the foundation for the
firm’s mission and subsequent choice and use of one or more strategies.^1391-7 The Strategic Management Process
As suggested by Figure 1.1, the strategic management process is a rational approach
firms use to achieve strategic competitiveness and earn above-average returns.
Figure 1.1 also features the topics we examine in this book to present the strategic
management process.
This book is divided into three parts aligned with the A-S-P process explained in the
beginning of the chapter. In Part 1, we describe the analyses (A) necessary for developing
strategies. Specifically, we explain what firms do to analyze their external environment
(Chapter 2) and internal organization (Chapter 3). These analyses are completed to iden-
tify marketplace opportunities and threats in the external environment (Chapter 2) and to
decide how to use the resources, capabilities, core competencies, and competitive advan-
tages in the firm’s internal organization to pursue opportunities and overcome threats
(Chapter 3). The analyses explained in Chapters 2 and 3 are the well-known SWOT anal-
yses (strengths, weaknesses, opportunities, threats).^140 Firms use knowledge about its
external environment and internal organization, then formulates its strategy taking into
account its vision and mission.
The firm’s analyses (see Figure 1.1) provide the foundation for choosing one or
more strategies (S) and deciding which one(s) to implement. As suggested in Figure 1.1
by the horizontal arrow linking the two types of strategic actions, formulation and
implementation must be simultaneously integrated for a successful strategic manage-
ment process. Integration occurs as decision makers review implementation issues