384
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s the Opening Case suggests, strategic leaders’ work is demanding, challenging, and
requires balancing short-term performance outcomes with long-term performance
goals. Regardless of how long (or short) they remain in their positions, strategic leaders
(and most prominently CEOs) affect a firm’s performance.^1 Obviously, Steve Jobs was
well known as a highly successful CEO who led Apple to achieve very high performance.
There were questions about whether anyone could follow him as CEO and be successful.
Those questions dogged Tim Cook, who became Apple’s CEO after Jobs passed away. Yet,
three and a half years into his tenure as CEO, Apple had an incredibly successful year and
became the first company to achieve a market value of $700 billion.
A major message in this chapter is that effective strategic leadership is the founda-
tion for successfully using the strategic management process. As implied in Figure 1.1
in Chapter 1 and through the Analysis-Strategy-Performance model, strategic leaders
guide the firm in ways that result in forming a vision and mission. Often, this guidance
involves leaders creating goals that stretch everyone in the organization as a foundation
for enhancing firm performance. A positive outcome of stretch goals is their ability to
provoke breakthrough thinking—thinking that often leads to innovation.^2 Additionally,
strategic leaders work with others to verify that the analysis and strategy parts of the
A-S-P model are completed effectively in order to increase the likelihood the firm will
achieve strategic competitiveness and earn above-average returns. We show how effective
strategic leadership makes all of this possible in Figure 12.1.^3
To begin this chapter, we define strategic leadership and discuss its importance and
the possibility of strategic leaders as a source of competitive advantage for a firm. These
introductory comments include a brief consideration of different styles strategic leaders
may use. We then examine the role of top-level managers and top management teams and
their effects on innovation, strategic change, and firm performance. Following this dis-
cussion is an analysis of managerial succession, particularly in the context of the internal
and external managerial labor markets from which strategic leaders are selected. Closing
the chapter are descriptions of five key leadership actions that contribute to effective stra-
tegic leadership: determining strategic direction, effectively managing the firm’s resource
portfolio, sustaining an effective organizational culture, emphasizing ethical practices,
and establishing balanced organizational controls.12-1 Strategic Leadership and Style
Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower
others to create strategic change as necessary. Strategic change is change brought about
as a result of selecting and implementing a firm’s strategies. Multifunctional in nature,
strategic leadership involves managing through others, managing an entire organization
rather than a functional subunit, and coping with change that continues to increase in
the global economy. Because of the global economy’s complexity, strategic leaders must
learn how to effectively influence human behavior, often in uncertain environments.^4Strategic change is change
brought about as a result of
selecting and implementing a
firm’s strategies.
Strategic leadership is the
ability to anticipate, envision,
maintain flexibility, and
empower others to create
strategic change as necessary.