Michael_A._Hitt,_R._Duane_Ireland,_Robert_E._Hosk

Chapter 12: Strategic Leadership 405

number of criteria that will allow it to have both a strategic and financial understanding
of its performance without becoming immersed in too many details.^139
Strategic leaders play an important role in determining a proper balance between
strategic and financial controls, whether they are in single-business firms or large diver-
sified firms. A proper balance between controls is important, in that “wealth creation
for organizations where strategic leadership is exercised is possible because these lead-
ers make appropriate investments for future viability (through strategic control), while
maintaining an appropriate level of financial stability in the present (through financial
control).”^140 In fact, most corporate restructuring is designed to refocus the firm on its
core businesses, thereby allowing top executives to reestablish strategic control of their
separate business units.^141
Successfully using strategic control frequently is integrated with appropriate auton-
omy for the various subunits so that they can gain a competitive advantage in their respec-
tive markets.^142 Strategic control can be used to promote the sharing of both tangible and
intangible resources among interdependent businesses within a firm’s portfolio. In addi-
tion, the autonomy provided allows the flexibility necessary to take advantage of specific
marketplace opportunities. As a result, strategic leadership promotes simultaneous use of
strategic control and autonomy.
As we have explained in this chapter, strategic leaders are critical to a firm’s ability
to successfully use all parts of the strategic management process, including strategic
entrepreneurship, which is the final topic included in the “strategy” part of this text’s
Analysis-Strategy-Performance model. We turn our attention to this topic in Chapter 13.

Figure 12.5 Strategic Controls and Financial Controls in a Balanced Scorecard Framework

• Cash flow


• Return on equity


• Return on assets


• Assessment of ability to anticipate customers’ needs


• Effectiveness of customer service practices


• Percentage of repeat business


• Quality of communications with customers


• Asset utilization improvements


• Improvements in employee morale


• Changes in turnover rates


• Improvements in innovation ability


• Number of new products compared to competitors


• Increases in employees’ skills

Learning

and

Growth

Internal

Business

Processes

Customer

Financial

Perspectives Criteria