Culture and Behaviorpg 96 - 138

Kevin Loebbaka8010 Strategic Behavior

Spring 2008

Strategic Work Culture Attributes

• Time Perspective• Domain of Alternatives• Inward vs. Outward Focus• Change Propensity• Discontinuity from Past Practice• Risk Propensity

Dominant Power Centers

• “Total Marketing Concept”Market / Operating Peaceful Coexistence

• Compromise Cultures

• Multi-Culture

Hypothesis 8.7: Duality of AspirationsIndividuals and groups typically have dual aspirations:Performance aspirations for results of strategic activity:Behavior aspirations for a certain type of strategic activity

• NASA's safety performance during the 1980s through the Columbia disaster in 2002 was mediocre and unacceptable, while the results its manned spaceflight program using reusable entry vehicles became a marvel of technology and science.

Hypothesis 8.8: Culture and Behavior Determined By AspirationsBehavior aspirations are the results of norms and values which determine the strategic culture of a group or individual.

• After the 1986 Challenger accident, NASA’s safety program was significantly improved. The organization drifted back in the years following toward a satisficing culture or one normally associates with “government work”. This groupthink centered on the lowest common denominator lowering the overall level of safety within the space shuttle program.

Hypothesis 8.9: Work Culture.Organizational units with distinctive work technologies have distinctive strategic cultures.

• Both the Columbia and Challenger accident were preceded by information held by the organization that could have potentially averted the accident. NASA engineers and contractors engineering groups had knowledge of the potential o-ring failures in freezing climates and the continual loss of foam off the main liquid fuel tank. These groups whose work supported the technology underlying the flight systems attempted to pass this critical information through the organization.

• This distributed safety accountability with no clear chain of safety authority as found by the investigating commission, prevented program administrators in understanding or processing the implications of this information.

Hypothesis 8.10: Multicultural ESO.The choice of strategic thrust of multicultural ESO's either reflects the aspirations of the dominant culture or is the result of a compromise among several strong cultures.

• NASA had undergone a transition since its inception from a culture dominated by its scientists and engineers to a culture driven by administrators and technocrats. The technocrats created a dominant culture that without them funding for NASA may not exist as the public's excitement for space travel waned. The resulting culture, a mix of the technocrats, scientists and engineers created the mediocrity of the safety systems at the time of the Columbia disaster.

Strategic Leadership

Participation in Strategic DecisionsFor Profit

Participation in Strategic DecisionsNot For Profit

Strategic Leadership Tasks

Strategic Leadership Tasks

Strategic Leadership Tasks

Hypothesis 9.1: Role of Strategic Leadership in Strategic Behavior.The Strategic behavior of an ESOs is determined by the competing forces of strategic leadership and political influence, both operating through the power structure. Strategic leadership influences an ESO to behave in organizationally rational manner. Political influence represents parochial interest of power.

• NASA's technocrats had significant responsibility in defining

the strategic behavior of the safety culture within NASA exhibiting weak strategic leadership.

Hypothesis 9.2: Responsibility for Strategic Leadership.While strategic leadership is the nominal responsibility of general management, in today's ESO's other groups increasingly exercised strategic leadership.

• After the commission's report, the engineering culture within NASA became significantly empowered within the new safety management system. This is an example of other groups within an ESO increasingly exercising strategic leadership.

Hypothesis 9.3: Political Influence by Strategic Leaders.Many general managers exercise weak strategic leadership. Many others use their office for exercise of political influence.

• The technocrats led the organization to behave irrationally as they possessed the political capital allowing them to continually rebuff the engineering culture’s concerns.

Hypothesis 9.4: Source of Legitimizing Leadership.The initiative for defining the raison d’etre and rules of the game for ESO's historically come and continues to come from power centers outside the ESO. Hypothesis 9.5: Importance of Legitimacy Leadership.In the future concern with legitimacy of the firm will become the central preoccupation of general management.

• President Bush renewed vision for discovering and subsequent charge for NASA to begin a new phase the space program re-exploring the moon and eventually reaching Mars (White House Press Release 2004).

• This vision is one NASA could not aspire to singularly without the support of the President, the Congress, and the public's approval of such a massive undertaking. As in private corporations, significant changes in strategy, must be optimally funded to achieve the intended result. President Bush provided NASA the legitimacy to begin formulating the strategy and funding new capability.

Hypothesis 9.6: Resumption of Corporate Leadership.A consequence of the present environmental turbulence is a progressive assumption of strategic decision leadership by top management.

• Ford announced in August 2003 the hiring of former Goldman Sachs investment banker Kenneth Leet to serve as strategic adviser to William “Bill” Clay Ford Jr. CEO. Increasing turbulence in the automotive industry triggered by higher gas prices has left Ford Motor Company with the cars that wouldn't sell and few new models in the design pipeline

• Ford Motor Co.'s board recognized Bill Jr.s lack of strategic vision and the importance of the strategic leadership when hiring Leet.

Hypothesis 9.7: Management Obsolescence.During transitions of environmental turbulence many general managers persist in strategic behavior, which has become organizationally irrational. Such managers are eventually replaced.

• Bill Ford clearly had not changed his strategic behavior or orientation of the company in response to the industry's changing environmental turbulence. Continuing the process to manufacture and selling high profit SUVs, and not forseeing a potential shift to smaller more fuel-efficient cars, Bill created the current situation of mounting losses.

• The family being a 40% shareholder prevented his replacement and sought a solution to bolster the strategic activity and vision of the company through the hiring of Leet. The hiring of Leet to supplement Bill Ford's capability is an example of Ansoff and Sullivan's hypothesis on management’s potential obsolescence Hypothesis 9.7.

Hypothesis 9.8: Style of Leadership.The style of strategic leadership, which is appropriate to an ESO success is determined by the environmental turbulence. In stable reactive environments entrepreneurial leadership can endanger the year ESOs survival. Hypothesis 9.9: Aggressiveness of Leadership.Aggressiveness and style of leadership are not necessarily correlated. There are aggressive stable leaders and weak entrepreneurial leaders.

• The transition between HP CEOs Fiorina and Hurd represent a dramatic change in the style and leadership expectations of HP's board. As personal computer competition with Gateway, e-machines, Dell, Compaq, and HP intensified in an almost commodity based industry , the printer market, HP's sole domain of the previous five years and source of substantial profit, was being eviscerated by Lexmark cannon and others.

• Fiorina had proposed a bold merger between Compaq and HP to reduce competition in the industry and gain a market share advantage. The resulting synergy did not return the cost savings projected before the merger forcing HP’s board to replace Fiorina with Mike Hurd to return HP to a more stable productivity based operating model focusing on execution excellence and cost management. Mike Hurd’s strong, effective, and aggressive leadership style supports is in contrast to Fiorina’s weak entrepreneurial leadership wich endangered HP’s survival.

Hypothesis 9.10: Multiple Behaviors and Strategic Leadership.Strategic leadership will increasingly require a combination of three archive field behaviors: statesman/politician, visionary, entrepreneur, charismatic doer.

• A key behavior required on the CEO directing M&A in China is that of the charismatic doer. Chinese companies and government officials require and need a personal level of contact and trust before engaging in any merger or acquisition. The three archetypal behaviors statesman politician, visionary entrepreneur, and charismatic doer are seen in Earl Ross of the Carlyle group of private equity group is leveraging the competitiveness of its worldwide machinery business with Xugong in China

Hypothesis 9.11: Strategic Leadership and Cultural Change.The greatest challenge the strategic leadership occurs in effecting a change in the culture of an ESO.

• Ray Ozzie's mandate at Microsoft is to change what is viewed both internally and externally as a successful culture and business model. Hired by Bill Gates to develop strategies required in the future to compete with Google and Yahoo, Ozzie must take Microsoft's creative force and mold it into a new vision supporting in future. This is no easy task within the greatest population of millionaires in the United States, who view their past successes as their path to the future. This form of strategic leadership and cultural change as the greatest challenge for CEOs in today's turbulence environment.

Hypothesis 9.12 Power Limits and Strategic Leadership.In the absence of a survival crisis, the magnitude of change which strategic leadership can introduce is limited by the power it possesses. When management attempts to exceed this limit, it's leadership is rejected by the ESO.(Ansoff & Sullivan, 1993, pp. 118)

Hypothesis 9.13: Rationality of Strategic Leadership.The rationality of the influence which leadership can impose on an ESO is limited by its power and strategic constraints imposed from the outside.(Ansoff & Sullivan, 1993, pp. 118) Hypothesis 9.14: Aggressiveness of Strategic Leadership.The aggressiveness of leadership is governed by the personal drive to the manager and extent to which the rewards of his role in meet his personal aspiration.(Ansoff & Sullivan, 1993, pp. 118)

• Fiorina’s short tenure as CEO of HP demonstrated the limits of power in strategic leadership. The merger with Compaq was question by both technologists in the media and HP's board supported by the two founding family groups. Fiorina pushed the merger through with use of the media demonstrating the aggressiveness of her strategic leadership.

• Almost ignoring the board’s wishes, Fiorina was spending the last of her political capital. HP's board ended her tenure creating a new direction for HP's strategy and finding new leadership.

Hypothesis 9.15: Model Behavior of Strategic Leaders.Strategic leaders will engage in political influence behavior in proportion to the following factors:

Their personal aggressiveness;The dysfunction between role rewards and personal ambitions:The power and security of their position.

• Fiorina mistook her personal aggressiveness and the dysfunction between rewards given to her role and her personal ambitions ultimately sacrificing the security of her position. Fiorina was driven partly by the image created in the media of her being one of the first and most powerful women CEOs to lead a major company.

Hypothesis 9.16: Trend To Multi-Management.In the future, the firm-wide stereotype of the company manager will be replaced by roles designed to fit the distinctive leadership requirements and distinctive personality profiles shown in figure 9.2.• NASA an independent government institution exhibits the

same strategic management complexity faced by many ESOs in today's highly turbulent environment. At one level bureaucrats manage the funding interface between NASA and the Congress, to which it is beheld for its funding. At this level, strategic leadership is very political and budgeting oriented.

• Flight operations management within NASA has almost the production level mentality.

• NASA engineers and scientists operate at the most turbulent edge of NASA's management spectrum. Incorporating new technology and systems in the quickly changing environment while weighing human risk against scientific reward.

Hypothesis 9.16: Trend To Multi-Management.In the future, the firm-wide stereotype of the company manager will be replaced by roles designed to fit the distinctive leadership requirements and distinctive personality profiles shown in figure 9.2.

Hypothesis 9.17: Organizational Myopia.During changes in environmental turbulence ESOs typically become myopic. (Ansoff & Sullivan, 1993, pp. 122) Hypothesis 9.18: Filtered Expectations The accuracy of an ESOs performance expectations is limited either by the forecasting or the perception filter, whichever is the narrower. Whenever filter excludes important environmental trends in problem ends, the performance expectations of the ESO will be inaccurate, regardless of the computation refinement of the forecasting methodology.(Ansoff & Sullivan, 1993, pp. 122)

• General Motors strategic and operating performance continues to decline. GM's distributed power structure has created multiple layers in the organization that filters information before reaching the strategic leadership level.

• Driven by production mentality, GM is producing the cars it wants to produce, not necessarily the cars America or the world wants to buy. Subsequently GM has also been unprepared to capitalize on the recent fuel efficiency oriented sales with its line of cars perceived as gas-guzzlers. Organizational myopia has prevented GM from appropriately directing strategy in tune with the industry's environmental turbulence.

Hypothesis 9.20: Logistic Competence and Strategic Thrust.The effectiveness of a particular logistic competence profile in supporting a strategic thrust depends on: The match of the profile to the thrust; The quality and the relevance of technology available in the ESO to the demands of the marketplace. Hypothesis 9.21: Organizational Capacity.The organizational capacity needed to support the strategic work of Aeneas to is proportional to: The level of the strategic thrust; The size of the strategic budget.• GM has diluted its strategic thrust within the automotive industry

attempting to distribute its auto making logistical competence across the electronics and aerospace industries. GM's aerospace and electronic divisions for a brief time fell under the leadership of the company's top lawyer and general counsel Executive Vice President Harry Pearce.

• After several more failed leadership transitions illustrating GM's inability to manage the business, GM sold its stake of Fuji Heavy Industries aerospace division to Toyota. GM's inability to apply auto making logistic expertise and manage the organization's capacity to the level of strategic thrust supports the antithesis of Ansoff and Sullivan's Hypothesis 9.20 and 9.21 on matching logistic competence and organizational capacity to the required strategic thrust and budget.

Hypothesis 9.22: Reversal of Chandler SequenceToday, a large percentage of ESOs continue to behave in the stable/reactive mode in which adjustment of strategic thrust follows the change in turbulence, and adjustment of capability follows the thrust. In the future, ESO's will increasingly eliminate the environment/thrust lag for strategic planning, and will also

• Frank Immelt is changing the environmental face of GE directing all its business units to reduce their emission of greenhouse gases. In the absence of a business case for this strategic initiative in 2006, GE is anticipating a future in which governments and the political will of people across the globe will require businesses to become greener. This change in organizational capacity is far in front of any strategic need to make GE green.

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