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2. The Triple Bottom Line: Incorporating Financial as well as Environmental
and Social Costs
Next, we state that many companies are measuring what they call the “triple bottom line.”
Such a technique involves an assessment of environmental, social, and financial performance.
Discussion Question 15: Do you know of organizations that may have, in effect, used the
“triple bottom line” approach to assess environmental, social, and financial
performance?
It is important to stress that when considering the “triple bottom line,” there are not
always tradeoffs. At times, firms can attain symbiosis—that is increase their effectiveness in
We close the section with a brief discussion of SRI (Socially Responsible Investing). SRI
The SUPPLEMENT below provides some figures on the favorable views of
Extra Example: Favorable Views on Environmental Sustainability
Data (obtained from research by American Express, Davos, Deloitte, Maritz Research and Price Waterhouse
Coopers) shows how positively CEOs and the general public view environmental sustainability:
87 percent of Fortune 1000 CEOs believe sustainability is important to a company’s profits.
73 percent of CEOs believe sustainability results in costs savings.
90 percent of the U.S. population says it is important for companies to be mindful of their impact on the
environment and society.
46 percent of consumers say they would shop at a retailer more if it was environmentally friendly.
consumers say they would pay more for environmentally friendly services, products, or
brands.
Source: Kubala, D. Apparel Technology & Business Insight—From Concept to Consumer (unpublished manuscript).
IV. The Strategic Management Perspective: An Imperative throughout
the Organization
There is an emerging need for empowerment and a strategic management perspective
throughout organizations. This is primarily due to today’s increasingly complex, interconnected,
To develop and mobilize people and other organizational assets, leaders are required
The SUPPLEMENT below provides and interesting and colorful perspective on the need
Extra Example: Avoid the heroes and drones imagery in organizations!
Sally Helgesen, author of The Web of Inclusion: A new Architecture for Building Great Organizations,
expresses the need for leaders throughout the organization. She asserts that many organizations “fall prey to the
heroes-and-drones syndrome, exalting the value of those in powerful positions while implicitly demeaning the
contributions of those who fail to achieve top rank. Culture and processes in which leaders emerge at all levels, both
up and down as well as across the organization, typify today’s high performing firms.
Source: Helgesen, S. 1996. Leading from the grassroots. In Hesselbein, F. Goldsmith, M. & Beckhard, R. (Eds.) The
leader of the future: 19-24, San Francisco: Jossey-Bass.
We provide examples of empowerment at both the Virgin Group that is well known for its
Discussion Question 16: With regard to Whirlpool’s initiatives, what do you think would
be some of the key challenges in bringing about change?
We close this section with STRATEGY SPOTLIGHT 1.4 that further reinforces the
benefits of broad involvement throughout the organization in the strategic management process.
The SUPPLEMENT below emphasizes the importance of empowering people throughout
Extra Example: The Value of Bringing in Middle Level Managers for Planning Sessions
Doug Schukar was very excited when his residential mortgage bank in St. Louis, USA Mortgage, increased the loans
it funded from $113 million in January 2009 to $1.2 billion by the end of the year. While other lenders struggled, he
boosted his sales efforts. However, by failing to keep key middle managers informed of growth plans such as
acquisitions, he let them get blindsided by the huge volume of work that came from the company’s rapid expansion.
Result: Almost all resigned, and he had to hire replacements. Today, he includes middle managers in annual and
quarterly planning sessions.
Source: Harnish, V. 2011. Five ways to get your strategy right. Fortune. April 11: 42.
V. Ensuring Coherence in Strategic Direction
Successful organizations express priorities through stated goals and objectives that form a
hierarchy of goals that include its vision, mission, and strategic objectives. What visions lack in
EXHIBIT 1.6 depicts the hierarchy of goals and its relationship to two attributes: general
versus specific and time horizon.
A. Organizational Vision
An organizational vision has been described as a goal that is “massively inspiring,
We review a study of 1,500 senior leaders that points out the importance of “a strong
We state the visions of five organizations—Disney, Medtronic, Wells Fargo, McDonald’s,
and Zynga. We also assert that a vision statement often contains a slogan, diagram, or picture—
The SUPPLEMENT below (going back in history nearly one hundred years) provides an
Extra Example: David Sarnoff’s Visionary Leadership
In 1906, a young Russian immigrant found work as an office boy at Marconi Wireless Telegraph Company. He
clawed his way up to Chief Inspector at the age of 22. And, ever watchful for ways to advance his career, he decided
to attend a demonstration of a new kind of circuit—one that could generate continuous electromagnetic waves. The
young man returned to work, convinced he had seen the future. Memos flew. He described how music could be
broadcast to hundreds of thousands of homes at once, and from a single transmitter. Every family in America would
buy a “radio box.” And Marconi would manufacture and sell every one. He wondered why executives couldn’t see
that there would be millions of dollars to be made. The company’s more senior managers thought he had lost his
mind. After all, they were in the telegraph business.
Years later, Marconi Wireless became RCA, the Radio Corporation of America. And former office boy David
Sarnoff became its president. As for those fellows he worked with, history lost track of them.
Source: Provided by CSX Intermodal (undated). We acknowledge their contribution.
Discussion Question 17: Would executives in companies with which you are familiar
been more receptive to such initiatives by lower-ranking executives? Why? Why not?
We close the section with a brief discussion of some of the reasons that visions fail:
The Walk Doesn’t Match the Talk
Irrelevance
Not the Holy Grail
The SUPPLEMENT below is another example of a well-known firm—Komatsu—which
faltered when it missed opportunities because it placed too much focus on its vision.
Extra Example How Komatsu “Encircled” Caterpillar
Faced with the challenge of rival Caterpillar’s entry into Komatsu’s protected home market, Ryoichi Kawai, then
CEO of Komatsu, focused the whole company on beating Caterpillar. “Maru-C” became the rally cry, which meant
“Encircle Caterpillar.” And, to make the enemy visible and omnipresent, Kawai purchased the largest Caterpillar
bulldozer available and placed it on the roof of Komatsu headquarters. The story is well-known of how Kawai
leveraged his aggression against Caterpillar into a highly disciplined and effective process of building up Komatsu’s
strengths and market position. (In fact, it became the most-used Harvard case study.)
However, there was a lesser-known downside. The two decades of focusing on a “life-and-death battle” with
Caterpillar prevented Komatsu from identifying new opportunities in related areas of business and from pursuing
genuine breakthrough innovations in its core earthmoving-equipment business. Eventually, Tetsuya Katada took
over and formally abolished the “Maru-C” slogan and removed all the symbols Kawai had built to represent the
Caterpillar battle. The result was successful expansion into related areas, such as robotics, and several fundamentally
different and highly innovative products, such as earthmoving equipment for undersea operations.
Source: Bruch, H. & Ghoshal, S. 2004. A bias for action. Boston: Harvard Business School.
Discussion Question 18: What are some effective (or ineffective) organization visions
with which you are familiar? Why are they successful (or unsuccessful)? (We have found
B. Mission Statements
A company’s mission statement differs from its vision in that it encompasses both the
Teaching Tip: Many students may have a very “cynical” perspective about mission
statements. They may view them as empty platitudes or public relations statements. And,
they may have been in organizations where managers did not “walk the talk.” You might,
EXHIBIT 1.7 contains the Vision Statement and Mission Statement of WellPoint Health
Network, a $62 billion managed health care organization. This exhibit helps to distinguish
Effective mission statements incorporate the concept of stakeholder management, and
suggest that organizations must respond to multiple constituencies if they are to survive and
We provide the mission statements of Federal Express and Brinker International (whose
Few mission statements identify profit or any financial indicator as the sole purpose of
At times, mission statements can, and should, change when competitive positions
dramatically change or when the firm is faced with new threats and opportunities. STRATEGY
Discussion Question 19: Can you think of other organizations that have successfully (or
unsuccessfully) changed their mission? What can explain their success (or lack thereof)?
The SUPPLEMENT below points out how Haier Group, a large Chinese appliance
Extra Example: The Mission of Haier Group’s CEO: Getting Closer to Customers
Zhang Ruimin, CEO of the Haier Group, realized that having a sole focus on generating huge profits today could not
ensure his company’s survival tomorrow. He chooses to focus on quality instead. He did so by following insights
from Peter Drucker’s management book, whose words Zhang took to heart: “There is only one valid definition of
business purpose: to create a customer.”
This insight prompted Haier Group to explore opportunities to create customers in the era of cyberspace and the
Internet. The result was an Internet and telephone marketing network and a physical logistics and services network
that allows Haier to excel in determining customers’ needs, rapidly delivering products, and after-sales services in
both rural and urban areas all over China. Another step Zhang has taken is to invert Haier’s organizational pyramid.
He truly believes that only people on the front lines can have a deep understanding of customer’s needs. Therefore,
employees who directly face customers should be at the top, and senior executives should support them so that they
can deliver on their commitments to customers. Zhang eloquently expresses his philosophy by drawing on Peter
Drucker: “All decisions I make must be consistent with the ever-changing external environment. If they aren’t, the
consequences may not emerge right away, but once danger shows up, it will be too late; like the Titanic, my
company will have no time to change course.”
Source: Zhang, R. 2009. What I learned from Peter Drucker: Distance has been eliminated. www.hbr.org. November:
np.
Discussion Question 20: Can you think of other measures to eliminate the distance
between a company and its customers?
Discussion Question 21: Can inverting the organizational pyramid really work? What
would companies gain by doing so? What would they lose?
C. Strategic Objectives
Strategic objectives are used to operationalize the mission statement. That is, they help to
EXHIBIT 1.8 lists several strategic objectives divided into financial and nonfinancial
objectives. While most of these objectives are directed toward generating greater profits and
For objectives to be meaningful, they must satisfy several criteria. They must be:
Measurable
Specific
Objectives that satisfy such criteria provide many benefits to the organization. These
include: (1) channel employees throughout the organization toward common goals, (2) motivate
There are, of course, other objectives that are even more specific that are often referred to
as short-term objectives. These are essential components of “action plans” that are vital in the
Organizations must ensure consistency throughout the organization when it implements
Extra Example: How Textron Implements its Strategic Objectives
At Textron, each business unit identifies “improvement priorities” that it must act upon to realize the performance
outlined in the firm’s overall strategic plan. Each improvement priority is translated into action items with clearly
defined accountabilities, timetables, and key performance indicators (KPIs) that enable executives to tell how a unit
is delivering on a priority. Improvement priorities and action items cascade to every level at the firm—lowest levels
in each of the firm’s 10 business units. Says Lewis Campbell, Textron’s CEO: “Everyone needs to know: ‘If I have
only one hour to work, here’s what I’m going to focus on.’ Our goal deployment process makes each individual’s
accountabilities and priorities clear.”
Source: Mankins, M. M. & Steele, R. 2005. Turning great strategy into great performance. Harvard Business
Review, 83(5): 66–73.
IVI. Issue for Debate
This is an issue that should generate a lot of student interest—given the importance of
values in the formulation and implementation of strategies. The issue should evoke some spirited
To begin the discussion, you might consider asking two students to take a side (i.e., cross
or not cross the picket line) on the debate. This helps, in effect, to polarize the class. Have the
At this point, introduce the concept of dialectical inquiry, which we discuss in Chapter
13. Here, identify what might be considered the “thesis” (cross the picket line and provide the
grocers with your product) and “antithesis” (don't cross the picket line and “honor” your
SEVEN GENERATION’S SOLUTION: You will probably get some creative ideas and,
perhaps, even something close to Seventh Generation’s creative resolution to the apparent
dilemma: A group called the “Values and Operating Principles Committee” (VOPS) was formed
The broader learning point to reiterate with this “debate” is for students to strive to avoid
the “tyranny of the ‘go’/‘no go’” and instead seek more creative solutions. Dialectical inquiry is
a useful means to this end—this decision-making process helps to address how various
QUESTIONS:
1. How important should Seventh Generation’s values be considered when deciding what
to do?
Students may have a variety of perspectives on this issue—often reflecting how important they
feel that non-economic factors should be in making important decisions. You might point out that
2. How can Seventh Generation solve this dilemma?
This, of course, is addressed above in the “Summary.” It will be most interesting to see what
VII. Reflecting on Career Implications
Below, we provide some suggestions on how you can lead the discussion on the career
implications for the material in Chapter 1.
Attributes of Strategic Management: The attributes of strategic management described
in this chapter are applicable to your personal careers as well. What are your overall goals
and objectives? Who are the stakeholders you have to consider in making your career
decisions (family, community, etc.)? What tradeoffs do you see between your long-term
and short-term goals?
Students should be aware of the context of their jobs and future careers. Ask students to describe
their jobs, and they are likely to list the tasks they complete each day. Now ask them why their
jobs are successful for them, and do not accept the salary as an answer. They should be trying to
Intended versus Emergent Strategies: While you may have planned your career
trajectory carefully, don’t be too tied to it. Strive to take advantage of new opportunities
as they arise. Many promising career opportunities may “emerge” that were not part of
your intended career strategy or your specific job assignment. Take initiative by pursuing
It may be useful to ask students how they chose their major. Was this major the same one they
initially considered after high school? Some students will probably have changed their major at
some point. You may get some stories about how hard their original choice was, or that there
An alternative and supplemental approach may be to share your own career path, or the choice of
The point with these discussions is to get students to expect or even plan for unexpected job
changes during their careers. They should be exploring activities to learn what they like and what
they are good at.
Ambidexterity: In Strategy Spotlight 1.1, we discussed the four most important traits of
ambidextrous individuals. These include looking for opportunities beyond the description
Ask students to list examples of how they have exhibited these traits in their employment
histories. Then ask them to share these with a classmate, a think-pair-share type of activity. The
sharing with a classmate may spark a discussion of various ways that each student could pursue
