CHAPTER 13
Strategic Leadership and Knowledge
Management
The purpose of this chapter is to examine the leader’s role in developing strategy, the organization’s plan
for achieving its vision, mission, and goals. Strategic leadership is the process of providing the direction
and inspiration necessary to create, provide direction to, or sustain an organization. We also focus on the
leader’s contribution to a continuing thrust in strategy, knowledge management, and developing a
learning organization.
CHAPTER OUTLINE AND LECTURE NOTES
Strategic leadership deals primarily with leadership in the executive suite, yet leaders at all levels are
expected to think strategically. For example, they should see the “big picture,” understand the long-range
implications of their actions, and recognize how their daily activities support the firm’s strategy.
I. THE DEVELOPMENT OF BUSINESS STRATEGY
Elaborate methods of planning are often used to help develop business strategy. Yet in the opinion
A. The Importance of Strategic Thinking
An important purpose of strategic planning is to get managerial workers throughout the
organization thinking strategically and wondering about how the firm adapts to it its
B. Maintaining a Human and Emotional Aspect
As implied by the creative component to strategy, strategic leaders rely heavily on intuition as
C. Gathering Multiple Inputs to Formulate Strategy
Many strategic leaders arrive at their ideas for the organization’s future by consulting with a
Chapter 13: Strategic Leadership and
Knowledge Management
A caution here is that if staff members are sked what direction and organization should take,
the executive weakens his or her leadership.
D. Leadership Effectiveness and Strategy Implementation
Carefully crafting a strategy and vision is not sufficient for its effectiveness. The strategy and
vision must also be implemented or executed by the leader/manager. No strategy, however,
initiatives from time to time.
E. Conducting a SWOT Analysis
Strategic planning encompasses those activities that lead to the statement of goals and
objectives and the choice of strategy. Strategic planning often takes the form of a SWOT
analysis, a method of considering internal strengths and weaknesses, and external
opportunities and threats in a given situation. A SWOT analysis examines the interaction
between the organization, or organizational unit, and the environment.
1. Preparing for the Analysis. Be clear about what you are doing and why you are doing
2. Conducting the Analysis. The components of SWOT are as follows.
a. Identify internal strengths. Assess factors within the organization that will have a
positive impact on implementing the plan. What are your advantages and what do
you do well?
Chapter 13: Strategic Leadership and
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II. A SAMPLING OF BUSINESS STRATEGIES FORMULATED BY LEADERS
In addition to the process of making strategic decisions, the content of these decisions is important.
Business strategies are often classified according to their focus of impact: corporate level, business
level, or functional level. Twelve current strategies are described next.
1. Differentiation. A differentiation strategy attempts to offer a product or service that is
perceived by the customer as different from available alternatives.
4. High quality. Leaders continue to emphasize quality even if there is less explicit emphasis
today on formal quality programs. An important exception is the Six Sigma programs that
emphasize statistical approaches to attaining quality. How about Apple Inc. or the Swiss
Army knife for a quality strategy?
7. Growth through acquisition. A standard strategy for growth is for one company to purchase
others. However, acquisitions are often made to acquire an important technology. The
approximately 200 acquisitions by Google fit the parent company, Alphabet’s, vision of
changing the world though information technology.
8. High speed and first-mover. High-speed managers focus on speed in all of their business
activities, including production development, sales response, and customer service. Getting to
market first is also referred to as the first-mover strategy. Moving in after a product or service
11. Brand leadership. Succeeding through developing the reputation of your brand can be
considered a business strategy. Many Internet-based companies perceive brand leadership as
a key to their survival. According to Interbrand, the ten leading brands in order of strength are
(1) Apple, (2) Google, (3) Coca-Cola, (4) Microsoft, (5) Toyota, (6) IBM, (7) Samsung, (8)
Amazon, (9) Mercedes-Benz, and (10) General Electric.
Chapter 13: Strategic Leadership and
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12. Competitive advantage through hiring talented people. To build great companies the most
urgent business charge is to find and keep great people. Talented people may need some
leadership, but they will think of new products and services and develop effective work
processes.
III. KNOWLEDGE MANAGEMENT AND THE LEARNING ORGANIZATION
Another strategic thrust of leaders is to help their organizations better adapt to the environment by
assisting workers and the organization to become better learners. Knowledge management (KM)
A. Knowledge Sharing
Knowledge management in the form of knowledge sharing has surged in importance in recent
years because so many baby boomers are retiring, resulting in tribal knowledge leaving the
B. Knowledge Management
Managing knowledge is an important leadership role because so few organizations make
systematic use of the collective wisdom of employees. Most knowledge in the organization
resides in the brains of employees or in documents not readily accessible to others. Knowledge
management has three components. Knowledge creation is used to spur innovation. Knowledge
dissemination through information technology is the most frequent activity within knowledge
management. Knowledge application is the process of getting workers better at what they do.
1. General Format of KM Programs. Most knowledge management programs are
technology mediated, yet person-to-person exchange of information is still important.
2. Servant Leadership and the Creation of Knowledge. A key point of a recent theory
about knowledge creation is that servant leaders are effective in sharing leadership
Chapter 13: Strategic Leadership and
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willing to disclose information and put effort into processing information.
A. The Learning Organization
A learning organization can be viewed as a group of people working together to enhance their
capacities to create results they value. Researched based on 20,000 executives found that
strategic leaders are the focal point for organizational learning, including establishing a
culture of inquiry. To help create a learning organization, several firms have created a
position such as Chief Knowledge Officer. WD-40 is an extreme example of a learning
organization—which probably is a surprise to many people.
1. Transformational versus Transactional Leadership and Organizational Learning. A
2. Leadership Initiatives for Enhancing the Learning Organization. A supportive learning
environment is a start, including comfort about expressing disagreement. Concrete
III. GUIDELINES FOR ACTION AND SKILL DEVELOPMENT
Three recommended rules toward making strategy understandable are (1) make it simple, (2)
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COMMENTS ON EXPERIENTIAL EXERCISES
Leadership Self–Assessment Quiz 13–1: Are You a Strategic Thinker?
If taken with a spirit of self-objectivity, this questionnaire can help many students realize that a key area
Leadership Skill–Building Exercise 13–1: Mapping Out a Future for an
Organization
Mapping out a future for an organization relies heavily on concpetual thinking even though the
Leadership Skill–Building Exercise 13–2: Conducteing a SWOT
Analysis
Leadership Skill-Building Exercise 13-3: The Business Strategy of a
Favored Company
The reason we include this new exercise is that the term business strategy or strategy is used so
Leadership Self–Assessment Quiz 13–2: My Attiudes Toward Sharing
Knowledge
Sharing knowledge is critical to the success of knowledge management, yet many people would
Leadership Skill–Building Exercise 13-4: My Leadership Portfolio
This portfolio exercise helps illustrate the idea that strategic thinking is possible even in
Leadership Skill–Building Exercise 13–5: Developing a Business
Strategy for an Appliance Repair Chain
This exercise provides an opportunity to practice one of the most useful aspects of
developing business strategy—creating ideas for the survival of an enterprise. The tactic so
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COMMENTS ON DISCUSSION QUESTIONS AND ACTIVITIES
1. Why might being very practical-minded interfere with being an outstanding strategic leader?
Developing a strategy for an organization requires some optimistic and wishful thinking, combined
2. How might being very strong with business analytics (such as analyzing reams of data and
preparing spread sheets) help a person develop business strategy?
Although effective business strategy is often based on hunches and intuition, it can also arise from a
careful analysis of data, such as scrutinizing data to find a marketplace niche. For example,
vehicles. Lower gasoline prices strengthened the trend toward purchasing large vehicles.
3. In what way can a business strategy motivate and inspire employees?
A business strategy can be motivational because the right strategy can be inspirational, particularly
4. How could you adapt a business strategy to guide you in your own career as a leader?
Several business strategies can be applied personally to guide a person’s leadership career. How
5. Many top-level managers say that they want lower-ranking managers to think strategically. How
can a middle manager or a first-level manager “think strategically”?
Middle managers can think strategically by looking at the long-range implications of their thinking,
that their daily activities support corporate strategy.
6. The Dollar Shave Club began as an online startup getting mostly free publicity on the social media.
Today this male grooming business is a serious competitor to major brands such as Gillette, and
was recently sold to Unilever for $1 billion. Use your imagination or do a little research to identify
the business strategy that propelled the Dollar Shave Club to success.
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7. Working alone or with several team members, provide a recent example of a company that is in big
trouble or went out of business because it lacked an effective strategy.
The most visible companies that went bankrupt or found themselves struggling to survive are in the
8. During the Great Recession, many consumers who had previously shopped at traditional
supermarkets shifted to doing basic shopping at dollar stores and discount department stores.
Furthermore, some of these shoppers remained loyal to the low-priced stores after the recession.
What are the strategy lessons here?
The consumer shift to low-priced supermarkets offers several important strategy lessons. One
9. In what way might doing a good job of knowledge management give a company a competitive
advantage?
A company that manages knowledge well would gain a competitive advantage through such means
10. Why do you think it has been so difficult for researchers to prove that knowledge management
really pays dividends to an organization?
A primary problem is that it is difficult to know when knowledge management has taken place.
Suppose company leadership mandates that people talk more freely with each other to share ideas,
PLAUSIBLE RESPONSES TO CASE QUESTIONS
Chapter 13: Strategic Leadership and
Knowledge Management
Leadership Case Problem A: The Saratoga Supply Company Needs a
Strategy
This case illustrates that strategic leadership, and it associated strategy, might be needed to help a
business firm survive.
1. How should Wes and his team go about developing a survival stratgegy for Saratoga Supply?
Wes and his team face a major challenge, and they must be far reaching in their quest to
2. Does Sarataoga Supply really need a survival strategy? Or should the company just begin to
downsize to fit the demand for its products and services?
Saratoga Supply Company really does need a survival strategy. If the company continues to
customer service, and then more layoffs.
3. From the limited evidence presented, how effectively do you think Wes is carrying out the role
of a strategic leader?
From the evidence presented, Wes is doing an incomplete job of being a strategic leader. He is
Associated Role Play
Leadership Case Problem B: The Product Differentiation Stratgegy
Team
This case deals with perhaps the most demanding aspect of strategy—identifying what does not
already exist. .
1. What approaches would you recommend that the product differentiation strategy team use to
identify new market space for the conglomerate?
A combination of brainwriting and brainstorming might be best with the goal of identifying a
2. How realistic is if for Kevin to delegate the tasks of finding a product differentiation strategy to
a group of middle managers? Explain your reasoning.
Chapter 13: Strategic Leadership and
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Delegating the product differentiation strategy to a group of middle managers would be
3. What do you think would be the effectiveness of using the Internet to develop a product–
differentiation strategy for the team? For example, why not go to Ask.com and enter the
question, “What would be a new market space with no competition?”
A thorough Internet search might provide more information on the nature of a product
Associated Role Play
We like this role play because it focuses on the principle of “Not leaving the room until you have