CHAPTER 13
Creating Vision and Strategic Direction
Chapter Outline
The Leader’s Job: Looking Forward
Leadership Vision
Mission
The Leader as Strategist-in-Chief
In the Lead
John Riccitiello, Electronic Arts
Ari Weinzweig and Paul Saginaw, Zingerman’s Community of Businesses
TeamBank, Volksbanken Raiffeisenbanken Group
Marissa Mayer, Yahoo
Leader’s Self-Insight
Leader’s Bookshelf
Ten Steps Ahead: What Separates Successful Business Visionaries from the Rest of Us
Leadership at Work
Future Thinking
Leadership Development: Cases for Analysis
Summary and Interpretation
Leaders establish organizational direction through vision and strategy. They are responsible for
studying the organization’s environment, considering how it may be different in the future, and
setting a direction everyone can believe in. The shared vision is an attractive, ideal future for the
organization that is credible yet not readily attainable. Leaders make a real difference for their
organization when they link vision to strategic action, so that vision is more than just a dream.
Your Leadership Challenge
After reading this chapter, you should be able to:
• Explain the relationship among vision, mission, strategy, and mechanisms for execution.
• Create your personal leadership vision.
Key Terms
Strategic Leadership: the ability to anticipate and envision the future, maintain flexibility, think
strategically, and initiate changes that will create a competitive advantage for the organization in
the future.
Vision: an attractive, ideal future that is credible yet not readily attainable.
Self-reference: a principle stating that each element in a system will serve the goals of the whole
system when the elements are imprinted with an understanding of the whole.
environment so as to achieve organizational goals.
Strategy: the general plan of action that describes resource allocation and other activities for
dealing with the environment and helping the organization attain its goals.
Core competence: something the organization does extremely well in comparison to
competitors.
Synergy: the interaction of organizational parts to produce a joint effect that is greater than the
sum of the parts.
Introduction
Nick Saban took on one of the most high-profile coaching jobs in college sports. Paul “Bear”
Bryant, who led the University of Alabama football team to six national championships, is still a
hero in Alabama. Even after he left as coach in the early 1980s, the Crimson Tide remained at
the top of the Southeastern Conference (SEC) and was for decades a team to be feared. Then
things went wrong. By the time Saban took over as head coach in 2007, the team had suffered
through several losing seasons, including some humiliating defeats, and sank to the middle of the
Annotated Lecture/Outline
Leadership Challenge #1: Explain the relationship among vision, mission, strategy, and
mechanisms for execution.
I. The Leader’s Job: Looking Forward
Superior organizational performance is not a matter of luck. It is determined largely by the
choices leaders make. Top leaders are responsible for knowing the organization’s environment,
considering what it might be like in 5 to 10 years, and setting a direction for the future that
everyone can believe in.
A. Stimulating Vision and Action
New Leader Action Memo: As a leader, you can combine vision with action. You can make a
difference for your team or organization by both having big dreams and transforming them into
significant strategic action.
Hopes and dreams for the future are what keep people moving forward. Leaders not only tap
into dreams for the future; to make a real difference, they link those dreams with strategic
Consider This: Opening a Window to a Brighter World
A blind man was brought to the hospital. He was both depressed and seriously ill. He shared a
room with another man, and one day asked, “What is going on outside?” The man in the other
bed explained in some detail about the sunshine, the gusty winds, and the people walking along
the sidewalk. The next day, the blind man again asked, “Please tell me what is going on outside
Exhibit 13.1: Linking Strategic Vision and Strategic Action
Exhibit 13.1 illustrates four possibilities of leadership in providing direction. Four types of
leaders are described based on their attention to vision and attention to action:
• The person who is low both on providing vision and stimulating action is uninvolved.
• The leader who is all action and little vision is a doer.
B. Strategic Leadership
Strategic leadership means the ability to anticipate and envision the future, maintain
flexibility, think strategically, and work with others to initiate changes that will create a
competitive advantage for the organization in the future. In a fast-changing world, leaders are
faced with a bewildering array of complex and ambiguous information, and no two leaders
will see things the same way or make the same choices.
New Leader Action Memo: As a leader, you can learn to think strategically. You can anticipate
The complexity of the environment and the uncertainty of the future can overwhelm a leader.
In addition, many leaders are inundated with information and overwhelmed by minutiae. No
organization can thrive for the long term without a clear viewpoint and framework for the
future.
Exhibit 13.2: The Domain of Strategic Leadership
Exhibit 13.2 illustrates the levels that make up the domain of strategic leadership. Strategic
leadership is responsible for the relationship of the external environment to choices about
vision, mission, strategy, and their execution. At the top of Exhibit 13.2 is a clear, compelling
vision of where the organization wants to be in 5 to 10 years. A vision is an aspiration for the
Strategic leadership doesn’t come naturally, but leaders can develop the necessary skills for
thinking strategically and navigating uncertainty:
• Anticipate threats and opportunities. Effective leaders are continuously scanning the
environment, so they don’t miss important signs of change that could help or hurt the
organization.
To improve strategic leadership, leaders can identify weak points in these skills and work
toward correcting them.
In the Lead: John Riccitiello, Electronic Arts
Several years ago, John Riccitiello saw that EA was in trouble. Social networks and mobile
phones were threatening the traditional video game business, and people in the company were
scared. Riccitiello had a realization that as a leader “you need to paint a picture that everyone can
buy into, even though you’re not sure yourself it’s going to work because you’re trying to see the
other side of a technology transition.”
the direction and know that leaders will pull back and make adjustments when they learn
something isn’t working. Riccitiello successfully steered EA through a major transformation
from console games to the world of mobile phones and tablets by aligning everyone in the same
Firm strategic leadership is essential for organizations to be effective.
Leadership Challenge #2: Create your personal leadership vision.
II. Leadership Vision
A vision is an attractive, ideal future that is credible yet not readily attainable. It is an ambitious
view of the future that everyone involved can believe in, one that can realistically be achieved,
yet one that offers a better future that is better in important ways than what now exists.
Exhibit 13.3: Examples of Brief Vision Statements
Exhibit 13.3 lists a few more brief vision statements that let people know where the organization
wants to go in the future. Not all successful organizations have short, easily communicated
slogans, but their visions are powerful because leaders paint a compelling picture of where the
Exhibit 13.4: The Nature of Vision
In Exhibit 13.4, vision is shown as a guiding star, drawing everyone along the same path toward
the future. Vision is based in the current reality but is concerned with a future that is
substantially different that the status quo.
A. What Vision Does
Vision works in a number of important ways. An effective vision provides a link between
today and tomorrow, serves to energize employees and focus their attention, provides
meaning for people’s work, and sets a standard of excellence and integrity in the organization.
New Leader Action Memo: Go to Leader’s Self-Insight 13.1 and answer the questions to learn
where you stand with respect to a personal vision.
Vision Links the Present to the Future
A vision is always about the future, but it begins with the here and now. Employees create
services that meet current needs, but they also strive to envision and create products and
Discussion Question #1: A management consultant said that strategic leaders are concerned
with vision and mission, while strategic managers are concerned with strategy. Do you agree?
Discuss.
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Discussion Question #6: Many visions are written and hung on a wall. Do you thing this type of
vision has value? What would be required to imprint the vision within each person?
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Vision Energizes People and Focuses Attention
People often leave their energy and enthusiasm at home when they go to work because
Vision Gives Meaning to Work
Vision needs to transcend the bottom line to provide employees with a sense of meaning
and purpose. People are generally not willing to make emotional commitments just for the
sake of increasing profits, but they are often eager to commit to something truly
worthwhile, something that makes life better for others or improves their communities.
People want to find significance and dignity in their work. Even employees performing
Discussion Question #2: A vision can apply to an individual, a family, a college course, a
career, or decorating your apartment. Think of something you care about for which you want the
future to be different from the present and write a vision statement for it.
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Vision Establishes a Standard of Excellence and Integrity
Vision provides a measure by which employees can gauge their contributions to the
organization. Most workers welcome the chance to see how their work fits into the whole.
Vision clarifies an image of the future and lets people see how they can contribute. A
vision presents a challenge—asking people to go where they haven’t gone before.
New Leader Action Memo: As a leader, you can articulate an optimistic vision for the future
Good visions clarify and connect to the core values and ideals of the organization
and thus set a standard of integrity for employees. A good vision brings out the best in
people by illuminating important values, speaking to people’s hearts, and letting them be
part of something bigger than themselves.
Leadership Challenge #3: Use the common themes of powerful visions in your life and work.
B. Common Themes of Vision
Four themes are common to powerful, effective visions: they have broad, widely shared
appeal; they help organizations deal with change; they reflect high ideals; and they define
both the organization’s destination and the basic rules to get there.
Vision Has Broad Appeal
Although it may seem obvious that a vision can only be achieved only through people,
many visions fail to adequately involve employees. The vision cannot be the property of
the leader alone. It “grabs people in the gut” and motivates them to work toward a common
end.
Discussion Question #3: If you worked for a company like Amazon or Google that has a
strong vision for the future, how would that affect you compared to working for a company
that did not have a vision?
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Vision Deals with Change
Effective visions help the organization achieve bold change. Change can be frightening,
but a clear sense of direction helps people face the difficulties and uncertainties involved in
the change process. When employees have a clear and consistent guiding vision, everyday
Vision Reflects High Ideals
Good visions are idealistic. Visions that portray an uplifting future have the power to
inspire and energize people. For example, when John F. Kennedy announced a vision for
NASA to send a man to the moon by the end of the 1960s, NASA had only a small amount
of the knowledge it would need to accomplish the feat. Yet in July 1969, the vision became
a reality.
Vision Defines the Destination and the Journey
A good vision for the future includes specific outcomes that the organization wants to
Discussion Question #4: Do you agree with the principle of self-reference? In other words, do
you believe if people know where the organization is trying to go, they will make decisions that
support the desired organizational outcome?
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Discussion Question #5: What does it mean to say that the vision can include a description of
both the journey and the destination?
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C. Leader Steps to Creating a Vision
In innovative companies, leaders cocreate the vision with followers so that everyone is
intimately involved in building the desired future. With cocreation, everyone can identify with
the vision and have a deeper understanding and commitment to achieving it.
New Leader Action Memo: As a leader, you can cocreate a shared vision so that every
individual, team, and department is moving in the same direction. You can help people see the
values, activities, and objectives that will attain the vision.
To cocreate a vision, leaders share their personal visions with others and encourage others to
express their dreams for the future. A leader’s ultimate responsibility is to be in touch with the
hopes and dreams that drive employees and find the common ground that binds personal
dreams into a shared vision for the organization. Leaders use the following steps to cocreate a
vision:
hopes. They may use focus groups or other mechanisms to get people talking about the
future and what they want it to be.
• Identify strengths. Create a vision that builds on and extends the current strengths of the
In the Lead: Ari Weinzweig and Paul Saginaw, Zingerman’s Community of Businesses
Ari Weinzweig and Paul Saginaw started a small delicatessen in Ann Arbor, Michigan, because
they wanted to serve the best sandwiches in the world. The deli was a rousing success, but after a
decade or so, the two noticed a problem. Business was still strong, but the deli no longer offered
challenges and opportunities for growth to employees. When one manager with an MBA decided
to start her own bakery to supply breads and pastries for the deli, Weinzweig and Saginaw had an
idea—why not tap into the dreams of employees and start a whole community of small
businesses, each with the Zingerman’s name but each having its own identity? Thus was born
Zingerman’s Community of Businesses, with each business unique, each with managing partners
III. Mission
Mission is not the same thing as a company’s vision, although the two work together. The
mission is the organization’s core broad purpose and reason for existence. It defines the
company’s core values and reason for being, and it provides a basis for creating the vision.
A. What Mission Does
Whereas visions grow and change, the mission persists in the face of changing technologies,
economic conditions, or other environmental shifts. It serves as the glue that holds the
organization together in times of change and guides strategic choices and decisions about the
future.
Exhibit 13.5: The Power of a Strong Mission
Exhibit 13.5 compares the Gallup results for those who agree that the mission makes their job
important to those who do not feel that the mission of the company makes their job important.
The mission is made up of two critical parts:
• Core values—guide the organization “no matter what.
Exhibit 13.6: Aflac’s Mission and Values
Exhibit 13.6 shows the mission and values for Aflac, an insurance company that serves more
than 50 million people around the world. Aflac uses the slogan “We’ve got you under our
wing” to encapsulate the company’s commitment to be there for policyholders in their time of
need.
Discussion Question #7: Do you think most employees know what the mission of their company
is? Suggest some ways leaders can effectively communicate the mission to people both inside
and outside the organization.
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Leadership Challenge #4: Describe four basic approaches for framing a noble purpose that
followers can believe in.
B. A Framework for Noble Purpose
An effective mission statement doesn’t just describe products or services; it captures people’s
idealistic motivations for why the organization exists. Most successful companies have
New Leader Action Memo: As a leader, you can keep in mind what the organization stands for
in a broader sense—its core purpose and values—and create the vision around that central
mission.
Exhibit 13.7: A Leader’s Framework for Noble Purpose
Exhibit 13.7 describes four basic approaches leaders take in framing an organizational purpose
that can tap into people’s desire to contribute and feel that their work is worthwhile.
Discovery
Many people are inspired by the opportunity to find or create something new. Discovery
for its own sake can serve as a noble purpose.
Excellence
Altruism
Many nonprofit organizations are based on a noble purpose of altruism because they
emphasize serving others, but businesses can use this approach as well. The basis of action
for altruistic purpose is to increase personal happiness.
In the Lead: TeamBank, Volksbanken Raiffeisenbanken Group
The vision for TeamBank, “to be a responsible partner for fair consumer financing,” grows out
of its mission to serve the country as an honorable financial services company. Leaders at
TeamBank, a subsidiary of the German Volksbanken Raiffeisenbanken Group, rejected the
assumption that it is impossible for a bank to make money by being fair, and even generous, to
its customers.
They overhauled the consumer credit product, called easyCredit, to compete on the concept of
fairness rather than price. It offers a 30-day customer retraction period, eliminates the penalty on
partial repayments, and offers protection packages that allow for short repayment extensions.
There are no hidden fees, and terms can be adjusted to reflect unexpected changes in the
Heroism
Heroism means the company’s purpose is based on being strong, aggressive, and effective.
With this approach, the basis of action is people’s desire to achieve and to experience self-
efficacy. People want to feel capable of being effective and producing results.
Discussion Question #8: Do you think every organization needs a noble purpose in order to be
successful over the long term? Discuss. Name one company that seems to reflect each category
of noble purpose as defined in the chapter.
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Leadership Challenge #5: Understand how leaders formulate and implement strategy.
IV. The Leader as Strategist-in-Chief
For organizations to succeed, leaders have to translate vision, values, and purpose into action,
which is the role of leader as strategist-in-chief. Strategic management refers to the set of
decisions and actions used to formulate and implement specific strategies that will achieve a
A. How to Achieve the Vision
Strategy can be defined as the general plan of action that describes resource allocation and
other activities for dealing with the environment and helping the organization attain its goals
and achieve the vision. Leaders have to be clear on the organization’s purpose and vision
before they can adopt an effective strategy. Strategy involves making decisions every day
based on what the organization wants to do and be.
Developing Effective Strategy
To develop strategy, leaders actively listen to people both inside and outside the
organization, as well as examine trends and discontinuities in the environment that can be
used to gain an edge. Rather than reacting to environmental changes, strategic leaders
study the events that have already taken place and act based on their anticipation of what
New Leader Action Memo: As a leader, you can prepare for the future based on trends in the
environment today. Don’t be afraid to think radically. You can shift your strategies to fit
changing conditions.
Leaders should also use hard analysis to help set a course for the future. They strive to
develop industry foresight based on trends in technology, demographics, government
regulation, values, and lifestyles that will help them identify new competitive advantages.
For example, situation analysis includes a search for SWOT—strengths, weaknesses,
Sometimes leaders have to shift their strategy several times before they get it right. In
addition, strategy necessarily changes over time to fit shifting environmental conditions.
In the Lead: Marissa Mayer, Yahoo
Yahoo still commands one of the largest audiences on the Web, but the company has been a “has
been” for so long that no one would believe it. New CEO Marissa Mayer does, though, and she
thinks her new vision and strategy can jolt the company back to relevance and profitability.
Mark Zuckerberg coined the term “social graph” for Facebook, and Marissa Mayer believes
Yahoo can become just as successful by being the world’s “daily interest graph.” To achieve the
vision, Mayer’s strategy includes developing products that will help Yahoo “create a complete
profile of everything you love,” allowing for more personalized content for users and more
Elements of Strategy
To improve the chances of success, leaders develop strategies that focus on three qualities:
• Core competence—an organization’s core competence is something the organization
does extremely well in comparison to competitors. Leaders identify the
organization’s unique strengths—what makes their organization different from others
in the industry.
• Developing synergy—synergy occurs when organizational parts interact to produce
a joint effect that is greater than the sum of the parts acting alone. As a result the
Strategy formulation integrates knowledge of the environment, vision, and mission with
the company’s core competence in such a way as to attain synergy and create value for
customers. When these elements are brought together, the company has an excellent
chance to succeed in a competitive environment.
Leadership Challenge #6: Apply the elements of an effective strategy.
B. How to Execute
Strategy execution means that leaders use specific mechanisms, techniques, or tools for
directing organizational resources to accomplish strategic goals. Strategy execution,
sometimes called implementation, is the most important as well as the most difficult part of
strategic management, and leaders must carefully and consistently manage the execution
process to achieve results.
New Leader Action Memo: Strategic management is one of the most critical jobs of a leader,
but leaders may exhibit different strategy styles that can be effective. Leader’s Self-Insight 13.3
lets you determine your strengths based on two important ways leaders can bring creativity to
strategic management.
Leader Tools for Strategy Execution
To implement the strategy, leaders make sure they provide followers with line of sight to
the organization’s strategic objectives, which means followers understand the goals and
how their actions will contribute to achieving them. The following techniques can help
leaders effectively implement strategy:
• Create ongoing communication. Leaders must communicate about the strategy
continuously so that people throughout the organization can understand and
internalize it.
By following these guidelines, leaders can ensure smoother strategy execution. In addition,
a new strategy is implemented through organizational elements such as structural design,
pay or reward systems, budget allocations, and organizational rules, policies, or
procedures.
The Leader as Strategic Decision-Maker
Leaders make decisions every day—some large and some small—that support company
strategy.
Exhibit 13.8: Making Strategic Decisions
Exhibit 13.8 provides a simplified model for how leaders make strategic decisions. The
two dimensions considered are whether a particular choice will have a high or low strategic
impact on the business and whether execution of the decision will be easy or difficult. A
change that both produces a high strategic impact and is easy to execute would be a
leader’s first choice for putting strategy into action.
The final category shown in Exhibit 13.8 relates to changes that are both difficult to
execute and have low strategic impact. Effective leaders try to avoid making decisions that
fall within this category.
Discussion Question #9: Strategic vision and strategic action are both needed for a leader to be
effective. Which do you think you are better at doing? Why?
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Discussion Question #10: If vision is so important, why do analysts and commentators sometimes
criticize a new CEO’s emphasis on formulating a vision for a company that is struggling to
survive? Discuss.
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Discussion Questions
1. A management consultant said that strategic leaders are concerned with vision and
mission, while strategic managers are concerned with strategy. Do you agree? Discuss.
Leaders are concerned with vision, mission, and strategy. When leaders rely solely on
formal strategic planning, competitor analysis, or market research, they miss opportunities.
2. A vision can apply to an individual, a family, a college course, a career, or decorating
your apartment. Think of something you care about for which you want the future to be
different from the present and write a vision statement for it.
A vision statement lets people know where the organization wants to go in the future. A