Strategic Leadership is broad in scope because it can encompass many facets of business and being a leader. For example strategic leadership can involve aligning with or partnering with companies or people to accomplish a certain end. It could represent leaders being vigilant about their business to understand the direction the business is going in the short-term and/or long-term. Understanding the direction of the market to remain competitive or to create a new product to be specialized in a specific area can be classified as strategic leadership.
According to Ulrich Wassmer, managing alliances are critical to strategic leadership for companies to understand because aligning with the right company can add synergy to your business. Creating a synergistic alignment can bring new knowledge to the organization, new resources and market penetration. That alignment can be with an existing vendor or company that you are doing business with or it can be external collaboration. However, companies have to be careful of external alignments when internal alignments may offer the benefit the external organization may offer. A company that is already involved with your company may be turned-off by you doing business with outside company, therefore leading to the existing company terminating the relationship, which could lead to huge financial loss, knowledge loss, and market penetration loss as in the case with Hangzhou Wahaha Group Co. Ltd and Danone both are bottling companies with market penetration in China.
Danone formed partnerships with competing bottling companies and Wahaha found that to be counterproductive. Consequently, Wahaha sued Danone and ended their partnership that eventually cost Danone almost $3 billion-about 10% of Danone worldwide sales. A more favorable case is a partnership between GM and Toyota. Toyota was interested in learning about General Motors distribution in the United States and how to work with union labor; General Motors wanted to learn about Toyota lean manufacturing process. It was a strategic alignment that stemmed from leaders recognizing a mutual benefit to each organization.
For effective strategic leadership, leaders and organizations are more effective when they scan their environment for opportunities, strengths, rumors, weaknesses and knowledge of their competition and the market place and with customers. George Day recommends a structural process to gather intelligence and then act on that intelligence. Companies that act on the intelligence can be creative and create products or services. They can discontinue out dated processes and upgrade processes. General Electric CEO Jeff Immelt considers his organization to be vigilant about the organization and market place. Coca Cola is another organization that has been considered as been strategic in the way they conduct business. Nevertheless, the best companies can experience lapses in strategic leadership and when that happens the CEO does not last or the company falls behind the competition. Microsoft is an example of a company falling behind the competition. As Google was coming on the scene with its search engine, Bill Gates, CEO of Microsoft noticed Google was searching to hire software engineers with the same profile as Microsoft software engineers. Gates mentioned it to his team but his team did not follow up on the information and as result Google’s search engine is dominant in the market.
“Organizations need to consciously design and develop their strategy in a way that ensures the integration of the three key strategic positions –product/markets, knowledge and innovation. Success and competitive advantage also depend on the organizations’ ability to not only align these positions initially but also to realign them as market externalities dictate. This will require constant monitoring of the competitive landscape and altering their current alignment in light of changes in their environment”. (McDonough III, 2008)
Day, G., & Schoemaker, P.. (2008). Are You a ‘Vigilant Leader’? MIT Sloan Management Review, 49(3), 43-51. Retrieved May 20, 2011, from ABI/INFORM Global. (Document ID: 1458948611).
McDonough, E., Zack, M., Lin, H., & Berdrow, I.. (2008). Integrating Innovation Style and Knowledge Into Strategy. MIT Sloan Management Review, 50(1), 53-58. Retrieved May 20, 2011, from ABI/INFORM Global. (Document ID: 1570723501).
Wassmer, U., Dussauge, P., & Planellas, M.. (2010). How to Manage Alliances Better Than One at a Time. MIT Sloan Management Review, 51(3), 77-84. Retrieved May 20, 2011, from ABI/INFORM Global. (Document ID: 2008977441).