GROUP 1

Chapter 2: Leading
Strategically

 MEMBERS:

OCAMPO, NIKKA JOY LUPAC, SHANE JOULIENE AGAO, GEORGIA CANDA, SIDNEY ANN
 Leading Strategically
LEARNING OBJECTIVES
After reading this chapter, you should be able to understand
and articulate answers to the following questions:

1. What are vision, mission, and goals, and why are they
important to organizations?
2. How should executives analyze the performance of their
organizations?
3. In what ways can having a celebrity CEO and a strong
entrepreneurial orientation help or harm an organization?
- Yves Saint Laurent
Questions Are Brewing at Starbucks

Starbucks’s global empire includes this store in Seoul, South Korea.

 March 30, 2011, marked the fortieth anniversary of
Starbucks first store opening for business in Seattle,
Washington. From its humble beginnings, Starbucks
grew to become the largest coffeehouse company in the
world while stressing the importance of both financial
and social goals. As it created thousands of stores
across dozens of countries, the company navigated
many interesting periods. The last few years were a
particularly fascinating era.
 In early 2007, Starbucks appeared to be very successful, and its
stock was worth more than $35 per share. By 2008, however, the
economy was slowing, competition in the coffee business was
heating up, and Starbucks’s performance had become
disappointing. In a stunning reversal of fortune, the firm’s stock was
worth less than $10 per share by the end of the year. Anxious
stockholders wondered whether Starbucks’s decline would continue
or whether the once high-flying company would return to its
winning ways.
 Riding to the rescue was Howard Schultz, the charismatic and
visionary founder of Starbucks who had stepped down as chief
executive officer eight years earlier. Schultz again took the helm
and worked to turn the company around by emphasizing its
mission statement: “to inspire and nurture the human spirit—one
person, one cup and one neighborhood at a time.

”Our Starbucks mission statement. Retrieved from

http://www.starbucks.com/about-us/company-
information/mission-statement. Accessed March 31, 2011. About a
thousand underperforming stores were shut down permanently.
Thousands of other stores closed for a few hours so that baristas
could be retrained to make inspiring drinks. Food offerings were
revamped to ensure that coffee—not breakfast sandwiches—
were the primary aroma that tantalized customers within
Starbucks’s outlets.
By the time Starbucks’s fortieth anniversary arrived, Schultz had led his
company to regain excellence, and its stock price was back above $35
per share. In March 2011, Schultz summarized the situation by noting
that “over the last three years, we’ve completely transformed the
company, and the health of Starbucks is quite good. But I don’t think
this is a time to celebrate or run some victory lap. We’ve got a lot of
work to do.”Starbucks CEO: Can you “get big and stay small” [Review of
the book Onward:

How Starbucks fought for its life without losing its soul by Howard
Schultz]. 2011, March 28. NPR Books. Retrieved from
http://www.npr.org/2011/03/28/134738487/starbucks-ceo-can-you-get-
big-and-stay-small. Indeed, important questions loomed. Could
performance improve further? How long would Schultz remain with the
company? Could Schultz’s eventual successor maintain Schultz’s
entrepreneurial approach as well as keep Starbucks focused on its
mission?
2.1 Vision, Mission, and Goals
 LEARNING OBJECTIVES
1. Define vision and mission and distinguish between
them.
2. Know what the acronym SMART represents.

3. Be able to write a SMART goal.

 The Importance of Vision

Good business leaders create a vision, articulate the vision,

passionately own the vision, and relentlessly drive it to
completion.

-Jack Welch, former CEO of General Electric

 Many skills and abilities separate effective
strategic leaders like Howard Schultz from poor
strategic leaders. One of them is the ability to
inspire employees to work hard to improve their
organization’s performance. Effective strategic
leaders are able to convince employees to
embrace lofty ambitions and move the
organization forward. In contrast, poor strategic
leaders struggle to rally their people and channel
their collective energy in a positive direction.
 As the quote from Jack Welch suggests, a vision is one
key tool available to executives to inspire the people in an
organization (Figure 2.1 "The Big Picture: Organizational
Vision"). An organization’s vision describes what the
organization hopes to become in the future. Well-
constructed visions clearly articulate an organization’s
aspirations. Avon’s vision is “to be the company that best
understands and satisfies the product, service, and self-
fulfillment needs of women—globally.”
This brief but powerful statement emphasizes several aims
that are important to Avon, including excellence in
customer service, empowering women, and the intent to be
a worldwide player. Like all good visions, Avon sets a high
standard for employees to work collectively toward.
Perhaps no vision captures high standards better than
that of aluminum maker Alcoa. This firm’s very ambitious
vision is “to be the best company in the world—in the eyes
of our customers, shareholders, communities and people.”
By making clear their aspirations, Alcoa’s executives hope
to inspire employees to act in ways that help the firm
become the best in the world.
 The results of a survey of one thousand five hundred executives
illustrate how the need to create an inspiring vision creates a
tremendous challenge for executives. When asked to identify the
most important characteristics of effective strategic leaders, 98
percent of the executives listed “a strong sense of vision” first.
Meanwhile, 90 percent of the executives expressed serious
doubts about their own ability to create a vision.Quigley, J. V.
1994. Vision: How leaders develop it, share it, and sustain it.
Business Horizons, 37(5), 37–41. Not surprisingly, many
organizations do not have formal visions. Many organizations
that do have visions find that employees do not embrace and
pursue the visions. Having a well-formulated vision employees
embrace can therefore give an organization an edge over its
rivals.
Figure 2.1 The Big Picture: Organizational Vision
Figure 2.1 The Big Picture: Organizational Vision
 Mission Statements
In working to turnaround Starbucks, Howard Schultz sought
to renew Starbucks’s commitment to its mission statement:
“to inspire and nurture the human spirit—one person, one
cup and one neighborhood at a time.” A mission such as
Starbucks’s states the reasons for an organization’s
existence. Well-written mission statements effectively
capture an organization’s identity and provide answers to
the fundamental question “Who are we?” While a vision
looks to the future, a mission captures the key elements of
the organization’s past and present (Figure 2.2 "Missions").
Figure 2.2 Missions

Figure 2.2 Missions

 Organizations need support from their key stakeholders, such as

employees, owners, suppliers, and customers, if they are to prosper. A
mission statement should explain to stakeholders why they should
support the organization by making clear what important role or
purpose the organization plays in society. Google’s mission, for
example, is “to organize the world’s information and make it
universally accessible and useful.” Google pursued this mission in its
early days by developing a very popular Internet search engine. The
firm continues to serve its mission through various strategic actions,
including offering its Internet browser Google Chrome to the online
community, providing free e-mail via its Gmail service, and making
books available online for browsing.
Many consider Abraham Lincoln to have been one of the greatest
strategic leaders in modern history
One of Abraham Lincoln’s best-known statements is that
“a house divided against itself cannot stand.” This
provides a helpful way of thinking about the relationship
between vision and mission. Executives ask for trouble if
their organization’s vision and mission are divided by
emphasizing different domains. Some universities have
fallen into this trap. Many large public universities were
established in the late 1800s with missions that centered
on educating citizens. As the twentieth century unfolded,
however, creating scientific knowledge through research
became increasingly important to these universities.
 Many university presidents responded by creating visions
centered on building the scientific prestige of their
schools. This created a dilemma for professors: Should
they devote most of their time and energy to teaching
students (as the mission required) or on their research
studies (as ambitious presidents demanded via their
visions)? Some universities continue to struggle with this
trade-off today and remain houses divided against
themselves. In sum, an organization is more effective to
the extent that its vision and its mission target employees’
effort in the same direction.
 Pursuing the Vision and Mission through SMART Goals

An organization’s vision and mission offer a broad, overall sense of the

organization’s direction. To work toward achieving these overall
aspirations, organizations also need to create goals—narrower aims
that should provide clear and tangible guidance to employees as they
perform their work on a daily basis. The most effective goals are those
that are specific, measurable, aggressive, realistic, and time-bound.
An easy way to remember these dimensions is to combine the first
letter of each into one word: SMART (Figure 2.3 "Creating SMART
Goals"). Employees are put in a good position to succeed to the extent
that an organization’s goals are SMART.
Figure 2.3 Creating SMART Goals
Figure 2.3 Creating SMART Goals
A goal is specific if it is explicit rather than vague. In May 1961, President
John F. Kennedy proposed a specific goal in a speech to the US
Congress: “I believe that this nation should commit itself to achieving
the goal, before this decade is out, of landing a man on the moon and
returning him safely to the earth.”Key documents in the history of
space policy: 1960s. National Aeronautics and Space Administration.
Retrieved from http://history.nasa.gov/spdocs.html#1960s Explicitness
such as was offered in this goal is helpful because it targets people’s
energy.
A few moments later, Kennedy made it clear that such targeting
would be needed if this goal was to be reached. Going to the moon,
he noted, would require “a major national commitment of scientific
and technical manpower, materiel and facilities, and the possibility of
their diversion from other important activities where they are already
thinly spread.” While specific goals make it clear how efforts should
be directed, vague goals such as “do your best” leave individuals
A goal is measurable to the extent that whether the goal is achieved
can be quantified. President Kennedy’s goal of reaching the moon
by the end of the 1960s offered very simple and clear measurability:
Either Americans would step on the moon by the end of 1969 or they
would not. One of Coca-Cola’s current goals is a 20 percent
improvement to its water efficiency by 2012 relative to 2004 water
usage. Because water efficiency is easily calculated, the company
can chart its progress relative to the 20 percent target and devote
more resources to reaching the goal if progress is slower than
planned.
 A goal is aggressive if achieving it presents a significant
challenge to the organization. A series of research studies have
demonstrated that performance is strongest when goals are
challenging but attainable. Such goals force people to test and
extend the limits of their abilities. This can result in reaching
surprising heights. President Kennedy captured this theme in a
speech in September 1962: “We choose to go to the moon. We
choose to go to the moon in this decade…not because [it is] easy,
but because [it is] hard, because that goal will serve to organize
and measure the best of our energies and skills.”
 In the case of Coca-Cola, reaching a 20 percent improvement
will require a concerted effort, but the goal can be achieved.
Meanwhile, easily achievable goals tend to undermine motivation
and effort. Consider a situation in which you have done so well in
a course that you only need a score of 60 percent on the final
exam to earn an A for the course. Understandably, few students
would study hard enough to score 90 percent or 100 percent on
the final exam under these circumstances. Similarly, setting
organizational goals that are easy to reach encourages
employees to work just hard enough to reach the goals.
 It is tempting to extend this thinking to conclude that setting
nearly impossible goals would encourage even stronger effort
and performance than does setting aggressive goals. People
tend to get discouraged and give up, however, when faced with
goals that have little chance of being reached. If, for example,
President Kennedy had set a time frame of one year to reach
the moon, his goal would have attracted scorn. The country
simply did not have the technology in place to reach such a
goal. Indeed, Americans did not even orbit the moon until seven
years after Kennedy’s 1961 speech. Similarly, if Coca-Cola’s water
efficiency goal was 95 percent improvement, Coca-Cola’s
employees would probably not embrace it. Thus goals must also
be realistic, meaning that their achievement is feasible.
 You have probably found that deadlines are motivating and
that they help you structure your work time. The same is true for
organizations, leading to the conclusion that goals should be
time-bound through the creation of deadlines. Coca-Cola has
set a deadline of 2012 for its water efficiency goal, for example.
The deadline for President Kennedy’s goal was the end of 1969.
The goal was actually reached a few months early. On July 20,
1969, Neil Armstrong became the first human to step foot on the
moon. Incredibly, the pursuit of a well-constructed goal had
helped people reach the moon in just eight years.
 Americans landed on the moon eight years after
President Kennedy set a moon landing as a key goal for
the United States.
 The period after an important goal is reached is often
overlooked but is critical. Will an organization rest on its laurels
or will it take on new challenges? The US space program again
provides an illustrative example. At the time of the first moon
landing, Time magazine asked the leader of the team that built
the moon rockets about the future of space exploration. “Given
the same energy and dedication that took them to the moon,”
said Wernher von Braun, “Americans could land on Mars as
early as 1982.”The Moon: Next, Mars and beyond. 1969, July 15.
Time.
 Retrieved from
http://www.time.com/time/magazine/article/0,9171,901107,00.html No
new goal involving human visits to Mars was embraced, however, and
human exploration of space was de-emphasized in favor of robotic
adventurers. Nearly three decades after von Braun’s proposed timeline
for reaching Mars expired, President Barack Obama set in 2010 a goal
of creating by 2025 a new space vehicle capable of taking humans
beyond the moon and into deep space. This would be followed in the
mid-2030s by a flight to orbit Mars as a prelude to landing on
Mars.Amos, J. 2010, April 15. Obama sets Mars goal for America. BBC
News. Retrieved from http://news.bbc.co.uk/2/hi/8623691.stm Time will
tell whether these goals inspire the scientific community and the
country in general (Figure 2.4 "Be SMART: Vision, Mission, Goals, and
You").
Figure 2.4 Be SMART: Vision, Mission, Goals, and You
Figure 2.4 Be SMART: Vision, Mission, Goals, and You
 KEY TAKEAWAY

Strategic leaders need to ensure that their organizations have three types of aims. A vision
states what the organization aspires to become in the future. A mission reflects the
organization’s past and present by stating why the organization exists and what role it plays
in society. Goals are the more specific aims that organizations pursue to reach their visions
and missions. The best goals are SMART: specific, measurable, aggressive, realistic, and
time-bound.
THANK YOU FOR LISTENING!