13 chapter title 16/e ppt corporate culture and leadership screen graphics created by: jana f....
TRANSCRIPT
1313
Chapter TitleChapter Title
16/e PPT16/e PPT
Corporate
Culture and
Leadership
Screen graphics created by:Jana F. Kuzmicki, Ph.D.
Troy University-Florida Region
McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
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“The biggest levers
you’ve got to change a
company are strategy,
structure, and culture. If I
could pick two, I’d pick
strategy and culture.”Wayne Leonard, CEO Entergy
Corp.
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“An organization’s capacity
to execute its strategy
depends
on its “hard” infrastructure –
its organization structure and
systems – and on its “soft”
infrastructure – its culture
and norms.”Amar Bhide
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Chapter 13 Roadmap
Instilling a Corporate Culture that Promotes Good Strategy Execution
Identifying the Key Features of a Company’s Corporate Culture Strong versus Weak Cultures Unhealthy Cultures High-Performance Cultures Adaptive Cultures Culture: Ally or Obstacle to Strategy Execution? Changing a Problem Culture Grounding the Culture in Core Values and Ethics Establishing a Strategy-Culture Fit in Multinational Companies
Leading the Strategy Execution Process Staying on Top of How Well Things Are Going Putting Constructive Pressure on the Organization to Achieve Good Results
and Operating Excellence Leading the Development of Better Competencies and Capabilities Displaying Ethical Integrity and Leading Social Responsibility Initiatives Leading the Process of Making Corrective Adjustments
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INSTILLING A STRATEGY-INSTILLING A STRATEGY-
SUPPORTIVE CORPORATE SUPPORTIVE CORPORATE
CULTURE CULTURE
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Defining Characteristics of Corporate Culture
Core values, beliefs, and business principles Ethical standards Operating practices and behaviors defining
“how we do things around here” Approach to people management “Chemistry” and “personality” permeating
work environment Oft-told stories illustrating
Company’s values Business practices Traditions
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Dedication to customer satisfaction
Zealous pursuit of low costs
Frugal operating practices
Strong work ethic
Ritualistic Saturday morning meetings
Executive commitment to Visit stores
Listen to customers
Solicit employees’ suggestions
Features of the CorporateCulture at Wal-Mart
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Hard-driving, results-oriented atmosphere prevails All businesses are held to a standard
of being #1 or #2 in their industries aswell as achieving good business results
Extensive cross-business sharing of ideas, best practices, and learning
Reliance on “workout sessions” to identify, debate, and resolve “burning issues”
Commitment to Six Sigma Quality
Globalization of the company
Features of the CorporateCulture at General Electric
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Entrepreneurship of employees
Empowered employees are encouraged to
Be innovative
Excel in their fields of specialization
Respond quickly to strategic opportunities
Creatively apply state-of-the-art technology in a manner to promote operating excellence
Features of the CorporateCulture at Occidental Petroleum
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Deliver exceptional customer service to customers
Company motto
“Respond to UnreasonableCustomer Requests”
Out-of-the-ordinary customer requestsviewed as opportunities for “heroic” acts
Promotions based on outstanding service
Salaries based entirely on commission
Features of the CorporateCulture at Nordstrom’s
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A company’s culture is manifested in . . . Values, business principles, and ethical standards preached
and practiced by management Approaches to people management and problem solving Official policies and procedures Spirit and character permeating work environment Interactions and relationships among managers and
employees Peer pressures that exist to display core values Its revered traditions and oft-repeated stories Its relationships with external stakeholders
Identifying the Key Featuresof Corporate Culture
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Founder or early leader
Influential individual or work group
Policies, vision, or strategies
Operating approaches
Company’s approach to people management
Traditions, supervisory practices, employee attitudes
Organizational politics
Relationships with stakeholders
Where Does CorporateCulture Come From?
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Role of Stories at Microsoft
Oft-told stories focus on . . . Long work hours of programmers Emotional peaks and valleys in encountering and
overcoming coding problems Exhilaration of completing a complex program on
schedule Satisfaction of working on cutting-edge projects Rewards of being part of a team responsible
for a popular new software program Tradition of competing aggressively
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Selecting new employees who will “fit” in
Systematic indoctrination of new employees
Senior management efforts to reinforce core values, beliefs, principles, key operating practices
Story-telling of company legends
Ceremonies honoring employeeswho display cultural ideals
Visibly rewarding thosewho follow cultural norms
How Is a Company’s Culture Perpetuated?
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Forces Causing Culture to Evolve
New challenges in marketplace Revolutionary technologies Shifting internal conditions
Internal crisis Turnover of top executives
A new CEO who opts to change things Diversification into new businesses Expansion into foreign countries Rapid growth that involves adding many new
employees Merger with or acquisition of another company
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Company Subcultures: Problems Posed by New Acquisitions and Multinational Operations
Values, beliefs, and practices within a company can vary by Department Geographic location Business unit
Subcultures can clash if They embrace conflicting business philosophies Key executives use different approaches to people
management Differences between a company’s culture and recent
acquisitions have not been ironed out Existence of subcultures does not preclude important areas
of commonality and compatibility being established in different countries
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Types of Corporate Cultures
Strong vs. Weak CulturesStrong vs. Weak Cultures
Unhealthy CulturesUnhealthy Cultures
High-Performance CulturesHigh-Performance Cultures
Adaptive CulturesAdaptive Cultures
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Conduct business according to a clear, widely-understood philosophy
Considerable time spent by management communicating and reinforcing values
Values are widely shared and deeply rooted
Have a well-defined corporate character,reinforced by a creed or values statement
Careful screening/selection of newemployees to be sure they will “fit in”
Characteristics ofStrong Culture Companies
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How Does a Culture Come to Be Strong?
Leader who establishes values and behaviors consistent with Customer needs Competitive conditions Strategic requirements
A deep, abiding commitment to espousedvalues, beliefs, and business philosophy Practicing what is preached!
Genuine concern for well-being of Customers Employees Shareholders
ValuesCustomers
EmployeesShareholders
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Characteristics of Weak Culture Companies
Lack of a widely-shared core set of values
Few behavioral norms evident in operating practices
Few strong traditions
No strong sense of company identity
Little cohesion among departments
Weak employee allegiance tocompany’s vision and strategy
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Highly politicized internal environment Issues resolved on basis of political clout
Hostility to change Avoid risks and don’t screw up Experimentation and efforts to
alter status quo discouraged “Not-invented-here” mindset – company
personnel discount need to look outside for Best practices New or better managerial approaches Innovative ideas
Disregard for high ethical standards and overzealous pursuit of wealth by key executives
Characteristics of Unhealthy Cultures
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Standout cultural traits include A can-do spirit Pride in doing things right No-excuses accountability A results-oriented work climate in which people go the extra
mile to achieve performance targets
Strong sense of involvement by all employees Emphasis on individual initiative and creativity Performance expectations are clearly identified for all
organizational members Strong bias for being proactive, not reactive Respect for the contributions of all employees
Characteristics ofHigh-Performance Cultures
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Willingness to accept change and embrace challenge of introducing new strategies
Risk-taking, experimentation, and innovation to satisfy stakeholders
Entrepreneurship is encouraged and rewarded
Funds provided for new products New ideas openly evaluated Genuine interest in well-being
of all key constituencies Proactive approaches to
implement workable solutions
Hallmarks of Adaptive Cultures
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Any changes in operating practices and behaviors
Must not compromise core values and long-standing business principles
Must be “legitimate” in the sense of not having an inappropriate or unfair impact on the best interests of key stakeholders
Customers
Employees
Shareholders
Suppliers
Communities
Dominant Traits of Adaptive Cultures
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A company’s culture can contribute to – or hinder – successful strategy execution
A culture that promotes attitudes and behaviors that are well-suited to first-rate strategy execution is a valuable ally in the strategy execution process
A culture where attitudesand behaviors impedegood strategy execution is ahuge obstacle to be overcome
Culture: Ally or Obstacleto Strategy Execution?
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A culture that encourages actions and behaviors supportive of good strategy execution Provides employees with clear guidance regarding what
behaviors and results constitute good job performance Creates significant peer pressure among co-workers to
conform to culturally acceptable norms
A culture imbedded with values and behaviorsthat facilitate strategy execution promotesstrong employee commitment to the company’s Vision Performance targets Strategy
Why Culture Matters: Benefitsof a Tight Culture-Strategy Fit
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A good job of culture-building by managers Promotes can-do attitudes
Encourages acceptance of change
Instills strong peer pressure forstrategy-supportive behaviors
Enlists enthusiasm and dedicatedeffort to achieve company objectives
Closely aligning corporate culture with the Closely aligning corporate culture with the requirements for proficient strategy execution requirements for proficient strategy execution merits the full attention of senior executives!merits the full attention of senior executives!
Optimal Outcome of a Tight Culture-Strategy Fit
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Conflicts between culturally-approvedbehaviors and behaviors needed for goodstrategy execution send mixed signals Should employees by loyal to the culture and company
traditions and resist actions and behaviors promotingbetter strategy execution?
Or should they support the strategy by engaging in behaviors that run counter to the culture?
When a company’s culture is out of sync with When a company’s culture is out of sync with what is needed for strategic success, the culture what is needed for strategic success, the culture has to be changed as rapidly as can be managed!has to be changed as rapidly as can be managed!
The Perils of Strategy-Culture Conflict
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Creating a Strong FitBetween Strategy and Culture
Responsibility of Strategy MakerResponsibility of Strategy Maker – –Select a strategy compatible with theSelect a strategy compatible with the
sacred or unchangeable parts of sacred or unchangeable parts of organization’s prevailing corporate cultureorganization’s prevailing corporate culture
Responsibility of Strategy ImplementerResponsibility of Strategy Implementer – –Once strategy is chosen, changeOnce strategy is chosen, changewhatever facets of the corporatewhatever facets of the corporateculture hinder effective executionculture hinder effective execution
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Fig. 13.1: Changing a Problem Culture
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Make a compelling case why a new cultural atmosphere is in best interests of both company and employees Challenge status quo
Create events where employeesmust listen to angry key stakeholders
Cite why and how certain behavioral norms and work practices in current culture pose obstacles to good execution of new strategic initiatives
Explain how new behaviors and work practices to be introduced will be more advantageous and produce better results
Menu of Culture-Changing Actions
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Replace key executives strongly associated with old culture
Promote individuals who have desired cultural traits and can serve as role models
Appoint outsiders who have desiredcultural attributes to high-profile positions
Screen all candidates for new positions carefully, hiring only those who fit in with the new culture
Mandate all company personnel attend culture-training programs to learn more about new work practices, operating approaches, and behaviors
Substantive Culture-Changing Actions
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Push hard to implement new-style work practices and operating procedures
Design compensation incentives to reward teams and individuals who display the desired cultural behaviors
Grant generous pay raises to individuals who lead the way in adopting desired work practices, displaying new-style behaviors, and achieving pace-setting results
Revise policies and proceduresin ways to drive cultural change
Substantive Culture-Changing Actions (continued)
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Lead by example – Walk the talk
Emphasize frugality
Eliminate executive perks
Require executives to spend time talking with customers
Ceremonial events to praise people andteams who “get with the program”
Alter practices identified as cultural hindrances
Visible awards to honor heroes
Symbolic Culture-Changing Actions
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A culture based on ethical principles isvital to long-term strategic success
Ethics programs help make ethical conduct a way of life
Executives must provide genuine supportof personnel displaying ethical standardsin conducting the company’s business
Value statements serve as acornerstone for culture-building
Our ethicsprogram
consists of . . .
Grounding the Culture inCore Values and Ethics
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Formal values statement and a code of ethics Word-of-mouth indoctrination and tradition Annual reports and Websites Making stakeholders aware of a commitment
to ethical business conduct is attributable to Greater management understanding of role
these statements play in culture building Renewed focus on ethical standards
stemming from recent corporate scandals Growing numbers of consumers who
prefer to patronize ethical companies
Approaches to Establishing Ethical Standards
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Test Your Knowledge
Which of the following topics would least likely be a topic or element of a company’s statement of its core values?
A. A dedication to superior customer service, top-notch quality, product innovation, and/or technological leadership
B. An expectation that company personnel will display creativity, exercise initiative, and accept responsibility
C. Prohibiting giving or accepting bribes, kickbacks, or gifts
D. A commitment to exhibiting such qualities as integrity, fairness, trustworthiness, pride of workmanship, Golden Rule behavior, and respect for co-workers
E. A commitment to making the company a great place to work
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Test Your Knowledge
Which of the following topics would least likely be contained in a company’s code of ethics?
A. Expecting all employees to not divulge trade secrets or proprietary information to outsiders
B. Expecting all company personnel to display honesty and integrity in their actions and avoid conflicts of interest
C. Not dealing with suppliers that employ child labor or engage in other unsavory practices
D. Committing to create a work environment characterized by teamwork and employee empowerment
E. Mandating full compliance with all laws and regulations
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Fig. 13.2: The Two Culture-Building Roles of aCompany’s Core Values and Ethical Standards
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Techniques to Transform Core Values and Ethical Standards into Cultural Norms
Screen out applicants who do not exhibit compatible character traits
Incorporate values statement and ethics code in employee training programs
Strong endorsement by senior executives of the importance of core values and ethical principles at company events and in internal communications
Use values statements and codes of ethics as benchmarks to judge appropriateness of company policies and operating practices
Make the display of core values and ethical principles a big factor in evaluating employee performance
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Techniques to Transform Core Values and Ethical Standards into Cultural Norms (continued)
Make sure managers at all levels are diligent in stressing the importance of ethical conduct and observance of core values
Encourage everyone to use their influence in helping enforce observance of core values and ethical standards
Hold periodic ceremonies to recognize individuals and groups who display the values
Institute ethicsenforcement procedures
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Fig. 13.3: The Benefits of Cultural Norms StronglyGrounded in Core Values and Ethical Principles
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Establishing a Strategy-Culture Fit in Multinational and Global Companies
Institute training programs to Communicate the meaning of core values and Explain the case for common operating
principles and practices
Create a cultural climate where the norm is to Adopt best practices Use common work procedures Pursue operating excellence
Give local managers Flexibility to modify people management
approaches or operating styles Discretion to use different motivational and compensation
incentives to induce personnel to practice desired behaviors
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For Discussion: Your Opinion
Identify one cultural trait that you would like to see at
the company you decide to go to work for when you
graduate? Why is this cultural trait important to you?
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STRATEGIC LEADERSHIPSTRATEGIC LEADERSHIP
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Visionary
Chief Entrepreneur & Strategist Capabilities
Builder
Resource Acquirer & Allocator
Culture Builder
Chief Administrator
& Strategy Implementer
Process Integrator
Coach
Crisis Solver
Taskmaster
Spokesperson
Negotiator
Motivator
Arbitrator
Consensus Builder
PolicymakerPolicy
Enforcer
Mentor
Head Cheerleader
Numerous Roles of Strategic Leaders
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1. Stay on top of what’s happening
2. Put constructive pressure oncompany to achieve good results
3. Lead development of stronger corecompetencies and competitive capabilities
4. Exercise ethics leadership and lead social responsibility initiatives
5. Take corrective actions to improve overall strategic performance
Leadership Activities of ChiefStrategy Implementer
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Develop a broad network of formaland informal sources of information
Talk with many people at all levels
Be an avid practitioner of MBWA
Observe situation firsthand
Monitor operating results regularly
Get feedback from customers
Watch competitive reactions of rivals
Role #1: Stay on Top of What’s Happening
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Successful leaders spend time
Mobilizing organizational energy behind
Good strategy execution and
Operating excellence
Nurturing a results-oriented work climate
Promoting certain enabling cultural drivers
Strong sense of involvement on part of company personnel
Emphasis on individual initiative and creativity
Respect for contributions of individuals and groups
Pride in doing things right
Role #2: Put Constructive Pressure onCompany to Achieve Good Results
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Treat employees with dignity and respect Make champions out of people who excel Encourage employees to use initiative Set stretch objectives and expectations that employees are
to give their best Use tools of benchmarking, best practices, business process
reengineering, TQM, and Six Sigma quality to focus attention on continuous improvement
Use full range of motivational techniquesand compensation incentives to
Inspire employees Nurture a results-oriented climate Enforce high-performance standards
Celebrate individual, group, company successes
Approaches to Instilling aSpirit of High Achievement
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Top management intervention isrequired to establish better or new Resource strengths and competencies
Competitive capabilities
Senior managers must lead the effort because Competencies reside in combined
efforts of different work groups and departments, thus requiring cross-functional collaboration
Stronger competencies and capabilitiescan lead to a competitive edge over rivals
Role #3: Promote Stronger CoreCompetencies and Capabilities
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Role #4: Display Ethics Leadership and Lead Social Responsibility Initiatives
Set an excellent example in
Displaying ethical behaviors
Demonstrating character andpersonal integrity in actions and decisions
Declare support of company’s ethics codeand expect all employees to conductthemselves in an ethical fashion
Encourage compliance and establish toughconsequences for unethical behavior
Our ethicscode is . . .
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Set an excellent ethical example
Provide training to employeesabout what is ethical and what isn’t
Declare unequivocal support of ethics code
Act as final arbiter on hard calls
Remove people from key positionsif found guilty of a violation
Reprimand people lax in monitoring ethical compliance
Roles of a Manager inEnforcing Ethical Behavior
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Structuring an Ethics Complianceand Enforcement Process
Form an ethics committee to give guidance on ethics matters
Appoint an ethics officer to head compliance effort Establish an ethics hotline/Web site employees can
use to Anonymously report a possible violation Get confidential advice on a
troubling ethics-related situation Conduct an annual ethics audit
to measure extent of Ethical behavior and Identify problem areas
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Have mandatory ethics trainings for employees Openly encourage employees to
report possible infractions via Anonymous calls to a hotline or Posting to a special company Web site
Conduct an annual audit to assess Each manager’s efforts to uphold ethical standards Actions taken by managers to remedy deficient conduct
Require all employees to sign a statement annually certifying they have complied with the ethics code
Make sure ethical violations carry appropriate punishment, including dismissal for egregious violations
Key Approaches toEnforcing Ethical Behavior
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Test Your Knowledge
Assuming that a company’s senior executives are really serious about enforcing high standards of ethical behavior, then they probably need to consider doing all but which one of the following?
A. Appointing a committee of high-profile employees to serve on a committee or task force that is charged with (a) being champions of high ethical standards, (b) finding ways to ingrain high ethical standards as a cultural norm, and (3) heading up the company’s ethics enforcement process
B. Having mandatory ethics training programs for employees C. Conducting an annual audit of each manager’s efforts to uphold ethical
standards and requiring formal reports on the actions taken by managers to remedy deficient conduct
D. Requiring all employees to sign a statement annually certifying that they have complied with the company’s code of ethics and making sure that ethical violations carry appropriate punishment, including dismissal if the violation is sufficiently egregious
E. Openly encouraging company personnel to report possible infractions via anonymous calls to a hotline or e-mails sent to a designated address
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For Discussion: Your Opinion
What would your reaction be if your employer
required you to sign a statement annually certifying
that you have complied with the company’s code of
ethics?
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Actions Demonstrating Commitmentto a Strategy of Social Responsibility
Craft a strategy that positively improves well-being of employees, environment, communities, and society
Use social and environmental metrics to evaluate company performance
Tie social and environmental performance to executive compensation
Take special pains to protect environment Take an active role in community affairs Generously support charitable causes
and projects benefiting society Support workforce diversity and commit
to overall well-being of employees
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Role #5: Lead the Process ofMaking Corrective Adjustments
Requires deciding When adjustments are needed
What adjustments to make
Involves Adjusting long-term direction, objectives, and strategy on
an as-needed basis in response to unfolding events and changing circumstances
Promoting fresh initiatives to bring internal activities and behavior into better alignment with strategy
Making changes to pick up the pace when results fall short of performance targets