BAE SYSTEMS North AmericaEXECUTIVE DEVELOPMENT INSTITUTE

Creating the Future:Leadership and Change

Jim ClawsonDarden Graduate School of Business Administration

University of Virginia

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Connection to other Institutes

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The TeachablePoint of

ViewStrategy

PersonalFoundations

BusinessAcumen

Leadership& Change

Structure of the Institute

• Leading Personal Change• Leading Team Change• Large Scale Organizational Change• Applications• Aspirations

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Level Three Leadership

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Jim Clawson

Darden Graduate School of Business

University of Virginia

Program Invitations• Look and listen for the possibilities• Keep a Personal Insight Page (PIP sheet)• Look for and write down things you would like to

work on in the next 90 days • Contribute your experiences and insight to the

group.• Read and prepare the assignments• Take responsibility for your own learning.

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What strategic challenges are you facing?

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STRATEGIC ISSUES

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A Strategic Issue is any issue that significantly influences your ability to develop and maintain a competitive advantage.

STRATEGIC LEVELSWho’s the “you?”

• Organizational• Work Group or Function• Individual

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COMPETITIVE ADVANTAGE

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A competitive advantage has three key characteristics:

1. it provides superior value to customers

2. it is hard to imitate

3. it enhances one’s ability to respond to changes in the environment.

Adapted from George Day (1994)

SOURCES OF COMPETITIVE ADVANTAGE

• Government subsidy or support• Established or monopolistic markets• Product innovation• Process innovation, Cost efficiencies• Superior Service• Human Resource Management• Learning

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Mental “Hats”

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Judge Listening for Conformity

Learner

Explorer

Designer

Champion

Listening for Possibilities

Pushing into New Zones

Planning for Changes

Leading Action

Leadership is not about title.What’s your Point of View?

Leader’s Point of View?

POVPOV Things they say…Things they say…

Follower’s Point of View?

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Bureaucratic Point of View?

Your point of view doesn’t depend on your title…

The Leadership Point of View

1. Can you see what needs to be done?2. Do you understand all the underlying

forces?3. Are you willing to initiate action to

make it better?

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Introductions

• Name• Location• What do you build?• Biggest Issue/Challenge you’re dealing with in

Life

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Problems: The Source of Change

“…the starting point of any effective change effort is a clearly defined business problem.” Beer, Eisenstadt, Spector—Why change programs don’t produce change. HBR

What problems do you SEE?What kind of problem is strong enough to initiate change?

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We live in a world of dramatic and on-going change…

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“Ten short years.... the one thing that we have done consistently is to change .... It may seem easier for our life to remain constant, but change, really, is the only constant. We cannot stop it and we cannot escape it. We can let it destroy us or we can embrace it. We must embrace it.”

Michael EisnerDisney 1994 Annual Report

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Population Growth

6.0

5.55.5

5.0

4.54.5

4.0

3.53.5

3.0

2.52.5

2.0

1.51.5

1.0

0.5

500 400400 300 200200 100 A.D.A.D. 100 200200 300 400400 500 600600 700 800800 900 10001000 1100 12001200 1300 14001400 1500 160016001700 180018001900

1950

20002000

World

Population

in

Billions

Source: US Census Bureau, Population Reference Bureau, adapted from Breathing Space, by Jeff Davidson

ThePlague

Industrial Revolution

Medical & InformationRevolution

Bio, Nano & Energy Revolutions

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Types of Change

• Big Bang: discontinuous• Incremental or evolutionary• Externally driven Internally driven• Top Down Bottoms Up• Out there In here

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Key Leadership Initiatives

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STRATEGY(priorities)

ORGANI-ZATION(design)

OTHERS(employees)

LEADER(traits) Strategic ThinkingDeveloping

Influence

Designing

2. What’s Your

“story?”

3. Can you“sell” your

story?

4. Does yourorganization

help or hinder?5. Can you lead changeto keep up?

1. Who areyou?

There are always two parties, the party of the past and the party of the future; the establishment and the movement.

Ralph Waldo Emerson.

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What kind of leadership will it take to overcome these

challenges?

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Every CEO has to spend an enormous amount of time shuffling papers. The question is, how much of your time can you leave free to think about ideas? To me the pursuit of ideas is the only thing that matters. You can always find capable people to do almost everything else.”Michael Eisner, Fortune, December 4, 1989, page 116.

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What this points out is …

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LEADERSHIP

CHANGESTRATEGY

Success• Performance• Satisfaction• Growth

Situation and Stakeholders• Economic and Socio-Political

Environment • Customers and Suppliers• Industry Structure• Competitive Dynamics• Employee Groups and Communities• Shareholders and Other Stakeholders

Strategy

Staff

Skills Style

Self:The Leader

Superordinate Goals

Structure

A Leader’s Guide to Understanding Organizations: An Expanded “7-S” Perspective

Systems

Shared Values

Figure 4Adapted from McKinsey & Co. and other sources

Economic DevelopmentWhere are the margins?

(Pine and Gilmore, The Experience Economy)

5. Transformations (pay for how time with you transforms me)

4. Experiences (pay for time with you)

3. Services supplant goods (what I do for you, and margins are … declining, becoming commoditized)

2. Goods out of commodities (margins?)

1. Commodities out of the earth (margins?)

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MARGINS

Commoditization of Margins

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Pine and Gilmore,The Experience

Economy

Strategy is the art of creating value. It provides the intellectual frameworks, conceptual models, and governing ideas that allow a company’s managers to identify opportunities for bringing value to customers and for delivering that value at a profit. In this respect, strategy is the way a company defines its business and links together the only resources that really matter in today’s economy: knowledge and relationships or an organization’s competencies and customers.Normann, R. and Ramirez, R., “From Value Chain to Value Constellation: Designing Interactive Strategy,” Harvard Business Review, July-August 1993, p.65.

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STRATEGIC FIT MODEL

Strategic MindsetsSTRATEGIC INTENT

MODEL

Source, Hamel and Prahalad, Strategic Intent, HBR

Strategic thinking is driven by the match between current capabilities and existing opportunities

Searching for sustainable advantages

Finding protected niches

Strategic thinking is driven by bridging gap between today’s reality and tomorrow’s vision

Finding ways to leverage resources

Outpacing competitors in building new advantages

Making new industry rules

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Realized Strategy

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IntendedStrategy

ActualStrategy

EmergentStrategy

RealizedStrategy

OpportunisticStrategy

Realized Strategy

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Realized strategy is the result of the collision between dreams and economic realities….

STRATEGIC CYCLES

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CURRENTREALITY

VISIONINTENT

DESIGN, COGNITIVE

ACTION, IMPLEMENTATION

CoreCompetencies

Innovator’s Dilemma

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Utilization of Features Overshoot

Not good enough, cheap disruptive technology

attracts non users

Learning high margin culture

Motivator’s Dilemma

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Utilization of Energy

Goal Overshoot

Not for profit disruptive substitutes attract employees’ energy

Learning goal oriented culture

EnergyDecline