The role of leaders in strategy

Accounting Ahead | Original study resource | accountingahead.com.au

The role of leaders in strategy

MODULE 1 | 1.8 | STUDENT COMPANION

Minimum requirements for turning plans into reality: make the need for change feel urgent; share the

vision widely; give people the power to act; and build the new ways of working into everyday practice.

Implementation will still mix planned activities with adaptations to changing circumstances.

A four-part change message

1. The current situation 2. The recommended change

What works now

Customers like talking to real people; staff know the products well

Problems, now or ahead

Waits have doubled, costs are rising, younger customers want to

self-serve

The change and its benefits

Online and chat service, phones kept for complex cases: shorter

waits, lower costs

Its risks and problems

Some customers struggle with digital tools; some roles change.

Response: retraining and a dedicated phone line

Jumping from problems straight to benefits suggests you haven't noticed what worries people

Checks while people move from the old, through transition, to a new beginning

Have people had a safe chance to express their feelings?

Have worries, raised in meetings or informally, been heard and talked through?

Have past achievements been recognised while the new direction is celebrated?

Are expectations of the new direction clear enough to avoid needless fear?

Communication also means active listening, aimed at understanding rather than replying, and it needs actions

as well as words, for example management by walking around.

GLOBAL STRATEGY AND LEADERSHIP | M1 | 1.8 | STUDENT COMPANION

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Accounting Ahead | Original study resource | accountingahead.com.au

Rational decisions, and why practice strays

A rational decision is... In practice, teams often...

Conscious, explicit and deliberate Jump from analysis straight to a recommendation

Internally consistent and logical Rush to finish the analysis

Fully informed and aimed at the end goal Agree too readily with the leader's proposal

Chooses among alternative ends and means to get the

best result

Hold on to a favourite answer formed early

Assumes the actions taken will cause the results Decide under stress, at speed, with incomplete

information

Four ways to make a decision

Command

The leader decides alone. Best in a fast-moving crisis that

needs immediate action

Collaborative

The team contributes; the leader decides. Usually most effective

when time allows

Consensus

The team votes; the majority decides. Fair when all are affected,

but slow for many decisions

Convenience

Delegated to a trusted team member. Builds skills; keep

strategy decision makers stable

Contingency again: choose by how much time you have, who is involved and how much the decision matters

Two views of a business's responsibilities

Classical view (Friedman)

Management's main duty is a return for the owners

Grow profits within the rules: open competition, no

deception or fraud

Social goals add cost and distract the firm

Owners, not managers, should decide how much to spend

on society

Socio-economic view

Leaders owe a duty to the society that sustains the

organisation

Protect and improve society's welfare, beyond profit

Separate legal status brings an expectation of a net

positive contribution

Real example: Unilever's Sustainable Living Plan,

launched 2010

Business ethics shapes the decisions; corporate social responsibility concerns their effects on society

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Accounting Ahead | Original study resource | accountingahead.com.au

Case note: Unilever under Paul Polman

Paul Polman became Unilever's chief executive in 2009 and soon stopped giving quarterly earnings guidance to

encourage long-term thinking. In 2010 Unilever launched its Sustainable Living Plan, aiming to double the size of

the business while halving the environmental footprint of its products, and to help more than a billion people

improve their health and wellbeing.

Sources: Unilever full-year results announcement (5 February 2009); Unilever Sustainable Living Plan launch (15 November 2010);

Unilever Annual Report 2013.

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Accounting Ahead | Original study resource | accountingahead.com.au

Practice questions

MODULE 1 | 1.8 | TRY THESE BEFORE THE WORKED ANSWERS

Question 1 case. Imagine an insurance company called Meridian that is closing its Townsville office of 40 staff.

The office has loyal staff and strong relationships with local brokers, but it costs far more per policy than

Meridian's Brisbane hub, and its lease ends next year. Twenty roles will move to Brisbane, ten staff will be

offered permanent remote work, and ten roles will close. Local brokers will be served by a dedicated relationship

manager.

Question 1 - Plan the change message

Part of the message What Meridian's leaders should say

What works now

Problems, now or ahead

The change and its benefits

Its risks and problems, and the

response

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Accounting Ahead | Original study resource | accountingahead.com.au

Question 2 - Choose a decision-making approach

Situation Approach and why

(a) A gas-leak alarm sounds on the factory floor.

(b) Choosing a new finance system that will be used for the

next ten years.

(c) A team choosing the date and venue for its team-building

day.

(d) Letting an experienced team leader decide the order of

work on a routine project, to build her skills.

(e) The board deciding whether to enter a new country next

year.

Question 3 - Two views of a community investment

Imagine a mining services company proposing to spend $2 million over five years on a training academy in the

regional town where most of its workers live. Argue for and against the proposal, first from the classical view and

then from the socio-economic view.

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Accounting Ahead | Original study resource | accountingahead.com.au

Worked answers

MODULE 1 | 1.8 | WORKED ANSWERS - ATTEMPT THE QUESTIONS FIRST

Question 1 - Meridian's change message

Part Suggested content

What works now Thank the team for its loyalty and its strong broker relationships, which Meridian wants

to keep

Problems, now or ahead Cost per policy far above the Brisbane hub; the lease ends next year, forcing a

decision

The change and its benefits Twenty roles move to Brisbane, ten become permanent remote roles, ten close; a

dedicated relationship manager keeps broker service strong; lower costs protect

competitiveness

Risks, problems and

response

Ten roles lost: redundancy support and help to find new work; possible service

disruption: a transition plan; relocation stress: support and clear timelines

Deliver it in person, allow questions and emotions, and follow up with actions that match the words.

Question 2 - Choose a decision-making approach

Situation Answer

(a) Gas-leak alarm Command: a crisis needing immediate action

(b) Ten-year finance system Collaborative: important, time available, expertise spread across users

(c) Team-building day Consensus: everyone affected, low risk

(d) Routine project order Convenience: delegation builds her skills

(e) Entering a new country Collaborative: a major strategic decision needing many perspectives; the

board still takes the final decision

Question 3 - Two views of a community investment

Classical view. For: if the academy creates a pipeline of skilled workers and cuts recruitment and turnover

costs, it can increase long-run profit, so it is justified on business grounds. Against: if it does not pay its way, the

$2 million belongs to the owners, who should decide for themselves whether to give to social causes.

Socio-economic view. For: the company depends on the town that houses its workforce and has significant

economic power there, so it owes a net positive contribution; training local people improves welfare and protects

its social licence to operate. Against: only if the money could do more good elsewhere, or if the program is badly

designed and creates dependence rather than lasting skills.

GLOBAL STRATEGY AND LEADERSHIP | M1 | 1.8 | WORKED ANSWERS

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