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Strategic Leadership

Page history last edited by David Touve 14 years, 6 months ago


Strategic Leadership

Submitted by: Ron Burt, University of Chicago Graduate School of Business

Suggested text: Burt, R. 2005. Brokerage and Closure: An Introduction to Social Capital. Oxford University Press.


More than ever before, the central role of a business leader is to formulate company objectives, organize to achieve the objectives, and convey the objectives in a form attractive to employees, investors, and customers. The CEO and his or her leadership team have point responsibility, but middle managers too are expected to play a role, and most certainly expected to shape their personal business responsibilities to broad corporate strategy. 


Leaders are less often trained to perform these responsibilities than they are simply expected to meet them. This course is about bringing people together to create and deliver value.  It is about identifying opportunities in the hurly-burly of everyday life around you, mobilizing resources around opportunities, and organizing to deliver on opportunities.  


In any situation, there is a social organization to the divergent interests of significant players.  Principles of social organization indicate how best to coordinate those interests to create value.  This course is an introduction to the principles and their application: coordinating your personal contacts to diverse groups in an organization, coordinating employees within and between functional groups, and coordinating business activities across markets.  A strategic leader knows alternative principles of organizing and when to optimize for one or another.  The key question:  How do I work with the other people to make it happen?


In other words, this is a course about the transition from smart to wise.  Smart is knowing how to compute.  Wise is knowing when and where computation adds value.  Wise poses the intuitive questions to which smart provides answers.  Smart is an able technician.  Wise is a leader.



1. Creating Value: The Social Capital of Growth of Innovation and Top-line Growth 

The shift to less hierarchical companies and global markets has triggered a shift from vertical chains of command to horizontal lines of cooperation.  Business leaders have a choice between two strategies for adding value:  Brokerage is a strategy for creating value, closure is a strategy for delivering on a known value stream.  This session is about the first strategy, brokerage.  It is about successful leaders who read organizations and markets to figure out what to do, and who to involve in getting it done.  Such leaders have social capital.  This session is about what it means to have social capital, and how having it is linked to growing the top-line (new customers, new products, new processes).  There is nothing to prepare for this first session, however, the brokerage argument and much of the evidence in this session is discussed in Chapters 1 and 2 of Brokerage and Closure.  If you are thinking about reading the book, I recommend waiting until after the session.  This advisory applies for each of the first four course sessions. 


2. Creating Value: Vicissitudes 

If you have an original idea, there is no budget for it.  If there is budget, someone already had the idea.  For the same reasons that network brokers have a competitive advantage in detecting rewarding opportunities, they have an advantage in finding resources by reading the interests of people who have budget.  This session begins with a video case of a person, John Clendenin, who was very successful in growing an organization from his initial unfunded idea. The video will be an occasion for us to talk about the process by which brokerage creates value and some of the issues attendant to working with brokers.  We’ll then shift, as a way of reviewing the first-session content, to discussing some contemporary issues concerning optimum networks, staffing, personality, and leveraging advantage from neighbor networks.  There is nothing to prepare for this second session, however, much of the evidence in this session is discussed in Chapter 2 of Brokerage and Closure.  


3. Delivering Value: The Social Capital of Cooperation and Bottom-Line Growth

Trust and reputation emerged in the first two sessions as key success factors for people trying to build bridges across structural holes. This session is about the critical role that teams play in building trust and reputation.  Top-line growth comes from bridging structural holes, but it is delivered by building a strong team around the bridge.  This session is about bottom-line growth; keeping as profit a larger proportion of income.  We’ll go deeper into what it means to build a strong team and how team spirit works as motivation.  Here again, there is nothing to prepare for the class session, however, the closure argument and much of the evidence in this session is discussed in Chapter 3 of Brokerage and Closure.


4. A Closer Look at Closure: Gossip and Groupthink 

 Dense connections within cohesive groups provide a deluge of information, especially on the common enemy that so often helps define such groups, and improper response leads to colleagues correcting, cautioning, or ostracizing the offending party.  So people turn to one another for quick, “appropriate,” interpretations of events.  In their social construction of events, people drag one another into groupthink, dependence, and rigidity, which creates the need for strategic partners.  This session is about how it happens, its potentially terrible consequences for businesses as well as individuals, and how to manage it.  There is nothing to prepare for this session, however, the network echo created by colleague gossip, and the rigidity and ignorant certainty that gossip creates, are discussed in Chapter 4 of Brokerage and Closure


5. Finding the Balance between Brokerage and Closure 

(WARNING: Case quiz at beginning of this session.  Quizzes are explained on page 10 of the syllabus.) 

The leadership styles associated with brokerage and closure were introduced separately because they involve such different social mechanisms.  Now that the mechanisms are introduced, we can get down to the realistic task of juggling both mechanisms simultaneously.  People are neither Robert nor James, but a mix of both.  How that works is the topic for this session.  I will use knowledge management as a vehicle for class discussion.  Knowledge is information in social context.  In contexts where information adds no value, it is merely noise (Lord Chesterfield: “Dirt is matter out of place”).  Where it adds value, we call it knowledge, and much of this course is about leaders moving information from places where it is routine to places where it is news.  This session is about knowledge, creating it, and moving it across market and organization boundaries — a core competence in the strategic leader’s skill set.  After a brief introduction to factors to consider in balancing brokerage and closure, we’ll discuss two cases.  The first is video shown in class on Glaxo Wellcome’s 1995 acquisition of Affymax.  The second case is about British Petroleum (“British Petroleum” case in packet).


Please come to the session with answers to the following questions: 

  1. BPX claims to be a global learning organization.  What does it mean for an organization to learn? 
  2. What features of BPX foster organizational learning?  In particular, what incentives are in place to encourage managers to transfer knowledge? 
  3. How would you move BPX’s learning capabilities to other parts of BP, or to other companies?  


6. Strategic Partners: Bridging Gossip-Enforced Walls

(WARNING: Case quiz at beginning of class.  Note this session is in the afternoon.) 

Session four was about gossip amplifying reputations out of proportion, both positive and negative, and about people deferring to groupthink rather than taking personal responsibility for their opinion and behavior.  We talked about how you break out of groupthink, but what if the problem isn’t you?  What if people cannot accept your ideas or leadership because of gossip-enforced stereotypes about people like you?  Perhaps you’re too young, or the wrong gender, or the wrong nationality, or went to the wrong school.  This session is about the cure.  We’ll proceed by reading a case two ways, first as an example of outstanding leadership, then with respect to working through strategic partners (for which I’ll draw on examples and systematic data not in the case).  The case is about Charlotte Beers turning around Ogilvy & Mather.  The case is in your packet.  Put yourself in Charlotte’s position as head of Ogilvy & Mather.


Please read the Ogilvy & Mather case, and come to class with answers to the following questions: 

  1. How would you describe the market in which Ogilvy & Mather operates when Beers takes over the company?  Drawing on your familiarity with business and corporate strategy, list some key factors that characterize the market. 
  2. How would you describe the condition of Ogilvy & Mather when Beers takes over? 
  3. What is Beers’ vision for revitalizing Ogilvy & Mather, and how does it address the market and organization pressures on the company?


7. Cracking into New Markets

(WARNING: Case quiz at beginning of class.) 

As a vehicle for discussing coordination in entering new markets, we’ll look at Kentucky Fried Chicken’s entry into Japan, and Jollibee Foods deciding whether to enter New Guinea, Hong Kong, and California.  In preparation for the session, prepare either the KFC case or the Jollibee case, not both.


If you select the KFC case, please come to class with answers to these study questions: 

  1. How did KFC build its position in the fast food market in the US?  How important to its success are consistent processes across its business establishments?  
  2. How would you evaluate Loy’s effectiveness as the first head of KFC Japan?  What is Loy Weston’s strategy to build the KFC business in Japan?  What competitive advantage does Loy gain from the parent company in the US?  
  3. Back in the US, Loy Weston is viewed with suspicion by some people because he goes outside corporate guidelines. What should Dick Mayer do about Loy?  Be ready to justify your recommendation. 


If you select the Jollibee case, please come to class with answers to these study questions: 

  1. How did Jollibee build its dominant position in the fast food market in the Philippines?  What sources of competitive advantage did it develop against McDonald’s? 
  2. How would you evaluate Tony Kitchner’s effectiveness as the first head of Jollibee’s international division?  Does his broad strategic vision make sense?  
  3. The alternatives of expanding into New Guinea, Hong Kong, or California not only represent important investment decisions for Jollibee, but also choices that will set the company on different strategic paths for the future.  As Noli Tingzon, how would you deal with the three options?  Be ready to justify your recommendations.  


8. Cornerstones of Business and Corporate Strategy

(WARNING: Case quiz at beginning of class.) 

This session is about coordinating businesses around a core competence.  Cisco Systems has been prominently successful in expanding its technological capabilities through acquisitions and alliances.  The company often comes up in day-to-day conversation about coordination across fast-moving technology businesses.


Please read the Cisco case in your packet and come to class with answers to these study questions: 

  1. What is the Cisco strategy and why does it involve so many acquisitions? 
  2. What do you believe are the most important factors (criteria, processes, specific actions, etc.) of Cisco’s approach to selecting and integrating acquisitions?  To identify factors, view the company first as a customer, then as an employee, and finally as an investor.  For each factor you identify, describe why it is important (what is its purpose?), and specify whether you would characterize it as typical (conventional practice by companies doing technology acquisitions) or unusual. 
  3. What are the limits?  Under what conditions should Cisco switch from A&D to the more usual R&D to put Cisco on a path to look like its more diversified competitors such as Lucent?  Is the Cisco strategy the future strategy of all firms? 


9. EXAMINATION for first half of the class session

Given the exam, there is no case assignment for the second half of the session.  Your primary task for this session is to prepare for the examination.  My challenge for the second half is to create value when people are post-exam numb.  I choose the topic of bouncing back from a career disaster and not sliding into one.  To stimulate the discussion, I’ll present a video on the curious case of Jeffery Sonnenfeld at Emory University. 


10. Selected Short Subjects 

One of the most important things acquired with an M.B.A. degree is confidence, confidence in knowing certain things, and confidence in being able to reason your way through complex issues that befuddle colleagues.  With time, the former fades and the latter becomes your steady ally.  This session is an introduction to some short topics intended to illustrate academic thinking on some questions at the frontier of research on strategic leadership.  These topics are subject to change at the last minute.  My plan now is to select from among the topics of network spillover, emotions and brokerage, buzz marketing, business ethics, “reading” social situations as a guide to action, and the use of strategy maps to identify rewarding structural holes to bridge.  




The below readings include most of the works cited in the handouts.  Books are typically listed as available from Amazon.  Several articles are available from the journal archiving service, JSTOR, and the University of Chicago Press Journals Division, both available through the University of Chicago library website “electronic resources” (at http://www.lib.uchicago.edu/e/db/).  Harvard notes and papers can be downloaded from the Harvard Business School Press website, www.hbsp.harvard.edu (also see the European Case Clearing House website).  


Aldrich & Ruef (2006) Organizations Evolving (www.amazon.com). 

Argote et al. (1990) “The persistence and transfer of learning in industry settings,” Management Science (search JSTOR). 

Barker (1993) “Tightening the iron cage: concertive control in self-managing teams,” Administrative Science Quarterly (search JSTOR). 

Barney (2002) “Diversification strategies,” Gaining and Sustaining Competitive Advantage (www.amazon.com). 

Benkler (2007) The Wealth of Networks: How Social Production Transforms Markets and Freedom (www.amazon.com). 

Bower (2001) “Not all M&As are alike -- and that matters,” Harvard Business Review. 

Brown and Duguid (2000) The Social Life of Information (www.amazon.com). 

Burt (1992) Structural Holes: The Social Structure of Competition, esp. Chapters 1, 3, and 7 (www.amazon.com). 

*Casciaro & Lobo (2005) “Competent jerks, lovable fools, and the formation of social networks,” Harvard Business Review. 

Coase (1937) “The nature of the firm,” Economica (search JSTOR). 

Collis & Montgomery (1998) “Creating corporate advantage,” Harvard Business Review. 

Cross, Nohria & Parker (2002) “Six myths about informal networks — and how to overcome them,” Sloan Management Review. 

Cross & Parker (2004) The Hidden Power of Social Networks (www.amazon.com). 

Doz & Hamel (1998) Alliance Advantage: The Art of Creating Value through Partnering (www.amazon.com). 

Dunbar (1997) Grooming, Gossip, and the Evolution of Language (www.amazon.com). 

*Eagly & Carli (2007) “Women and the labyrinth of leadership,” Harvard Business Review. 

Edmondson et al. (2001) “Speeding up team learning,” Harvard Business Review. 

Ellickson (1991) Order without Law: How Neighbors Settle Disputes (www.amazon.com). 

*Fleming & Marx (2006) “Managing creativity in small worlds,” California Management Review. 

Foss (ed., 1997) Resources, Firms, and Strategies (www.amazon.com). 

Ghemawat et al. (2001) Strategy and the Business Landscape (www.amazon.com). 

Gladwell (2000) The Tipping Point (www.amazon.com; see http://www.gladwell.com/ for Gladwell’s original and subsequent New Yorker articles).  

Goleman (1998) “What makes a leader?” Harvard Business Review.  

Gomes-Casseres (1994) “Group versus group: how alliance networks compete,” Harvard Business Review. 

Granovetter (1985) “Economic action and social structure: the problem of embeddedness,” American Journal of Sociology (search JSTOR). 

Granovetter & Swedberg (2005) The Sociology of Economic Life (www.amazon.com). 

Greif (1989) “Reputation and coalitions in medieval trade: evidence on the Maghribi traders,” Journal of Economic History (search JSTOR). 

*Groysberg (2008) “How star women build portable skills, Harvard Business Review. 

*Groysberg, Nanda & Nohria (2004) “The risky business of hiring stars,” Harvard Business Review. 

 *Hagel & Brown (2005) “Productive friction,” Harvard Business Review (and see http://edgeperspectives.typepad.com for Hagel’s insightful commentary). 

*Hallowell (1999) “The human moment at work.” Harvard Business Review. 

*Hansen & von Oetinger (2001) “Introducing t-shaped managers: knowledge management’s next generation,” Harvard Business Review.  

*Hargadon & Sutton (2000) “Building an innovation factory,“ Harvard Business Review. 

Hayek (1945) “The use of knowledge in society,” Economica (search JSTOR). 

Irwin & Klenow (1994) “Learning-by-doing spillovers in the semiconductor industry,” Journal of Political Economy (search JSTOR). 

Janis (1982) Victims of Groupthink (www.amazon.com). 

*Kets de Vries (2005) “The dangers of feeling like a fake,” Harvard Business Review. 

Kilduff & Tsai (2003) Social Networks and Organizations (www.amazon.com). 

*Kim & Mauborgne (2004) “Blue ocean strategy,” Harvard Business Review. 

Klapp (1978) Opening and Closing (www.amazon.com) 

*Kotter (1990) “What leaders really do,” Harvard Business Review. 

Kuhn (1962, third edition 1996) The Structure of Scientific Revolutions (www.amazon.com). 

*Maletz & Nohria (2001) “Managing in the whitespace,” Harvard Business Review.  

March (1991) “Exploration and exploitation in organization learning,” Organization Science (search JSTOR). 

*Martin (2007) “How successful leaders think,” Harvard Business Review. 

Milgram (1974) Obedience to Authority (www.amazon.com). 

Mizruchi & Stearns (2001) “Getting deals done: the use of social networks in bank decision-making,” American Sociological Review (search JSTOR). 

Nohria & Ghoshal (1997) The Differentiated Network, esp. Chapters 1 and 4 (www.amazon.com). 

O’Reilly (1989) “Corporations, culture, and commitment,” California Management Review. 

Obstfeld (2005) “Social networks: the tertius lungens orientation, and involvement in innovation,” Administrative Science Quarterly (search JSTOR). 

Olson (1965) The Logic of Collective Action: Public Goods and the Theory of Groups (www.amazon.com). 

Pfeffer & Salancik (1978) The External Control of Organizations (www.amazon.com). 

*Pfeffer & Sutton (1999) “The smart-talk trap,” Harvard Business Review. 

*Pfeffer & Sutton (2006) “Evidence-based management,” Harvard Business Review.  

Phillips & Zuckerman (2002) “Middle-status conformity,” American Journal of Sociology (search JSTOR). 

Podolny (2005) Status Signals: A Sociological Study of Market Competition (www.amazon.com). 

Porter (1983) “Note on the structural analysis of industries,” (www.hbsp.harvard.edu; Chapter 1 in his 1980 best-seller, Competitive Strategy). 

Porter (1985) Competitive Advantage (www.amazon.com). 

Porter (1998) “Clusters and the new economics of competition,” Harvard Business Review. 

Prahalad & Hamel (1990) “The core competence of the corporation,” Harvard Business Review. 

*Prokesch (2000) “Unleashing the power of learning: an interview with British Petroleum’s John Browne,” Harvard Business Review.  

Roberts (2004) The Modern Firm: Organization Design for Performance and Growth (www.amazon.com). 

Rosen (1997) “Austrian and neoclassical economics: any gains from trade?” Journal of Economic Perspectives (search JSTOR). 

Rosen (2002) The Anatomy of Buzz (www.amazon.com).

Saloner, Shepard & Podolny (2001) Strategic Management (www.amazon.com). 

Saxenian (1994) Regional Advantage (www.amazon.com).  

*Sgourev & Zuckerman (2006) “Improving capabilities through industry peer networks,” Sloan Management Review (see Zuckerman below for source). 

Simon (1996) The Sciencies of the Artificial (www.amazon.com). 

Saltzer, Reed and Clark (1984) “End-to-end arguments in system design.” ACM Transactions in Computer Systems 2:277-288. (search web). 

*Sonnenfeld & Ward (2007) “Firing back: how great leaders rebound after career disasters,” Harvard Business Review. 

Sorensen & Stuart (2001) “Syndication networks and the spatial distribution of venture capital investments,“ American Journal of Sociology (JSTOR). 

Stern & Stalk (1998) Perspectives on Strategy (www.amazon.com). 

Stokes (1997) Pasteur’s Quadrant: Basic Science and Technological Innovation (www.amazon.com). 

Sutton (2001) Weird Ideas that Work: 11 1/2 Practices for Promoting, Managing, and Sustaining Innovation (www.amazon.com). 

Thomas & Brown (2007) “The play of imagination: extending the literary mind,” Games and Culture (U of C Library “electronic resources” webpage). 

Thompson (2001) “How much did the Liberty shipbuilders learn? new evidence for an old case study,” Journal of Political Economy (search JSTOR). 

Tullock (1985) “Adam Smith and the prisoner’s dilemma,” Quarterly Journal of Economics (search JSTOR). 

Üstüner & Godes (2006) “Better sales networks,” Harvard Business Review. 

*Uzzi & Dunlap (2005) “How to build your network,” Harvard Business Review. 

Uzzi & Spiro (2005) “Collaboration and creativity: the small world problem,” American Journal of Sociology (University of Chicago Press Journals). 

Von Hippel (1994) “Sticky information and the locus of problem solving: implications for innovation,” Management Science (search JSTOR). 

Watts (1999) Small Worlds (www.amazon.com). 

Weick & Roberts (1993) “Collective mind in organizations: heedful interrelating on flight decks,” Administrative Science Quarterly (search JSTOR). 

Zaleznik (1977) “Managers and leaders: are they different?” Harvard Business Review. 

Zucker (1977) “The role of institutionalization in cultural persistence,” American Sociological Review (search JSTOR). 

Zuckerman (1999) “The categorical imperative: securities analysts and the illegitimacy discount,” American Journal of Sociology (search JSTORl). 

Zuckerman & Sgourev (2006) “Peer capitalism: parallel relationships in the U.S. economy,” American Journal of Sociology (University of Chicago Press Journals via U of C Library “electronic resources” webpage).  

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