Powerpoint

Saylor URL: http://www.saylor.org/books Saylor.org

Chapter 2

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?

Questions Are Brewing at Starbucks

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

Image courtesy of Wikimedia, http://commons.wikimedia.org/wiki/File:Starbucks-seoul.JPG .

Chapter 2 from 003000440056005700480055004C0051004A0003003600570055004400570048004A004C004600030030004400510044004A004800500048005100570003 was adapted by The Saylor Foundation under

a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 license without attribution as re Tuested by the work’s original creator or licensee. 2014, The Saylor Foundation. Saylor URL: http://www.saylor.org/books Saylor.org

March 30, 2011, marked the fortieth anniversary of St arbucks 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 naviga ted 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.” [1]About a thousand underperforming stores were shut

down permanently. Thousands of other stores closed fo r 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 comp letely 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.” [2]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?

[1] Our Starbucks mission statement. Retrieved from http://www.starbucks.com/about-us/company-

information/mission-statement. Accessed March 31, 2011. Saylor URL: http://www.saylor.org/books Saylor.org

[2] 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 .

Saylor URL: http://www.saylor.org/books Saylor.org

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 strategi c 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. 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. Saylor URL: http://www.saylor.org/books Saylor.org

The results of a survey of one thousand five hundre d 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 percen t 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. [1]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.

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.

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. Saylor URL: http://www.saylor.org/books Saylor.org

Many consider Abraham Lincoln to have been one of the

greatest strategic leaders in modern history.

Image courtesy of Alexander Gardner,

http://wikimediafoundation.org/wiki/File:Abraham_Li

ncoln_head_on_shoulders_photo_portrait.jpg .

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, measur able, aggressive, realistic, and time-bound. An easy Saylor URL: http://www.saylor.org/books Saylor.org

way to remember these dimensions is to combine the first letter of each into one word: SMART.

Employees are put in a good position to succeed to the extent that an organization’s goals are SMART.

A goal isspecific 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 believ e 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.” [2]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 unsure of how to proceed.

A goal ismeasurable 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 en d 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 isaggressive if achieving it presents a significant challenge to the organization. A series of

research studies have demonstrated that perform ance 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 th at you only need a score of 60 percent on the final Saylor URL: http://www.saylor.org/books Saylor.org

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 thes e 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 berealistic, 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-boundthrough

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.

Saylor URL: http://www.saylor.org/books Saylor.org

Americans landed on the moon eight years after President Kennedy set a moon landing as a key

goal for the United States.

Image courtesy of NASA Apollo Archive,

http://upload.wikimedia.org/wikipedia/commons/8/8b/5927_NASA.jpg .

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,Timemagazine 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, “Ame ricans could land on Mars as early as 1982.” [3]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. [4]Time will tell whether these goals

inspire the scientific community and the country in general .

KEY TAKEAWAY

xStrategic 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 play s 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.

EXERCISES

1. Take a look at the website of your college or university. What is the organization’s vision and mission?

Were they easy or hard to find? Saylor URL: http://www.saylor.org/books Saylor.org

2. As a member of the student body, do you find the vision and mission of your college or university to be

motivating and inspirational? Why or why not?

3. What is an important goal that you have established for your career? Could this goal be improved by

applying the SMART goal concept?

[1] Quigley, J. V. 1994. Vision: How leaders develop it, share it, and sustain it. Business Horizons, 37(5), 37–41.

[2] Key documents in the history of space policy: 1960s. National Aeronautics and Space Administration. Retrieved

from http://history.nas a.gov/spdocs.html#1960s

[3] The Moon: Next, Mars and beyond. 1969, July 15. Time. Retrieved

fromhttp://www.time.com/time/magazine/article/0,9171,901107,00.html

[4] Amos, J. 2010, April 15. Obama sets Mars goal for America. BBC News. Retrieved from

http://news.bbc.co.uk/2/hi/8623691.stm

Saylor URL: http://www.saylor.org/books Saylor.org

2.2 Assessing Organizational Performance

LEARNING OBJECTIVES

1. Understand the complexities associated with assessing organizational performance.

2. Learn each of the dimensions of the balanced scorecard framework.

3. Learn what is meant by a “triple bottom line.”

Organizational Performance: A Complex Concept

Organizational performance refers to how well an organization is doing to reach its vision, mission, and

goals. Assessing organizational performance is a vita l aspect of strategic management. Executives must

know how well their organizations are performing to figure out what strategic changes, if any, to make.

Performance is a very complex concept, however, and a lot of attention needs to be paid to how it is

assessed.

Two important considerations are (1) performance measures and (2) performance referents (Figure 2.5

"How Organizations and Individuals Can Use Fi nancial Performance Measures and Referents").

A performance measure is a metric along which organi zations can be gauged. Most executives examine

measures such as profits, stock price, and sales in an attempt to better understand how well their

organizations are competing in the market. But these measures provide just a glimpse of organizational

performance. Performance referents are also needed to assess whether an organization is doing well. A

performance referent is a benchmark used to make sense of an organization’s standing along a

performance measure. Suppose, for example, that a firm has a profit margin of 20 percent in 2011. This

sounds great on the surface. But suppose that the firm’s profit margin in 2010 was 35 percent and that the

average profit margin across all firms in the industry for 2011 was 40 percent. Viewed relative to these two

referents, the firm’s 2011 performance is cause for concern.

Using a variety of performance measures and referents is valuable because different measures and

referents provide different information about an organization’s functioning. The parable of the blind men

and the elephant—popularized in Western cultures through a poem by John Godfrey Saxe in the

nineteenth century—is useful for understanding the complexity associated with measuring organizational Saylor URL: http://www.saylor.org/books Saylor.org

performance. As the story goes, six blind men set out to “see” what an elephant was like. The first man

touched the elephant’s side and believed the beast to be like a great wall. The second felt the tusks and

thought elephants must be like spears. Feeling the trunk, the third man thought it was a type of snake.

Feeling a limb, the fourth man thought it was like a tree trunk. The fifth, examining an ear, thought it was

like a fan. The sixth, touching the tail, thought it was like a rope. If the men failed to communicate their

different impressions they would have all been partially right but wrong about what ultimately mattered.

Figure 2.5 How Organizations and Individuals Can Use Financial Performance Measures and

Referents Saylor URL: http://www.saylor.org/books Saylor.org

This story parallels the challenge involved in understanding the multidimensional nature of organization

performance because different measures and referents may tell a different story about the organization’s

performance. For example, the Fortune500 lists the largest US firms in terms of sales. These firms are

generally not the strongest performers in terms of growth in stock price, however, in part because they are

so big that making major improvements is difficult. During the late 1990s, a number of Internet-centered

businesses enjoyed exceptional growth in sales and stock price but reported losses rather than profits.

Many investors in these firms who simply fixated on a single performance measure—sales growth—

absorbed heavy losses when the stock market’s attention turned to profits and the stock prices of these

firms plummeted.

The story of the blind men and the elephant provides a metaphor for understanding the

complexities of measuring organizational performance.

Image courtesy of Hanabusa Itcho,

http://en.wikipedia.org/wiki/File:Blind_monks_examining_an_elephant.jpg .

The number of performance measures and referents that are relevant for understanding an organization’s

performance can be overwhelming, however. For exampl e, a study of what performance metrics were used

within restaurant organizations’ annual reports found that 788 differe nt combinations of measures and Saylor URL: http://www.saylor.org/books Saylor.org

referents were used within this one industry in a single year. [1]Thus executives need to choose a rich yet

limited set of performance measures and referents to focus on.

The Balanced Scorecard

To organize an organization’s performance measures, Professor Robert Kaplan and Professor David

Norton of Harvard University developed a tool calle d the balanced scorecard. Using the scorecard helps

managers resist the temptation to fixate on financial measures and instead monitor a diverse set of

important measures.

Indeed, the idea behind the framework is to provide a “balance” between financial measures

and other measures that are important for understandin g organizational activities that lead to sustained,

long-term performance. The balanced scorecard recommends that managers gain an overview of the

organization’s performance by tracking a small number of key measures that collectively reflect four

dimensions: (1) financial, (2) customer, (3) internal business process, and (4) learning and growth. [2]

Financial Measures

Financial measures of performance relate to organiza tional effectiveness and profits. Examples include

financial ratios such as return on assets, return on equity, and return on investment. Other common

financial measures include profits and stock price. Su ch measures help answer the key question “How do

we look to shareholders?”

Financial performance measures are commonly articu lated and emphasized within an organization’s

annual report to shareholders. To provide context, such measures should be objective and be coupled with

meaningful referents, such as the firm’s past performance. For exampl e, Starbucks’s 2009 annual report

highlights the firm’s performance in terms of net reve nue, operating income, and cash flow over a five-

year period. Saylor URL: http://www.saylor.org/books Saylor.org

Customer Measures

Customer measures of performance relate to custom er attraction, satisfaction, and retention. These

measures provide insight to the key question “How do customers see us?” Examples might include the

number of new customers and the percentage of repeat customers.

Starbucks realizes the importance of repeat customer s and has taken a number of steps to satisfy and to

attract regular visitors to their stores. For example, Starbucks rewards regular customers with free drinks

and offers all customers free Wi-Fi access. [3]Starbucks also encourages repeat visits by providing cards

with codes for free iTunes downloads. The featured so ngs change regularly, encouraging frequent repeat

visits.

Internal Business Process Measures

Internal business process measures of performance re late to organizational efficiency. These measures

help answer the key question “What must we excel at?” Examples include the time it takes to manufacture

the organization’s good or deliver a service. The time it takes to create a new product and bring it to

market is another example of this type of measure.

Organizations such as Starbucks realize the importance of such efficiency measures for the long-term

success of its organization, and Starbucks carefully examines its processes with the goal of decreasing

order fulfillment time. In one recent example, Starbucks efficiency experts challenged their employees to

assemble a Mr. Potato Head to understand how work could be done more quickly. [4]The aim of this

exercise was to help Starbucks employees in general match the speed of the firm’s high performers, who

boast an average time per order of twenty-five seconds.

Learning and Growth Measures

Learning and growth measures of performance relate to the future. Such measures provide insight to tell

the organization, “Can we continue to improve and create value?” Learning and growth measures focus on

innovation and proceed with an understanding that strategies change over time. Consequently,

developing new ways to add value will be needed as the organization continues to adapt to an evolving

environment. An example of a learning and growth measure is the number of new skills learned by

employees every year. Saylor URL: http://www.saylor.org/books Saylor.org

One way Starbucks encourages its employees to learn skills that may benefit both the firm and individuals

in the future is through its tuition reimbursement program. Employees who have worked with Starbucks

for more than a year are eligible. Starbucks hopes that the knowledge acquired while earning a college

degree might provide employees with the skills need ed to develop innovations that will benefit the

company in the future. Another benefit of this program is that it helps Starbucks reward and retain high-

achieving employees.

Measuring Performance Using the Triple Bottom Line

Ralph Waldo Emerson once noted, “Doing well is the result of doing good. That’s what capitalism is all

about.” While the balanced scorecard provides a popu lar framework to help executives understand an

organization’s performance, other frameworks highlight areas such as social responsibility. One such

framework, the triple bottom line, emphasizes the three Ps of people(making sure that the actions of the

organization are socially responsible), the planet(making sure organizations act in a way that promotes

environmental sustainability), and traditional organization profits. This notion was introduced in the

early 1980s but did not attract much attention until the late 1990s.

The triple bottom line emphasizes the three Ps of people (social concerns), planet (environmental

concerns), and profits (economic concerns).

In the case of Starbucks, the firm has made clear the importance it attaches to the planet by creating an

environmental mission statement (“Starbucks is committed to a role of environmental leadership in all

facets of our business”) in addition to its overall mission.[5]In terms of the “people” dimension of the

triple bottom line, Starbucks strives to purchase coffee beans harvested by farmers who work under

humane conditions and are paid reasonable wages. Th e firm works to be profitable as well, of course. Saylor URL: http://www.saylor.org/books Saylor.org

KEY TAKEAWAY

xOrganizational performance is a multidimensional concept, and wise managers rely on multiple measures

of performance when gauging the success or failure of their organizations. The balanced scorecard

provides a tool to help executives gain a general understanding of their organization’s current level of

achievement across a set of four important dimensions. The triple bottom line provides another tool to

help executives focus on performance targets beyond profits alone; this approach stresses the

importance of social and environmental outcomes.

EXERCISES

1. How might you apply the balanced scorecard framew ork to measure performance of your college or

university?

2. Identify a measurable example of each of the balanced scorecard dimensions other than the examples

offered in this section.

3. Identify a mission statement from an organization that emphasizes each of the elements of the triple

bottom line.

[1] Short, J. C., & Palmer, T. B. 2003. Organizational perf ormance referents: An empirical examination of their

content and influences. Organizational Behavior and Human Decision Processes , 90, 209–224.

[2] Kaplan, R. S., & Norton, D. 1992, February. The balanced scorecard: Measures that drive performance. Harvard

Business Review, 70–79.

[3] Miller, C. 2010, June 15. Aiming at rivals, Starbucks will offer free Wi-Fi. New York Times. Section B, p. 1.

[4] Jargon, J. 2009, August 4. Latest Starbucks buzzword: “Lean” Japanese techniques. Wall Street Journal, p. A1.

[5] Our Starbucks mission statement. Retrieved on March 31, 2011, from http://www.starbucks.com/about-

us/company-information/mission-statement. Accessed March 31, 2011.

Saylor URL: http://www.saylor.org/books Saylor.org

2.3 The CEO as Celebrity

LEARNING OBJECTIVES

1. Understand the benefits and costs of CEO celebrity status.

2. List and define the four types of CEOs based on differences in fame and reputation.

3. Be able to offer an example of each of the four types of CEOs

Benefits and Costs of CEO Celebrity

The nice thing about being a celebrity is that wh en you bore people, they think it’s their fault.

Henry Kissinger, former US Secretary of State

The wordcelebrityquickly brings to mind actors, sports stars, and musicians. Some CEOs, such as Bill

Gates, Oprah Winfrey, Martha Stewart, and Donald Trump, also achieve celebrity status. Celebrity CEOs

are not a new phenomenon. In the early twentieth century, industrial barons such as Henry Ford, John D.

Rockefeller, and Cornelius Vanderbilt were household names. However, in the current era of mass and

instant media, celebrity CEOs have become more prevalent and visible ( Figure 2.7 "CEO"). [1]

Cornelius Vanderbilt was one of the earliest celebrity CEOs; Vanderbilt University serves as his

legacy. Saylor URL: http://www.saylor.org/books Saylor.org

Image courtesy of Mathew Brady and Michel Vuijlsteke,

http://en.wikipedia.org/wiki/File:Cornelius_Vanderbilt_Daguerrotype2.jpg .

Both benefits and costs are associated with CEO celebrity. As the quote from Henry Kissinger suggests,

celebrity confers a mystique and reverence that can be leveraged in a variety of ways. CEO celebrity can

serve as an intangible asset for the CEO’s firm and may increase opportunities available to the firm.

Hiring or developing a celebrity CEO may increase stock price, enhance a firm’s image, and improve the

morale of employees and other stakeholders. However, employing a celebrity CEO also entails risks for an

organization. Increased attention to the firm via the celebrity CEO means any gaps between actual and

expected firm performance are magnified. Further, if a celebrity CEO acts in an unethical or illegal

manner, chances are that the CEO’s firm will receive much more media attention than will other firms

with similar problems. [2]

There are also personal benefits and risks associated with celebrity for the CEO. Celebrity CEOs tend to

receive higher compensation and job perks than their colleagues. Celebrity CEOs are likely to enjoy

increased prestige power, which facilitates invitations to serve on the boards of directors of other firms

and creates opportunities to network with other “managerial elites.” Celebrity also can provide CEOs with

a “benefit of the doubt” effect that protects against quick sanctions for downturns in firm performance

and stock price. However, celebrity also creates potential costs for individuals. Celebrity CEOs face larger

and more lasting reputation erosion if their job pe rformance and behavior is inconsistent with their

celebrity image. Celebrity CEOs face increased personal media scrutiny, and their friends and family must

often endure increased attention into their personal and public lives. Accordingly, wise CEOs will attempt

to understand and manage their celebrity status. [3]

Types of CEOs

Icons are CEOs possessing both fame and strong reputations. The icon CEO combines style and substance

in the execution of his or her job responsibilities. Mary Kay Ash, Richard Branson, Bill Gates, and Warren

Buffett are good examples of icons. The late Mary Kay Ash founded Mary Kay Cosmetics Corporation. The

firm’s great success and Ash’s unconventional motivational methods, such as rewarding sales Saylor URL: http://www.saylor.org/books Saylor.org

representatives with pink Cadillacs, made her famo us. Partly because she emphasized helping other

women succeed and ethical business practices, Mary Kay Ash also had a very positive reputation. Richard

Branson has created an empire with more than four hundred companies, including Virgin Atlantic

Airways and Virgin Records. Branson’s celebrity status led him to star in his own reality-based show. He

has also appeared on television series such asBaywatchandFriends, in addition to several cameo

appearances in major motion pictures. Bill Gates, fo under and former CEO of Microsoft, also has fame

and a largely positive reputation. Gates is a proverbial “household name” in the tradition of Ford,

Rockefeller, and Vanderbilt. He also is routinely listed among Timemagazine’s “100 Most Influential

People” and has received “rock star” receptio ns in India and Vietnam in recent years.

Former Microsoft CEO Bill Gates exemplifies a CEO who has reached icon

status.

Image courtesy of World Economic Forum,

http://en.wikipedia.org/wiki/File:Bill_Gates_in_WEF_,2007.jpg .

Warren Buffett is perhaps the best-known executive in the United States. As CEO of Berkshire Hathaway,

he has accumulated wealth estimated at $62 billion and was the richest person in the world as of March

2008. Buffett’s business insights command a level of respect that is perhaps unrivaled. Many in the

investment and policymaking communities pay careful attention to his investment choices and his

commentary on economic conditions. Despite Buffett’s immense wealth and success, his reputation

centers on humility and generosity. Buffett avoids the glitz of Wall Street and has lived for fifty years in a

house he bought in Omaha, Nebraska, for $31,000. Meanwhile, his 2006 donation of approximately $30

billion to the Bill and Melinda Gates Foundation was the largest charitable gift in history. Saylor URL: http://www.saylor.org/books Saylor.org

CEOs who display high levels of relative fame but low levels of reputation are in the group called

scoundrels. These CEOs are well known but vilified. The late Leona Helmsley was a prototypical

scoundrel. Leona Helmsley’s life was a classic rags-to- riches story. Born to immigrant parents, Helmsley

became a billionaire through her work as the head of an extensive hotel and real estate empire. While

certainly famous, her reputation was anything but positive, as reflected by her nickname: the Queen of

Mean. During Helmsley’s trial for tax fraud, her housekeeper quoted her as proclaiming, “We don’t pay

taxes. Only the little people pay taxes.” Following twen ty-one months in jail, Helmsley was required to

perform 750 hours of community service. One hundred fifty hours were added to this sentence after it was

discovered that employees had performed some of her service hours. Helmsley’s apparent arrogance,

combined with her cruelty to employees and her reputation as the ultimate workplace bully, cemented her

position as a scoundrel.

The corporate governance scandals of the early 2000s revealed several CEOs as scoundrels. Perhaps the

best known were Kenneth Lay and Dennis Kozlowski. Bo th men rose to prominence as their firms’ success

and stock prices soared but were undone by dubious activities. Lay was once revered as the son of a poor

minister who founded Enron and built it into a giant in the energy business. In 2001, however, he became

the face of corporate abuses in the United States after Enron’s collapse led to scenes, captured on

television, of employees left jobless and with retirement accounts full of worthless Enron stock. Lay was

convicted of fraud in 2006 but died before sentencing.

Also born to a poor family, Kozlowski started at Tyco as an accountant and worked his way up to the

executive suite. In May 2001, aBusinessWeekcover story lauded Kozlowski as “the most aggressive CEO”

in the country and detailed his strategy for building Tyco into the next General Electric by using

acquisitions to gain the first or second position in all the industries in which it competed. By 2002,

Kozlowski’s reputation was in jeopardy. He was indicted for avoiding more than $1 million in sales taxes

on art purchases. Media stories described in detail a $2 million birthday party Kozlowski threw for his

wife (billing half of it to Tyco as a company func tion), a $19 million apartment Tyco purchased for him,

and $11 million worth of furnishings for the apartment (including an infamous $6,000 shower curtain).

Accusations that Kozlowski and another Tyco executive stole hundreds of millions of dollars from the firm

ultimately led to a prison sentence of eight to twenty-five years. Saylor URL: http://www.saylor.org/books Saylor.org

Hidden gems are CEOs who lack fame but possess positive reputations. These CEOs toil in relative

obscurity while leading their firms to success. Their skill as executives is known mainly by those in their

own firm and by their competitors. In many cases, the firm has some renown due to its success, but the

CEO stays unknown. For example, consider the case of Anne Mulcahy. Mulcahy, CEO of Xerox, started

her career at Xerox as a copier salesperson. Despite building an excellent reputation by rescuing Xerox

from near bankruptcy, Mulcahy eschews fame and publicity. While being known for successfully leading

Xerox by example and being willing to fly anywhere to meet a customer, she avoids stock analysts and

reporters.

Silent killers are the fourth and final group of CEOs. These CEOs are overlooked and ignored sources of

harm to their firms. While scoundrels are closely monitored and scrutinized by the media, it may be too

late before the poor ethics or incompetence of the silent killers is detected. In this sense, silent killers are

sometimes worse than scoundrels. One example of a silent killer is Harding Lawrence, former CEO of

defunct Braniff International. Lawrence initiated a massive expansion of the airline following industry

deregulation in the late 1970s. The result was a bloated firm, ill-equipped to survive the extremely

competitive setting that evolved in the early 1980s. Howard Putnam, the CEO of a small regional carrier

named Southwest Airlines, was hired in a failed effort to save the company. By the time Braniff went

bankrupt, Putnam was left to explain its demise, and the name of the main culprit was all but forgotten.

Ironically, had Putnam declined the opportunity to try to save Braniff, perhaps he and not Herb Kelleher

would have become an icon at the helm of Southwest.

Strategy at the Movies

Iron Man

Has Tony Stark gone crazy? This was the question that many stakeholders of Stark Industries were asking

themselves in the 2008 blockbusterIron Man. Tony Stark, CEO of Star k Industries, stunned his

shareholders, employees, and the world when he announced that he was changing Stark Industries’

mission from being one of the world’s leading weapons manufacturers to being a socially responsible,

clean energy producer. Following his announcement, St ark faced fierce opposition from his board of

directors, employees, the media, and clients such as the US military. The changes at Stark Industries Saylor URL: http://www.saylor.org/books Saylor.org

attracted tremendous attention in part because of the glamorous Stark’s status as a celebrity CEO.

Initially, Stark is seen by the public as a scoundrel that pays little attention to the social impact his

company makes. After shifting the direction of Stark Industries, however, Stark is viewed as an icon that

is just as attentive to the social performance of the company as he is to its financial performance. Iron

Manillustrates that while changing elements such as firm mission and CEO status is difficult, it is not

impossible.

Iron Man: The Greatest Creation of Fictional Celebrity CEO Tony Stark

Image courtesy of Pop Culture Geek, http://www.flickr.com/photos/popculturegeek/4858995531 .

Celebrity Rehabilitation

Anything I say or do is now at risk of showing up on the front page of a national daily newspaper and

therefore, I need to be much more conscious about the implications of everything that I say or do in all

situations.

John Mackey, CEO of Whole Foods Market Saylor URL: http://www.saylor.org/books Saylor.org

Achieving the level of success that brings about cele brity is seldom a completely smooth process. Even

well-regarded celebrity CEOs seldom have totally un tarnished reputations. Bill Gates has been portrayed

as a ruthless and devious genius, for example, while General Electric CEO Jack Welch was attacked in

media outlets for an extramarital affair.

One of the more interesting recent cases of a tarnished reputation centers on John Mackey, founder and

CEO of Whole Foods Market. His strategy of offering organic food and high levels of service allowed

Whole Foods to carve out a profitable and growing niche in an industry whose overall margins have been

squeezed as Walmart’s Supercenters have gained mark et share. Under Mackey’s leadership, Whole Food’s

stock price tripled from 2001 to 2006. Mackey’s efforts to make food supplies healthier and his teamwork-

centered management approach attracted publicity, and he appeared headed for icon status.

But in 2007 Mackey and Whole Foods were embarrassed by the revelation that Mackey had been

anonymously posting negative information about a riva l, Wild Oats, online. Through his online persona

“rahodeb” (a scrambling of his wife’s name), Mackey asserted that Wild Oats’ stock was overpriced and

that the firm was headed toward bankruptcy. This was viewed by some observers as a possible effort to

manipulate Wild Oats’ stock price prior to a proposed acquisition by Whole Foods. Meanwhile, in e-mails

to other Whole Foods executives, Mackey noted that the acquisition of Wild Oats could allow them to

avoid “nasty price wars.” This caught the eye of Federal Trade Commission (FTC) regulators who were

concerned about the antitrust implications of the acquisition.

Whole Foods CEO John Mackey’s celebrity status was amplif ied when it was revealed that he had posted negative

information online about competitor Wild Oats. Saylor URL: http://www.saylor.org/books Saylor.org

Image courtesy of Joe M500, http://en.wikipedia.org/wiki/File:Jo hn_Mackey,_of_Whole_Foods_in_2009.jpg .

What should a CEO do when his or her reputation takes a hit? As the old saying goes, honesty is the best

policy. An example is offered by David Neeleman, founder and CEO of JetBlue. The reputations of JetBlue

and Neeleman took a severe blow after a widely repo rted February 2007 debacle in which travelers were

stranded in airplanes for excessive periods of time du ring a busy holiday weekend. Neeleman took a giant

step toward restoring both his and JetBlue’s reputation by issuing a public, heartfelt apology. He not only

issued a written apology to customers but also bought full-page advertisements in newspapers, posted a

video apology online, and created a new “bill of rights” for JetBlue customers.

Mackey apologized for his actions via his blog in 2008. As part of this apology, Mackey acknowledged that

he had failed to recognize how expectations change when one becomes a celebrity. Mackey noted that

when Whole Foods was a smaller company, “I was seld om interviewed and few people knew or cared who

I was. I wasn’t a public figure and had no desire to become one.” As his company grew, however, Mackey

became subject to more scrutiny. As Mackey put it, “At some point in the past 10 years I went from being a

relatively unknown person to becoming a public figure. I regret not having the wisdom to recognize this

fact until very recently.” [4]A big part of managing celebrity status is realizing that one is in fact a celebrity.

KEY TAKEAWAY

xThe media exposure common to modern CEOs provides the opportunity for such top executives to reach

celebrity status. While this status can provide positive benefits to their firms such as increased

performance, CEOs should be aware of and manage the potential for increased scrutiny associated with

this status.

EXERCISES

1. Can you identify another example of a celebrity CEO, such as Cornelius Vanderbilt, that existed prior to

the 1900s?

2. Identify examples of icons, scoundrels, hidden gems, and silent killers other than the examples offered in

this section. Saylor URL: http://www.saylor.org/books Saylor.org

3. Would you enjoy the media attention associated with CEO celebrity, or would you prefer to hide from the

limelight? Does your answer have implications for your future career choices?

[1] This section of the chapter is ad apted from Ketchen, D., Adams, G., & Shook, C. 2008. Understanding and

managing CEO celebrity. Business Horizons, 51(6), 529–534.

[2] Ranft, A. L., Zinko, R., Ferris, G. R., & Buckley, M. R. 2006. Marketing the image of management: The costs and

benefits of CEO reputation. Organizational Dynamics, 35(3), 279–290.

[3] Wade, J. B., Porac, J. F., Pollock, T. G., & Graffin, S. D. 2008. Star CEOs: Benefit or burden? Organizational

Dynamics, 37(2), 203–210.

[4] John Mackey’s blog. 2008, May 21. Re: Apology. Retrieved

fromhttp://www2.wholefoodsmarket.com/blogs/jm ackey/2008/05/21/back-to-blogging/#more-26.

Saylor URL: http://www.saylor.org/books Saylor.org

2.4 Entrepreneurial Orientation

LEARNING OBJECTIVES

1. Understand how thinking and acting entrepreneurially can help organizations and individuals.

2. List and define the five dimensions of an entrepreneurial orientation.

The Value of Thinking and Acting Entrepreneurially

When asked to think of an entrepreneur, people typically offer examples such as Howard Schultz, Estée

Lauder, and Michael Dell—individuals who have started their own successful businesses from the bottom

up that generated a lasting impact on society. But entrepreneurial thinking and doing are not limited to

those who begin in their garage with a new idea, fina nced by family members or personal savings. Some

people in large organizations are filled with passion for a new idea, spend their time championing a new

product or service, work with key players in the organization to build a constituency, and then find ways

to acquire the needed resources to bring the idea to fruition. Thinking and behaving entrepreneurially can

help a person’s career too. Some enterprising individuals successfully navigate through the environments

of their respective organizations and maximize their own career prospects by identifying and seizing new

opportunities.[1]

As a college student, Michael Dell demonstrated an entrepreneurial

orientation by starting a computer-upgrading business in his dorm room.

He later founded Dell Inc.

Image courtesy of Ilan Costica,

http://en.wikipedia.org/wiki/File:Michael_Dell_at_Oracle_OpenWorld.J

PG. Saylor URL: http://www.saylor.org/books Saylor.org

In the 1730s, Richard Cantillon used the French term entrepreneur, or literally “undertaker,” to refer to

those who undertake self-employment while also acce pting an uncertain return. In subsequent years,

entrepreneurs have also been referred to as innovators of new ideas (Thomas Edison), individuals who

find and promote new combinations of factors of production (Bill Gates’ bundling of Microsoft’s

products), and those who exploit opportunistic ideas to expand small enterprises (Mark Zuckerberg at

Facebook). The common elements of these conceptions of entrepreneurs are that they do something new

and that some individuals can make something out of opportunities that others cannot.

Entrepreneurial orientation (EO) is a key concept when executives are crafting strategies in the hopes of

doing something new and exploiting opportunities that other organizations cannot exploit. EO refers to

the processes, practices, and decision-making styles of organizations that act entrepreneurially. [2]Any

organization’s level of EO can be understood by examin ing how it stacks up relative to five dimensions: (1)

autonomy, (2) competitive aggressi veness, (3) innovativeness, (4) proactiveness, (5) and risk taking.

These dimensions are also relevant to individuals.

Autonomy

Autonomy refers to whether an individual or team of individuals within an organization has the freedom

to develop an entrepreneurial idea and then see it through to completion. In an organization that offers

high autonomy, people are offered the independence required to bring a new idea to fruition, unfettered

by the shackles of corporate bureaucracy. When individuals and teams are unhindered by organizational

traditions and norms, they are able to more effectively investigate and champion new ideas.

Some large organizations promote autonomy by empowering a division to make its own decisions, set its

own objectives, and manage its own budgets. One example is Sony’s PlayStation group, which was created

by chief operating officer (COO) Ken Kutaragi, largely independent of the Sony bureaucracy. In time, the

PlayStation business was responsible for nearly all Sony’s net profit. Because of the success generated by

the autonomous PlayStation group, Kutaragi later was tapped to transform Sony’s core consumer

electronics business into a PlayStation clone. In some cases, an autonomous unit eventually becomes

completely distinct from the parent company, such as when Motorola spun off its successful

semiconductor business to create Freescale. Saylor URL: http://www.saylor.org/books Saylor.org

Competitive Aggressiveness

Competitive aggressiveness is the tendency to intensely and directly challenge competitors rather than

trying to avoid them. Aggressive moves can include price-cutting and increasing spending on marketing,

quality, and production capacity. An example of comp etitive aggressiveness can be found in Ben & Jerry’s

marketing campaigns in the mid-1980s, when Pillsbury’s Häagen-Dazs attempted to limit distribution of

Ben & Jerry’s products. In response, Ben & Jerry’s launched their “What’s the Doughboy Afraid Of?”

advertising campaign to challenge Pillsbury’s actions. This marketing action was coupled with a series of

lawsuits—Ben & Jerry’s was competitively aggressive in both the marketplace and the courtroom.

Although aggressive moves helped Ben & Jerry’s, too much aggressiveness can undermine an

organization’s success. A small firm that attacks larger rivals, for example, may find itself on the losing

end of a price war. Establishing a reputation for competitive aggressiveness can damage a firm’s chances

of being invited to join collaborative efforts such as joint ventures and alliances. In some industries, such

as the biotech industry, collaboration is vital because no single firm has the knowledge and resources

needed to develop and deliver new products. Executives thus must be wary of taking competitive actions

that destroy opportunities for future collaborating.

Innovativeness

Innovativeness is the tendency to pursue creativity and experimentation. Some innovations build on

existing skills to create incremental improvements, while more radical innovations require brand-new

skills and may make existing skills obsolete. Either way, innovativeness is aimed at developing new

products, services, and processes. Those organizations that are successful in their innovation efforts tend

to enjoy stronger performance than those that do not.

Known for efficient service, FedEx has introduced its Smart Package, which allows both shippers and

recipients to monitor package location, temperature, and humidity. This type of innovation is a welcome

addition to FedEx’s lineup for those in the business of shipping delicate goods, such as human organs.

How do firms generate these types of new ideas that meet customers’ complex needs? Perennial

innovators 3M and Google have found a few possible answers. 3M sends nine thousand of its technical Saylor URL: http://www.saylor.org/books Saylor.org

personnel in thirty-four countries into customers’ workplaces to experience firsthand the kinds of

problems customers encounter each day. Google’s two most popular features of its Gmail, thread sorting

and unlimited e-mail archiving, were first suggested by an engineer who was fed up with his own e-mail

woes. Both firms allow employees to use a portion of their work time on projects of their own choosing

with the goal of creating new innovations for the company. This latter example illustrates how multiple

EO dimensions—in this case, autonomy and innovativene ss—can reinforce one another.

Ben & Jerry’s displays innovativeness by developing a series of offbeat and creative flavors over time.

Image courtesy of theimpulsivebuy,

http://www.flickr.com/photos/theimpulsivebuy/5613901887/sizes/m/in/photostream .

Proactiveness

Proactiveness is the tendency to anticipate and act on future needs rather than reacting to events after

they unfold. A proactive organization is one that adopts an opportunity-seeking perspective. Such

organizations act in advance of shifting market demand and are often either the first to enter new markets

or “fast followers” that improve on the initial efforts of first movers. Saylor URL: http://www.saylor.org/books Saylor.org

Consider Proactive Communications, an aptly named small firm in Killeen, Texas. From its beginnings in

2001, this firm has provided communications in hostile environments, such as Iraq and areas impacted by

Hurricane Katrina. Being proactive in this case means being willing to don a military helmet or sleep

outdoors—activities often avoided by other telecommun ications firms. By embracing opportunities that

others fear, Proactive’s executives have carved out a lucrative niche in a world that is technologically,

environmentally, and politically turbulent. [3]

Risk Taking

Risk taking refers to the tendency to engage in bold rather than cautious actions. Starbucks, for example,

made a risky move in 2009 when it introduced a new instant coffee called VIA Ready Brew. Instant coffee

has long been viewed by many coffee drinkers as a bland drink, but Starbucks decided that the

opportunity to distribute its product in a different format was worth the risk of associating its brand name

with instant coffee.

Although a common belief about entrepreneurs is that they are chronic risk takers, research suggests that

entrepreneurs do not perceive their actions as risky, and most take action only after using planning and

forecasting to reduce uncertainty. [4]But uncertainty seldom can be fully eliminated. A few years ago,

Jeroen van der Veer, CEO of Royal Dutch Shell PLC, en tered a risky energy deal in Russia’s Far East. At

the time, van der Veer conceded that it was too early to know whether the move would be

successful. [5]Just six months later, however, customers in Japan, Korea, and the United States had

purchased all the natural gas expected to be produced there for the next twenty years. If political

instabilities in Russia and challenges in pipeline construction do not dampen returns, Shell stands to post

a hefty profit from its 27.5 percent stake in the venture.

Building an Entrepreneurial Orientation

Steps can be taken by executives to develop a stronger entrepreneurial orientation throughout an

organization and by individuals to become more en trepreneurial themselves. For executives, it is

important to design organizational systems and policies to reflect the five dimensions of EO. As an

example, how an organization’s compensation systems encourage or discourage these dimensions should Saylor URL: http://www.saylor.org/books Saylor.org

be considered. Is taking sensible risks rewarded th rough raises and bonuses, regardless of whether the

risks pay off, for example, or does the compensation system penalize risk taking? Other organizational

characteristics such as corporate debt level may influence EO. Do corporate debt levels help or impede

innovativeness? Is debt structured in such a way as to encourage risk taking? These are key questions for

executives to consider.

Examination of some performance measures can ass ist executives in assessing EO within their

organizations. To understand how the organization develops and reinforces autonomy, for example, top

executives can administer employee satisfaction surveys and monitor employee turnover rates.

Organizations that effectively develop autonomy should foster a work environment with high levels of

employee satisfaction and low levels of turnover. Innovativeness can be gauged by considering how many

new products or services the organization has developed in the last year and how many patents the firm

has obtained.

Similarly, individuals should consider whether their attitudes and behaviors are consistent with the five

dimensions of EO. Is an employee making decisions that focus on competitors? Does the employee

provide executives with new ideas for products or processes that might create value for the organization?

Is the employee making proactive as opposed to reac tive decisions? Each of these questions will aid

employees in understanding how they can help to support EO within their organizations.

KEY TAKEAWAY

xBuilding an entrepreneurial orientation can be valu able to organizations and individuals alike in

identifying and seizing new opportunities. Entrepreneurial orientation consists of five dimensions: (1)

autonomy, (2) competitive aggressiveness, (3) innovativeness, (4) proactiveness, and (5) risk taking.

EXERCISES

1. Can you name three firms that have suffered because of lack of an entrepreneurial orientation?

2. Identify examples of each dimension of entrepreneurial orientation other than the examples offered in

this section.

3. How does developing an entrepreneurial orientation have implications for your future career choices? Saylor URL: http://www.saylor.org/books Saylor.org

4. How could you apply the dimensions of entrepreneurial orientation to a job search?

[1] This section is adapted from Certo, S. T., Moss, T. W., & Short, J. C. 2009. Entrepreneurial orientation: An

applied perspective. Business Horizons, 52, 319–324.

[2] Lumpkin, G. T., & Dess, G. G. 1996. Clarifying the en trepreneurial orientation construct and linking it to

performance. Academy of Management Review , 21, 135–172.

[3] Choi, A. S. 2008, April 16. PCI builds telecommunications in Iraq. Bloomberg Businessweek. Retrieved

fromhttp://www.businessweek.com/magazine/content/08_64/s0804065916656.htm .

[4] Simon, M., Houghton, S. M., & Aquino, K. 2000. Cognitive biases, risk perception, and venture formation: How

individuals decide to start companies. Journal of Business Venturing, 14, 113–134.

[5] Certo, S. T., Connelly, B., & Tihanyi, L. 2008. Managers and their not-so-rational decisions. Business

Horizons, 51(2), 113–119.

Saylor URL: http://www.saylor.org/books Saylor.org

2.5 Conclusion

This chapter explains several challenges that executives face in attempting to lead their organizations

strategically. Executives must ensure that their or ganizations have visions, missions, and goals in

place that help move these organizations forward. Measures and referents for assessing performance

must be thoughtfully chosen. Some executives become celebrities, thereby creating certain

advantages and disadvantages for themselves and for their firms. Finally, executives must monitor

the degree of entrepreneurial orientation present within their organizations and make adjustments

when necessary. When executives succeed at leadin g strategically, an organization has an excellent

chance of success.

EXERCISES

1. Divide your class into four or eight groups, depending on the size of the class. Assign each group to

develop arguments that one of the key issues discussed in this chapter (vision, mission, goals; assessing

organizational performance; CEO celebrity; entrepreneurial orientation) is the most important within

organizations. Have each group present their case, and then have the class vote individually for the

winner. Which issue won and why?

2. This chapter discussed Howard Schultz and Starbucks on several occasions. Based on your reading of the

chapter, how well has Schultz done in dealing with setting a vision, mission, and goals, assessing

organizational performance, CEO celebrity, and entrepreneurial orientation?

3. Write a vision and mission for an organization or firm that you are currently associated with. How could

you use the balanced scorecard to assess how well that organization is fulfilling the mission you wrote?