Leadership in the

Context of
Strategy and
Sustainability

Prof Peter Stokes

Professor
 PROFILE
Peter Stokes is Professor of Leadership and Professional Development in the Leicester Castle Business School, De
Montfort University (Leicester, UK). Previously he was professor, faculty-wide Deputy Dean (2012-2015), Acting
Executive Dean (2012-2014) and Director of Research and Knowledge Transfer (2014-2015) at the University of
Chester (UK). He has extensive corporate and consultancy experience spanning over 48 years.

He has taught, researched, published and reviewed extensively in leading journals in the areas of, among others:
Management Learning and Development, Human Resource Management, Business Ethics, Management Philosophy,
Organizational Design, Organizational Behaviour, Critical Management Studies, and Research Methodology. His work
has appeared in world-class journals such as, for example: Human Resource Management, Organization, Studies in
Higher Education, Journal of Organizational Change Management, Employee Relations, Journal of Organisational
Behaviour (USA) and Entrepreneurship and Regional Development and he has published books on research methods
and critical management studies. He is Editor-in-Chief of the International Journal of Organizational Analysis and
serves on a number of international journal boards including the EuroMed Journal of Business. He has been visiting
professor and academic advisor in businesses and university business schools in a number of countries including:
France, Netherlands, Spain, Ireland, Germany, Senegal (West Africa),Vietnam, Morocco, Hong Kong, China, India,
Mexico and Dubai. He is fluent in French and Spanish and has a working knowledge of Swedish and Italian.
 1. What is Strategy?
The importance of Strategic Agility
 What do all these events have in common?
World War I Supply-chain breakdown 2008 Great Recession

2022 Pakistan Floods Military unrest Covid-19

Breakdown in: Production – Supply chain – Employment - Finance / liquidity – Law & regulations – Trust / reputation

Engau, C., & Hoffmann, V. H. (2011). Strategizing in an unpredictable climate: exploring corporate strategies to cope with regulatory
uncertainty. Long Range Planning, 44(1), 42-63.
 They are all “Black Swan” events that had a global effect…which drive the
turbulence of our times…
Market forecasts Industry performance

People, companies, leaders are biased towards using

the past to predict the future (e.g., budgeting, sales
forecasting). We do that because it is reassuring and
easy. But between the past and the future at best we
can find correlation, almost never causality…
The “Black Swan” theory was developed by Nassim Nicholas
Taleb who provides the following definition of the concept:
• A “Black Swan” is an unpredictable event
• It has widespread consequences
• After the event has occurred, people will assert that it was
explainable and predictable (hindsight bias)

Lybeck, E. (2017). An Analysis of Nassim Nicholas Taleb's The Black

Swan: The Impact of the Highly Improbable. Macat Library.
 The world is becoming increasingly complex and making strategic choices
is becoming much more difficult…

From To

Infrequent Very frequent

disruptions disruptions

Disconnected Hyper connected

Systems systems

Small Big
Data Data

Work for Work for

Living *VUCA: Volatility, Uncertainty, Complexity, Ambiguity Purpose

Bennis, W., & Nanus, B. (1985). The strategies for taking charge. Leaders, New York: Harper. Row, 41.
Bennis, W. G., & Nanus, B. (1974). Leadership. University of Cincinnati.
VUCA & BANI
• A VUCA focus aims for rapid adaptation,
agile processes and flexible planning
methods.
• Instead of creating long-term project plans
and relying on individual forecasts, teams
should be able to react quickly to new
information and requirements.
• Agile methods such as Scrum or Kanban
make it possible to tackle projects in short
iterations and adapt them flexibly.

• BANI requires companies to rethink their risk

tolerance, focus on the emotional needs of
employees and strengthen their ability to
solve problems non-linearly.
• Companies that adopt the BANI model meet
modern challenges with resilient structures,
mindfulness, adaptability & transparency.
 Logical Incrementalism – Business Planning in small steps - Planning
Long-term but
resources to
• Most business planning is medium to long term be reactionary
• Achieving an organization's goals by making smaller decisions and taking smaller steps, as
opposed to the complex approach and bigger leaps of long-term strategic planning.

Quinn, J. B. (1978). Strategic change:" logical incrementalism". Sloan Management Review (pre-1986), 20(1). Cyclical but
Quinn, J. B. (1981). Formulating strategy one step at a time. The journal of business strategy, 1(3), 42. impacted by
regulations

Innovative &
disruptive
What is a strategy?

Strategy is the direction and scope of an organisation over the long term:
which achieves advantage for the organisation through its configuration
of resources within a changing environment, to meet the needs of
markets, customers or clients and to fulfil stakeholder expectations.
(Johnson, Scholes and Whittington, 2011)
 More definitions of strategy

10

Sources: A.D. Chandler, Strategy and Structure: Chapters in the History of American Enterprise, MIT Press, 1963, p. 13; M.E. Porter, ‘What is strategy?’, Harvard Business Review, November–December 1996, p. 60; P.F. Drucker, ‘The theory of
business’, Harvard Business Review, September–October 1994, pp. 95–106; H. Mintzberg, Tracking Strategies: Towards a General Theory, Oxford University Press, 2007, p. 3.
What is strategy for?
To define an organisation’s purpose:
– Mission Statement
– Vision Statement
– Statement of Corporate Values
– Statement of Objectives

Effective strategy is built around three key questions:

1. How can my business create value for customers?
2. How can my business create value for employees?
3. How can my business create value by collaborating with suppliers?

Helps leaders set organizational goals: 11

• Price: How to price goods and services based on customer satisfaction and cost of raw
materials
• Suppliers: Whether to source materials sustainably and from which suppliers
• Employee recruitment: Attract and maintain talent
• Resource allocation: How to allocate resources effectively
Stakeholders
• To define and express the purpose of
an organization to stakeholders.
• Stakeholders are those individuals or
groups that depend on an organisation
to fulfil their own goals and on whom,
in turn, the organisation depends.
Johnson & Johnson Shareholders
Name Equities % Valuation
Vanguard Fiduciary Trust Co. 228,938,504 9.50% 33 613 M $
BlackRock Advisors LLC 145,731,837 6.05% 21 396 M $ 12
STATE STREET CORPORATION 133,519,781 5.54% 19 603 M $
Geode Capital Management LLC 53,322,964 2.21% 7 829 M $ Freeman, R. E. et. al., (2010). Stakeholder theory: The state of the
Eaton Vance Management 42,549,943 1.77% 6 247 M $
art.
BlackRock Life Ltd. 37,465,814 1.56% 5 501 M $
State Farm Investment Management Corp. 31,675,492 1.31% 4 651 M $ Freeman, R. E. (2023). The politics of stakeholder theory: Some
JPMorgan Investment Management, Inc. 29,309,544 1.22% 4 303 M $ future directions. In R. Edward Freeman’s Selected Works on
Wells Fargo Bank NA 27,263,857 1.13% 4 003 M $
Stakeholder Theory and Business Ethics (pp. 119-132). Cham:
Norges Bank (13F) 25,977,042 1.08% 3 814 M $
Springer International Publishing.
 What are the choices and trade-offs?
The first choice is about defining the Strategic
01 Priorities that a company needs to address with the
Strategy.

The second choice is about choosing the tactics or

02 the initiatives that will help to address each Strategic
Priority.

The third is about reducing the uncertainty and the

03 risk that the first two choices are wrong.

Regulation vs 1st to market Technology advances vs Cost Supply speed vs Consistency

The Strategy Activation ‘gap’ by the numbers

67% 95% 14% 38%

… of strategies fail … of the typical … of CEOs consider … is the average

due to poor workforce doesn’t their company to decrease in
execution understand what be effective at financial
the Strategy is executing the performance if
Strategy strategies are not
activated
 Percentage of leaders at each level in an organisation who can list their

“No one
company’s top three priorities

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

knows their Top Team 51%

strategy, not Senior Executives 22%

even Top Middle Managers 18%

Leaders” Frontline Supervisors 13%

“Execution is a • Research shows that 90 percent of organisations
People fail to execute their strategies successfully.

Problem, Not a • Senior leaders spend great amounts of time

Strategy creating the strategic plan, often in isolation.

Problem” • Strategy is often imposed onto those who are

tasked with implementing it.

• This leads to lack of commitment from the most

important stakeholders – the implementers.
“ A good plan executed now is better
than a perfect plan executed next
week “
George S. Patton
 Business Agility
Dictionary definition: A set of organizational capabilities, behaviors, and ways of working that affords
your business the freedom, flexibility, and resilience to achieve its purpose.

Evans, N. D. (2002). Business agility: strategies for gaining competitive advantage through mobile business solutions. FT Press.
It is paramount to apply Agile Principles to the process of
Strategy – “What is agility?”
Practical Implications

Strategy should be developed in a progressive way,

Commitment comes from starting from verbalising the Vision, Mission and Level of
empowerment; it cannot be passed Ambition, then determining the Strategic Priorities for
on by authority. the long range, then developing more articulated
operating plans for the short to mid term
Prioritise
Empowerment
1 vs Centralization Figuring out all details of
2 • Train the team to develop “back of the envelope”
execution in advance is less and
less feasible nor desirable. Better skills to quickly build educated assumptions and
Prioritise estimates when precise data is not there (yet).
to have a “rough plan” and move •
Speed over Accept Strategic Planning as imperfect and never
to action truly finished, as new data and information must be
Prioritise Perfection
flexibility over added to it over time.
following a
plan • Adopt information systems which will reduce the
3 “pain” of making changes to projections, reports, and
Leaders must realise that
other constructs which are normally used to capture
abandoning a plan is often as planning decisions.
necessary as it is difficult. • Streamline continuous data collection for frequent,
short and “pain free” progress Review.
• Create a strong culture of learning.
What are the key components of Strategy?

A Strategic Plan outlines the leaders’

Few, broad
commitments vision for the future of the
to action organisation and the long-term
goals and objectives (5-10 years)
and the Key Priorities.

The Operating Plan outlines the key

projects and initiatives an
organisation will undertake during a
shorter period of time, usually 1-3
years.
Many, specific
commitments
to action Strategy Formulation + Execution = Strategy
Activation
The Levels of Strategy

Corporate-level
Concerned with what businesses the company
should be as a whole.

Business Strategy
Involves determining what markets a business unit should
compete in and how it should compete (e.g., how to create
competitive advantage in each business ?)

Functional Strategy
Focuses on the role of individual functions
(e.g., marketing, human resources, etc.), and on
individual programmes or projects, in
delivering the business level Strategy.
The Levels of Strategy
Craft the brands and choice
of drinks that people love,
Corporate-level
to refresh them in body and
spirit

Business Strategy

Functional Strategy
 The ultimate goal of a Strategy is to help the company
achieve Competitive Advantage
8

7
RETURN ON INVESTED CAPITAL (ROIC)

Corporation 5 has a clear Competitive Advantage

6

Average
4

0
Corporation 1 Corporation 2 Corporation 3 Corporation 4 Corporation 5 Corporation 6
The Competitive Advantage can be achieved in three ways
Margin Cost Leadership

Price • Similar pricing

• Different cost structure
• Advantage derived
Cost ADVANTAGE from cost
Company Industry

ROIC Margin Differentiation

Price
ADVANTAGE • Different pricing
ADVANTAGE
• Similar cost structure
Cost
• Advantage derived from pricing

Company Industry
Company Industry
Margin • Different pricing Hybrid Strategy
Comparison at Price • Different cost
same volumes ADVANTAGE structure
• Advantage derived
Cost ADVANTAGE from both pricing
and cost structure
Company Industry
Competitors
 However, Competitive Advantage does not last forever…
60

Competitive forces drive Competitive Advantage down

50

40

30
ROIC

Competitive Advantage
20
Period

10 Value creation

0
12/31/1899 1/1/1900 1/2/1900 1/3/1900 1/4/1900 1/5/1900

Time
There are two fundamental ways of renewing Competitive
Advantage
Continuous Improvement Transformation

Making improvements wherever possible, An innovative product / service that

such as: opening up new distribution transforms the entire organisation and
channels, launching new products, or finding industry
more efficient ways to work E.g., Apple with iPhone
The Strategic Management Process

External
Analysis

Develop
Establish Perform Define and Measure and
Vision and Define Implement
Long-term Situation Plan Evaluate
Mission Priorities Strategy
Objectives Analysis Initiatives Performance
Statements

Internal
Analysis

Strategy Formulation Strategy Implementation Strategy Evaluation

How Strategy is cascaded from Vision to Strategic Projects
Vision
The key pillars of the Strategy, in order, are:
Mission & Values
1. An agreed vision and mission and a clear set
of values Level of Ambition

2. A set of long-term objectives (financial and Priority 1 Priority 2 Priority 3 Priority 4

non-financial) linked to the vision and
• Objective 1 • Objective 1 • Objective 1 • Objective 1
mission • Objective 2 • Objective 2 • Objective 2 • Objective 2
• Objective 3 • Objective 3 • Objective 3 • Objective 3

3. A small number of priorities (enabling and

strategic) deriving from a robust situation
analysis, with clearly defined objectives

Initiative 10

Initiative 11

Initiative 12
Initiative 1

Initiative 2

Initiative 3

Initiative 4

Initiative 5

Initiative 6

Initiative 7

Initiative 8

Initiative 9
linked to the long-term targets

4. A set of initiatives aiming to address the

objectives of each priority
 How Strategy is cascaded from Vision to Strategic Projects
An example (Pharma SME)
Vision: Our company will be an innovator and leader in
repurposing of known therapies to improve patient care.
Mission: Advancing today’s therapies to enable healthier lives.

Level of Ambition: Revenue (From £1.5m, To £150m), EBITDA (From 10 %, To 70 %), Number of Patents (From 33, to 70),Revenue
from own Products (From 5 %, To 80 %), etc. (earnings before interest, taxes, depreciation, and amortisation)

Achieve cultural change to

Priorities

Become an established
improve decision making, Develop affordable
technology-driven Increase product licenses
delegation and differentiated drugs
company
accountability
Initiatives

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 Strategic agility
6 Principles to Build
Your Company’s
Strategic Agility

• Principle 1: Prioritize speed over perfection

• Principle 2: Prioritize flexibility over
planning
• Principle 3: Prioritize diversification and
“efficient slack” over optimization
• Principle 4: Prioritize empowerment over
hierarchy
• Principle 5: Prioritize learning over blaming
• Principle 6: Prioritize resource modularity
and mobility over resource lock-in

https://hbr.org
/2021/09/6-principles-to-build-your-com
panys-strategic-agility