1. commitment to quality
i. commitment to quality not only improves outputs but also reduces costs involved in scrap, warranty, and service after the sale.
o Building quality into a product can reduce the costs of rework, scrap, and servicing the product after the sale.
o The business benefits from increased customer satisfaction and repeat sales, which can improve economies of scale.
• Differentiation on the basis of low costs
o Many firms that achieve low-cost positions also lower their prices because many of their competitors may not be able to afford to match their price level.
• Process innovations
o Process innovations increase the efficiency of operations and distribution.
o Although these improvements are normally thought of as lowering costs, they can also enhance product or service differentiation.
• Product innovations
o Product innovations are typically presumed to enhance differentiation but can also lower costs
o Example: adding filters to cigarettes not only helped differentiate one brand from another, but it also reduced production costs.
• Value innovations
o Modify products, services, and activities in order to maximize the value delivered to customers.
o Differentiate products and services only when associated cost hikes can be justified by increases in overall value and by pursuing cost reductions that result in minimal, if any, reductions in value.
• Human resources: the experience, capabilities, knowledge, skills, and judgment of all the firm's employees.
• Organizational resources: the firm's systems and processes, including its strategies at various levels, structure, and culture.
• Physical resources: plant and equipment, geographic locations, access to raw materials, distribution network, and technology.
• 1. Pay attention to areas of the business believed to be linked to the success of the firm's strategies.
o This goal can be accomplished formally (by measuring and controlling the activities of those areas), or informally (by making specific comments or asking questions at meetings).
o These areas are the ones identified as critical to the firm's long-term performance and survival, such as customer service, new product development, or quality control.
• 2. React strategically to critical incidents and organizational crises.
o The way a CEO deals with a crisis, such as declining sales or technological obsolescence, can emphasize norms, values, and working procedures, or even create new ones.
• 3. Serve as a deliberate role model, teacher, or coach.
o When a CEO models certain behavior, others in the organization are likely to adopt it as well.
o Example 1: executives who give up their reserved parking place in favor of the general parking lot send a message about the importance of status in the organization.
• 4. Strategically allocate rewards and status.
o Leaders communicate their priorities by consistently linking pay raises and promotions, or the lack thereof, to particular behaviors.
• 5. Modify the procedures through which an organization recruits, selects, promotes, and terminates employees.
o Hire and promote individuals whose values are similar to those of the fir and whose beliefs and behaviors more closely fit the organization's changing value system.
o The easiest way to affect culture over the long term is to hire individuals who possess the desired cultural attributes
• Regardless of leadership style, a leader's likelihood of success has also been tied to emotional intelligence, one's collection of psychological attributes, such as motivation, empathy, self-awareness, and social skills.
• Executives who possess a passion for their work, are socially oriented, and understand their own needs, as well as those of their subordinates, are more likely to gain the trust, confidence, and support necessary to lead their organizations.