30Strategic Management: Mindsets and Behaviors

As we described at the beginning of Chapter 29, effective strategic management requires fluency in two distinct yet interrelated disciplines. One, strong analytics capabilities, was the subject of that chapter. This chapter focuses on the other discipline: the mindsets, behaviors, and processes that orient and motivate the entire management team toward its long-term common goals.

For all the time managers spend developing strategic plans, they are often ineffective at turning those plans into actions. Budgets and actual spending don’t always reflect strategic priorities. In a 2016 survey of 1,271 executives, only 30 percent said their company’s budgets for capital expenditures, research and development (R&D), and sales and marketing were closely aligned with their strategic plans.1 Instead, companies frequently cut back R&D spending or sales and marketing expenditures to meet arbitrary short-term earnings targets. Similarly, managers responding to another survey indicated that their companies are too stingy, especially with investments expensed immediately through the income statement and not capitalized over the longer term.2 About two-thirds of the respondents said their companies underinvest in product development, and more than half said their companies underinvest in sales and marketing and in new products or new markets (see Exhibit 30.1).

Exhibit 30.1 Where Executives Would Spend More to Maximize Value

Source: T. Koller, ...

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