25 Strategic Leadership

Learning Objectives:

The Learning objectives of the module is to explore the nature of strategic leadership and nature of strategy, to address the following questions:

1.    What is the definition and focus of strategic leadership?

2.    How does strategic leadership differ from leadership?

3.    What makes strategic leadership so difficult and challenging?

4.    How can strategy-making and strategy-implementing processes work in organizations to create enduring success?

5.    What are the implications for leaders of making and implementing strategy?

1.Introduction

In simple words, the strategy can be defined as establishing a plan to achieve the mission and envisioned future of the firm. In recent times,strategy is transformed phenomenally as success tool that engaged various stakeholders to participate in the economic success of the firms.The global economy and the worldwide trends bring new challenges filling the corporate life. Along with the changing economic paradigm, the political and economic uncertainty brings about an increased demand for ‘right leaders’ with visions and authority.

Moreover, the economic recession of the last decade has stressed the importance of leadership as a significant part of the corporate strategic management. Viewed from a distance of several years, this topic should be reconsidered and the situation analyzed from different angles. Figure 1 depicts how Leadership prevails and act as the backbone of the business decision making and organizational excellence.

Figure 1: Leadership role in an organization (Source: Author)

Following YouTube link explains the Need of Strategic Leadership for a Business (Source:www.powtoons.com)

https://www.youtube.com/watch?v=EhNXknJree8

Strategic leadership ensured six skills, that encourage leaders to think strategically and navigate the unknown effectively. Skills includes (a). Anticipate; (b) Challenge; (c) Decide; (d) Align; and (e) Learn. An effective Strategic Leader should focus on developing these abilities as suggested in the Table I

Table I: Abilities to be focused by the Strategic Leader

2. Defining Strategic Leadership

The term “Strategic Leadership” refers as the strategic outlook of the manager’s potential to express a strategic vision for the organization, or a part of the organization. Primarily involved into motivating, persuade others to acquire the vision as a whole. Strategic leadership can also be defined as utilizing strategy in the management of employees.

3. Factor affecting “Strategic Leadership”

The term “Strategic leadership” is getting momentum in last one decade, due to the following factors:

1.    Pace of Change: There is a quick change in the product / service innovation, new products is being developed faster, fast change in the business landscape. Therefore, there is an emerging requirement of establishing right relationship between changing business landscape and leadership at business level.

2.    Increasing uncertainty: Due to the uncertainty, long term forecasting and planning becomes essentially important in recent times.

3.    Growing ambiguity: Problem levels are required to be clearly indicated and required to be solved using competent Human resource.

4.    Increasing Complexity: Business problems are getting complex. The amount of usable information required at process level getting importance for operational decisions.

At organization level there is an urgent requirement to develop an organizational Strategy to support strategic leadership at larger, it is a learning process that includes five elements:

a.    Positional assessment

b.    Understanding the vision

c.    Strategic formulation

d.    Identifying and implementing tactics

e.    Checking the Progress

4.Scope of Strategic Leadership

Conceptually, the focus of strategic leadership is sustainable competitive advantage, or the enduring success of the organization. Sustainable competitive advantage is the key focus of Strategic Leadership. Strategic leadership is exerted when the decisions and actions of leaders have strategic implications for the organization.

The Scope of Strategic leadership can be understood as:

a.    Strategic leadership is broad in scope.

b.    The impact of strategic leadership is felt over long periods of time.

c.    Strategic leadership often involves significant organizational change.

5. Properties of Strategic Leadership

a. Scope: The broad scope of strategic leadership means that it impacts areas outside the leader’s own functional area and business unit—and even outside the organization. This broad scope requires seeing the organization as an interdependent and interconnected system of multiple parts, where decisions in one area provoke actions in other areas. The scope of strategic leadership extends beyond the organization, acting on and reacting to trends and issues in the environment.

b. Duration: Like its scope, the time frame of strategic leadership is also far reaching. The strategic leader must keep long-term goals in mind while working to achieve short-term objectives. In contrast, not all leadership requires this forward view to be effective. Very good operational leaders manage day-to-day functions effectively and are skilled at working with people to ensure that short-term objectives are met. This is important work, but it does not always need to take the long term into account.

C .Organizational Culture: A third way strategic leadership differs from leadership in general is that it results in significant change and impact the organization in the longer run. For example, consider the strategic impact of a new compensation system that touches all parts of the organization, provides a structure for defining differences in roles and appropriate salary ranges, and ties performance plans and measures to the strategic objectives of the organization, giving people a clear understanding of what is required to advance along various career ladders.

6. Focus of Strategic Management

Strategic leadership provides a framework that primarily focused on values, vision, business techniques that focus organizations to follow certain course of action to remain competitive and relevant.

Strategic leadership ensured a learning organization to adapt various survival strategies to remain competitive and sustain in the market place. Also, to ensure adoption towards changing technology, climate change and economic factors risks the organization becoming obsolete. It balances a focused analytical perspective with human dimension of strategy making. Overall, Strategic leadership engage entire business in one strategic thread in order to lay the foundation for building winning organizations that can define, commit, adjust and adapt their strategy wherever required.

7. Process of Strategic Leadership

Figure 3 depicts the process of strategic leadership. Various stages involved in the Strategic leadership includes

(i) Define Leadership requirements: As formal definition of leadership depict the term leadership as a process of social influence in which a person can enlist the aid and support of others to accomplish common task. Understanding the ‘Leadership requirements’ become a focal requirement of successful and effective leadership.

Various factors that need to be consider while defining the leadership requirements includes; Traits, situational interaction, function, behavior, power, vision and values.

(ii)   Assess Current Behavior: There is always a need to evaluate the behavior of successful leaders, determining a behavior taxonomy, and identifying broad leadership styles. It is observed that positive reinforcement can be used to resolve a business issues. Example, an employee does not show up to work on time every day. The manager of this employee decides to praise the employee for showing up on time every day the employee actually shows up to work on time. As a result, the employee comes to work on time more often because the employee likes to be praised. In this example, praise (the stimulus) is a positive reinforce for this employee because the employee arrives at work on time (the behavior) more frequently after being praised for showing up to work on time.

(iii)   Assess Organizational Implications; Assessment of implication of leadership on overall processes, functions and style is important to know the effectiveness of leadership.

(iv)Develop strategically individual team organization: For successful implications of overall strategy, team structuring is required.

(v)  Reassessment: Reassessment of processes, evaluating and redesigning the same for next level.

8. Roles of Strategic Leaders:

Besides to activities like industry analysis, competitive analysis, strategic Leaders has to perform lot of organizational roles and activities. The Roles and responsibilities primarily aims to develop a Strategic Vision and Mission; Sitting Goals and Objectives; Crafting a Strategy, Executing a Strategy and Evaluating the Performance.

In other words, we may define the scope of Strategic leadership as leadership as vision; leadership as command, leadership as symbol and Leadership as Decision Making. Figure 4 depicts the scope of Leadership from different perspective.

9. Principles of Strategic Leadership

I. Distribute responsibility. Strategic leaders gain their skill through practice. For decision making at different levels, distribution of responsibility gives potential strategic leaders the opportunity towards better decision making.

Case: In an oil refinery on the U.S. West Coast, a machine malfunction in a treatment plant was going to cause a three-week shutdown. Ordinarily, no one would have questioned the decision to close, but the company had recently instituted a policy of distributed responsibility. One plant operator spoke up with a possible solution. She had known for years that there was a better way to manage the refinery’s technology, but she hadn’t said anything because she had felt no ownership. The engineers disputed her idea at first, but the operator stood her ground. The foreman was convinced, and in the end, the refinery did not lose a single hour of production.

When individuals like the plant operator are given responsibility and authority, they gain more confidence and skill. And when opportunities to make a difference are common throughout an organization, a “can-do” proficiency becomes part of its identity. At Buurtzorg, a Dutch neighborhood nursing organization, most decisions are made by autonomous, leaderless teams of up to a dozen nurses. A small central management team supports and coaches the frontline nurses; there is no other middle management. The company achieves the highest client satisfaction levels of all community nursing delivery in the Netherlands, at only 70 percent of the usual cost. Patients stay in care half as long, heal faster, and become more autonomous themselves. And the nurses gain skills not just for leading their part of the enterprise, but in community leadership as well.

2.  Be honest and open about information. The management structure traditionally adopted by large organizations evolved from the military, and was specifically designed to limit the flow of information. In this model, information truly equals power. The trouble is, when information is released to specific individuals only on a need-to-know basis, people have to make decisions in the dark. They do not know what factors are significant to the strategy of the enterprise; they have to guess. And it can be hard to guess right when you are not encouraged to understand the bigger picture or to question information that comes your way. Moreover, when people lack information, it undermines their confidence in challenging a leader or proposing an idea that differs from that of their leader.

Some competitive secrets (for example, about products under development) may need to remain hidden, but employees need a broad base of information if they are to become strategic leaders. That is one of the principles behind“open-book management,” the systematic sharing of information about the nature of the enterprise. Case: Southwest Airlines, Harley-Davidson, and Whole Foods Market, which have all enjoyed sustained growth after adopting explicit practices of transparency.

Transparency fosters conversation about the meaning of information and the improvement of everyday practices. If productivity figures suddenly go down, for example, that could be an opportunity to implement change. Coming to a better understanding of the problem might be a team effort; it requires people to talk openly and honestly about the data. If information is concealed, temptation grows to manipulate the data to make it look better. The opportunity for strategic leadership is lost. Worse still, people are implicitly told that there is more value in expediency than in leading the enterprise to a higher level of performance. Strategic leaders know that the real power in information comes not from hoarding it, but from using it to find and11

 

10.  Strategic Leadership as sustainable competitive advantage

Individuals and teams enact strategic leadership when they think, act, and influence in ways that promote the sustainable competitive advantage of the organization.

The focus of strategic leadership is sustainable competitive advantage, or the enduring success of the organization. Indeed, this is the work of strategic leadership: to drive and move an organization so that it will thrive in the long term. This is true whether the organization is for-profit or nonprofit.

It depends only on whether your organization seeks and achieves an enduring set of capabilities that provide distinctive value to stakeholders over the long term, in whatever sector your organization operates or whatever bottom line you are measured by.

11. Traits of Strategic Leader:

There is always a need to understand the personal aspirations of a leader. It reflects the kind of leadership one could have.

•  Values. What values are most central and critical to how you approach work? What values do you want to be known for practicing (not just preaching)?

•  Leadership legacy. What do you want to be your leadership legacy to others? What do you want others to say about your leadership after you’ve left your current position or the organization? What lasting impact do you want to have—not just on the organization but also on the people around you?

•  Career aspirations. What kind of role would you like to have five or ten years from now? Describe the critical elements of what for you would be an ideal opportunity for strategic leadership

12. Strategic Leadership as Learning Process:

There are many theories and approaches to leadership that try to identify a methodology how to identify and objectively measure effectiveness of leaders. Table III exhibit various approaches to define leadership as the process.

Table III: Various Approaches to Strategic Leadership

Theory	Approach
Antonakis,   Cianciolo	Leadership   as   situational   and   contingency   approaches,
and Sterberg (2004)	transformational leadership, transactional leadership,  and trait
	based theory, and information processing.
(Keller, 2006).	The transactional leadership builds on monitoring and controlling
	of followers and rewarding desirable behavior
(Judge, Piccolo, 2004).	Two  fundamental  tools  are  suggested  for  effective  strategic
	leadership,  namely  –  contingent  reward  and  management  by exceptions

Bass Judge, Piccolo (2004) and  (1997)

The  transformational  leadership  is  based  on  charisma  of  a leader and inner motivation of his collaborators. Tools including-   idealized   influence   (charisma),   inspirational   motivation,

13. Stakeholder Value in Strategic leadership framework

Strategic leaders are ultimately responsible for creating vision and value congruence across the individual, unit, and organization levels as well as for developing effective relationships between the organization and environmental stakeholders. Creating value for the multiple stakeholders could be done with innovation and imagination by reinventing the methods and systems so they produce more value for all stakeholders. Modern organizations must be ambidextrous (i.e., able to execute and innovate) in order to be successful because of the multiple environmental pressures they face and because they must organize a diverse workforce to do this work. Discussion about diversity must include a variety of topics. With regard to the demographic curve, it will be at least the subject ageing

Figure 6 illustrates, various processes comes under development to create stakeholder value

Summary:

Strategic Leadership is at the same time a high position in an organization or society, a personal characteristic, and a relationship between leaders and followers Strategic Leaders are partially born and partially made.

Various traits of a Leader includes Value, Leadership Legacy, Career Aspirations.

Individuals and teams enact strategic leadership when they think, act, and influence in ways that promote the sustainable competitive advantage of the organization.

Progress Check Points

Question 1: Define the term “Strategic Leadership”. What is the scope of Strategic Leadership in Corporate Landscape?

Question 2: How various theories on Strategic Leadership support its acceptability in both service and manufacturing sector?

Question 3: List basic traits of strategic leader

Question 4: “Strategic Leadership is the tool to maintain competitive advantage”. Discuss.