Module 1 – Strategic leadership: laying foundations Overview In this module we first invite you to reflect, in an analytical and critical manner, on what the concept of 'strategic leadership' means and what it encompasses – in theory primarily, but also in practice. As you will learn, we regard corporate governance as a central task of strategic leaders. We hence encourage you to do the same in respect of the concept of 'corporate governance'. At this level of postgraduate studies the development of analytical and critical thinking abilities is essential and you are thus challenged towards this end. We help you to come to a better understanding of relevant concepts, but we also specifically guide you to apply some analytical and critical thinking as you engage with the essentials of the broad theme/s of this course. The latter revolves around the 'tasks' and challenges of leaders who function at the upper-most echelons of businesses and organisations more generally. These people are responsible and accountable for the overall leadership of organisations. Being a leader at the pinnacle of business and organisational life today can almost be likened with leading an army through war. There are numerous 'battlefields', 'campaigns', 'war-zones', 'enemies' and so forth. The 'art of the general' (which is what 'strategists' work is about) revolves around 'winning the war' – and hence the war as a whole is what is at stake at the top level. As we've said, we are primarily concerned, in this course, about leadership from the perspective of 'the top'. Business and organisational life today, spurred on and facilitated greatly by the information technology revolution, is 'global'. Big picture (holistic) and conceptual thinking is very important at this level. The global world is filled with 'minefields' and the top-level leaders of today are bound to stumble across numerous 'dangers', traps, surprise tactics, unexpected resistance, fierce competitive behaviours, and so on. It should hence come as no surprise to you that the concept and notion of strategy has its origin in the context of the military. Strategic leadership therefore has to do with the decisions and actions of the 'war strategists' – the 'generals' of organisations (business as well as others). The thinking, behaviour and competencies and capabilities that today's and especially tomorrow's top level leaders will need in order to sustain competitive advantage and success over the long term can somehow be expected to differ from those required in the past. In particular, as you'll discover, we believe that sustainability should be placed central to the task and challenges related to strategic leadership. Objectives At the successful completion of this module, you should be able to: ● analyse and critically discuss what is meant by strategic leadership and corporate governance ● explain the scope of strategic leadership as field of theory and practice, including corporate governance ● analyse and explain potential areas for future research pertaining to strategic leadership. Learning resources Text George, B 2007, True north, John Wiley & Sons. Solomon, J 2014, Corporate governance and accountability, 4th edn, John Wiley & Sons, Chichester. Behan, B 2011, Great companies deserve great Boards: a CEOs guide to the Boardroom, Palgrave Macmillan. Selected readings 1.1: Nicholls, J 1994, 'The strategic leadership star: a guiding light in delivering value to the customer', Management Decision, vol. 32, no. 8, pp. 21–6. 1.2: Harrison, EF & Pelletier, MA 1997, 'CEO perception of strategic leadership', Journal of Managerial Issues, vol. Ix, no. 3, pp. 299–317. 1.3: Cannella, A & Monroe, M 1997, 'Contrasting perspectives on strategic leaders: toward a more realistic view of top managers', The Journal of Management, May–June, vol. 23, no. 3, pp. 213–37. 1.4: Hewson, R 1997, 'New dimensions in strategic leadership', Strategy and Leadership, September–October, vol. 25, no. 5, pp. 42–7, EBSCOhost database Business Source Premier, item: AN 9710175908. This reading can be accessed through the Library databases. 1.5: Carpenter, MA, Geletkanycz, MA & Sanders WG 2004, 'Upper echelons research revisited: antecedents, elements, and consequences of top management team composition', Journal of Management, vol. 30, no. 6, pp. 749–78. 1.6: Boal, K & Hooijberg, R 2001, 'Strategic leadership research: Moving on', The Leadership Quarterly, vol.11 no.4, pp.515-49. 1.7: Nielson, K & Daniels, K 2012, 'Does shared and differentiated transformational leadership predict followers' working conditions and well-being?' The Leadership Quarterly, vol. 23, pp.383-97. 1.1 What 'strategic leadership' means and entails We will shortly, before we start our journey of learning more about the challenges related to strategic leadership, be asking you the question 'What do you think does strategic leadership mean?' We'll thus take a closer look at the meaning of 'strategic leadership'. However, let's first just contextualise where and how this course fits into the various course offerings we have in the area of leadership. After all – this course is not 'strategic management', neither is it 'team leadership' – it is about strategic leadership. People enrol in particular courses for a variety of reasons. More importantly, course participants (note that you are regarded as a special kind of 'student') bring a diverse set of skills, knowledge and experience to each course and this provides for some interesting views, ideas and comments on specific topics. As you come into this course – wanting to learn and hence being an active participant in the learning experience – you may have your own idea of what strategic leadership is all about. In all likelihood you have already been exposed to the field of study of leadership here at USQ – or perhaps elsewhere. As mentioned, we offer numerous courses that revolve around leadership. We usually prefer people to first complete the course MGT8038 Leadership Development before they embark on the other courses that constitute the leadership stream of our course offerings. The other course you might have taken is MGT8037 Team Leadership. Whereas MGT8038 is meant to serve as the 'foundation course' – it lays the foundation for further learning and development in the field – MGT8037 focuses on the operational 'mechanics' of being a leader in a team environment. MGT8040 Entrepreneurship, Innovation and Creativity has a more narrow focus in some sense – it places emphasis on the managerial leadership dynamics related to organisations that wish to compete on the basis of innovation and entrepreneurial endeavour. This course, MGT8039, also has its focus narrowed down – to strategic level leadership dynamics. We assume you have enrolled in this course because you have the desire to learn more about leadership related dynamics and challenges 'at the top'. But what then do we understand by 'strategic leadership'? Learning activity 1.1 Sit down and think a while – think what you understand by the concept 'strategic leadership'. Do not read any further for the moment. Think about when you decided to enrol for this course. What can you remember – what triggered you about this course? Why did you want to learn more about this topic? Write down these ideas: 1. What is strategic leadership according to you? 2. What did you find fascinating or intriguing about this topic when you considered enrolling for this particular course? 3. Why did you enrol for this course? What do you expect to learn and get out of it? In order to develop a better understanding of the concept of 'strategic leadership' it is essential to unpack the concept. The concept consists of two words – strategic and leadership. We are therefore here concerning ourselves with leadership of a specific kind or type. This makes it appropriate to now first take a look at the term leadership. 1.1.1 'Leadership' as concept: a brief introduction As you read from various sources you'll find that leadership is defined in many different ways. One almost gets the feeling that there are as many definitions as there are authors on the subject. One definition holds that leadership is 'the ability to influence and develop individuals and teams to achieve goals that contribute to a worthwhile purpose' (Robbins, Millett, Cacioppe & Waters-Marsh 2001, p. 400). This definition is one of the many that assumes that leadership is a process of intentional influence exerted by one party over another in order to guide activities and foster relationships to meet some group or organisational goal (also see for instance Yukl 2002, pp. 2–3 and Daft 2002, pp. 5–6). According to Lussier and Achua (2003) leadership in an organisational context is a process happening between leaders and followers, entailing influence to achieve organisational objectives through change. Leadership is the use of influence to bring about some or other change within the organisation – it will involve change as it is about moving from one state to another (it is goal directed). It entails 'an interaction between two or more members of a group that involves a structuring or restructuring of the situation and the perceptions and expectations of the members' (Bass 1990, p. 19) and it is 'an influence relationship among leaders and followers who intend real changes that reflect their mutual purpose' (Rost 1993, p. 103). This influence process in a relationship is based on influence that is multi-directional and staff, followers or associates are active participants in the process – true leadership is a shared influence process. Leaders and followers purposefully desire substantive and transforming future changes; and leaders and followers develop common purposes that are a reflection of their intended changes (Yukl 2002). According to Dubrin and Dalglish (2003, p. 21) 'Leadership is the ability to inspire confidence in and support among the people who are needed to achieve organisational goals … Leadership is said to deal with change, inspiration, motivation and influence'. From the foregoing it ought to be clear that people must always be at the very heart of any topic or discussion that involves leadership and that leadership involves the use of influence to change the activities and relationships of people within an organisation. It revolves around the interaction between two or more members of a group in a situation in striving to achieve some goal/s. The role of the perceptions and expectations of these interacting parties or role-players are obviously very important in the whole process where there are influencing behaviours at play all the time. These influence processes in a relationship are based on influence that is multi-directional and staff, followers and others may all be active participants, to a greater or lesser extent, in the process. When we study leadership from an organizational and managerial perspective the issue of organizational performance inevitably comes into the equation. An assumption underlying the study of organizational leadership is that leaders affect organisational performance. The belief that leaders actually influence organisational performance is very strong – even though empirical research findings about the exact relationship may be less straight-forward. Although there is evidence that leadership does make a difference, it is important to understand the perceptions of difference (Yukl, 1994). An understanding of these perceptions derives from attribution theory - the process of attributing causality to events. Events are explained often in simplistic terms: A new leader takes over, the organisation does better, the leader is given credit for the change, though in fact it may be due to a much more complex set of reasons. The whole issue of formal versus informal leadership also comes into play in organizational contexts. The debate about the roles related to 'leadership' and 'management' has become pretty prominent over the last decade or so. In organisations the formally appointed leaders are normally referred to as the managers. There may however be many other leaders, who may not be managers. We'll be exploring this issue a bit more in the Assignment. Why not engage in some discussion about this on the course study desk forums? From a theoretical point of view there are also some other important issues that can elicit good debate. Which leadership theory or theories, for instance, seem to be most appropriate and reflecting 'real world' dynamics? 1.1.2 Leadership' theories: an introductory overview It is important to be au fait with the different leadership theories. These are covered more comprehensively in other courses – such as in MGT8038 (Leadership Development). We will now merely briefly refer to the relevant theories to refresh your memory. If you do not have sufficient knowledge about such theories it may serve you well to do a bit more wider reading about these. Lussier and Achua (2004) identify four leadership theory paradigms, namely trait, behavioural, contingency and integrative. Dubrin et al. (2006, pp. 16–18) basically cover these four paradigms but in a different way, as you will discover as you work through the relevant material. Trait theories These theories attempt to unravel the distinctive characteristics of 'great' leaders. One of the earliest theories of leadership was the 'Great Man' theory (Stogdill 1974). Popular at the beginning of the century, this theory held that leaders and followers were fundamentally different – that leaders were more capable, possessing a qualitatively different set of personality traits. Despite considerable research, little support has been found for the Great Man theory. The general conclusion is that leaders and followers are not fundamentally different. Further more, the obvious diversity among leaders suggests that successful leaders cannot be defined by a single collection of traits (Muchinsky 1993). Nevertheless, research suggests that certain personality traits generally help leaders to be more successful (Dubin & Dalglish 2001). Research indicates that better leaders do possess certain personality traits (Kirkpatrick & Locke 1991, Goleman 1998). Certain personality traits of effective leaders are closely associated with task accomplishment even though they appear to be more accurately classified as traits rather than as behaviour. These traits include (Dubin & Dalglish 2006, pp. 34–8): ● Passion for the Work and the People is a dominant characteristic of effective leaders. Passion for the work is especially evident in entrepreneurial leaders and small-business owners who are preoccupied with growing their business. ● Emotional Intelligence refers to how well a person manages his or her emotions and those of others influences leadership effectiveness. The qualities of emotional intelligence include understanding one's feelings, empathy for others, and the regulation of emotions to enhance living. Five key factors are included in emotional intelligence: (1) Self-awareness helps you understand your impact on others. (2) Self-regulation helps you control your emotions. (3) Motivation includes passion for the task itself, and resiliency. (4) Empathy is the ability to respond to the unspoken feelings of others. (5) Social skill centres on interpersonal relationships. ● Flexibility and Adaptability is necessary for a leader be able to cope with change, especially because a leader is someone who facilitates change. Flexibility, or adjusting to situations, has long been recognised as an important leadership characteristic. ● Internal Locus of Control – People with an internal locus of control believe that they are the primary cause of events happening to them. A leader with an internal locus is perceived as more powerful than one with an external locus because he or she assumes responsibility for events. ● Courage is necessary for leaders to take risks and to take the initiative. Courage in the present context refers to behaviours such as prudent risk taking, facing responsibility, and a willingness to put one's reputation on the line. Overall it seems that the evidence is quite strong that good leaders possess different personal characteristics from those of 'non-leaders'. A knowledge of the traits associated with leadership effectiveness helps in the selection of leaders. Awareness of these characteristics can also point a person toward the right developmental experiences, such as learning to become more assertive. The current emphasis on emotional intelligence, which is really a group of traits and behaviours, reinforces the importance of the trait approach. The trait approach is limited, because it does not specify which traits are indispensable in varying leadership situations and how much of each trait is needed. Certain traits increase the probability of a person's becoming an effective leader, but the situation often influences which traits are more important. Further, leaders need balance in tempering one trait with another (Yukl 1998, p. 258). The behavioural theory paradigm of leadership The perspectives that can generally be said to belong to this theory paradigm attempt to explain distinctive 'styles' of behaviour used by leaders, or to describe the nature of the work of leaders. The search for a better understanding of leadership thus later moved on to concentrate not only on traits but to identify patterns of behaviour that enable leaders to influence others. This implied that leaders could learn appropriate behaviours. It was the basis for many of the behaviour shaping and behaviour-modelling training that is still prevalent in many organisations leader training programs. Many/most of the organisations in which leadership style research was undertaken in the 1960s and 1970s were very hierarchical organisations. Generally people's expectations of effective leaders' behaviours have undergone some serious change since the 1960s and 1970s. Leadership styles must now also reflect the realities of the 'knowledge era' and not only the old 'control' style of the mechanistic organisations that promoted hierarchical and autocratic environments. The knowledge era requires leadership behaviours, which permeate the organisation holistically, horizontally, vertically and throughout the functions and processes. There are two classical two-dimensional leadership theories. The Ohio State studies identified two dimensions (by means of factor analysis) that accounted for 85 percent of the variance in descriptions of leadership behaviour in organisations. Initiating structure is the degree to which the leader organizes and defines relationships in the group by activities such as assigning specific tasks, specifying procedures to be followed, scheduling work, and clarifying expectations. Consideration, as the second dimension, is the degree to which the leader creates an environment of emotional support, warmth, friendliness, and trust. Leaders who score high on the consideration factor typically are friendly, trustful, earn respect, and have a warm relationship with team members. An important output of the research on initiating structure and consideration was to categorize leaders with respect to how much emphasis they place on the two dimensions. A leader's combination of attitudes and behaviours leads to a certain regularity and predictability in dealing with group members. Leadership style is the relatively consistent pattern of behaviour that characterizes a leader. Most classifications of leadership style are based on the dimensions of initiating structure and consideration. Participative leadership style Sharing decision making with group members, and working with them side-by-side, has become the generally accepted leadership approach. Participative leaders share decision making with group members. The style encompasses three subtypes: (1) consultative leaders confer with group members before making a decision, but retain the final authority; (2) consensus leaders strive for consensus; and (3) democratic leaders confer final authority on the group. The participative style has also been referred to as trickle-up leadership because the leader accepts suggestions for managing the operation group members. The participative style is well suited to managing competent people who want to get involved in making decisions and giving feedback to management. However, the style often results in extensive and time-consuming team meetings and committee work. Leadership grid® styles The Leadership Grid is a framework for simultaneously specifying concern for production and concern for the people dimensions of leadership. Grid styles are based on the extent of a person's concern for production and people: Authority-Compliance (9,1); Country Club Management (1,9); Impoverished Management (1,1); Middle-of-the-Road Management (5,5); and Team Management (9,9). The ideal position is the 9,9 orientation, which integrates concern for production and concern for people. This team management style usually results in improved performance, low absenteeism and turnover, and high employee satisfaction. The manager should use principles of human behaviour to size up the situation. The contingency and situational leadership theory paradigm Contingency approaches to leadership point out that situational variables affect leadership outcomes. Each of these perspectives seeks to systematically address the relationship between leaders and the context in which they have to function. The components of leadership style, subordinate or associate characteristics and situational elements are interdependent and impact on each other. The situational component consists of a number of subcomponents such as task structure, leader-member relationships, formal authority system, rewards available in the organisation or environment, potential decision structures or even location. Situational leadership theory led to the development of leadership models that have been widely used as a training device in many large organisations. Originally developed by Hersey and Blanchard, contingency theory argues that leaders should modify their behaviour according to the level of commitment and maturity of the followers they have in those particular circumstances. Contingencies that are relevant to the analysis of leadership are: ● the characteristics of the leader ● the task(s) and objective(s) to be achieved ● the individuals and subordinates who are the object of the leadership process ● the group or team that is the object of the leadership process ● the context within which the leadership process is to take place ● role expectations. According to this paradigm, any leader has the option of using one of various leadership styles in various circumstances or situations. The Path-Goal theory of leadership effectiveness The path-goal theory of leadership effectiveness, proposed by House (1971) and House and Mitchell (1974), is a contingency theory that integrates job satisfaction, motivation, and leadership (Muchinsky 1993). The theory specifies leader behaviours necessary to achieve high productivity and morale, and assist subordinates to attain their goals. Path-goal theory is based on expectancy theory (Vroom 1964). The Hersey-Blanchard Situational Leadership model The situational leadership model matches leadership style to the readiness of group members. The key contingency factors are thus group member characteristics and leader behaviours. Task behaviour describes the extent to which the leader spells out the duties and responsibilities of an individual or group, including goal setting and direction. Relationship behaviour describes the extent to which the leader engages in two-way or multi-way communication, such as providing encouragement, listening and coaching. Combinations of task and relationship behaviours fall into four quadrants as follows: Style 1-High task and low relationship. The "telling" style is directive. Style 2-High task and high relationship. The "selling" style is also directive but in a more persuasive, guiding manner. Style 3-High relationship and low task. In the "participating" leadership style, there is less direction and more collaboration between leader and group members. Style 4-Low relationship and low task. In the "delegating" style, the leader delegates and is kept informed of progress. (Figure 1.1) Figure 1. 1: Hersey Blanchard Leadership Grid According to this theory the most effective style of leadership depends on the readiness level of group members. Readiness is the extent to which a group member is able and willing to accomplish a specific task, it has two components: ability and willingness. Ability is the skills, knowledge and abilities an individual or group brings to a particular activity. Willingness refers to the extent to which an individual or group has the motivation, confidence, and commitment to accomplish a specific task. Possibly S3 has the most potential for leaders in Figure 1.1. When there is a high level of group member readiness, a leader can rely more on relationship behaviour and less on task behaviour. Some perspectives of an 'integrative' leadership theory paradigm The theories under this 'umbrella' seek to blend and combine various aspects related to and stemming from the trait, behavioural and contingency theory perspectives to explain the dynamics underlying successful leadership. As you would have gathered thus far, leadership is rather complex and that is also why we believe it is useful to learn about leadership and develop one's understanding of leadership as a point of departure for not only learning about strategic leadership, but also for management in general. Charismatic leadership Charisma is a Greek word meaning divinely inspired gift (Yukl 1998). In the study of leadership, charisma is a special quality of leaders whose purpose, powers and extraordinary determination differentiate them from others. (Conger & Kanungo 1988, cited in the text page 62). Charisma is a positive and compelling quality of a person that makes others want to be led by that person. The late 20th century has been characterised by high levels of uncertainty, turbulence, rapid change and intense competition. Many organisations are struggling with the need to manage change – internal and external – to reinvent their businesses, to restructure, to adopt or invent new technologies, and empower organisational members. These challenges have renewed interest in transformational and charismatic style of leadership. Gardner and Avolio (1998) applied the term 'Charisma' to leader constituent relationships in which the leader has an exceptional gift for inspiration and non-rational communication. Charismatic leaders work consciously at cultivating the relationship with group members through impression management. These leaders recognise that the perceptions of constituents determine whether they function as charismatics. Charismatic leaders are skillful actors in presenting a charismatic face to the world. Further, Gardner and Avolio contend that charismatic leaders, to a greater extent, than non-charismatic leaders, value and pursue interrelated sets of images: trustworthy, credible, morally worthy, innovative, esteemed and powerful. An implication of the impression management analysis of charismatic leaders is that they are skillful actors, presenting a charismatic face to the world. It appears likely that a situation that encourages the followers to willingly obey the leader encourages them to be emotionally involved in the mission of the charismatic leader and their own goals. The followers must have a strong desire to identify with the leader. Charismatic leaders tend to have unique characteristics, and many of these characteristics apply to a transformational leader – one who brings about positive, major changes in an organisation. We'll return to this theme shortly, and again in the last module of this course. Charismatic leaders are typically (and amongst others) said to include the following: ● Are visionary ● Have masterful communication skills ● Have the ability to inspire trust ● Are able to make group members feel capable ● Have energy and an action orientation ● Have emotional expressiveness and warmth ● Romanticise risk ● Use unconventional strategies ● Have a self-promoting personality ● Challenge, prod, and poke ● Are dramatic and unique. Transformational leadership Burn's (1978) suggested that power and leadership were two different things. Power-wielders were those individuals who used their power to influence followers to behave in such a way as to accomplish the leader's goals. Power wielders often saw followers as a means to an end and treated them accordingly. According to Burns, leadership is inseparable from the follower's needs and goals. From his perspective all leaders were power wielders but not all power wielders were leaders. Burns also believed that leadership could take two forms – transactional leadership and transformational leadership. Transactional leadership is characterised by leaders and followers being in an exchange relationship (your text, page 105). Transactional leadership is very common and tends to be transitory, for the duration of the transaction. Transformational leadership (page 104 of your text) focuses on what the leader accomplishes rather than on the leader's personal characteristics and relationships with group members. The transformational leader facilitates major change. In contrast, the transactional leader focuses on more routine transactions and rewarding group members for meeting standards. How transformation takes place The transformational leader attempts to bring about change through altering the organizations culture. Seven ways in which the leader brings about such transformations are: 1. Raise people's awareness 2. Help people look beyond self-interest 3. Help people search for self-fulfilment 4. Help people understand the need for change 5. Invest managers with a sense of urgency 6. Commit to greatness 7. Adopt a long-range perspective and observe organisational issues from a broad rather than a narrow perspective. Qualities of transformational leaders There are four qualities that are particularly useful in enabling them to bring about transformations (Burns 1978): ● Charisma – above all, transformational leaders are charismatic – they have vision and a sense of mission. They also have the respect, confidence and loyalty of group members. ● Inspirational leadership – part of the inspiration derives from communicating a vision with fluency and confidence. By giving emotional support and making emotional appeals, transformational leaders inspire group members to exceed their initial expectations. ● Intellectual Stimulation Transformational leaders provide intellectual stimulation by encouraging group members to examine old problems and methods in new ways. The transformational leader creates an atmosphere that encourages creative thinking and problem solving. ● Individualised consideration – transformational leaders demonstrate individualised consideration by giving personal attention to group members. According to Burns (1978), these behaviours have to take place with a specific value system and include change that involve followers' participation in activities motivated by end values. 1.1.3 'Leadership': concluding remarks Our aim at this point is to develop some common understanding about the concept of 'strategic leadership'. As you can gather, when we refer to organisational leadership more generally, we are essentially concerning ourselves with leadership 'in' organisations. When we move into the domain of strategic leadership, there is a shift in focus though. We return to this later. (We wish to again stress that you are strongly encouraged to read much more extensively about leadership if you do not already have a firm grasp from previous studies. You are probably aware of the fact that we offer other postgraduate courses on leadership, namely 'Team Leadership' (MGT8037) and 'Leadership Development' (MGT8038). Particularly in MGT8038, Leadership Development, the concept of leadership is analysed and considered in much more depth.) 1.1.4 'Strategic' as concept The term 'strategic' derives from the noun 'strategy'. Strategy as concept and notion is in fact very ancient. For thousands of years rulers of nations have been thinking 'strategy' issues. Sun Tzu's book Art of War, referred to strategy some 2500 years ago – in a military context. Machiavelli wrote about political strategy in his book The Prince in 1513. In the nineteenth century, a famous Prussian military theorist, Carl von Clausewitz, also wrote extensively about strategy in a military context, in the book On war. Not surprisingly, therefore, Franks (1987, p. 33), in referring to the concept of strategy, suggests it is '...important to review its origins in the art of war'. Learning activity 1.2 We now encourage you to engage in some independent, informal 'research' about strategy in the military context. Write down some of your findings about the following: 1. In what ways is the term strategy used in military contexts? 2. In what ways are the concepts of 'strategy' and 'tactics' used differently and/or similarly in military contexts? How would you distinguish between 'strategy' and 'tactics', based on your findings? 3. In the military context, who are directly involved in 'strategy-making'? Who are involved in the 'tactics'? Make sure you develop some 'feel' for the different role-players and their roles in the military context. If you wish – feel free to engage in some discussions about this activity on the discussions platform (some of you may have had direct exposure, working in military contexts). You should have now developed some better understanding about the meaning of strategy (and tactics) in the context where it originated thousands of years ago. Today, and in this course, the context is very different though. Perhaps a key question to consider is whether the meaning of this concept, as we use it in the business and organisational context should be transplanted unchanged or whether it should be used denoting something completely different. What do you think? You should consider sharing your views about this with all others on the discussions platform. We probably will arrive at some admitting that indeed times have changed, and the world of work, organisational life and business – although in some sense sharing many similarities with the world of the military, war and political life – is also in many ways very different. To cite some simple examples may serve to illustrate some of this. In war it is important to be able to 'compete' and to 'out-manoeuvre' the enemy. In the business world it is likewise important to do the same and to 'beat the competition' – but it may mean that one has to collaborate with certain competitors. In the context of war it is essential to mobilise and orchestrate the military resources towards 'winning the war'. In business context organisations must mobilise, develop and steer all their resources towards competitive advantage over rival organisations. Sometimes this may entail taking over resources of competitors – or even the whole of the competitor. It may mean allowing to be taken over by another organisation or a merger with a former competitor. Here we are clearly thinking of things such as take-overs, mergers and acquisitions. Sometimes it becomes necessary to get rid of certain resources – e.g. when there are decisions to downsize or 'right-size' organisations. This often is accompanied by changing structures. Whereas in the military context the structure or organisational form is typically very hierarchical and top-down in terms of decision-making and authority with heavy emphasis on command-and-control types of processes and systems, modern-day business organisations are not all configured around highly centralised, hierarchical, top-down structures. In fact, as you probably already know – there is a trend towards designing organisations' structures around the organic mode – towards flexible design. Also, the essential goal of war is normally to 'defeat the enemy'. The world of business competition is seldom that drastic. In the complex world of business rivalry the competitive spirit is usually such that there is room left for co-existence, and hence the aim is not so much the complete 'destruction' of 'enemy' organisations. Given the similarities (especially in relation to the idea of 'competing to survive and ultimately win') it is little wonder that when the concept of strategy first entered the management context, it also closely resembled its military counterpart. In the context of the management of organisations and business, it was not until the mid-twentieth century that the concept of strategy was utilised and applied. In 1962 in his book entitled Strategy and structure, Chandler (1962, p. 13) defined strategy as 'the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for these goals'. This is the classical view of strategy and up until today there is a strong managerial school of thought ascribing primarily to this view of strategy. The top level military leaders (generals) would analyse the map of the 'war-zone' or 'territory' as a whole, and will rationally determine and plot out a structured and directive 'plan' of how to mobilise all the resources. In a similar way the top managers of companies are viewed as the strategic planners of organisations who determine the overall goals, direction and overall plans of mobilising resources towards goal accomplishment. They are the ones viewed as being able and responsible for doing the extensive long-term rational planning for the organisation as a whole. Because of its rational, analytical and structured characteristics, this view is also referred to as the 'design school' of strategy. The top-level managers are the strategists and they are the people who will objectively analyse the organisation's external and internal environments, and based on these analyses they'll make rational choices and decisions, they will formulate objectives, craft strategy and design a blueprint of the organisation's required infrastructure resources (sometimes referred to as the organisational 'architecture'). They will then also, according to this classical viewpoint, take certain actions to get this 'overall game plan' implemented in order to achieve the formulated objectives or goals. It should however be noted that over time scholars and practitioners alike have learned that this neat and tidy view of strategy is not fully reflected in the 'real world'. As Hill and Jones (2001, p. 5) explain: 'Although the view of strategy as the product of a rational planning process driven by top management has some basis in reality, it is not the whole story …not all of an organisation's strategies result from formal strategic planning exercises. Valuable strategies often emerge from deep within the organisation without prior planning.' Whittington (1993) refers to the so-called evolutionary, processual and systemic perspectives of strategy which, over time, have come to augment our views of what strategy is all about. The evolutionary perspective holds that strategy 'emerges' in response to turbulent environments. The environment is hence viewed as dominant, dictating how organisations will 'respond'. Organisations and their 'strategy' (if it can be called that at all) are viewed as being relatively reactive, and they simply co-evolve with their environments. The processual perspective builds on this view, but proposes that strategy emerges as part of and from much more complex processes. It is not merely a case of rational, top-down decision-making. Organisations are seen as being far too complex for such a simplified viewpoint. Strategy, according to this perspective, is seen as evolving from and emerging as a complex process of pragmatic interactivity and compromise between various organisational stakeholders, role-players and constituents. Both the processual and evolutionary perspectives therefore view strategy, and the processes of strategy-making and 'making-strategy-work', as containing elements of what is often called 'emergence', 'incrementalism' or 'logical incrementalism'. These processes are viewed as being less structured, not all-rational, often non-deliberate and much more diffused. There is also much less emphasis on the clear-cut distinction between strategy formulation and its implementation. Viljoen and Dann (2000) explain: 'Logical incrementalism (as the incremental approach is normally termed) requires management to move towards change in an evolutionary way…it does not require a sequential model of strategy (analysis, choice, implementation, evaluation) such as the formal mode… Rather, strategy implementation is the continual testing of small-scale projects, and the adoption of the scaling up of those projects that work…the incremental approach does not imply an ad hoc approach. The organisation still needs a solid sense of purpose and direction …' Viljoen and Dann (2000, pp. 63–4) There are thus different authors with different scholarly backgrounds and ascribing to different 'schools of thought'. This we have to accept. Even so, we don't have to accept any single definition of 'strategy' as the absolute truth if we want to come to a better understanding of what it entails. What we can do rather, is to scrutinise some of the relevant literature and build up our own understanding of what strategy means. Then we can go on and try to make more sense of what the concept 'strategic leadership' means and should revolve around. Let's now start off with by looking at different literature-based definitions of the concept strategy in a business or organisational context. Pettigrew (2003, p. 333) explains that 'affective' (in the form of action) concepts of organizing and strategizing are necessary for capturing the momentum of continuous improvement toward managerial action and success. Thompson and Strickland (2002, p. 3) also describe strategy as 'game plan management for staking out a market position and conducting its operations. It entails managerial choices among alternatives and signals organisational commitment to specific markets, competitive approaches, and ways of operating. It consists of a combination of competitive moves and business approaches to please customers, compete successfully, and achieve organisational objectives.' From this definition the support for the classical viewpoint of strategy can clearly be detected. Johnson and Scholes (2002, p. 10) in turn define the term strategy as: '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 and to fulfil stakeholder expectations.' Johnson and Scholes (2002, p. 10) also list the following five consequential characteristics of strategy: Strategy and strategy-related decisions are complex, made under conditions of high uncertainty in general and mostly involve change. Furthermore strategy related issues and decisions require an integrated approach because it involves cross-functional issues and views. Lastly, they mention that strategy goes beyond the boundaries of the organisation, and hence involve relationships and networks outside the organisation. From these descriptions or definitions we can now try to arrive at a summary of 'strategy' in an organisational context. Learning activity 1.3 You can now first try to arrive at your own conclusions: 1. In an organisational context what does 'strategy' mean? 2. In what ways is the concept of 'strategy' used differently and/or similarly in military and organisational contexts? Share your views/conclusions with others – via the discussion forum for module 1. We reckon that any definition/description of strategy in an organisational context must somehow also refer to the overall and unifying way/s in which organisations mobilise all resources to compete, survive and thrive over the long run, within complex and ever-changing environments, to optimally satisfy all stakeholders. Learning activity 1.4 We now invite and encourage you to engage in some healthy/constructive debate on the discussion forum, based on the following: Power: how is it used, and abused by leaders? • Some of the most 'effective' leaders in corporations are sociopaths, psychopaths or narcissists - consider the alignment of attributes between 'good' and 'bad' leaders. • Can ethics be avoided at a strategic level of leadership? Strategy and tactics: • If tactics are about winning the battle, and strategy is about victory in the campaign; how is this manifest in your organisation? • • How relevant are the works of Sun Tzu The art of war and Niccolo Machiavelli The Prince to your organisation? Politics. • What role do you, as a strategic leader, play in politics within, and externally, on behalf of your organisation? We will be returning to this debate again later in this Module – and also as we progress through this course. In the above activity we referred to strategic leaders. We thus almost assume that you have now made the connections. If you have a grasp of what strategic leadership is about, you should have some idea of who are the people who are involved in strategic leadership. Strategy is the primary concern of top-level managers mainly. This doesn't mean that strategy is not also the concern of other managers and employees though. Quite to the contrary – one of the key challenges for top-level leaders is exactly that: to make organisational strategy filter throughout the organisation so that each and every member of the organisation feel that they 'own' part of the strategy and take part actively in its formation as well as execution or implementation. In this course we therefore take a distinct perspective of leadership. The leadership topics or themes covered in this course are pitched primarily at the upper echelons of organisational leadership. This requires us to consider leadership through a strategic lens, rather than an operational lens. There are, as mentioned, other courses that focus on more operational issues that are important for the day-to-day practice of leadership in organisations. MGT8039 however, requires thinking about the leaders and leadership issues that are the primary concern of the most senior organisational leaders. We concern ourselves with leadership dynamics that go beyond the 'management' of the organisation, dynamics pertaining to the relationship between the organisation, its top-level management and also the owners, other key stakeholders and the general environment of the organisation. The latter dynamics thus include in particular also the whole issue of organisational purpose and governance. In all of this, the underlying theme is strategic thinking. Strategic thinking relates to thinking about the competitive advantage of an organisation and how to achieve it. Strategic leadership relates to steering the organisation towards achieving long term visions by creating competitive advantage. Top down leadership and bottom-up management practices are essential in this quest. Johnson and Scholes (2002, p. 44) explain that managers as human beings 'are able to function effectively not least because they have the cognitive capability to make sense of problems or issues … when they face a problem they make sense of it in terms of the mental models which are the basis of their experience.' Important however, as these same authors argue, is the fact that these mental models not only help and guide our strategic thinking and decisions but it may also limit or constrain our ability to make sound strategic choices and decisions that are appropriate in terms of time and place. It is in this context that Rosabeth Moss Kanter (1998), in her article 'Rethinking Your Strategy', says the following: Today's leaders must change their strategic thinking if they are to guide their companies to success…To succeed in the global economy, businesses need the best and latest ideas and technologies…they must create new concepts to change the rules of the game, deliver higher value, and constantly innovate … The new strategic planning process must unlock the power of imagination of people so they can contribute ideas to improve and redefine the business concept…People don't become assets until what they know is deployed on behalf of the customer…That knowledge is valuable only when it is passed on…through the rapid spread of best practices and then used on behalf of the customer. Rosabeth Moss Kanter (1998, pp. 3–4) Strategic thinking is therefore central to strategic leadership – and strategic management. It is now perhaps the appropriate time to draw the distinction between strategic management and strategic leadership. Learning activity 1.5 It may well be that somewhere during this course you will be challenged to consider the similarities/differences/connections/etc – of and/or between, strategic management and strategic leadership. For the moment we'd like to encourage you to engage in some independent, informal 'research' on these two concepts, in particular at this stage, on what 'strategic management' entails. Write down some of your findings: 1. What is strategic management? 2. How does strategic management relate to strategic leadership? In essence, from the perspective of the design school of thought, strategic management entails two distinct but closely intertwined sets of tasks, namely that of 'strategy-making', and that of 'making strategy work'. Some distinguish between strategy formulation or formation and strategy implementation or execution. Others refer to the former as strategic planning. As we have explained already, in practice these two sets of 'tasks' are closely intertwined with boundaries between them mostly being vague and fuzzy, rather than clear-cut and rigid. Is strategic leadership concerned with strategy-making? Does it concern itself with strategy execution or implementation? Where and how do these two connect or relate – strategic management and strategic leadership? Or don't they at all? These are important questions to guide your own thinking about this field. We trust that as the course further unfolds throughout the semester, you will gain greater clarity in your own mind about these (and related) issues/questions. From the perspective of the resource-based view of strategy, people form a key building block of developing the competitiveness of organisations. In 1984 Wernerfelt published a conceptual article in the Strategic Management Journal entitled: 'A resource-based view of the firm', stating that, 'for the firm, resources and products are two sides of the same coin.' (Wernerfelt 1984, p. 171) Building on this early conceptual work Dierickx and Cool (1989, p. 1504) for instance reminded scholars and practitioners of strategy, that managers often fail to recognise that a bundle of assets, rather than a particular product market combination chosen … lies at the heart of their firm's competitive position. Barney (1991) also contributed to this then-evolving school of thought and made an in-depth analysis of the resource-based-view of strategy, illustrating that organisational resources are the key determinants underlying the performance of organisations – in particular when these organisational resources are unique and firm-specific, valuable, rare or scarce, difficult to imitate, difficult to transfer and non-substitutable. This, the resource-based view of strategy proposes, forms the best platform on which to craft and build strategy that can yield sustainable competitive advantages over rival organisations in the long run. In a very similar vein and at about the same time, Robert Grant wrote an article in the California Management Review (1991, pp. 114–35) entitled 'The resource-based theory of competitive advantage: implications for strategy formulation'. Grant (1991) explains: The starting point for the formulation of strategy must be some statement of the firm's identity and purpose … Typically the definition of the business is in terms of the served market … But in a world where customer preferences are volatile, the identity of customers is changing, and the technologies for serving customer requirements are continually evolving, an externally focused orientation does not provide a secure foundation for formulating long-term strategy. When the external environment is in a state of flux, the firm's own resources and capabilities may be a much more stable basis for strategy … While resources are the source of a firm's capabilities, capabilities are the main source of its competitive advantage. (Grant 1991 in Zack 1999, pp. 5–7) As Grant (1991) explains (in Zack 1999, p. 10): 'Creating capabilities is not simply a matter of assembling a team of resources: capabilities involve complex patterns of coordination between people and between people and other resources.' From the foregoing it should be quite clear that with the coming of this school of thought, renewed impetus has been given to the notion that it is, to a large extent, the people of an organisation, and what they know and can do, and how all of this is harnessed – that forms the cornerstone of creating sustainable competitive advantage. This puts the human resource and the leadership capabilities of any organisation squarely at the centre-stage of strategy and the competitiveness or organisations. According to our approach, strategic leadership is meant to bring about this emphasis on the people side of the strategic dynamics of organisations. 1.2 Synthesis: 'strategic leadership' – meaning, scope and perspectives By now you should have formed a fair idea already of what 'strategic leadership' entails – and also what our approach is in this regard, in this course. When we are focussing on strategic leadership we are concerning ourselves with the leadership 'of' organisations – because the emphasis falls on leading any organisation as a whole. This is in line with Storey's (2005) approach. Let's now try to make some summary of what we regard as strategic leadership and put back together the two terms that make up this concept and title of this course. From our perspective the focus of strategic leadership is primarily on the upper-most leader echelons of organisations, and their abilities and efforts to mobilise all the relevant people, other resources and stakeholders to collaboratively work towards organisational success and sustainability over the long term. These upper-most leaders typically work as part of leadership structures like Boards of Directors (BoD's in short) and top management teams (TMT's). Keep in mind, though, that even though we focus on role-players like executive and non-executive directors, Chief Executive Officers (CEO's) and those chairing BoD's, we are not hereby saying that strategic leadership is limited to this highest organisational levels of leadership. We are indeed of the view that a key challenge of strategic leadership is the art distributing appropriate leadership dynamics throughout organisations. In line with Hughes and Beatty (2005) we regard it as central to strategic leadership to get as many as possible people who are involved with an organisation, to think and behave or act in ways that have the effect of positively and constructively influencing other people and resources towards making organisations successful over the long term and contributing to sustainability. Let's take a further look at some of the perspectives held by other authors in this field. According to Ireland and Hitt (1999) Competition in the 21st century's global economy will be complex, challenging, and filled with competitive opportunities and threats. Effective strategic leadership practices can help firms enhance performance while competing in turbulent and unpredictable environments. Ireland and Hitt (1999, p. 43) Although the future is seen to be unpredictable, the emergence of a truly global economy has been identified as an event that stimulates visionary companies to compete in the future on the basis of unique and innovative sets of competencies, including strategic leadership practices. Hoskisson, Hitt and Ireland (2004) say that strategic leadership: … is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary … managing through others, managing an entire enterprise rather than a functional subunit. Ireland and Hitt (1999, p. 37) The authors identity six 'key strategic leadership actions': ● determining strategic direction ● exploiting and maintaining core competencies ● developing human capital ● sustaining an effective organisational culture ● emphasising ethical practices ● establishing balanced organisational controls. These six components are embedded in a definition of strategic leadership by Ireland and Hitt as being '…a person's ability to anticipate, envision, maintain flexibility, think strategically, and work with others to initiate changes that will create a viable future for the organisation' (Ireland & Hitt 1999, p. 45). Competitive advantage can be realised when a firm's strategic leadership processes become difficult for competitors to imitate. We adapt these to arrive at the following key aspects of strategic leadership as covered in this course: ● Who the strategic leaders are, the structures through which their roles are executed, and their actual roles, functions and tasks and the challenges related thereto. The structures through which strategic leadership occurs, namely the Board (Board of Directors – or BoD) and the TMT (top management team) – form a key focus of this course, in particular the BoD. So too, will the role-players or people who make up these structures and the work and leadership dynamics of these people and structures. As such, the Chair (or Chairman) of the Board, the CEO (Chief Executive Officer – can also be referred to as the president of a company), the directors (executive as well as non-executive directors) and the teams of most senior or top-level managers of organisations are the typical role-players focused on in this course. From our perspective in this course, these are ultimately the 'real strategic leaders' – the 'followers' are all the rest of the people or human resources of the organisation (the managers and leaders, and including all the 'non-management' employees) and even perhaps those people beyond the organisational boundaries who have a stake in the organisation. ● Special attention is devoted to the critical areas of work of 'boards' or BoDs and also the important variables, issues and dynamics related hereto, and to board leadership in particular. ● Corporate governance is the responsibility of BoDs and as such we pay particular attention to this theme, emphasising the importance of balancing 'conformance' and 'performance' driven perspectives and work at this level. ● Our approach reflects a bias towards 'corporate citizenship' and as such we regard sustainability and hence aspects like corporate social responsibility and ethical conduct and accountability as being of central concern to strategic leadership. ● Developing the resources and capabilities of organisations towards 'high', but 'balanced', 'performance', competitive advantage and sustainability – make up essential ingredients of strategic leadership from our perspective. This includes the development of an appropriate organisational culture through authentic leadership and for the transformation of organisations as 'corporate citizens'. Throughout the rest of this course you'll learn that we believe that strategic leadership should also be driven by characteristics such as these just mentioned. Not only are the competencies of the top level leaders thus viewed as critical to this type of or approach to strategic leadership, but their 'mind-maps' (or frames of mind) about issues such as stakeholders, performance, learning and knowledge. Organisations require a new breed of strategic leaders who do not view their own leadership position as rank and title. Instead, we believe they are rather to be viewed as important nodes in a network of influence between various stakeholders and they ought to rather consider playing relevant roles as nodes rather than islands, emphasising the sharing of insights, knowledge, and responsibilities for balanced performance outcomes and sustainability. We regard strategic leaders are simultaneous 'dream-makers', 'path seekers', 'path finders', 'path travellers' and 'path makers'. Finding and crafting 'the path' is considered by most to be the first fundamental challenge of strategic leadership. In terms of Nicholls's (1994) 'strategic leadership star' this is the first point of the five-point star – defining the purpose of the organisation – its 'reason for being' – or 'raison d'etre. You should now embark on some further reading – blending what your own views were or still are, with what you have read thus far and then, crucially, also with the perspectives of others. Reading activity 1.1 You should now read the perspectives contained in selected readings 1.1–1.6. In selected reading 1.1 you are introduced to the strategic leadership star of John Nicholls. It is his version of a visual and conceptual guide to strategic behaviour that focuses on delivery of value to customers. Take note of the idea that strategy formulation and implementation are no longer being viewed as sequential or separate, but rather being 'subsumed in the complementary leadership activities of path-finding and culture-building' (Nicholls 1995, p. 25). In selected reading 1.2, Harrison and Pelletier (1997) focus on the CEO (Chief Executive Officer) perceptions of strategic leadership. Note here the perspectives on the role of the CEO in exercising strategic leadership in a specific organisational context and also the views on the determinants and outcomes of strategic leadership. Selected readings 1.3 and 1.4 are meant to broaden your insights into some of the theoretical and more academically rigorous views or perspectives related to strategic leadership. Cannella and Monroe (1997) review and critique two distinct and dominant traditions of empirically studying top level managerial leaders, namely positive agency theory and strategic leadership theory. They furthermore argue that these approaches are limited and ought to be augmented by developing perspectives in respect of visionary leadership theory, personality theory and also transformational leadership theory. They conclude that multiple perspectives are required if one is to come to a better appreciation and understanding of the complexities involved in the world of top level managerial leaders and they propose some direction for future research in this field. How do you feel about these? Getting all excited to go on into a doctoral programme here at USQ to further explore these kinds of issues? We hope so – for this course is but an early point in your life-long journey of being the leader you can be and achieving all that is locked up in you! Selected readings 1.5 and 1.6 are meant to provide you with more recent research-based perspectives of strategic leadership issues. Note (in reading 1.5) how Carpenter, Geletkanycz and Sanders (2004) in their article entitled "Upper Echelons Research Revisited: Antecedents, Elements, and Consequences of Top Management Team Composition" for instance refer to the TMT as the focus versus the role also of Boards of Directors. As you'll no doubt find out in this course, our view is precisely that, namely that a focus on TMT's and not rather also (or even more) on BoD's is not appropriate from a strategic leadership paradigm. In reading 1.6, and an excellent discussion of most leadership theories and more detail concerning the different approaches, Boal and Hooijberg provide a fascinating discussion of strategic leadership. You should use this version for key referencing and revision for the case studies. Similarly in reading 1.7, Nelson and Daniels note that "although a group-level perception of the leader's transformational leadership behaviours seemed to create a group-level perception of positive working conditions in terms of a cohesive group, meaningful work, social support and fewer role conflicts, these group-level perceptions of working conditions appear to be related to individual-level well-being to a lesser extent than differentiated perceptions" (2012: p. 392). Please note: At a minimum, readings 1.3, 1.5, and 1.6 are absolutely necessary for you to acquire a strong knowledge of the topic thus far. In terms of future research, we quote from Storey's article (2005): Given the collective and political nature of governance, leadership and strategic management at senior group level, there are limits to the value of studies which focus entirely on the demographic characteristics and personality traits of CEOs or other individual corporate leaders such as chairman, managing director, director general or president. … The recommendation in this paper has been some shift … As has been noted 'leadership interaction style has received, so far, the most attention in the literature' … The main unit of analysis has been the relationship between a leader and his/her followers. The purpose of this article has been to show how other units of analysis and other thematics deserve at least equal attention. Storey (2005, p. 102 ) Thus, it is suggested that a future research agenda for upper echelon leadership could and should comprise some systematic analysis of the following themes: ● Power and spheres of influence at top levels. The way in which leaders are embedded within webs of influence, constraints, alliances and politics requires much more study than has so far been undertaken. ● Leadership as one means of handling the conflictual nature of organizational life. This theme would examine leaders discourse, most especially the way leaders derive their influence from drawing on appropriate (i.e. the most persuasive at the time) wider set of regimes of truth … ● What are the valued (or expected) functions of the senior group? What, at minimum, do their different stakeholders judge should be the contributions which they are expected to make? How does the bounded, relational nature of leaders of organizations roles shape the exercise of those roles and crucially, to what extent, and how can some players break free of, or at least stretch, these boundaries? ● What competences are required in order to discharge these expected functions effectively? ● Comparative interpretations and sense-making – how top group members think and act. In particular, how do those in senior leadership positions interpret their roles? What do they think people in their positions should be doing? What range of beliefs and assumptions do members of the senior group have?" 1.3 Corporate governance: an introduction It could be argued that corporate governance is the 'heart' of strategic leadership by some. In your one prescribed textbook, Solomon (2014) explains that the term governance comes from the Latin word gubernare which means 'to steer'. It thus essentially refers to steering the organisation in a particular direction. There are many different definitions of corporate governance. Reading activity 1.2 You should now read pages 11–15 of your prescribed book by Solomon (2014). There are a number of different theoretical frameworks that help to draw together perspectives about corporate governance. These include agency theory, transaction cost theory and stakeholder theory. You can now learn more about these. Reading activity 1.3 Read the rest of chapter 1 of Solomon (2014). What connections can you make between these theories and some of the other readings you have engaged with thus far? Concluding module 1 In this module we have tried to lay some conceptual foundations for the rest of this course. In the next module we now take a more in-depth look at corporate governance issues. References and selected sources Ansoff I 1988, The new corporate strategy, John Wiley & Sons, New York. Baatz, E 1991, 'The changing face of the organization', Electronic Business, March 18, vol. 17, no. 6, p. 60–3. 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