Strategic Leadership

One of the key strategic roles of both general and functional managers is to use all their knowledge, energy, and enthusiasm to provide strategic leadership for their subordinates and develop a high-performing organization. Several authors have identified a few key characteristics of good strategic leaders that lead to high performance: (1) vision, eloquence, and consistency; (2) articulation of the business model; (3) commitment; (4) being well informed; (5) willingness to delegate and empower; (6) astute use of power; and (7) emotional intelligence.

Vision, Eloquence, and Consistency

One of the key tasks of leadership is to give an organization a sense of direction. Strong leaders seem to have clear and compelling visions of where their organizations should go, are eloquent enough to communicate these visions to others within the organization in terms that energize people, and consistently articulate their visions until they become part of the organization’s culture.

In the political arena, John F. Kennedy, Winston Churchill, Martin Luther King Jr., and Margaret Thatcher have all been described as examples of visionary leaders. Think of the impact of Kennedy’s sentence, “Ask not what your country can do for you—ask what you can do for your country”; of King’s “I have a dream” speech; and of Churchill’s “we will never surrender.” Kennedy and Thatcher were able to use their political office to push for governmental actions that were consistent with their vision. Churchill’s speech galvanized a nation to defend itself against an aggressor, and King was able to pressure the government from outside to make changes in society. Examples of strong business leaders include Microsoft’s Bill Gates; Jack Welch, the former CEO of General Electric; and Sam Walton, Walmart’s founder. For years, Bill Gates’ vision of a world in which there would be a Windows-based personal computer on every desk was a driving force at Microsoft. More recently, the vision has evolved into one of a world in which Windows-based software can be found on any computing device, from PCs and servers to video game consoles (Xbox), cell

phones, and handheld computers. At GE, Jack Welch was responsible for articulating the simple but powerful vision that GE should be first or second in every business in which it competed or it should exit from that business. Similarly, it was Walmart founder Sam Walton who established and articulated the vision that has been central to Walmart’s success: passing on cost savings from suppliers and operating efficiencies to customers in the form of everyday low prices.

Articulation of the Business Model

Another key characteristic of good strategic leaders is their ability to identify and articulate the business model the company will use to attain its vision. A business model is a manager’s conception of how the various strategies that the company pursues fit together into a congruent whole. At Dell Computer, for example, it was Michael Dell who identified and articulated the basic business model of the company:

the direct sales business model. The various strategies that Dell has pursued over the years have refined this basic model, creating one that is very robust in terms of its efficiency and effectiveness. Although individual strategies can take root in many different places in an organization, and their identification is not the exclusive preserve of top management, only strategic leaders have the perspective required to make sure that the various strategies fit together into a congruent whole and form a valid and compelling business model. If strategic leaders lack clear conception of what the business model of the company is or should be, it is likely that the strategies the firm pursues will not fit together, and the result will be lack of focus and poor performance.

Commitment

Strong leaders demonstrate their commitment to their vision and business model by actions and words, and they often lead by example. Consider Nucor’s former CEO. Ken Iverson. Nucor is a very efficient steelmaker with perhaps the lowest cost structure in the steel industry. It has turned in 30 years of profitable performance in an industry where most other companies have lost money because of a relentless focus on cost minimization. In his tenure as CEO, Iverson set the example: he answered his own phone, employed only one secretary, drove an old car, flew coach class, and was proud of the fact that his base salary was the lowest of the Fortune 500 CEOs. (Iverson made most of his money from performance-based pay bonuses.) This commitment was a powerful signal to employees that Iverson was serious about doing everything possible to minimize costs. It earned him the respect of Nucor employees and made them more willing to work hard. Although Iverson has retired, his legacy lives on in the cost-conscious organizational culture that has been built at Nucor, and like all other great leaders, his impact will last beyond his tenure.

Being Well Informed

Effective strategic leaders develop a network of formal and informal sources who keep them well informed about what is going on within their company. At Starbucks, for example, the fi rst thing that former CEO Jim Donald did every morning was call up to 10 stores to talk to the managers and other employees and get a sense for how their stores were performing. Donald also stopped at a local Starbucks every morning on the way to work to buy his morning coffee. This allowed him to get to know individual employees very well. Donald found these informal contacts to be a very useful source of information about how the company was performing.

Similarly, Herb Kelleher, the founder of Southwest Airlines, was able to find out much about the health of his company by dropping in unannounced on aircraft maintenance facilities and helping workers perform their tasks. Herb Kelleher would also often help airline attendants on Southwest flights, distributing refreshments and talking to customers. One frequent flyer on Southwest Airlines reported sitting next to Kelleher three times in 10 years. Each time, Kelleher asked him and others sitting nearby how Southwest Airlines was doing in a number of areas, looking for trends and spotting inconsistencies.

Using informal and unconventional ways to gather information is wise because formal channels can be captured by special interests within the organization or by gatekeepers, managers who may misrepresent the true state of affairs to the leader. People like Donald and Kelleher who constantly interact with employees at all levels are better able to build informal information networks than leaders who closet themselves and never interact with lower-level employees

Willingness to Delegate and Empower

High-performance leaders are skilled at delegation. They recognize that unless they learn how to delegate effectively, they can quickly become overloaded with responsibilities. They also recognize that empowering subordinates to make decisions is a good motivation tool and often results in decisions being made by those who must implement them. At the same time, astute leaders recognize that they need to maintain control over certain key decisions. Thus, although they will delegate many important decisions to lower-level employees, they will not delegate those that they judge to be of critical importance to the future success of the organization, such as articulating the company’s vision and business model.

The Astute Use of Power

In a now classic article on leadership, Edward Wrapp noted that effective leaders tend to be very astute in their use of power. He argued that strategic leaders must often play the power game with skill and attempt to build consensus for their ideas rather than use their authority to force ideas through; they must act as members of a coalition, or its democratic leaders, rather than as dictators. Jeffery Pfeffer has articulated a similar vision of the politically astute manager who gets things done in organizations through the intelligent use of power.

In Pfeffer’s view, power comes from control over resources that are important to the organization: budgets, capital, positions, information, and knowledge. Politically astute managers use these resources to acquire another critical resource: critically placed allies who can help them attain their strategic objectives. Pfeffer stresses that one does not need to be a CEO to assemble power in an organization. Sometimes junior functional managers can build surprisingly effective power bases and use them to influence organizational outcomes.

Emotional Intelligence

Emotional intelligence is a term that Daniel Goldman coined to describe a bundle of psychological attributes that many strong and effective leaders exhibit: they are as follows:

Self-awareness: the ability to understand one’s own moods, emotions, and drives, as well as their effect on others

Self-regulation: the ability to control or redirect disruptive impulses or moods, that is, to think before acting

Motivation: a passion for work that goes beyond money or status and a propensity to pursue goals with energy and persistence

Empathy: the ability to understand the feelings and viewpoints of subordinates and to take those into account when making decisions

Social skills: friendliness with a purpose

According to Goldman, leaders who possess these attributes—who exhibit a high degree of emotional intelligence—tend to be more effective than those who lack these attributes. Their self-awareness and self-regulation help to elicit the trust and confidence of subordinates. In Goldman’s view, people respect leaders who, because they are self-aware, recognize their own limitations and, because they are self-regulating, consider decisions carefully. Goldman also argues that self-aware and self-regulating individuals tend to be more self-confident and therefore better able to cope with ambiguity and more open to change. A strong motivation

exhibited in a passion for work can also be infectious, helping to persuade others to join together in pursuit of a common goal or organizational mission. Finally, strong empathy and social skills can help leaders earn the loyalty of subordinates. Empathetic and socially adept individuals tend to be skilled at managing disputes between managers, better able to find common ground and purpose among diverse constituencies, and better able to move people in a desired direction compared to leaders who lack these skills. In short, Goldman argues that the psychological makeup of a leader matters.

Source: Hill and Jones , strategic Management