Critical Analysis: Strategic Leadership

Critical Analysis: Strategic Leadership Ginger Drehmel-Leland Globe University Business Program Capstone (BS 475) Doctor Gordon E. Whitehead 4/17/2011

Critical Analysis: Strategic Leadership Overview/Introduction To understand what strategic leadership is, it is important to first understand other leadership styles and how they can be compared to strategic leadership. Once you understand

the different leadership styles, one can better understand how to identify strategic leadership and recognize its value to an organization. In this analysis I will address the following: (a) What is strategic leadership, (b) How does a vision create value for a company, and (c) How should strategic leaders develop a control system that balances strategic controls and financial controls. Leadership Types There are three main leadership styles: managerial, visionary, and strategic (Row & Nejad, 2009). Each leadership type can be identified by the focus of the leader upon operations and the future vision of the organization. Imagining a spectrum, one could put managerial and visionary leadership on opposite ends of the spectrum. Strategic leadership would be found in the middle of the spectrum. Although one would believe that finding the balance between these leadership styles would be rather easy, it is actually much more difficult than this visual makes it appear. What is Managerial Leadership Managerial leaders are leaders that are focused on the day to day operations of an organization (Row & Nejad, 2009). Their focus is specifically on short-term business concerns. Managerial leaders work well in environments where they have control, where the environment is relatively stable, and they are able to be in control of the details (Row & Nejad, 2009). You will find managerial leadership is many large, already established organizations which are not focused on innovative growth. Instead, managerial leaders are largely focused on efficiency and cost-cutting opportunities which will benefit the short-term financial state (Row & Nejad, 2009).

Critical Analysis: Strategic Leadership Managerial leaders attempt to control followers through control mechanisms such as rewards, punishment, and coercion (Row & Nejad, 2009). What is Visionary Leadership Visionary leaders are leaders who are focused on the future. They are primarily futureoriented, proactive, and risk-taking (Row & Nejad, 2009). Their focus is on the long-term future of the organization as they envision it to be. Visionary leaders are dreamers, and they are able to articulate their vision in a way that inspires followers to get engaged in bringing the

vision to life (Row & Nejad, 2009). Visionary leaders will likely be found in environments with less regulation and restriction for their creative minds. Unfortunately, visionary leaders spend so much time focused on their vision for the future that they forget the day to day operations of the organization (Row & Nejad, 2009). This can have a strong negative impact upon the financial

health of the organization and ultimately put the long-term viability of the organization into question. What is Strategic Leadership Strategic leadership can be easily described as the combination of the assets of both managerial and visionary leadership. Strategic leaders empower followers within the organization by developing and providing a set of tools that allows them to make day to day decisions that benefit both long- and short-term goals (Row & Nejad, 2009). They do this by developing a clear vision and understanding within the organization as to what the company stands for. Strategic leaders rely upon their followers to play a large role in ensuring that the business is running efficiently and effectively (Row & Nejad, 2009). They do this by not strangling groups with formal control systems which would prevent their ability to identify and implement positive change, such as you would find with managerial leadership, but by investing

Critical Analysis: Strategic Leadership

in their human capital (Row & Nejad, 2009). The strategic leader, by empowering the followers, then has more time to focus on critical issues, evaluating the internal/external environment variables, making adjustments to the vision, and identifying opportunities for innovation (Row & Nejad, 2009). In strategic leadership, neither the short-term nor the long-term health of the organization is overlooked. Ireland and Hitt identify six components of strategic leadership (Ireland & Hitt, 2005). Each of these components helps build the stage for the environment necessary for strategic leadership to succeed within. These components are (Ireland & Hitt, 2005): Determining the Firms Purpose or Vision Exploiting and maintaining core competencies Developing human capital Sustaining an effective organizational culture Emphasizing ethical practices And, Establishing balanced organizational controls.

Why is a Vision Important In order to empower the followers, an effective vision and mission are vitally important. If the followers do not have a clear vision of the intended future and the intentions of how to arrive at that vision, they will lack the ability to be effective in decision making for the day-today and short-term operations. Strategic leaders are unlike managerial leaders in the fact that they do not intend to be on control of all short-term decision making. They recognize that doing so would tax them so much that they would lack the ability to focus on other important long-term concerns. Once they provide the framework for the short-term operations, they are available for consultation, but spend a considerable amount of their time focusing on other issues.

Critical Analysis: Strategic Leadership Ireland and Hitt express that effective visions make sense to all organizational citizens,

stretch citizens imaginations but are still within the bounds of possibility, are understood easily, and create a cultural glue that allows units to share knowledge sets (Ireland & Hitt, 2005). Without effective visions, strategic leadership would not be possible (Mayo, 2007). Jones expresses that a vision can be divided into two levels: as a guiding beacon for the firm, and secondly, as a sense making tool that allows the organization to guide itself through turbulent environments (Jones, 2010, p. 49-50). Jones continues on to say the vision provides direction and purpose to the whole organization (Jones, 2010, p. 50). Without the vision, the followers would not be enabled with the knowledge necessary to play an active role on operations within the organization. Balancing Control Systems Control systems can be defined as formalized routines and procedures that use information to maintain or alter patterns in organizational activity (Simons, 1991, p. 49). These systems are often used to provide feedback for planning, budgeting, cost control, environmental scanning, competitor analysis, performance evaluation, resource allocation, and employee rewards (Simons, 1991, p. 49). These systems can be effective in the control function of managers comparing results against the planned goals. Management control systems are a vital component of management-by-exception (Simons, 1991, p. 49). Unfortunately, control systems can be used in a manner that it can hamper the ability to implement change in a timely manner. By introducing inflexible control systems, information is unlikely to be challenged. Without challenging the information, new strategies are unlikely to develop. Therefore it is important that the control systems be balanced. This means that they need to provide structure but at the same time be flexible enough to allow for the change

Critical Analysis: Strategic Leadership necessary in a dynamic business environment. The control structures need to provide the information necessary to make strategic decisions for the organization both in the short-term for organizational efficiencies to be identified and for long-term innovation opportunities to come to light. Therefore, research is showing that using control systems interactively, rather

than only for management-by-exception, can uncover a wealth of information about internal and external environmental variables to help provide quantitative metrics to the strategic management process (Simons, 1991, p. 60). Conclusion Of the three different leadership styles, strategic leadership provides an effective balance that capitalizes upon the advantages of both managerial and visionary leadership while reducing much of the risk attributed to each style. Strategic leadership relies on the effective performance of the follower group as much as the leader themselves. An environment which empowers followers by providing them with the tools and understanding to make effective decisions is a critical component to strategic leadership. Strategic leaders understand the importance of a welldeveloped vision and organizational culture that focuses on developing their human capital. Finally, strategic leaders comprehend the value of balancing control systems to improve information flow, for it is the flow of information that provides the input to identify and adjust to the dynamic business environment.

Critical Analysis: Strategic Leadership References