Strategic Leadership

Strategic planning is oriented to enhancing the bottom-line.  Leadership affects organizational performance as well.[1] Therefore, strategic leadership, which can be defined as the formulation and articulation of a vision depicting a social reality and incorporating strategic aims, can enhance a firm’s sustainable competitive advantage.[2] Strategic leadership is an intangible core competency that can give rise to a core capability differential involving reputation.[3] That strategic leadership is difficult to understand and therefore to imitate contributes to its value in no small measure. But a straightforward application of strategic leadership may be thwarted if a tension develops in its exercise.  In particular, the principles behind an enduring leadership vision can be at odds with pressing strategic interests, especially as these profit-interests change while the abstract vision still holds.

Because strategic leadership involves the organization as a whole and its relationship with its environment, it falls on top-level executives to exercise it.[4]  Indeed, a leader’s distance from operations “can generate and establish lofty principles and goals and visions”.[5]  So strategic leadership as used here pertains to executive leadership, stressing the relationship between strategy and leadership.

Strategic leadership relates an organization’s ideologies, identity, mission and view of the macro environment system to its differentiated core competencies. The word relates implies that the leadership vision is not identical to the strategic elements.[6]   Therefore, the visionary and strategic can be at odds.

With regard to the vision component, leaders depict or construct not only a vision of the organization’s mission, but of an encompassing social reality of the environment (i.e. society).[7] Relating the organizational mission to the values in the encompassing environment pertains to the legitimacy and credibility of the vision and the organization. Whereas an organization’s mission is broad or abstract enough to be consistent with values held by the wider society, strategic plans tend to be more tightly oriented to a firm’s exclusive interests or competitive niche. Such plans may thus be at odds with societal interests and values even though they dovetail with the organization’s mission. The wider societal system is not centered on the interests of a leader’s particular organization even though that organization may have a mission congruent with both the plans and societal values.

For example, a hospital’s mission of curing disease may be consistent with a societal value on health.  The hospital’s strategic plan to minimize its treatment of uninsured patients may be consistent with sustaining that particular hospital as it cures disease, even as this strategy is opposed to the societal value on health.  The organization’s interests differ from those of society; the difference is typically labeled as externalities.  Effective strategic leadership aims to breach this gap, satisfying strategic concerns as well as the firm’s legitimacy and credibility.

For a leader’s vision to be regarded as credible, the interpretation of social reality “must not be affected by success-oriented considerations in favor of the corporation”.[8] The interpretation must transcend personal or organizational interests and frameworks to be credible in society. Enhancing credibility and legitimacy from an ideology presented in terms of disinterest is not consistent with efficiency.[9]

With regard to its strategic component, however, strategic leadership is self-consciously and unapologetically oriented to furthering the organization’s exclusive interests. It contains both broad questions of what an organization ‘is’ in terms of its being unique and distinctive among its competitors, and relatively narrow strategic plans oriented to maximizing the tangible (i.e. financial) gain of the enterprise as a method of competition.[10]  It is the latter, dovetailing with efficiency, which can be in tension with the vision in executive leadership.

In short, a strategic leader may have to deal with tension between short-term profit-interests and the relatively enduring vision. This is not to say that the tension is inherent to strategic leader. A good strategic leader wields profit-interests such that they are in line with the vision of what the organization stands for and how it claims to relate to society. Perhaps because CEO’s so often crimp on the pre-established organizational vision rather than let it get in the way of a changed profit-line, the tension has been virtually ignored in writings on strategic leadership. It is even possible that the tension is inherent in strategic leadership even though individual leaders have been able to quickly reorient breaching profit-interests. Abstractly, the tension boils down to a trade-off between broader values evoked in a leader’s vision and relatively narrow values pertaining to strategic planning. Unlike the organization’s mission and the society, strategic plans are not within a leader’s vision. So a strategic leader must have one foot in strategic planning and the other in ‘the vision thing’ (mission and societal social reality).   Holding onto both poles can be a difficult task for a strategic leader, given that both of them are legitimate within the practice of strategic leadership.

Badaracco and Ellsworth provide an excellent depiction of the tension with which strategic leaders must grapple--between strategic and visionary values.[11]  They cite the CEO in the large, decentralized company with a strong faith in autonomous divisions. On the one hand, the abiding values of local autonomy and a sense of ownership at the division level had served the company well for decades. But on the other hand, it was clear that duplication of efforts and higher costs were letting a very powerful competitor with efficient centralized operations make inroads into the company's markets, causing immediate financial damage.   The strategic value of efficiency conflicted with the value of liberty in the leader’s vision, and the heightened competitive pressure exacerbated this tension.  For the organization to be sustained and the leadership remain credible, both values would need to be given weight. 

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[1]. J. A. Petrick and J. F. Quinn, “The Challenge of Leadership Accountability for Integrity Capacity as a Strategic Asset,” Journal of Business Ethics 24 (2001): 331; S. Finkelstein and D. Hambrick, Strategic Leadership: Top Executives and Their Effects on Organizations (St. Paul, MN: West Publishing, 1996); J. Ciulla, “Leadership Ethics: Mapping the Territory,” Business Ethics Quarterly, 5, no. 1(1995): 5-28; K. B. Lowe, K.G. Kroeck, and N. Sivasubramaniam: “Effectiveness Coorelates of Transformational and Transactional Leadership: A Meta-analytic Review of the MLQ Literature,” Leadership Quarterly 7, no. 3 (1996), 385-425.

[2]. R. D. Ireland and M.A. Hitt, “Achieving and Maintaining Strategic Competitiveness in the 21^st Century: The Role of Strategic Leadership,” Academy of Management Executive 13, no. 1 (1999): 43.

[3]. Petrick and Quinn, “The Challenge of Leadership”; J. A. Petrick et al, “Global Leadership Skills and Reputational Capital: Intangible Resources For Sustainable Competitive Advantage,”  Academy of Management Executive 13, no. 1(1999): 58, f.n. 2.

[4]. Ireland and Hitt, “Achieving and Maintaining Strategic Competitiveness,” 48.; A. A. Cannella and M. J. Monroe, “Contrasting Perspectives on Strategic           Leaders: Toward a More Realistic View of Top Managers,” Journal of Management 23 (1997): 213-237; D. C. Hambrick and P. Mason, “Upper Echelons: The Organization as a Reflection of its Top Managers,” Academy of Management Review 9 (1984):193-206; P. Shrivastava and S.A. Nachman, “Strategic Leadership Patterns,” Strategic Management Journal 10 (1989), 51-66; H. Mintzberg, The Nature of Managerial Work (Englewood Cliffs: Prentice-Hall,1973).

[5]. N. Brunsson, The Organization of Hypocrisy: Talk, Decisions, and Action. In Organizations (NY: John Wiley (1989): 223.

[6]. Ireland and Hitt, “Achieving and Maintaining Strategic Competitiveness,” 48.

[7]. S. Worden, The Essence of Leadership: A Cross-Cultural Foundation  (Phoenix: The Worden Report, 2017).

[8]. G. Enderle, “Some Perspectives of Managerial Ethical Leadership,” Journal of Business Ethics, 6 no. 8 (1987): 661.

[9]. N. Brunsson, The Organization of Hypocrisy ,198, 218.

[10]. L. T. Hosmer, Moral Leadership in Business (Burr Ridge, IL: Irwin, 1994, 237.

[11]. J. L. Badaracco and R.R. Ellsworth, Leadership and the Quest for Integrity (Boston: Harvard Business School Press, 1989).

The Founder of Theranos: A Flawed Charismatic Vision and Leader

“Theranos rose quickly from being a college dropout’s idea to revolutionize the blood analysis industry to a hot tech bet that accrued $700 million in funding and many famous names for its board.”[1] Elizabeth Holmes, the company’s founder, was stripped of her position at the company in 2018 after the SEC discovered her deep involvement with the fraud at the company. Her “smarts, fierce determination and Steve Jobs-inspired look . . . were critical” to her being able to perpetuate the lie that the company had a device that could do blood tests with just a scant amount of blood, obviating the unpleasant experience of having blood drawn by needle.[2] Although Jack Welsh, Bill Gates, and Steve Jobs accomplished enough to warrant their fame, I submit that companies are too prone to create “champions”—even strangely calling them “rock stars.” In other words, even though charismatic vision is of value to a business, neither such a leader nor his or her vision itself should be overplayed. Business, I submit, has a marked tendency to do just that, and often with impunity.

At 19, Elizabeth Holmes dropped out of Stanford University because she had an idea of how blood tests could be done without the need of so much blood that a needle is required. She was “determined to create a company that would help anyone who, like herself, was afraid of needles and dreaded taking blood tests.”[3] Where the school Northern Illinois University or the University of Arizona, her decision to drop out for such a reason could be reasonable, but to give up a Stanford education so people wouldn’t have to feel a needle for “blood work” indicates a flawed judgment. Where were her parents? She was 19! Finish college then start your company. That it took her a decade of work before she debuted her company—and even then without the requisite technology—suggests that there was no rush. Simply out, it is very odd that she dropped out of Stanford. Yet this point was somehow missed by investors such as Rupert Murdock, Cox Enterprises, and Walgreens, and board members including George Schultz and Henry Kissinger, former U.S. Secretaries of State,  former U.S. Senator Sam Nunn, former Secretary of Defense William Perry, and the current Defense Secretary James Mattis. Did they all show up drunk at board meetings? Was there even an audit committee that reported directly to the board?

Clearly, we can be dazzled by celebrity, and the famous can cash in on their reputations. That no flags were raised concerning the founder raises larger questions in business related to the troublesome transfer of power and position from charismatic founders to managers. Investors should not rely on the charisma of founders; even the promises of Bill Gates and Steve Jobs warranted being independently checked out. CPA firms should not have to rely on founders, or even managers, for renewals. Business, in other words, can easily get too cozy, leaving investors out in the dark.

In terms of leadership, charismatic vision should be distinguished from the implementation of strategy. I’m not even sure “avoiding needles” is big enough to warrant being reckoned as a vision. Founders and managers alike may distend what are actually good ideas into charismatic vision.[4]

In conclusion, the background of Theranos, including that of its founder, should have raised red flags. Likening her to Steve Jobs because she wore black turtle-neck shirts borders on the ridiculous, and yet a self-aggrandizing company can easily get on that band-wagon, ignoring the hypertrophy. Leadership vision is valuable, but in a business context the vision thing must be related to concrete strategies, with realizable benchmarks. This is not to say that leadership vision should collapse into strategic interests, for such reductionism rids the vision of its own integrity and coherence.[5] The point is not to get carried away with charismatic vision in business even as such vision should not reduce to strategy.

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[1] Marco della Cava, “Behind the Scenes of Theranos’ Dramatic Rise, Fall,” USA Today, March 16, 2018.

[2] Ibid.

[3] Ibid.

[4] On leadership vision, see Skip Worden, The Essence of Leadership: A Cross-Cultural Foundation

[5] Skip Worden, “The Role of Integrity as a Mediator in Strategic Leadership: A Recipe for Reputational Capital,” Journal of Business Ethics, 48 (August, 2003) No. 1, 31-44.

A European Utility Re-Envisioning Energy: An Opportunity for Visionary Leadership

When Eneco began a business called CrowdNett in which the company would sell large home-batteries to people having solar panels, the Dutch electric utility was on the way toward putting its electricity-production business out of business. The company would continue, though radically transformed. The strikingly different strategic-course correction was based on a rather unique vision of a novel social reality in which homes generate their own energy and then some. In the context of climate change and accumulating carbon dioxide in the atmosphere, Eneco’s CEO had an opportunity in 2017 to lead not only organizationally, but societally as well by promoting the radical social reality already envisioned.

Already by 2017, surplus power generated by houses with the solar panels could be stored in large batteries. Eneco could tap into “a portion of that storage to help balance the electricity grid. Customers [received] 450 euros, or $530, a year for allowing use of their batteries.”[1] The customers could also rent a meter called a Toon for €3.50 a month for an expected energy savings of 10 percent. However, to give customers an incentive to produce as much energy as possible beyond their consumption, Eneco should have agreed to pay per unit of energy sold to the company and given the Toon monitors away (or with a small initial fee). The incentives of the customers as producers would have been more closely aligned to Eneco's strategy. Even so, the value of the company's vision is unimpeachable.

It may seem odd in conventional terms that Eneco would encourage its customers to buy less electricity; such an approach to selling a commodity would under normal circumstances be quite bizarre, but the company’s management did not view the company as necessarily being in a commodity business for long. Moreover, the management questioned the very notion that large power plants are necessarily the default means of energy production in spite of the fact that they were at the time. The people at Eneco were utilizing their energy to transform not only the company, but also the entire energy sector, with implications far beyond the E.U.

How did the management get to that point? When the company was “locked in a profit-zapping battle with competitors, cutting prices for electric power and natural gas,” the management “decided that a radical change was necessary.”[2] Hans Valk, a former head of Eneco’s customer business, explained the thinking at the time as: “What we are trying to do is switch from selling a pure commodity to selling energy as a service.”[3] That is, Eneco would provide services to the people generating the energy. The company bought Jedlix, for instance, so to be able to get into the business of providing charging services for electric cars. Leveraging the information available from the home energy monitors, Eneco could enjoy a sustainable competitive advantage in solar-panel repairs.

In terms of the original energy-production end of the business, when “large volumes of wind and solar-generated electricity” undermined “the economics of traditional power plants,” Eneco could perceive “the outlines of a future in which conventional power plants on longer [would] supply the bulk of a home’s electricity.”[4] In a dramatic reversal, the home would be the generating site and Eneco would purchase the right to draw surplus energy in order to transfer it to homes in need of an infusion of energy. Eneco could thus potentially transition itself into being a transfer-conduit and balancer rather than a producer. The company would be juggling “a thousand points of light,” or sources thereof, and the light would be cleaner and thus in line with limiting climate change. This picture is tailor made for visionary leadership, not only organizationally, but for a societal and even global audience as well. 

In his 1989 inaugural address, U.S. President George H.W. Bush had envisioned a thousand points of light in terms of community service. He was attempting to call forth the dispersed energy of the American people. Similarly, Eneco’s CEO had an opportunity as early as 2010 to take up the mantel of visionary leadership to envision for the world a future wherein homes and businesses are the sites of energy production from wind and the sun. In parallel terms, the CEO could have extrapolated to home gardens and local farmers’ markets as potentially playing a much greater role in food production, hence reducing the carbon footprint in transporting foodstuffs. The coherence of such a vision would be amazing, such that the leadership could be quite effective in the promotion of the vision. It could be called, Radical Decentralization in a Globalized World. Such a vision is the stuff that leaders are made for. Even the radical strategic shift in buying energy-servicing companies pales by comparison. To be sure, strategic management and leadership differ; each has its own purview.[5] When the two are conflated, the bottom line usually sees to it that strategic considerations dwarf or compromise the more ethereal visionary leadership. Yet as the European energy utility demonstrates, strategic change need not be the whole story, and the combination of strategic redirection and a radical vision going even beyond the organization itself can be huge, with major dividends in the long term.


For more on visionary leadership and management, see The Essence of Leadership: A Cross-Cultural Foundation, available in print and as an ebook at Amazon. 

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1 Stanley Reed, “Dutch Utility Bets Its Future on an Unusual Strategy: Selling Less Power,” The New York Times, August 18, 2017.

2. Ibid.

3. Ibid.

4. Ibid.
5. Skip Worden, The Essence of Leadership: A Cross-Cultural Foundation (Seattle, WA: Amazon Books, 2017).

Ethical Leadership: Pruning Off the Debris

As business practitioners grapple with the intangible yet potentially valuable notion of ethical leadership, it is left to scholars to assess whether those practitioners are “coloring within the lines.” It is admittedly all too easy to draw in exogenous material that is pleasing to the eye; it is all too easy to deem such material required for ethical leadership rather than ballast weighing it down, unnecessarily. One business practitioner characterizes ethical leadership as that which “inspires the behaviors in people necessary to create competitive advantage.” As achieving a sustainable competitive advantage is the task of strategy, inspiration alone can be extracted as that which is particular to leadership. Strategy is what is left once one has extracted inspiration from the characterization.

Material from this essay has been incorporated in The Essence of Leadership, which is available at Amazon in print and as an ebook.