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.
[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 21st 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).
