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Saturday, February 1, 2014

Strategic Leadership: Disentangling Strategy and Leadership

Strategic leadership relates an organization’s differentiated core competencies to its ideologies, identity, mission and view of the macro environment system. Relates implies that strategic elements are not identical with a vision containing values (Ireland et al, 1999, p.48). In fact, a tension can be involved, as interest applies one way to core competencies and another to the social reality that a leader promotes in line with an organizational mission (and identity). For one thing, the basis of a competitive advantage can be rather limited temporally, due to technological changes, for example, while values espoused are presumably long-lasting in their validity and thus not easily changed. 

To be sure, the tension between more immediate strategic objectives and a longer-term social reality formulated and “sold” by an organizational leader need not exist. Crafting strategy that is in line with what an organization “stands for” is possible and, indeed, can be quite profitable as well as societally legitimate (i.e., in line with the mission that is in line with societal values). Even so, at an abstract level, strategic interest does not dovetail with a holistic vision that is societally valued because the organization is central in one but not in the other.

Ethical leadership as a means of managing strategic leadership (Worden, 2003a and 2003b)        

In business terms, the hub-and-spokes structure of the stakeholder management framework differs from the web-like “network” that characterizes social reality at the societal level and contains the organization’s mission. An organizational leader constructs and depicts not only a vision of the organization’s mission, but of an encompassing social reality of the environment (i.e. society).  Both of these elements pertain to the legitimacy of the vision as well as the organization itself in society.  For a leader’s vision to be regarded as credible in society, integrity is necessary (or, sadly, at least the appearance thereof). The leader’s interpretation of social reality “must not be affected by success-oriented considerations in favor of the corporation” (Enderle, 1987, p. 661). The lack of any tension, which is admittedly possible, must not be a result of changing the vision whenever core competencies change. Integrity applied to a leader means resisting the temptation to turn the vision into a malleable chameleon as per strategic convenience. This is a relatively tight interpretation of integrity applied to leaders, for no extrinsic values are being attributed to leaders here. For example, I am not saying that a leader must be fair in order to have integrity as a leader. Integrity applied to a leader has to do with leadership itself, rather than opening a flood-gate of whatever ethical value the investigator or practitioner favors.

In short, strategic leadership is a mixture rather than compound. Relating strategy to leadership implicitly involves managing two paradigms—one that of leadership vision (tapping into a societal “web-like” framework) and the other that of strategic management (the organization as necessarily “front and center”). If these paradigms are not balanced, the leader risks either portraying a self-serving vision or shirking the organization’s survival. In difficult market conditions, a leader might lean toward strategic objectives—though without violating the vision’s values. In a favorable economy, the pruning of strategy to boost the credibility of the vision can effectively counter the strategic leaning at the expense of standing on principle.

One might ask whether viewing strategic leadership as something to be managed renders a leader a phony in terms of believing in the principles being advanced in the leader’s wider vision as well as what the organization stands for. In other words, would a leader who is passionate about certain values be willing to compromise them in bad times because any loss in societal credibility can be made up on the flip side? Moreover, if a leader really does believe in the values being evoked, wouldn’t every strategy employed necessarily dovetail with them? The underlying question may be whether the organization functions primarily to accrue profit or to advance the values or ideology expressed in the leader’s vision. The priority on profit is a default. In public corporations, stockholders can or should be able to determine the default on account of owners’ property rights. Indeed, I submit that these rights should eclipse even the business judgment rule that gives priority to managerial expertise (which assumes profit as the default objective).

Generally speaking, where strategic objectives are in tension with leadership vision, the question of whether the two underlying paradigms should be managed has to do with the relationship between the default and the espoused principles or values. It could be that the tension only arises when profit-making is the default. In any case, understanding the two basic paradigms underpinning strategic leadership can add to our understanding of strategic leadership itself as not simply “leadership that is strategic.”  

G. Enderle, “Some Perspectives of Managerial Ethical Leadership,” Journal of Business Ethics 6 (1987), no. 8:657-663.

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(1999), no. 1: 43-57.

S. Worden, "The Role of Integrity as a Mediator in Strategic Leadership: A Recipe for Reputational Capital," Journal of Business Ethics, August 2003(b) (Vol. 46, No. 1), pp. 31-44.
S. Worden, Strategic Leadership as a Source of Competitive Advantage: A Qualified Dualistic Model,”  Proceedings of the Midwestern Academy of Management (St. Louis, 2003(a)).