STRATEGIES TO CREATE AND INCREASE TRUST IN CLIENTS
STRATEGIC MANAGEMENT AND CHANGE
“Effective leadership of any organization is the most important element of long term success”.
Discuss and analyse this assertion and identify the characteristics and behaviour of effective leadership using current or recent examples from business organisations and relevant theories.
Intro
To answer this topic question in the best way, it will be necessary to understand the factors that contribute to the long-term success of an organisation and the definition of what leadership is (what a leader does). The author will start by looking at the most obvious, traditional notion of a leader, then some of the new leadership roles that have emerged in response to the changing environment. We then analyse the different characteristics of leadership and how these lead to alternative styles. Finally, using examples, show how effective leadership relates to the long-term success of businesses, and why it is essential.
Factors in the longterm success of a company
Building organisational awareness is essential when there is a need for change within an organisation to stay competitive but key players do not notice it or have a lack of motivation to lead the company through that period.
According to Mintzberg there are several other forms of forces decisive for the long-term successes of a company. The first of these is accountability: if efforts are not accountable (with respect to the outcomes), than it is almost impossible to measure the efficiency of an organisation. Another factor was innovation and learning. An organisation needs to constantly evolve: to learn about their customers, the markets and the competition. A third factor that was identified was the need to co-operate - to work together to achieve a common goal, even if they are rivals. For example, companies sometimes co-operate by working on new standards together (e.g. with VHS and CDs). The standards were mutually beneficial - because they stabilised the marketplace, allowing the consumer to buy, and the companies to sell without worry. Other examples are join-ventures, where one company has a legal base, money, linguistical and cultural knowledge, and the other, experience and ideas. For example in 07/04/2000 Marks & Spencer Ventures announced that it had entered into a strategic partnership with Talkcast Corporation plc, a digital media and communications company, to provide the M&S’s costumers with new a range of products and services. At the time, the dot.com euphoria was at its height, and Marks and Talkcast saw this as an initiative that would let them jointly reap the rewards from it.
Marketing was also identified as another key factor. Where companies are reliant on a few products for their business, the success of these is paramount, and whilst the quality of the products is important, it is the marketing department that sells the goods. A prime example of the importance of marketing to the success of a new product can be seen in the contrasting fortunes of the Sega Dreamcast and the Sony Playstation after their launches in 1999 and 1997 respectively. Sony’s product soon became the market leader, on the strength of its powerful marketing machine. It was rumoured that Sony had spent over 10 million dollars on the launch alone. When Sega launched its product, it was to much acclaim amongst the gaming press. It was by far the most advanced and powerful machine available, and Sega already had a great prestige in making games. Despite all this, the marketing campaign was poor, and the machine sank without a trace, almost taking Sega with it.
Shareholders and customer satisfaction are utmost important the long-term success of the organisation and go hand in hand. If we take a look at the stock market, than sometimes the shareholders opinion about the value of a certain share is everything. A negative rumour can be enough to let the share price sink considerably, so you always want to keep them happy. These rumours are sometimes out of the reach of the leader of a company, and there is nothing he can do about. In terms of costumer satisfaction; In America for example costumers can be convinced of a better deal to buy the concurrent product through an advertisement. Other than in German adds where naming and criticising concurrent companies during ads is against the law. The only things a leader can do is fighting back with the same weapons and try to state the weaknesses of the peers’ product.
What is Leadership?
Leaders, especially in the West, used to have the image of heroes, great men who appear in bad times and lead the people out of their miseries in a revolutionary manner (De Wit, Meyer, Strategy Process, Content, Context, 1994, p134). As long as that myth prevails, the focus about what leadership means is based on short-term events and conjures up images of a commanding General standing on a podium issuing orders to all his troops. This traditional image of what leadership means is characterised by a one-way communication flow – where the subordinates do nothing but listening and following. However, over the years, new ideas about what a leader is have evolved. These will be discussed.
New Leadership Roles
According to Bob De Wit and Ron Meyer, leaders are designers and teachers.
Designer:
One of the last roles that people come up with when they are asked to talk about leadership roles is the designer. Different groups of managers were asked about the roles they thought involved leadership and many different answers were given. The most popular answers were director, decision-maker, and controller, with hardly any identifying the designer. If we regard for example, how fashion designers dictate how the rest of the world should dress.
Teachers:
According to Herman Miller CEO Max de Pree (1989) “The first responsibility of a leader is to define reality”. Before we discuss the role of a leader as a teacher within an organisation we have to know the meaning of the term ‘reality’ in this context. Reality is the current state of believes of what is real and this can change anytime. The task of the leader therefore is not to ‘tell’ his employees what reality is, but to guide them into the right direction so that they can discover it for themselves. This can be considered in line with the other functionalities of the leader in this context, coaching, guiding and facilitating. The leader role here can be seen as the coach guiding change in personal mental models, and challenging established thinking. In some ways, to do this, they have to act as mental explorers, analysing the issues in people’s heads. This is important as is shown by an example from Mitroff. In one of his studies, he notes that General Motors has build cars based on to the ‘mental model’ that Americans choose cars because of their styling rather than the quality. Therefore, more effort was put into the style design rather than improving build quality. This view was so entrenched that it was used with question, and hence was to all intents and purposes hidden. Leaders as teachers therefore help people to restructure their views of reality, to clarify wrong assumptions, to create pressure and new challenges where needed, to identify limits and react to crises.
New Leadership Ideas
Now, the leader has more of a role in the way of assisting and direction setting. His job is more persuasive than coercive. For example, a director may seek to persuade his employees to work harder by explaining what the corporate targets will be and why they are so important to each individual, as well as to the firm as a whole.
It is about seeking for understanding and agreement about what has to be done in order to lead the firm to success. Leadership is to generate the sense of corporate identity within each employee at any level without blinding his intellect. It is not to treat the employee as a slave and to ignore his potential to contribute to the organisation’s good. It is not about giving commands or simple ordering the tasks out to their employees. It is not a one way, from up to down, communication flow, but much more a discussion within a group where every employees ideas and metal assets should be listening to and if appropriate taken into account when decision making. These groups described as task team. According to Edgar Schein, “Leadership is intertwined with culture formation”. The unique and essential leaders function is an evolutionary rather then revolutionary approach to shape and build the organisation’s culture and collective mindset (De Wit).
re are certainly many types of leadership used to achieve and informed consent by followers. However, we can distinct between two ideal types, which are interrelated: transactional and transformational leadership. The author will firstly define those two types in more detail and then describe their implications. In the light of this further investigation, will be based on Bass’s proposition (1998) consistent with Burns (1978) that authentic transformational leadership must rest on foundation of legitimate values. This holds above and beyond issues of cultural relativism.
Transactional leadership is more management-based, and controls an organisation, whereas transformational shapes it. Transformational leadership contains four components: charisma or idealized influence (attribute or behavioural), inspirational motivation, intellectual stimulation, and individualized consideration (Bass, 1985, 1998, Bass & Avolio, 1993). Shamir, House and Arthur (1993) and Conger and Kanungo (1988) conceive of the same components as all falling under the category of charismatic leadership. It involves that followers identify with the charismatic leaders’ aspirations and want to emulate the leaders. Followers are motivated by the leaders’ promises, praise, and reward.
Douglas Mitchell and Sharon Tucker (1992) said that we have the image of leadership as being the power to take charge and get things done. It was pointed out that it should be perhaps the time now to rethink leadership as teamwork based discourse and more as a way of thinking about ourselves, our jobs, nature of task and the environment in which we live rather than seeking for aggressive action provocation. Thus, “instructional leadership” changes to “transformational leadership”. The idea of transformational leadership was first developed by James McGregor Burns in 1978 and later extended by Bernard Bass as well as others. These studies were based on research about political leaders, Army officers and business executives. In the light of this examples were given where a shift away from Type A to Type Z organizations has taken place. Type Z organizations reduce the differences in status between managers and workers, emphasizing an participative decision-making process, and are based on a form of “consensual” or “facilitative” power that is manifested through other people instead of over other people (Kenneth Leith wood 1992).
For effective leadership of any organization both styles are necessary. According to Waldman, Bass, & Yammarino, 1990 transformational leadership does not replace transactional leadership but increases its effectiveness.
The importance of Leadership
So what makes an effective leader? As we have seen from above, an effective leader should combine the transactional style leadership with transformational. Transactional leaders are more drawn towards managerial attitudes. Just like managers their are thought to be the budgeters, the organizers, the controllers — the ants, as one observer puts it — while transformational leaders are the charismatic, big-picture visionaries, the ones who change the whole ant farm. However it is sometimes hard to distinguish these two sides within one person (just like Clark Kent and Superman). “Everybody has got a little bit of each in them,” says John Kotter. “There are lots of people who look and act like managers, who have excellent managerial skills, and who don’t make a lot of noise. Nobody is writing cover stories about them. But after they have been in an organization for a period of time, things are significantly better,” observes Badaracco. Some great managers struggle with change and fail to be great leaders, while a great leader might fail to create a sense of stability in an organization and not measure up as a manager. HBS (Harvard Business School) professor David Thomson points out “increasingly, the people who are the most effective are those who essentially are both managers and leaders.”
Below are some other qualities that are relevant. He listens, responds good to change. He must know how to motivate people by given them positive feedback and rewards if appropriate. Through appreciation of its employees performance the leader will earn respect in return. A good leader knows how to gain trust and has a good sense of humour. This will break the ice and is an easy way of brings the people along with you. A confident leader also has to be a risk taker, to take the chance and learn from it when it fails or succeeds. Leaders also should reward taking risks in others. He should also be able to focus, and tell people clearly what he wants from them.
A strategic vision is the long-term focus of any organization on its key objectives, crucial for its long-term success. It is the driving force in an ever-changing and uncertain business environment. In smaller businesses the entrepreneur as a personal process of decision-making takes on this role. In larger, more mature companies professional management takes over the role of the entrepreneur (Newton, Strategic Thinking: Leadership and the Management of Change, 1993, p.134). It is also likely that the decision-making process is shared within a team of managers. The driving force is than not longer a personal, but a shared vision, derived from modified and discussed personal views. Having summarised these two sources we can then state that the leaders role differs dramatically from that of the charismatic decision maker. To shape the organisation into the right shape in order to survive in the long run.
It is about trying to predict the future, to lead and shape the organisation into his right competitive form almost simultaneously with the changing environment. It is not about to wait until the change happens, seeing how these changes affect the business and than react with ‘strategic plans’. No, strategic planning is far more ‘proactive’ rather then ‘reactive’. As leader of a modern organisation we can even go a step further and provoke change with our strategic plan. For example to invent a new technology that changes the way how people work and behave in a revolutionary and globally spread extend, thus leads to competitive advantages to be the first on a new product market, to be able for direction setting and determine segmentation and market share, brand, price etc. Examples for this would be, the change from 5 ½ disks to 3 ¼ disks, or from LP’s to CD’s etc. The importance of leadership cannot be stated more obviously than to localize or provoke change, and to guarantee competitive advantages, hence the survival of the organisation in the long term. A good leader, one that is respected because he is doing his job well, can boost morale and generate the feeling of security for his employees. Working in a stable company, they are unlikely to lose their jobs, and this certainty allows them to concentrate on their own work better.
The importance to a leader of the people he is surrounded with should not be underestimated. For example if we consider Belbin’s group roles theories. The author would like to take two characters out of the seven given. The ‘leader’ is a progressive thinking character willing to change things and does not fear to take risk and to say want he thinks. But he might not be the smartest in the group or organisation. The ‘plant’ is the character that does not say a lot and needs to be sometimes asked to say something before he does, but if his ideas are brilliant. One could compare that with the leader of the United States (in the President), who is obviously not the brightest. However, he is surrounded by the smartest advisors of the country, specialists for every field, the President himself does not know a lot. Yet the people still respect him as leader and do what he says.
Beyond the textbook ideas of the qualities of a good leader, we can see Berlosconi, the president of Italy, who wants to release left wing journalists who are respected in the country for decades as one of the best in their area, but seem not say and think what the current government leadership wants to hear. Bill Gates, whose power consist purely in money and market share, hated by the most, he stole Macintosh’s first windows interface and became so one of the reaches persons in the world. A few years later he paid Macintosh voluntarily millions to keep up the image to have a concurrent, since the government of the United States would have caused him trouble having an absolute obvious monopole in the computer software industry. Lehman’s had the right strategy, split up from American Express 1989; target was to be the best operator instead of eternal growth. Not the size of the organisation counts but the quality of the products.
We can learn much from examining the reasons why ineffective leaders failed, and linking them to company decline. In 2000, [1]Marks and Spencer the leading and global English retailer company experienced its biggest economical downturn since 1992. Many retailers particular in the clothing middle market have seen their profits squeezed by discounters and top end fashion retailers. However, M&S were hit most dramatically with a share price drop from more than 650p at the end of 1997 to 209p at September 2000. This decline may be attributed to a lack of vision and reluctance to innovate by high-level management. The organisational structure had not changed in years, and its long communication channels meant that it struggled to react quickly. It was strictly hierarchical, with a communication flow that was strictly from top to bottom. This can be compared with the transactional theory of leadership were subordinates were told what to do. Thus there was a lack of feedback into the system.
Their stores and products seemed out-dated compared to their competitors, and it began to labour under an image of being old-fashioned. These issues were not noticed for a long time. It is only recently, that it has recovered from its problems, under the leadership of Luc Vandevelde. The much-publicised problems of Enron were because the CEO failed to promote a regime of honesty and accountability. This may be seen as the cause of the widespread corruption and abuse of power.
Argument:
Leadership is important, but not everything can be done by it. Even though if in the most optimistic company all internal factors are under control by management and leadership, yet external factors can affect the firm and are often very hard to predict. External factors such as: competitors, media, political changes, technology, and effects from an economic downturn. Change is all around us. The external environment is in a constant state of flux. A competent leader in this context is a leader who knows his limits of control, and how to deal with the risk that these uncontrolled changes can generate. A good leader should therefore expect the unexpected and be aware that there are things that can go wrong and cannot be predicted. However it should be in the leaders interest to permanently seek for understanding, the external factors that drive change, thus can help him to understand why the organisation must change, how it must change, and what would happen if not
Conclusion:
In this paper we have been looking towards the long-term factor that make a company successful. Then we were looking at what leadership is and how a solid leadership can influence these factors. On the one hand we found that leadership is an influence process: “The ability to motivate others to do something, believe something or act a certain way”. On the other hand we also found that leadership is far more than telling people what to do, even more so leaders should also be listeners just as much and continuously search for new ways, taking on new ideas and skills, seeing themselves also as learners as well as teachers. Therefore we said that leadership can be executed in many different ways and that many leaders may have many different styles of leadership. Leadership style is: “the pattern of behaviours you use when you are trying to influence the behaviour of others”. That led us over to find out about different leadership styles. Henry Mintzberg defined leaders, as teachers and designers. He was saying that leaders can have different roles within an organisation, and a good leader would know how to swoop from one style to another depending on the people and situation he is dealing with. Further we discussed the difference and importance of transactional and transformational leadership, one more managerial the other more leadership driven, and that both go hand-in-hand. We also found that there is a bit of both sides in most leaders and effective use of each site depending on the given situation will make the difference of success. A further very important leader task is to build a vision. A capable leader would be able to articulate his vision in clear simple language with the emphasis on what will be rather than what is.
[1] Resource for M&S, BBC NEWS archive
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