Thursday, 13 September 2012

Link Between Strategic Management & Leadership

“Since change is the function of leadership, being able to generate highly energized behavior is important for coping with the inevitable barriers to change. Just as direction setting identifies an appropriate path for movement and just as effective alignment gets people moving down the path, successful motivation ensures that they will have the energy to overcome obstacle.”

Executive Summary
The study reveals the link between the strategic management and the leadership. Strategic decisions are crucial for the growth and development of any organization and vary according to different management and different leadership styles. It also evaluates the utility of different leadership styles in context of different situations. Different theories of management and leadership are also evaluated in this report with regard to their impact on strategy of an organization. It is also concluded in the end that in the given scenario what should have been the approach of the leadership for the strategic decisions and the recommendations are made accordingly.

Introduction
“Since change is the function of leadership, being able to generate highly energized behavior is important for coping with the inevitable barriers to change. Just as direction setting identifies an appropriate path for movement and just as effective alignment gets people moving down the path, successful motivation ensures that they will have the energy to overcome obstacle.”
-John P. Kotter

The basic difference between managers and leaders is that managers don’t accept any change rather they believe in stability but leaders are supposed to bring changes. A leader has strategy and vision while a manager has plans and he executes his plans.(Kotter, 1990). As it is obvious from the given scenario that Dan J. was not able to handle challenges which his Printing Company encountered due to rapid change in technologies, competitive market, increasing expenses and pressure of pricing. He was working more like a manager, specifically store manager, than a leader. (Griffin , R. W. 1999).

Dan J as he is popularly known was the owner of a Printing Company in the Twin Cities. The term Twin Cities in the United States refers specifically to the cities Minneapolis and Saint Paul, both of which are in the mid western state of Minnesota. Lastly Dan j. took the services of C.M. Perme & Associates as consultants. C. M. Perme and Associates is known for engaging leaders from CEO to supervisors, since 1990. This decision of Dan J. brought substantial positive changes to his business figures. (John Adair, 2010).

Link between Strategic Management and Leadership
As John P. Kotter suggested that the change is the function of leadership and strategic decisions means decisions leading to substantial changes in management processes. Hence, Strategic Management and Leadership are closely related or in other words, inseparable. In fact, the terms leadership and strategic management are interchangeable because a leader performs key function like initiating, planning, supporting, controlling, evaluating, etc. Their other responsibilities include building, developing maintaining a team and achieving a common goal by keeping the individual member of the team motivated. (Griffin , R. W. 1999).

“As strategic leaders, top level managers must guide the firm in a ways that result in formation of strategic intent and strategic mission. This guidance may lead to goals that stretch everyone in the organization to improve their performance.”
- Griffin , R. W. 1999

Strategic management is a process of coordinating technological, financial, material and human resources of an organization for enabling it and its stakeholders in achieving stipulated target efficiently and effectively. Strategic management is a wide term in comparison to leadership as far as scopes are concerned because leadership is mainly limited to organizing, directing and supporting individuals or the human resource in order to achieve the stipulated goal whereas strategic management refers to all resources within an organization.

Strategic leadership plays key role in responding to the challenges which businesses have to face due to rapid changes in technology, growing competition and globalization. Dan J. was facing the same problems and the business was declining tremendously. The stock prices were very high due to rise in the market. (John Adair, 2010).

Printing, like many other industries, faced the challenges of rapidly changing technologies and pricing pressures during the 1990s. Costly capital expenditures and a corresponding jump in capacity prompted a move toward increased consolidation according to a 1997 Minneapolis and St. Paul City Business article by Jennifer Ehrlich. Yet rising stock prices had become a prohibitive factor. 'Because the market has risen so fast, the value being placed on companies is too high, and it doesn't make as much sense as it did in the past to buy them. Dan J. also bought out his partner Glenn which increased his work loan and he decided to delegate responsibilities and rely on staffs more. He hired C.M. Preme & Associates and their leadership strategies registered a growth of 10% despite recession.

Impact of leadership styles and management on strategic decisions
There are different types of leadership styles like Autocratic, Bureaucratic, Charismatic, Democratic, Laissez- faire, etc. (Richard L.H. and Katherine C. B. 2005)
1. Autocratic leadership style: when the leaders use absolute powers in making decisions. This is more prevalent in military and Adolf Hitler is a good example of it. In corporate world, United Aviation Services (Dubai) is known for autocratic leadership.
2. Bureaucratic leadership: when the leader follows the strict theories of leadership defined in books. This style is followed where safety measures are prominent specially working on machines.
3. Charismatic leadership: When the followers are highly inspired by the leader and believe blindly in their leader. Mahatma Gandhi was a Charismatic leader..
4. Democratic leadership: When team members are included in decision making by the leader. This helps in building team spirit and motivating all by increasing trust, skill and confidence.
5. Laissez-faire leadership: When the leader leaves the team members to take decisions n their own and monitors them. This is applicable with efficient and capable teams.

Dan J. was an autocratic leader and failed to get the best output of his team when he faced adverse situation in the business till he hired the services of C.M. Preme & Associates. Neither he could improve organizational performance nor enhance work group effectiveness to drive competitiveness and curtail the cost of employee turnover as it was done by his consultant later.

Leadership styles adapted to different situations
It is evident from the various scenario of the given that different leadership styles are required to be adapted in different situation. Dan J. was an autocratic leader but his consultants adapted democratic style and they communicated with his employees about the management style of Dan J., they also sought the opinion of the employees about what they wanted to do or what they could do but didn’t get the opportunity. Then they were debriefed, coached and trained. Team training was mandatory. They followed the bureaucratic style of leadership by seeking the opinion of the of the customers about the services and the product mix and suggested required changes to market them. C.M. Preme & Associate adapted Laissez- Faire by transforming production manager Kurt into sales manager and registered substantial positive changes. Jack was hired as production manager and wife of Dan J. also joined as an important member of the team and Dan J. himself was now transformed from a store manager to a leader. The sales have grown more than 10% despite recession and employees work in a team to resolve business issues and as a leader Dan J. focuses on long- term strategy, marketing campaigns, customers, etc. (John Adair, 2010).

Impact of different theories of management and leadership on organizational strategy
There are several theories of management and leadership on organizational strategy like Great Man theories, Trait theories, Behaviorist theory, Situational leadership, Contingency theory, Transactional Theory, transformational theory, etc. Different organizations are influenced by different theories of management and leadership.
Organizational strategy of Philips is based on behaviorist theory and the key factors of it are determination to achieve results, focus on the market, finding better ways, top performance, inspiring commitment and developing self and others.
In case of Vodafone the strategy is mainly based on situational leadership and contingency theory with special features like valuing communication, team development, strategic vision, building capability and commercial drive. (Richard L.H. and Katherine C. B. 2005)

The theories of management and leadership which had an impact on the strategy adopted earlier by Dan J. and later by the consultants C.M. Preme& Associates are entirely different. Dan J. seemed to follow Great Man theory and Trait Theory as he assumed that being a leader his traits are to be followed by others because leaders are born with great qualities. C.M. Preme & Associates worked differently and adopted many theories as Behaviorist theory was adopted in communicating with different stakeholders, situational and contingency theories were adapted in implementing changes according to situation and transactional and transformational changes were adopted by changing responsibilities and awarding staffs.(Roger I.D,, Hitt M.A., Camp S.M. and Lexton D.L., 2009)

Conclusion
The scenario of the given case proves that the planning methods are useful in meeting the challenges of any situation and developing leadership skills. Leadership traits can be learnt and developed to meet the strategic needs. This paper has the relevance for handling complex situation of the present competitive business world by utilizing leadership skills in making strategic decisions to achieve the stipulated goal.

Referencing
1. Griffin , R. W. 1999. Management. (6th ed.). Boston, MA: Houghton
2. John Adair, 2010. Effective strategic leadership; the complete guide to strategic management. Oxford, Pan books.
3. Kotter J. P. 1995. Leading change
4. Richard L.H. and Katherine C. B. 2005. Becoming a Strategic Leader, Jossy-Bass Publisher, USA
5. Roger I.D,, Hitt M.A., Camp S.M. and Lexton D.L., 2009. Integrating entrepreneurship and strategic management actions to create firm wealth, Academy of management executive, Vol. 11 (3)