Friday, August 27, 2010

Successful Entrepreneurs exercise Strategic Leadership

Entrepreneurs and employees make decisions every day as they interact with their firm’s stakeholders, customers, suppliers, the communities in which they operate, and each other. When these decisions are in accordance with the strategic direction of the organization, the company will thrive. The key is strategic leadership so this takes place consistently and automatically.

Strategic leadership means influencing your employees to voluntarily make decisions on a day-to-day basis that enhance the long-term viability of the organization while at the same time maintaining its short-term financial stability. Are the decisions that employees are making in accordance with the strategic direction of the organization? Will these decisions enhance the future of the organization and make sense in the short-term?

It makes sense that if you can count on employees to voluntarily make decisions that benefit the organization you won’t have to expend as much effort on monitoring and controlling your employees. Counting on your employees to do the right thing will also give you more time to examine what the organization needs to do, both in the short and long-term.

But how best to ensure that you can count on your employees to make those decisions? Communication is one key way. When employees understand and embrace the strategic direction of the company they will more likely make appropriate decisions. Conversely, if employees do not know the strategic direction of the organization they may inadvertently make decisions that damage it.

Influencing subordinates to voluntarily make decisions that enhance the organization is the most important part of strategic leadership. Noel Tichy professor of organizational behavior and human resource management at the Ross School of Business at the University of Michigan says 

When you can’t control, dictate or monitor, the only thing you can do is trust. And that means leaders have to be sure that the people they are trusting have values that are going to elicit the decisions and actions they want.

If you clearly delineate the values of your organization, people will be more inclined to live up to those values. This means that your employees will voluntarily make decisions and take actions on a day-to-day basis that will eventually determine the strategy your organization is pursuing. Entrepreneurs who are strategic leaders understand and use this to ensure the current and future viability of their organizations.
Two additional views on Strategic Leadership are as follows: 

“There are three categories of people – the person who goes into the office, puts his feet up on his desk, and dreams for 12 hours; the person who arrives at 5 am  and works for 16 hours, never once stopping to dream; and the person who puts his feet up, dreams for one hour, then does something about those dreams.”
—Steven J. Ross, Former Chairman and co-CEO of Time-Warner

“Without effective strategic leadership, the probability that a firm can achieve superior or even satisfactory performance when confronting the challenges of the global economy will be greatly reduced.”
—R. Duane Ireland and Michael A. Hitt, authors of Strategic Management: Concepts & Cases Competitiveness and Globalization

*Dr. Glenn Rowe is the Director of the Executive MBA Program at the Richard Ivey School of Business, Canada. He is an Associate Professor of Strategic Management and holds the Paul MacPherson Chair in Strategic Leadership.


gilliebean said...

This is similar to a phrase we use in the film industry:

"Are we all making the same movie?"

Sometimes, when conflicts arise, it's because the director and his or her key creative personnel aren't actually trying to make the same movie. They may *think* they are; but they have severely different assumptions and visions about what the end product is supposed to look like!

Everyone needs to be making the same movie, and the director needs to be able to communicate the vision and goals effectively to everyone - from the director of photography to the production designer to the costume designer to the production assistant! Otherwise, at each of those levels, a decision could be made that does not line up with the intended film. A costume could be too bold when it needs to be subtle. A camera move could be too slow when it needs to be fast. A prop could be too big or too small! A line of dialog delivered wrong! So many things! The director needs to be able to communicate the vision and the goals effectively so that each member of a films cast and crew can voluntarily make decisions that contribute to a unified vision of what the film is going to be! Every one needs to be making the same movie!

Unknown said...

A fun analogy for gilliebean from marketing -> the expectation gap, however, was meant to describe the difference in expectation, between customers and product/service providers.

A more closer view would be "management by objectives", however, less focus was placed on values and much on processes.

The last comment I have here from organizational structures .. The network-centric organization. It describes Rowe's text quite well but more so focused structure. I learned of this in a high school class video. Not sure what it was called but sure was informative in respects to Japanese management thinking.

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