 Role models, corporate credos and codes
Chapter 11: Strategic Leadership
Leadership
- Process of transforming organizations from what
they are to what the leader would have them
become
 Proactive: Dissatisfaction with the status
quo
 Goal-Oriented: Vision of what should be
 Focused on the creation and
implementation of change: Process for
bringing about change
- Zero-sum reward system: leads to the
dysfunctional situation in which one party’s gain is
viewed as another party’s loss and collaboration
THREE INDEPENDENT ACTIVITIES
1. Setting a Direction
- Strategic leadership activity of strategic analysis
and strategy formulation
- Benefits:
 A clear future direction
 Framework for the organization’s mission
and goals
 Enhanced employee communication,
participation and commitment
- Ability to scan the environment to develop a
knowledge of all the company’s stakeholders and
other salient environmental trends and events
2. Designing the organization
- Strategic leadership activity of building structures,
teams and systems, and organizational processes
that facilitate the implementation of the leader’s
vision and strategies
- Lack of appropriate design could lead to
problems:
 Lack of understanding of responsibility
and accountability among managers
 Reward systems do not motivate toward
desired organizational goals
 Inadequate budgeting and control
systems
 Insufficient mechanisms to integrate
activities across the organization
- Related diversification: reward systems; unrelated
diversification: financial indicators
3. Nurturing a culture dedicated to excellence
and ethical behavior
- Organizational culture: effective means of
organizational control
- Brian Chesky: the culture is what creates the
foundation for all future innovation
- Elements that must present and reinforced for a
company to be highly ethical:
 Accept personal responsibility
 Consistently demonstrate that such
behavior is central to the vison and
mission of the organization
of conduct, reward and evaluation
systems, policies and procedures
Two capabilities that are marks of a successful
leadership
1. Overcoming barriers to change
- Barriers to change: characteristic of individuals
and organizations that prevent a leader from
transforming an organization
- Organizations are prone to inertia and are slow to
learn, adapt and change because:
 Many people have vested interests in the
status quo (a barrier to change that stems
from people’s risk aversion)
 There are systemic barriers(barriers to
change that stem from an organizational
design that impedes the proper flow and
evaluation of information)
 Behavioral barriers (barriers to change
associated with the tendency for
managers to look at issues from biased or
limited perspective based on their prior
education and experience)
 Political barriers ( related to conflicts
arising from power relationships)
 Personal time constraints (that stems
from people’s not having sufficient time for
strategic thinking and reflection)
2. Using power effectively
- Power : leader’s ability to get things done in a
way he wants them to be done; ability to influence
people’s behavior, persuade them to do things,
overcome resistance and opposition
TWO CLASSIFICATION
A. Organizational Power (LICoR)
- Formal management position that is the basis of a
leader’s power
 Legitimate Power: organizationally
conferred decision-making authority and
is exercised by virtue of a manager’s
position
 Information Power: manager’s access,
control and distribution of information
 Coercive Power: power a manager
exercises over employees using fear of
punishment for errors or omission
 Reward Power: ability of the leader to
confer rewards for positive behavior or
outcomes
B. Personal Power
- A leader’s personality characteristics and behavior
that are the basis of the leader’s power
 Referent Power: leader’s personal
attributes or charisma might influence
subordinates and make them devoted to
that leader
  Expert Power: leader’s expertise and
knowledge
Emotional Intelligence: A Key Leadership Trait
- Three broad sets of capabilities:
 Purely Technical Skills
 Cognitive abilities
 Emotional Intelligence
 Capacity for recognizing one’s
own emotion and those of others
FIVE COMPONENTS OF EMOTIONAL INTELLIGENCE
1. Self-Awareness
- A person having a deep understanding of his or
her emotions, strengths, weaknesses and drives
and recognizing their impact on others
- Neither overly critical nor unrealistically optimistic
2. Self- Regulation
- Ability to control or redirect disruptive emotions
and impulses and adapt changing circumstances
- political behavior and infighting are sharply
reduced and productivity is high
3. Motivation
- Being driven to achieve for the sake of
achievement, not simply for money or status
4. Empathy
- Ability to see and consider other people’s feelings
especially when making decisions
- Important because
 Increase use of teams
 Rapid pace of globalization
 Growing need to retain talent
5. Social Skills
- Ability to build and manage relationships to move
people in the desired direction
Creating a Learning Organization
- To enhance the long-term viability of
organizations, leaders also need to build a
learning organization
SIX KEY ELEMENTS OF A LEARNING OBJECTIVE
1. Inspiring and motivating people with a mission or
purpose
- Learning Organizations: organizations that create
a proactive, creative approach to the unknown,
actively solicit the involvement of employees at all
levels and enable all employees to use their
intelligence and apply their imagination
2. Developing leaders
- Done in two ways:
 Programs help participants learn new
skills that help be more capable
 Train employees to be more effective at
learning over time by giving them skills
- Successful development programs share four
common traits
 Programs are designed to fit the firm’s
overall strategy
 Combine real-world experiences with
classroom learning to build the desired
skills
 Leader development programs need to
have hard conversations to identify and
overcome organizational biases
 Top managers and trainers need to
assess impact
3. Empowering employees at all levels
- Leaders must envision themselves as flexible
resources willing to assume numerous roles
- Central key to empowerment: Effective
Leadership
4. Accumulating and sharing internal knowledge
- Redistribute knowledge and rewards
- Need to disseminate information by sharing
customer expectations and feedback
5. Gathering and integrating external information
- Ideas on how to gather information internally and
externally:
 Use a variety of resources to acquire
external information (magazines, books)
 Benchmarking: managers seeking out
best examples of a particular practice as
part of an ongoing effort to improve the
corresponding practice in their own
organization
 Competitive Benchmarking:
restricts the search for best
practices to competitors in the
industry (generic processes)
 Functional Benchmarking:
endeavors to determine best
practices regardless of industry
(industry-specific standards)
6. Challenging the status quo and enabling creativity
- Overcome barriers to foster creativity and enable
it to permeate the firm
 Forcefully create a sense of urgency
 Establish a culture of dissent
 Encourage mistakes as part of their
competitive advantage
- Approaches to encourage risk taking and learning
from mistakes:
 Formalize forums for failure
 Move the goalposts
 Bring in outsiders
 Prove yourself wrong, not right
Creating an Ethical Organization
Ethics: system of right and wrong that assist individuals in
deciding when an act is moral or immoral and/or socially
desirable or not
 - Business Ethics: application of ethical standards
to commercial enterprise
- Ethics has everything to go with leadership

Individual Ethics vs Organizational Ethics

- Organizational Ethics: values, attitudes and
behavioral patterns that define an organization’s
operating culture and that determine what an
organization holds as acceptable behavior
- Ethical Orientation: key factor in promoting ethical
behavior; the practices that firms use to promote
an ethical business culture
- Leaders with high ethical standards become role
models

Integrity based vs Compliance-Based Approaches

- Organizational Integrity: rests on a concept of
purpose, responsibility and ideals for an
organization as a whole
- Two approaches
 Compliance-Based Ethics Program:
programs for building ethical
organizations that have the goal of
preventing, detecting and punishing legal
violations
 Integrity-Base Ethics Program: programs
for building ethical organizations that
combine a concern for law within an
emphasis on managerial responsibility for
ethical behavior
- Key elements to become a highly ethical
organization:
 Role Models
 Corporate Credos and Codes of Conduct
 Corporate Credo: statement of
beliefs typically held by managers
in a corporation
 Reward and Evaluation Systems
 Policies and Procedures