Strategic Leadership for Turbulent Times

Mark Kriger, Yuriy Zhovtobryukh

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN: 9781137405623
• eBook ISBN: 9781137403803
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

In today's organizations, it is no longer the CEO who acts as the sole strategic leader. From single individuals to larger teams and networks, leaders at all levels are infiltrating the formal organizational structure and making strategic leadership an increasingly complex endeavor. In Strategic Leadership for Turbulent Times, Kriger and Zhovtobryukh shrewdly describe the true experiences of what employees encounter as internal and external environments evolve, and how to uphold the personal and organizational values which affect both human and social capital. They examine how leadership strategies are used in real situations and highlight the importance of managerial wisdom for sustainable growth. Finally, they offer advice for strategic leaders on leading effectively in highly turbulent economic, social, technological, and multicultural times.  

Part I
Foundations of Strategic Leadership

© The Author(s) 2016

Mark Kriger and Yuriy ZhovtobryukhStrategic Leadership for Turbulent Times10.1057/978-1-137-40380-3_1

Begin Abstract

1. Reimaging Strategic Leadership

Mark Kriger¹ and Yuriy Zhovtobryukh²

(1)

Norwegian Business School BI, Oslo, Norway

(2)

Menon Business Economics, Oslo, Norway

End Abstract

The Traditional View of Strategic Leadership

Imagine for a moment that you are the CEO or President of your organization, the so-called strategic leader of your firm. A key question to you is, what makes a good, not just an effective, strategic leader? Strategy textbooks taught in MBA and many executive courses around the globe offer a set of disparate perspectives to answer that question. One dominant perspective, the positioning school (Porter 1980, 1996, 2008), implies that effective strategic leaders are those able to (1) favorably position the firm in its industry or industries, and, if possible, to reshape the industry forces, and (2) secure its competitive position with high entry barriers with the aim of gaining long-term superior performance (Porter 1979, 1996). Another major school, the resource-based view (Barney 1991; Hamel and Prahalad 1994; Grant 1996), shifts attention to the interior of the firm. Here, the core task of strategic leaders is to acquire, develop, and build resources and capabilities, including stocks of knowledge and skills, that are rare, valuable (not easy for other firms to copy), and difficult to substitute, in order to achieve a long-term sustainable competitive advantage for the firm.

Other literature adds nuances to these dominant views. The activity-based perspective (Porter 1985), for example, emphasizes the value-chain configuration as the determinant of strategic positioning. The knowledge-based view (Nonaka and Takeuchi 1995; Spender 1996; Stewart 1997; Boisot 1998; Nonaka and Konno 1998) suggests that the core task of strategic leaders is to manage a firm’s knowledge as the most important of their resources, the source of innovation and means of sustaining competitive advantage. Finally, the micro-strategizing approaches (Johnson et al. 2003) bring the attention of strategic leaders to the processes and practices governing day-to-day micro-level activities related to strategic outcomes. However, a good strategic leader goes beyond effectiveness to instilling the values and creating routines and activities that result in long-term health for the organization, that is, to the task of creating a good organization for all relevant stakeholders (i.e. managers, employees, customers, and shareholders).

Strategic Leadership as Navigating in a Sea of Shifting Signals

What the extensive body of existing strategy literature does not explain, however, is how strategic leaders address those tasks in real organizational settings. And, more generally, how should they go beyond consequentialism (the achieving of goals and objectives)? When you walk into the workplace of any organization you are immediately inundated with countless signals from others, both visible and invisible messages, intended and unintended. These messages are both verbal and, most importantly, nonverbal and subliminal, below the threshold of ordinary awareness. You are literally confronted with a sea of sights, sounds, and hidden messages that are constantly shifting. As a leader at whatever level of the firm, you must develop the relevant skills to be present and responsive to these signals and messages.

People in strategic leadership positions need to be aware of this sea of messages, able to decipher them, and act upon them with wise discernment. This range of far-reaching signals and messages, that are often in the unseen contexts in board meetings, top management teams, and task forces, flow through the organization through extensive relationship networks between leaders and followers, laterally between coworkers and hierarchically between leaders and subordinates. This book is about how strategic leaders do not just set directions, strategies, long-term visions and objectives (i.e. they are consequentialist), but also they are highly emotional and even playful, at times, as appropriate for the situation (Kahneman 2011).

The Tacit Aspects of Strategic Leadership

While the dominant paradigm in the strategic management literature focuses on explicit strategy formulation, this book develops a model of strategic leadership based on the premise that strategy formulation emerges out of a complex set of largely tacit and unarticulated thoughts and feelings, and is not just a function of rational or “boundedly rational” search processes, that facilitate collective decisions and action over time. The key to creating a shared strategy is to generate in others a common set of feelings, shared values, perceptions, and beliefs, and then to articulate a corresponding set of purposes and directions. Once again, this lies within the sphere of strategic leadership. In the attempt to make strategy a “cognitive science,” there is an over-focus on thinking the right strategic thoughts and having the right strategic plans. In contrast, the most essential yet often hidden aspects of strategy –holistic and rapid intuitive judgments – have usually been overlooked, or even denied. The former constitute processes of “thinking slow” whereas the latter processes have been termed “thinking fast” (Kahneman 2011).

The need to understand the inner processes by which senior leaders engage in highly exploratory and improvisational strategic practice is reflected in the words of Lou Gerstner, the CEO of IBM from 1993 to 2001. He wrote in his book, Elephants Can Learn to Dance, about what he graphically termed ‘The Dirty Little Secret of Strategy’:

It is extremely difficult to develop a unique strategy for a company; and if the strategy is truly different from what others in the industry are doing, it is probably highly risky. The reason for this is that industries are defined and bounded by economic models, explicit customer expectations, and competitive structures known to all and impossible to change in a short period of time. (Gerstner 2002, 229)

We shall return later to the problems of dealing with highly unpredictable and difficult-to-manage “strategic inflection points” and “black swan” events. These have significant ramifications for organizations that seem obvious after the fact, but are often not even imaginable before they occur. Only the exercise by leaders of foresight and the use of the creative imagination can yield valuable scenarios that prepare organizations for the unimaginable (Schwartz 1996; Wack 1985a, b).

Turbulence and the Need for Ambidextrous Strategic Leadership

Numerous corporate events, such as the bankruptcy of Lehman Brothers, the crisis in Nokia in the 2000s, and the plummeting share price of many tech companies during the dot.​com and real estate bubbles, make the term “sustainable competitive advantage” a mere myth which is left over from the dreams of strategists and strategy researchers in the twentieth century.

In the increasingly turbulent world of the twenty-first century, the long-term success of companies hinges on the ability both to exploit and to reinvent firm capabilities as rapidly as possible so the firm can meet changing external events and competitive challenges. To achieve this, strategic leaders constantly need to balance a number of ongoing, often competing, demands.

These include the following:

1. 1.
   Balancing long-term, medium-term, and short-term investment horizons
2. 2.
   Analytical planning processes with intuition-based visioning
3. 3.
   Local and global geographic constraints and opportunities
4. 4.
   Simultaneous forces of differentiation and integration in varying organizational functions
5. 5.
   Simultaneous needs for both ongoing flexibility with centralized control
6. 6.
   Simultaneous processes of exploitation of existing resources with exploration of what is currently beyond the known
7. 7.
   Managing of both changing internal and external environments

Figure 1.1 illustrates such a comprehensive strategy process, where more short-term-oriented and rational exploitation cycles complement longer-term, vision- and intuition-driven exploration.

Fig. 1.1

Strategic process and direction setting (Based on M. Kriger, “What Really is Strategic Process?” In Innovating Strategy Process: Genesis, Contexts and Models, S.W. Floyd, J. Roos, C.D. Jacobs...

Table of contents

• Cover
• Frontmatter
• 1. Foundations of Strategic Leadership
• 2. Strategies for Dealing with Complexity and Change
• 3. Leadership Wisdom, Inner Meaning and Creating Healthy Organizations in the Long Term
• 4. Putting it All Together
• Backmatter