“Twin Cities” Strategic Management & Leadership

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Table of Contents

Executive Summary
Introduction
Strategic management and leadership
Leadership styles on strategic decisions
Adaptation of Different leadership styles
Theories of management and leadership that affect strategy
Conclusion
References

Executive Summary

The case analysis of the printing company run by Dan J shows how a small company can change the way it operates by embracing a few changes in its leadership and management style and organizational structure. The changes brought forth helped the company to perform better and made its employees satisfied.

The research paper demonstrates that strategic management and leadership style have to work collusively in order to create common strategic goal for the employees and leadership will show the path to achieve these goals. The paper follows with a discussion of the correlation between strategic management and leadership and the way its collaboration can bring greater benefit to Dan’s company. This part shows that Dan should infuse strategic intent in culture and leadership within the organization.

Further analysis into the leadership style of Dan and its shortcomings, it was understood that Dan’s leadership was more autocratic. However, with strategic management in mind, his leadership style had to change to become more contingent with the changing requirements for the organization. Therefore, it was advised to Dan to adopt a path-goal model of leadership style.

Introduction

The case analysis is on the management and strategy related issues faced by the owner, Dan J, owner of a Printing Company from Twin Cities. The case presents a challenging scenario that the company was facing in light of recession in the 1990s. One of the main problems that the company faced was increase in stock prices that showed an inflated price of stocks and the companies were not actually worth it. In this external environment, Dan J bought his partner’s share and was pressed with greater job responsibilities.

Dan realized that he has to shift his focus from being a store manager to a business leader. Therefore, Dan hired a consultant C. M. Perme and Associates to help the company cope with the change and be more strategically aligned. This case study presents the story of the company and how its leadership and strategic management was streamlined to bring forth appropriate changes within the company and help it to adapt to it.

Strategic management and leadership

The case analysis first establishes the link between the strategic management and leadership for the Printing Company. In order to understand this, the analysis must first look into why Dan felt the need to hire a consultant. The CEO and founder of Apple Inc. once said, “Innovation distinguishes between a leader and a follower.”

Aiming to get a consultant for the small-time printing firm by Dan was definitely an innovative move as it helped the company to move from a small company thinking in terms of its immediate production and sales to a company with a strategic intent. Strategic management refers to the coordination of material, human, financial and technological resources of an organization to enable it and all its stakeholders to achieve their stipulated goals in an effectively and efficiently.

The aim of leadership is to organize, support, and direct the employees in an organization such that the former can influence the latter to work in pursuit of its goals . In case of Printing Company, so far the two did not move together. However, the consultants had to show the management and Dan that strategic management and leadership are inseparable and therefore, used interchangeably in strategic management.

As strategic management and leadership are closely linked consequently is difficult to differentiate between the two . As strategic management involves appropriate preparation, organization of activities, control of the organizational activities such that the goals are attained, and motivate the employees in order to make the organization a success . Therefore, Dan had to transform his leadership style form that of only an autocrat to democratic or laissez-faire in order to lead the company with a strategic intent.

Therefore, he had to shift focus from simply managing the store to becoming a visionary for the company who could think of matters of greater strategic importance to the company. Therefore, the printing company of Dan too went through a process of change wherein the independent functional structure of the organization was changed to work more collectively as was done in Chrysler under the leadership of president Lee Iacocca in the 1980s and 1990s :

Chrysler’s management realized that the company’s conventional functional organization, which consisted of the usual design, engineering, manufacturing, marketing, and sales departments, was a prime culprit. Each functional group tended to operate as an independent fiefdom with its own goals… Chrysler’s president often ended up having to arbitrate among groups that should have been cooperating instead of competing.

In order to bring forth changes in organizational structure and change in the culture of the organization it required a strong leadership as Chrysler found in Iacocca. Therefore, the functional structure of the company was changed into product category based divisions. As Chrysler made five types of cars, each type of car was equipped with its own team right from designing to manufacturing such that “Each platform team is like a small company aimed at producing a single category of vehicle.”

Consequently, the five platforms that became the new divisions and each worked individually as a single unit did not see any functional divide. Therefore, there was greater alignment between functions and less bureaucratic conflict.

Jack Welch of General Electronics (GE) showed exceptional leadership quality to bring forth the changes in the world’s one of the largest companies. In the very first phase of Welch’s career as the leader of GE, he downsized the non-performing business units from the company’s portfolio and aligning the non-cooperating divisions together:

1. In the first cycle (early 1980s to late 1980s) he focused GE on the elimination of variety in its portfolio of businesses by reducing the nonperforming business units as judged by market performance. 2.During a subsequent learning cycle (late 1980s to mid-1990s), Welch focused the company on simplifying and eliminating nonvalue-added activities through creative efforts of teams using Work-Outs and the Change Action Process (currently called the Change Acceleration Process).

Jack Welch was well known for his actions in the early stage of his career when closed “businesses that were unprofitable and had little potential of turnaround” from the case of GE it is evident that with “evolving concept of leadership required to sustain a winning competitive position”.

Therefore, the essence of leadership is to focus on maintain a learning culture within the organization that allows the company to learn through the changing and dynamic times. Unable to attain it, complacency in the culture and leadership may lead to downfall of the organization. From the experiences of great leaders like Jobs, Iacocca, and Welch it is clear that aligning strategic intent with the various functions of the company is important to bring about strategic change and advancement.

Therefore, the first step taken by Dan in order to face tough external environment conditions and the aligning organization was to bring forth strategic change aligned with leadership and organizational intent. Usually, under strategic management the employees work just to comply with the goals directed by those in the authority . Though employees succeed in achieving their goals, it is often found that they fail to internalize the goals.

In case of Dan, he was a leader who had goals but he did not have the management style to be delivered to his employees to make them internalize the goals he had for the company. It is a fact that although strategic management and leadership are two different, yet both are closely interlinked things.

Therefore understanding the applications and approaches being used for each are distinct, and therefore, understanding each is important. This could only be done by redefining roles, changing the way the organization worked and increasing cooperation within various functions of the company. Dan brought about the changes in the organization increasing the performance of the company.

Leadership styles on strategic decisions

Leadership has different impact on the decision taken depending on the style, content, and context of the decision taken by the leader: “The style of the leader may vary, as may the content in which it takes root.” There is a great difference in the styles of leadership such as autocratic, democratic, laissez faire, charismatic, etc., and how they are implemented.

For instance for Dwight D. Eisenhower the meaning of leadership was “… the art of getting someone else to do something you want done because he wants to do it.” On the other hand, Bill Gates defined it as “As we look ahead into the next century, leaders will be those who empower others.”

Therefore, the way leadership is perceived also differs between individual leaders. In case of the printing company of Dan, before Dan hired the consultancy, there were problems faced by the company in its high expenditures due to high capacity utilization prompted by increased consolidation. Earlier, Dan was a stricter leader trying to do all the work himself and relying less on his staff. In a way, he controlled all the major functions and decisions of the company.

Nevertheless, with the consultancy firm bringing forth the changes within the company, Dan started to reply more on his employees. Evidently, Dan did not give due importance to the interest of his staff that is done by many companies like Virgin Atlantic. Richard Branson speaks of his philosophy of leading his company Virgin Atlantic:

Our priorities in managing the business dont appear in most management textbooks or most British companies. We give top priority to the interests of our staff; we give second priority to the interest of our customers; and third priority goes to the interests of our shareholders. This is not only a reflection of the interests of our people; it is also the most positive way of fitting together these three priorities.

One aspect of leadership style missing in Dan’s leadership is laissez faire. A laissez faire leader is one who allows his followers to go on with their work without interfering when they are doing is correctly. In another word, Dan had to let his employees do their job by trusting them with it and in expressing his appreciation for what they did for the company.

The true sign of a laissez faire leader was found in Sam Walton : “Sam Walton, founder of Wal-Mart, who often visited Wal-Mart stores across the country to meet with associates to show his appreciation for what they did for the company.”

Dan was not a democratic leader. Though a democratic leader is one who makes the final decision, he always involves his employees in the decision making process. Dan is in a way impatient that is why he ends up doing all work by himself. However, in becoming a democratic leader it would take time, as the process of self-induced participation is slow. In order to incorporate both these styles of leadership in his leadership, Dan has to adopt path-goal type of leadership.

A path-goal leadership style is a framework that “explains the success of leaders who are flexible and able to generate high levels of work group effectiveness by increasing members’ motivation through clarification, direction, structure, and rewards” . Therefore, a path-goal leadership style provides clarity and direction to the employees, “help remove obstacles, and provide encouragement and rewards for goal achievement” .

However, a few prerequisites for this type of leadership would be to enable a great deal of co-working with the followers influencing them as a charismatic leader, which would ultimately bring satisfaction to the employees. This is a more flexible leadership style, which enables the leader to alter his stand according to the goal at hand. Therefore, leaders who “assigns responsibility for a work group’s effectiveness to its leaders based on the premise that leaders’ behaviors impact their work groups” .

Therefore, Dan so far had overlooked the need to create a common work goal for his employees that he needs to do at the present situation. This would also increase motivation of the employees and reduce their turnover intentions .

Therefore, Dan can achieve this goal by “emphasizing common values and conducting appropriate diversity training may be able to improve employee satisfaction and diverse work group performance” . Dan must strive to create a common goal that would be the strategic goal of the company, and incorporate it in his leadership style.

Adaptation of Different leadership styles

The consultants found that there was a great barrier to the better performance of the company due to Dan’s controlling or autocratic leadership style. So far, Dan wanted to do all jobs on his own, take the final decisions, and did not incorporate the employees in the decision making process.

In a way, his employees were actually unaware of the future and the goal of the company. This de-motivated them to a great extent. Therefore, Dan had to quit being an autocratic leader. He actually had to let go of most of his functions to his employees and shift his focus on strategic things.

Following path-goal leadership style, Dan had to shift from being a democratic and laissez faire leader. It is clear that the “leader’s ability to lead is contingent upon various situational factors, including the leader’s preferred style, the capabilities and behaviors of followers and also various other situational factors.”

Therefore, based on the situation, condition, and external environment, Dan had to shift his focus on giving his employees involvement or more involvement in the strategic decision making process of eh company and giving more responsibility. The area of changing Dan’s leadership style was to align his personality that influenced his leadership style and expressing the situation (see figure 2). Therefore, the consultants must explain to Dan the present situation of his management style and the way it is stopping growth of his company.

Figure 2: Fielder’s Contingency Theory. Source: Knowledge Exchange.

Based on their findings through the interviews with the staff of the company, the consultants must inform Dan where he lacks as a leader and what aspect of his management style was actually stopping his company to grow. The consultants must show Dan that being a more open, cooperating, and transformational leader will help him to run his company in a more efficient manner (see figure 3).

Dan has to become a leader who will look into the environmental needs and strategies. Nevertheless, as a leader he has to impart his strategies to his employees who would actually help him to attain it. Therefore, Dan had to open up opportunity for his employees and stop over-working himself.

Figure 3: Leadership style to be adopted by Dan – Path-Goal Leadership model.

Therefore, Dan had to be supportive and participative in his leadership behaviour in order to help his employees attain their goals. As in a strategic management environment, employees are goal oriented. Dan has to be the anchor that helps them to achieve their goals and ultimately the goal of the company. This would motive the employees to perform. Further, motivation of the work group is essential in understanding the perceived goals of the employees. This would allow the employees to perform better in a work group .

Theories of management and leadership that affect strategy

Leadership styles, in managerial context, are the general ways a leader behaves towards subordinates in order to attain given objectives. The degree to which a manager delegates authority, the modes of power a manager employs and his relative concerns for human relationships or task orientation tend to reflect the manager’s leadership style. Each organization is a unique combination of individuals, tasks and objectives. Each manager has a unique personality and set of abilities.

Thus, leadership is not set of permanent qualities enabling one person to suit best all occasions. For a good leader in one situation may be worst in another. Research has shown that the correct style of leadership depends on nature of the work/ task/job, preference of the employees/subordinates/followers, manager’s/leader’s temperament/attitude, and situation/ circumstance a t a point in time. Therefore, based on these leadership styles the manager/ leader must change the way he leads his employees.

As leadership styles are generally classified into three – traditional, modern, and contingency leadership styles. In the traditional leadership, style leaders are autocratic, democratic, or laissez-faire. Modern leadership styles enables leaders to be job-centered, employee centered or job-employee centered.

Contingency approaches are based on Fielder’s Model, Path-Goal Model, Vroom-Yetton model. In the case study, Dan is advised to follow a Path-Goal model of leadership, as this would allow him the greatest flexibility in terms of changing internal and external conditions and motivate his employees to the greatest extent.

Employees are the asset of a successful company and the leaders who recognized it nurtured it fully. Leaders like Walt Disney and Lee Iacocca were leaders who felt that leaders have to be close to their employees in order to make them work more efficiently. In case of Dan, the consultants would suggest that he had to increase his association and contact with the employees.

Further, he had to empower his employees in order to increase their trust or him. In addition, he has to make them feel that they are part of the company and not just cogs in a machine. Therefore, Das has to become a leader who brings forth transformation in his organization as well as follow contingency theory of leadership. The most important aspect of his leadership style that he has to alter is to increase trust on his employees and empower them.

He has to identify their interests and skills and place them accordingly so that their knowledge can be best utilized. Therefore, being a transformational leader, will help Dan become more adaptive to the changes that the external environment has to offer and meet the expectations of his employees. As a transformational leader, Dan can emulate the leadership style of Walt Disney, become more close to the staff members, and listen to their suggestions rather than becoming the one who runs everything.

So far, Dan maintained a centralized form of decision-making. However, embracing a transformational leadership style would lead to a decentralized decision-making process that would led to his staffs gaining greater empowerment, encouraging leadership from among the employees, and increasing confidence as had been done by William Weldon, CEO of Johnson and Johnson. Therefore, he has to become a leader of his employees rather than his company.

Conclusion

Leadership styles have evolved over time. The paper shows that there can be one or more leadership style used to handle a situation. Leadership style cannot be constrained to one style; rather it can be diversified and flexible based on the strategic intent of the company. Strategic management and leadership have to go hand in hand in order to create suitable goals for the employees and show the path to them through which they can achieve it.

The case analysis points out that Dan’s way of managing his company was very centralized, with all decision and key functions done by him. This showed his low confidence level on his employees that led to dissatisfaction of the employees. However, with change in Dan’s leadership style from being a transactional leader to a transformational leader, the employees will have greater empowerment and responsibility. This would lead to a better performing company and satisfied employees.

References

Ashley, S. 1997, Keys to Chrysler’s comeback. Web.

Boje, D. M. & Rosile, GA 2007, Specters of Wal-Mart: A Critical Discourse Analysis of Stories of Sam Walton’s Ghost. Web.

Changing Minds 2002, Contingency Theory. Web.

Dixon, M. L. & Hart, L. K. 2010, The impact of path-goal leadership styles on work group effectiveness and turnover intention. Web.

Edberg, H. 2007, The Positivity Blog, Web.

Hall, J., Johnson, S., Wysocki, A. & Kepner, K. 2009, Transformational Leadership: The Transformation of Managers and Associates. Web.

Knowledge Exchange 2005, Introduction to Excellence in management and leadership. Web.

Life Positive 2007, New Age – Leaders do not Conform, they transform. Web.

Watson, GH 2001, Cycles of Learning: Obser vations of Jack Welch. Web.

Westley, F & Mintzberg, H 1989, Visionary Leadership and Strategic Management. Web.

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