Title

Strategic Leadership – Does it make a difference?

Sub-Title

The nature and function of Strategic Leadership – a review of some key issues and themes.

Abstract

This essay begins with a review of the nature of strategy and the strategic process in order to
differentiate between strategy formulation and strategy implementation, and goes on to use the
these frameworks to argue that strategic leadership defined as:

“the ability to anticipate, envision, maintain flexibility, think strategically, and

work with others to initiate changes that will create a viable future for the
organisation.” (Ireland, Hitt & Hoskinsson, 1999, p.43)

is integral to the effective implementation of strategy. The following theories are reviewed
namely; strategic leadership theory (Ireland, Hitt & Hoskinsson, 1999; Finkelstein &
Hambrick, 1996), visionary leadership (Yukl G, 1998; Boal & Byson, 1985; Nutt & Backoff,
1997; Hunt, 1996), charismatic leadership (Conger & Kanungo, 1999) and transformational
leadership (Bass & Avolio, 1990; Burns 1978, 1998) in order to support the above assertion and
dispute Lieberson & O’connor’s (1972) study which argues that top managers have little
impact in reality on organisational performance.

Whilst it is argued that the theories reviewed are neither mutually exclusive nor exhaustive
frameworks, they are clearly indicative of the types of leadership behaviours and approaches
which can ‘lead’ to fundamental and permanent changes in organisational culture (Schein E,
1992), resulting in empowered followers who learn (Pedler et al., 1996) through feedback at all
levels to develop an environment within which the organisation is able to achieve and sustain
competitive advantage.
Key Words

Strategy, Strategic Objectives, Corporate Strategy, Business Strategy, Strategic Leadership,

Strategic Management, Subordinates, Followers, Competitive Advantage, Leadership,
Management, Influence, Shared Vision, Shared Goal, Strategic Direction, Core Competencies,
Collective Learning, Human Capital, Intellectual Capital, Organisational Culture, Sustaining
Culture, Changing Culture, Ethical Leadership, Ethical Culture, Organisational Controls, Upper
Echelon Theory, Bounded Rationality, Executive Choice, Executive Orientation, Strategic
Situation, Strategic Context, Filtering, Constructed Reality, Strategic Choice, Executive
Behaviours, Organisational Performance, Visionary Leadership, Charismatic Leadership,
Attribution Theory of Charismatic Leadership, Transformational Leadership, Transactional
Leadership, Full Range Leadership Model, Charisma, Idealised Influence, Inspirational
Motivation, Intellectual Stimulation, Individual Consideration, Contingent Reward, Management
by Exception, Laissez-Faire, Empowerment, Cultural Change.
According to Andrews (1987) strategy mat be defined as a:

“pattern of decisions in a company that determines and reveals its objectives,

purposes, or goals, produces the principal policies and plans for achieving those
goals, and defines the range of business the company is to pursue, the kind of
economic and human organisation it is or intends to be, and the nature of the
economic and non-economic contribution it intends to make to its shareholders,
employees, customers, and communities.”(Andrews, 1987, p.86)

Hax (1990), whilst not differentiating between corporate and business strategy, argues that
‘strategy’ is the fundamental frameworks through which an organisation is able to:

“Assert its vital continuity while at the same time purposefully managing its
adaptation to the changing environment to gain competitive advantage” (Hax,
1990, p.32).

Hax (1990) goes on to argue that strategy can be viewed in terms of the following six critical
dimensions which underpin the above definition.

1. Strategy as a coherent, unifying and integrative pattern of decisions.

2. Strategy as a means of establishing an organisation’s purpose in terms of its long-term
objectives by defining the major programs, the actions needed to achieve such objectives and
providing a framework for deploying the necessary resources.
3. Strategy as a definition of an organisation’s competitive domain – strategy formation
requires strategists to take decisions in relation to areas of growth, new product/service
development, diversification and investment, thus, defining the core nature of the business
activities and the organisation’s position in the market place.
4. Strategy as a response to external opportunities and threats, and to internal strengths and
weakness as a means of achieving competitive advantage – thus, the outcome of strategic
planning is a rational approach to maintaining and developing the organisation’s competitive
advantage within clearly defined market segment(s). The underlying philosophy recognises
that; the ultimate objective is for the organisation to achieve a long-term competitive
advantage over its key competitors, that such a competitive advantage will result from a
rational analysis of internal and external forces for change and that a viable match between
an organisation’s internal resources and the external environment can be achieved.
5. Strategy as a logical system for differentiating managerial tasks at corporate, business and
functional levels. This dimension is a recognition that the managerial responsibilities at
corporate, business and functional levels are different and the potential exists for them to
become internally inconsistent and strategically dysfunctional. Organisational strategy needs
to address the needs’ of the organisation as a whole (corporate strategy), the business level
needs integral to enhancing the competitive position of each individual business unit, and the
need to develop the specialist organisational functions eg finance, human resources in order
to support the achievement of strategy at other levels. The key issue here is that, regardless
of organisational structure a key dimension of strategy is the integration of these needs into a
unified framework.

Strategic Leadership - Does it make a difference? Page 1

6. Strategy as a definition of the economic and non-economic contribution the firm intends to
make to its stakeholders. In this sense the term stakeholder can be applied to anyone who
directly or indirectly receives the benefits or sustains the costs that result from an
organisations’ actions. Strategy needs to take into account the short term and long term
needs of its stakeholders, which may sometimes appear ill-conditioned or even ideologically
in opposition eg the need for short term profits verses a desire to pursue environmentally
friendly manufacturing processes.

In attempting to define and discuss the nature of strategic leadership as an integral role of the
strategist it is necessary to differentiate between strategy formulation (deciding what to do) and
strategy implementation (achieving identified outcomes). Viewed in this way Strategy
Formulation is essentially an extension of rational approaches to problem solving and decision
making including the activities of: identification of opportunity and risk, determining the current
state of the organisation’s material, technical, financial and managerial resources and the extent
to which these will constrain or facilitate the achievement of competitive advantage,
(environmental survival), and consideration of what alternatives are preferred by senior
managers ie what are their preferred ideologies and what values and beliefs are these predicated
on? In this sense these activities assume that strategists, (and hence strategic leaders), are
analytically objective in estimating the ability of their organisation to obtain and sustain
competitive advantage. However, it is important to recognise that the range of options
considered will be framed and constrained by the values, beliefs and individual needs and
preferences of the strategists themselves. (Hambrick & Mason, 1984)

According to Andrews (1987) Strategy Implementation involves a series of activities which are
essentially administrative in nature namely; determining and developing suitable organisational
structures and accountability relationships, establishing measures of organisational control, and
providing the strategic leadership necessary to convert strategy into reality. The sub-activities of
strategy formulation and implementation are represented in the form of diagram at the top of
page 3.

Once developed the key role of senior managers is to ‘manage the strategy process’,
Chakravarthy & Lorange (1991) to reduce goal incongruence and informational asymmetry.
This is viewed as consisting of four distinct dimensions which help shed light on the role of
senior managers and the functional outcomes of the strategic leadership process.

Dimension 1 - Strategic Planning System: Here the role of the senior manager is concerned
with communicating corporate vision, setting objectives, (delineating strategic intent), which
ensure that the vision is attainable in reality and perceived by subordinates to be so, and to ensure
the involvement of functional managers in the further development and implementation of
strategy. The latter may involve a degree of negotiation and rational persuasion in order to
transform subordinate compliance into commitment to new roles and new ways of working.

Dimension 2 – Monitoring Control and Learning: The key roles here involve developing
performance measures, the monitoring and controlling of output and ensuring that feedback from
quality control systems engenders learning at all levels in the organisation. Ensuring that the
efforts of the workforce are co-ordinated and focused on the strategic objectives, developing an

Strategic Leadership - Does it make a difference? Page 2

organisational culture which supports the strategy by ensuring that changes in the underlying
assumptions of the workforce (Schein E, 1992) are in line with set objectives, and facilitate
organisational learning.

Dimension 3 - Incentives Systems: Key roles of senior managers need to include ensuring that
strategically and culturally orientated behaviour and performance are adequately rewarded,
developing congruence between organisational sub-units and encouraging the exchange of full
and valid business information. (According to Pedler et al (1996) the latter being one
prerequisite of a learning company).

Dimension 4 – Staffing Systems: Key roles involve the matching of managerial experience,
values, beliefs and personality with strategic and cultural imperatives through the development,
recruitment, and socialisation of key employees, whilst, redesigning work and business processes
to ensure that the achievement of strategic objectives is intellectually and vocationally
challenging and thus contributes to employee satisfaction.

Fig 1 – Strategy Formulation and Implementation

FORMULATION IMPLEMENTATION
(Deciding what to do) (Achieving Results)

1. Identification of 1. Organisation structure

opportunity and risk and relationships: Division
of labour, Co-ordination of
divided responsibility,
information systems

2. Determine the 2. Organisation processes

company’s material, and behaviour
technical, financial and CORPORATE STRATEGY Standards and
managerial resources measurement, Motivation
and incentive systems,
control systems,
recruitment and
development of managers

3. Personal values and

aspirations of senior Patterns of purposes and 3. Top leadership
management policies defining the company Strategic,
an its business Organisational,
4. Acknowledgement of Personal
non economic
responsibility to society
[Source: Andrews, 1987, p.91]

Yukl (1998) and Northhouse (2001) argue that whilst leadership can be defined from many
perspectives there are several components which can be defined as central to phenomenon.

Strategic Leadership - Does it make a difference? Page 3

Namely, that leadership is a process, leadership involves influencing followers, leadership
usually occurs within a group context, and leadership involves the attainment of team and
organisational goals.

“Based on these components the following definition of leadership … [can be

developed] … leadership is a processes whereby an individual influences a group
of individuals to achieve a common goal” (Northouse, 2001, p.3)

The remaining sections of this essay build on this definition in order to discuss the nature and
form of strategic leadership in relation to the dimensions of the strategic management process
described above.

Ireland, Hitt & Hoskinsson (1999) define strategic leadership as:

“The ability to anticipate, envision, maintain flexibility, think strategically, and

work with others to initiate changes that will create a viable future for the
organisation.” (Ireland, Hitt & Hoskinsson, 1999, p.43)

They go on to argue that effective strategic leadership, which results in the successful
implementation of strategies, is underpinned by the following key actions:

Determining the Strategic Direction: this involves formulating and articulating a long term
vision of strategic intent which involves a view of the organisation at least 5-10 years in the
future. A successful vision is viewed as one, which motivates employees to stretch beyond their
expectations of accomplishment towards a desirable but achievable future state, which in turn
will inform organisational structure and culture. Yukl (1998) in attempting to define the quality
and characteristics of an effective vision cites the work of (Bennis & Nanus, 1985; Kotter,
1996; Kouzes & Posner, 1995; Tichy & Devanna, 1986) in arguing that a vision should be a
simple and idealistic picture of a desirable future state and not a complex project plan with
detailed action steps, and should appeal to the values, hopes, and ideals of organisation members
whose support is required. Additionally the vision should be challenging but achievable. Yukl
(1998) enunciates the following guidelines for leaders who need to develop a meaningful vision.

Guidelines for Formulating a vision

• Involve key stakeholders

• Identify strategic objectives with wide appeal
• Identify relevant elements in the old ideology
• Link the vision to the core competences of the
organisation
• Evaluate the credibility of the vision
• Continually assess and refine the vision

(Yukl G, 1998, p.446)

Strategic Leadership - Does it make a difference? Page 4

In terms of the strategic management process Prahalad & Hamel (1990) equate the term ‘core
competencies’ to collective learning which resides within an organisation which is derived from
communication, wide spread dissemination of information and a deep commitment to working
across organisational boundaries.

Rowe (2001) offers a pragmatic definition of strategic leadership as the process which:

“Influences others to voluntarily make day-to-day decisions that enhance the

long-term viability of the organisation, while at the same time maintaining its
short term financial stability.” (Rowe, 2001, p.82)

The outcomes of the strategic leadership process as defined by Rowe (2001) namely long-term
survival (competitive advantage) and short-term financial stability whilst commensurate with
earlier cited definitions of strategic process, do not directly elude to the role vision. Rowe
differentiates between visionary leadership and strategic leadership in arguing that the latter
whilst future oriented is concerned with risk taking and not necessarily constrained by the
environment. (See table 1 on page 6)

Exploiting and maintaining the core competences: as explained above the core competences
of an organisation refer primarily to functional skills and knowledge such manufacturing,
finance, marketing, human resource management, research and development. Strategic leaders
need to be able to analysis the fit between the organisations core competencies and the likelihood
that these can be marshalled in order to respond competitively to the pressures of the external
environment. This is an integral stage in strategy formulation (Hax, 1990)

Developing Human (Intellectual) Capital: According to Ireland, Hitt & Hoskinsson (1999)
developing human capital involves developing the knowledge and skills of the organisation’s
entire workforce in order to align core competencies with strategic objectives. The development
of human capital is integral to an organisation’s ability to develop and sustain a culture
commensurate with its corporate, business and functional strategies.

Sustaining an effective Organisational Culture: Schein E (1992) defines organisational

culture as;

“A pattern of shared basic assumptions that the group learned as it solved its
problems of external adaptation and internal integration, that has worked well
enough to be considered valid and, therefore, to be taught to new members as the
correct way to perceive, think, and feel in relation to those problems.” (Schein E,
1992 p.12)

Because organisational culture influences how an organisation operates and conducts its
business, it tends to have a regulatory effect on the behaviour of organisational members, hence,
a corporate culture aligned to the demands of the external environment can be source of
competitive advantage. Schein E (1992) argues that leaders can influence organisational culture
in the following ways: the way in which they gain and sustain the attention of followers, through
their reactions to crises, through the allocation of rewards, by setting criteria for selection,

Strategic Leadership - Does it make a difference? Page 5

through the design of organisational and team structures, the design of the working environment
and ways of working, by narrating and passing on organisational folklore in the form of legends
and stories, and through the use of public statements. (For more information see table 2 on page
7).

Table 1
Strategic Leaders
• Synergetic combination of managerial and visionary leadership
• Emphasis on ethical behaviour and value-based decisions
• Oversee operating (day-to-day) and strategic (long-term) responsibilities
• Formulate and implement strategies for immediate impact and preservation of long-term goals to enhance
organisational survival, growth and long-term viability
• Have strong positive expectations of the performance they expect from their superiors, peers, subordinates
and themselves
• Use strategic and financial controls, with emphasis on strategic controls
• Use, and interchange, tacit and explicit knowledge on individual and organisational levels
• Use linear and non-linear thinking patterns
• Believe in strategic choice, that is, their choices make a difference in their organisations and environment.
Visionary Leaders Managerial Leaders

• Are proactive, shape ideas, change the way
people think about what is desirable, possible
and necessary
• Work to develop choices, fresh approaches to
long standing problems
• Are concerned with ideas, relate to people in
intuitive and empathetic ways
• Feel separate from their environment; work in,
but do not belong to, organisations; sense of
who they are does not depend on work
• Influence attitudes and opinions of others
within the organisation
• Concerned with ensuring the future of the
organisation, especially through the
development and management of people
• More embedded in complexity, ambiguity and
information overload, engage in
multifunctional, integrative tasks
• Know less that their functional area experts
• More willing to invest in innovation, human
capital, and creating and maintaining an
effective culture to ensure long-term viability
• Focus on tacit knowledge and develop
strategies as communal forms of tacit
knowledge that promotes enactment of vision
• Utilises non-linear thinking
• Believe in strategic choice, that is, their choices
make a difference in their organisation and
environment
• Are reactive; adopt passive attitudes towards
goals; goals arise out of necessities, not desires
and dreams; goals based on past experiences
• View work as an enabling process involving
some combination of ideas and people
interacting to establish strategies
• Relate to people according to their roles in the
decision-making process
• See themselves as conservators and regulators
of existing order; sense of who they are
depends on their role in the organisation
• Influence actions and decisions of those with
whom they work
• Involved in situations and contexts
characterised by day-to-day activities
• Concerned with, and more comfortable in,
functional areas of responsibility
• Expert in their functional area
• Likely to make value-based decisions
• Engage in, and support short-term, least cost-
behaviour to enhance financial performance
figures
• Focus on managing the exchange and
combination of explicit knowledge and
ensuring compliance to standard operating
procedures.
• Utilise linear thinking
• Believe in determinism, that is, the choices they
make are determine by their internal and
external environments.

[Source: Rowe, 2001, p.82]

Strategic Leadership - Does it make a difference? Page 6

Strategic Leadership - Does it make a difference? Page 7
Table 2 Primary and Secondary Leadership Mechanisms for and Changing and Sustaining
Organisational Culture (Schein, 1992)

The way in which they gain and sustain the attention of followers:
• Leaders communicate their priorities, values and concerns by their choice of things to ask about, measure,
comment on, praise and criticise
• Much communication occurs when the leader is planning activities and monitoring operations.
• [Occasional] Emotional outbursts by leaders have an especially strong effect in communicating values and
concerns.
Through their reactions to crises
• Because of the emotionality surrounding crises, a leader's response to them can send a strong message
about values and assumptions.
• A leader who faithfully supports espoused values when the pressure is on for expedient action
communicates clearly that the values are important
By role modelling strategically desirable behaviours
• Leaders communicate values and expectations by their own actions, especially actions showing loyalty,
self-sacrifice, and service beyond the call of duty.
• A leader who institutes a policy or procedure but fails to act in accordance with it is communicating the
message that it is not really important or necessary.
Through the allocation of rewards
• The criteria used as the basis for allocating rewards signal what is valued by the organisation.
• Formal recognition in ceremonies and informal praise communicate a leader's concerns and priorities.
• Failure to recognise contributions and achievements sends a message that they are not important.
By setting criteria for selection
• Leaders can reinforce or change the culture through the criteria [lawful] that they set for selection to and
promotion within work.
Through the design of systems and procedures
• Formal budgets, planning processes, reports, performance reviews, and management development reviews
can be used to emphasise some activities and criteria whilst helping to reduce role ambiguity.
• This in turn may impact on organisational and team culture - a preference for formality reflects strong
values about control and order.
Through the design of organisational/team structure(s)
• The design of structure is often influenced by assumptions about internal relationships or implicit theories
of management than by the actual requirements for effective adaptation
• A centralised structure reflects the belief that only the leader can determine what is best, whereas a
decentralised structure or the use of self-managed teams reflects a belief in individual initiative and shared
responsibility
Through the design/redesign of facilities (Working Environment)
• Although seldom done as an intentional strategy, leaders can design facilities to reflect basic values eg an
open office layout [or use of multidisciplinary teams] is consistent with a value for open communications
and collaborate problem solving.
By narrating/passing on stories, legends and myths to successive generations
• Stories about improvement events and people in the organisation help transmit values and assumptions.
[Stories and myths are more a reflection of the culture than a determinate of it].
• The potential use of this mechanism by leaders to influence culture is very limited in any organisation/team
or society where open communication makes it possible to detect a 'false' story.
Through the use of formal statements
• Public statements of values by the leader and written value statements, charters and philosophies can be
useful as a supplement to other mechanisms.
• Such statements often ignore the informal, grass roots sub-cultures.

Emphasising Ethical Practices: in order to influence the behaviour of followers strategic

leaders need to ensure that they are strong role models for the type of ethical behaviour which

Strategic Leadership - Does it make a difference? Page 8

will sustain a market position commensurate with the long-term survival of the organisation.
Thus, espoused ethical behaviour becomes a practical filter through which decisions are taken
and justified by organisational members as well as customers. Strategic leaders who strive to do
the right thing, and whose behaviour exhibits honesty and integrity are likely to inspire these
qualities in others. Thus, facilitating the development of a culture in which ethical practices
become behavioural norms and over time form underlying assumptions about the way business is
done. Ireland, Hitt & Hoskinsson (1999), identify the following actions that strategic leaders
can take to develop and ethical organisational culture:

Table 3
Leadership Guidelines for Developing an Ethical Organisational Culture

1. Establishing and communicating specific goals to describe the organisations

ethical standards
2. Continuously revising and updating the code of conduct, based on inputs
from followers throughout the organisation and external stakeholders
3. Disseminating the organisation’s code of conduct to all members of the
organisation and external stakeholders (eg customers, suppliers, contractors)
in order to inform of the organisation’s ethical frameworks for practice
4. Developing and implementing methods and procedures to use in achieving
the organisation’s ethical standards (internal and external auditing
procedures)
5. Creating and using explicit reward systems which recognise ‘acts of courage’
(eg rewarding (and protecting) those who use appropriate channels and
procedures to report malpractice)
6. Creating a work environment, which promotes respect and dignity for all
stakeholders.
(Adapted from: Ireland, Hitt & Hoskinsson, 1999, p.404-405)

Establishing balanced organisational controls: Simons (1994) defines organisational controls

as:

“Formal information based procedures used by managers to maintain or alter

patterns in organisational activities” (Simons, 1994, p.170)

Which according to Simons (1994) will enable strategic leaders to build credibility, demonstrate
the value of espoused strategy to the organisations’ stakeholders, and promote and support
strategic change. In this manner controls provide the parameters within which strategies are
implemented, performance measures derived, and corrective action taken. A key issue here for
strategic leaders is to achieve a balance between exercising strategic control themselves and
delegating this to organisational sub-units, allowing lower level managers the autonomy to take
advantage of specific and opportunistic business opportunities.

“Effective organisational controls provide an underlying logic for strategic

leadership, focus attention on critical strategic issues, support a competitive

Strategic Leadership - Does it make a difference? Page 9

 culture, and provide a forum that builds commitment to strategic intent.”
(Ireland, Hitt & Hoskinsson, 1999, p.406)

Upper echelon theory (Hambrick & Mason, 1984), which built on the work of Child (1972)
amongst others, argues that the specific knowledge, skills, experiences, values, ideologies and
preferences of a small number of top managers within organisations influence the assessment of
the environment and thus, constrain the strategy choices organisations make. Upper echelon
theory provides the archetype for what by the 1980’s was considered to be main stream Strategic
Leadership Theory. Which at a basic level argues that:

“top managers’ values, cognitions, and personalities affects their field of vision,
their selective perception of information, and their interpretation of information.
These intervening information-processing steps transmit the effects of
psychological constructs by affecting the options that top managers evaluate and
select. Therefore strategic leadership theory is very much a decision making
theory.” (Cannella A, Monroe M, 1997, p.215)

Finkelstein & Hambrick (1996) in developing their model of strategic leadership argue that
decision making logic of top managers is framed by a ‘bounded rationality’ which hinges on the
premise that leaders are confronted with more stimuli from both within and outside the
organisation that they can assimilate, and that such stimuli are often ambiguous, contradictory
and overly complex. Hence, strategic leaders will construct their own view of reality, leading to
decision making through a staged process of; limiting the field of vision, selective perception and
interpretation. This filtering process is determined by a strategic leaders ‘executive orientation’
which is dependent on psychological factors such as personal values, their cognitive model of
reality, and other personal factors such as the need for power or achievement; and determinants
of observable experiences such as age, tenure, educational background, functional background
etc. (See fig 2)

Limiting the field of vision is the first stage in the filtering process; strategic leaders will filter
external stimuli in order that they are exposed to only a small subset – this is sometimes known
as environmental scanning – a prerequisite of organisational learning (Senge 1990, Pedler et al.,
1996). Some leaders may pay more attention to various functional areas of the organisation or to
various market segments than others. The field of vision is closely related to the extent of the
manager’s/leader’s internal and external networks (Minzberg, 1973; Kotter, 1982)

Selective perception occurs because the strategic leader can only selectively perceives a limited
number of stimuli in her/his field of vision.

“Starbuck and Miliken (1988) refer to this as the process of noticing and argue
that noticing is a complex function of what is familiar and unfamiliar to the
decision-maker. On the one hand, people become relatively insensitive to
familiar stimuli. [….] the same filtering process may occur when the executive
sits through a long meeting of presentations by a subordinate … [….] not all of
the information within the executive’s field of vision will register equally: some
will be vivid and meaningful, and engaging; some will slide into the executive’s

Strategic Leadership - Does it make a difference? Page 10

 sub-conscious; and some will escape the executive’s attention altogether.”
(Finkelstein & Hambrick, 1996, p.44)

Interpretation is the third stage in the filtering process and is the point at which the strategic
leader attaches meaning to selected perceptions within his/her limited field of vision. This stage
is sometimes known as sense-making and is the point at which the strategic leader constructs
reality or defines the ‘enacted environment’ (Weick, 1969; Dixon, 1997), prior to making
strategic decisions which define the relationship of the organisation with its environment and
thus affect performance/competitive advantage.

Executive Orientation: can be defined in terms of two classes of personal characteristics;

psychological properties, such as values and cognitive models, and other elements of personality.
These properties provide the basis on which executives filter and interprets stimuli in order to
make choices.

In the last two decades of the 20th century research in strategic leadership focussed on new
theories of charismatic, transformational and visionary leadership. Boal & Hooijberg, (2001) in
discussing contemporary frameworks for strategic leadership, argue that these theories
emphasise the interpersonal processes between leader and followers. They argue that all
organisations possess an identity that describes what it is and what is distinctive and
distinguishing, and that it is through the vision of the leader that past, present and future come
together. Such visions have both a cognitive and an affective component. The cognitive
component focuses on outcomes and means of achieving them and the affective component
makes a direct appeal to the personal values and beliefs systems of the their followers. Yukl’s
(1998) guidelines on creating vision can be loosely equated to Boal & Byson’s (1988)
components of vision:

Guidelines for Formulating a vision

• Involve key stakeholders [Cognitive domain]

• Identify strategic objectives with wide appeal
[Affective domain]
• Identify relevant elements in the old ideology
[Affective domain]
• Link the vision to the core competences of the
organisation [Affective domain]
• Evaluate the credibility of the vision [Cognitive
domain]
• Continually assess and refine the vision [Cognitive
and Effective domain]

(Yukl G, 1998, p.446)

Strategic Leadership - Does it make a difference? Page 11

 Fig 2 - Strategic Leadership and Executive Choice
[Source: Hambrick and Mason (1984) in Finkelstein & Hambrick, 1996, p.42]

Executive
Orientation
Filtering Process
Psychological
Factors
Values
Cognitive Model
Other personality
Factors

Strategic Situation
(All potential Strategic
environmental and Limited Field of Selective Interpretation Constructed Choices and Organisational
organisational stimuli) Vision Perception Reality Executive Performance
Behaviours

Observable
experiences
Age or Tenure
Formal education
Function
Background
Other Factors

Strategic Leadership - Does it make a difference? Page 12

Nutt & Backoff (1997) articulate the following criteria, which underpin visionary leadership; possibility,
desirability, actionablity and articulation. They suggest that visions should:

• Have innovative features that are unique, vibrant and inspirational, and that offer new order, and
be future oriented enough to reveal opportunities with potentially important consequences
(Possibility)
• Should draw upon the organisation’s value and culture, and connect the possibilities to these
values (Desirability)
• Clearly outline achievable activities that followers can undertake to move toward the desirable
future (Actionability)
• Meet the reality test ie followers believe that they are achievable – here the leader needs to use
powerful images, stories, and organisational folklore to crystallise in the minds’ of followers what
is possible (Articulation)

According to Hunt (1996) within the of visionary leadership framework, strategic leaders believe that
they are able to influence organisational performance by empowering followers to realise cultural
determinants of their vision.

“The vision and culture-creating process is carried out by means of five leader behaviours
or skills derived from Bennis & Nanus (1985). Thus, the approach emphasises leader
personal characterises [a central tenant of strategic leadership theory of (Finkelstein &
Hambrick, 1996)], organisational settings within which the visionary leader acts, and
specific actions that they take to build vision and culture. [….] The visionary leadership
behaviour consists of focussing the attention on the vision; communicating the vision
personally; demonstrating trustworthiness; displaying respect; and taking risk.” (Hunt J,
1996, p.195, p.196)

Conger J A & Kanungo R B (1987, 1999) argue that charismatic leadership is an attribution based on
followers' perceptions of their leader's behaviour. Leadership is the result of the interaction between
members of a group, as each member works with others in the group to attain the objectives of the group,
each begins to realise his or her status in the group as either a leader or follower. This realisation is based
on observations of the influence processes within the group, the individual who is able to exert maximum
influence over other members of the group is perceived to be filling the leadership role. This leadership
role is then validated when the group members recognises and identifies with the leader on the basis of
their interactions with that person. In other words, leadership qualities are attributed to an individual's
influence.

"Thus, charisma [and thus charismatic leadership] must be viewed as an attribution made
by followers. This is consistent with the assumption stated earlier that leadership is a
rational and attributional phenomenon. The leadership role behaviours displayed by a
person make that individual (in the eyes of the followers) not only a task leader or a social
leader and a participative or directive leader but also a charismatic or non-charismatic
leader. The leader's observable behaviours can be interpreted by his or her own followers.
These dispositional attributes are inferred from the leader's observable behaviour in the
same way as other styles of leadership that have been identified previously (Blake &
Mounton, 1964, Fielder, 1967, Hersey & Blanchard, 1977). In this sense, charisma can be

Strategic Leadership - Does it make a difference? Page 13

 considered an additional inferred dimension of leadership behaviour or an additional
leadership role." (Conger & Kanungo, 1999, p.48)

It is reasonable to ask - what are the leadership behaviours responsible for such attributions, given the
above process definition of leadership? According to (Conger & Kanungo, 1999) the leadership
behaviours involved in the process of moving organisational members from an existing status-quo
towards the achievement of long-term goals may be represented in terms of a three stage model, leading
to outcomes at an Organisational, Group and Individual (Follower) Level which reinforce followers'
attributions of charismatic leadership.

In the first stage the leader needs to critically evaluate the existing situation or status quo. Deficiencies in
the status quo or poorly exploited opportunities in the environment lead to the formulation of future goals.
The leader will need to assess the inclinations, the abilities, the needs and the level of satisfaction with the
present state experienced by followers.

The second stage is concerned with the formulation and articulation of goals, in this stage the leader will
need to develop and communicate a powerful, engaging and realistic vision in order to define an idealised
but achievable future state. The third stage is concerned with the leader demonstrating to his/her followers
how the future goals inherent in the vision can be achieved. Within this staged model of the influence
process (Conger & Kanungo, 1999) distinguish at each stage between the behaviours associated with
charismatic and non-charismatic leaders, (see table 4)

"This model, however, nicely simplifies and approximates this dynamic process
[leadership] and allows us to more effectively construct the differences between
charismatic and non-charismatic leadership. The reader should simply keep in mind that,
in reality, a leader is constantly moving back and fourth between the stages or engaging in
them simultaneously." (Conger & Kanungo, 1999, p.49)

In the third stage of the leadership process, charismatic leaders build in followers a sense of trust in their
abilities and clearly demonstrate the tactics and behaviours required to achieve the organisation's goals.
The charismatic leader does this through personal example and risk taking, as well as through
unconventional expertise. It is critical that followers develop a trust in the leader's vision. In general,
leaders are perceived as trustworthy when they advocate their position in a disinterested manner and
demonstrate a concern for follower's needs rather than their own self-interest. They must transform their
concerns for their followers' needs into a total dedication and commitment to a common cause they share,
and they must express this in a disinterest and selfless manner.

Charismatic leaders will need to engage in exemplary acts that are perceived by followers as involving
great personal risk, cost and energy. Personal risk that leads to the attribution of charisma may involve
the possible loss of formal or informal status, power, authority and credibility, or even the possible loss of
personal finances, being fired or demoted.

"The more leaders are able to demonstrate that they are indefatigable workers prepared to
take on high personal risks or incur high personal costs to achieve their shared vision, the
more they reflect charisma in the sense of being worthy of complete trust." (Conger &
Kanungo, 1999, p.56)

Strategic Leadership - Does it make a difference? Page 14

 Fig 3 - A Staged Model of Charismatic Leadership

LEADER BEHAVIOUR OUTCOMES

Stage 1: Evaluation Stage 2: Formulation Stage 3: Means to Organisational or Group Level
of Status Quo (Present and Articulation of Achieve Outcomes:
State) Organisational Goals • High internal cohesion
• Assessment of • Formulation of • By personal • Low internal conflict
environmental environmental example; risk taking; • High value congruence
resources/constraints opportunities into a and counter-cultural • High consensus
and follower needs strategic vision empowering, and
impression Individual (Follower) Outcomes
• Effective • Effective management • In relation to the leader
articulation articulation of practices, leader  Reverence for the
inspirational conveys goals, leader
• Realisation of vision that is demonstrates means  Trust in the leader
deficiencies in highly discrepant to achieve, builds  Satisfaction with the
status quo from the status follower trust, and leader
quo yet within motivates followers.
latitude of • In relation to the task
acceptance  Work group cohesion
 High task performance
 High level of empowerment

[Source: Conger J A & Kanungo R B, 1999, p.40]

Strategic Leadership - Does it make a difference? Page 15

 Table 4 Distinguishing Attributes of Charismatic and Non-Charismatic Leaders [Source:
Conger J A & Kanungo R B, 1999, p.51]
Non-Charismatic Leaders Charismatic Leaders
Stage 1: Evaluation of Status Quo
(Present State)
Environmental sensitivity Low need for environmental High need for environmental
sensitivity to maintain status quo sensitivity to change the status quo
Relation to status quo Essentially agrees with status quo Essentially opposes status quo and
and strives to maintain it strives to change it

Stage 2: Formulation and

Articulation of Organisational
Goals
Future Goals Goals not discrepant from status quo
Likeableness Shared perspective makes him/her
likeable
Articulation Weak articulation of goals and
motivation to lead
Stage 3: Means to achieve
Behaviour novelty Conventional, conforming to
existing norms.
Trustworthiness Disinterested advocacy in
persuasion attempts.
Expertise Expert in using available means to
achieve goals within the framework
of the existing order.
Idealised vision that is highly
discrepant from status quo
Shared perspective and idealised
vision make him or her likeable and
worthy of identification and
imitation.
Strong and/or inspirational
articulation of future vision and
motivation to lead.
Unconventional or counter-
normative
Passionate advocacy, incurring great
personal risk and cost.
Expert in using unconventional
means to transcend the existing
order

Influence Strategy
Power base usage Positional power and personal power Personal power (based on expert
(based on reward and/or expert power; respect and admiration for a
power, and liking for a friend who is unique hero).
a similar other).

In an attempt to develop an ‘all embracing’ theory strategic of leadership, recent research has
focussed on the transformational ability of senior managers. The concept of transformational
leadership is described in a seminal work by the political sociologist James MacGregor Burns
(1978) entitled Leadership. In his work, Burns attempts to link the roles of leadership and
followership. He describes transformational leaders as those people who tap the motives of
followers.

"Transformational leadership refers to the process whereby an individual engages

with others and creates a connection that raises the level of motivation and
morality in both the leader and the follower. This type of leader is attentive to the

Strategic Leadership - Does it make a difference? Page 16

 needs and motives of the followers and tries to help followers reach their fullest
potential.” (Northhouse P, 1997, p.131)

This is a different type of leadership from transactional leadership argues refers to the majority
of leadership models which focus on an exchange which occurs between leaders and followers
eg senior executives who offer promotion to employees who surpass set objectives are exhibiting
transactional leadership.
According to (Bass & Avolio, 1990; Bass, 1998) the key issue here is not that constructive
transactional approaches should be avoided (as at times these provide essential frameworks for
action), but need to be balanced with transformational approaches. This is illustrated in their full
range leadership model:

Fig 4 - Full Range Leadership Model (Bass & Avolio, 1990)

Transformational Leadership

Factor 1 Factor 2 Factor 3 Factor 4

Charisma Inspirational Intellectual Individualised
Idealised Influence Motivation Stimulation Consideration

Transactional Leadership

Factor 5 Factor 6
Contingent Reward Management by
Constructive Exception Active and
Transactions Passive Corrective
Transactions

Non Leadership

Factor 7
Laissez-faire
Non-transactional

[Source: Bass, 1998, p.6]

Charismatic leadership (CL) or idealised influence (II) describes leaders who act as strong role
models for followers. Followers identify with these leaders and want very much to emulate
them. These leaders usually have very high standards of moral and ethical conduct can be
counted on to do the right thing. They are deeply respected by followers, who usually place a
great deal of trust in them. They provide followers with a vision and a sense of mission. This

Strategic Leadership - Does it make a difference? Page 17

dimension provides a conceptual link between the charismatic leadership theory of Conger &
Kanungo (1999), and Bass & Avolio’ (1990) multi-dimensional model.

Inspiration or inspirational motivation (IM) is descriptive of leaders who communicate high

expectations to followers, inspiring them through motivation to become committed to and a part
of the shared vision in the organisation. In practice, leaders use symbols and emotional appeals
to focus the group members’ efforts to achieve more that they would in their own self-interest.
This type of leadership enhances team spirit.

Intellectual Stimulation (IS) includes leadership that stimulates followers to be creative and
innovative, and to challenge their own beliefs and values as well as those of the leader and the
organisation. This type of leadership supports followers as they try new approaches to issues. It
promotes followers thinking things out on their own and engaging in careful problem solving.

Individualised Consideration (IC) is representative of leaders who provide a supportive climate

in which they listen carefully to the individual needs of followers. Leaders act as coaches and
advisors while trying to assist individuals in becoming fully actualised. These leaders may use
delegation as a means to help followers grow through personal challenges.

Contingent Reward (CR): is the first of two transactional leadership factors. It refers to an
exchange process between leaders and followers in which effort by the followers is exchanged
for specific rewards. With this kind of leadership, the leader tries to obtain agreement from
followers on what needs to be done and what the payoffs will be for the people doing it.

Management by-Exception (MBE): refers to leadership which involves corrective criticism,

negative feedback and negative reinforcement. Management-by-Exception (MBE) takes two
forms: active and passive. A leader using the active form of MBE, (MBE-A), watches followers
carefully for mistakes or rule violations and the takes corrective action. A leader using the
passive form of MBE, (MBE-P) intervenes only after standards have not been met or problems
have arisen. Both active and passive MBE use more negative reinforcement patterns than the
positive reinforcement pattern associated with the use of contingent rewards.

Laissez-Faire Leadership: refers to an abdicated approach to leadership. Such a leader abdicates

responsibility, delays decisions, gives no feedback, and makes little effort to help followers
satisfy their needs. There is not exchange with followers or any attempt to help them grow.

Research based on the full range leadership model of Bass & Avolio (1990), (see Fig 5),
suggests that strategic leaders who are most likely to engender permanent change within their
organisations commensurate with strategic objectives need to balance the frequent application of
transformational dimensions with appropriate, but less frequent use of constructive transactional
behaviours.

Given the integral nature of the leadership process to the models of strategy and strategy
implementation reviewed in this essay (Andrews, 1987; Hax 1990), the research evidence which
suggests that strategic leadership really does make a difference in reality (Tichy & Devanna,
1986; Tichy & Sherman, 1993; Virany & Tushman, 1986; Murray, 1989), coupled with

Strategic Leadership - Does it make a difference? Page 18

Hambrick and Mason’s, (1984) re-examination of Lieberson & O’connor’s (1972) study
which cast doubt on their original assertion that that top executives have little impact on the
organisation’s performance; then strategic leadership would appear to be a sizeable determinant
of organisational performance and thus an important influence on strategy formulation and
implementation. Which in turn facilitate an organisation in asserting its vital continuity while at
the same time purposefully managing its adaptation to the changing environment to gain
competitive advantage. (Hax, 1990).

The complex, interrelated and dynamic, processes and structures which define the global market
at the beginning of the 21st century, necessitate a greater understanding of the process of strategic
leadership, and it is therefore not surprising that equally complex frameworks are required in
order to gain a full understanding of the organisational effects of the phenomena. The
frameworks reviewed for this essay, namely; strategic leadership theory (Ireland, Hitt &
Hoskinsson, 1999; Finkelstein & Hambrick, 1996), visionary leadership (Yukl G, 1998; Boal
& Byson, 1985; Nutt & Backoff, 1997; Hunt, 1996), charismatic leadership (Conger &
Kanungo, 1999) and transformational leadership (Bass & Avolio, 1990; Burns 1978, 1998) are
neither mutually exclusive nor exhaustive frameworks. However, they are clearly indicative of
the types of leadership behaviours and approaches which can ‘lead’ to fundamental and
permanent changes in organisational culture (Schein E, 1992), resulting in empowered followers
who learn (Pedler et al., 1996) through feedback at all levels to develop an environment within
which the organisation is able to achieve and sustain competitive advantage.

Strategic Leadership - Does it make a difference? Page 19

 Fig 5 - Full Range Leadership Model (Bass & Avolio, 1990)

Effective

4Is

CR

Passive MBE Active

-A

MBE
-P
Frequency
LF

Ineffective

The leader with an optimal transformational profile infrequently displays laissez faire
(LF) leadership and leadership predicated on management by exception passive (MBE-
P) and adopts leadership predicated on management by exception active (MBE-A) or
contingent reward (CR) and frequently uses styles of leadership associated with the (4Is
of Transformational leadership) ie: Idealised Influence (II) or (Charismatic Leadership
(CL)), Inspirational Motivation (IM), Intellectual Stimulation (IS) and Idealised
Consideration (IC). [Source: Adapted from Bass, 1998, p.8]

Strategic Leadership - Does it make a difference? Page 20

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