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Chapter 2 Journal articles

Organizational Leadership

John Bratton

Part 1

Contextualising leadership

2

Strategic management, innovation and leadership

Chapter 2

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Learning outcomes

After completing this chapter, you should be able to:

Explain the external and internal contexts of work organizations and the potential implications for leader-followers relations and behaviours;

Discuss the proposition that neoliberalism has shaped the role of leadership

Analyze the factors driving innovation and the leaders’ roles in facilitating the process

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Introduction

Until recently, academic interest in the role of context has been ‘limited’ to examining the links between economic-political crises and charismatic leadership (Conger, 2011). This is because few leadership scholars have a ‘macro’ or political economy background and, further, any contextual investigations are complicated by the fact that individual leaders and followers will perceive the relative importance of any contextual changes differently.

The aim of this chapter is to provide a sketch of the contexts that affects leadership dynamics. But we also have to bear in mind that corporate leaders attempt to change the external context. The chapter proceeds to examine innovation, its drivers and the role of leadership in promoting innovation.

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Strategic management

Whether in private or public sector organizations, a successful strategy is consistent with the organization’s environment and with its internal goals, resources, capabilities and shared values. But an important antecedent is corporate ideology that influences strategic decisions by senior executives.

Strategic management is best defined as a continuous process that requires the constant adjustment of three major, interdependent poles: the values of senior management, the resources available and the environment (Figure 2.1).

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Strategic management

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Strategic management

Environment operates at macro (external to an organization, i.e. industry level, economic) and micro level (specific environment, i.e. processes within the organization). Elements in the macro environment constantly penetrate into the micro environment, and affect an individual organization.

Conventional Strategic Management Process:

Mission and Goals

Organization’s direction and outcomes to be accomplish

Environmental Analysis

Macro – STEEPLE

Micro – SWOT or PRIMO-F

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Strategic management

Strategic Formulation

Evaluation of factors and choices made to meet goals

Strategy Implementation

Leadership – adaptation and development of a strategy, and gaining support and commitment of those who are expected to carry it out

Strategy Evaluation

Activity that determines whether the actual change and performance matches what has been planned to what extent

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Strategic management

However, this process only shows how strategic management should be done rather than describing what is actually done by senior managers.

Again, strategy is a political process undertaken by people with power and who are influenced by ideology.

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Macro environment

Socio-cultural, Technology, Economic, Ecology, Politics, Legal, Ethical

Micro environment

People, Resources, Innovation, Marketing, Operations – Finance & Strengths, Weaknesses, Opportunities, Threats

A framework for studying strategy and leadership

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A framework for studying strategy and leadership

A hierarchy of strategy

Corporate-level strategy

Business-level strategy

Functional-level strategy

Team-level strategy

Levels of leadership

Organizational performance

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A framework for studying strategy and leadership

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The nature of innovation

Innovation can be defined as the process of coming up with good, new ideas and making them work technically and commercially (Tidd and Bessant, 2018). Innovation therefore only counts as innovation, if it produces something that ultimately will be sold to customers, or, in the public sector, that will result in ‘more for less’ (Parker, 2018, p. 30).

Incremental innovations enable organizations to ‘do things better’. Over time, and in cumulative form, incremental innovations can produce significant changes. Breakthrough innovations enable organizations to ‘do things different’ (Bessant, 2003).

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The nature of innovation

Product innovation

Process innovation

Disruptive innovation is a common pattern of innovation (Christensen, 2016).

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The external and internal contexts driving or disables innovation

External

Globalization

Market opportunities

Competitive pressures

Changes in laws and regulations

Changes in available technologies

Internal

Available knowledge and resources

Positive innovation strategies

Organizational cultures and practices

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The leaders’ roles in innovation processes

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The leaders’ roles in innovation processes

Individuals in leadership roles therefore need to be able to work well together in order to exercise shared leadership (Bolden and O’Regan, 2016).

Leadership of different types is thought to be needed at different stages of the innovation process.

There need to be a balance of exploration (search for new knowledge and ideas) and exploitation (of what is already known), also known as ambidexterity to realize an innovation process.

E.g. Transformation and transactional leadership

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Evaluation and criticism

Neoliberalism has been criticised as not just as something that has created the atomization of labour through strict regulation and strengthen management’s ‘right to manage’; it is also emphasized to be more than just the economic system – it has a political and ideological agenda.

This leads to corporate ideology where the major beliefs and values provided by leaders form the frame of reference for decision-making and action (lets us to understand how the employment relationship is managed).

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Evaluation and criticism

This idea continues to be aided by other organizations such as business schools, ‘think tanks’ and the media as “apparatus of justification” to continue spreading and formulation of these neoliberal ideas, such as shareholder value – illustrating that this is the way to do things and how the world is viewed.

Power blind becomes an important matter in discussion of the strategy literature.

Charismatic leaders also are romanticized as innovation enablers, while other key variables such as employees with creativity or the state is being ignored or downplayed.

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