Académique Documents
Professionnel Documents
Culture Documents
01.
Introduction
02.
Leadership Theories
2-4
03.
5-8
Leadership Competencies
9-11
05.
12-15
06.
16
07.
Game theory
17-22
08.
Types of strategy
22-24
09.
Implications
25
10.
Conclusion
26
11.
Reference
27-28
organization to acquire that vision. In order to know the meaning of actual Strategic
leadership, we have to know the actual meaning of Strategic and Leadership. Strategic is
very much related to the word Strategy, Which means a plan of action implementing a
plan. The word Strategy can be used in both broad and narrow sense. But for Todays
strategy we use the word for strategic planning, decision making, Bombing etc. We can
know come forward to word Leadership. Leader is the person who lead his or her
follower in such a way that will help them to achieve their desired goal.
In a recent survey of 400 executives from all over the world, approximately forty- percent
believed that business leaders from emerging countries will be most influencing and
dominating in the world economy for the next five years (Accenture, 2010). They have
come forward to this point due to the huge change in the economic power rankings in
recent years. Emerging countries such as Brazil, Russia, India and China have emerged as
potential superpowers in the last two decades and will continue to degrade USA and
Japan from the ranking in the near future (World Economic Forum, 2009; Accenture,
2009).
Leadership Theories:
Interest in leadership actually emerged during the twentieth century. From several types
of theories we can notify or give importance to eight type of theories. They are explained
below:
Great Man theory assumes that the ability for leadership is inbred. It also added that
great leaders are born, not made. These theories often portray great leaders as heroic,
mythic and destined to rise to leadership when needed. The term "Great Man" was used
because, at the time, leadership was thought of firstly as a male quality, especially in
terms of military leadership.
Trait Theories:
Trait theory assumes that people inbred certain qualities and traits that makes them better
adapted to leadership. It identify certain personality and behavioral characteristics of the
leader.
Situational Theories:
Situational theories infer that the people who leads generally choose the best situation for
the best course of action. Different styles of leadership may be more appropriate for
certain types of decision-making.
Contingency Theories:
Behavioral theories:
Basically Behavioral theories of leadership are based upon the belief that great leaders
are made, not born. This leadership theory focuses on the actions of leaders, Eventually
not on mental qualities or internal factors. According to this theory, people can learn to
become leaders through teaching and observation.
Functional Theories:
Functional leadership theory (Hackman & Walton, 1986; McGrath, 1962; Adair, 1988;
Kouzes & Posner, 1995) is a particularly influential theory for addressing specific leader
behaviors expected to contribute to organizational or unit effectiveness. This theory
argues that the leader's main job is to checkout and watch out whatever is necessary to
group needs is taken care of, thus, a leader can be said to have done their job well when
they have contributed to group effectiveness and cohesion (Fleishman et al., 1991;
Hackman & Wageman, 2005; Hackman & Walton, 1986).
Management Theories:
Relationship Theories:
Relationship theory focus on the relation between the Leader and Followers. It is also
known as Transformational theory.
Leadership styles, from the very classical autocratic approach to very modern
participative approach, all have effectiveness depending on organizational structure and
different situations (Kaith Davis, 2007). The leaders should be conscious about different
leadership style as different leadership styles are needed for different situation, and they
should adopt some leadership strategies focusing on organizations goals and objectives.
Autocratic leadership style is the classical approach and most old dated approach where
managers hold maximum power and decision making authority, and employees have little
or no right in decision making and they are expected to obey rules and regulations, and
order attributed from higher authority. This leadership style relies on employee
punishment and threats, and staffs are seemed to be untrusting. Though this leadership
style is not so much effective in todays organizations, its not bad at all.In some countries
it is very much applicable. Autocratic leadership style is more effective for the
organizations that are new in their business operations because, at the beginning of any
new business the future of the company remains uncertain (GA YUKL , 2006); any
wrong decision may cause serious harmness for that organization. If we think from
organizational perspective, autocratic leadership style is more effective for public sector
organizations, and less effective for private sector and non-profit organizations like
charity.
Graph:1
Democratic leaders release the ultimate decision of anything, but gather information from
staff level and share every higher to lower level decisions with all employees, and also
keep employees informed of everything that affect their business. The most effective
practice of democratic leadership style is shown in service sector organizations as the
success of this kind of organizations directly rely on quality of services (BA Hayward,
2006).
Graph: 2
The free rein leader hold less authority and power to take any decision of an organization,
and a high degree of independence is given to subordinates. The free rein leadership style
is more effective for non-profit organizations.
Graph: 3
Likert constructed a scale with four different leadership styles called system 14.
System 1 is a very task oriented style with a very negative view of the
subordinates. Leaders use threats and punishment to get subordinates to perform
their work.
System 2 leaders have some confidence in their subordinates but all decisions are
still made by the leaders.
System 3 leaders have much more trust and confidence in their subordinates and
delegate some decisions.
System 4 is a very people oriented style with complete trust and confidence in the
subordinates. This includes group decisions and building supporting relationship
with the subordinates.
Likert stated that the highest performing teams who follow the employee oriented style
are eligible for system 4 (Kleim, 2004).
Who have searched for Globe and Hofstede studies in the Power Distance dimension in
India; in 67% situations, leaders are initially responsible for an outcome; whereas 11%
situations describe shared responsibility of leaders and team, according to the studies of
Ljungberg & Johansson (2010);
From the above statements it can be derived that presently autocratic style of University
of Iowa studies and system 1 & 2 of Likerts theory is prevailing in India, because
employees in India need clear and distinct directions.
Although all of the studies state that Democratic style, High-high leadership
structure, Team management style and System 4 are most beneficial styles for high
performance of an organization in the long run. Also Globe and Hofstedes studies in the
Power Distance show that a low power distance is the best option to improve productivity
in the long run.
Leadership Competencies:
A competence can be defined as the ability of as individual to activate, use and connect
the acquired knowledge in the complex, diverse and unpredictable
situations(Perrenoud,1997,in Svetlik,2005).According to Bennies(1987,citied in Thach et
al.,2007) for effective leadership there are few leadership competencies that have been
proven time and showed that they are very much compulsory. There are some common
competencies which have been referred include: technical competence, honesty, integrity,
diversity consciousness, change management, result orientation, problem solving,
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decision making, customer focus, business skill, team leadership, influential skill, conflict
management and more importantly emotional intelligence, social and environmental
responsibility, depending on the culture of the organization even humor and
innovation(Trinka,2004;cited in thach et al,2007;spencer and spencer ,1993;Employers
organisation,2004;Guggenheimer and Szule,1998;Breckenride Consulting
Group,2004;OPM,1992;Laszlo,2003;Goleman,2003;Mckee and
Boyatzis,2002;Thompson,1985)
Basically we can aggregate those competencies and divide those elements into three
parts.
They are:
Cognitive Competencies:
This dimension of competencies includes control of general principles, laws, theories and
concepts. Particularly it includes: Divergent thinking, Critical thinking, Creativity,
strategic thinking, Problem solving, Analytical skills.
Functional competence:
Leadership Qualities:
There are Ten leadership qualities which helps a person to built himself as a leader. A
good leader must have the discipline to work toward his or her vision single-mindedly, as
well as to direct his or her actions and those of the team toward the goal.
Analysis:
Integrity is the co-ordination of outward actions and inner values. A person having
integrity is the same on the outside and on the inside. Such an individual can be trusted
because he or she never changes from inner values, even when it might be adept to do so.
A leader must have the trust of followers and therefore must display integrity..
Dedication means spending whatever time or energy is necessary to accomplish the task.
A leader inspires dedication by example, doing whatever it takes to complete the next
step toward the vision and goal. By approaching through dedication, one can build a
better future for himself and others.
Magnanimity means giving credit where it should be. A magnanimous leader ensures
that credit for successes spread as widely as possible throughout the company.
Conversely, a good leader takes personal responsibility for failures. This sort of reverse
magnanimity helps other people feel good about them and draws the team closer together.
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Humility recognizes that their will be equal right and evaluation for all. A humble leader
is not self-effacing but rather tries to elevate everyone. Leader with humility will evaluate
others with equal mentality. Leaders with humility also understand that their status does
not make them a god. Mahatma Gandhi is a role model for Indian leaders, and he pursued
a "follower-centric" leadership role.
Openness means being able to listen to new ideas and share his views with others even if
they do not conform to the usual way of thinking. Good leaders are able to suspend
judgment while listening to others' ideas, as well as accept new ways of doing things that
someone else thought of.
Creativity is the ability to think differently, to apprehend differently, to get outside of the
box that hinders solutions. Creativity gives leaders the ability to see things that others
have not seen and thus lead followers in new directions.
Fairness means dealing with others consistently and judicially. A leader must check all
the facts and hear everyone out before passing judgment. He should have the mind to
judge all equally that means no biasness will take place. He or she must avoid leaping to
conclusions based on incomplete evidence. When people feel that they treated fairly, they
reward a leader with loyalty, dedication and integrity.
Assertiveness is not the same as aggressiveness. Rather, it is the ability to clear state
what one expects so that there will be no misunderstandings. A leader must be assertive to
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get the desired results. Am assertive leader will lead him and others the right way to
achieve or approach.
This is not simply a matter of showing people poor sales statistics or talking about
increased competition. Open an honest and convincing dialogue about what is happening
in the marketplace and with your competition. If many people start talking about the
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change you propose, the urgency can build and feed on itself. Therefore, it is an urgent
position or time to make change for an organization.
One can find effective change leaders throughout our organization they do not
necessarily follow the traditional company hierarchy. To lead change, one needs to bring
a coalition or team of influential people, whose power comes from a variety of sources,
including job title, status, expertise, and political importance.
A clear vision can help everyone understand why everyone asking him or her to do
something. When people see for themselves what one is trying to achieve, then the
directives they are given tend to make more sense.
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Do not just call special meetings to communicate ones vision. We should use the vision
daily to make decisions and solve problems. When one keeps it fresh on his minds, he
will remember it and respond to it.
Put in place the structure for change, one should continually check for barriers to it.
Removing obstacles can empower the people one needs to execute his or her vision, and
it can help the change move forward.
will want to have results that his or her staff can see. Without this, critics and negative
thinkers might hurt ones progress.
Create short-term targets not just one long-term goal. One wants each smaller target to
be achievable, with little room for failure. Ones change team may have to work very
hard to come up with these targets, but each "win" that ones produce can further
motivate the entire staff.
Launching one new product using a new system is great. But if one can launch 10
products, that means the new system is working. To reach that 10th success, one needs to
keep looking for improvements.
Each success provides an opportunity to build on what went right and identify what one
can improve.
Make continuous efforts to ensure that the change has come in every aspect of ones
organization. This will help give that change a solid place in his or her organization's
culture.
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It's also important that ones company's leaders continue to support the change. This
includes existing staff and new leaders who are brought in. If you lose the support of
these people, you might end up back where you started.
We have already gone through the eight step of Kotters Change theory. For the strategic
implementation, only an authentic leader can implement the mandatory issues for
developing an organization strategic hierarchy. Implementing corporate strategy requires
a team effort headed by organizations leadership team. Each person involved in change
management has his or her responsibilities, and it is important for the entire organization
to understand the role of leadership in strategic implementation to make delegating
responsibility more effective.
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Interest
Sometimes organization feels the need of change and implementing those changes.
Implementing change or any new strategy within a company requires a feeling of urgency
on the part of the entire company. It is the job of management to create that urgency by
explaining to the staff why the implementation is necessary. Leadership needs to help the
employees understand how the company benefits from the new implementation. With
changing those old dated things only leaders can create a new work environment.
Monitoring
Strategic implementation within a company is not an exact and sloth process. It is a
dynamic procedure. It needs monitoring by management and altering to meet
implementation goals. It is the responsibility of leadership to put a monitoring system in
place, analyze the data that is being generated during the implementation and make any
necessary changes to make the implementation more efficient and competent.
Next Step:
Corporations implement the strategy in phases and in regular steps. The company
leadership needs to be able to identify when each phase of a strategic implementation is
accomplished and be ready to transition the company to the next phase. For example, if
the company is bringing in a new software program for customer management, then the
first phase of the program may be to implement it in the sales department. Then after
setting on their sales department, they will start counting their total sales. By doing so
they can come to the point that what they should do to increase total sales or productivity,
whether they need any type of new strategy or not.
Game theory:
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Game theory has been a sufferer of its own successes. Now it is widely entrenched as a
method of analysis as an important tool in economics, political science, law, social
psychology and other disciplines. In mid nineteenth century with the publication in 1838
of augustin cournots researches into the mathematical principle of the theory of wealth
,in which he tried to explain the underlying behavior of duopolists. In 1944, John von
Neumann and Oskar Morgenstern's The Theory of Games and Economic Behavior were
published and with that the principle of game theory constructed. The Game theory has
been widely used to the behavior of producers with a few competitor. The Game Theory
refers that one has opponents who are conforming their strategies according to what they
believe everybody else is doing and the opponents should be the part of ones strategy. In
order to analyze such a game one put oneself at the place of other players stage. He
recognizes that his opponents is as clever as he is and doing just the same thing as he is
doing.
Elements of a Game:
Strategies: Rules that tell a player which action to take at each point of the game.
Outcomes: The results that unfold, such as a price war, world peace, etc.
Payoffs: The utilities (or happiness) that each player realizes for a particular
outcome.
With a view to applying game theory to the behavior of firms, it faces a number of
strategic choices, which lead their ability to grasp a desired pay-off. So,game theory is
very much applicable and comparable with todays world.
Raise()
Lower()
Hold()
Firms could originate a range of possible pay-offs from their strategy choices, including:
The Prisoner's Dilemma is a simple game. It demonstrates the choices facing oligopolies.
As one read the scenarios, one can play the part of one of the prisoners. Here is the
scenario:
The scenario:
Robin and Tom are prisoners. They are being arrested and accused for a petty crime.
There is good evidence of their guilt they will receive Two-year sentence if they proved
as guilty.
During the interview, the police officer becomes suspicious about the two prisoners of
being guilty of a serious crime, but is not sure he has any evidence.
Robin and Tom placed in separate rooms. There they cannot communicate with each
other. The police officer tries to get them to confess to the serious crime by offering and
showing them some options, with possible pay-offs.
The options:
They are told that they will receive a sentence of three years if they both confess to the
serious crime. However, they also told that if one of them confesses the serious crime
then he will get a light sentence of one year, and the other will get ten years. So, It has
become a dilemma for them. They know that if they both reject or deny the serious
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offence they are certain to be found guilty of the lesser offence, and will get a two years
sentence.
This chart is showing the whole picture transparently. Here we can come to a conclusion
which will be the better decision.
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The dilemma is that their own pay-off is very dependent on the behaviour of the
prisoners. However, there is a way of getting things at a better way. To avoid the worsen
scenario (10 years), the safest and the better option is to confess and get three years
sentence. If collusion is possible they can both come to the decision to deny (and get Two
years), but there is a very strong possibility to betray because, if one denies and the other
confesses, the best consequence of all is possible - that is one year. The best option is to
confess if any possibility of cheating there.
Types of strategy:
Maximax:
Where the player attempts to earn the maximum possible benefit available is called the
maxima strategy. This means they will like to have the alternative. It includes the
probability of achieving the best possible outcome even if a highly adverse outcome is
possible.
This strategy, often referred to as the best of the best is often seen as naive or
unaffected and overly optimistic strategy, however it assumes a highly auspicious
environment for taking decision.
The best pay-off will be for Robin from confessing is one year. But in that case Tom has
to deny and the best pay-off from denying is two years (with Tom denying) - so the best
of the best is to confess (one year).
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Maximin:
Where a player chooses the best of the worst pay-off is called the Maximain strategy.
This is generally chosen when a player cannot depend on the other party to keep any
agreement that has been made - for example, to accept. In the Prisoner's Dilemma, the
worst pay-off to Robin will be confessing and getting three years (with Tom confessing),
and the worst pay-off from denying is ten years (with Tom confessing) - therefore the
best of the worst is to confess.
In this case, both the maximin and maximax strategies are referring to the same result,
that will be Confessing .When this things happen, it is said to be the dominant strategy.
Dominant strategy:
A dominant strategy is the best outcome regardless of what the other player selects. Now
for that case it is for each player to confess - both the optimistic maximax and pessimistic
maximin lead to the same decision being taken.
We have got the better outcome and worse outcome about Robin and Tom. Now we are
going to find out how does this relate to a firm's behavior.
Game theory gives opinion that firms are unlikely to trust each other, even if they
collude and come to an agreement such as raising price or decline together.
Consider the hypothetical example of two Airlines and return ticket prices to New York.
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In this case, for both Airline A and B, the aggressive maximax strategy is 140m from a
low price and 120m from a high price. So we can come to the point that low price gives
the maximax pay-off.
On the other hand, the pessimistic maximin strategy, the worst outcome from a low price
is 100m, and from a high price is 70m - hence a low price provides the best of the
worst outcomes.
Lowering price is the dominant strategy, and the only way to enhance the pay-off would
be to collude and increase price together. Definitely, this requires an agreement, and
collusion, and this creates two further risks - one of the airlines reneges on the agreement
and 'rats', and the competition authorities investigate the airlines, and impose a penalty.
Nash equilibrium, which is named after famous Nobel winning economist John Nash, is a
solution to a game relating two or more players who want the best outcome for
themselves and must take the actions of others into account. After The Nash equilibrium
is reached, players cannot make better their payoff by independently changing their
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strategy. This means that it is the best strategy thinking the other has chosen a strategy
and will not change it. For example, in the Prisoner's Dilemma game, confessing is a
Nash equilibrium because it is the best result, taking into account the likely actions of
others.
Implications:
Game Theory provides many information like capacity of getting or solving many
problem into the behavior of oligopolists. For example, it shows that generating rules for
behavior may take some of the risks out of competition, such as:
1. Using a simple cost-plus pricing method which is shared by all participants. This
would work better in situations where oligopolists share similar or identical costs,
such as with petrol retailing.
2. Without any type of confusion, agreeing a 'price leader' with other firms as
followers. In the Airline example, firm A may lead and raise price, with B will be
following suit. In this case, both would generate revenues of 120.
3. Supermarkets are completely agreeing with some lines where price-cutting will
take place, such as bread or baked beans, but keeping price constant for most
lines.
4. Generally keeping prices stable to avoid price retaliation.
Conclusion:
Effective strategic leadership is a prerequisite to gain or achieve success in every
organizational activities. Different types of Leadership theory can influence our both
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practical and institutional work success. Besides, Game theory helps one to develop
optimal strategies. In an environment in which many outcomes and consequence are predetermined when sophisticated players follow their best strategies, the way to improve
one's payoff is to change the actual structure of the strategic interactions and strategies
before the game is even played. This game theory has large implication in our practical
life also.
"It is better to lead from behind and to put others in front, especially when you celebrate victory when nice
things occur. You take the front line when there is danger. Then people will appreciate your leadership ."-
Nelson Mendela
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