Harvard Business Review Article - Essay Example

? Topic: Harvard Business Review Article School Affiliation Strategy Insight: What one has learned aboutthe art of effective strategic leadership. Effective strategic leadership is essential for the survival and prosperity of any corporate firm as it determines the outcomes of the various relationships and negotiations of the company (Lynch, 2008, p.59-131). Following seven key lessons will emphasize on the significant aspects of effective strategic leadership as learnt and comprehended by a student. Key Lesson 1: Maintaining Effective Communication Communication of the organization's purpose is one of the most vital aspects to be considered. A corporate organization's purpose of being is what it stands for and gives an overview of the main aims it wants to achieve. So, it is essential for effective strategic leadership of a corporate organization to state clearly its mission and vision. This can be explained lucidly by the mission statement of Google, which is to organize all the information in the world in a systematic manner so that it can be accessed and utilized universally. Moreover, the brand name of a company should be a direct reflection of its core values, so that the customers would be aware of the services being provided and being attracted to avail them at the same time. Richard Reed, Co-founder of Innocent, did an exceptional job at coming up with the brand name. Innocent; which is one of the most recognized and acclaimed brand in the UK, produces healthy fruit juices and food items only. The company's name, Innocent goes hand in hand with the word natural, which depicts the very nature of innocent products. Key Lesson 2: Sustaining Competitive Market Advantage Another important lesson is to sustain competitive advantage in the market over the passage of time. Skimming, price war, and predatory pricing etc. are some of the marketing techniques which could be utilized by the company to sustain the advantage or to drive their competitors out of the market completely. If this upper-hand advantage is not achieved and sustained, a company could face serious consequences, which reflect adversely on its strategic leadership policies. The downfall of PepsiCo is one of the examples of this scenario as Indra Nooyi, the current chairman and CEO of PepsiCo, is facing a loss of market shares and decreasing stock values due to failure at sustaining competitive advantage with rival beverage company Coca Cola. In an announcement made in February, 2012, it was revealed that due to its financial concerns, PepsiCo is cutting down 8,700 employees. The company is starting new lines of diet soda and sugar free products to increase the customer interest but this strategy has not been very successful due to the launch of similar product lines from rival companies. PepsiCo is trying to devise new product lines in order to obtain competitive market advantage so that it can be successful in the market again. Indra Noooyi is also feared to be terminated from her current position of the CEO of the company if the financial position of the company does not stabilize. Key Lesson 3: Effective Change Management Faslane Naval Base was run entirely by the Ministry of Defence of UK and the Royal Navy up until 2002. Afterwards, a contract was signed with Babcock Marine to reduce the cost and to improve operational efficiency. The staff had to work under a different managing authority with new aims and futuristic goals. John Howie, director of Babcock Marine, set forth the emphasis on delivering services to the Navy, eradicating the previous goals of focusing on building infrastructures. Effective strategic leadership could never be achieved without efficient and timely change management in the organization. Faslane is an organization where the only assets are the people, so to implement change, the shackles which bound the workers, had to be eliminated. Starting with low level managerial changes, the company moved towards gaining efficiency by re-engineering fundamental processes to save time. By this way at the end of Year 5, Faslane was able to reduce the annual cost by 20%. Along with this, better attitudes and better communication was achieved by successful change management. The business market is always evolving due to its experimental nature as every product is tested to the market to check if it is worth it to make this product available. IDEO is a firm which is altering this idea by presenting the approach that instead of designing products and making them attractive and desirable to the customers, it will be better if the products are focused on the customers. Creating ideas for products which are designed solely to meet the needs and desires of the customers is a more strategic role as compared to the former tactical role with its limited value creation. Adapting this new strategy has opened new gates of innovativeness for the company and its customer satisfaction rate has never been higher as IDEO and its staff has adapted to the change effectively by approaching a better planned strategy (Blogs.hbr.org., 2010, n.p.). Key Lesson 4: Smooth Operation of Internal Organizational Affairs If the different structures of a corporate organization do not run together efficiently, then it will poise various internal and external threats, which cannot be combated unless the human resource management inside the company is smooth. David Jones was appointed the COO of Energix; a company which designed and manufactured wind turbines. Jones’ experience at this company is a clear depiction of how companies can suffer from tremendous market loss due to failure of effective human resource management within the company. Even with competent staff on the team, without mutual understanding and trust, a company cannot achieve its agendas and goals. The same scenario was experienced when Challenger, the spaceship was launched even though there was conflict in the management about the timing. The ineffective cooperation resulted in taking the lives of several astronauts and one civilian. This loss of precious human lives could have been prevented if proper measures would have been taken. Space travel is highly expensive and the destruction of Challenger prior to the fulfilment of its mission was a tremendous financial loss. It was the consequence of the lack of apt management as the analytical team repeatedly pointed out the fact that the current weather conditions could be hazardous for the launch so it is advised that the launch be postponed for a more suitable time in the near future. The launching team and other officials did not agree with this analysis and launched the spaceship on the original date and time. This lack of coordination and ineffective management was the cause of this incident because if the launch would have been delayed for a few days, the spaceship would have not been exploded and reached its destination safely (Challenger, go for launch, 2009, n.p.). Key Lesson 5: Maintaining Flexibility The demands of consumers are continuously changing; hence it is essential that companies revise their policies with the changing target markets. One person who has benefited tremendously from this strategy is the most successful businesswoman in show business; Madonna. She has changed her music style and personal image with the passage of time in sync with the target markets. From her early flamboyant pop style to her acid rock and techno urban image, the queen of pop has never failed to influence her audience. Madonna met the demands of the audience irrespective of her personal interests and stayed flexed with the need of the hour. This flexibility and adaptiveness shows her skills of business strategies and self preservation. She failed to give in to the criticism of anyone and with her mocking and ironic style she managed to stay on the top of the music charts and alive in the hearts of her fans after all this time. She managed all this by adopting a realistic approach towards the fashion industry instead of equipping herself with idealistic approaches which are not desired by the customers and market alike. She has moulded herself into characters which are preferred by the people and her music targets to attain the attraction of the masses. Her chameleon like personality and visage which kept altering with the changes in the world, has made her an exceptional business women with a firm strategy of never remaining the same and revolutionizing the fashion industry with rebellious yet trend setting styles suitable for each time period. (Johnson, P., 2011, p. 226-228). On the other hand, Carrefour – one of the largest hypermarkets of the world, did not adapt themselves with the changing times and it worsened the situation of the company. Hypermarkets are 8.8% more expensive than other retail stores, so Carrefour should have developed smaller, cheaper stores yet they established another bulk shop chain which has exacerbated their problems even further. The company lost its French market shares which account for 42% of its sales. This enormous loss in its own home country affected the image of the company adversely. This happened as a result of inept management, failed strategies and a badly planned Brazilian merger plan. Last year, Carrefour's shares fell by 45% and the final calculations of the financial losses and the fate of the company and its manager, Mr Olofsson''s future will be decided (Neate, R.,2011, n.p). Key Lesson 6: Adopting a Holistic Approach By adopting a holistic approach, a company can achieve its goals efficiently, as setting ethical standards can facilitate in establishing effective strategic leadership. Staff members can work in a better way if their work place environment is comfortable and driving at the same time. If the environment is too slack, and laid-back, the workers might stop focusing on achieving the goals. So, the office environment should be motivating as well as free of any ethical issues, like gender biasing, racism, and sexual harassment etc. Corporate social responsibility should be followed so that any products, which are manufactured, should not harm the environment in any way. Moreover, their degradation should not affect the ecosystems and the natural balance adversely. Richard Reed of Innocent says that earning revenue and maintaining a successful business is important, but maintaining ethical standards and respecting the customers should be the foremost priority of any company. Key Lesson 7: Adopting an Open-Minded Attitude Another important aspect is to be open to new strategies and alternatives. Brainstorming is essential for problem solving, and seeking alternate solutions is an effective method for a company to move forward. A live example is that of Longabeger, a hand woven baskets company based in Ohio. Due to seasonal fluctuations in the number of workers, the demand of the baskets went higher than their supply. This was a critical problem for the company but the management met this challenge effectively by seeking alternatives to minimize the company’s dependence on baskets and maintaining satisfactory net profit margin. By diversifying the products manufactured, the company saved itself from its downfall. Carrefour is also facing critical loss in its finances due to its failure to maintain a candid approach towards the changing market trends and demands. Previously the company was prospering due to its three strengths which were low prices, cheap clothing and food and the convenience of all these things under one roof. Now, with the change in technology and the demography, these strengths are not desirable any more. Online shopping has taken the place of supermarkets where everything is available within the reach of a single click. The prices are cheap, there is a wide range to select from and the customers get their services and products delivered to their doorstep. Hypermarkets like Carrefour do not have the upper hand advantage now. Moreover, European demography is changing rapidly and this change is affecting Carrefour negatively as it is mainly based in European countries. More and more people are living alone these days, a major portion of the population is ageing so the need of shopping in bulk is disappearing fast. This trend is shifting as people living alone like to shop in a small quantity, locally and frequently. This way of living and the accessibility of online shopping has made hypermarkets outdated. Carrefour has failed to change its product lines, quantities and strategies which is the main reason why it is facing a huge economic and customer loss (Neate, R.,2011, n.p). On the other hand, companies which have successfully adapted to change are thriving in their businesses and their customer satisfaction levels are also high as they keep synchronizing with the trends and demands of the ever changing market. IDEO is an excellent example of such a company as it is innovative and adaptive at the same time. Tim Brown – The CEO of IDEO, has described optimism, experimentalism and collaboration as the reasons behind his firm's success. He believes in to conceiving a fully developed marketplace by envisioning how would customers want to use and utilize his creations and he has engineered tremendously towards this insight. The company is moving forward with the concept of design thinking which involves a broad spectrum of innovative activities imbued by customer centred designed ethos. This means that the vision of IDEO is to move forward by inventing creative products which are desired by the customers and most importantly they are ethically and morally attractive for them. This type of business planning is highly effective as the needs and preferences of the customers are kept in mind and they are presented in a desirable method. The various products and services provided by the company are flexible and the management is agile so that it can change its plans with the demands of the current market (Blogs.hbr.org., 2010, n.p.). At some point, corporate education programs were a disconnected series of individual events. Today, they are usually part of an integrated career development plan that is linked to strategic objectives with clear and achievable aims. Effective strategic leadership is only possible through effective communication inside the company, the message it portrays to external elements, the relationship it has with customers, and the analysis of its commitments. Coca Cola spent 8.3% of its sales on advertising and customer relationships contrasting to the 3.3% by Pepsi; the effects of this difference can be seen by the net market benefits of both the companies. Academic Critical Reflection Strategic leadership is the ability to anticipate, envision, and give power to others in order to create strategic change. Multifunctional in nature, strategic leadership involves management through others, the management of a whole enterprise instead of a functional subunit, and coping with the escalating changes of the fast paced 21st century. Because of the complexity and global nature of the modern world, strategic leaders must learn how to effectively influence human behaviour. By their words or by actions through personal examples, and mainly through their ability to envision the future and maintain flexibility, effective strategic leaders meaningfully influence the behaviours, thoughts, ideas, and feelings of those with whom they work (Haberberg, 2007, p.46-99). Richard L. Lynch's five elements of effective strategic leadership which strategic leaders need to address are developing and communicating the organisation’s purpose i.e. the organizational heads must formulate a firm mission and vision of the company's core values and futuristic goals. This purpose must be communicated to the organisation effectively. Secondly, he focuses on the importance of human resources in an organization as it is the selection and recruitment of new employees that is of a great significance to a leader. Strategic leaders must reward and motivate the staff members to boost their morale and keep their interest in work high. The third most important element discussed by Lynch is setting ethical standards and establishing corporate social responsibility in the company. It is the responsibility of the leader to set high moral values in the workplace and monitor their achievement by the employees. Then there is the aspect of defining and delivering to stakeholders as it falls upon the strategic leadership to maintain a good relationship with stakeholders. The final element necessary to achieve effective strategic leadership is to sustain competitive advantage over time. Improvement in the quality of the products/services, investment in innovative strategies across a broad spectrum as well as increasing the organisation's reputation are all steps which could facilitate in sustaining competitive advantage (Lynch, R., 2008, p.618-620). The above described factors are similar to the key lessons mentioned earlier in the paper. The need for flexibility and adoption of a realistic approach holds a vital position in decision making as it can facilitate organizations in gaining a competitive edge. One point which Lynch stressed on was long term planning and maintenance of a firm vision of the firm; this point is crucial for the strategic success of a company but it was not highlighted in the key lessons suggested in the first paper. Transcendent Leadership model takes another overview of the strategic leadership dynamics. It focuses on the fact that with the advancement of 21st century, all previous theories are revolutionized. This model explains the different elements of effective strategic management by various levels of leadership responsibility. It consists of macro and micro levels and focuses on the view that leadership is interrelated to all these levels. These levels include leadership of self, others, and organization. According to the transcendent model, a transcendent leader is one who leads within and amongst all these levels (Crossan, M. et al., 2008, p.569-581). This model is quite different from the key lessons explained above as it focuses on the dynamics of the modern world while mine does not revolve around a specific time frame and is applicable in all time periods, at the same time keeping in mind the demands of that hour. Leadership of self involves the responsibility of incorporating self-awareness and providence in the development of personal strengths. Leadership of others includes the mechanism involved in the interpersonal influence and impacts a leader upon other staff members. Leadership of organization consists of the alignment and collaboration of the three interrelated areas which are: environment, strategy, and organization. This strategy which initiates at the root base level is not included in the key lessons in the above paper. This model should be followed in all organizations because of its thoughtful and precise way of dealing with problems from the lowest level to the highest. (Crossan, M. et al., 2008, p.569-581) According to Ireland, Hoskisson and Hitt, strategic leaders must form firm guidelines in order to achieve effective strategic leadership in an organization. To achieve this, strategic leaders, as top level managers should focus on the formulation of a strategic intent and strategic mission. They should guide their companies in this process of formation as this guidance might result in establishment of such goals, encouraging the employees and improving their performance. Furthermore, it is the responsibility of strategic leaders to develop appropriate strategic actions and take measures to ensure their implementation. This pays off as the culmination of strategic competitiveness and above-average returns. Additionally, the strategic leader determines and develops organizational structure and establishes a reward system of a firm as these affect the strategic actions taken for the implementation of various strategies (Ireland et al., 2008, p.372-405). This model differs on other aspects from my key lessons except for the aspect of competitiveness and implementation of strategic mission. The article: The innovator's DNA, does not linger upon the conventional methods of achieving effective strategic leadership, but discusses innovators like Steve Jobs, Jeff Bezos and A. G, their novel thoughts, and their uncanny ability to hire innovative employees. Research shows that the following five traits are similar amongst these strategic leaders, which distinguish them from others. Their first skill is associating as it helps them discover new dimensions by establishing links and connections between seemingly unrelated questions, ideas and problems. Secondly, questioning allows these innovators to think differently from the mainstream thoughts and consider new perspectives and ideas. Their third skill is their power of observation. Through their meticulous observation, these entrepreneurs look out for small behavioural details in the consumers and other companies in order to gain insights on handling things differently. Through experimenting and being inquisitive about everything, they explore the world and come up to new conclusions. And finally they can broaden their perspectives through networking with a wide array of people. It is through these skills that innovators become excellent strategic leaders and achieve effective and successful strategic leadership in their companies (Dyer et al., 2009, p.61-67). This is the most radical model in the academia on this subject and it differs from my lessons as it encompasses the skills of highly successful entrepreneurs only. The model presented by Richard Lynch is the closest to my own lessons about effective strategic leadership as the ideas of a clear vision, sustainable decisions, and competitive advantage are similar between the two of them (Lynch, 2008, p.618-620). References Blogs.hbr.org (2010) IDEO's Tim Brown on Using Design to Change Behavior - Reena Jana - Harvard Business Review. Accessed 18 May 2012: http://blogs.hbr.org/cs/2010/03/design_to_change_behavior_tips.html Challenger, go for launch 2009 (video recording), BBC News. Accessed: 18 May 2012: Crossan, M. et al. 2008. “Transcendent leadership: Strategic leadership in dynamic environments.” The Leadership Quarterly, 19: 569-581 Dyer, J. et al. 2009. “The innovator's DNA.” Harvard Business Review, Volume 87 Number 12: 61-67 Haberberg, A. 2007. Strategic Management: Theory and Application. Oxford University Press, p.46-99 Ireland, D. et al. 2008. Strategic Management: Competitiveness and Globalization: Concepts & Cases. 8th ed. Cengage Learning, p.372-405 Johnson, P. 2011. ‘Madonna: the reigning queen of pop?’ Business Strategy, p. 226-228. Lynch, R. 2008. Strategic Management. 5th ed. Prentice Hall, p.618-620 Neate, R. (2011) Carrefour makes ?221m half-year loss | Business | The Guardian. Accessed: 18 May 2012: Read More