Creative Leadership - Literature review Example

Creative Leadership Introduction The organization chosen for analysis is Amazon.com, an international companythat many recognize as the most innovative in the electronic commerce world. Jeff Bezos, the company CEO, epitomizes creative leadership, as his business environment is both versatile and complex; both his response and his team’s reaction to their surroundings provide crucial lessons that can be learnt by other firms. Creative leadership is what oversaw the strategic change from an online bookseller to one of the most trusted vendors in the online world. It took a lot of ingenuity for this company to win consumer loyalty and thus garner high reputation-potential within the e-commerce world. The need for creative leadership Current and future leaders are now operating in a tumultuous environment; the past decade has recorded some of the most intense changes in history. While some factors may be helpful to organizations, others tend to complicate business operations and must be overcome in order to forge ahead. Studies have shown that the new environment is now highly volatile since change occurs on a large scale and quite fast. Several CEOs are also acknowledging that the future has also become more uncertain with challenges being complicated by a number of parameters. This implies that single solutions are insufficient to respond to each one of these problems; sadly that was not the case a few decades ago. Ambiguity is also seen as another challenge that ought to be considered by most leaders since a number of them barely have clarity on what certain events imply, and the overall effect that those events can have on their businesses (Petrie, 2014). Complex environments are particularly difficult for business leaders to deal with because most of them contain large elements that interact with each other simultaneously. As if this is not enough, information within the system tends to be difficult to decipher; could be incomplete and highly ambiguous. The system elements are nonlinear and even a small change can cause larger than expected outcomes, so solutions ought to come from within rather from a place outside the system. This also implies that leaders cannot look to their past to find solutions; they should instead acknowledge the fact that the system is always in a state of flux (Petrie, 2014). The most common challenges cited by leaders on why the current environment is complicated to operate in include new technology changes that often disrupt work as well as information overload. Others believe that the elimination of conventional organizational boundaries may have led to these problems, as all systems appear to be interconnected. Globalization also has a part to play because it has contributed to the interaction of various cultures, which have to cooperate and work with each other. All the above factors have caused many leaders to focus on creativity, as it appears to be the anecdote to complexity and unpredictability. Creative leaders tend to be highly experimental and many of them can tolerate or even thrive in ambiguous business circumstances. In order to lead a new generation of followers as well as interact with them and connect with them, it is imperative for leaders to adopt a new outlook. Creativity in this context may be best understood as having the ability to bring something new into existence that is innovative, disruptive and continuous. Leaders in today’s complex environment ought to be willing to defy convention by engaging in breakthrough thinking. Their commitment to continuous innovation must not be festered, and they should demonstrate this by consistently causing their firm to experiment. This is the only way that companies can stay afloat in the tumultuous waters of globalization, technology proliferation and information overload. The company under consideration is Amazon.com, which has been in operation since 1995, but the strategic change under considerations is reputation potential, which was spearheaded by CEO Jeff Bezos. The company realized that switching costs were likely to affect the company adversely since as many as 28% of all online buyers tended to switch to a new vendor if they experienced difficulties in shopping at the website (Mirow, 2005). Amazon’s leaders realized this fact, and wanted to overcome it by building trust among their buyers; the way in which the company achieved this objective was by nurturing loyalty among its customers through frequent innovations. The online business environment is one in which loyalty is difficult to build owing to diminished opportunities to engage in face to face interactions. Notwithstanding, the company was able to attain the highest scores in terms of customer satisfaction rating in the online world due to its creative approach. The organization pioneered the introduction of propriety technologies, such as recommendations among clients as well as search properties. Transaction processing services as well as customer interaction and website management were also some of the innovations that contributed towards building a loyal consumer base that has stuck with the company consistently. Creative leadership and teamwork IBM claim that creative leaders rely on innovative inspiration from four categories of followers; warriors, artists, explorers and saints (IBM, 2010). An explorer is a worker who draws inspiration from different worlds and thinks of things that have never been seen while saints derive inspiration from connecting with others and developing their world. Conversely, artists draw creative energy from making meaning in writing, art and music; they focus on self-expression. The warriors are those people who relish challenges and feel that they must win in order to become deeply fulfilled. Creative leadership that mostly relies on explorers, as the primary source of creativity tends to give little meaning to measurable performance as their main goal is to achieve something that has never been done. However, this does not imply that all organizations tend to put themselves in a box by only focusing on one creative archetype. IBM’s study found that the most creative leaders acknowledged the relevance of all sources of creativity in a team environment. It is for this reason that a number of them combined various creative personalities in teams; it was assumed that diversity in teams lead to original and highly valuable solutions (Lombardo and Roddy, 2010). For instance, a warrior kept the team focused on their end goal while saints mended relationships among members. Artists were largely responsible for creation of vision for the team while the explorers played a critical role in creating new inventions among team members. In this dynamic world, creative leaders do not place all their eggs in one basket; they instead try to capitalize on contributions from all team members. Studies indicate that creative organizations have leaders to craft an environment of creativity across the board; each entity in the firm is to be regarded as a catalyst for creativity (Agbor, 2008). Gone are the days when creative types were placed in separate departments like product design where they could concentrate on innovations. Nowadays, companies center on capitalizing on new ideas from every employee as this creates a diversity of contributions; the mindset of always questioning things is a common quality to several creative companies. Instead of having a command and control structure, it is more effective for firms to adopt the influence and persuade approach. This implies that even the manner in which creative leaders are communicating is changing; rather than relying on one-way methods, CEOs are now using networking channels in order to foster this environment of creativity. Literature indicates that certain leadership structures are more favorable for innovation than others as they build the right environment for creativity. Leadership can either be shared or authoritarian, with the latter belonging to the traditional mindset while the former belongs to the current mindset of creative leadership. In the past, top leaders used to do all the work; they made the decisions, allocated resources and controlled the work carried out in their institutions. The overall result was a disempowered workforce that lacked the ability to be productive and creative. Modern organizations still hold this perspective when they assume that leaders are the ones with all the great ideas needed to achieve success. Conversely, more sustainable leadership models are the ones in which leaders do not conceptualize themselves as the central forces behind every development in the company. It is a cooperative and shared leadership model in which many individuals are given the skills and tools needed to create and then allowed to do so. This does not in any way imply that there is absence of leadership; instead, leaders think of their positions as opportunities to empower and inspire their followers to be creative. Leadership prospects need to be prevalent in every aspect of the organization and should not just be limited to the people who occupy top positions. All persons in the company need to horn their leadership potential, and utilize it to make effective outcomes associated with the overall objectives. Likewise, Amazon believes in these values because innovations are a group process; the organizational leaders do not wait for lone geniuses to come and introduce new ideas. Instead, they focus on forging cooperation among a wide range of people in order to ensure that creativity is a skill to be passed. This establishment has taken to perfect the way teams work as most of them tend to be highly focused and achieve highly. The top leadership ensures that every small group can work together seamlessly in order to increase their chances of innovating (Mirow, 2005). In fact, leadership in Amazon has time and time again proven that it is critical to create a culture of creativity within one’s organization. In this company, innovation is not something delegated to the leadership or exclusive groups; it is envisaged as something that all employees should participate in. The CEO of Amazon has shown the importance of replicating creative skills around the entire business as this ensures sustainability even after top-management’s departure. Leaders at Amazon are good creative problem solvers, but most importantly, they realize that long-lasting innovative capabilities can only be achieved if others master the skills needed to become creative as well. Leaders cannot do it alone; they are only as good at the team members that surround them and the people who can effectively carry on after they have left. The way in which members operate within their teams is also quite impressive; the company has a two-pizza-rule that several consultants are now aware of. Jeff Bezos states that unless a team can be fed by two boxes of pizza, then it is not effective enough to achieve its objectives. Most taskforces in the company are between five and seven in number in order to minimize cases of redundancy or group think that haunt several other institutions (Bacharach, 2013). Even the manner in which members are hired testifies to its creative leadership; recruits must have the minds of explorers and pioneers. As they carry out their responsibilities, most teams members tend to think of themselves as critical components of the leadership structure. They know that they have the responsibility to make decisions and allocate resources at their level in accordance with certain creative opportunities. This eventually leads to the manifestation of a great level of autonomy among project team members, and also makes people responsible for their own outcomes. The leadership structure in a creative organization must always be such that it gives all members opportunities to contribute in accordance with their capacity. Command and control structures or excessive bureaucracy tends to yield ineffective results because by the time ideas get to the top, they will already have been surpassed by external forces. It is thus imperative for companies to adopt matrix structures in which power, responsibility and values are delineated away from the top. Amazon ascribes to such a school of thought as it grants everyone an opportunity to serve as a leader in their respective positions. The company depends on various sources of creative leadership as people are not unhealthily dependent on Jeff Bezos; most of them are free to contribute their natural abilities towards the creative endeavor of the institution. People are also empowered to become better by constantly coaching and training them in the latest innovations and technology development. This causes them to think about new ways in which they can apply these new developments in their own organization thus perpetuating a continuous cycle of innovation (Bacharach, 2013). How creative leadership is implemented The other quality that stands out in the top leadership of the organization is the CEO’s commitment to upsetting convention. Jeff Bezos was himself a highly creative individual who had a number of patents to his name, but he was not afraid of re-examining his own creations and adopting new strategies to deal with them. Rather than use formal annual planning processes, literature recommends that creative leaders ought to re-conceptualize their strategies throughout. This seems to be the approach selected by Bezos, who did not think of his creations as objects that had been curved in stone. Amazon operates in an environment where immediacy is crucial, so traditional planning cycles would simply not be sufficient to achieve its strategic objectives. For instance, the company does not stock all the books that it sells within its warehouses; it relies on the seamlessness of its vendors’ product cycles to deliver to clients on time. The company’s top leadership realized that it could not use traditional time horizons like other book sellers; it needed to engage in creative thinking to overcome this hurdle (Dyer and Gregersen, 2012). The company introduced an inventory management system that would allow them to synchronize client orders with their vendors’ systems through a high level of innovation. Bezos knew that he had to upset the status quo in order to circumvent this challenge of immediacy; there were several other threats that were related to the issue of immediacy, as well. This company’s leadership illustrates the necessity of seeing what lurks around the corners, predicting what has to occur and acting despite the uncertainty that surrounds that decision. Another way in which Amazon defied convention was when it decided to use an adversarial approach among its team members. In the early 2000s, several management consultants claimed that communication was the key to successful team outcomes, yet the firm’s CEO despised social cohesion. He often believed that too much consensus ruins teams because it makes them agree on almost everything without thinking about repercussions. For this reason, Amazon’s CEO told his team members to refrain from too much communication even when this was common practice among other players in the industry (John, 2013). As a result, his teams continued engaging in constructive debate and coming up with projects that built customer loyalty even more. One must also note that it is crucial for creative leaders to act in spite of uncertainty as the current dynamic environment does not allow companies to review their choices before they implement them (Realin, 2003). The days of lengthy, protracted market reviews are long gone as response to new ideas affecting organizations is what keeps many companies ahead of the pack. When Amazon was making the choice to boost customer trust, it realized that it would be necessary for it to respond to new factors as soon as they arose. This is not to say that organizations must make decisions on a whim; however, they need to respond to situations faster than ever before in a creative fashion in order to keep pace with this changing world. The relevance of acting promptly without hesitation even in uncertain times cannot be overemphasized as this enables companies to take advantage of certain windows of opportunity. Creative leadership assists individuals in taking stances against common wisdom and moves the team forward when legacy inertia has kicked in. Hesitant and uncreative leaders may be side-stepped by individuals with more confidence in their own abilities. Amazon was able to achieve its ultimate goal of becoming an industry leader by being willing to change when industry trends altered. For instance, when social media became a formidable force in the business world, the company found new ways of connecting with its employees and clients in order to maintain loyalty (Bacharach, 2013). Creative leadership involves a willingness to change as the industry changes even when the returns from these innovations may be unclear. Studies have also shown that creative leadership readily breaks ground using new business models that shutter industry barriers. Creative leaders tend to be more prepared than other individuals to pursue innovative business models even when this may entail an entire overhaul of their system. Japanese business leaders have often stated that in the current fast-paced world, business models can no longer be regarded as absolute; managers ought to respond to their environment (IBM, 2010). Creative leaders ought to be willing to continuously alter and redesign their core activities as certain things may require modification when forces change around them. Different business model innovations need to take place in order for one to work effectively within volatile business environments, and sometimes partnerships have to be revisited. New business models are imperative because consumer tastes keep altering and competitors are always continuously challenging conventional businesses. Likewise, Amazon has implemented the above recommendation to the letter, over the past few years; it has introduced a range of business model innovations. Some of them include Kindle and Prime, which have enabled the company to generate high degrees of revenue throughout their existence (Islam and Crego, 2013). Sometimes shareholders who claim that they may not yield immediate results have not always supported the new models, but the company’s leadership has always proceeded with these ideas because it keeps its focus on the long term. The company changed its business models by re-conceptualizing its definition of the consumer; initially, buyers were seen as those final consumers of the firm’s products. However, under the company’s leadership, it became necessary to change categories that were treated as customers as third-party sellers quickly became recognized as a formidable group affected by the institution. It then created a single-store application designed to accommodate such thinking; merchandise for the company would be presented alongside its vendors’ product. Small and medium-sized firms then got the opportunity to harness resources from Amazon while at the same time maintain their independence. A ten year partnership with Toys R Us was an illustration of how the company was able to redefine its business models. It agreed to host the inventory for the organization as well as ship the products to buyers; handling other aspects such as processing payments and also dealing with customer service. Studies also indicate that creative leaders tend to stimulate creativity by challenging their followers to create new ideas or find solutions to certain problems (Spillane, 2005). Stimulation works by asking questions that cause individuals to think freely, and building challenges that make others imaginative. Employees must feel loosened and trusted enough to make mistakes and not be punished for them; this means that a fear culture ought not to exist in the institution or organizational politics should not undermine these efforts. Even as these leaders challenge their followers, they must also embrace mistakes as part of the learning process, and make them feel that it is not always necessary for them to deliver results at every turn. It is imperative to invite everyone to participate in the business of coming up with solutions for the organization as this ensures that the company maintains an innovative and inclusive spirit. Leaders have a lot of power in determining the creative direction of their companies and they have the ability and resources needed to foster such an environment. Working conditions in which members feel included irrespective of their positions are ideal for creative output especially in high-technology firms. All employees are unique in their own way, and their backgrounds as well as their skills and experience allow them to be able to contribute to their institution in their own way. They have certain ideas and dimensions that may not always concur with the ones belonging to other workers, but this input should still be respected and valued. Amazon also mirrors these values through the leadership’s interaction with employees; brainstorming, thinking, and debating are a natural part of the organization. The CEO is highly committed and passionate about encouraging his workers to innovate, so he often gives them opportunities to exhibit this trait. He often has the goals and vision that have nurtured most members of the company into becoming highly creative employees; many are excited about his vision are more than eager to contribute to its realization. Individuals are often encouraged to experiment in little and big ways such as cloud technology and minor changes on the website (Baer, 2014). At one time, the company had certain people who worked on the user interface within their organization in order to make consumer experiences better. This is usually possible after members of a team brainstorm and come up with new ideas on how they can improve on the website. The propensity to innovate through leadership creativity has led to substantial improvements in the way the company is perceived among consumers. Consumers like the reliability, instability, security, privacy and efficiency of the website, and this has been possible through consistent individualization as well as innovation. In fact in the electronic commerce market, Amazon has now been regarded as a market leader in design practices, and has encouraged other companies to do the same. Companies that rate online organizations have found that it is the customer service, comfort and level of convenience that buyer’s experience, which set the firm apart. Becoming a pioneer in e-tailing has been possible owing to the creative environment that has thrived at Amazon; all the areas linked to buyer experience were deliberately improved and worked on by the organization. Moving beyond tested and tried management styles is also critical to success in creative leadership, especially in communication and training. Common wisdom states that most companies ought to have formal and systematic communication processes among their employees and clients. However, sometimes this approach may not work in environments where social networking, blogging and other internet platforms lie beyond the control of the organization. Less formal and wide-ranging communication methods need to be embraced; Amazon seems to be aware of this school of thought as it has tried as much as possible to implement open communication environments where customers or employees can gain direct access to the company CEO and other top leaders. In coaching or training, leaders need to instill the spirit of training through formal and informal mechanisms, and this should be made into a priority. Amazon also mirrors these aspects by supporting and rewarding people who always go out of their comfort zones and embrace certain aspects that relate to their creativity goals. How leadership at Amazon compared with benchmarks and research findings Research has shown that creativity and innovativeness can be immense sources of competitive advantage, and this appears to be the case for Amazon. The case study has also shown that innovation and creativity are not qualities that appear accidentally; they must occur under the guidance of effective leaders. These individuals are largely responsible for the changes in structure and culture that are needed in order to transform a company into a creative one (Agbor, 2008). The company under analysis had a leader who gave the vision and momentum needed in order to create success for the business; he was the one who catalyzed and managed his environment as was necessary. Amazon thus validates research on creative leadership by proving what had been said earlier; the strategies, culture and environment needed to innovate are important, but it is the leadership that ultimately leads to success. Literature also states that effective leaders need to guide and inspire others in the innovation or creativity processes. It is incumbent upon leaders to sustain and support workers such that creative efforts work; therefore, companies must first start with the right leadership before they begin to be creative. This was the case for Amazon as well; the organization started with the right leadership in the person of Jeff Bezos, who then established the processes and structures that were needed to stay creative. He appears to believe in these principles because every person admitted into the organization must pass a recruitment test that reveals how creative the person is (Bacharach, 2013). All the leaders who arise in the organization thus already have the right background, and only require a gently nudge for them to be completely effective. Having an interest in innovation is one of the worthwhile traits that should be exhibited by the organizational leadership or else it is likely to impede creative efforts. Top leaders at Amazon have demonstrated that they have the ability to create strategies which eventually lead to innovation. Those leaders that lack the ability to perceive opportunities for change are unable to exploit it. Jeff Bezos has shown that leaders who are interested in innovation tend to create dynamic and ambitious objectives, and also have a practical attitude towards response to change. These are the prerequisites to innovation as they are predicated on the capacity to absorb change as it occurs within the concerned institution. Creativity literature may sometimes contradict itself on the primacy of leadership in innovation as some researchers may state that aspects like corporate culture are the key determinants to success. Many papers have looked at the Japanese auto industry and credited the high level of innovation synonymous in the sector to corporate culture. Therefore, according to these analysts, corporate culture is more critical than other outcomes; what these researchers have not understood is that culture is created by leaders. Companies like IBM and General Electric were stuck in years of redundancy, but when they introduced new leadership through Lou Berstner and Jack Welch respectively, they were able to change their organizational cultures. Organizational culture will not be conducive for creativity if the right leaders are not there to build or change this culture, so Amazon defies some forms of literature on the subject but validates others that get to the root cause of culture change. Literature has shown that some of the companies undergoing major restructuring are usually the ones that have been run ineffectively over the years. Weak leadership often goes for the easy way out when organizational hurdles become overwhelming; for instance, they will downsize and restructure in order to solve problems because they are used to the reactive approach (Agbor, 2008). However, organizations in which strong and creative leadership thrives tend not to be subject to such major overhauls because problems that necessitate restructures are already averted by the concerned leaders. Amazon has also proven that creative leaders are in turn more responsive to their environments than those who do not possess this trait. Their commitment to continuously meeting the needs of their customers in tandem with the external changes that are taking place around them has ensured that they can always weather the storm (Bacharach, 2013). The company has not undergone major downsizing or restructuring as most of its changes have been incremental. This organization’s stock price has increased by leaps and bounds and thus shown that their approach is quite appropriate for companies working in such dynamic environments. Recommendations Amazon ought to continue with these practices as they have always delivered positive outcomes for shareholders and thus shown the value of creative leadership. As the organization gets larger, it may become more challenging for it to maintain the high degree of autonomy, independence and creativity that have been the hallmark of its success. In order to minimize chances of failure when the organization becomes too big, it may be necessary for the organization to plan ahead and create strategies that will safeguard against excessive bureaucracy in the future. It may also be challenging for the company to deal with succession once Jeff Bezos exits Amazon as he has created a legacy of creative leadership in the institution. Many technology companies such as Apple have experienced periods of low performance due to the exit of their creative and central leaders. In order to avoid the possibility of such an outcome, it is imperative for the company to prepare before hand and create an internal succession system based on commitment to creativity. Since this has been the major selling-point for the company, it makes sense for it to focus on this aspect as it plans for succession within the respective institution. Conclusion The company under analysis operates in one of the most dynamic and challenging environments, so its leaders must react effectively to these forces or face the threat of extinction. Jeff Bezos and his team have demonstrated the qualities of creative leadership when they implemented a strategic change for heightening consumer loyalty. First, the leaders have always acted in spite of uncertainty especially when they introduced social media when its returns were uncertain. The firm has been at the forefront of introducing new business models like Kindle even when these changes were not supported by top management. The leaders have worked on building a creativity-culture such that team members can carry on with creative work even when key personalities have left; this must be intensified and continued. The case study has also shown that certain characteristics must be evident in enterprises that want to enjoy competitive advantage due to creative leadership. The top leadership should itself be enthusiastic about creativity and encourage other persons to develop the same passion. They can do this by having the right strategy and vision needed to achieve this and also by building the right work environment required to make them highly innovative. Leaders ought to perceive their roles as being more strategic than hands-on; they ought to inspire others to achieve rather than to dominate the entire creative process. Leaders need to embrace the fact that change is continuous, so they must not be the only ones who act as catalysts for creativity; instead the entire organization ought to be regarded as the entity that is responsible for creative outcomes. Amazons’ leaders took the time to craft creativity into their organization by inspiring and recognizing those who exhibit the trait. Organizations that want to achieve similar outcomes to Amazon’s ought to create situations in which creativity is not confined to silos within certain departments; it needs to be perceived as something that everyone can own. References Agbor, E., 2008. Creativity and innovation: The leadership dynamics. Journal of Strategic Leadership, 1(1), 39-45. Bacharach, S., 2013. Jeff Bezos’ innovation formula. [online] Available at: http://www.inc.com/samuel-bacharach/jeff-bezos-innovation-formula.html [Accessed 19 Jun. 2014] Baer, D., 2014. Brilliant strategies Jeff Bezos used to build the Amazon Empire. 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