Leadership and Organizational Growth - Literature review Example

Organizational Leadership: Change and Innovation

Introduction

Leaders, as opposed to managers, are the drivers of change, innovation and creativity, spearheading organizational growth. The leadership skills are vital factors in the enactment of change, and achievement of increased innovation and creativity. Change, innovation and creativity are the main aspects of corporate growth and long-term sustainability (Benn, Dunphy, & Griffiths, 2014, 4). Leaders boost creativity amongst employees through the creation of an enabling and supportive working environment. On the other hand, managers seek to abide by set regulations and systems to ensure productivity and continuity of organizational operations (Gray, 2013, 19). It thus makes leadership skills the most vital aspects in the enactment of change, innovation and creativity, unlike management skills, whose major function is supporting systems and day to day activities (Steiber &Alange, 2013, 250). An organization's leadership, therefore, should follow leadership theories and adopt flexible systems to maximize creativity and innovation. Through cooperation and working together, employees can generate game-changing ideas, which will maximize the company's profitability. Consistent growth is vital for any business, and thus the need for constant change and adaptation to market changes (Branson, 2008, 391). Leadership seeks not to control the workforce, but to maximize organizational growth and competitiveness (Doyle & Bridgewater, 2012, 4). Leadership skills, unlike management skills, are the drivers of organizational change, innovation and creativity.

Leadership skills are more effective in enacting organizational change and innovation in comparison to management (Quinn et al., 289). The vast focus of this paper is to elucidate the effectiveness leadership has in enacting change and innovation in comparison to management, and accounts for the reason behind the variance.

Comparison of Leadership and Management Skills

Management skills differ significantly from leadership skills, resulting to a variation in outcome in regard to organizational change and innovation (Kuipers et al., 2014, 12). Leadership skills support innovation and creativity, unlike management skills, making them most vital in enacting organizational change and growth (Matzler et al., 12). Leadership and management are words that supplement each other during usage, despite their significant difference. According to Warren Bennis, ‘A leader has followers, and a manager has employees.’ Bennis is also famous for his quote, ‘managers do things right, and leaders do the right things’ (Ashmos & Duchon, 2000, 134). It, therefore, implies that managers follow set rules and systems to govern organizational operations, whereas leaders readily adopt change and listen to other people's views. Leaders focus on bettering the organization, whereas managers are results oriented, setting targets and goals that must be accomplished in a given amount of time (Kessler, 2014, 11). Leaders enact change within the organization, making the business relevant to the times of operation and market needs (Jarvis et al., 2013, 31). Managers, on the other hand, keep the original business culture and structure, are resistant to change, and hardly welcome employees’ thoughts and ideas. Consequently, they limit innovation and creativity within the organization, as they have set targets and expectations from their employees (Jones, 2010, 6).

Literature Review on Organizational Change, Innovation and Creativity Drivers

Leadership and management are complementary, and the success of an organization depends on the successful application of both (Fullan, 2014, 2). However, there are many differences between a leader and a manager, as depicted by scholars. A leader enacts organizational change better in comparison to a manager. A manager applies normal systems of functionality, and can therefore be termed as a copy, whereas a leader is original (Kuipers et al., 2014, 21). A leader innovates and develops, whereas a manager administers and maintains. Another core difference between a manager and a leader is that the latter focuses on the people, whereas a manager focuses on structures and organizational systems (Kessler, 2014, 23). A leader inspires trust, whereas a manager uses control and orders to get things done. According to organizational experts, a leader challenges the status quo, making him or her own person, whereas a manager accepts it and is thus a classic good soldier. According to scholars and literature works, leaders have unique traits that make them better in enacting organizational change as compared to managers (Benn, Dunphy, & Griffiths, 2014, 12).

Leadership Theories

Theory suggests that leadership skills are the drivers of organizational change, innovation and creativity, and not management skills. The role of management skills is maintenance of organizational stability and ensuring conduction of day to day activities (Patterson et al., 2013, 8). The theories of leadership are majorly classified into five major categories, each consisting of many individual theories as proposed by their founders (Matzler et al., 19). They include behavioural leadership theories, transformational leadership theories, situational leadership theories, participative leadership theories, and contingency leadership theories (Ivancevich & Matteson, 2011, 19). These categories have varying beliefs in regards to leadership, with some views being antagonistic to each other. The behavioural theory suggests that leadership can be acquired, and discredits the ‘great man’ theory, which suggested that leaders are born. The theory suggests that leadership is a learnable behaviour, which can be acquired by any person through the identification and betterment of one’s traits (Patterson et al., 2013, 12). The transformational theory focuses on leadership concerning inspiration and injection of enthusiasm to one’s followers (Fullan, 2014, 6). The theory suggests that good leadership is through sharing one’s vision with his or her followers, which results to injection of energy, as the followers become more enthusiastic and inspired by the leader’s goals and vision (Thomas et al., 2011, 28).

Situational theory, on the other hand, suggests that leadership depends on varied situations, affecting its effectiveness and impact on the followers (Rothaermel, 2015, 2). The theory focuses on the various factors that influence decision making, such as employee motivation and capability, the leader-employee relationship among other factors. Participative leadership theory suggests that employee morale is heightened through involvement in decision making, as they feel like part of the team and working towards familiarized goals (Choi & Ruona, 2010, 15). The theory holds a belief that many minds result to a more informed decision, compared to individual approaches. Joint goals have a positive impact on employee morale, making them more collaborative and competitive, which consequently results in profitability betterment and growth of the organization (Sandelands, 2015, 3). Finally, contingency theory suggests that leadership is significantly impacted by the leader's preferred style and the capability of his or her followers. The theory implies that there is no single leadership method and that the effectiveness of a leadership style depends on the situation (Oreg, Vakola, & Armenakis, 2011, 470).

Organizational Impacts of Leadership

Leadership has various impacts on an organization, based on its application and intended goal. The core focus of this paper is on the role played by leadership in enacting organizational change, innovativeness, and creativity. Change enactment is vital for an organization’s sustainability and competitiveness (Matzler et al., 38). Leadership, as opposed to management, has a significant impact on organizational growth, through the enactment of organizational change and transformation, and the enhancement of creativity and innovation among the employees.

Leadership Role on Change Enactment

Organizational transformation is vital for the maintenance of sustainability and growth maximization. An organization should continually adopt a change to remain relevant and competitive in the highly volatile business market (Jones, 2010, 3). Market unpredictability has resulted in the need for constant change to maintain ahead of the competition in regards to profitability and competitiveness (Kessler, 2014, 12). Failure to adopt change results in lagging behind in the business world, and being outdone by rival organizations. Most multinational giants have been phased out in the recent past, owing to the failure of adopting a change in regards to technological innovations. Some include Blockbuster, Xerox, and Blackberry (Thomas et al., 2013, 58). These multinationals were global leaders in their respective industries, but the lack of adoption of change and transformation led to their downfall.

Leadership plays a vital role in the enactment of change within an organization. A leader is keen and pays attention to employees’ suggestions in regards to market changes and the need for change. An enabling environment supports change and new inventions in the organization, maximizing productivity and competitiveness of the organization (Jones, 2010, 8). A leader supports the ideas of his ‘followers’ boosting their morale, and maximizing productivity (Choi, 2011, 481). The significant difference between a leader and a manager is that a manager focuses on upholding organizational values and systems, whereas leaders are against conformity and advocate for change and variation in business perspectives. Leaders work with employees to create new products and methods of conducting business, maximizing organizational growth and profitability through the enactment of change (Steiber &Alange, 2013, 252).

The corporate change enables an organization to remain relevant in its industry and market. Trendsetters reap the highest profits from change, and lead in their respective business fields (Gray, 2013, 9). Followers of the new trend also benefit from the change but do not make it to the top in regards to leading organizational change. Organizations that fail to adapt, however, lose out significantly, and end up being pushed out of business and file for bankruptcy (Pace, 2013, 48). Such organizations do not keep track of market changes and do not see the need for adoption of change within the organization's way of conducting business. There a couple of models used for enacting change by organizations. The most popular method is Kotter's 8-Step Model, which details eight major steps of enacting change within an organization. The model is summarized in the image below.

(Kotter, 2012)

Effective leaders support and motivate employees in idea generation. Successful adoption of change is effected by the leader’s ability to create a supportive working environment, and elimination of criticism, which significantly ruins employee morale concerning idea generation and organizational change. A good leader is collaborative, supportive, and approachable, enabling employees to share their ideas with him or her. With good leadership, an organization can successfully adopt change, and maximize its growth and profitability (Cusumano, 2010, 9).

Leadership Role on Creativity and Innovation

As depicted in the case of Apple Inc., leadership plays a vital role in enhancing creativity and innovation. Innovative ideas result from the collaboration of minds and pulling together towards a similar and shared goal. When employees collaborate and are supported by the organizational leadership, they exhibit high levels of innovativeness and results to inventions that lead in revolutionizing global business (Oreg, Vakola, & Armenakis, 2011, 473). The case of a smartphone, for example, was conceptualized by Steve Jobs. However, the achievement and realization of this dream were enhanced by working together and sharing ideas amongst the workforce and organizational leaders (Kuipers et al., 2014, 15).

Generation of innovative ideas within a business organization is majorly determined by the leadership. It is the role of the leader to identify an invention or creative idea and discover the potential in it (Thomas et al., 2011, 17). Employees work to please their bosses, keep their jobs, and climb the corporate ladder. Therefore, a leader that supports innovative and revolutionary ideas creates a culture of creativity and innovativeness within the organization (Ustaömer, Durmaz, & Lei, 2015, 429). A leader leads through the creation of a supportive culture, one that enables creativity and innovativeness amongst the organizational workforce (Van der Voet, 2014, 379). Such an environment welcomes new ideas and presents a supportive audience to the inventions and ideas brought forth by the employees. Innovation and creativity are the major drivers of success in the 21st century. An organization that lacks these two drivers fails to compete with rival and highly adaptive organizations, making them followers or even losers in the industry (Davila, Epstein, & Shelton, 2012, 18). They make their move after industry leaders have already made theirs, making them followers with minimized profitability. Had they supported invention and creativity, these organizations would be global trendsetters, maximizing their profitability levels and productivity.

Leadership helps keep the employees on track, in regards to the achievement of the set goals. Through the leader's efforts, employees remain motivated and focused on the achievement of the set organizational and personal targets. Morale may deteriorate at times, whose non-replenishment may result in failure of achievement of the set organizational objective (Sandelands, 2015, 13). Leadership helps retain the morale and energy, through a constant reminder of the objectives and necessary adoptions for the achievement of inventions (Quinn et al., 290).

Leadership Implications in Comparison to Management and Real World Examples

Most companies have embarked on fostering leadership to nurture innovation and enact change for the maximization of competitiveness and profitability (Ivancevich & Matteson, 2011, 8). Some of the real world examples of these instances are topped by Apple’s Steve Jobs, who led the organization into achieving major milestones. Through Job's leadership, the company was able to foster talent and come up with revolutionary ideas that resulted in an unimaginable growth of the organization (Patterson et al., 2013, 5). The leader led the company to the creation of the first smartphone, which has revolutionized the mobile industry, resulting in the collapse of many giants, such as Blackberry (Cusumano, 2010, 12). The organization has become one of the largest organizations in the world based on revenue generation.

Based on products and market coverage, Google is one of the largest organizations today and touches the lives of almost all of the world's population (Rothaermel, 2015, 13). The company is popular for its working environment, with a culture that supports personal goals and targets of the employees. The company allows its employees to dedicate a day every week to working on their personal projects. It has fostered organizational growth, with the constant innovation and creativity of the organization’s employees (Gassmann, Enkel & Chesbrough, 2010, 218). The corporation continues to provide new products, leading in major technological initiatives that have transformed the world.

British Airways was undergoing major losses when they sought a new CEO to oversee regaining of profitability and stability within the organization. The new CEO noted the wastage of resources within the organization and advocated for organizational change (Quinn et al., 293). The first step taken by the CEO was communication of the plan to all relevant stakeholders, especially the employees of the corporation (Ustaömer, Durmaz, & Lei, 2015, 430). The CEO had planned to minimize organizational spending on the irrelevant workforce and therefore had to fire many workers. He notified them prior the sending off, and the organization was privatized, regaining stability and profitability. The move appeared risky and uninformed, but the results proved the need for change in an organization (Bolden & Gosling, 2006, 153).

Recommendations

As depicted, organizational change and innovativeness are key aspects of the growth and competitiveness of any organization. It is, therefore, crucial that companies adopt change aimed at maximizing their relevance and position in the market. Therefore, organizations should adopt good leadership to keep track of market changes and predict the unforeseen to enable them to maximize profitability. Leadership, unlike management, has no specific outlines and systems. Instead, it supports organizational growth and competitiveness through the adoption of change and innovation. Businesses should thus integrate management and leadership to come up with a strategy that allows for the adoption of leadership traits, but still maintains the need for business culture, which keeps the business in operation even after market crashes.

For maximization of profitability of an organization, it is vital that a business entity adopts innovation. The best approach towards incorporating innovation within an organization, is leading change through inspiration. Employees need motivation, and through leadership, and not management, an organization can maximize its effectiveness in adoption of innovation and creativity, which are vital for organizational success. It is also crucial that organizations seek like-minded employees, who will share the corporate values of the organization, and embark on change, innovativeness, and creativity. Some employees work by following orders and instructions and assess their productivity in regards to the achievement of the set targets by the boss. It is thus vital that companies hire people who share their goals and beliefs as it enables them to work together towards the achievement of set organizational targets.

As seen in the paper, Kotter’s 8-Step model for leading change is a vital tool for the enactment of organizational change. It is, therefore, important that an organization seeks the most effective tool for enacting change within the organization. Various change model tools are effective for various circumstances. Therefore, an organization should cover the models and assess their viability, prior adoption as the tool for the enactment of change within the organization. Lack of assessment of the available methods may result to settling for an ineffective tool, which results to a poor and unsuccessful enactment of organizational change within the company.

Conclusion

Conclusively, it is evident that leadership skills, unlike management skills, are the drivers of organizational change, innovation and creativity. Leaders enact change within an organization, while managers enable the running of the business and conduction of daily activities. An organization that fails to adopt change, innovation and creativity is prone to fail, owing to the high levels of competition and the dynamism of the market and industry. Leadership plays the vital role of the enactment of these three organizational objectives, and nurture employees energy and morale through constantly affirming the viability of the project and how it will benefit them on completion. It is thus clear that leadership, and not management determines the organization’s success in regards to adoption of change and innovation, as it nurtures talent and creativity amongst the organizational workforce. It results in increased organizational profitability, competitiveness, and stability, owing to the maintenance of market and industrial relevance, despite the various variations in consumer demand.