[Book Manuscript Draft]
The New Business Environment
Expansion and Benchmarking
Nature of Human Behavior
Human Networking & Human Capital
Rules and Principles of Management
Strategic Management Rooted in Education
Change in Today’s Organization
Technology to Enable Strategic Management
Strategic management is an elusive term that has as its basis various theories of leadership and the associated various factors that comprise the leader that is effective in leading the organization to success. This chapter provides a review of previous examinations of leadership theory and the formation of leaders in today’s organizations as well as providing a brief review of the factors that impact strategic leadership in the organization. This chapter sets the stage for a study of what factors and elements serve to formulate, affect, and drive strategic management within the organization and more importantly how these factors, elements, and drivers affect strategic management in the globalized and highly technologically enabled contemporary environment. This chapter is simply a review of what this book will examine more deeply and thoroughly and that being what comprises and serves to form successful and effective organizational strategic management in today’s globalized business environment.
The New Business Environment
Historically, strategic management has had a localized focus and strategy was formulated based upon local beliefs about management techniques, which were derived from tradition and established organization culture. However, globalization has shifted the focus of strategic management to a broader perspective that is inclusive of a diversity of considerations including cultural differences in management strategy. Buytendijk (2009) defines globalization as “the integration of the world’s culture, economy, and infrastructure driven by the lowering of political barriers to transnational trade and investment, and by the rapid proliferation of communication and information technologies.”
Globalization is a term that is often used to refer to the impact of the free-market on the economies including local, regional, and national. One of the effects of globalization and one of the new considerations in strategic management is that of outsourcing. Outsourcing is economical because the work is contracted out and costs less. This changes the focus of strategic management greatly and the necessity of reduction of costs results in the shift in focus in managing the organization and its resources, particularly the resource of human capital within the organization.
Expansion and Benchmarking
Today’s organizations have the potential for expansion into other geographic regions and this creates threats to the organizations already existing due to new entrants into the market and increases the rivalry among already existing firms. In addition, globalization has increased the bargaining power of consumers and buyers and changes the way that businesses are required to compete in the globalized market. This also makes a requirement of evaluating competitors more thoroughly to understand the organization’s needed policies and procedures that lead to success. This may include evaluation of the organization’s products and services in order to understand how the organization can improve its own products and services to gain a competitive advantage in the global marketplace. This process is known as benchmarking and is a process that provides the organization with benefits and leads to education of company executives on methods of product improvement as well as improvement of business operations and the areas in the organization that requires improvement in strategy.
Today’s organizations operate in a business environment characterized by variations in culture, religion, as well as variations in economic conditions in the marketplace. Therefore, marketing operations have to be sensitive to these variations and adjust accordingly, however; these adjustments have to be fully informed by research into the differences existing in global cultural, religious and local traditional factors. The organization’s mission and vision is critical in directing the organization toward goals that are achievable and principles by which to guide the organization in reaching those goals. However, all too often the organization’s goals and mission is viewed simply as rhetoric with no real or material meaning.
As stated by Buytendijk (2009) the problem that exists with the majority of organizational mission statements is “that they are often not implemented, because system goals usually supersede them.” (p.192) The connection or relationship between the mission of the organization and what they witness on a daily basis in the organization are far too different and inconsistent. Because the mission statement is often misaligned the organization’s employees hold a cynical view of the mission and become indifferent to the organization’s stated mission. There has been a failure on the part of organization’s to properly invest in the organization’s human or social capital.
Nature of Human Behavior
Strategic management must take into account the nature of human behavior in the strategic management initiative as the human factor is of primary importance in optimization of business processes and in the product and service line conception, development, and production processes. There are various schools of thought on the issue of human behavior and motivation and this includes the work of Plato, Thomas Hobbes, Hume, and others. While variations do exist in the approaches and the theoretical underpinnings, today’s strategic manager will benefit from the knowledge of this various approaches and theories in the strategic management initiative.
Human Networking & Human Capital
There are in fact books recently published on what are termed ‘human networks’ held to be inherently important in the consideration of human capital in today’s globalized world. Human capital concerns are those driven by such as globalization, the knowledge-based economy, and the rapid evolution of technology all of which have served to motivate the organization in seeking new methods of gaining and then maintaining competitive advantage.
Semantically speaking the concept of human or social capital is a combination of ‘human’ and ‘capital’ with the capital speaking of the factors of production used in the creation of goods and services and which are of the nature that are not consumed in a significant manner in the process of production. The human is the ‘subject’ that works in directly the economic activities taking place including the production of goods, the consumption of goods and finally the transaction of those goods. From this view, human capital has the meaning of being one of the elements of production able to generate values that are added-in by input.
Rules and Principles of Management
While the rules of management and its principles remain the same the people with whom the management and leadership of the organization interact with in foreign countries presents a different landscape especially as noted by Barlett, Ghoshal and Beamist (2008) that organizations on the global level result in changes that are affected by three primary factors including the dominant cultural lifestyles of individuals in the organization, change agents and leaders in strategic opinion. The reason for the importance of these considerations is the impact of the various cultures, genders, races, and ethnicities on the organization. The ways in which these factors affect the organization and its strategies are important for the strategic management initiative and important for the manager to have knowledge of and to understand.
Total Quality Management
Total Quality Management (TQM) is a structured process used in the establishment of long-range goals in the organization and at its highest levels and the means that can be utilized in reaching those goals. This philosophy is one that is centered on the customer and involves all members of the organization both management and employees seeking to systematically determine the problems in terms of their root causes and to then effectively manage improvement addressing these problems.
The principles of Total Quality Management are used in promoting efficiency in the operation in order to drive the organization’s efficiency and profitability. Within the principles of Total Quality Management is the Six-Sigma approach and which is a tool that is valuable in managing the company’s improvement in productivity and performance.
This tool is primarily used in the quality management initiative and has been demonstrated to positively impacts the organization’s performance and the quality of the product produced by the organization. This is a time-consuming process that is based upon a methodology that is highly definitive and that involves ongoing monitoring and measuring of the results in comparison to the metrics used for calculation of the defect rate of the product during the manufacturing process.
Innovation is also cited as being key in the competitive advantage gain for organizations and specifically in the financial situation characterized by global change and rapid expansion in IT resulting in the necessity to reexamine and re-identify the creation and management of innovation. This has resulted in the increasing importance of external knowledge and this accelerates the need for innovation that is new in the organization. Studies on innovation of organizations have been centered in transitions within the organizations and on the evolution of innovation.
There is a need however for additional studies in the area of determination of specific practices that supports ongoing innovation and financial outcomes that are improved. There are many unknowns in the area of leadership of innovation and research is needed for identifying methods for coping with issues relating to innovation. Expansion of the organization on a global scale requires restructuring of the organization and this is a redesign that reaches outside of the company to the global scale with the necessary control levels outgoing from the domestic organizational location. An IT system has the capacity to enable this level of global control from the domestic operation with the provisions of enhanced instantaneous communication. The provision of instant communication is of optimum importance in the environment characterized by uncertainty where the organization is operating in a market that is not familiar and with unfamiliar conditions.
Another aspect of the challenges to globalization are the cultural barriers that some companies have experiences and this impacts the organizational policies and processes that are instituted to overcome these challenges. This challenge may at first glance appear to be of a minor nature however, such challenges loom large in terms of organizational efficiency, effectiveness, and profitability because failure to overcome such cultural challenges results in poor performance not only in the market but also in terms of product and service production of the organization. The organization’s mission statement should pointedly address and contribute to the alignment of the organization and mission statements that are credible and such that allows for the future growth of the organization and the company’s success and opportunity.
Strategic Management Rooted in Education
Strategic management is critically rooted in education of managers that enables them to critically analyze information and data and vests in the individual the ability to engage in applied or evidence-based research. Through interaction with peers during educational pursuits, the individual learns leadership behavior and acts and instills integrity in the individual as they become empowered to align meaning with thought and action. The thoughts and actions are then combined with and support by new knowledge that is acquired in the learning process and which can then be converted into the leadership practice. This is a core principle of true leadership behavior.
During the educational process the future leaders learns to receive constructive feedback and this contributes to the individual’s growth and learning. The individual learns to be receptive to feedback from their peers and instructors and this serves to enable them as future leaders. Feedback serves to stimulate the thought process and further is a tool that can be used in dissemination of information and used as a catalyst for acquisition of additional knowledge. This is important in view of strategic management and most specifically in view of what is termed ‘transformational leadership’, which is noted in the work of Bass (1985, 1997) as being a “multi-dimensional phenomenon.” Transformational leadership speaks of the ideal leader who leads through inspiring and motivating those whom they lead.
Change in Today’s Organization
Another aspect of strategic management in today’s organization is the factor of ‘change’ because change is one of the only absolutes in today’s globalized business world and marketplace. Change can be attributed to mean ‘transformation’ and transformation of organizational strategic management is largely at focus by many organizations and leaders due to the nature of the business environment in today’s world. Change is the norm for today’s organizations due to the rapidly changing nature of business, the globalization of business, and the shifting economics of the global economy.
Transformation is a process that cannot be regimented out to independent business units within the organization but instead is an organization-wide initiative and one that begins with the leadership of the organization. Transformation of the organizations’ leadership begins with brainstorming among leaders and with critical self-reflection on the part of the leaders of the organization as to what needs to be changed as well as what should and must be changed in order for the organization to be competitive in today’s globalized business environment. This type of change involves setting aside much of traditionally and historically held beliefs about leadership and strategic management in the organization.
Transformational change has been demonstrated to bring about necessary change even when other change initiatives have floundered and then failed. One example of this type of change took place among a group of domestic violence offenders in the State of Florida. These individuals had been exposed to various types of programs with none of the programs enabling these individuals to make the necessary changes in their lifestyle and in their behavior. However, with the transformational change that took place in this program these men were able to overcome the problems that had resulted in their commission of domestic violence.
This transformational change was accomplished through mentoring with one another and supporting the change process that these individuals were seeking thereby transforming and changing the lives of these individuals. What was needed and accomplished was a complete and total change or a transformation of these individuals and their behavior. Therefore, organizational leadership transformation would necessarily make a requirement of mentoring among those in leadership positions and a brutal self-honestly and deep level of critical reflection in order to identify and then emphasize what needs to be changed and only then can a transformational process among organizational leadership begin.
The transformational leadership change initiative however in the American business world presents a challenge in that the American approach to management is one characterized by ‘control’ and it is a control that is held at the higher levels of the organization. It is necessary to relinquish this control at the higher levels for transformational change in leadership to take place within the organization. This centralization, which characterizes the American business world, has as a result the overloading of leadership at the top of the organization with everyday activities such as resources and hiring and little time is available for focus on strategic decision making processes and planning for future activities of the organization.
Today’s organization as well as the organization of tomorrow will necessarily become more decentralized in terms of authority and control within the organization and such that not only allows but also that enables individual autonomy. There are four factors associated with transformational leadership which are communication-based factors and include the communication of enthusiasm and the communication of a vision of the result of the change and direct consideration of the individual through interaction that is direct and which serves to stimulate the thinking and communication of ideas as cited in the work of Dumdum, Lowe, and Avolio (2002).
Transformational leaders have been found to be more effective and under analysis possess certain factors including higher levels of morality and of self-sacrifice and ethics. Transformational leaders empower and motivate those whom they lead and put their own interests aside placing the group interests first. The most effective leaders are those with transformational and transactional leadership skills. There are various models of leadership that are used by today’s strategic management in the organization.
The following chapters in this book will delve into these various leadership styles, which include but are not limited to such as transformational, transactions, contingency, and other models of leadership that are effective in leading today’s organizations. These leadership models can be used singularly or in combination as effective forms of leadership in the organization. Charismatic leadership is another leadership model that is very similar to the transformational leadership model and is one that is comprised by the combination of the capacities of the leader including such as self-confidence and moral conviction as well as in the capacity to articulate goals and visions for the organization.
Leadership theory was first researched around 1910 in the attempt to ascertain what traits of personality, intelligence or other factors were associated with those who lead in order to distinguish the qualities of future leaders. However, researchers in 1948 determined that there were not any specific common traits that could be used to define leaders. Following World War II other researchers set out to attempt to determine the various types of leadership styles or behavior that could identify leader and provide insights for effectiveness of leaders. These studies were such that made predictions about the relationships between certain leadership styles and productivity however, these studies were again unsuccessful in providing an explanation for the effectiveness of leadership.
Research conducted later started by examining leadership styles as a function of performance and was focused on an examination of the interactions between leaders and those whom are being led. The primary focus in the late 1980s was the contingency model approach and which emphasized the significance of any given situation including such as the nature of the environment, the nature of tasks, as well as power distribution based on power theory in which the functions of leadership take place. This was the dominant theme in theories including Fiedler’s Theory, the Vroom and Yetton’s Decision Theory and the Path Goal Theory. It was noted that each of this theories are leadership-oriented theories since the focus is the actions and attitudes of the leader.
The most recent endeavors to study leadership theories was such that built upon the earlier theories stressing the organization’s sociological environment and the addition of the factor of the leader’s transformational ability in assisting organizational change. Various leadership theories and styles will be examined in the chapters which follow as well as the use of these theories and leadership styles in combination in the attempt to determine which leadership theories are the most pertinent and which leadership styles whether used alone or in combination are the most useful in leading in today’s organization in light of globalization and the use of technological innovation in this endeavor. The following chart shows the various factors that serve to formulate and to impact strategic management.
Elements that Assist in Formulating and that Serve to Impact Organizational Strategic Management
Company Mission, Vision, and Values
Technology to Enable Strategic Management
It is certain that with the amount of technology available to strategic management in today’s organization that there are IT programs that serve to enable and empower the level of strategy that can be utilized by management in the organization. Information technology programs can be utilized for the purposes of communication, tracking inventory, shipping, and customer services as well as in project planning and development and implementation. There are also many other features available in IT programs for assisting any strategic management initiative and due to the prevalence of technology is all aspects of the organization’s workings, this is an area that is critical to examine in any study of the organization and most particularly in the area of strategic management.
Summary of Chapter
Chapter One has set the discussion for the chapters to follow in this book and provides a general overview of where the book is headed in terms of what this work intends to examine in relation to the study and dissemination of what is known as strategic management. This work does not hail from any specific school of thought or theoretical framework and neither does this work ascribe to any specific leadership model or models but instead this work seeks to examine all known theories of leadership as well as all known leadership models with efficacy. This work further seeks to gain an understanding of how certain theories and models or how a combination of theories and models results in the most optimal strategic management possible in today’s organizations in what is a globalized and highly technologically enabled environment. Further, this work seeks to identify the characteristics of the individual who is in the role of leadership that are most effective for use in the strategic management of an organization. Naturally, this will include an extensive review of the technological attributes that are utilized by today’s strategic managers in reaching organizational goals and in the realization of strategic management of resources that leads to an overall profitability of the organization. The Chapters, which follow, will conduct a study of leadership theory, leadership models, information technology programs that assist strategic management as well as other relevant topics that contribute to the study and dissemination of strategic management.
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