Strategic Leadership, Power, and Ethics in Organizational Change

Strategic Leadership

The process of transforming organizations from their current state to what the leader envisions them to become, involving dissatisfaction with the status quo and a vision for change.

Three Interdependent Leadership Activities

The "three-legged stool" of strategic leadership: 1) Setting a direction, 2) Designing the organization, and 3) Nurturing a culture dedicated to excellence and ethical behavior.

Setting a Direction

A leadership activity involving scanning the environment to develop a strategic vision that provides a clear future direction and framework for the firm's mission and goals.

Diversity

Equity, and Inclusion (DEI), A crucial modern trend in "Setting a Direction" that focuses on creating an inclusive culture where all employees feel appreciated.

Designing the Organization

A leadership activity involving building mechanisms (structures, teams, systems, and processes) to implement the leader's vision and strategies.

Nurturing a Culture

A leadership activity requiring managers to accept personal responsibility for developing and sustaining an organizational culture of ethics and excellence.

Barriers to Change

Factors that make organizations prone to inertia and slow to learn, including vested interests, systemic barriers, behavioral barriers, political barriers, and time constraints.

Vested Interests in the Status Quo

A barrier to change stemming from the human tendency to be risk-averse and resistant to change to protect one's own position or power.

Escalation of Commitment

The tendency for individuals to continue investing resources in bad decisions despite negative feedback, often driven by vested interests.

Systemic Barriers

Barriers to change caused by an organization's design, structure, and reporting relationships that impede the proper flow and evaluation of information.

Behavioral Barriers

Barriers to change caused by managers viewing issues from a biased or limited perspective based on their specific education, training, and work experiences.

Political Barriers

Conflicts arising from power relationships within an organization, manifested as resource hoarding, information blocking, or petty interpersonal differences.

Personal Time Constraints

A barrier to change where operational decisions consume all available time, limiting a leader's ability to think strategically.

Gresham's Law of Planning

The principle stating that operational decisions will drive out the time necessary for strategic reflection and thinking.

Power

A leader's ability to get things done, persuade people to do things they otherwise would not do, and influence other people's behavior.

Organizational Bases of Power

Power that a person wields specifically because of their formal management position: Legitimate, Reward, Coercive, and Information power.

Legitimate Power

Power derived from organizationally conferred decision-making authority and exercised by virtue of a manager's position.

Reward Power

Power based on the ability of the manager to confer rewards (money, status, promotion) for positive outcomes.

Coercive Power

Power based on the use of fear of punishment for errors of commission or omission.

Information Power

Power arising from a manager's access, control, and distribution of information that is not freely available to everyone else.

Personal Bases of Power

Power derived from a leader's specific personality characteristics and behavior: Referent and Expert power.

Referent Power

Power sourced from a subordinate's identification with, liking, or admiration of the leader (often associated with charisma).

Expert Power

Power sourced from the leader's special knowledge and expertise that subordinates depend on to perform their jobs.

Emotional Intelligence (EI)

The capacity for recognizing one's own emotions and those of others; consists of self-awareness, self-regulation, motivation, empathy, and social skill.

Self-Awareness (EI)

The ability to know one's own emotions, drives, values, and goals, and recognize their impact on others.

Delphic Oracle

The ancient source of the advice "Know thyself," which relates to the Self-Awareness component of Emotional Intelligence.

Self-Regulation (EI)

The ability to control or redirect disruptive impulses and moods, and the propensity to suspend judgment to think before acting.

Motivation (EI)

A passion to work for reasons that go beyond money or status, characterized by energy, persistence, and a love of learning.

Empathy (EI)

The ability to understand the emotional makeup of other people and treat them according to their emotional reactions; critical for retaining talent.

Social Skill (EI)

Proficiency in managing relationships and building networks; often described as "friendliness with a purpose" to move people in a desired direction.

Potential Drawbacks of High EI

Leaders may over-identify with others (making tough decisions hard), become overly critical of others' shortcomings, or allow passion to close their minds to reality.

Learning Organization

An organization capable of adapting to change, fostering creativity, and questioning basic assumptions to refresh strategies.

Five Elements of a Learning Organization

1) Inspiring and motivating with a mission, 2) Empowering employees at all levels, 3) Accumulating and sharing internal knowledge, 4) Gathering and integrating external information, 5) Challenging the status quo and enabling creativity.

Heroes-and-Drones Syndrome

A failure in empowerment where the value of those in powerful positions is exalted while the value of other employees is diminished.

Benchmarking

The process of seeking out best examples of a particular practice to improve performance.

Competitive Benchmarking

Benchmarking where the search for best practices is restricted to competitors (e.g., comparing auto parts to rival auto parts).

Functional Benchmarking

Benchmarking where the search for best practices looks at any industry (e.g., comparing a call center to a generic best-in-class call center).

Culture of Dissent

A norm where dissenters can openly question a superior's perspective without fear of retribution, fostering creativity and risk-taking.

Forums for Failure

Formalized mechanisms (like GE's "Imagination Breakthroughs") where lessons from failures are shared to encourage risk-taking and learning.

Ethics

A system of right and wrong that assists individuals in deciding whether an act is moral or socially desirable.

Individual vs Organizational Ethics

Ethics failures often reflect cultural norms and systems, not just "rogue" individuals.

Compliance-Based Ethics Program

An ethics approach driven by legal counsel that focuses on preventing, detecting, and punishing legal violations through external control and fear of punishment.

Integrity-Based Ethics Program

An ethics approach driven by management that combines concern for the law with an emphasis on managerial responsibility and self-governance.

Corporate Credo

A statement of beliefs and norms that provides specific guidelines for decision-making and helps employees refuse to commit unethical acts.

Role Models (Ethics)

Leaders whose actions set the tone for the organization; they must be consistent in words and deeds ("walk the talk") to be effective.

Sarbanes-Oxley Act of 2002

Legislation that provides legal protections for whistleblowers in public companies and establishes criminal penalties for executives who retaliate against them.

Texas Instruments Ethics Quick Test

A tool for employees to evaluate decisions: Is it legal? Is it consistent with values? Will you feel bad? What would the public think?

Inner Gyroscope

A term used by Raytheon to describe the internal ethical principles they look for in leaders.

Dark Side of Competition

The phenomenon where intense competition increases the likelihood of unethical or illegal behaviors (e.g., falsifying data).

New York Emission Tests

Study showing that facilities with more local competitors were more likely to pass cars with high emissions to avoid losing customers.