The Importance Of Effective Leadership Today

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In todays climate of complexity and change there is no ideal structure, strategy, or management approach that guarantees business success. Leadership provides the organisational rudder and when effective, it is pointed in the right direction; it is embracing; it is intelligent; and it is ethical.

Leadership is both a position and a process. The quality of leadership can make the difference between a mediocre and a great organisation. Leaders 'do' leadership effectively. They use the authority accorded to them in their position to engage in the process of effective leadership.

John P. Kotter outlines the processes involved in organizational leadership in his book A Force for Change : How Leadership Differs from Management. Kotter sees establishing direction and aligning people, motivating and inspiring people as the most important. He maintains that these three factors form the primary function of leadership and produce changes which relate to effective leadership.

Setting Direction

Effective leaders provide stewardship for the larger purpose that underlies the enterprise. They know where they want to go, and set the direction.

Setting a direction is inductive. Leaders gather a wide range of data and look for patterns, relationships, and linkages that help explain things. They establish and drive values, and construct a shared vision and strategy that embraces the interests of important constituencies including shareholders, customers, employees, and the community. These describe a business, technology, or corporate culture in terms of what it should become over the long term and articulate a feasible way of achieving this goal.

A leader is not only a visionary, but also a broad based strategic thinker who is willing to take risks while motivating people. Since change is a function of leadership, being able to create highly charged behaviour is essential for dealing with change and its associated barriers. Leaders live comfortably with ambiguity and complexity, and avoid simplistic solutions and 'spin' to appeal to short term interests.

Direction setting can lead to a lack of closure which is very disastrous to an inexperienced leader. In an effort to reduce exposure to this pitfall, effective leaders should exhibit five consistent traits:

(1) Constantly challenge the status quo by asking simple questions and setting the atmosphere for new alternatives.

(2) Search for answers for these queries (not give them) and test them against a wide-array of information and proven systems or mechanisms.

(3) Exhibit decisiveness, regardless of the endless, broad, and in depth amount of data available to them. Hence, they do not succumb to "analysis paralysis". Leaders are willing to and even abstinent about eliminating self-imposed constraints to solve problems.

(4) Display flexibility, and not rigidity, concerning decision-making. Leaders are willing to revisit a decision, if necessary, and re-structure it.

(5) Leaders who exhibit these traits in setting directions produce the desired actions of the vision and strategies. Direction setting and planning are distinct efforts yet interdependent components. Without good planning, a vision can lose touch with reality over time. Without solid direction setting, one loses the focus essential for intelligent planning.

Effective business visions regularly have an almost mundane quality, usually consisting of ideas that are already well known. For example, when CEO Jan Carlzon articulated his vision to make Scandinavian Airlines System (SAS) the best airline in the world for the frequent business traveller, he did not introduce something new to the airline industry. Business travellers fly more consistently than other market segments and are generally willing to pay higher fares. Thus, focusing on business customers offers an airline the possibility of high margins, steady business, and considerable growth. But in an industry known more for bureaucracy than vision, no company had ever combined these simple ideas and dedicated itself to implementing them. When SAS did, it worked.

Aligning Constituencies:

A central feature of modern organizations is interdependence, where no one has complete autonomy, where most employees are tied to many others by their work, technology, management systems, and hierarchy. These linkages present a special challenge when organizations attempt to change. Unless many individuals line up and move together in the same direction, people will tend to fall all over one another. What executives need to do is to align people.

Aligning is more of a communications challenge than a design problem. Aligning involves talking to many individuals, including a manager's subordinates, bosses, peers, as well as suppliers, government officials, and even customers.

Anyone who can help implement the vision and strategies or who can block implementation is relevant. For example, although the first decade since the establishment of Eastman Kodak saw a growth of nearly $ 1 billion in revenues, the costs were high, profits were hard to find and problems were nearly everywhere. The employees knew there were problems but they couldn't agree on solutions. Bob Crandall the head of the engineering and manufacturing organization set up many vehicles to emphasize his vision, of becoming a world class manufacturing operation, and to align people to it. Results begun to appear in 6 months and the successes made the vision more credible and helped get more people on board. Quality and productivity increased while costs and inventory levels decreased.

An effective leader will align people by using a good, open communication process which pulls people together in informal relationships to attain the final goal of direction commitment. The benefit then is that alignment empowers people to initiate action since it is easier when consensus is prevalent on vision and strategies.

Another big challenge in leadership efforts is credibility-getting people to believe the message. Many things contribute to credibility: the track record of the person delivering the message, the content of the message itself, the communicator's reputation for integrity and trustworthiness, and the consistency between words and deeds.

Finally, aligning leads to empowerment in a way that organizing rarely does. One of the reasons some organizations have difficulty adjusting to rapid changes in markets or technology is that so many people in those companies feel relatively powerless. They have learned from experience that even if they correctly perceive important external changes and then initiate appropriate actions, they are vulnerable to someone higher up who does not like what they have done.

Alignment helps overcome this problem by empowering people in at least two ways. First, when a clear sense of direction has been communicated throughout an organization, lower-level employees can initiate actions without the same degree of vulnerability. As long as their behaviour is consistent with the vision, superiors will have more difficulty reprimanding them. Second, because everyone is aiming at the same target, the probability is less that one person's initiative will be stalled when it comes into conflict with someone else's.

Motivating & Inspiring:

When the direction has been set and the people have been aligned to the task, the group must be motivated and inspired. Since change is the function of leadership, being able to generate highly energized behaviour is important for coping with the inevitable barriers to change.

Motivation and inspiration energize people, not by pushing them in the right direction but by satisfying basic human needs for achievement, a sense of belonging, recognition, self-esteem, a feeling of control over one's life, and the ability to live up to one's ideals. Such feelings touch us deeply and elicit a powerful positive response.

For a leader to effectively energize people, they must be able to communicate their vision and strategies in a way that appeals to the fundamental values of the target group, otherwise referred to as "cultural-functional humility". By stressing the values of the group (possibly even above their own), leaders can achieve the task at hand, resulting in a shared vision with greater satisfaction and more meaning.

The time and energy required for effective communication are directly related to the clarity and simplicity of the message. Communication seems to work best when it is so direct and so simple that it has a sort of elegance. Also, the most carefully crafted messages rarely sink deeply into the recipient's consciousness after only one pronouncement. As a result, effective information transferral almost always relies on repetition.

Often the most powerful way to communicate a new direction is through behaviour. When the top five or fifty people all live the change vision, employees will grasp it better. When they see top management acting out the vision, a whole set of troublesome questions about credibility tends to evaporate.

The communication of vision is often a difficult activity, and should not be underestimated as it can easily turn into a one-way broadcast in which useful feedback is ignored and employees are made to feel unimportant. In highly successful change efforts, this rarely happens, because communication always becomes a two-way endeavour. Encouraging people to challenge the vision is an essential method of helping to answer all the questions that occur in a transformation effort.

Another important motivational technique is to support employee efforts to realize the vision by providing coaching, feedback, and role modelling, thereby helping people grow professionally and enhancing their self-esteem. Good leaders recognize and reward success, which not only gives people a sense of accomplishment but also makes them feel like they belong to an organization that cares about them. When all this is done, the work itself becomes intrinsically motivating.

Another factor which distinguishes effective leaders from their lesser counterparts is their ability to be astute organizational politicians, not of the Machiavellian sort, but of the enlightened, sensitive type who put the company above his/her own personal gain. This was never truer then now when CEO's from TYCO, WorldCom, ENRON and others are under fire for just such faults.

The pre-dominant leadership in Procter & Gamble is that of participatory, delegating, and empowerment. The decision making process has been decentralized in such a way that the middle level management does not have to wait for headquarters approval and funding in order to embark on certain key innovative projects.  Because of this empowerment, it is much easier for employees to customize products and customer services internally. The success of this giant corporation is closely tied to its leadership style.

Good leaders motivate people in a variety of ways. First, they always articulate the organization's vision in a manner that stresses the values of the audience they are addressing. This makes the work important to those individuals.

The more that change characterizes the business environment the more that leaders must motivate people to provide leadership as well. When this works, it tends to reproduce leadership across the entire organization, with people occupying multiple leadership roles throughout the hierarchy. This is highly valuable, because coping with change in any complex business demands initiatives from a multitude of people. Nothing less will work.

In short, effective leaders create a future, enrol others in the journey forward, and seek ongoing development in themselves and others.

Leaders vs managers

The debate between leadership and management has been raging for a number of years. Leadership and management are two distinctive and complementary systems of action. Each has its own function and characteristic activities. Both are necessary for success in an increasingly complex and volatile business environment.

Managers and leaders are two very different types of people. So what are the differences between managers and leaders? Managers' goals arise out of necessities rather than desires. Leaders, on the other hand, adopt personal, active attitudes toward goals. They look for the opportunities and rewards that lie around the corner, taking risks to in order to achieve their visions.

Companies manage complexity first by planning and budgeting-sensing targets or goals for the short term future, establishing detailed steps for achieving those targets, and then allocating resources to accomplish those plans. By contrast, leading an organization to constructive change begins by setting a direction - developing a vision of the long term future along with strategies for producing the changes needed to achieve that vision.

Management develops the capacity to achieve its plan by organizing and staffing-creating an organizational structure and set of jobs for accomplishing plan requirements, staffing the jobs with qualified, specialized individuals, communicating the plan to those people, delegating responsibility for carrying out the plan, and devising systems to monitor implementation. The equivalent leadership activity, however, is aligning people. This means communicating the new direction to those who can create coalitions that understand the vision and are committed to its achievement.

Finally, management ensures plan accomplishment by controlling and problem solving- monitoring results versus the plan in some detail, both formally and informally, by means of reports, meetings, and other tools; identifying deviations; constraining the energy; and then planning and organizing to solve the problems and to prevent negative outcomes. But for leadership, achieving a vision requires motivating and inspiring-keeping people moving in the right direction, despite major obstacles to change, by appealing to basic but often untapped human needs, values, and emotions. By inspiring subordinates and firing up the creative process with their own energy, leaders promote positive outcomes.

Companies need both managers and leaders to excel. Many companies have managed to create the right environment for leaders to flourish. PepsiCo produces some of the most sought after executives in the world today. Why? Because PepsiCo has discovered that the ultimate competitive advantage lies in tapping the natural tension between management and leadership to balance and integrate all the success variables into one dynamic whole. PepsiCo's former CEO, Wayne Calloway, knew that his organization's success hinges equally on the minds of his managers and the souls of his leaders spent so much of his time working toward the development of both in his organization that his thinking had spread far beyond his own direct reporting relationships. Throughout the organization, managers strove to nurture leaders as well as other managers, and leaders strove to develop managers as well as other leaders.

John Kotter pointed out that "Leadership and management are two distinctive and complementary systems of action…… Both are necessary for success in an increasingly complex and volatile business environment." Organizations need both managers and leaders to succeed, but developing both requires a reduced focus on logic and strategic exercises in favour of an environment where creativity and imagination are permitted to flourish.


Despite the increasing importance of leadership to business success, the on-the-job experiences of most people actually seem to undermine the development of the attributes needed for leadership. Nevertheless, some companies have consistently demonstrated an ability to develop people into outstanding leader-managers.

Recruiting people with leadership potential is only the first step. Equally important is managing their career patterns. In order for an organization to create sufficient leadership or a leadership talent pool internally, the organization must attract enough people who have potential and desire. This can be accomplished through many different avenues such as the hiring process, creating internal leadership training programs (i.e General Electric's Groton Leadership Facility), providing role models and mentors or utilizing academia. The key underpinning to successful leadership organizations is creating and maintaining the right cultural atmosphere.

Firms need to provide people with difficult tasks that "cry-out" for leadership qualities while placing them in challenging roles which stretch their abilities and most importantly, organizations need to support people irrespective of success or failure. Leaders almost always had opportunities and were encouraged early in their careers to actually try to lead, to take a risk, and to learn from both triumphs and failures. Such learning seems essential in developing a wide range of leadership skills and perspectives. These opportunities also teach people something about both the difficulty of leadership and its potential for producing change.

Corporations that do a better-than-average job of developing leaders put an emphasis on creating challenging opportunities for relatively young employees, in many businesses, decentralization is the key. By definition, it pushes responsibility lower in an organization and in the process creates more challenging jobs at lower levels. Johnson & Johnson, 3M, Hewlett-Packard, General Electric, and many other well-known companies have used that approach quite successfully.

Some of those same companies also create as many small units as possible so there are a lot of challenging lower-level general management jobs available. Sometimes these businesses develop additional challenging opportunities by stressing growth through new products or services. Over the years, 3M has had a policy that at least 25% of its revenue should come from products introduced within the last five years. That encourages small new ventures, which in turn offer hundreds of opportunities to test and stretch young people with leadership potential.

But developing people for important leadership positions requires more work on the part of senior executives, often over a long period of time. Managers should be role models, infusing high expectations and motivating people to reach higher. To encourage managers to participate in these activities, well-led businesses tend to recognize and reward people who successfully develop leaders. When told that future promotions will depend to some degree on their ability to nurture leaders, even people who say that leadership cannot be developed somehow find ways to do it.

Such strategies help create a corporate culture where people value strong leadership and strive to create it. Just as we need more people to provide leadership in the complex organizations that dominate our world today, we also need more people to develop the cultures that will create that leadership, institutionalizing a leadership-cantered culture is the ultimate act of leadership.

Good leaders motivate people in a variety of ways. By articulating the organization's vision in a manner that stresses the values of their audience, they make the work important to those individuals. The more that change characterizes the business environment the more that leaders must motivate people to provide leadership as well. When this works, it tends to reproduce leadership across the entire organization, with people occupying multiple leadership roles throughout the hierarchy. This is highly valuable, because coping with change in any complex business demands initiatives from a multitude of people.

In retrospect, leadership is about change while management is about sustainability. For organizations to compete in the new millennium they will need superb leadership talent which can only come from a learning organization which promotes and supports a culture conducive to the attainment of shared visions and strategies, while creating value and maximizing customer satisfaction.