Strategic Thinking and Strategic Leadership Abstract The purpose of the study is to evaluate and discuss the concepts of strategic thinking and strategic leadership to gain competitive advantage for organizations. For this, every aspect related to strategy is discussed. The study starts with introducing the concept of strategy, strategic thinking, strategy analysis, strategic leadership, strategic implementation and learning organization.
Thus, the challenge to managers is to decide on strategies that provide advantages that can be sustained over time. Introduction to Strategy The myriad activities that go into creating, producing, selling, and delivering a product or service are the basic units of competitive advantage. Operational effectiveness means performing these activities better—that is, faster, or with fewer inputs and defects—than rivals.
But from a competitive standpoint, the problem with operational effectiveness is that best practices are easily emulated. As all competitors in an industry adopt them, the productivity frontier—the maximum value a company can deliver at a given cost, given the best available technology, skills, and management techniques—shifts outward, lowering costs and improving value at the same time. Such competition produces absolute improvement in operational effectiveness, but relative improvement for no one.
And the more benchmarking that companies do, the more competitive convergence you have—that is, the more indistinguishable companies are from one another. Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways. Three key principles underlie strategic positioning. 1. Strategy is the creation of a unique and valuable position, involving a different set of activities.
Strategic position emerges from three distinct sources:serving few needs of many customers (Jiffy Lube provides only auto lubricants)serving broad needs of few customers (Bessemer Trust targets only very high-wealth clients)serving broad needs of many customers in a narrow market (Carmike Cinemas operates only in cities with a population under 200,000) 2. Strategy requires you to make trade-offs in competing—to choose what not to do. Some competitive activities are incompatible; thus, gains in one area can be achieved only at the expense of another area.
For example, Neutrogena soap is positioned more as a medicinal product than as a cleansing agent. The company says “no” to sales based on deodorizing, gives up large volume, and sacrifices manufacturing efficiencies. By contrast, Maytag’s decision to extend its product line and acquire other brands represented a failure to make difficult trade-offs: the boost in revenues came at the expense of return on sales. 3. Strategy involves creating “fit” among a company’s activities. Fit has to do with the ways a company’s activities interact and reinforce one another.
For example, Vanguard Group aligns all of its activities with a low-cost strategy; it distributes funds directly to consumers and minimizes portfolio turnover. Fit drives both competitive advantage and sustainability: when activities mutually reinforce each other, competitors can’t easily imitate them. When Continental Lite tried to match a few of Southwest Airlines’ activities, but not the whole interlocking system, the results were disastrous. Strategy Must Be Distinctive, Focused, and Values-Based.
A focused and distinctive strategy for delivering value to a targeted customer segment is essential for sustained competitive advantage. A focused strategy freed management to hire only people who were aligned with low-cost and friendly service. Its organizational design, operating system, and human resource policies were intended to compete with the car, bus, and train travel typically used by leisure travelers. Strategic Thinking Strategic thinking, according to the National Defense University, is a different way of approaching how we think.
In the book, Becoming a Strategic Leader, Richard Hughes and Katherine Beatty define strategic thinking as “the collection, interpretation, generation, and evaluation of information and ideas that shape an organization’s sustainable competitive advantage. ”Moreover, according to T. Irene Sanders, author of Strategic Thinking and the New Science, strategic thinking involves the synthesis of information to identify issues, connections, and patterns. This synthesis involves one’s intuition, judgment, creativity, and the “soft underbelly of the organization more than quantifiable measures. 1 In short, strategic thinking involves looking at emerging trends, identifying whether or not they represent opportunities or threats to the organization, and developing an organizational response to take advantage of the potential opportunity or mitigate the threat. The ability to do this faster and more effectively than others gives the organization a competitive advantage. The Liedtka Model of the Elements of Strategic Thinking Following the Mintzberg model, Liedtka (1998) developed a model which defines strategic thinking as a particular way of thinking, with very specific and clearly identifiable characteristics.
Figure 1 illustrates the five elements of strategic thinking. Figure 1: Elements of Strategic Thinking The first element is a systems perspective. A strategic thinker has a mental model of the complete system of value creation from beginning to end, and understands the interdependencies within the chain. Peter Senge (1990) also stresses the significance of mental models in influencing the behavior. The systems perspective enables individuals to clarify their role within the larger system and the impact of their behaviour on other parts of the system, as well as on the final outcome.
This approach addresses, therefore, not only the fit between the corporate, business, and functional levels of strategy, but very importantly, the person level. According to Liedtka (1998): It is impossible to optimize the outcome of the system for the end customer, without such understanding. The potential for damage wrought by well-intentioned but parochial managers optimizing their part of the system at the expense of the whole is substantial.
Thus, from a vertical perspective, strategic thinkers see the linkages in the system from multiple perspectives and understand the relationship among the corporate, business, and functional levels of strategies to the external context, as well as to the personal daily choices they make. From a horizontal perspective, they also understand the connections across departments and functions, and between suppliers and buyers. The second element of strategic thinking is that it is intent-focused and intent-driven.
Liedtka (1998) puts it this way: Strategic intent provides the focus that allows individuals within an organization to marshal and leverage their energy, to focus attention, to resist distraction, and to concentrate for as long as it takes to achieve a goal. In the disorienting swirl of change, such psychic energy may well be the scarcest resource an organization has, and only those who utilize it will succeed. Therefore, strategic thinking is fundamentally concerned with, and driven by, the continuous shaping and re-shaping of intent. The third element of strategic thinking is intelligent opportunism.
The essence of this notion is the idea of openness to new experience which allows one to take advantage of alternative strategies that may emerge as more relevant to a rapidly changing business environment. Mintzberg (1999) sees this approach as underscoring the difference between emergent strategy and deliberate strategy. In practicing intelligent opportunism, it is important that organizations seriously consider the input from lower level employees or more innovative employees who may be instrumental in embracing or identifying alternative strategies that may be more appropriate for the environment.
The fourth element of strategic thinking is referred to as thinking in time. According to Hamel and Prahalad (1994), strategy is not solely driven by the future, but by the gap between the current reality and the intent for the future. According to them: Strategic intent implies a sizeable stretch for an organization. Current capabilities and resources will not suffice. This forces the organization to be more inventive, to make the most of limited resources.
Whereas the traditional view of strategy focuses on the degree of fit between existing resources and current opportunities, strategic intent creates an extreme misfit between resources and ambitions. Thus, by connecting the past with the present and linking this to the future, strategic thinking is always “thinking in time. ” In a nutshell, strategic thinking connects the past, present, and future and in this way uses both an institution’s memory and its broad historical context as critical inputs into the creation of its future.
This oscillation between the past, present, and future is essential for both strategy formulation and execution. The fifth element of the strategic thinking recognizes the process as one that is hypothesis-driven. Like the “scientific method” it embraces hypothesis generation and testing as core activities. According to Liedtka (1998) this approach is somewhat foreign to most managers: Yet in an environment of ever-increasing information availability and decreasing time to think, the ability to develop good hypotheses and test them efficiently is critical . . the ability to work well with hypotheses is the core competence of the best strategy consulting firms. Because strategic thinking is hypothesis-driven, it circumvents the analytical-intuitive dichotomy that has dominated much of the debate on the value of formal planning. Strategic thinking is both creative and critical, although accomplishing both types of thinking simultaneously is difficult, because of the requirement to suspend critical judgment in order to think more creatively.
Liedtka (1998) states that, “Taken together, these five elements describe a strategic thinker with a broad field view that sees the whole and the connections between its pieces, both across the four vertical levels of strategy and the horizontal elements of the end-to-end value system. ” The combined effects of these is the creation of a capacity for strategic thinking that meets what Day (1994) refers to as the three fundamental tests for a strategically valuable capability: 1. they create superior value for customers, 2. they are hard for competitors to imitate, and . they make the organization more adaptable to change. Liedtka (1998) suggests that these three discrete, but inter-related elements, when taken together can lead to significant positive outcomes in organizations, provided there is the accompanying supportive strategic planning context to encourage and enable the implementation of the fruits of this type of thinking. Strategic Analysis Strategy, Innovation and Change Strategy is about making choices, and top management needs to be as clear as possible about the rationale for making them.
Firms can compete on price or differentiation (Porter, 1980; 1985). In the latter case, firms differentiate their products in order to avoid competing solely on price. Non-price attributes include reputation, brand, superior product performance, and service. Top management also must choose what products, customers, and market segments to serve. Innovation should reinforce the basis on which the firm chooses to compete, i. e. , price or differentiation. Ideally, innovation enhances a core competence that permits the firm to surpass its competition on dimensions that its customers value.
In today’s dynamic and global competitive environment, innovation is becoming more pertinent, mainly due to three major trends: concentrated international competition, disjointed and challenging markets, and assorted and swiftly changing technologies (Wheelwright and Clark, 1992). New types of business and corporate strategies are being explored: better market segmentation, industry consolidation, changed delivery channels and expanded product offerings. Information technology (IT) has been established as a key enabler of change.
It is also resulting into a driver of change with new products in every sector. Innovation is considered to be a critical requirement for the growth and profitability of organizations. For private sector organizations operating in increasingly competitive market, innovation is often a condition for simple survival. The capability to innovate is ever more viewed as the single most vital factor in developing and supporting competitive advantage (Tidd, 2001). According to Davila, Epstein and Shelton (2009) innovation is a necessary ingredient for sustained success and is an integral part of the business.
Much weight has been accorded on building innovative institutions and the management of the innovation progression as necessary elements of institutional survival (Brown, 1997). Innovation represents today’s competitive advantage, supported by strong mainstream capabilities in quality, efficiency, speed and flexibility. Innovation can help firms play a dominant role in shaping the future of their industries. High performing innovators are able to maintain a giant juggling act of capabilities, and consistently bring new high quality products to the market faster, more frequently and at a lower cost than competitors.
Moreover, these firms use process and systems innovation as a way of further improving their products and adding value to customers. This combination creates a dynamic and sustainable strategic position making the organisation a constantly moving target to competitors (Kiernan, 1996). Innovation is not a competitive strategy in itself, but can enhance any competitive strategy once the strategy has been articulated. If the strategy involves increasing the rate at which new products or services are introduced, then innovation can impact the firm in multiple ways.
Innovation can enhance how a firm conducts day-to-day operations, increase the rate at which all employees generate ideas for new products and services, and facilitate quick and efficient commercialization of new products. The link between vision, strategy and innovation is important to effective innovation management. Strategy determines the configuration of resources, products, processes and systems that firms adopt to deal with the uncertainty existing in their environment. It requires that firms make decisions about what businesses and functions they should be performing and in what markets.
Successful innovation requires a clear articulation of a common vision and the firm expression of the strategic direction. This is a critical step in institutionalizing innovation. Without a strategy for innovation, interest and attention become too dispersed. The most innovative companies seek to be “the best of the best”. Their employees have clarity of purpose and issue a challenge to find totally new ways of doing things in order to achieve the goal. For these companies, innovation is more than benchmarking.
They do not try to succeed simply by matching others. Innovation strategy is critical in directing organizational attention. In general, organisations that adopt an offensive strategy of trying to create the future (as opposed to protecting the past) are more innovative. The success of companies who broke the rules of their industry through innovation — with or without technology — and went on to become a dominant player has been well-documented (Hamel, 1998; Kim & Mauborgne, 1999; Markides, 1997; Markides, 1998).
These companies were able to stimulate demand, expand existing markets and create new ones through an accessible and competitive market price. The ability of the innovation capability to integrate newstream and mainstream is therefore ever more important. The newstream enables the creation of new products and services while the focus on lowering costs and improving quality reinforces the need for strong mainstream capabilities. Many authors highlight the different characteristics of mainstream and new stream processes.
Kanter (1989) argued that organisations are most effective where the different resource needs of the “mainstream” and “newstream” are recognised and their management largely autonomous. Managing business units in this way assists organisations in balancing the tensions of stability and change. Kanter (1989) showed that mainstream activities provide funding for newstream development. New products and processes are then assimilated back into the mainstream. Continuous development activities (i. e. doing the same things better) arise through constant communication between the two streams.
Kanter’s (1989) model is conceptualised in Fig. 2. Unfortunately, managing the different needs of the mainstream and newstream independently is unlikely to be successful in a dynamic and turbulent operating environment. There needs to be strong information flows and connections of effort between the two streams or else successful commercialization is threatened. Figure [ 2 ]: Conceptualisation of Kanter’s (1989) model Strategic Leadership Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.
Multifunctional in nature, strategic leadership involves managing through others, managing an entire enterprise rather than a functional subunit, and coping with change that continues to increase in the 21stcentury competitive landscape. Strategic Leadership can be distinguished from leadership on two basic aspects7 :  Strategic leadership theory relates to the study of people at the top of the organization while leadership theory relates to the study of people at any level of the organization. 2] Leadership theory focuses on the behaviour and relationship between leaders and followers. Strategic Leadership theory covers a wider spectrum; it studies the executive work as a relational activity; it examines the context of the interactions in terms of strategic and symbolic activities. Strategic leadership can be defined as the leader’s ability to anticipate, envision, maintain flexibility, to think strategically and to work with the members of the team to initiate changes that will create a viable future for the organization8.
It is the ability of the leader to influence others to voluntarily make dayto-day decisions that enhance the long-term viability of the organization while at the same time maintaining the short-term financial stability9. Stratified Systems Theory (SST) is a seminal theory related to strategic leadership and organizational hierarchy and serves as a key framework for understanding the importance of cognitive capacity of strategic leaders.
SST, initially developed by Elliott Jaques, focuses on an individual’s cognitive power and ability to reason over a specific period of time—to think through complex and interactive sequences of cause and effect. Based on their research performed with senior Army officers and civilian executives (government Senior Executive Service), Jaques and leadership researcher and scholar Owen Jacobs argued “…leadership in large part reflects a cognitive, or problem-solving process. 1 Using SST, they demonstrated this requirement by finding that as a person moves up the organizational leadership hierarchy, “problem types and decisions choices become more ambiguous, less structured, more novel, and more differentiated at higher organizational levels. ”2 This required a more complex cognitive capacity at each of the higher levels of leadership. To perform with the requisite cognitive ability, the leader must have matching frames of reference or complex mental models that align with the complexity of the job at a specific leadership level.
This required difference results because (a) executive leaders’ maps must accommodate many more causal elements; (b) these elements have more complex interconnections and associations; (c) multiple causal chains may be occurring simultaneously, requiring both differentiation and integrations; (d) antecedental events occur over longer time frames at higher organizational levels, greatly increasing the difficulty of perceiving and integrating them into a comprehensive causal map; and (e) executives who are operating within the external environment also need to factor into their frames of reference the strategies and purposes of executives of other co-acting and competing organizations. To meet effectively the cognitive capacity required at the higher levels of SST, the strategic leader must develop complex frames of reference and mental models that will be sufficient to deal with today’s VUCA external environment and the “wicked” problems and challenges faced at the strategic level. Such cognitive capacity requires adept thinking skills, including metacognition—thinking about how one thinks. “These more complex frames of reference allow executives to consider multiple options and multiple strategies, to deal with more complex forms of organization and a wider variety of influential constituent groups. ”vii Roles of Strategic Leadership Essentially the leadership position would emerge as a range of responsibilities to each of the stake-holders rather than as a position of rank or title or status.
The leader needs to be a facilitator or a mentor vis-a-vis the members of the organizational community helping and empowering them to realize and unleash their creative energies and enable the group as a whole to reach pinnacles of excellence. It is a matter of relationships and sharing of knowledge, insights, experience and achieved outcomes. Some key roles are discussed below: 1. Determining the Firm’s Purpose or Vision For the effective long-term growth and sustenance of a firm clear vision is an essential ingredient. In the organizational context who is better equipped to initiate and create a clear vision than the CEO? The CEO may be assisted in this by the Top Management Team[TMT]; together they have to elicit the involvement of the entire organizational community in postulating the vision of the firm.
Creating a vision for the firm – visioning – is an elaborate process by itself; it would involve the participation of all members of the organizational community but the main contribution would invariably come from the CEO. 2. Exploiting and Maintaining Core Competencies In an era of turbulent markets, the growth and success of a firm are intimately linked to its ability in creating and sustaining core competencies. Core competencies are the building blocks of competitive advantage of a firm. The resources, knowledge, skills and insights of a firm acquired and nurtured over time constitute its competitive advantage when they are exclusive to the firm and are rare among its competitors.
Core competencies are the building blocks of competitive advantage of a firm. Core competencies are the building blocks of competitive advantage of a firm. In a fast changing world, in order to maintain the competitive advantage, the firm needs to enhance and upgrade its core competencies continuously. The challenge is more critical when we notice that the main ingredient of core competencies is the knowledge element. 3. Developing Human Capital Human capital refers to the knowledge and skills of the people of the firm. It is the people through which the firm acquires and enhances its knowledge-base and thus core competencies and competitive advantage.
Given this context, it becomes the key performance area for the strategic leader to invest in its people and their enhancement of knowledge and skills. Employees cherish the organization that is concerned about the development of its people; this enhances and ensures their involvement and commitment to the organization. 4. Sustaining an Effective Organizational Culture Organization culture represents a set of practices, symbols and core values preciously held together by the people of the organization. Culture is evolved over the life of the organization, nurtured by leaders and the community through trials and tribulations; it becomes a way of life within the organization.
It provides the context in which competencies are nurtured, policies and strategies are formulated and implemented and organizational goals are accomplished. For the continuous growth and success of the firm, it is necessary to nurture a culture that is comprehensive, that is adaptable, that is continuously evolving, that is conducive to the accomplishment of the organizational goals on a continuous basis. 5. Emphasizing Ethical Practices Long-run survival, growth, sustenance and brand image of a firm depends significantly on adherence to ethical standards and practices also. A CEO’s emphasis on ethical values and practices sets the tone for establishment of healthy norms and practices among the people of the organization.
A strategic leader needs to understand the diversity inherent in the 21st century operations; he needs to understand the legitimate expectations of the stakeholders and on this basis establish ethical norms. All his dealings and decisions will have to imbibe this spirit of establishing ethical norms. 6. Establishing Balanced Organizational Controls A leader needs to establish a system to monitor the execution of policies and decisions and redirect them towards the organizational objectives. In the context of the 21st century the traditional systems of control tends to be inadequate. The new environment is pregnant by opportunities that can be better handled by innovation and creativity.
How do we monitor such situations? Generally two types of controls are suggested21: financial controls and strategic controls. Financial controls are based on financial parameters that measure performance-induced outcomes. They measure accomplishment of short-term performance goals. Strategic controls require a thorough understanding of the competitive conditions and the dynamics of each of the SBUs and control mechanism is created to monitor the actions in the desired directions; not necessarily on the outcomes. This system allows fair amount of freedom to the managers in their action-plans. The focus in the case of strategic controls is long-term.
The prescription to the strategic leader is to employ financial control to focus on short-term results and to employ strategic controls to focus on long-term goals. Strategy Implementation As companies around the world transform themselves for competition that is based on information, their ability to exploit intangible assets has become far more decisive than their ability to invest in and manage physical assets. Companies are hugely required to adapt with transformation for being as contender in the global competition. So, companies transform themselves based on information, their capability to make use of intangible assets which has turn out to be more significant than their capability to spend and deal with physical assets.
The first three management processes— translating the vision, communicating and linking, and business planning—are vital for implementing strategy, but they are not sufficient in an unpredictable world. Three management processes are considered as significant in the implementation of strategy, however they are insufficient in an unpredictable world. Several years ago, in recognition of this change, a concept was introduced called the balanced scorecard. The balanced scorecard supplemented traditional financial measures with criteria that measured performance from three additional perspectives—those of customers, internal business processes, and learning and growth. See figure 2) The Balanced Scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the Balanced Scorecard transforms strategic planning from an academic exercise into the nerve centre of an enterprise. Towards a New Strategic Management System Many companies adopted early balanced scorecard concepts to improve their performance measurement systems. They achieved tangible but narrow results. Adopting those concepts provided clarification, consensus, and focus on the desired improvements in performance.
More recently, we have seen companies expand their use of the balanced scorecard, employing it as the foundation of an integrated and iterative strategic management system. Companies are using the scorecard to * clarify and update strategy, * communicate strategy throughout the company, * align unit and individual goals with the strategy, * link strategic objectives to long-term targets and annual budgets, * identify and align strategic initiatives, and • conduct periodic performance reviews to learn about and improve strategy. The balanced scorecard enables a company to align its management processes and focuses the entire organization on implementing long term strategy.
At National Insurance, the scorecard provided the CEO and his managers with a central framework around which they could redesign each piece of the company’s management system. And because of the cause-and-effect linkages inherent in the scorecard framework, changes in one component of the system reinforced earlier changes made elsewhere. Therefore, every change made over the 30-month period added to the momentum that kept the organization moving forward in the agreed-upon direction. Without a balanced scorecard, most organizations are unable to achieve a similar consistency of vision and action as they attempt to change direction and introduce new strategies and processes.
The balanced scorecard provides a framework for managing the implementation of strategy while also allowing the strategy itself to evolve in response to changes in the company’s competitive, market, and technological environments. Managers using the balanced scorecard do not have to rely on short-term financial measures as the sole indicators of the company’s performance. The scorecard lets them introduce four new management processes that, separately and in combination, contribute to linking long-term strategic objectives with short-term actions. (See Figure 3) The first new process— translating the vision helps managers build a consensus around the organization’s vision and strategy.
Despite the best intentions of those at the top, lofty statements about becoming “best in class,” “the number one supplier,” or an “empowered organization” don’t translate easily into operational terms that provide useful guides to action at the local level. For people to act on the words in vision and strategy statements, those statements must be expressed as an integrated set of objectives and measures, agreed upon by all senior executives, that describe the long term drivers of success. The second process— communicating and linking—lets managers communicate their strategy up and down the organization and link it to departmental and individual objectives.
Traditionally, departments are evaluated by their financial performance, and individual incentives are tied to short-term financial goals. The scorecard gives managers a way of ensuring that all levels of the organization understand the long-term strategy and that both departmental and individual objectives are aligned with it. Figure 3: Translating Vision and Strategy: Four Perspectives The third process— business planning—enables companies to integrate their business and financial plans. Almost all organizations today are implementing a variety of change programs, each with its own champions, gurus, and consultants, and each competing for senior executives’ time, energy, and resources.
Managers find it difficult to integrate those diverse initiatives to achieve their strategic goals—a situation that leads to frequent disappointments with the programs’ results. But when managers use the ambitious goals set for balanced scorecard measures as the basis for allocating resources and setting priorities, they can undertake and coordinate only those initiatives that move them toward their long-term strategic objectives. Figure 4: Managing Strategy: Four Business Processes The fourth process— feedback and learning —gives companies the capacity for what we call strategic learning. Existing feedback and review processes focus on whether the company, its departments, or its individual employees have met their budgeted financial goals.
With the balanced scorecard at the center of its management systems, a company can monitor short-term results from the three additional perspectives—customers, internal business processes, and learning and growth— and evaluate strategy in the light of recent performance. The scorecard thus enables companies to modify strategies to reflect real-time learning. The balanced scorecard signals to everyone what the organization is trying to achieve for shareholders and customers alike. But to align employees’ individual performances with the overall strategy, scorecard users generally engage in three activities: communicating and educating, setting goals, and linking rewards to performance measures. The process of building a balanced scorecard— clarifying the strategic objectives and then identifying the few critical drivers—also creates a framework for managing an organization’s various change programs.
These initiatives— reengineering, employee empowerment, time-based management, and total quality management, among others—promise to deliver results but also compete with one another for scarce resources, including the scarcest resource of all: senior managers’ time and attention. The final step in linking strategy to actions is to establish specific short-term targets, or milestones, for the balanced scorecard measures. Milestones are tangible expressions of managers’ beliefs about when and to what degree their current programs will affect those measures. Learning Organization People have found the idea of a learning organization to be inspiring, yet difficult to implement. It frequently involves deep change in the mind sets of people as well as the culture of organizations and societies. Learning Organization is relatively a new phenomenon but these days more and more firms wish to shift towards this title.
Not much research is being conducted that may help the organizations to find out what are the factors (major and important) which helps any organization to be a true learning organization. The term refers to a firm that works for the learning and development of its employees individually, team wise and learning of whole organization. Such organizations appreciate continuous transformation (Pedler,Burgogyne, and Boydell, 1997). Main objective is to enhance their capabilities so that the productivity, profitability and efficiency of organization are increased. Thus, we see that the most successful firms in today’s world are the ones which followed the concept of “Learning Organization”.
To make an organization successful and transform into learning organization, it needs to implement: Innovation Innovation and Brining in changes according to need of environment and time is very important for every organization these days. As competition is increasing every now and then, organizations are required to maintain and excel their product / service or operations. Adopting the change and coping up with needs of time requires organization to have sufficient resources. Having strong systems and procedures is important in order to remain competent in the market. This concept is also supported by Watkins and Marsick’s (2003) model of learning organization.
This model believes that there is interdependency of an organization between the external and internal customers and influences. It says that to be learning organization, the organization should responsive to the members of organization and should also be quickly responsive to the external environment (changes and innovations). Harvard Professor Rosabeth Moss Kanter concluded from her study of large U. S. corporations that successful organizations have cultures that encourage multiple sensing mechanisms to the environment and enable quick reactions to changing environments by generating the best combinations of people for the job. This ability makes learning organization real success of modern times. Human Resource Practices
Human resource practices are also one of the factors that serve as reason of being successful learning organization. Human resource practices of an organization are of prime importance for any organization because they manage the man power of the firm. The learning ability and knowledge level of organizational members is the only factor that can serve as competitive advantage for a firm, it is responsibility of HR practitioners to understand and manage how these abilities can be developed (Dechawatanapaisal, 2005; Saru, 2007). Thus, the organizations are required to take advantage of their employee’s strategic potential and competencies and should try to polish them in a way that it becomes beneficial for the organization (Rouona & Gibson, 2004).
In any organization, HRM is the department that takes care of this concern as HRM practices have strong potential to mold the behavior of learners (employees) and would play evident role in making successful learning organization (Soliman & Spooner, 2000; Shipton, 2002). We see that most successful learning organization possess very efficient HRM practices which ensures that team learning is conducted and employees are encouraged and treated as an asset of the organization. This employee care is one of the reason why learning organization are the ‘Employer of the choice’. Leadership Style Leadership is very important aspect of learning organization’s life because it is their strong organizational leadership that distinguishes them from other firms.
Leadership is one of the important functions of any manager. Leadership style possessed by mangers of the organization influence the productivity of their employees and also impacts the overall productivity of the organization. Peter Senge (1990) explains that the discipline of leadership in an organization explores how managers —and leaders at every level in an organization — can unleash and explore the full potential of each and every employee in the organization. Often this involves moving away from more traditional command-and-control management structures and toward more fluid, self-organizing leadership. This discipline is truly redefining the role of management for businesspeople everywhere.
According to James McGregor Burns’ book called “Leadership” he argued that there are two types of leadership: transactional and transforming (Rosenbach, Saskin, & Harburg, 1996). Same way organizational leaders influence employees of the organization. Transactional leaders influence people by means of a transaction. That is they give followers money, praise, or some other reward or punishment in exchange for the followers’ effort and performance (Rosenbach, Saskin, & Harburg, 1996). The transformational leader influences followers to perform beyond expectations. This means first creating an awareness of the importance of achieving valued outcomes.
To do this, transformational leaders work to define shared values and beliefs. Team Learning Team learning means collective learning or group learning. It is one of learning style in which all the organizational members seek knowledge thus the result is improved productivity and new skills learned. Team learning is of prime importance as every individual of the organization is responsible for organization’s success. Seeking knowledge and learning new skills and abilities adds to competitive advantage of the firm. Team learning is a process in which a collective group of individuals meets together and form a team. Their purpose is to make changes for improvement. (Edmondson, 1999; Argote et al. , 2000).
For the time of teams acting together the understanding between the members is a crucial thing (Simons, 1991). Thus, the main focus is on interpretation and integration of knowledge to develop coherent and corrective action (Crossan et al. , 1999). No one can imagine the concept of learning organization without agreeing to the fact that learning can occur at individual and group levels. A number of researchers in the field of learning organization emphasized that organizations are required to provide learning opportunities to all of its members. This includes individual learning as well as group learning. Team learning serve as reason for future success of organizations (e. g.
Nonaka, 1991; Senge et al. , 1994). Learning organizations concentrates on “team” and not individual learning. It is ‘the process of aligning and developing the capacities of a team to create the results its members truly desire’ (Senge, 1990). Concluding Remark Organizations have started implementing innovative strategies nowadays to gain competitive advantage. This study therefore focused on Strategic Thinking and Strategic Leadership concepts required to make an organization successful and transform into a learning organization. To improve performance management systems, organizations hence should implement effective strategy to be successful.
Concept of balanced score card for this purpose therefore is analyzed and discussed. Further, concepts to transform an organization into learning organization are discussed. Appendix What is Strategy? I. Operational Effectiveness is not Strategy Positioning—once the heart of strategy—is rejected as too static for today’s dynamic markets and changing technologies. According to the new dogma, rivals can quickly copy any market position, and competitive advantage is, at best, temporary. But those beliefs are dangerous half-truths, and they are leading more and more companies down the path of mutually destructive competition. True, some barriers to competition are falling as regulation eases and markets become global.
True, companies have properly invested energy in becoming leaner and more nimble. The root of the problem is the failure to distinguish between operational effectiveness and strategy. The quest for productivity, quality, and speed has spawned a remarkable number of management tools and techniques: total quality management, benchmarking, time-based competition, outsourcing, partnering, reengineering, change management. Operational Effectiveness: Necessary but Not Sufficient Operational effectiveness and strategy are both essential to superior performance, which, after all, is the primary goal of any enterprise. But they work in very different ways.
Operational effectiveness (OE) means performing similar activities better than rivals perform them. Operational effectiveness includes but is not limited to ef? ciency. It refers to any number of practices that allow a company to better utilize its inputs by, for example, reducing defects in products or developing better products faster. In contrast, strategic positioning means performing different activities from rivals’ or performing similar activities in different ways. II. Strategy Rests on Unique Activities Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.
Strategic positions emerge from three distinct sources, which are not mutually exclusive and often overlap. First, positioning can be based on producing a subset of an industry’s products or services. This can be called as variety-based positioning because it is based on the choice of product or service varieties rather than customer segments. Variety-based positioning makes economic sense when a company can best produce particular products or services using distinctive sets of activities. A second basis for positioning is that of serving most or all the needs of a particular group of customers. This can be called as needs-based positioning, which comes closer to traditional thinking about targeting a segment of customers.
It arises when there are groups of customers with differing needs, and when a tailored set of activities can serve those needs best. Some groups of customers are more price sensitive than others, demand different product features, and need arying amounts of information, support, and services. The third basis for positioning is that of segmenting customers who are accessible in different ways. Although their needs are similar to those of other customers, the best con? guration of activities to reach them is different. This can be called as access-based positioning. Access can be a function of customer geography or customer scale—or of anything that requires a different set of activities to reach customers in the best way. Positioning is not only about carving out a niche.
A position emerging from any of the sources can be broad or narrow. A focused competitor targets the special needs of a subset of customers and designs its activities accordingly. Focused competitors thrive on groups of customers who are overserved (and hence overpriced) by more broadly targeted competitors, or underserved (and hence underpriced). Having de? ned positioning, we can now begin to answer the question, “What is strategy? ” Strategy is the creation of a unique and valuable position, involving a different set of activities. If there were only one ideal position, there would be no need for strategy. Companies would face a simple imperative—win the race to discover and preempt it.
The essence of strategic positioning is to choose activities that are different from rivals’. III. A Sustainable Strategic Position Requires Trade-offs Choosing a unique position, however, is not enough to guarantee a sustainable advantage. But a strategic position is not sustainable unless there are trade-offs with other positions. Trade-offs occur when activities are incompatible. Simply put, a trade-off means that more of one thing necessitates less of another. Trade-offs arise for three reasons. The ? rst is inconsistencies in image or reputation. A company known for delivering one kind of value may lack credibility and confuse customers—or even undermine its reputation—if it delivers another ind of value or attempts to deliver two inconsistent things at the same time. Second, and more important, trade-offs arise from activities themselves. Different positions (with their tailored activities) require different product con? gurations, different equipment, different employee behavior, different skills, and different management systems. Finally, trade-offs arise from limits on internal coordination and control. By clearly choosing to compete in one way and not another, senior management makes organizational priorities clear. Companies that try to be all things to all customers, in contrast, risk confusion in the trenches as employees attempt to make day-to-day operating decisions without a clear framework.