# **The Enactment of Strategic Leadership** A Critical Perspective

**Darko Tipurić**

The Enactment of Strategic Leadership

# Darko Tipuric� The Enactment of Strategic Leadership

A Critical Perspective

Darko Tipurić Faculty of Economics & Business University of Zagreb Zagreb, Croatia

ISBN 978-3-031-03798-6 ISBN 978-3-031-03799-3 (eBook) https://doi.org/10.1007/978-3-031-03799-3

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## **Preface**

Te book *Te Enactment of Strategic Leadership: A Critical Perspective* contains ideas and concepts I have pondered over for decades, in search of meanings and roles that strategy and leadership play in our lives.

I have not hesitated to play with the language of strategy and leadership. To me, the thing we call reality has long been nothing more than a fragile illusion: a social construction assembled from our cognitive limitations, bias, failures and delusions, stripped of all superfuous things and deprived of an objective mind; created through our fghts for words, recognizing and harmonising, in the domain of language where everything begins and ends. Tis is the stretched-out space in which I move and where I put together bundles of individual threads of insight to form the yarn ball that represents my understanding of the world around me.

Tis promised to be an exciting journey into the far unknown. What we imagine before we set of on a journey is never the same as what we actually see when we arrive at our destination. Terein lies the true beauty of creation: prepared drafts and torn out fragments get a patina and become ennobled by new insights, opening up paths we had never even dreamed of at the beginning. A book is never a placid river—it is a surging food of thoughts.

A postmodernist deconstruction of strategy as a vague construct to which a myriad of meanings is attributed, a construct that can explain planned and actually occurring patterns of collective behaviour in the context of time, certainly turned out to be a good point of departure for a fight of the mind into the realm of strategic leadership. Connecting two so elusive and mystical constructs was a challenge I simply could not resist.

I started with the question articulated as an adaptation of the Euthyphro dilemma: do we believe strategic leadership exists because it *actually* exists or does strategic leadership exist because we *believe* it does. Te answer ofered by this book is a paradox: both are true.

Strategic leadership is imbued with the need to supervise organisational outcomes. Te core issue is a search for meaning and purpose, the art of drawing the lines within which strategy emerges, the development and selection of guidelines and developmental trajectories, the imprinting of symbols and plausible explanations that can bring together and motivate people in common action.

Te duality of the essence of strategic leadership is crystal clear. It may appear to be *personalised*: indivisible from persons who take part in defning and interpreting the organisational purpose and whose decisions have a critical impact on the organisation's future, or it may seem to be *an important characteristic of the organisation* enacted everywhere where there is guidance, integration and creation of commitment in the collective, emerging from a whirl of interaction, exchange and institutional arrangements.

Strategic leadership frmly connects strategy with organisational action. It guides the collective members' actions and inspires them to achieve the defned objectives; integrates coordination eforts in the performance of activities; helps solve major disputes and disagreements; encourages members to perform to the best of their abilities; gives sense to moves made and activities performed so far, in the light of an envisaged future or set of principles that justify organisational collectivity.

Te discussion about strategic leadership raises more questions than it answers. Te fact that it has been described in detail does not mean we have an in-depth understanding of it.

Te dark side of strategic leadership is revealed if we view it through the lens of a world full of dominant ideologies, structures of power and infuence intent on domination and social control.

Power is not a means; it is an end—as George Orwell put it. In the last instance, it can lead to complete supremacy, or *hegemony*: a situation where members of the collective willingly accept the leader's dominance, identify with them, follow their guidance and never question the established structures of organisational and social power.

Strategic leadership continually emerges from ideology. Organisational ideology is not a construct that exists independent of civilisation, culture, space or time; it serves to legitimise dominance of privileged structures in the society. It represents the collective spirit's circumnavigation of the illusion perceived as the true reality.

Hegemony and ideology are two sides of the same medal: sophisticated tools in desubjectivisation of a person and their reducing to a mere fragment that is incomprehensible if observed outside the collective being.

Strategic leadership does have a bright side, too. It plays a role in preventing a moral decline of the civilisation by departing from greed, selfishness and callousness on which the dominant social paradigm rests. It is meant to change people, organisations and the society for the better: to be a strong driving force for creating and spreading noble ideas and responsibility to the future generations.

Unity and equality, solidarity and cooperation, social and organisational balance, lesser inequality and better social utility, environmental protection and interests of all stakeholders—all these things have to be important elements of the managerial elites' agenda. Te best leaders are completely certain in knowing that in life, instead of doing nothing—to paraphrase Helen Keller—one has to be daring enough to embark on the adventure of creating a better future.

Between the dark and bright side there is a whole plethora of manifestations and possibilities of strategic leadership.

My personal experience has helped me gain a better understanding of strategic leadership. It has been several times over the course of thirty years that I held the position of organisational leader or close associate to a person at the top of the hierarchical ladder. Experience has also helped me consider the possible answers to the question of what strategic leadership is and what it defnitely must not be.

I cannot claim that the troubles we found ourselves in—the COVID-19 pandemic and the massive earthquakes that hit Croatia—have not had an impact on the fnal form of the sentences put to paper. Te extraordinary conditions I was working in and the new reality we are still living in have made me think diferently about many things and make some additions to my previous writing.

I would like to briefy revisit the question: Why did I write this book? After all, there are already some good strategic leadership books available. Obviously, no single book on strategic leadership can possibly answer all the remaining questions or integrate all of the relevant domains of study.

I felt that there was a need for a book that readers would fnd both signifcant and readable, but at the same time challenging. Te book takes a somewhat diferent path than other strategic leadership pieces of writing, largely because it starts from a slightly diferent point. I have instilled into it my own thoughts and ideas, research fndings and theoretical concepts from numerous relevant scientifc and professional papers.

I do hope this has resulted in a book that is up to date and refects an out-of-the-ordinary standpoint. Te book also introduces insights from critical perspectives which do not take the current state of the world for granted. Te aim is not to identify the correct answers or the best way of understanding the issue at hand. Te intention behind presenting the tensions and contradictions is to raise further questions, to trigger discussion and debate, to stimulate challenge and critical thinking. In short, the book's primary objective is to help you really think deeply about strategic leadership.

Te complete list of people who have helped nurture the ideas in this book in one way or another would make a new chapter in its own right. Of course, the book would not be possible if it were not for the many great minds that have contributed to science and laid the foundation for the ideas and concepts presented in this book. Some of my previously compiled writings and notes found their way into a manuscript, as did notes scribbled on the margins of books and articles I read. All of that was then carefully incorporated into the body of the manuscript and woven into the fabric of this book.

Special thanks must go to my colleagues Domagoj Hruška, Ana Aleksić, Lana Cindrić and Ana Krajnović for their constructive comments and suggestions. Tanks also go to those who have read and made some improvements to this text, including Ana Brezovac, George Martin and Nina Bardek.

Writing a book is a lonely journey and, as such, it would be impossible to do without the unconditional support of my family.

Zagreb, Croatia Darko Tipurić

## **Contents**


**xi**

# **List of Figures**



# **1**

# **The Classic Ontology of Leadership**

### **Perspectives of Leadership**

Leadership can be viewed from more than one perspective.

Leadership is primarily a concept that denotes an individual or a group of individuals whose authority has been accepted by others. It is also a process in which the set goals, plans and tasks are realised through exerting infuence on one's followers and their behaviour. It may be viewed as a relation between two persons or as a multilateral relation in hierarchies and networks that connect people. Finally, leadership is the connection between collective intentionality, collective action and the desired outcomes: it exists as a guiding, integrative and coordinating mechanism of common action in the collective.

Firstly, we can defne it as a process by which one actor infuences others in a group, organisation or several organisations and social settings, to make them understand and accept the tasks that need to be performed and the way they need to be performed, as well as a process by which individual and collective eforts are directed towards the accomplishment of common goals (Yukl, 2006).

Te ability to infuence others is a key element of the leadership process (Bass, 1981), in which an individual involves a group of people to accomplish common objectives (Northouse, 2015).

Tis understanding of the concept underlines the importance of the leader's actual and desirable traits, the collection of knowledge and skills that they need to perfect, and the leadership style they need to adapt to the members of the collective and to the specifc characteristics of the situation and the job at hand.

Leaders appear in a collective depending on how well they match the collective's identity, or how similar they are to the group prototype, as underlined by the social identity theory (Hogg, 2001; as cited in Northouse, 2010).

Te leader's role is to properly inspire and motivate the members of the collective to make the collective action as successful as possible. Te quality of their leadership depends on their ability to achieve unity, willing participation, and maximum engagement of everyone involved, along with adequate coordination of the activities required to perform the set task.

Secondly, leadership can be understood as a *social process involving iterative exchange processes* between several individuals (Lord & Dinh, 2014: 161) *who take on (and release) the leading roles over the course of time in both formal and informal relationships* (Yammarino et al., 2012: 382).

According to this view, social interaction and transaction relations are the quintessence of the dynamic leadership process, understood as an *essential attribute of the collective*, which manifests diferently depending on the situation.

In many cases, leaders and followers switch places depending on the context, goals, and competences required. Tere are also examples of collective coordination of courses of action and activities that give leadership a very impersonal dimension in some circumstances.

Diferent perspectives on leadership can lead to conceptual confusion. Whether leadership is linked to a person's distinctive ability, or to the exchange process between the members in a collective, is a question without an unambiguous answer. Tis should not concern us, however, if we choose to rely on the old Latin proverb *omnis defnicio periculosa est.* Or, as eminent writer Borges put it nicely: *Very often, we make the mistake of*  *thinking that we do not know something just because we are unable to defne it… It could be argued that we can only defne something when we know nothing about it*.

Recognising the basic relations in the classical ontic triad—leader, follower, task—is the frst step in understanding leadership.

We can recognise leadership in the relation between entity A, which assumes and displays leadership (leader), and entity B, which accepts leadership (follower), or in a multiple relation in which a leader A (or a group of leaders A1, A2, … Am) have multiple followers at the same time (B, C, D, E, …, N). Furthermore, leadership aims to ensure successful performance of a task. Tis requires clear objectives, along with focused action that will lead to the desired outcomes.

Te characteristics of the situation (the context) determine how roles are assumed, and how the relations between the concerned social actors are manifested. Te *interaction* between leaders, followers and situations (Hollander, 1978) is one of the possible defnitions of leadership. It is therefore benefcial to observe leadership through the prism of the specifc characteristics of its environment.

Te classic ontology identifes the following elements and relations that can be used to explain the phenomenon of leadership: (1) specifc nature of the situation in which the need for leadership appears (collective and environment), (2) authority and other characteristics of the leader, (3) acceptance of authority by the members of the collective (feeling of connectedness or obedience), (4) the leader's infuence on the follower (direct and indirect infuence mechanisms), (5) connection and alignment of goals in order to perform a task and achieve the best possible outcomes in a given situation (Fig. 1.1).

A number of research and theoretical approaches that are based on the classic ontology of leadership have been developed over the past 80 years. Depending on their primary focus, we can group them into research eforts and conceptual eforts: (1) leader-focused (approaches based on leadership traits, skills and styles), (2) follower-focused (approach based on information processing, social constructivism paradigm and implicit leadership theories), and (3) situation-focused (approaches centred on the impact of the situation on leadership and its manifestations).

**Fig. 1.1** A Classical view of leadership

First and foremost, we can view leadership from the perspective of the leader: their inherent traits and learned and acquired skills, or behaviour patterns, manifested in interactions with others in and outside of the collective.

Approaches based on leaders' traits assume that some leaders possess certain qualities, characteristics and attributes that make them more efcient than others (Bryman, 1986; Stogdill, 1948, 1974). Leaders are born rather than created, and the success of leadership is explained by the possession of special traits that distinguish leaders from "ordinary" people. Or, as the great writer Goethe wrote: *A great person attracts great people and knows how to hold them together*.

Tis school of thought is called *the great man theory* or, more often, *the trait theory*, with an emphasis on identifying the people who are destined to assume leader positions at all levels in the society, and exploring the important traits and attributes that successful leaders possess or should possess (examples include Kirkpatrick & Locke, 1991; Zaccaro et al., 2004; Zaccaro, 2007; Malakyan, 2015).

Talent is the key aspect of leadership. As the renowned management author Peter F. Drucker stressed in *Te Practice Management* in 1954: *Leadership is of the utmost importance. Indeed there is no substitute for it (…) But leadership cannot be created or promoted. It cannot be taught or learned* (p. 156).

Stogdill (1974) identifes ten key leadership traits: (1) drive for responsibility and task completion, (2) vigour and persistence in pursuit of goals, (3) risk taking and originality in problem solving, (4) drive to exercise initiative in social situations, (5) self-confdence and sense of personal identity, (6) willingness to accept consequences of decision and action, (7) readiness to absorb interpersonal stress, (8) willingness to tolerate frustration and delay, (9) ability to infuence other people's behaviour, and (10) capacity to structure social interaction systems to the purpose at hand.

In Northouse's opinion (2010: 19–21), the best leaders have the following fve most important traits: (1) intellectual capabilities, a combination of verbal, perceptual, and reasoning capabilities, (2) self-confdence, refected in self-respect, self-assuredness, and strong conviction that one has the capacity to attain goals, (3) determination in action, (4) integrity, including honesty and the trust one inspires, and (5) sociability, or the inclination to seek and build social relationships in which everyone will feel comfortable.

It is obvious there is no universally accepted list of leader traits.

Unlike the trait-based approaches, which diferentiate between individuals based on their innate traits, skill-based approaches assume that leadership can be learned and perfected over time.

Katz (1955) argues that leaders need technical and interpersonal skills, as well as the skill of abstract thinking. Similarly, Mumford et al. (2000) underline three important capabilities that leaders can improve: the skills that allow them to creatively solve new and challenging problems, the skills of social judgment (the ability to understand people and social systems), the knowledge that allows analytic and synthetic thinking, and the development of strategies of appropriate action in complex situations. Te outcome of leadership (how well the leader performed their task) is a direct result of these skills.

Te leadership skills that are required difer depending on the size and type of the collective, the environment and the situation, the level of hierarchy, and a number of other factors. For example, leaders at the strategic level of large organisations need well-developed strategic thinking skills and the ability to understand the big picture, as well as the skill of networking and building relationships with a number of interest groups in and outside of the organisation, whereas the leaders of smaller units in an organisation need sufcient technical knowledge to act adequately within the given framework, the ability to solve current operating problems, and adeptness at social relations that exist within smaller groups.

Over time, people can perfect their leadership skills and make considerable headway in developing and utilising their leadership potentials. Leadership grows into a discipline that can be learned through experience and lifelong pursuit of new knowledge. Rather than a trait possessed by "a select few" who happened to have been born with distinctive attributes, leadership is a set of skills that are used in working with people, decision-making, and performing collective tasks. Anyone who wants to learn and is persistent enough in their ambitions can hone and bolster their leadership capabilities over time.

In the words of the great US President John F. Kennedy, *leadership and learning are indispensable to each other*. 1 Tis perspective emphasises that leaders can be made through experience, learning and determined selfwork (Fig. 1.2).

Moreover, observing leaders in diferent situations can help us understand leadership, which is recognised in the set of visible and comparable activities undertaken by leaders in relation to (1) the members of the collective and (2) the task at hand. Instead of analysing innate traits and

<sup>1</sup> In the remarks prepared for delivery at the Trade Mart in Dallas, TX, November 22, 1963 [undelivered].

**Fig. 1.2** "The Leadership Triangle"—Leader's perspective

skills that can be further developed, the focus is on answering the question what the leaders *actually* do when interacting with the members of the collective.

A number of theoretical conceptualisations touch upon this subject, including, inter alia, McGregor's X and Y theories (1960), the infuential dichotomy of autocratic and democratic leadership, Blake and Mouton's (1964, 1985) 2 leadership grid and Mintzberg's managerial roles (1973).

Value-based leadership theories are similar to the above-mentioned behavioural models. Tey are based on identifying a particular way of leading, or leadership style, which comprises collective values, behaviour types, and the form of interaction between the leader and the followers. Te conceptualisations of transactional and transformational leadership are widespread (Burns, 1978; Bass, 1981), and so are charismatic leadership (House, 1976; Howell & Avolio, 1993; Zaleznik, 2009), authentic leadership (Gardner et al., 2005; Shamir & Eilam, 2005) and servant

<sup>2</sup>Te original name of the Blake-Mouton model is "managerial grid." Te model was designed to explain how managers help attain the organisation's goals through two crucial dimensions: concern for results, and concern for people.

leadership models (Greenleaf, 1970; Greenleaf & Spears, 2002; Bennis, 2002; Blanchard & Hodges, 2003).

Te presented models point to patterns that are used to recognise specifc characteristics of leadership depending on assumed values, diferent task characteristics, and types of interpersonal relations. Tese patterns are usually referred to as "leadership styles": simplifed representations and descriptions of leaders' actions that usually include conficting behaviour attributes to highlight the available leadership modes.

Ethical aspects of leadership are also important, with a view to the negative historical examples of leaders whose actions had devastating consequences, as well as the existence of several moral dilemmas regarding the decisions of leaders and their actions in diferent circumstances.

Te behavioural complexity theory (Denison et al., 1995), which suggests that leaders are forced to deal with paradoxes and contradictions while taking on multiple, often competing leadership roles, is also worth mentioning here.

Furthermore, leadership is impossible to understand without analysing the complexity of the interactions between the leaders, the followers and the context, and the nature of their interrelations. Te suitability and efectiveness of leadership depend on the conditions and the situation. Diferent situations and task structures require diferent leadership styles, making the pursuit of "ideal" leader traits, or the best leadership style, fundamentally wrong: the successfulness of leadership is unquestionably determined by the situation.

Situational leadership theories follow the premise that there is no ideal, universally acceptable leadership style. Not all styles are successful in all circumstances. Leadership is contingent on factors such as the followers' traits, abilities and behaviours,3 the preferred leadership style, available resources, support and coordination, and so on (Crossan et al., 2008).

Te following are the most important situational approaches: (1) Fiedler's contingency model (1967, 1995), which positions leadership styles depending on three characteristics of the situation: leader-member relations, task structure, and leader's position power; (2) *the path-goal* 

<sup>3</sup> Situational leadership models include a number of moderating factors related to the followers, such as their loyalty, support, preparedness to cooperate with the leader, experience, skills, selfconfdence, etc.

*theory*, which underlines the relation between the leadership style and the traits of the collective members, or the choice of style that best suits the members' motivational needs (House, 1971; House & Mitchell, 1974); (3) situational leadership described as the situational framework connecting leadership styles with the followers' maturity level, which is based on the presumption that the leadership style must be adapted to the ability and preparedness of the collective members to perform the task (Hersey & Blanchard, 1993).

Such approaches accentuate the need to adapt leadership to the environment, task structure, and the followers' traits. If we accept the criterion of efciency as the rational framework, leadership should be continually aligned with the requirements and the forces in the environment in order to achieve the best possible outcomes.

Moreover, we can view leadership from the angle of the followers, or members of the collective, who are ready to accept another person's leadership.

Te leadership model based on information processing (Lord & Maher, 1991) and the implicit leadership theories (Phillips & Lord, 1982) are examples of follower-centred leadership theories.

Also, behavioural connections between leaders and followers can be observed as products of the followers' special social and mental constructs (Meindl, 1995). Leadership emerges when followers *arrange* their experiences in the key categories related to leadership, and interpret their relationship with another person as a "leader-follower" relationship. It emerges when individual, group and organisation processes drive individuals to (1) recognise themselves as followers and (2) commit to the identity, intentions, and symbolism of another person.

In the process of social construction of followers, this person embodies the leader; their ideological perspectives, ambitions and objectives are accepted; and a constellation of relations is established where the followers' actions are aligned with the leaders' intentions. It should be noted that *social constructivism* is based on the assumption that people together create their environment, with the entirety of its social, cultural and psychological formations (Berger & Luckmann, 1992: 72). Entity X can therefore be considered a "social construct" if it is a product of deliberate human activity (Kukla, 2000: 3).

Reality is not an objectivity to be discovered: rather, the environment of leadership is a product of social action and creation of meanings beyond the objective world.

Te context in which leadership is built depends on the traits and the cognition of future followers, their intragroup relations, intraorganizational and interorganizational settings, and the situation in which the need for leadership is refected.

Leaders thus *emerge* as the products of the social interactions and mental systems of individuals who are ready to accept someone else's authority. In this sense, leaders are the "products" of their future followers even before these followers have actually started following the leader whom they have thus "created."

In addition to the three discourses centred on the leader, follower and situation, the opinion that the essence of leadership lies in the relation born out of the interaction of social actors is also widespread in the academic community.

An analysis of the connection between the leader and the followers can defnitely improve the understanding of the phenomenon of leadership in modern organisations.

Te extremely infuential *leader-member exchange theory* (LMX theory), focused on exploring the unique *relationship* between the members of the collective who assume leader roles and the followers, as well as on the quality of the exchange related to the collective and the consequences of the collective action (Dansereau et al., 1975; Graen & Uhl-Bien, 1991, 1995), is an important example of this view.

Tis theory understands leadership as the process of interaction between the leader and the followers. In the early stages of development of the LMX theory, special attention had been focused on vertical relations in two types of relationships: (1) relationships in one's *own* group, including the development of mutual trust and respect, and the assumption of commitments and additional responsibilities; and (2) the relationships in the *external* group, in which actors are brought together by defned organisational roles and formal communication (Northouse, 2010: 152–154).4

<sup>4</sup>Malakyan (2014) underlines that the concepts of own and external groups are highly focused on the leader and the leader's position, even though the intention is to put the relationship in the focus of observation.

Naturally, relationships are better in one's own group, where followers are prepared to do more for their leader and vice versa, unlike the external group, where followers have no interest in strengthening their connections and becoming more involved in the performance of the task.

Regardless of the type of their connection, if the relationship of exchange between the leader and the members of the collective is good and successful, the followers feel better and achieve better results, which contributes to the well-being of everyone involved. For this reason, the focus must be on continual improvement of the relations and communication with everyone involved in the realisation of set goals: high quality of mutual exchange is linked to positive organisational outcomes.

Te LMX theory helps us better understand shared, distributed, and collective leadership. Rather than analyse the traits, skills and behaviours of the person who has authority, this theory observes and explores the quality of relationships between the actors involved, taking into account the character of the relationship and its duration (Pearce & Conger, 2003; Avolio et al., 2009).

For instance, positions and relations in the "leader-follower" dyad can alternate, depending on the required knowledge, tasks to be performed, and situational infuences, as a result of the relationship dynamics between the actors in the organisation. Leadership can be seen as emerging or changing, depending on constellations (Uhl-Bien, 2006), as postulated by the *relational leadership theory*. Te same actor can thus be a leader one moment, and a follower the next, depending on the situation that calls for action (Hunt, 2004).5

In any case, leadership is a relational construct: a leader's competence lies in their capacity to develop and manage relationships in organisations (Fletcher, 2007: 348; Carmeli et al., 2011).

<sup>5</sup>Cullen-Lester et al. (2017) emphasise that other relational theories depict leadership as the process of social construction that takes place through communication exchanges (Dachler & Hosking, 1995; DeRue & Ashford, 2010; Drath et al., 2008; Hosking, 1988; Uhl-Bien, 2006) or as the process of mutual infuence (e.g., Bedeian & Hunt, 2006; Uhl-Bien et al., 2000).

## **Authority**

Te classic ontology of leadership is based on two important categories: (1) the readiness of the members of the collective to accept someone's authority; and (2) the ability to infuence others in order to motivate them to perform a task.

As we have stressed before, the manifestation of leadership is the result of social actors' eforts to build temporary or permanent relations while performing collective actions. Leadership rests on accepting authority, recognising the purposefulness of the relationship that has been established, and developing infuence to achieve the desired outcomes. Assumption of leader and follower roles emerges as a structural dimension, and the relations between the members of the collective indicate how leadership is manifested. Te essence of the leadership process is defned by situational and relational dynamics: the positions of the actors, and their actions, depend on changes in their interrelations and the structure of the task, as well as on contextual factors.

Leadership need not be based on formal positions in a hierarchical structure: the important thing is the authority, recognised by others, and the art of persuading people to voluntarily and enthusiastically contribute to the fulflment of the common purpose and set goals. *You don't have to hold a position in order to be a leader*, said entrepreneur and industrialist Henry Ford a hundred years ago.

Authority is the power to infuence others, and as such is the primary prerequisite for the assumption of a leader role.

Authority *is the power to manage people and assets without direct use of physical force,* or *the power to command others based on one's own reputation and dignity,*<sup>6</sup> or *the ability of a person, role, service or state to give actual or seeming legitimacy to the actions performed and orders issued on its behalf*. 7 In addition, authority *refers to the recognised ability and quality of an entity* 

<sup>6</sup> Enciklopedija.hr: http://www.enciklopedija.hr/natuknica.aspx?id=4770 (accessed: 12 August 2019).

<sup>7</sup>Authority, in: Pravni leksikon (2007: 55), Zagreb: Miroslav Krleža Institute of Lexicography.

**Fig. 1.3** Authority and tolerance for control

*(person, group, institution) that is capable of infuencing individuals to ensure their obedience in the attainment of an objective*. 8

Chester I. Barnard (1938/1950), one of the best-known researchers of management in the early days of development of this discipline, defned authority as an inverse relation, or the preparedness to submit that occurs in a social entity that has been exposed to the infuence of another social entity.

In other words, a person accepts authority for as long as they allow their behaviour to be controlled by someone else's decisions without independently questioning their substance.

Fig. 1.3 conceptualises Barnard's view of authority with two variables: tolerance for control, and payof of obedience to authority.

<sup>8</sup>Dictionary of Philosophical Terms: https://www.flozofja.org/rjecnik-flozofskih-pojmova/ (accessed: 12 August 2019).

Te function of tolerance is expressed as a measure of the followers' perception of their own burden and sacrifce that results from accepting the control of the person who demonstrates authority. Tolerance for control decreases as the perceived burden and sacrifce increase, and vice versa. A high level of tolerance is usually associated with low levels of authority. In the fgure, this function is shown inversely, in the form of "intolerance."

Te payof function shows the followers' perception of the benefts they obtain by accepting another person's authority. Te assumption is that, at every level of authority, the follower evaluates the proftability of starting a relationship with a wielder of authority, and its efects.

In Barnard's opinion, as the authority of one person increases, the payof of starting a relationship with them decreases for others, and the level of intolerance for the exhibited control increases at the same time.

Authority is not boundless. Tere is always an authority "acceptance zone", outside of which the follower will deny the leader their obedience and submission (Barnard, 1938/1950; Simon, 1997).9 Te relationship between the persons in the hypothetical situation shown in the Fig. 1.3 can only exist, *ceteris paribus*, if the level of authority is lower than the level marked "x." A demonstration of stronger authority (higher than "x") undermines the possibility of establishing such a relationship between two social actors.

Te authority relationship only exists in a situation in which both parties exhibit identifable behaviour patterns. One party has to express a request and a clear expectation of its fulflment, and the other has to act to fulfl it.

Te relationship between the two parties is not unchangeable: at one moment, the two actors can be in a relationship in which authority is manifested, and in the next they can end it, depending on the situations they fnd themselves in over time (Simon, 1997: 179).

Te behaviour of the followers is an important determinant of authority. Te request does not have to be expressly voiced in all instances and in every kind of relationship: the follower's actions can be guided by their own perceptions of the behaviour that the authority wielder would expect

<sup>9</sup>Chester Barnard refers to the authority acceptance area as the *indiference zone*.

in a given situation. In this case, authority is manifested in the possible review of the follower's actions after their completion, and in the likely reaction to the follower's mistake (Simon, 1997: 182). Te mere implication of review and corrective action strengthens the leader's authority.

Tere are diferences between formal (position-related) and informal authority, as much as they share the same substance. Formal authority is related to the position a person occupies in the organisation and the person's rights derived from this position. Quinn (1980) understands it as a delegated right to use the power of legitimation. Organisations usually present their structures by a drawing of formal authority and responsibility chains, or vertical command lines that together form the chart known as the *organigram* (*organigramme* in French).

Informal authority, on the other hand, is not anchored in position or hierarchy, but depends solely on reputation, authenticity, and human, moral, intellectual, professional and other traits reinforcing one's potential for infuencing other people. Others readily accept the authority of the individual who has the above traits, and thus create a space where they can realise their leadership. Martin Luther King, Jr. is an excellent example of authority resulting from distinctive characteristics and determination to put noble ideas to work. His charismatic, yet inclusive leadership, based on the advocation of civil disobedience and nonviolence, defned the *Human Rights Movement* in the USA in the 1950s and 1960s.10

In contrast, a *decisionist leader* does not need true virtues that inspire loyalty in his followers. Such a leader only requires servility, which can stem from indoctrination, or from imposed rules.11 Hitler, Mussolini and

<sup>10</sup>Martin Luther King, Jr. played the key role in the civil rights movement in the USA until he was assassinated in 1968. One of the central fgures of the peaceful protests demanding equality and human rights for African Americans, the economically disadvantaged, and all other victims of social injustice in the US society at the time, he was presented with a Nobel Peace Prize in 1964.

<sup>11</sup>Zygmunt Bauman makes an interesting point in his memorable essay *How Neoliberalism Prepared Te Way For Donald Trump* (2016): "*A 'decisionist' leader needs nothing except a (spontaneous or contrived, voluntary or imposed) public acclaim to act. His decisions bear no other constraints—not even the one supposedly derived from and/or imposed by genuine or putative 'higher reasons' or supreme, indisputable super-human commandments—as in the case of divinely anointed monarchs of the Middle Ages. A decisionist leader comes close to the absolute: as God in his reply to Job's questioning, he refuses to explain his decisions and rejects Job's (or anybody else for that matter) right to ask for explanation and expect it to be given. Te sole explanation that the leader's resolution required, and that was owed to those afected and given to them, is the leader's will.*" See: https://www.socialeurope.eu/how-neoliberalismprepared-the-way-for-donald-trump (accessed 30 October 2020).

Stalin ofered no explanations for their monstrous actions, simply stating their will, which almost everyone in their communities accepted unconditionally and without question (with or without fear, but mostly with approval), even though it had been perfectly clear that they constituted the worst aberrations in the history of mankind.

Tere are many examples of markedly autocratic leaders wielding unquestionable authority, in whose behaviour evil is an unhealthy illusion of the only "rightness" possible in following their will, rather than a substitution element. In such situations, Barnard's variables of tolerance for control and proftability of the "leader-follower" relationship have no relevance as measures of authority. Te leader's immense power only superfcially conceals the inanity, futility and misery of such a community, which is languishing in absolute subservience. Te collective becomes the opposite of its own defnition: a mere extension of the person of the leader.

In conclusion, both formal and informal authority are a part of personality and the inner being, or the collective traits that the infuence over others stems from, rather than a futile institutional trait derived from a position of power. An individual can have legitimation power, for instance, but have no ability to wield it to infuence others. Or, one can have the authority of profession or reputation, but show no desire to use it in the collective.

## **Infuence**

Leadership is impossible to understand without the category of authority, and the preparedness of the members of the collective to follow the instructions or frameworks provided by an individual (or a group, or an entire organisation) who plays the leader role. Authority gives the leader the room they need to infuence the followers. Tis infuence is used to exert control over the behaviour of others in order to realise ideas and formulated plans.12

<sup>12</sup>Te set of strategies leaders use to efciently infuence the members of the collective are discussed in Chap. 4.

Te leadership process results in the subordination or devotion of the followers, who willingly accept and obey the leader's commands, follow their guidelines, and adjust their behaviour to the leader's expectations.

Two types of social infuence that lead to subordination are known in social psychology: (1) normative infuence, referring to people's eforts to remain in an organised group and avoid excommunication or marginalisation, which makes them willing to follow another person; and (2) informational infuence, well-suited to uncertain, unclear and complex situations, which the individual does not understand well enough, and needs additional explanations and information from other persons in order to understand the context (Aronson et al., 2005).

Subordination is achieved through: (1) obedience of the followers, whose submission is the result of fear of sanctions, or the expected reward for compliance, (2) identifcation with the leader, and (3) internalisation that occurs when intrinsic personal values inspire obedience in followers (Tyler et al., 1990).

Complaisance can be much greater if the followers, in addition to the above factors, have a strong emotional connection with the leader in form of devotion and fascinated commitment. *It is not enough to conquer*, Voltaire noted, *a leader must also know how to seduce*. Te leader's success lies in changing and adjusting the followers' beliefs so that they accept the leader's personality and proclaimed intents.

Yukl (2008: 5) compares rational and emotional aspects of infuence. Te rational interpretation of infuence is associated with the understanding of the need for cooperation in the pursuit of common goals because it leads to mutual beneft. However, extraordinary successes and accomplishments of some collectives can be explained by the emotional side of infuence as well. In this vein, Yukl stresses that leaders inspire followers to voluntarily sacrifce their own egotistical interests for a higher purpose. Soldiers, for instance, risk their lives to complete an important mission, or to protect their fellow-fghters.

Te area of desirable action for followers is shaped by the leader's aspirations and intentions. Bringing out the best in people and uniting them around a common purpose and common goals is a challenge all leaders face (Svensson & Wood, 2006).

Leaders purposefully realise their intentions through the activities of others. Tis is only possible if they set clear and easily understandable expectations, achieve an enviable level of integration in the collective, and raise the followers' level of preparedness to participate in common undertakings.

Leadership is not a typical power game, as its classic defnition, based on authority and infuence over others, would have us believe. All leaders have access to sources of power, but as Gea (2016: 363) underlines, not all power-wielders are leaders, and not all have to be.

Successful leaders inspire actional commitment in the members of the collective to the accomplishment of the collective mission and formulated guidelines. Teir ability to infuence others results in synergy action and in the desired changes that characterise efcient collective action. Indiferent acquiescence and apathetic compliance are hardly associated with a leader's efcient infuence over his follower.

## **Individual vs. Collective Leadership**

Leadership can appear in two variants: the case when an individual, usually occupying the top of the organisational pyramid, assumes the role of dominant leader, with signifcant impact on the mission and development trajectory of the organisation, or the case when the leadership role is distributed horizontally and/or vertically among multiple members of the organisation.

In the frst case, leaders have a recognisable and unequivocal position in the organisation and their words resonate the loudest when it comes to direction of action and visioning of a desirable future. Organisation is the long arm of the leader's intentions: the ideas and the aspirations are the result of the leader's own thinking and planning.

Normally, leaders of this type are observed in the light of their autocratic tendencies and their taking of full leadership responsibility. Tis may, but does not necessarily have to be the case. Leaders can include other organisational members in the management processes, to a greater or lesser extent; they can do this in the form of consultancy or delegating of some of the authority, or through members' direct participation in the decision-making process.

Individual leadership results in signifcantly lower costs of negotiation and implementation than it is the case with collective leadership (Kriger & Zhovtobryukh, 2013: 421).

Powerful leaders are better at what they do if they lead businessminded, low-complexity and/or small-size organisations in an environment that is not too complex or turbulent. Besides, overcoming crisis situations also requires leadership to be in the hands of a single individual who can make quick and radical decisions without hesitation or much procrastination.

Tere are situations when greater environmental complexity creates problems due to greater demands for information (and consequently larger costs of information) and due to the need for a broader spectrum of knowledge on the part of the leader. In large and complex organisations, the coordination demands and the need to coordinate increase proportionately to its size and complexity.

Te "lone ranger" type of leader has a hard time coping with the challenges presented by such situations: the complexity of the issues, problems and possibilities increases exponentially as one moves from the bottom to the top of the organisational ladder (House & Aditya, 1997).

Te enduring question is whether a single leader can even have the capacity to fully lead and manage all the elements involved in such situations.

In most organisations, sooner or later, the function of leadership gets divided among members with managerial authority. Leadership emerges as a collective activity where important decisions are made and the future of the organisation monitored jointly.

Collective leadership encompasses a greater or smaller number of individuals who assume greater or lesser responsibility in managing the collective or the network. Responsibility and power of collective leadership can be symmetrical or asymmetrical, depending on the positions and sources of power accessible to individuals within the group that assumes leadership.

Collective leadership is a complex phenomenon. It is the result of interrelations of individuals who have stable and clearly assigned roles, or individuals who swap leadership roles in formal and informal relations (Yammarino et al., 2012). It can be defned as *a dynamic leadership process in which a defned leader, or set of leaders, selectively utilize skills and expertise within a network, efectively distributing elements of the leadership role as the situation or problem at hand requires* (Friedrich et al., 2009: 933).

Notion of interchanging leadership is similar to the construct of "collective leadership" as it was used by Friedrich et al. (2011) when they examined the processes that take place in teams.

Tis kind of leadership can be understood as the collective action that emerges from multiple mutually dependent entities interacting with one another, creating a relationship network that emerges and changes over time (Cullen-Lester & Yammarino, 2016). A detailed analysis of interactions between organisational actors can help understand collective behaviour.

Collective leadership is associated with the concept of *shared leadership*, but the two have diferent meanings. Collective leadership as a concept has a wider meaning and encompasses diferent forms of leadership, involving multiple individuals in diferent ways, whereas shared leadership is a construct associated with a team or group of people and it has the characteristics of horizontal leadership (Fig. 1.4).

**Fig. 1.4** Individual and collective leadership

Te roots of shared leadership date back to the Roman Empire, when a group of individuals shared their power via the Senate.

According to one of the defnitions, shared leadership is a dynamic and interactive process of exerting infuence among individuals in a group with the aim of leading one another toward achieving the group's or the organisation's goals, or both (Pearce & Conger, 2003). According to others, it is a group property that results in distribution of leadership infuence among multiple members (Carson et al., 2007) or in other words, a phenomenon of mutual infuence and shared responsibility of members of a group whereby they lead one another to achievement of the defned goals (Wang et al., 2014). Shared leadership can also be observed from a diferent perspective: as the way diferent individuals enact the roles of leader and followers at diferent points in time (Lord et al., 2017).

Te logic behind shared leadership lies in optimisation of the leadership function in order to arrive at the best possible solutions to the problems and challenges that the organisation is faced with. Instead of relying on a single leader, members develop lateral relationships and assume joint leadership of the group, collective or entire organisation. Shared leadership relies on dispersion of leadership: persons in the team complement their strengths and skills, learn from one another, and make decisions in the common interest.

Ideal conditions for spontaneous or controlled development of shared leadership are found in a cohesive environment imprinted with the integrating shared purpose of the group members, their mutually accepted clear objectives, strong inter-group and organisational support, and a climate where every member's voice can be heard and everyone's contribution is recognised and valued (Carson et al., 2007).

Tere are views that this type of leadership increases participation and information-sharing, has a positive impact on group performance, and supports the processes of easier integration of the collective; some research even shows that shared leadership has a positive impact on team performance (Ensley et al., 2006).

Shared leadership can be presented as the opposite of vertical leadership, which is based on the relation of formal authority of a single leader on the one side, and members accepting their position as followers on the other. It can be understood as horizontal leadership where leadership functions and impacts of group members interchange depending on the demands of the situation (Zhu et al., 2018).

Collective and shared leadership can increase the organisation's administrative and managerial costs. Existence of multiple leaders in an organisation can lead to signifcant bargaining costs depending on the diferent objectives and diferential power held by the leaders in the collective (Cyert & March, 1963; Kriger & Zhovtobryukh, 2013). Tis problem can be solved by agreeing on objectives in a clearly defned vision, by creating and accepting shared organisational values that will bring together and embolden members of collective leadership to act in their common interest.

Furthermore, one must not forget that any attempt to analyse collective and shared leadership is inevitably accompanied by a veritable galimatias. Tere are numerous diferent and often overlapping defnitions that could eliminate all precision from observing this phenomenon. It gets all the more confusing if we include interchanging and distributed leadership in the analysis.

Tere are also some other issues involved. Kriger and Zhovtobryukh (2013: 415) listed three groups of limitations when it comes to current research in distributed, shared and collective leadership. Firstly, research is usually focused on teams, whereas leadership is indisputably a multilevel phenomenon. Secondly, their propositions are based on a positive correlation between distribution of leadership and performance irrespective of the context and turbulence in the environment or internal complexity. Tirdly, although it has been noticed that vertical and dispersed leadership can exist simultaneously, these are observed and analysed in studies as discrete phenomena.

Finally, mention should also be made of an interesting, albeit controversial, idea of a complete vertical and horizontal expansion of leadership in order to ensure *equal infuence* of all stakeholders across all organisational levels. Such post-modernist concept of the collective, referred to as *holographic leadership* (Denis et al., 2001), has at its core direct and equal involvement of everyone in leadership processes and arrangements. Instead of conforming or attempting to fnd a consensus, holographic leadership is about enabling the exploration of diversity in order to improve leadership practices.

#### **Interchanging Leadership Roles**

Where there is stable leadership, the roles are clear and positions are invariably fxed, irrespective of the type of leadership structure involved. Leaders are easily identifable and their position is unequivocal: all organisational actors recognise and follow them. Tey are constantly expected to manage processes, take on the tasks connected with mobilising staf and integrating the collective, as well as other tasks required by their position.

On the other hand, interchanging leadership exists where there is no clearly defned and invariable distribution of leadership roles within the organisation. It can be defned as a continual mutual infuence process in which leadership is swapped between individuals having the key knowledge, skills and abilities required for a specifc area that the team is faced with (Pearce & Conger, 2003). Consequently, leadership and followership should be perceived as dynamically interchangeable behavioural functions toward reciprocal interpersonal relationships between situational (nonstatic) leaders and followers in social group settings (Malakyan, 2015: 238).

Te hypothetical example provided in Fig 1.5 shows the relation between two organisational actors involving the swapping of roles. In situation A, Actor 1 assumes the role and tasks of the leader, does everything it takes, and includes Actor 2 in the performance of the relevant tasks and obligations. In time, the roles reverse—situation B occurs, where

**Fig. 1.5** Interchanging leadership

leadership is assumed by Actor 2 and Actor 1 takes over the role of the follower. In other words, leadership is the dynamic inter-relational function based on role-focused and interchangeable process of "leadship" and "followship" in organizations and groups.

Interchanging leadership implies organisational leaders continually swapping their roles depending on their knowledge of the problem, context and challenges. Te leader and follower functions frequently alternate and swap: diferent actors assume the leadership functions in diferent situations, depending on the demands and characteristics imposed by the current situation (Copland, 2003). Dynamic changes in roles depend on the types of problems at hand; a position of leadership is temporarily assumed by members with the most experience, knowledge and information required for solving a burning issue, strategic or functional challenge. Te question of who leads and who follows becomes pointless in this context, especially if one thinks in the long term.

## **References**

Aronson, E., Wilson, T. D., & Akert, R. M. (2005). *Socijalna psihologija*. Mate. Avolio, B. J., Walumbwa, F. O., & Weber, T. J. (2009). Leadership: Current theo-

ries, research, and future directions. *Annual Review of Psychology, 60*, 421–449. Barnard, C.I. (1938/1950). *Te functions of the executive*. Harvard University Press.


Burns, J. M. (1978). *Leadership*. Harper & Row.


Relationships as social capital for competitive advantage. In: Ferris, G. (ur.). *Research in Personnel and Human Resources Management* (137–185). Greenwich, CT: JAI Press.


**Open Access** Tis chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/ by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence and indicate if changes were made.

Te images or other third party material in this chapter are included in the chapter's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

# **2**

# **Collective and Leadership**

### **Collective, Collective Intentionally and Collective Action**

Individuals are defned by collectivity. Te perception and understanding of one's environment, self-defnition, and types of behaviour depend on culture, language and collective heritage, on interactions with others, and on the awareness and understanding of one's position in the society.

People belong to more than one social group at the same time, connecting with others to meet their needs and to realise their own and common interests, and assuming diferent roles and duties. Tey are infuenced by diferent ideologies and social settings and conceptions, and their identities refect collective and individual experiences, developing on the basis of a weaker or stronger perception of membership in a group.

Symbolically speaking, an individual is a cross-section of the sum of collectivities he belongs to, with a more or less robust link to each one, coexisting in them and fulflling himself as a social entity. Te importance of a group depends on the space it occupies in the individual's cognitive landscape, the individual's existential connection with the collectivity, the intensity of his forced or voluntary involvement, and the extent to which the individual identifes with the group and recognises himself as its member.

It is human nature to belong to a group and pursue not only individual achievements, but also achievements shared directly or indirectly with others. Collectiveness is a prerequisite for our existence, as much as it results in a measure of depersonalisation. Individuals are fragments of the social unit that defnes them, as described by Aristotle's notion of "koinonia" (κοινωνία in ancient Greek), which refers to unity as an essential component of people's actions and lives.1 Rare individuals who have been torn out of the collective, whether voluntarily or by excommunication, are seen as deviations that give our inherent sociality a mirrored meaning.

Te collective is a fulflment of the human need and aspiration for unity. It refers to a social group as a sum of individuals united by common values, interests, goals and expectations, mentality, customs, tradition, etc.

It comes in many diferent forms, from dyads (groups of two) to countries and international organisations, from loosely tied groups to tightknit ones, from loose reference groups to fully integrated ones. Collectives can be shaped by strong authority, or they can be devoid of authority altogether. Tey can be designed for a specifc purpose, or form spontaneously. Tey can have a complex or simple structure, they can be temporary or lasting, and so on.

Examples of a collective include an art troupe, a football team and a supporter group; a political party and a shipbuilding project team; an international company and a small local bakery; a well-organised army, but also a civil movement, or a group of friends spending leisure time together. Collectives can be characterized by discipline, or unrestrained behaviour; a lower degree of member identifcation and indoctrination,

<sup>1</sup>Aristotle's original term is actually *political community* (κοινωνία πολιτική in ancient Greek), mentioned in his work *Politics*. Aristotle underlines the awareness of collectiveness and the need for common action in poleis, united by collective values and a prescribed code of conduct. Such a community strives for *eudaimonia* (τὸ εὖ ζῆν *tò eu zēn*), which could be translated as happiness or prosperity, and the individual in the community is a "zoon politikon" (ζῷον πολιτικόν in ancient Greek), or a *social animal*.

or a higher one; very distinct symbols and convincing narratives, or weak and unanchored elements of collective identity.

Unlike crowds and undefned mobs, groups brought together by chance, or casual meetings without a particular goal, collectives are characterised by *collective intentionality*.

*Collective intentionality* could be defned as *the power of minds to be jointly directed at objects, matters of fact, states of afairs, goals, or values* (Stanford Encyclopaedia of Philosophy, 2013).2 It involves the fusion of multiple individua into a collective in itself ("we as a collective"). We recognise it when multiple people in a group share the same intentions, collective attention and similar beliefs, when they accept language and roles, and express collective emotions.

Te collective develops a group reason of its own in pursuit of the reason for its formation. It defnes collectivity conditions for the members, and encourages the development of collective commitment to the collective's mission and aspirations (Tuomela, 2013).

Its important features include codes of conduct (collective norms) and the subjective interpretations of the collective norms by its members (perceived norms), which guide their actions (Lapinski & Rimal, 2005). Expectations of desirable behaviours are developed, and mechanisms are built to bind the members even more frmly together so that the collective would function as an integrated social entity.

Furthermore, the collective is characterised by a sense of purpose (or an illusion of one) that justifes its existence. A distinctive intent that is more than just a sum of individual intents is another attribute of the collective: it is impossible to unequivocally divide the collective's eforts into the aspirations and wishes of its members. Te collective is a social entity whose mostly unquestionable individuality stems from the dynamic of the members' internal and external interactions, the collective identity, and the structural determinatives and behavioural norms.

Te collective becomes a compact social group when the members strongly identify with it, and when they use similar self-assessment and

<sup>2</sup>Te concept of collective intentionality was frst introduced by philosopher John Searle in the article *Collective Intentions and Actions*, published in 1990. See: Stanford Encyclopaedia of Philosophy (2013) at: https://plato.stanford.edu/entries/collective-intentionality/ (accessed 12 August 2019).

self-determination devices, and the same behaviour patterns in dealing with persons outside the collective (Miles, 2012: 289). In this case, in Fayol's words, the collective is graced by an *esprit de corps*, or a "spirit of togetherness," interpretable as a well-developed sense of pride in afliation, identifcation, mutual loyalty and commitment in the members.3

Particularly important are the collectives formed as *organisations*: purposeful entities and social institutions in which people are interconnected by unity of management, structure and processes in the intent to perform a task. Te development stage when a collective becomes an organisation, and the features diferentiating the former from the latter, are not entirely clear. Mintzberg, however, ofers an interesting (1979: 2) defnition of an organisation as an entity based on two primary activities: a clear division of the work into tasks to be performed, and a coordination that has been put in place to allow efcient performance of the tasks.

In short, the existence of collective intentionality is the defning feature of all collectives. Loosely knit groups and crowds lack this essential feature of integration and therefore cannot be considered collectives.

Collective intentionality is the prerequisite for meaningful group action, alignment of individual eforts and aspirations, and development of unity. It is a *potentiality* of sorts that can be realised through *collective action*.

In the simplest terms, collective action means acting as a group to achieve common objectives. It can be understood *as* the action taken by a group (either directly or on its behalf through an organization) in pursuit of members' perceived shared interests (Marshall, 1998) (Fig. 2.1).

Some collective actions are short-lived and may or may not be repetitive, while others last longer, with centuries or decades of eforts focused on accomplishing a mission (like a church, pyramid construction and so on). Collective actions can be very simple, such as several friends planning to go to a game together, or very complex, such as the mission to send man to the Moon.

<sup>3</sup>Te French phrase *esprit de corps* is one of Henri Fayol's 14 Principles of Management. Fayol emphasises that an organisation must do everything in its power to maintain group cohesion. Fayol believed that organisations must have a team spirit, and that their members must think of themselves as constituent parts of the organisation. Te unity of the members in a collective is an important prerequisite of an organisation's success. Fayol's Principles of Management are presented in his book *Administration Industrielle et Generale*, published in 1916.

**Fig. 2.1** The collective, collective intentionality, and collective action

Some of the relevant questions are: What is the connection between collective intentionality and collective action? How are courses of action developed, and how are the actions of collective members combined and aligned? How do ideas, symbols and narratives come together to form shared meanings in the collective? Which obstacles need to be removed in order for the collective to be capable of coherent and integrated action? And what is the role of leadership in all this?

In particular, American economist Mancur Olson called attention to problems arising in collective action, noting that groups of individuals, in addition to efcient organisation, needed appropriate mechanisms and selective incentives (reward, punishment) to act in common interest (Olson, 1971/1965).

Diferences in individuals' interests can lead to confict and to behaviours that will not yield the best possible outcome for the group as a whole. In our opinion, this problem can be addressed, apart from incentive instruments, by consolidating intergroup relations, and building a homogenous collective.4

A strong collective can outgrow the individuals and their interests and become an entity in itself, with its own goals, desirable outcomes and results of its activities. Unity then becomes *a substance* that cannot be reduced to a collection of individualities, and collectiveness is perceived as more important than individual eforts.

Collective action can take two generic forms: cooperation and coordination.

Cooperation is usually manifested as a more or less spontaneous adaptation of group members to each other, whereas coordination is manifested as the establishment of a structure of governing and leading based on formal or informal authority.5

Cooperation and coordination are needed in a wide range of activities, from neighbours helping each other with gardening, student excursions, humanitarian campaign organisation, and smaller entrepreneurial ventures involving several partners, to running a hospital or a big global company, or governing a country. However, their role is not the same in all possible situations.

Te needs for organisation, standardisation of behaviour, and leadership increase as the collective and collective action become increasingly complex.

<sup>4</sup> In this we diverge from the common understanding of the problem of collective action in reference works, which describes it as a social dilemma involving suboptimization by rational individuals, who strive to maximize their own beneft, irrespective of the beneft of the collective, as can be analysed in one of the game theory models. Our view is that the problem of collective action can in some situations be resolved through homogenization and identifcation, and by building a sense of togetherness in the collective, with members uniting their individual benefts towards shared aspirations.

<sup>5</sup> Similarly, Mintzberg (1979: 3) identifes fve coordinating mechanisms as the "glue" that keeps an organisation together: mutual adaptation, direct supervision, standardisation of work processes, standardisation of work outputs, and standardisation of worker skills.

Mutual adaptation of individuals is not an adequate alternative to the coordination of the more complex jobs and tasks needed for the achievement of multiple objectives, and *a priori* standardisation of the behaviour of group members is not sufcient, except when they operate in a very predictable and simple environment.

Larger organisations need a complex internal structure covering the relations between members, their interconnecting elements, and the key features of the organisation. In addition to dividing the work and defning roles and positions, it is also important to institutionalize the coordination systems by establishing a formal chain of authority and responsibility.

Moreover, the connectedness between members and the collective needs to be reinforced, their dedication and motivation in performing tasks needs to be boosted, and an appropriate environment needs to be built to strengthen the collective identity and improve the organisation's climate. Leadership plays an indispensable role in this.

#### **Leadership vs. Management**

Te need for leadership occurs naturally with the emergence and development of collectives. To paraphrase physicist and philosopher Ernst Mach, the collective is needed to understand leadership, just as leadership is needed to understand the collective.

Leadership is a persistent feature of the collective: it is the contribution of one or more members to the collective, but also the result of interactions and processes between the members of the collective (Boal & Hooijberg, 2000; Day et al., 2006). Rarely is it possible to efectively achieve goals of common activities without leadership.

Leadership springs from collective intentionality and is materialized in collective action: it requires the establishment of clear guidelines and the creating of an image of a desirable future, the development of a purpose, or the set of meaning needed to interpret the course of collective action, efcient division and coordination of labour, as well as recruitment, mobilisation and motivation of members so they would selfessly make a sufcient contribution to the accomplishment of the collective's goals.

Planning, leadership, and management are interwoven, interconnected and complementary in tasks, and together form the foothold triangle of an organisation (Ohmae, 1982). Planning is a management function and the basis for successful leadership, but leadership is not synonymous with management, and management cannot be equated with leadership in every situation.

Leading (not leadership) is usually identifed as one of the functions of management, with an emphasis on its "human side": the infuence the managers exert on the behaviour and value systems of their subordinates and co-workers to make them enthusiastically pursue the objectives of the organisation, or its constituent part. It is often argued that the art of mobilising people is the most difcult and complex task in management, since people are the source of most of the problems in any organisation. Efcient managers, according to typical opinions, have to be good leaders as well.

On the other hand, the phenomenon of leadership cannot be reduced to a mere ingredient, or segment, of management. Leadership presents challenges and overcomes tensions between two components of collective action: bringing people together, motivating and steering them; and the complexity of the task at hand.

Te thesis that successful leaders also have to be good managers is simply not valid. Managers may or may not have leader traits in addition to their manager function. Management and leadership are two fundamentally diferent phenomena.

Management optimises the existing systems, procedures and processes within the existing paradigm of the organisation (Hinterhuber & Friedrich, 2002). It is defned as the process of accomplishing the organisation's objectives through efective and efcient use of limited resources. Management is based on the functions of planning, budgeting, organizing, stafng, controlling, and problem solving.

Hierarchy is the backbone of management and the source of formal power. Managers are members of the collective at diferent levels of hierarchy to whom the responsibility of managing a unit within the organisation, or the organisation as a whole, has been delegated.

Management is a phenomenon of the Industrial Age: its importance became particularly pronounced with the separation of the ownership role from the resource administration role, and with the establishment and expansion of *modern corporations*, whose top management was given the position of corporate control,6 and which the distinguished economic historian Alfred Chandler (1990: 7) identifes as possibly the most important social innovation of the last century. Te modern corporation bred management as the central institutional mechanism.

What are the similarities and diferences between leadership and management?

Both systems rest on building a belief in the existence of a common goal (Barnard, 1938/1950). Both include activities such as making decisions about tasks to be performed, ways to perform them, and people to perform them with, in order to efectively attain the objectives that have been defned beforehand.

Unlike management, which is based on facing complexity and establishing order and consistency in the organisation's existence, leadership is primarily a phenomenon of facing changes (Kotter, 1990), based on shaping a vision and on connecting people, inspiring and encouraging them to act together.

Instead of the division of labour, rational utilisation of scarce resources, planning and supervisory mechanisms, and making and implementation of decisions, which are the characteristics of management, leadership rests on discovering a purpose, building a desirable future, and coordinating the collective. Management can thus be viewed as set of functions to be assumed in a position of formal authority, whereas leadership can be viewed as a phenomenon of relationship, bringing members of the collective together, and giving a purpose to collective action.

Some believe that the contrast between management and leadership is evident in the diferences in the personalities and modes of operation of persons assuming one or the other role. According to such views, a leader is not an administrator, as compliance with rules and regulations is not an

<sup>6</sup> "Modern corporation" is a term coined by Adolf Berle and Gardiner Means, referring primarily to the type of company whose owners are no longer personally liable for its commitments or any other obligations that the company incurs or could incur (limited liability), as well as to the separation of the ownership function from the function of administrating company's resources, as one of the most important phenomena in economic history (Berle & Means, 1933). Te modern corporation is characterised by a dispersed ownership structure and the dominant position of the management.

important part of their job description, whereas shaping new rules is. Unlike a manager, who maintains the system in order to attain objectives, a leader builds trust in order to accomplish a mission and change the organisation for the better. Te leader aims to "do the right thing," unlike the manager, who aims to "do things right" (Bennis, 2009).

Management underlines rationality and control: managers need analytic competences, persistence and consistency in their work, good problem-solving skills, and tolerance of others. In contrast, leaders are more open to possibilities, they create and accept new ideas, take a personal and active view of targets, and develop new approaches to old issues (e.g., Zeleznik, 1992).

Te meanings of management and leadership collide and, in our view, it is a mistake to shape dichotomies describing antithetical traits of typical managers and leaders, placing them in separate, untouching categories. Tey are unquestionably separate phenomena or constructs, with diferent ways of materializing from the collective reality and diferent manifestations, narratives and symbolic spaces, yet they are often frmly interwoven and difcult to separate.

On the other hand, the infation in the use of the word *leadership* and *leader* to refer to an ever-growing spectrum of roles, tasks and processes in organisations calls for caution. Leadership seems a better and more comprehensive response to most challenges and problems in an organisation than other constructs. Many members of the collective refer to themselves (or others refer to them) as *leaders*, thus increasing their confdence level and improving their social position in comparison with *administrators*, *supervisors*, *foremen*, *bosses*, *managers*, and the like. In most cases, however, their job roles lack the substance we have identifed with leadership above: this is a semantic confusion that occurs because this term is more attractive than some others.

As Learmonth and Morrell (2020) have pointed out, "leader" is a positive and prestigious title in the modern world. It has the power to strengthen a person's position and boost their infuence in and outside of the collective, as well as to convincingly conceal the actual political interests and power relations in the organisation. Tis is true even though most "leaders" are not really leaders, as an analysis of their behaviour and job roles can confrm.

Extremes like Nelson Mandela's and Mahatma Gandhi's leadership in the infuential collective actions that radically transformed the South African and Indian societies, and the managements of most commercial banks and other "machine bureaucracies," are easier to recognise as archetypal examples of managerial consistency in assuming formal responsibility and in administrative coordination, with a high level of job standardisation.7 Between these two extremes, there is an impressively large area where leadership and management coexist, especially in organisations competing in the markets, or organisations facing substantial pressure from their environment or threats to their survival. Famous corporation founders and/or leaders like Apple's Steve Jobs, Nike's Phil Knight, Xerox's Anne Mulcahy, SAP's Henning Kaggerman, and many others, are examples of both successful leaders and excellent managers.

Succinctly, leadership encourages the formation of a new collective, or emerges in an existing collective to inspire, unite and steer its members in performing collective actions and accomplishing common goals.8

#### **Depersonalized Leadership**

In most cases, we *personalize* leadership, i.e., we associate it with leaders, their qualities and abilities, their position and the role in integration of the collective and creation of organizational future. Personalized

<sup>7</sup>Mintzberg (1979, 1983) defnes machine bureaucracy as one of the fve basic confgurations of an organisation. Te characteristics of machine bureaucracy include highly specialised, routine operative tasks, formalised procedures in the operative core, proliferation of rules and regulations, formalised communication within the organisation, large units at operative levels, functional task grouping, relatively centralised decision-making power, and a well-developed administrative structure. Te following characteristics are also prominent: ofcial communication, formal authority and responsibility chain, unquestionable and recognisable division of labour, clear diferentiation of organisation units, strong control, and division of power between the top-ranking managers and analysts from the organisation segment that Mintzberg referred to as "technostructure."

<sup>8</sup>Te leadership position was recognised as early as in the Antiquity. In *Te Republic*, Plato argues in favour of the need for a strong leader, capable of serving the society as a whole. According to Plato, the leader should provide the collective with food and protection (trophḗ or τροφή in Ancient Greek), like a shepherd provides for his fock. Trophḗ Ta is divided into two functions: care (epimeleia; ἐπιμέλεια in Ancient Greek), and willingness to help (therapeuo; θεραπεύω in Ancient Greek). Te leader is the basic exponent of the force that serves as *the animating principle of the organisation* (Kirkeby, 2008: 18–19).

leadership can be manifested in individual or collective leadership; it can be concentrated or dispersed; with a higher or lower level of decisionmaking discretion; with symmetrical or asymmetrical structure of power distributed within the organization.

Analysing leadership based on examples of behaviour of infuential individuals is fairly common, both in practice and in popular literature.

Leadership can indeed be observed by correlating the success of an organisation with the traits and competencies of its upper echelons: they create and/or legitimise the strategic intent and make decisions of vital importance for the organization. In fact, many sociodemographic and psychological factors, as well as business experience and life experiences of those occupying the upper echelons certainly have a signifcant impact on the efciency and performance of the organizations.

Nonetheless, one must not forget that the organization is a set of routines, processes and/or systems in which inputs are transformed into outputs. Its existence is afected by existing administrative mechanisms and structure, formally established rules of conduct and organizational settings, embedded culture and ideology, and non-formalized ways of acting and interacting with the surroundings.

Organizations relying predominantly on formalization of behaviour may end up *bureaucratizing* their governance processes, efectively reducing them to conduct that does not depend on any individual or group but on a well-established set of rules which are manifested through division of labour and adequate job specifcation, clear chain of command and communication, and standardization of diferent types of jobs. In some cases, this can lead to almost complete depersonalisation of strategic leadership.

Depersonalisation can also appear in a situation characterised by comprehensive decentralisation, where members of the collective act jointly in strategic processes, without any identifable individual diferences or clear hierarchical relations. Tis kind of strategic leadership, where the idea of individual contributions is lost as such, requires a high degree of indoctrination and homogenisation of the collective, strong agreement when it comes to direction of action, and developed decision-making mechanisms of direct democracy and participation.

Moreover, depersonalisation can also be observed in the forms of network leadership, especially those where there are no strong managerial nodes.

Depersonalisation of leadership can imply focus on the functions of leadership (and followership) rather than on the persons holding those functions. In this context, leadership is seen as a dynamic, highlyrelational process emerging in diverse situations and aiming to *acknowledge the non-existence or the mythological nature of leaders and followers as nouns or separate identities* (Malakyan, 2015: 228). Tis kind of relational and process paradigm is, at frst glance, distinct from the bureaucratic approach, but it actually shares with it a strong reliance on organisational (or group) settings and depersonalisation of leadership *per se*.

Tere is an actual duality of leadership in organisations.

Any leadership has its own depersonalised substance which is the result of specifcities of bureaucratic structures and characteristics of the environment and the organisation, and which is refected in the limitations and available decision-making discretion; however, it is also undisputed that prominent individuals, with their traits, knowledge and leadership styles, afect the way leadership is manifested.

Te content and processes of leadership include in most cases personalisation and mechanisms of administration and management.

Duality of leadership can also be manifested in a completely diferent way: by distinguishing formal from emerging relationships within the organisation. Tis is where the contrast between the personal and the impersonal is manifested as a kind of structural paradox.

Incidentally, there is an interesting idea about the coexistence of two leadership structures, an idea developed within the complexity theory that postulates the existence of two connected but distinctly separate leadership phenomena. Tese are (1) leadership based on administrative structures and formal positions, and (2) adaptive leadership, which is based on the dynamics of relationships and complex interactions in social networks. Adaptive leadership, as underpinned by the advocates of that theory, plays a particularly important role in organisations where creation and dissemination of knowledge and information is a crucial determinant of their existence and development (Kriger & Zhovtobryukh, 2013; Uhl-Bien et al., 2007; Uhl-Bien & Marion, 2009).

## **Leadership as a Collective Attribute**

A vast majority of theoretical and practical approaches to leadership belong to the discourse relying on the classic ontology. We can shed some light on what we think of as leadership by analysing certain determinants and relations in the categorical tripod "leader-follower-outcomes." Whether it involves process aspects, relationships or characteristics of social actors and situations, the manifestation of leadership comes down to having and accepting authority, and to the infuence that is supposed to result in desirable outcomes in the realisation of collective action.

Te classic ontology is intuitively acceptable and, according to its advocates, helps us explain the diferent manifestations of leaderships, and discern recognisable behaviour patterns and typical relations that can help us build theoretical models with predictive potential, or fnd interpretations that provide an in-depth overview of the characteristics of the constituent elements of the categorical tripod and their interrelations in diferent situations. We believe, and we are not alone in this, that such ontic reality is not entirely satisfactory in providing a bigger and complete picture of leadership in the modern organisations of our time.9

Neo-Kantians like Dilthey, Ricker and Windelband maintain that "understanding," or establishing connections between individual meaningful phenomena and a specifc whole, is the basic principle of social sciences (unlike natural sciences, where the main principle is "explaining," or establishing causally determined connections). Te two difer by their treatment of phenomena: whereas the nature of phenomena in social sciences is individual and specifc (they only occur once), their nature in social sciences is general, because they can be repeated ad infnitum (Supek, 1996: 79–80).

We are of the opinion that unclear defnition boundaries mandate caution in the study of leadership: irrespective of the discourse we subscribe to, the important thing is to defne the boundaries of the concept's semantic space in order to adequately "understand" or "explain" what it

<sup>9</sup>We indisputably see the world as the *understandable* world, in the entirety of the phenomena that comprise it and that we are capable of understanding. In such a world, we strive to understand why something happens, why phenomena are what they are, which conditions they depend on, and which rules the connection between a condition and its subject follows (Tipurić 2014).

is, what it can be, and how it relates to other phenomena.10 Peeling away the accumulated excess components of the defnition seems an almost impossible task, as does implementing entirely new constitutive semantic formations. In doing so, we must accept the fact that nothing is immutable in the social environment: as a phenomenon, leadership can, and does, change over time, as do the meanings of leadership in the minds of everyone it concerns.

Leadership serves as an *invisible integrative mechanism* of an organisation (Barnard, 1938/1950), tremendously important in building a common worldview that helps the organisation survive as a coherent entity. Rather than an appendage or decoration, leadership is a substantive element that is essential to the collective's existence; its function, as Peter Senge et al. (2007) perceptively noted, is to *defne the reality of the organisation*.

It is also a complex, multilevel phenomenon that does not yield itself to simple direct observation (Weick, 1978; Yukl, 2006). We also know that leadership *emerges* from the collective as its essential component, whether the collective in question is a dyad, triad, a small group or a large one, a tribe or a religious congregation, an enterprise or a non-proft association, a national or international organisation, and so on.

Collective intentionality constitutes the essence of the collective, and efcient implementation of collective action through cooperation and coordination mechanisms in order to accomplish common goals constitutes its purpose. Leadership is the key to the coordination of collective action, and much more than (just) an activity by which one actor infuences others in order to control their behaviour. Leadership is a crucial characteristic of the collective that essentially defnes it.

Such a view can go against our intuition, which tells us to look for leadership in designed constellations where we can always recognise visible structures of formal and informal authority, as well as the actors who assume leader and follower roles, and the descriptions of behaviours in

<sup>10</sup> Stogdill's view that "*there are almost as many diferent defnitions of leadership as there are people who have tried to defne it*" (1974: 259) is well known. Some believe we should consider the usefulness of the construct of leadership in scientifc research, considering how unclear and undefned the concept is (e.g., Alvesson & Sveningsson, 2003).

the established interrelations are known beforehand. It also demolishes the constructed reality built on such a defnition of leadership, which is widespread.

On the other hand, how do we interpret situations distinguished by symmetric distributions of roles, where roles in the relationship of leadership are not clearly diferentiable, or where the interrelations between the actors are dynamic, with the leader and the followers often changing places? How do we explain the widespread phenomena of shared and distributed leadership in teams and complex organisations?11 Does leadership as such even exist if everyone in the collective assumes the role of the "leader" together?

Tere is also the concept of *self-leadership*, which is a result of the encouragement of autonomy, and empowerment of individuals to act without supervisory mechanisms.12 Leaders' intrapersonal relationships are not a frequently discussed topic in reference works in the feld of organisation and management, even though some authors argue that they constitute a leadership problem *par excellence* (Kirkeby, 2008: 16).

Moreover, how is leadership manifested in strategic alliances and other constellations comprising multiple entities? Social network leadership also has specifc traits that are not identifable with the classic concept of authority, hierarchical relations and explicit "leader-follower" relations, and yet it exists as "leadership."

Besides, how do we interpret a type of leadership where infuence, as a generic attribute, takes on the form of *serving* people, a group or an organisation, and/or something that can be understood as a higher collective purpose?

Changes in circumstances at a time when new forms of organisation and association appear further emphasise the need for an ontological "expansion" so that we could study how leadership emerges as a collective trait that helps align the common activities undertaken by its members.

<sup>11</sup>Tere are several ways to *share* leadership. A group of key people in an organisation can grow into a *dominant coalition* that assumes joint leadership functions. Secondly, leadership can be dispersed and distributed across the organisations, taking one of the forms of collective leadership.

<sup>12</sup> Self-leadership develops when a collective encourages its members to act independently, without the guidance and the authority of a superior (see e.g., Gardner & Pierce, 1998). Te advanced change theory also underlines the need for self-leadership. Leaders face a high level of cognitive, behavioural and moral complexity, and must therefore focus on changing themselves (selfleadership) to be able to successfully change others and the entire system (Quinn et al. 2000).

Leadership is irreplaceable in building group identity and shaping the way how members will be united and directed towards the accomplishment of common goals. Tis does not have to be, and often is not, the result of one leader's infuence over the followers in the collective. Te semantic universe of leadership needs to be expanded.

Tuomela (2007) underlines that unity in a collective depends on the existence of constitutive structures and a group agent that unites the collective and helps defne it. Te group agent rests on three footholds: the defnition of key issues of interest for the collective (*realm of concern*) and the creation of an *intentional horizon*, which comprises answers to formulated questions that have been coordinated and accepted by the group, and the existence of an *ethos* linking the frst two elements, which is recognisable in the main goals and in the commitment to the collective (Tuomela, 2007: 15, as cited in Laitinen, 2014). In such a defnition of the collective, leadership is the group agent, but it cannot be understood (just) as a trait of the actors concerned, a relationship, a simple process, or infuence in itself.

Leadership can be understood as an interactive social process *in which decisions are made on what needs to be done and how to do it… that involves many diferent people infuencing one another* (Yukl, 2008: 4). Te understanding of leadership as a dispersed complex process comprising multiple infuences accentuates, in particular, the importance of the collective in the concept.

From the relational perspective, development of leadership can be understood as an improvement of leader-member exchange (LMX theory, e.g. Graen & Uhl-Bien, 1995) or as the strengthening of the collective's ability to create direction, collectivity and commitment through interactions in network relationships (Van Velsor et al., 2010; Cullen-Lester et al., 2017). Tis is in line with strategic leadership being viewed as an *organisational characteristic* that emerges as a shared or collective process (e.g., Pearce & Conger, 2003).

Since organisations are dynamic processes simultaneously creating and destroying shared meanings (Gray, 1985), leadership can also be understood as a way to align collective intentionality with the symbolic representation of the illusion of the organisation's reality.

Drath et al. have ofered one of the more interesting approaches to identifying "an alternative ontology" of leadership. Rather than uncritically accept the ontology that seeks the defnition of leadership in the relationship leader-followers, in their view, leadership should be conceptualised around the ontic triad "direction-alignment-commitment" (DAC) (Drath et al., 2008).

Te alternative ontology considers leadership an inalienable feature of the collective as a whole. Leadership is manifested (and exists) wherever there is direction, alignment, and commitment building in a collective, regardless of the possible reference to the asymmetric relationship of infuence between members that shapes some individuals into leaders, and others into followers.

*Direction*, the frst element of such an ontology, refers to common efort and understanding in the collective of its purpose, task, course of action, and idea about the future. Direction usually includes mission, vision, main policies and goals. It can be imposed on the members of the collective through authority and infuence, but it can also be the result of adaptation, coordination and agreement between the members. Te more involved the members are in defning the courses of action, the greater is their common understanding and value.

*Alignment*, the second element, is related to the organisation and coordination of knowledge and labour in the collective. Drath et al. (2008: 647) argue that larger organisations conduct collective alignment through structure and management functions (planning, budgeting etc), whereas smaller groups conduct it through mutual adaptation. Alignment helps make the collective's activities coherent.

*Commitment*, the third and fnal element, refers to the preparedness of the members to subject their eforts and their own well-being to the common interest of the collective. Commitment depends on loyalty, devotion and identifcation of the members, and is usually manifested in the energy, efort and time invested in the performance of common tasks and jobs in the collective.

Individual and collective convictions on how direction, alignment and commitment are formed in the collective, and how these convictions lead to "leadership practices," or the realisation of the three elements in the collective reality, are the key components of the "leadership framework".

Te following analogy about the development of leadership potentials ofers a good illustration of the relationship of the two ontologies. Te classic ontology gives importance to the development of the leader (in some theoretical approaches) by reinforcing the leader's abilities to efciently fulfl the leading role, and take on important processes in the relations with their followers. Te alternative DAC ontology draws attention to the expansion of a collective's leadership capacity. Te objective is to continuously create direction, alignment and commitment through mutual interactions (Van Velsor et al., 2010).

Such a defnition of the constitutive elements of leadership is easier to associate with the relational processes occurring at multiple levels in and outside of the organisation (Cullen-Lester et al., 2017: 131), as well as in the conditions in which the actors' roles are alternating, shared or not distinguishable enough.

Te alternative DAC ontology is similar to our view of leadership, based on the essential connection between collective intentionality and collective action (Fig. 2.2).

In conclusion, leadership emerges as a coordination mechanism in collective action-taking, regardless of the existing constellations of authority and the distribution of roles between the actors.

It arises as a *collective phenomenon* wherein the removal of individual organisational groups cannot explain its true substance. It arises as a response to an identifed need, problem or opportunity with which the organisation is faced. It is identifed as a sort of "property" of the collective, the kind that is created in dynamic processes of leadership role swapping; it is constituted and modifed through formal and informal

**Fig. 2.2** Collective and leadership

relationships within the organisation. Hence, it comprises relations and structural patterns that emerge as the result of interaction between mutually dependent actors (Yammarino et al., 2012; Cullen-Lester & Yammarino, 2016).

Te challenges of leadership increase with the number and complexity of the actions to be taken, and the level of uncertainty and variability in the collective's environment.

Leadership implants desirable values, develops a culture of mutual understanding, and reinforces cohesion. It creates the frameworks for understanding, purpose and meaning of collective action (Jacobs & Jaques, 1987) and delivers symbols and stories that help shape and reinforce the collective identity.

Leadership inspires commitment in members and strengthens connections, provides a purpose, and aligns unity in collective action.

### **References**


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# **3**

# **The Rise of Strategic Leadership**

## **Strategy and Leadership**

In the last few decades, the construct of "strategic leadership" has originated and developed as a distinct area of theory and research that connects the disciplines of strategic management and leadership within social sciences.

Strategic management is much more focused on strategic choices and strategic decisions than on the processes by means of which such decisions are made or implemented, whereas leadership theory based on classic ontology mostly deals with matters of the "leader–follower" relationship in teams or at lower organisational levels, with little emphasis on actions of organisational leaders (Yammarino & Dubinsky, 1992; Wang et al., 2012).

Tere are difculties with the circular defnition of strategic leadership. Strategic leadership is a general linguistic construct, a neologism that connects two categories the meanings of which are elusive and variable depending on the context in which they are used.

Strategy was created in order to explain the behaviour of people, organisations and other social entities when interacting with the environment, and the intent behind such behaviour. As pointed out by Henry Mintzberg (1994, p. 75), strategies are unique concepts that exist only in people's minds and *are not sharply-defned entities to be stacked up like crates in a warehouse*. People use them to try to explain the world around them, to give it meaning, to recognise and determine its purpose, to create a framework within which actions taken in this world that surrounds them can be infuenced.

Strategy is not a coherent thought construct with unambiguous meaning to which we can attribute an indisputable interpretation. It is a multisignifer with a plethora of signifeds that change and expand; we know that there is no possibility of fnding its "fnal meanings." Strategy may be observed from a perspective provided by Derrida's concept of *diférance*, a word that cannot be easily translated but that can be understood as the special mechanism used to produce meaning.1

It is a *transnarrative* and brings a multitude of various and variable meanings, tones and defnitions. As a concept, it is mainly related to the most important aspects of being, a holistic view of and a relationship with the future, as well as a selection and radical separation of what is important from what is not important. In addition, strategy is an idiosyncratic idea and a mystical aporia, a collection of mystifying insignias that attribute importance to a particular social constructed entity; it is in contrast to less important, minor manifestations. Strategy is difcult to defne, and it is accompanied by many diferent conceptions, metaphors, images and stories that come with it.2

Meaning is given to strategy depending on the discourse, as well as the historical and cultural context.

Strategy emerges in the interaction of important actors involved in creating meaning through their interpretations. Instead of focusing on

<sup>1</sup>*Diférance* is a neologism that explains the intrinsic property of language. For Derrida, it is neither a word nor a concept, but *the possibility of conceptuality, of a conceptual process and system in general* (Derrida, 1982, p. 11). Te French word "diférence" means diference, while "diférer" means to defer or postpone. Derrida used these two words to coin a new word, *diférance*, which carries the meaning of both diference and deferral. In addition, *diférance* is pronounced the same as *différence*, which fact Derrida used to additionally emphasise the precedence of written text.

<sup>2</sup>For more details, see my book, *Iluzija strategije (Illusion of strategy)*, published in 2014 (in Croatian).

decision-making, strategic leaders *would concentrate on the values, symbols, language, and dramas that form the backdrop for decision making structures* (Smircich & Stubbart, 1985, p. 731). Strategy exists and lasts as an idea and/or as an action, woven into the world and language of leaders, managers and organisations.

Strategy provides the *fundamental justifcation* to an organisation for its existence: *ex ante* or *ex post* interpretation of strategy is the most important part of the managerial elite's task in seeking and creating organisational purpose (Tipurić, 2014, pp. 27–29). It is interpreted as imaginary, visualised, mind-made and recognised; however, it is also noticeable in designed or observed behaviour patterns. At the same time, it is a focus on what is important and it creates a structure that establish order in networks of meaning.

It may be a refection, mental representation, cognitive labelling and sensemaking, as well as an action, a type of activity or an execution. It is observed in the consistent and integrated behaviour of social entities, via purposefully combined and interconnected activities, rules and routines, through which one may identify the reasonableness of action and its rootedness in the social environment in which it is manifested.

Leadership bears several meanings, as we have already highlighted. Leadership is a concept that denotes an individual or a group of individuals whose authority has been accepted by others. Secondly, leadership is a process in which the set goals, plans and tasks are realised through exerting infuence on one's followers and their behaviour. Tirdly, leadership may be viewed as a relation between two persons or as a multilateral relation in hierarchies and networks that connect people. Finally, leadership is the connection between collective intentionality, collective action and the desired outcomes: it exists as a guiding, integrative and coordinating mechanism of common action in the collective.

Strategic leadership shares the plurality of meanings of both underlying concepts, producing diferent meanings which are not mutually exclusive and which adequately point to real and perceived dimensions of the phenomenon.

It is a social construct *sui generis*: researchers and practicians use their knowledge to form social facts that infuence the world of the phenomenon; in fact, they *constitute* strategic leadership, impose properties on it and create it.3

## **Construction of Strategic Leadership**

Tere are multiple ways in which we can approach the understanding of strategic leadership. Diferent perspectives make it difcult to establish a stable symbolic canopy, although nowadays no one can dispute the creation of an "autonomous sub-universe of meaning"4 of strategic leadership, which has the capacity of a feedback efect upon the persons who have produced such a meaning.

Firstly, when we add the attribute "strategic" to a phenomenon, we emphasise its signifcance and isolate its relevance in regard to the underlying phenomenon. Concepts such as strategic plan, strategic thinking, strategic behaviour, strategic move, etc. are subgroups within the basic category, with connotations of the essential and the critical as a common feature.

What do the "strategic" attributes of an action or thought have in common? It is undisputed that "strategic" means importance in and of itself, but also in regard to what is less important; "strategic" things are signifcant and often have an existential underlining; "strategic" connotes fated predetermination and alchemical magic of action or thought about essential matters that concern the social entity. In other words, the attribute "strategic" is linked to separating the class of main and particularly important components in a class of manifestations or constructions. For instance, in that regard, the most important decisions that defne the being and the future of an organisation are referred to as "strategic decisions."

<sup>3</sup>Berčić (2012, p. 263) uses the metaphor of "cookie cutter" for such an anti-realist form of knowledge, as opposed to the metaphor of "chopping meat", which is appropriate for the realist form of knowledge. Advocates of the constructivist approach see researchers as "craftsmen" and "toolmakers" who are part of a *network* that creates knowledge and ultimately guides practice (Mir & Watson, 2000, p. 941).

<sup>4</sup> I borrowed the terms in quotation marks from authors Berger and Luckmann (1992).

Franklin (1998, p. 320) points out: *Te word 'strategy' is brought out... when writers and speakers, theorists and managers are looking for a more impressive word than 'important'*. Te construct of leadership sufers from the same ailment, as emphasised by Learmonth and Morrell (2020, p. 20) in a witty parable: *Leadership is simply being used almost like an aerosol sprayed over every activity to make it somehow 'special'*.

A similar logic may be applied to strategic leadership, which we can identify as a special type of leadership in important and crucial situations with signifcant consequences for the collective or the organisation. Strategic leadership can thus be understood as *the ability to handle complex problems for which there is no obvious short-term solution, in which the stakes are high, and in which infuencing others is essential* (Kleiner et al., 2019).

*"If strategy is so important"*, Knights and Morgan (1991, p. 255) questioned, "*how did business manage to survive so long without 'consciously' having a concept of strategy?*" In fact, it would seem that we actively afect the constitution and redefnition of problems and then ofer a *strategy* as their solution.

Secondly, strategic leadership can be understood as a kind of *metaleadership* or in other words, a leadership setting that gives meaning and a framework for all leadership activities and processes in a collective or organization.

Strategic leadership integrates coordination eforts in an organization and sets the framework for fulflment of the mission and for outlining of a desirable future. It is a crucial instrument in an organisation's interaction with its surroundings.

In other words, it is an integrative activity connected with the ability to create, improve and maintain the capacity for learning, changing and managing strategic thinking in an organization. It helps to face uncertainty, complexity and overfow of information, by requiring timely action and adaptability to changes in the environment (Boal & Hooijberg, 2000). Another function of strategic leadership is efcient mobilisation of available human and social capital of an organization (Kriger & Zhovtobryukh, 2016).

Its purpose is to engage members so that they may play an active role in organisational transformation (Nutt & Backof, 1993, p. 324), to develop abilities and instil core values (Boal & Hooijberg, 2000) and to strengthen their commitment (Collins, 2001).

Tis goes to show that strategic leadership implies a need to control the organisation's destiny. Te central issue is the quest for sense and purpose, development and selection of guidelines and developmental trajectories, imprinting of symbols and plausible explanations that can mutually connect and motivate the members of the organisation in common action. It can also be seen as an art of setting boundaries where strategy emerges, a making and giving of sense and purpose of organisational actions (Crossan et al., 2008, pp. 573–574) and as a link between key organisational dimensions: ideology, identity, mission, context and core competencies of an organisation (Worden 2003, p. 32).5

Tis defnition outlines strategic leadership as an organisational feature or an integrated process that does not have to depend on individuals or groups that assume the position of formal authority. It can be personalised or depersonalised, concentrated or dispersed, pertinent to only one collective or pertinent to an alliance or network of individuals, groups or organisations.

Tirdly, one can separate strategic leadership from "ordinary" leadership, depending on its position in the organisation. According to this idea, "ordinary" leadership deals with relations within an organisation ("leadership *in* organisations") whereas strategic leadership, on the other hand, focuses on leading entire organisations ("leadership *of* organisations") (Boal & Hooijberg, 2000).

Leadership of whole organisations is usually entrusted to an individual or a coalition of people with the highest authority and infuence in an organisation ("upper echelons") who are at the top of the hierarchical ladder (Hambrick, 2007). Position, role and activities of upper echelons greatly difers from positions and activities of all other individuals who have diferent managerial responsibilities and authority in an organisation.

<sup>5</sup>Crossan et al. (2008) propose that a form of strategic leadership which simultaneously "covers" three levels: level of one's self (self-leadership), leadership of others and leadership of an organisation, be referred to as transcendent leadership. Transcendent leadership supersedes the three levels mentioned above and, according to those authors, improves organisational performance in a dynamic environment.

Tis prompted some scholars to attempt to distinguish between theoretical approaches: according to them, leadership theory focuses on leaders at any level of an organisation, from heads of smaller or larger teams or groups, to foremen or managers on all levels, whereas strategic leadership theory focuses only on individuals at the top level of the organisation (Hambrick & Pettigrew, 2001).

It is common for strategic leaders to be entrusted with tasks such as: (1) formulating organisational goals and strategy, (2) developing structures, processes, controls and core competencies for the organisation, (3) managing multiple constituencies, (4) selecting key executives, (5) creating the context for grooming the next generation of executives in the organisation, (6) providing direction with respect to organizational strategies, (7) maintaining an efective organisational culture, (8) sustaining a system of ethical values, and (9) serving and acting as the representative and negotiator on behalf of the organisation *vis-à-vis* external entities such as government and other organizations and constituencies (Bass, 2007, p. 36).

Successful strategic leaders need to be good at coping with paradoxes (Peters, 1991; Wang et al., 2012), possess mental elasticity and the quality of grasping time, from the past to the future (Goldman, 2012, p. 27; Liedtka, 1998), develop a capacity for dialectical thinking (Lloyd, 1990; Zhang and Chen 1991, according to Wang et al., 2012), know how to deal with contradictions, and move away from one-dimensional and naive interpretation of reality.

Apart from the relational "leader–followers" activities characteristic of "ordinary," analysis of strategic leadership cannot be complete without including strategic and symbolic activities (Cannella, 2001), or in other words, without an insight into the characteristics, cognition, behaviour, actions and strategic choices of persons on top positions in the organisation, including the connection between those attributes and organisational performance in the broadest sense (Hambrick, 2007; Finkelstein et al., 2009, p. 4).

In this context, strategy becomes the *punctum saliens* of strategic leaders' work. As emphasized by Porter (2001), the role of strategic leaders is to *teach* others about strategy, to act as a barrier preventing any straying from it, and to defne limits for organisational action. Tey make and communicate decisions that afect the future of the organisation (Zaccaro, 1996).

From a pragmatic viewpoint, strategic leadership is the ability to infuence others to voluntarily make day-to-day decision required to improve long-term survival of the organisation, while at the same time ensuring its fnancial stability in the short term. Rowe (2001, p. 83) explains that such defnition implies *an ability to infuence subordinates, peers, and superiors and that the leader understands the emergent strategy process that some authors consider more important than the intended strategic planning process for organizational performance*.

Former *British Petroleum* CEO John Browne emphasised that the important constitutive elements of leadership at the highest level are the following: (1) identifying possibilities that other may not have identifed, (2) use those possibilities quickly and completely, (3) inspire people to achieve more than they think they can achieve, and (4) convince them that they should never be satisfed with their present position (Prokesch, 1997).

Fourthly, strategic leadership can be explained as a refection of ruling ideologies and power structures in the society and in the organisation.

Tis approach interprets strategic leadership as a phenomenon used to obscure and cover up the obvious legitimacy of existing social relations, specifcally in terms of maintaining and strengthening the position of some interest group in order to retain power and the constellation of infuences in the organisation and around it. It additionally helps to justify and reproduce existing power relations, resource inequality and injustice in organisations and in the society.

A number of scholars have attempted to observe strategic management, and consequently strategic leadership as well, from a viewpoint inspired by the Critical Teory of the Frankfurt School. Te idea is to emphasize the *discursive* and *ideological* dimension of strategy, which is close to post-modernist criticism, but with a higher degree of optimism, believing that *change for the better* can happen. As the advocates of the Critical Teory believe, strategic management is a privileged area of management theory and practice one that is very much involved in maintaining existing unfair social relations and, as such, it cannot be politically neutral.

Consequently, one may postulate that the construct of strategy was introduced and envisaged to legitimize the actions of managerial leaders and to justify the importance of their position in inter-organizational structure and processes and in corporate governance relations. In this vein strategy can be understood as *part of a discourse of power which reproduces certain sets of hierarchical social relationships through legitimating them with reference to positivistic and scientifc norms of rationality* (Knights & Morgan, 1990, p. 477).

Strategic leaders are frst and foremost advocates and interpreters of desirable social values and promoters of mutually agreed interests of key interest and infuence groups; they could be referred to as beacons of predominant ideologies.

Tey are ideologically dependent and tangled in webs of discourse, in which context *strategy constructs a myth of commonality of organizational purpose by positing lofty and unattainable aspirations* (Harfeld 1998, according to: Levy et al., 2003, p. 97).

Teir duty is to preserve the existing power and ideology in the organisation and in the society: they use strategy as a cohesive instrument of conservation of a certain state of afairs, obscure exploitation and produce narratives and other symbols that create an illusion of purposefulness of their action.

Finally, we can view successful strategic leadership as a phenomenon that changes organisations and the overall society for the better.

Each organisation is a part of the society: its activities afect, to a greater or lesser extent, our common present and future. Selfshness and lack of understanding of social reality, social insensitivity and environmentally harmful behaviour create massive damage, destroy modern-day institutions and undermine trust that has already been created.

Strategic leadership entails civilizational responsibility. Te world needs to be changed and the planet has to be protected in the process: in this type of work, leaders need to play a vital role, focusing on the interests of future generations and on social benefts. Te creation of new value and its allocation has to be contextualised, including by distancing it from short-sighted interests based on greed and avarice. Te recent pandemic crisis has shown just how important social responsibility, acting in common interest and departure from myopic view of reality actually are.

Hence, strategic leaders must not stay isolated behind closed doors of their ofces where they discuss only the survival and prosperity of an organisation. Tey have to be capable of seeing beyond the horizon and the boundaries of the organisation, and take into account the long-term needs of the entire civilisation. Teir leadership has to embody "doing what is right," irrespective of the palliative and partial benefts endowed in the holders of positions of power.

Tis again raises the eternal question of how to solve the paradox which, to paraphrase Aristotle, can be outlined as follows: in order to be capable of doing what is right and good, we have to know what is right and good; and to know what is right and good, we frst have to do it. Te future of our civilisation and preservation of the planet for future generations is the only meta-criterion that is appropriate, in our view.

Collective intentionality and collective action need to be ennobled by the highest human values. Balancing between economic, social and environmental objectives has to be the cornerstone of strategic leadership in collectives on all social levels: from small groups to the largest global organisations. Responsibility to the society, the environment and to those that will come after us becomes the quintessence of strategic leadership.

## **Realm of Strategic Leadership**

Any organisation needs strategy in order to create new economic and/or social value.

Strategy may seem as an organisational *supra-function*: an integrating arrangement that is to optimize and coordinate organisational action. It acts as a support for the collective in internal and external interactions and transactions; it helps the organisation and its members to act in unison as a coherent group. As Rumelt (2011, p. 2) noted: *Te core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors*.

It is identifable in key images, narratives, plans, decisions and activities, in the selected model of interaction with the surroundings, in resource combinations and dynamic capabilities, in the leaders' ideas about defnition and future of the organisation, in the degree of innovativeness and entrepreneurial orientation, in the speed of adaptation to change in the environment and in a whole series of other characteristics, attributes and organisational features.

On the other hand, organisational action is an impression onto reality: a transposition of collective intentionality and strategy into organisational decisions and procedures.6 Organisational action is characterised by permanent, almost change-resistant behavioural patterns. Routines, processes and standardisations help to connect and integrate, whereas clear and indisputable objectives facilitate work focus and implementation of what has been planned.

Traces and symbols of strategy can be seen in implemented organisational action. Moreover, Mintzberg (1987) paraphrases the philosopher David Hume, emphasizing that strategies result from human actions, not from human design. According to Weick (1987, p. 231), *strategy is a form of discovery of meaning that arises from actions that have been taken*. Just like in other situations, its content and meaning depend on the *degree to which they are arranged into sensible, coherent confgurations*.

Clear and unambiguous strategy should ensure consistent and nonredundant behaviour of an organisation. Uniformity in action is the premise of coordinated activity, loss prevention and better monitoring of resource usage. Tis requires discipline and commitment, and also stability in organisational action.

Te need for strategic leadership arises due to a gap between strategy and organisational action.

Strategy defnes the relationship of the organisation and its environment; interaction with the world beyond its boundaries needs to be nonconficting, non-redundant and manageable. Existence of coordination mechanisms in the implementation of organisational action is a prerequisite without which this cannot be achieved.

<sup>6</sup>Te phrase "collective action" can be replaced by "organisational action" while still keeping the basic meaning when talking about complex collectives, such as larger organisations.

Strategic leadership bridges this gap. It is intended to direct various organisational activities, resolve the major issues and disagreements concerning key issues, encourage members to achieve the best possible results, and give sense to current measures and performances in the light of an imaginary future or a set of principles that justify joint organisational eforts.

Enactment of strategic leadership creates the prerequisites for congruence between key organisational components (Fig. 3.1).

Strategic leadership is inseparable from social expectations and organisational aspirations in which ambience is constructed, meanings are created and instilled, and purpose for the entire organisation is provided. It purposefully connects the organisation with its surroundings, while

**Fig. 3.1** Enactment of strategic leadership

simultaneously taking into consideration the constellations and needs of internal and external stakeholders.

To be more precise, an organisation is not a carved-out, self-sufcient fragment, but rather an indivisible part of the overall social fabric from which our present and future are sewn. It is a *socially-constructed reality* (Berger & Luckmann, 1991; Morgan, 1986), an ideological stage and a power playground, an entity comprised of intertwined interests that has sociopolitical and economic relations with actors from its environment, a collective in which mutually dependent actors take on roles and assignments.

Diferent environment settings can signifcantly afect strategic leadership and the ways of establishing direction and achieving consistent action in an organisation and its permeation into its surroundings. Diversity of ambience afects the diferences that are manifested in events, processes and elements of strategic leadership, much like the organisation and its strategy are decisive to the form of strategic leadership.

Te degree of uncertainty also afects strategic leadership. Te nature of leadership is not the same in a simple and in a complex environment: demands of an organisational environment that is uniform and monolithic are diferent from those found in one that is turbulent and heterogeneous. In some situational confgurations leaders have more managerial discretion, whereas in others their decision-making margin is narrowed and restricted by the characteristics of the organisation and environment. Te more complex and larger the managed organisation and the more versatile and unpredictable the environment, the more complex the demands of strategic leadership.

Confgurational characteristics of the organisation directly infuence the form of strategic leadership, just as strategic leadership defnes the organisation. Strategic leadership shapes and connects strategy and organisational action, but they in turn defne strategic leadership itself. Sometimes strategy encourages the creation of an adequate form of leadership, and sometimes it can be identifed and distilled from organisational actions the consequences of which might stimulate the emergence of identifable behavioural patterns.

Terefore, strategic leadership appears as a *necessity* in order for the organisation to adequately adjust to its environment. Without strategic leadership it is hard to expect the encouragement of strategic thinking when it comes to purpose or direction of action, or the connecting with collective action. It emerges as a distinctive organisational response with the aim of integrating the organisation, inspiring its members and strengthening collective identity. Te classic ontology of leadership is not sufcient for explaining the emergence, logic and role of strategic leadership in organisations.

Indeed, connecting strategic leadership with high-profle individuals on top of the organisational hierarchy seems logical. However, is it always so and does this apply to every situation? Is it possible to interpret the *agere sequitur esse* ("action follows being") logic diferently in case of strategic leadership? In other words, can it exist without clearly identifable persons as leaders and how can it manifest itself in such case?

If we were to answer the last question with "yes", then it would mean that we accept the assumption that strategic leadership can outgrow the construction based on the "leader-followers" relation, i.e., the one that is based on classic ontology.

We recognise strategic leadership as a *characteristic of an organisation* that does not have to be dependent on formal authority. Tis means that roles and functions of strategic leadership can be divided and dispersed between multiple actors in the organisation, but also formalised in routines, procedures and activities embedded in the organisational system.

Tere are cases when leadership of this type is structurally predetermined by existing administrative mechanisms, formally established rules of conduct, sometimes even by culture and ideological beliefs predominant in the organisation; at times it is greatly dispersed and depersonalised, whereas sometimes it is changeable depending on the types of tasks and challenges and, as such, not reliant on hierarchical relations.

In large and complex organisations that include diferent types of business activities and that are functioning at numerous locations, it is possible to vertically distribute strategic leadership to follow the hierarchy, in order to ensure an adequate response to demanding challenges of leadership and management. Te formal authority chain in such situations serves as a transmitter for distributing strategic leadership within the organisation.

Apart from that, strategic leadership may also emerge in social networks of leaders inside the organisation and around it. It can vary depending on the type of tasks and problems that need to be dealt with, and distanced from "heroic" personalities usually associated with leaders or strong interest coalitions of a handful of leaders who are dominant in the organisation.

Even complete depersonalisation of strategic leadership is possible: in situations where it is completely separated from the actors and when it can persist even in the absence of any individual.

Depersonalised strategic leadership can appear in the form of *putting the collective in charge*, especially if there is a symmetrical power structure, a strong commitment to the mission and ideology as a result of existing beliefs and values or as a result of successful indoctrination of members. Presence of a strong strategic leader is not necessary in order to fulfl a common mission. Tere are examples of collective leadership of various citizens' initiatives, social and political movement, business associations and cooperatives, which indicates that there is a need to further study the phenomenon of this type of strategic leadership.

It may be possible to transpose the idea of coexistence of two leadership structures (developed in the complexity leadership theory) into the realm of strategic leadership. According to this theory, organisations simultaneously have (1) leadership based on administrative structures and formal positions, and (2) adaptive leadership based on a dynamic of relationships and complex interactions in social networks, which is of particular importance in organisations in which the creation and dissemination of knowledge and information is a crucial determinant of their activity (Kriger & Zhovtobryukh, 2013; Uhl-Bien & Marion, 2009). We can add to this a third structure: strategic leadership that supports valuebased, institutional and social arrangements that refect the existing ideology and serve to ensure its survival.

Hence, strategic leadership is a complicated phenomenon that cannot be singularly associated with an individual or with the leadership elite, nor is the answer about the identity of strategic leaders always connected with the characteristics or traits which diferentiate them from other actors on the organisational stage. It is *enacted*, or in other words socially constructed (it emerges from organisational reality) as a response to the need for congruence between chosen guidelines for action and actual organisational action.

Enactment of strategic leadership is the process of cognitive and social construction of internal and external environment, creation of meaning, and acceptance of important narratives and symbols, allocation and acceptance of roles, and interaction within the collective, resulting in strategic architecture—a predominant way of the organisation's permeation into its surroundings, one that we may see as a process of change management designed to fulfl the purpose and achieve strategic objectives.

#### **Social Construction of Environment**

Tere is no objective reality: organisational actors function in a socially constructed world; their mental models are developed in social interaction and they are inseparable from the context in which they operate. Tey "construct" their environment by bringing their versions of "order" and categorisation into the environment, failing to take notice of certain objective dimensions and at the same time assigning subjective meanings to their observations.

Teir reality is a socially constructed world with clearly perceived roles, in which a plethora of information is processed simultaneously and widespread "recipes" for efective behaviour are accepted unreservedly.

Organisations are embodied through diferent and diverse roles that are assumed, including those that pertain to position, infuence, power and conduct. Construction of role typologies, as pointed out by Berger and Luckmann, is *a necessary correlate of the institutionalisation of conduct*." An individual's participation in a social world thus comes down to playing roles, and "*by internalizing these roles, the same world becomes subjectively real to him* (1991, p. 91).

To cite the authors, by assuming the role of the leader, an individual has to be *initiated into the various cognitive and even afective layers of the body of knowledge that is directly and indirectly appropriate to this role* (1991, p. 94).

Strategic leadership is also "a stage" that requires defnition of roles to be played. Some members of an organisation assume the roles of strategic leaders and develop socially adapted mental models that delimit the space for creation of strategic versions and development of strategic actions (Sparrow, 2000, p. 19). Together with other actors, they participate in the construction of an ambience in which strategy will emerge, and assume a key role in connecting it with organisational action.

Te realm of a strategic leader's thinking and acting is *a world of enactment*, where the boundaries in the two-way relation between environment as the object and leader as the subject are very vague (Weick, 1979, pp. 164–166).

#### **Sensemaking and Orchestrating Meanings**

Strategic leadership needs to make and give sense, construct meanings and imprint symbols on the organisational stage. Tis can be explained metaphorically as the creation of a screenplay and assignment of roles of director and actors in an imaginary play.

Te symbolic function is exceptionally important in understanding the way strategic leaders operate. We accept the idea that the key factor of strategic leadership is the capacity to infuence and organise meaning, especially meaning that purposefully connects bundles of individual and group interests and infuences goals, decision-making and patterns of organisational behaviour.

Te task of strategic leaders is to give meanings to relationships, symbols and other artefacts that constitute reality, and to use existing or construct new ideologies in searching for and giving sense to organisational action.

Strategic leaders interpret the organisation and the world around them based on their own cognitive structures that indicate how *they internalise their knowledge and understanding of organisational life in the form of a simplifed representation of reality* (Hodgkinson & Clarke, 2007; Hodgkinson & Healey, 2008).

Using their own cognitive structures (mental models), they simplify the complexity associated with the surroundings and, during that process, determine which stimuli from the environment will be noted and which will be ignored (Starbuck and Milliken 1998, according to: Hruška, 2011, p. 47). Tese are diferent structures of knowledge in the form of representations and pictures that leaders have about how the world around them functions (De Wit & Meyer, 2010, p. 77).

Two cognitive processes are key: sensemaking and sensegiving; they both lead to collective interpretation of decisions and to taking of organisational action.

Firstly, *sensemaking* is a departure from commonality that helps to constitute an ambience of strategic leadership and interpretation during the formulation and implementation of strategy. It is a social activity motivated by something unusual, unexpected or very important—this involves any circumstance that departs from routine (Weick, 1995; Tomas & Porac, 2002; Narayanan et al., 2011).7

Secondly, *sensegiving* is an act of articulation by strategic leaders and their giving sense to change in the organisation as well as formulation of organisational interpretations (Gioia et al., 1994). Tis represents the leaders' steering of the process of sensemaking and construction of meaning in other members of the collective towards the preferred defnition of organisational reality (Gioia & Chittipeddi, 1991). Use of signs and symbols is crucial in sensegiving (Narayanan et al., 2011).

#### **Language and Culture**

Similar view of reality and common mental models are the result of successful construction and they are suitable for understanding the position

<sup>7</sup>Weick (1995) lists seven basic properties of sensemaking: (1) reality has the properties of continuity (sensemaking concerns an ongoing process, continually varying interpretations of the past and variations of choices that alter the intensity of the organisation's members' behaviour), (2) the intention of the organisation's members is to create order, (3) sensemaking is a retrospective activity: recollection and retrospection are the primary sources of meaning, (4) every situation is *rationalised* and justifed by the leader or manager by socially acceptable reasons, (5) symbolic processes are central because the assumptions about symbolic patterns that result in specifc action limit interpretations, (6) managers create and maintain a broader picture of reality in order to have temporary instructions for action, and (7) the way the decision-making situation is observed rationalises activity: pictures of reality result from rationalisation of activity (according to Hruška, 2011, p. 58).

of all important organisational actors. Members interact with one another, exchange information and combine their existing knowledge structures. Te same applies to other actors in the surroundings who have a cooperative or competitive contact with organisational interactions and transactions and who encounter similar problems and reach similar ideas about how to solve them. In time, their views of the world become more and more alike, and similar beliefs and ideas about things that defne the organisation and its environment emerge.

Te way of understanding things eventually becomes similar among members of the organisation; similar perceptions about the settings and milieu are developed; a common language is made; the way the situation and the surroundings are viewed is shared, and common "systems of meaning"8 are created, thus resulting in an "enacted environment" being constructed. Story-telling, rhetoric, myths and signs play a major role in this process.

If key actors on the stage of the organisational game do not share the same fundamental beliefs and values, understand messages and symbols in the same way, if they do not have similar cognitive flters that simplify the reality for them in a way that is acceptable, and if they fail to even seemingly understand the allocation of roles in the process of division of power—they will have a hard time agreeing about the character of reality.

What is obligatory in all this is the role of existing organisational culture through which history, tradition and ideological assumptions are integrated, and collective beliefs and views within the organisation mirrored. It can be said that culture directly afects sensemaking and sensegiving, just like sensemaking and sensegiving can afect the potential (usually slowly occurring) change of organisational culture.

Strategic leadership plays an important role in the creation and change of language and organisational culture. Its enactment is intended to simplify the multiple and complex organisational relationships and assign clear roles; convergence and coordination need to be tightly interwoven with strong and inspiring messages and symbols. Rhetoric and

<sup>8</sup>Weick (1995) refers to such groups as communities of believers who have local rationalities or interpretative stances).

hermeneutics are irreplaceable elements of leadership: they serve as a mantle without which the core, the content, becomes pointless.

On top of that, success of leadership is to a greater or lesser extent connected with deep *immersion* of members of the collective in a formed atmosphere in which they accept existing constellations and recognise self-fulflment in the development of mutual relationships. Te members' commitment is a consequence of the capabilities of strategic leadership in the context of creating a climate of togetherness and a strong identifcation with the organisation, recognition and sharing of collective achievements, and freeing up of individual and group potentials.

#### **Ideology and Power**

Ideology defnes the space for strategic leadership, it is the connective tissue of the collective and it provides justifcation for organisational existence. Strategic leaders rely on ideology because it underlines all the basic organisational values, gives intrinsic purposefulness to action and connects followers, making them more or less committed and loyal members of the collective.

It is impossible to understand the stage where strategic leadership is played out without social and organisational ideology and existing structure and dynamics of power. Ideology encourages the development of acceptable discourses, it binds together beliefs and values of members of the collective, establishes relationships and gives meaning to the strivings and intentions of strategic leadership.

Ideology always exists, but it can be weak, inconsistent and confusing to members of the organisation. Existence of heterogeneity in organisational values, unclear ideological assumptions, incoherent and sometimes opposing views of the world among individual members of the collective, insufcient level of identifcation with the organisation and the leader, additionally hinder the activities of organisational leaders.

Strategic leaders use power to facilitate the reaching of objectives that arise from strategic intent. Tey choose strategies of infuencing the relationships inside the collective in order to achieve cohesion and organisational harmoniousness, to additionally motivate and inspire others in order to fulfl the tasks that are relevant for reaching the defned objectives.

Power does not only have to be an instrument of strategic leadership; sometimes it is its primary meaning and content. Te goal in such cases is a self-centred: to additionally strengthen one's position in the society and to use the organisation as means of self-actualisation and one's own promotion.

Te stage of strategic leadership can also, over time, become an arena where one fghts to achieve maximum infuence in constellations of key organisational constituents. Competing for the position of the dominant entity in the organisation can blur the actual essence of strategic leadership, and so can the "stretching" or "narrowing" of the space for managerial discretion in the decision-making process (Tipurić, 2011).

#### **Correctness**

In modern-day world, we must not observe strategic leadership merely as a performative construct, not taking into consideration the long-term interests of the society; short-sightedness, alienation and inhumaneness must not be its support pillars. Humaneness and moral correctness of organisational action are no longer just pretty accessories which diferentiate those who are better from others who are worse, but rather they are imperative substantial elements that any leadership must take into consideration.

One should also refrain from what we might call, similarly to Weberian determination, a "technical rationality," a rationality without morals that encourages the creation of dehumanised, highly bureaucratised relationships that destroy the humane mission of new age strategic leadership.9

Sometimes organisational actions can have consequences that may jeopardise the community, disrupt social relations and ethics, pollute or even devastate the environment, deplete resources and be in collision

<sup>9</sup> It is interesting that Max Weber believed that only charismatic leadership can fght bureaucracy and its fatal dehumanisation. See more about Weber's types of rationality in the next chapter, and for even more details, see the review by Stephen Kalberg written in 1980.

with the planet's sustainability and prosperity of future generations. Such actions may, from an opportunistic point of view, be successful in the short term and bring revenue for the organisation and/or owners of key organisational resources, but at the same time they are often socially unproftable and destructive to social values.

A century ago, strategic leaders faced completely diferent, signifcantly smaller social expectations and demands. However, the world has changed almost beyond recognition since then. Over time, awareness of social responsibility and environmental protection, or in other words, awareness of inseparability of an organisation from its environment, has become much greater.

Gender, racial and all other types of equality, economic democracy and fairness, acceptance of diversity and overall humanisation have emerged as solid constituents of modern-day society. Te ambience in which contemporary leaders think and act cannot even be imagined without considering the civilisational advancements that have done away with self-interest as the sole motive for action.

Construction and interpretation of reality is interwoven with the thread of ethics, with emphasis on special values and beliefs that strategic leaders bring into the ambience (Rowsell & Berry, 1993). Te ethical dimension of their view of the world defnes the boundaries of ideological space: it determines the ways actors on the stage think and act, the ways facts are ft into a mould and interpreted, and the consequences that can be expected from dissemination of power and dominance in an organisation and its environment.

## **Architecture of Strategic Leadership**

Strategic leadership is a key confgurational characteristic of an organisation: a bond between strategy and organisational action that need not always be observed as a set of tasks to be performed by top leaders. Terefore, it is an organisational phenomenon and not a designation automatically associated with persons on top positions in an organisation.

Tere are two opposing views in this context. According to the frst one, organisational leaders have the crucial role in defning strategic intent; they defne modes and dynamics of the organisation's adaptation to its surroundings; they use their skills and knowledge to connect, motivate and integrate members of the organisation; they directly and indirectly infuence the outcomes of leadership and organisational performance.

According to the other view, the environment and the collective play a more important role than the formally positioned leaders. Structure, rules, routines and processes in an organisation dominantly afect strategic leadership and leaders do not have too much managerial discretion: their space for independent making of strategic decisions is narrowed and limited.

In order to understand strategic leadership, one has to recognise key meta-activities and meta-processes that can be assigned to diferent actors in the organisation. Primarily, one has to identify the *architecture of strategic leadership* and only then look for attributes, characteristics and performances of persons involved in important decisions, processes and activities.

Architecture of strategic leadership is the result of orchestrating meaning and important interpretations that emerge in the interaction of organisational actors and build the main platform for organisational action. It is also defned by other elements of enactment: social construction of ambience and role assignment, language and culture, social expectations, ideology and power structures, and ultimately the issue of moral appropriateness in organisational behaviour.

It is the result of thoughts and actions of the leader or a coalition or network of leaders; and/or social, institutional and organisational properties; and/or collective intentions and agreements.

It refers to the role and place of creative, managerial and administrative mechanisms and clearly positions strategy in the centre of organisational goings-on. It provides a framework for defning main priorities, endeavours and guidelines, and for aligning the organisation with the determinants of the present and future environment.

Regardless of those extremes, we believe that it is possible to identify four components of strategic leadership architecture in any situation. Tese are: (1) strategic direction, (2) external adaptation, (3) integration of collective, and (4) strategic leadership outcomes (Fig. 3.2).

**Fig. 3.2** Architecture of strategic leadership

#### **Strategic Direction**

Te journey from the present towards an imagined future relies on intentions and abilities of key organisational actors in developing the imaginarium of the new reality.

Strategic direction answers the question how organisations deal with the challenges of present and future surroundings. Tis is a grateful task, because, as Victor Hugo wrote: *Tere is nothing like a dream to create the future*.

It creates traces of sense and produces clusters of important meanings for members of the organisation. It comprises the challenges that need to push the boundaries of the action horizon, by bonding people into a collective and encouraging their commitment and identifcation with the organisation.

Additionally, it integrates the vision and the mission: it shows what the organisation strives to, what the aspirations are, and gives a glimpse of the desired future. Mission interprets the principles of behaviour, recognises the purpose or reason for the organisation's existence, identifes the basic values, outlines the scope of operation and method of management, and delimits the directions of action. Vision is an individual or group mental image of the future of an organisation and It lies at the heart of organisational strivings (Stacey, 1997).

Strategic direction might involve a diferent term to express the same meaning, for example the concept of *strategic intent*.

Te domain of strategic intent is broader than the main priorities and strategic objectives and involves distinctive principles and guidelines of organisational action. Hamel and Prahalad (1994) defne strategic intent as *an ambitious and compelling … dream that energizes … that provides the emotional and intellectual energy for the journey … to the future*.

Strategic direction can be the conception of the individual or group holding the top managerial position, or it may emerge as the result of intra-organisational agreements and actions. It can be the consequence of set plans or a lucky outcome after much trial and error in strategic experimentation that has become a behavioural pattern.

In any case, it is a more or less inevitable journey into the unknown; a departure from familiar shores towards clouded and unpredictable horizons of tomorrow.

Te role of organisation's leaders in the forming of strategic direction is often emphasised. However, caution is needed in this context. Some leaders are known as visionaries, while others hardly possess the stuf that key elements of vision are made of. Some of them are unable to participate because they do not have sufcient room available to make decisions, but they are capable of transforming existing ideas into successful organisational actions.

#### **External Adaptation**

Interaction between the organisation and its present and future environment is an important element of strategic leadership architecture. Surroundings are inseparable from the organisation; the boundaries between them are often movable, fuid and permeable. Strategic leadership should help to fnd reactive and proactive ways of facing a dynamic, quick-changing and uncertain environment.

Te way the ambiance in which the organisation fnds itself is contextualised afects the way the two interact. It could be said that organisations and its surroundings are constructed together in the process of social interaction of key organisational participants, as Smircich and Stubbart (1985, p. 726) noted and added: *organizations and environments are convenient labels for patterns of activity*.

Te same applies when we observe organisations that compete in the market. Indeed, it is hard to challenge the idea that organisations and markets are *sticky, messy phenomena, from which strategies emerge with much confusion and in small steps* (Whittington, 2001, p. 21).

External adaptation is at the same time a process of cognitive constitution and action adjustment. Subjective interpretations of external information are objectivised through the actions of leaders, organisations and other participants in the environment (Porac & Tomas, 1990; Tomas & Porac, 2002).

It is necessary to develop and support the process aimed at proactive maintenance of the organisation in continuous balance with its surroundings.

Tere are two perspectives, the managerial and the evolutionary one, and they view the strategic leaders' potential of afecting the organisation's adaptation to its surroundings diferently.

Managerial perspective is based on strong trust in the leader, in the leader's willingness and capability of long-term planning, strategy formulation and decision-making, through which the leader can infuence the positioning of the organisation in its environment. Obviously, one should not strive to an unreachable ideal of rational action, but rather one should accept the world as it is and act in accordance with it.

To develop a successful strategy means to align the organisation's potentials with the characteristics of the environment; adapt oneself to the surroundings and its demands, and, to the extent possible, shape the surroundings according to one's own needs and abilities. Cognitive, informational, cost-based and other limitations, just like the extent of decision-making discretion, defne the perimeters of strategic action. Tis kind of approach is comparable to Whittington's *systemic perspective* of strategy, which assumes that organisations are capable of planning ahead and that they can be efcient in interacting with their environment. Leaders are not *simply detached, calculating individuals interacting in purely economic transactions, but people rooted deeply in densely interwoven social systems* (Whittington, 2001).

On the other hand, the evolutionary perspective does not ascribe much importance to choices and deliberate action of the managerial big shots. Environment exposes organisations to contradicting selectional pressures so that in most cases it is completely uncertain whose and which strategies will "survive."

Selection in a social context involves, on the one hand, the processes of learning and discovering, and on the other hand, a selection mechanism of some kind for making choices (Dosi & Nelson, 1994, pp. 154–155). Selection processes often generate unexpected consequences and there are no guarantees that selection will result in survival of the most efcient. According to the evolutionists, surroundings will provide a *meta-criterion* for the selection of the best ways and strategy versions; the role of leaders of organisations is only a minor one.

Evolutionists emphasize that organisations are not too successful in anticipating and adapting to change of environment. Tey point out that the importance of deliberate strategic creation is overestimated by strategic leaders and other top managers, and that construction of "long-term strategies" distracts their attention from operational efectiveness and the aspiration towards achieving the highest possible efcacy. Tis is a view based on which strategic leadership is removed from inventive construction of future environment. Selection on markets will separate those that are fttest in evolutionary terms, those that have opted for strategies best suited to answer the demands of the environment and that consequently have the best performance and chances for survival.

Managerial and evolutionary perspective are extremes between which we need to look for the position of strategic leadership. In our opinion, within the permissible space, strategic leaders need to fnd adaptive responses to massive and critical changes happening in the environment. Tis is the key substance of their work.

#### **Integration of Collective**

Te decisive activity of strategic leadership is integration of the collective. It requires a clear idea of the purpose of common action and the desirable future that is to be realised. Members of the organisation need to be inspired and encouraged, motivated and emboldened in togetherness; they need to be helped to better understand the vision, to accept it as their own, and to invest efort in making it a reality.

Integration of the collective depends on size, complexity and locational distribution of the organisation, or in other words, on the amount of information and scope of tasks that need to be covered in order for strategic leadership to be efective. Te more actions performed by the organisation and the greater need for knowledge and special skills of members, the greater the challenges of integration of the collective.

Homogeneity of the collective and organisational cohesion are strengthened by socialisation and indoctrination of members.

Coordination of activities is also important to avoid redundancy, distraction and contradicting organisational action. Coordination-related activities falling within the scope of competence of managers need to be diferentiated from those that fall into the category of strategic leadership. Lack of systematic approach and contradiction in the main objectives, policies, activities and programmes is an indication of strategic problems and overcoming those problems is the duty of the leaders of the organisation.

In other words, directing and connecting people in common action is an essential "ingredient" of strategic guidance. Integration of the collective is a prerequisite for efcient implementation of organisational action. Not only members, but also all other factors that are relevant in strategy implementation and that have an interest in and impact on the organisation have to be involved.

In addition to that, strategic leaders need to sensibly and plausibly communicate in order to create commitment and strengthen coherence of action within the organisation. Communication of important narratives, mission and strategic vision, signs and symbols, plays a part in integration. Symbols and rhetoric help with organisational bonding and encourage members to coordinated common action. Telling memorable stories and putting emphasis on select examples can help to strengthen the feeling of connectedness and dedication among followers.

Integration of the collective depends on the traits that strategic leaders possess. Integrity is always central, and it has to be accompanied by imaginativeness and a high level of social awareness, self-confdence and determination. Leadership capacity, credibility, reputation, reliability and consistency between what is said and what is done encourage the creation of an atmosphere of confdence and belonging, with people trusting the leadership and the organisation, and inspiredly performing their assignments.

Te relationship between the collective and the persons who take on the role of strategic leadership is not a simple one. Formal authority is not a guarantee that someone will become a leader. Te collective has to accept a person's leadership and adhere to this person's ideas, intentions and conduct.

Imposed and unaccepted managers can rarely achieve anything more than what is guaranteed by the power of their position. Tey are unable to create a proper connection and motivate people in the performance of their assignments. Leader identity cannot be created without the collective endorsement of the actors the leader is supposed to lead (DeRue & Ashford, 2010).

#### **Strategic Leadership Outcomes**

Te key result of successful leadership is an incremental or radical change in the organisation that can be recognised as progress in comparison to the present situation.

Taylor-Bianco and Schermerhorn (2006, p. 458) posit that organisations expect "*commitment to continuous change*" and that it is "*ever-present as a goal*." Tey further note: *people in organizations are expected to both change and perform well at the same time*.

Success of an organisation can be decomposed to two elements: (1) efcacy of strategic leadership, and (2) efcacy of all other actors in the organisation and in its surroundings. Te greater the share of the frst component in overall success, the greater the sensitivity of the organisation to the quality of strategic leadership.

If strategic leadership is seen as *personalised*, then efcacy is directly associated with the skills, knowledge, human and social capital and managerial capabilities of organisational heads. Key capabilities are connected with formulation and implementation of strategy, articulation of a superior vision, potential for strategic thinking and excellent management of human potentials. If, on the other hand, it is understood as a *characteristic of the collective*, efcacy is related to the quality of key managerial processes (integration, alignment and commitment) in situational challenges an organisation might be faced with.

Besides that, strategic leadership outcomes are also represented in the selection of objectives that are set and that serve as a measure of success when organisational performance is observed *a posteriori*.

Te setting of objectives is the process of determining the main areas of performance that can be controlled and delimited in time. It was Marcus Aurelius who wrote: *People who labour all their lives but have no purpose to direct every thought and impulse toward are wasting their time even when hard at work* (2001, p. 23).

Strategic leadership needs to encourage the collective in the discovery of objectives that can be identifed as possible outcomes and that can be the bonding and integrating force of the organisation.

Specifcally, a lack of systematic approach and contradiction in the main objectives, policies, activities and programmes is an indication of problems in strategic leadership.

Strategic objectives need to be demanding, challenging and ambitious, they need to really stretch toward the limits of what is achievable so that the organisation may reach its full potential. Still, the objectives must not be unrealistic and unachievable, extending beyond what is possible in view of the available resources and capacities.

Tis approach was well portrayed by Porras and Collins (2002), who introduced the concept known as BHAG, the acronym of *Big, Hairy, Audacious Goals*. Te underlying idea is the assumption that ambitious and almost unachievable goals can motivate people inside an organisation to achieve much greater things than what is normally expected from them. According to the authors' opinion, striving to exceptionally challenging goals gives greater chances for success of organisational action.

Stretched objectives are based on the assumption that it is necessary to motivate people and focus their creative energy by setting high levels of organisational aspirations.10 We can paraphrase the words of the famous, early twentieth century car designer and manufacturer Henry Royce: *Take the best that exists and make it better. When it does not exist, design it*.

Strategic leaders might experience problems in applying the BHAG concept if organisational potentials and culture do not sufciently accommodate large and radical steps, and when there are objective obstacles and limitations in the surroundings that might hinder such signifcant achievements.

Finally, it should be pointed out that defned objectives need to refect multiple harmonized interests that emerge within the collective and around it and that are in furtherance of general welfare and well-being, and ultimately survival of the collective and its environment.

Te issue of creating new value in organisations can, therefore, not be analysed without taking into consideration the society and the environment, specifcally social proftability and protection of natural resources.

*Responsible leadership* has been developed as a distinct construct that observes leadership through the leader's interaction with other interest groups (with the aim of balancing out many diferent needs), where the leader's success is measured based on their providing of legitimate solutions for everyone involved, by including the economic, social and environmental dimension in the targeted domain of organisational action (Waldman & Galvin, 2008; Voegtlin et al., 2012; Carter & Greer, 2013).

Recently, the need for a triple bottom line has been underlined. Tis concept includes economic, environmental and social lines as the prerequisites for achieving outcomes of proft and non-proft organisations in the twenty-frst century.

Important objectives can be categorised in three groups (*the triple bottom line concept*), which refect the domain of organisational action: the

<sup>10</sup>Porras and Collins (2002) listed examples of four types of such objectives: (1) target BHAG, e.g. Ford's turn-of-the-century goal to "Democratize the automobile," (2) common foe BHAG, e.g. Philip Morris's "Knock of R.J. Reynolds as the number one tobacco company in the world," (3) role model BHAG, e.g. "Become the Nike of the cycling industry" of Giro Sport Design, and (4) internal transformation BHAG, such as, for example, Rockwell's "Transform this company from a defence contractor into the best diversifed high-technology company in the world."

economic, the environmental, and the social domain (Elkington, 1997). In other words, organisations and their leaders need to simultaneously focus on economising, sustainability of life on the planet, and on people and the society as a whole (Fry & Slocum Jr., 2008). Tis leads to additional tensions being put before strategic leadership, considering the fact that those objectives exist in a natural confict, which is then refected in the expected results and achievements of organisational action (Fig. 3.3).

Firstly, the economic dimension of objectives is associated with economic prosperity, business success, and growth. It underlines the need for rational use of organisational resources, with indicators such as return on investment, revenue, profts, and other. Information about industrial proftability and other comparable indicators for comparison with the competition (such as sales growth rate, market shares, innovation success and the number of new products, numeric distribution, and other)

**Fig. 3.3** Triple bottom line in contemporary organisations

infuence the defning of economic objectives and measures of performance of a company.

Secondly, the social dimension of objectives presupposes a responsibility to the community and to people. Social measures refect organisational commitment, welfare and vitality of the members of the organisation and the community, charitable contributions and quality of organisational connectedness in the society. Strategic leaders need to impose socially responsible business as an imperative for their organisations. Te objectives and measures have to incorporate good-quality inclusion in the community, health and welfare of employees, commitment to society, contribution to community vitality, but also contributions toward humanitarian and other social agendas (Fry & Slocum Jr., 2008; Carter & Greer, 2013).

Tirdly, the environmental dimension of objectives refects the importance of minimising the harmful efects of human action and the overall collective presence in the environment. Environmental indicators are based on sustainability of organisational and civilizational existence (e.g., protection of natural resources, balanced consumption of energy, reduced waste and harmful emissions, etc.), or in other words, on helping to preserve the living conditions on the planet (Slaper & Hall, 2011). Successful leadership cannot be separated from the great responsibility we each bear for the future of our planet. Development and expansion of circular economy, lower energy wasting, reduced pollution and harmful emissions, responsible waste management and proper valuable inventory management—all this should be integrated in the target area of modern-day leadership.

Strategic leaders have to overcome the contradictions and try to strike the right balance between the three dimensions. It is not easy to establish and maintain balance between the triad of the target areas and at the same time avoid redundancy, distraction or contradictory organisational action. Tis is a paradox, but at the same time it is also a challenge when it comes to creating value for the organisation and the society.

Being blinded by (purely) organisational achievements cannot be sustainable: without a holistic approach incorporating social balance, fairness, human rights, ecological challenges and circular economy, as well as the interests of future generations and sustainability of life on the planet as objectives defned and realised by leaders, there can be no prosperity.

### **References**


Mintzberg, H. (1987). Crafting strategy. *Harvard Business Review, 65*, 66–75.


Stacey, R. D. (1997). *Strateški menedžment i organizacijska dinamika*. Mate.


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# **4**

# **External Adaptation**

## **Environmental Turbulences**

Strategic leaders have to adapt their actions to the basic characteristics of the organisation's environment. Teir task is to fnd a way to get the organisation harmonized and almost imbued with its overall surroundings, both present and future.

Complexity, uncertainty and lack of defnition are characteristic of both proft and non-proft organisations, regardless of their size or character, posing a great challenge for leaders and organisations alike.

Beyond the boundaries of the organisation, there lies a world of limitless possibilities and strong, sometimes destructive threats, including smaller or larger crises, sudden and sometimes fantastic opportunities, technological and market-related shocks, structural social changes, new institutional and legal arrangements, changes in sociopolitical and economic conditions, and a whole series of other environmental factors.

Te more complex and dynamic the environment, the more uncontrollable variables there are, which means that leaders are faced with more difculty when it comes to creating strategy and adjusting the organisation to its surroundings.

Environmental turbulences can be identifed in a combination of three categories (Volberda, 1998). Tese are: dynamism (intensity and frequency of change in the environment), complexity (number, relatedness and diversity of environmental factors) and unpredictability (cyclical nature of changes and clarity of data).

*Environmental dynamism* shows the nature and strength of the powers that drive strategic changes. A dynamic environment is characterised by fast-occurring, strong, often very deep changes in its key elements. Stable environments, with slight, slow-occurring changes, are rare in modernday world.

In most cases, strategic leaders have to base their action on the premise of changeability beyond organisational limits. Technological advancement, inventions and innovations, development of new business models, creation of completely new demands, increased eco-awareness and other factors infuence the intensity and frequency of change, or in other words, the dynamism of the environment.

*Environmental complexity* is determined by the number of factors that surround a company, their relatedness and diversity.

Situations where organisations interact in a simple environment are not very common. If the environment involves a multitude of diverse elements that the leader has to monitor, it becomes that much more complex. Tere are contexts in which a multitude of various factors exist, with complex mutual relations that are hard to grasp; it is not easy to simplify and create easy-to-understand environment models that can facilitate understanding and efective managerial action.

*Environmental unpredictability* is defned as a lack of identifable patterns of change in the environment and inaccessibility (or ignoring) of relevant information.

Predictability has two measures: the frst is the *degree of change*, which can range from slow to fast, and the other is *visibility of the future* as a measure of availability and usability of information used for making predictions. Modern-day strategic leaders can rarely make predictions considering the frequent waves of changes that come rolling in suddenly and upturn organisational reality.

In this context it appears that turbulence is greater the greater the dynamism, complexity and unpredictability of the environment. Such storminess brings uncertainty and creates and interesting paradox: on the one hand, greater uncertainty reduces the usability of collected information, but on the other hand, it creates the need for additional information.

Te role of strategic leaders can be compared to the role of a ship's captain steering the ship across stormy seas full of surprises and uncertainty. To be able to reach its port of destination, the captain has to have a clear plan and guidelines for navigation—or in other words, he needs a strategy in terms of ways to adapt to changes that are happening around him and that may afect the success of his endeavour. On the other hand, leaders' strategic choices are often restricted because of their limited and insufcient understanding of the environment in which their organisations operate: they often fnd themselves in a situation where they do not really know what they want or how to achieve it (Simon, 1997).

Necessity of survival forces the organisation to fnd modes of interacting with the environment. Successful organisations have to be very adaptable and reactive, and they have to develop systems that will enable swift and fexible innovations in response to increasingly fast, unpredictable environmental changes.

#### **Objective and Subjective Environment**

An environment is a construct that can be understood and interpreted in diferent ways. Estonian biologist and founder of biosemiotics Jakob von Uexküll made a distinction back in 1909 between the *objective environment* (in German: Umfeld) and *subjective environment* (in German: Umwelt) (Kreye, 2013, p. 139).

Te subjective environment is the way an organism sees and perceives the environment around it, whereas the objective environment encompasses and afects *all* entities in an environment.

Te objective environment ("objective external reality"), if such a thing even exists, is not a relevant construct from the perspective of organisational leaders and managers; they perceive and understand things and act based on their own subjective environment, which is a construct of their own, created as a result of a specifc social context existing in certain space and time.

Leaders (and other social actors) across diferent historic and cultural contexts and traditions perceive and shape their subjective environment diferently, forming diferent patterns of interaction with that environment. An interesting example of subjectivity was given by Kreye in the paper referred to in the references, describing the diferences in how Europe and the USA perceive the present. In Europe, the present is seen as *the most recent point in history*, whereas in the USA it is viewed as the *beginning of the future*.

Tere is no doubt that modern-day leaders operate in a complex and interconnected world riddled with uncertainty. Tey are inextricably connected with the environment that has created them and that signifcantly afects the manifestations and forms of their behaviour.

Recognition and structuring of the subjective environment, the disambiguation, segmentation and ultimately construction of that environment—in fact, the process of giving sense to an incredibly large number of elements that surround the organisation—depend on factors that have a crucial impact on changes in the world we live in.

Leaders and other organisational actors seek the purpose of their own action, they give meaning to the identifed and constructed constituents, and create a world of their own interpretations in a socially constructed ambience they call environment. Tey interpret the environment based on their own *cognitive maps, cognitive schemata* or *mental models*: various knowledge structures in the form of ideas or images they have about how the world around them functions (De Wit & Meyer, 2010, p. 77).

Mental models are developed in social interaction and they are inseparable from the context in which they function. Tey serve as the instrument for giving meaning to information extracted from the environment; for example, when it comes to companies, this may involve the context of the industry, boundaries of competitive arenas, identities of competitors and the way they compete with the company, their position in the environment, and other similar information. Tey are necessary simplifcations that help managers overcome the food of information and their own cognitive limitations (Narayanan et al., 2011).

Reality is, hence, inseparable from cognition (how we understand the world we perceive), the way we express ourselves (language, both spoken and written word), and the way we interact with the environment we have created—not only we as individuals, but also the groups and organisations we belong to, and the society as a whole.

We have already mentioned when we cited Smircich and Stubbart (1985) that organisations and environments are constructed simultaneously in the process of social interactions between key actors. Te two authors identifed three models of the environment that strategic leaders have to take into account: (1) *objective environment*, with a clear "organisation–environment" dichotomy, (2) *perceived environment*, which is identifed as a sort of simplifcation of a multitude of unclear information, and (3) *enacted environment*, which is created by constructing the world, categories and relationships between the organisation and the environment.

Tere is no objective reality within an organisation. Leaders create elements of a constructed environment through *organisational routines, rhetorical devices, shared values and ceremonies* (Mir & Watson, 2000, p. 945). Tis sometimes creates "multiple realities" within the organisation, depending on the diferent perspectives and understanding of the ambience in which the organisation interacts with its environment.

Consequently, a leader's primary responsibility is to defne reality (DePree, 1989, p. 19) which in fact implies *defning the reality of others* (Worden, 2003, p. 32) by infuencing the systems of meaning and rounding-of the organisation's continued existence in time.

#### **Environment Modelling**

A model of the environment is the result of strategic leaders' cognition and experience, but also of harmonisation and convergence of mental models of a larger number of people at a certain point in time, in a certain activity or fragment of social reality.

Leaders *recognise* the environment in constructed structural elements that have been created and shaped through their cognitive processes or borrowed from existing methods of shaping the environment from available narratives, good business practices and *conventional wisdom*; they give sense to those elements and use them as the basis and foundation for development of strategy and strategic decision-making.

Strategy is bounded by their understanding of the environment or, more precisely, it is the answer to the environment that they themselves have created.

Te collective understanding of the environment defnes the permissible space for organisational action, seeing that key actors from the environment and their mutual relationships are embedded in the cognitive structures of strategic leaders. A change of environment happens retrospectively when the predominant cognitive structure is reformulated (or replaced) to give meaning to unexpected events that do not ft into the existing model of the environment.

Moreover, we can model the environment based on the characteristics of the era in which the organisation exists (Lenz & Engledow, 1986). According to this approach (the era model), environment is a set of social structures, values and assigned of social roles that characterise a certain period. Perspectives on environmental factors are harmonised and widely accepted among important social actors. Te ambience in which organisations operate is perceived singularly: objectives, institutional relationships, ideologies and value creation methods defne the point of view of strategic leaders. Organisations are frmly and inextricably incorporated in the complex network of social relationships existing at a given moment in time.

Perspective of the environment changes during the process of turbulent transition in which the existing order is replaced by a completely new one—one that will produce new structural elements, constellations and values. For example, a radical shift from one industrial revolution to another changed the strategic leaders' model of the environment. Similarly, the transition from real socialism towards capitalism that occurred in Eastern Europe thirty years ago changed the perspective of almost all social actors.

Not only radical social changes, but also technology and experiments of individuals in pursuit of self-fulflment within the context of dominant institutions (such as family, organisations, society) can change the ambience. One has to keep an eye out for megatrends, chaotic and sudden events that upturn social developments and that can change the existing view of the world from the bottom up.

Finally, the model of the environment can be the result of plausible and accepted conceptualisations that strategic leaders use to better cope with environmental challenges.

In short, *environment* is a common name for a set of constructed and recognised factors that exist beyond organisational boundaries and afect, to a larger or lesser extent, the organisation's existence and actions in the present and in the future. An example of modelling is a generic environment model, which can be adapted to organisational specifcities in any possible ambience, irrespective of the purpose or duration of the organisation (Fig. 4.1).

A generic environment model represents a cognitive simplifcation of reality depending on the era, organisational activity and characteristics of strategic leaders and other important members of the organisation. It is presented based on two groups of constituents depending on the distance and relations between them and the organisation.

Te frst group, comprising factors that exist externally, at a certain distance from the organisation, is usually referred to as the

**Fig. 4.1** Generic environment model

macroenvironment. Te second group is comprised of the closer, interactional and transactional environment (sometimes also referred to as task environment), and in most cases it has a greater impact on the organisation than the macroenvironment.

**Macroenvironment.** Infuence on the macroenvironment is limited; strategic leaders and organisations have to accept it as a set of uncontrollable variables and adjust the strategy to its specifc characteristics, regardless of whether it generates threats or opportunities.

Macroenvironment-related factors are factual from the organisation's point of view. Leaders have to direct organisational action in accordance with imposed limitations and pressures. Some factors are more important than others; some represent major threats whereas others create special opportunities that are to be taken advantage of; there are also those that represent both a threat and an opportunity at the same time, and others that only have a negligible impact on the organisation.

Strategic leaders and their associates need to identify the factors that are important and they especially have to understand the structural determinants of the macroenvironment. Tey have to continually monitor and analyse the macroenvironment, particularly they have to be able to recognise the early signs of signifcant changes in the structure and relations between the most important factors, and think about interpreting the environment from various possible, often alternative perspectives (e.g., in terms of existing and potential competitors' view of the macroenvironment, threats and opportunities that may arise).

Analysis of the environment should help them interpret the important elements of the environment and understand their signifcance and infuence on the organisation.

Assessment of the macroenvironment is an obligatory part of strategic leaders' work: without understanding the existing infuences and defned frameworks, the degree of uncertainty and dynamism, or expected future changes in the constellations of environmental factors, it is impossible to create strategy and make rational strategic decisions.

Macroenvironment has to be sorted into sets of political, legal, institutional, economic, sociodemographic, technological, scientifc, cultural and other important factors existing in the organisation's ambience.

Good examples of macroenvironment-related factors would be the COVID-19 pandemic and its impact on organisational action, or a change of government following an election in a country, a new scientifc discovery or a radical technological change that afects the business model, or the demands of the users of services or products supplied by the organisation, and similar factors.

Strategic leaders have to adjust their intentions and organisational action to macroenvironment-related factors.

**Interactional and transactional environment.** Te environment is a place of interaction *sui generis*: through its actions, the organisation afects the environmental factors and at the same time responds and adjusts to their infuences. Te forces of competition and cooperation interchange and complement one another, and sociopolitical and socioeconomic relations between organisations and other factors determine the elements of success or failure.

Every organisation can be observed as a system in which inputs are transformed in order to produce outputs. Transactions and interactions between the organisation and the environment include exchange of various types of resources, such as information, knowledge, money, property, services, products, and other, but they also involve a certain power play between competing organisations in their attempt to achieve the best possible market position to ensure their survival and further development.

Analysis of interactional and transactional environment involves identifcation of factors that the organisation afects more signifcantly and that play an important role in its transactions or interactions.

Factors belonging to this segment of the environment impact the organisation's conduct, performance and decisions, but in turn, the organisation can also infuence those factors, and the intensity of those factors, through its own actions.

For example, a strategic analysis of a business organisation is intended to assist in assessing the structure and dynamics surrounding a specifc task, and in understanding the competition-related circumstances with a view of predicting the key variables of competitiveness in the relevant industry. It is important for the analysis to determine the key factors of market success and foresee their potential changes, as well as the means and methods of potentially achieving competitive advantage.

Successful strategic action requires good knowledge of the factors and characteristics of transactional and interactional environment.

Tat environment can be structured diferently. Factors inherent in the transactional and interactional environment of business organisations can, for example, be service users and consumers, customers, suppliers, current and potential competitors, agents and distributers, strategic partners, fnancial institutions, other creditors or potential investors.

It is important to highlight the existence of cooperation and competition relations between the organisation and its environment. Suppliers and customers, for instance, appear both as partners and rivals of an organisation in the value creation chain. Te same applies to competitors, who can appear as partners in research projects, or associates when it comes to establishing competition standards, or other.

An organisation's strategic direction and strategic leaders' decisions directly depend on existing constellations of factors from the organisation's interactional and transactional environment.

From this perspective, external adaptation can be seen as a strategic leader's action toward positioning the organisation in both of the two mentioned segments of the environment, specifcally to a position that promises the best chance of survival in the long run. Tis is very appropriately phrased in Charles Darwin's famous sentence, where he said that it is not the strongest or smartest that survive, but those *most responsive to change*.

## **Institutional Pressures**

No organisation is an entity with complete autonomy to act: it is restricted and limited by the institutional context. Institutional pressures shape behaviour, directly or indirectly pressuring organisations and their leaders to act in a more or less restricted space.

Institutions are types of man-made, formal or informal restrictions that structure political, economic and social interaction and *consist of both informal constraints (sanctions, taboos, customs, traditions, and codes of conduct), and formal rules (constitutions, laws, property rights)* (North, 1991, p. 97), representing points where discourses create so-called *communities of agreement* (Mir & Watson, 2000, pp. 942–4). Institutions are imbued with symbolic elements, dependent on technological progress and material resources, and reliant on history in that they take into consideration previous practices and decisions (Scott, 2004).

Pressures on organisational action are exerted by formal or informal institutions, but a prominent role in this context belongs to shared beliefs and all forms of categorisation that contribute to objectivization and constitution of a social reality that the organisation is embedded into.

Scott (2001) noted that the process of institutionalisation yields three types of institutions that create a framework for, and rules of, conduct: (1) *regulatory institutions*, which rely on compulsory rules of conduct (mostly laws and regulations) that have to be observed or otherwise sanctions will be imposed, (2) *normative institutions,* which are based on norms of behaviour, social values and professional standards, and (3) *cognitive institutions*, which defne social reality through shared values and concepts (socially acceptable behaviour is most often taken for granted as the only type of behaviour that is appropriate).

Strategic leaders are left with limited choices: the way they guide the organisation has to ft into the institutional framework. Tis reduces uncertainty and unclarity, and legitimises conduct from the point of view of the society. Legitimacy is, according to Suchman (1995, p. 574), *a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed systems of norms, values, beliefs, and defnitions*.

Leadership is faced with a problem when the institutional framework is inconstant and fuid, or when it is in the stage of transition to a new institutional balance.

Institutions are, in most cases, very resilient and reluctant to change. Changes at an institutional level happen rarely and usually externally, and organisations mostly accept a certain conduct within the institutional area by making normatively rational choices in line with social expectations, norms, values and beliefs present in the institutional environment.

Te environment defnes the patterns of desirable action: those that fail to ft in cannot survive. As a result, leaders develop and implement *socially acceptable* forms of action (strategies, organisational structures and practices) that are in line with institutional requirements and pressures, with a view of *legitimating* the organisation in the environment, i.e., getting the social approval of its actions. In other words, conduct that is in line with social expectations increases the likelihood that the key environmental factors will support them in their activities and decisions (Meyer & Rowan, 1977; DiMaggio & Powell, 1983; Scott, 1995).

Institutionalists emphasise that (1) all organisations exist in a *milieu* of institutional rules (there is no such thing as a market—all markets are socially constructed), (2) all organisations are *settings* established based on social expectations that force them to take only the kind of action that is acceptable, and (3) all leaders and managers are socialised through accepting the appropriate view of the world that outlines their understanding of the available options. In other words, managerial discretion is very limited.

Leaders and managers are not and cannot be autonomous agents; they are restricted by social norms and expectations comprising assumptions about their organisational world and appropriate behaviour (Jenkins et al., 2007, p. 16).1 Tere is no *unrestricted human agency* in strategic decision-making and action. As underlined by Tolbert and Zucker (1983), people make decisions but this is in no way free or unrestricted: their conduct is always conditioned by social pressures.

When viewed from this perspective, strategic leaders' behaviour serves to adapt the organisation to the presented demands of the institutional environment and to achieve social legitimacy, or in other words, to action that will be congruent with the values and expectations of key factors in the social environment. Acceptance of norms, rules and practices of the institutional environment is an imperative that shapes strategic choices and decisions.

External adaptation, from this point of view, implies adaptation to institutional pressures. Te greater the demands, formalisation of behaviour and restrictions, the easier it is for organisations to accept and implement quick and simple strategies of aligning with such institutional

<sup>1</sup>Te neoinstitutionalist approach is more about analysing the efects of institutionalisation than about analysis of the processes through which organisations become institutionalised. *Eo ipso*, organisations are treated as *black boxes*, and this is the most criticised element of this theory (Miles, 2012, pp. 148–149).

norms, with a view of avoiding being recognised in their feld as nonlegitimate (Krajnović, 2018, p. 48). Tis signifcantly restricts the space available for strategic leadership action.

Furthermore, successful adaptation and conformity with institutional pressures will make all the entities in the organisational feld2 mutually alike, which leads to a phenomenon known as *institutional isomorphism*.

Institutional isomorphism is a homogenisation of organisational practices in the process in which organisations become increasingly similar to one another in their intention to achieve social legitimacy. DiMaggio and Powell (1983, p. 149) defne isomorphism as *a constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions. At the population level, such an approach suggests that organizational characteristics are modifed in the direction of increasing comparability with environmental characteristics*.

Tere are three types of institutional isomorphism: coercive, normative and mimetic isomorphism (DiMaggio & Powell, 1983). Coercive isomorphism emerges as a consequence of institutional pressures exerted on the organisation by the entities on which the organisation depends (it is the result of formal and informal pressures by the government, legislative bodies, regulatory agencies, but also cultural expectations from the organisation in the eyes of the society). Normative isomorphism is the result of professionalization within a certain organisational feld. Mimetic isomorphism represents the process of copying and adopting practices and structures of an organisation perceived by others as being successful and legitimate.

DiMaggio and Powell (1983) noted in this context that one should not forget the phenomenon of *structuration*, which refers to processes through which institutionalised social structures shape action and behaviour, but also the processes through which those structures are recreated and reproduced through preformulated action and behaviour. Conformist behaviour on the part of organisations thus serves to reinforce existing social structures. Te authors also underlined the problem of *reproduction* 

<sup>2</sup>Te concept of organisational feld is recognised in the institutional determination of the environment comprised of multiple transactional relations in a network of participating organisations; each of them has a shared understanding of the form that such transactions should take (Jenkins et al., 2007, p. 21).

*dynamics*: institutional structures emerge from social interaction, serve to direct those interactions, and are ultimately reproduced through those interactions.

Oliver (1991) claims that organisations can adopt a wide range of strategies, from extremely passive to extremely active ones. According to her, possible organisational reactions are: (1) acquiescence, (2) compromise, (3) avoidance, (4) defance*,* and (5) manipulation.

It is important to underline that the institutional approach explains strategy as a socially acceptable adaptation of the organisation to the existing network of institutional arrangements, social networks and expectations. Te role of strategic leaders lies in the performing of activities aimed at the best possible implementation of strategy.

Qualitative comparison between organisations is based on creating *institutional advantage*: some organisations will be *better* than others because they are better and more successful at socially legitimating themselves in a given organisational feld.

Te twenty-frst century world is also changing the way organisations and leaders approach limitations and pressures of the institutional environment.

Some organisations act like true *institutional entrepreneurs* (DiMaggio, 1988), or in other words, they are active participants in a more or less radical change in the environmental factors surrounding their institution (Oliver, 1991). Tese changes can be correlated with the phenomenon of deinstitutionalisation, which is a process *through which the legitimacy of an established organisational practice is lost or terminated* (Oliver, 1992) and which serves to challenge, negate or disapply the established or imposed practices or procedures.

Nowadays, the infuence of organisations of this kind is getting greater and greater—they are the creators of economic value that not only ofer innovative products, services and business models but also undermine the foundations of contemporary society by changing existing institutional arrangements and opening up new spaces by shaping new social structures and rules.

What connects organisations and systems such as AirBnB, Uber, Bitcoin, PayPal, M-Pesa, Pirate Bay and many others, are not just revolutionary innovations in business, but also massive institutional changes that are created as a result of existence of such organisations. Such actors change the basic substance of society: customary practices, organisation and order that we have become accustomed to, as well as the methods of creating, appropriating and distributing value.

Teir action more or less successfully *destroys* the rooted-in institutional logic and existing rules of the game. Tey do not accept the inherited social and market-related frameworks and do not hesitate to question the existing widespread categories and constructs: from money, capital market, goods and information, contracts, business models, to the character of entrepreneurial initiatives.

Some strategic leaders change institutions and create completely new organisational felds. Teir success is not measurable by the level of institutional advantage in the existing organisational feld, but by their ability to establish new institutional constellations and balances where they will have the pre-emptive advantage of social legitimacy in the eyes of organisations that they lead.

#### **Neo-Darwinian vs. Adaptationist Discourse**

Tere are two main discourses when it comes to understanding the relationships between an organisation and the environment that condition the actions of a strategic leader.

*Neo-Darwinian discourse* is based on the idea that there are evolutionary forces that afect survival in a population of organisations, whereas the *adaptationist discourse* relies on the hypothesis that organisational change happens as a managerial response to the dynamics of the environment (White et al., 1997). Based on the frst approach, the role of strategic leadership remains in the organisational backstage, whereas based on the second approach, it is put on a pedestal as a key instrument and driver of change.

Te key element in any evolutionary theory—regardless of whether it is in the feld of linguistics, culture, technology, biology or economics—is the mechanism of creating new things, based on the concepts and logic of *variation, selection and retention*.

One continually questions whether it is possible to plausibly transpose evolution-related assumptions to social sciences, or whether it is just a trend among researchers, one that obscures the real nature of social phenomena involved in this process and reduces human behaviour to a game of natural selection, a so-called "blind choice" that remains outside the domain of people's conscious decisions and intentions. On the other hand, it is unquestionable that ideas stemming from evolutionary theory have enriched and provided a diferent, sometimes complementary, perspective on the scientifc disciplines dealing with economic and managerial processes.

In strategic management, the recent popularity of evolutionary ideas is, as Augier (2005, p. 352) noted the words of Sidney Winter, based on the fact that *these ideas provide a fairly 'big tent', a fairly broad framework in which you can analyze the basic ideas of frm behavior. Firms commit themselves to trying certain things, and then the environment renders a verdict in terms of 'success' or 'failure' of those attempts*. He also noted that *that has so much descriptive plausibility that it is easy to think about strategy in that framework.*

A special contribution to Neo-Darwinian discourse that concerns survival of entire organisations was given by Howard Aldrich (1979). He attempted to explain how variation, selection and retention, as key categories of the theory of evolution, can be observed as predictors of organisational change over time. His hypothesis was that an organisation's greater or lesser adequacy to its environment (possessing of adequate organisational characteristics) translates into its prosperity or downfall much more than decisions and strategic guidelines selected by organisational leaders (Murmann et al., 2003).

In other words, the organisations that are best adapted to the environment will survive, while others will perish over time.

Evolutionary processes at organisational level can be presented as follows: Variations change existing structures or behaviour, and they can be *planned, unplanned, accidental, circumstantial, systematic, predictable or heterogenous* (Aldrich, 2017, p. 33). Processes of selection separate certain variations from all those that are available; i.e., they select the variations that will survive in the upcoming period.

*Natural selection* is the key mechanism of selection: Selection processes often generate unexpected consequences and there is no guarantee that selection will result in the survival of the most efcient.

Te environment confronts organisations with contradictory selection pressures and, in most cases, it is completely uncertain which or whose strategies will be the ones to survive. Te best way to tackle the future environment is to experiment and develop a multitude of minor strategic initiatives, some of which will be recognised by the environment as being good.

Te trial-and-error approach redirects focus from developing coherent and consistent all-encompassing strategies to creating intraorganizational conditions that will allow for various responses to diferent changes in the environment to *emerge* over time. According to evolutionists, the environment will provide the metacriterion for selection of the best methods and versions of strategy; the role of strategic leaders and managers in this process is only a minor one.

Evolutionists emphasise that organisations (and their leaders) are not too competent when it comes to anticipating or adapting to changes in the environment. Tey underline that the importance of deliberate strategic creation by the upper echelons is overestimated, and that the concept of "long-term strategies" detracts managers' focus from operational efciency and the aspiration towards the greatest possible efcacy. Instead of this being done by rational leaders or managers who willingly select and implement what they think are the best strategic directions, it will actually be the market that will select *ex post* the best strategies.3

<sup>3</sup> In the feld of economics and management science, important fundamental ideas of the evolutionist approach have been contributed by numerous scholars. One such contribution was provided by Hannan and Freeman (1974) in the development of population ecology, which most researchers nowadays refer to as *organisational ecology*. In his analysis of social psychology in organisations, inspired by the works of Donald Campbell from the 1960s introducing a sociopsychological theory about how individuals coordinate their actions, Weick (1979) developed an approach wherein one can clearly see the evolutionary logic based on variation, selection and retention; Aldrich (1979) is also known for proposing that the concept of evolution should be an *overarching framework* in which all other business-related research approaches should be recognised. Nelson and Winter (1982) who, inspired by ideas and concepts of Cyert, March, Simon and Schumpeter, believed that the key of evolution was in routines as the fundamental unit of selection rather than individual organisations. Resource-based view of a company (e.g., Barney, 1991; Wernerfelt, 1984) was also strongly infuenced by the evolutionist perspective of Nelson and Winter (1982) on the development of a company. Evolutionary ideas can also be seen with DiMaggio and Powell (1983) in their explanation of companies' behaviour based on the principles of neo-institutionalist approach. All of them (and numerous other researchers) fnd that evolutionary meta-logic is appropriate when it comes to researching the business world (Hodgson, 2002).

It arises that the evolutionary perspective does not place too much importance on managerial choice or planned action; selection occurring in the environment will select those who are more capable (in evolutionary terms), those who have opted for strategies best suited to the forces present in the environment and who stand a better chance of survival as a result.

Contrary to the view that purposeful and deliberate creation of organisational future is overestimated, the adaptationist discourse emphasises the importance of leadership, organisational strategy and choice.

Leaders and managers make conscious decisions aimed at aligning the organisation with the characteristics of its environment; adapting it to the environment and the demands it brings and, to the extent possible, shaping the environment according to the needs, capabilities and expressed aspirations. A strategic leader is usually perceived as a completely rational individual on top of the organisational pyramid, a *homo oeconomicus* who acts rationally, maximising benefts. Tis discourse is based on strong trust in the leader, their abilities and capacity to make long-term plans and shape a strategy that can maximise profts or achieve another tangible objective that the organisation aspires to.

Te classic adaptationist discourse developed over time into a *systemic perspective* on strategy, as seen by Whittington (2001, p. 26), which is based on the assumption that organisations (or those that manage them) are capable of planning ahead and being efcient in interacting with its environment. It describes how strategic objectives and processes paint a picture of the social systems in which strategy is created, and rationality of behaviour is determined based on a particular social context instead on some general criteria.

Rules that govern company strategy are less constrained by the cognitive framework of those that create strategy, and more so by cultural rules and norms existing on a local social level (e.g., the infuence of social class, profession, gender, nation, country, family, or other), irrespective of strong infuences of globalisation.

Te systemic perspective de-centres strategy as a universal category and positions it into diferent segments of human reality in various diferent ways, which results in strategy becoming a discourse signifcantly dependent on contextual variables that determine the ambience in which the organisation exists. Tis is a truly post-modernist alternative: a major departure from classical adaptationist perspective where the rationale behind any strategy is recognised in its instrumental role, with the mediation of the upper echelons, in achieving the highest possible earnings for shareholders or satisfying the interests of other dominant stakeholders.

In conclusion it can be said that there is no doubt that organisational adaptation to the environment is not a simple phenomenon, just like strategy is not something that can be singularly interpreted.

Strategic leaders can in some situations enjoy freedom and complete control in the forming of strategy, whereas other times they may be signifcantly restricted by ideology, history and past organisational practices. Moreover, organisational adaptation can be based on strategy development through incremental improvement of organisational processes (e.g., Barnard, 1938; Burgelman, 1994; Quinn, 1980) or in other words, through daily adjustments of organisational routines that occur irrespective of the defned plans and guidelines (Mintzberg & McHugh, 1985).

Te greater the uncertainty in the environment, the less usable any pre-designed action plans, because it becomes harder to turn them into reality. In such situations, other characteristics of the organisation become more important: ability to experiment, potential for organisational learning, and greater fexibility and adaptability. Tese characteristics can help to adjust to fundamentally unpredictable future events and emergence of patterns of the organisation's behaviour that can then develop into a successful strategy (De Wit & Meyer, 2010, p. 114).

Strategic leadership has an important place in all the mentioned situations: in radical choices that create new confgurations in the organisationenvironment relationship, but also in the creation of a context and a stimulating climate that can indirectly and gradually lead to alignment of organisational components with important environmental factors. Strategy is an instrument of leadership in the dynamic interaction of the organisation and the environment; it is an adaptive response to important and critical changes that happen in it.

## **Strategy and External Adaptation**

As already underlined, external adaption is an inextricable element of strategic leadership architecture and, together with strategic direction and integration of the collective, it afects organisational action and guides it towards the expectations and outcomes that contribute to the organisation's survival.

An organisation can be observed as an open system that merges with its environment, consisting of interconnected and interdependent elements that function as a whole in that interaction. Organisation is a system that depends on its environment to survive and fourish.

Te boundaries between the environment and the organisation can be perceived as fuid and variable, allowing for the comparison to a very unstable *permeable membrane* which *de facto* outlines the organisation as a distinct entity. Across these boundaries, organisations receive inputs, transform them, and return them to the environment in the form of outputs (information, services, products or other) which refect their primary purpose.

Te organisation is afected by environmental developments but at the same time it, too, afects the environment. At times its entangledness with the environment is greater, and at times it is lesser, depending on the intensity of their mutual infuences.

Potential for resource exchange, control of key resources, issues of resource scarcity and availability, greater or lesser resource dependence on others, mutual infuences and all kinds of adaptations as well as other sociopolitical and economic relationships, determine the degree of the organisation's interwovenness with the environment.

Te fundamental purpose and objective of any system, and consequently of any organisation, is survival. Successful adaptation to the present and future environment guarantees survival. Tis adaptation can be referred to as *strategy*, or as the organisation's way of more or less coherently or consistently directing its relations to and relationships with the environment, regardless of whether some action has been planned by the strategic leaders or emerges as a result of years of experience and gradually developed and unplanned behavioural patterns.

Hence, strategy is the mediating *force* between the organisation and the environment which increases the chances of survival in the long term.

From the perspective of strategic leaders, developing a successful strategy means coordinating the organisational potentials to match the specifcities of the environment; adapting to the environment and its demands and, to the extent possible, moulding the environment according to one's own needs and capabilities.

In other words, strategic leaders need to continually strengthen their organisations' *adaptive potential*: their efort is important when it comes to eliminating or mitigating threats and weaknesses, utilising opportunities and maximising strengths in order to succeed in making their mission a reality.

Disambiguation and "diagnostics" of the environment are obligatory in that process. Tis includes researching and interpreting political, economic, social, technological and other factors. Leaders should pay special attention to the events or trends that have the potential to change the world radically. Value shifts in the society, signifcant technological innovations, structural shifts and other paradigmatic changes could completely change the way market competition works, the role the organisation plays, and also the way it interacts with the environment.

Standard forecasting techniques and methods are of little assistance when it comes to the complex and variable ambience in which modernday organisations operate. Most forecasting methods can only be implemented when there is information available about the past that can be quantifed in the form of input data, and when it is possible to assume with a relatively high degree of certainty that past phenomena will continue in the future. Nowadays, it seems that forecasts and trends are not useful even when it comes to relatively short-term forecasts: elements of *structure of the future* change so quickly that quantifed indicators and expected future data, which usually appear as outputs in a classic forecast system, lose their qualitative character, and this represents a much bigger issue than a mere numerical error, which could sometimes be tolerated.

Tis brings to mind the witty remark of great physicist Niels Bohr, who said: *Prediction is very difcult, especially if it's about the future.*

A high degree of uncertainty that is inherent in the environment of contemporary organisations does not, from the adaptationist approach, reduce the need for strategic leaders' visioning or the need to examine, explain and interpret the future by using organisational strategy, which is in essence a construct comprising the desired picture of the organisation's future, main strategic direction and organisational action required to making all that a reality.

**Scenario planning.** Scenario planning can help the organisation better face the challenging turbulences and provide a good link between two components of strategic architecture: external adaptation and strategic direction. It helps in the analysis of the future environment and development of strategy, strategic objectives and initiatives by helping strategic leaders think outside the box when it comes to the future and future events, in order to be prepared for them as much as possible.

Te main purpose of scenario planning is the creating of a comprehensive and integrative picture of the future that can afect the decisions that are to be made by strategic leaders at the present moment and the purposefulness of which is beyond question.4

Scenarios are to be understood as schemata or *schematic concepts* that strategic leaders use to familiarise themselves with the consequences and actions involved in a hypothetical situation. Any possible future is presented based on a number of variables and their signifcant interrelations, and the term *scenario* is used for such a set of logically structured hypotheses the relevance and coherence of which can be empirically and analytically verifed and the likelihood of which can be estimated, allowing for an estimate of opportunities and threats for the organisation in the future that require an immediate response (Tipurić, 1997).

Instead of the *most probable future*, scenarios focus on various possibilities and create room for thinking in terms of "if-then" statements. Tey are the tool for *editing* the perceptions of alternative future environments in which strategic leaders' potential decisions and aspirations can be compared. Te most important step in scenario analysis is identifcation of the most important trends and so-called *critical uncertainties* (various

<sup>4</sup>Particular credit for theoretical elements of scenario planning introduced in the 1970s is owed to Pierre Wack, who understood that there were hidden forces that afect the creation of future and that planners need to look at and accordingly shape the future of the company in a new way, by afecting the "mental maps" of decision-makers so that they could have a set of scenarios based on which they could make strategic decisions with promising outcomes. See: Tipurić (1997).

phenomena and factors) which could have a positive or negative impact on the organisation's future ambience. By exploring their interaction, one can develop distinct structures of the future that serve as a basis for construction of scenarios as *alternative futures* that necessitate the organisation's strategic adaptation and create a foundation for strategic leaders' action.

Scenarios are developed as sets of only a few plausible stories that describe the organisation's possibilities in the most important optional futures, and these are then planned down to a few scenarios, i.e., unique and rational stories with suggestive plots that can intrigue strategic leadership and facilitate the understanding of the possibility of change management (Tipurić, 1997).5

Each scenario describes an outline of the future that is completely diferent from those presented in other scenarios. Wack (1985), for instance, claimed that the ideal number of scenarios was three, with one being a "surprise-free" scenario, and the other two presenting diferent perspectives of the world based on critical uncertainties of key variables. On the other hand, Schwenker and Wulf (2013) believed that it is reasonable to develop four scenarios that would be based on varying two important dimensions in the so-called scenario matrix. It would be inappropriate to design more than four scenarios, as most decision-makers cannot manage that many "worlds".

Scenarios should help strategic leaders develop their own perceptions of the nature of the environment and the forces and factors operating in it, and also of the uncertainty brought on by alternative scenarios and concepts of interpretation of data about the future. Te central point of a scenario is the impact on the strategic leader's mindset: their internal model of reality, set of assumptions about the structure of the external world and the organisation's place in it.

<sup>5</sup> Scenarios are designed by taking distinct important trends and critical uncertainties and including them in the recognition and development of scenario dimensions in order to provide explanations that will help structure and understand how they correlate with one another. One should not focus on a cross analysis of mutual infuences of all existing variables because that would create thousands of variations which could not be consistently incorporated in the development of alternative scenarios. Scenarios should: (1) portray an imaginable coherent future, (2) difer in terms of structure, (3) be distinct from standard predictions, (4) comprise elements that are of interest to, and that may potentially impact the organisation and its environment, and (4) challenge the existing frameworks and assumptions (e.g., mere copying of the present into the future by drawing on simple trends, or alike).

More than anything else, strategic leaders require plausible narratives about the future of the ambience. Tese serve to facilitate the designing and development of options that can prevent, redirect or encourage the constellations and processes in the environment that will have a key impact on the organisation in the future.

In short, external adaptation can be seen as a link created by strategic leaders between the organisation and its environment. Assessment of the present environment and anticipation of the future one helps to identify the potential space for important actors' infuence on planned organisational action. Scenario planning helps understand and contextualise uncertainty, and strategic direction rounds of the organisation's mission and vision, serving as the foundation for decisions and moves that the leader and the organisation are going to take.

Coordinating one's own intentions with expected actions of other mutually dependent entities, with a realistic assessment of the current position, helps create a *strategic ft* as the main objective of organisational adaptation to a variable and uncertain environment.

Analysis of the environment cannot be complete or purposeful without analysing the future, nor can strategy be contemplated without thinking about what tomorrow will bring.

**Blending intention and anticipation.** Strategy can be understood as blending intention and anticipation, both in leaders and in organisations, as noted by Wensley (2003, p. 105). Teir relationship in external adaptation (in accordance with postmodernist discourse) should be observed from a synchronic perspective (which means that a diachronic observation of their relationship should be avoided).

Intention is connected with the leader's and the organisation's purposeful behaviour, and anticipation on the other hand is connected with understanding the behaviour of others who infuence or could infuence the efects of the organisation's behaviour. Tey are indispensable in the conceptual scope of strategic leadership: they represent the totality of environmental factors that we can refer to as "Others."

Hypothetically, an organisation could have only one important environmental actor with a stable and predictable set of actions that impact its existence. In such case, external adaptation comes down to a range of decisions and potential actions and reactions in that dyad.

Te other extreme would be a huge number of all kinds of environmental actors, each with diferent objectives and intentions, whose actions cannot be predicted, making it necessary to develop alternative scenarios in the strategic anticipation process, and to group actors and factors from the environment by their similarities to create simplifed models of the environment in which collective intentionality can be better understood and outlined. Te more complex and variable the environment, the harder and more challenging the task to anticipate things in it.

In the range of possible situations between the two mentioned assumed extremes, external adaptation always comes down to potential and actual relations with "Others."

Wensley (2003, pp. 123–129) presented a simplifed situation based on strategic leaders' intention and anticipation. Based on that approach, we can identify four types of external adaptation, depending on the intensity of those two constructs.

Where the intensity of strategic leaders' intentions and anticipations is low, external adaptation can be referred to as *meandering mode*, in which everything that happens to the organisation will be the result of external forces and infuences, without any actual knowledge about the environment or activities that could be implemented. Tere is no strategy in terms of a defned intent or plan, and meandering implies reacting to changes and demands presented by the environment.

High-intensity intentions and low-intensity anticipations lead to a situation referred to by Wensley as *myopic mode* of external adaptation. Despite their aspirations and clear intentions, strategic leaders cannot (or are unable to) analyse the infuence of the "Others" or the possible future changes in their environment. Tis myopia increases with the increased intensity of turbulences in the environment. A low level of anticipation indicates the need to adapt in a short period of time and to implement certain activities that will not threaten the organisation's existence in the long term.

Next, strategic leaders' low-intensity intentions can be connected with high-intensity anticipation. Tis situation is referred to by Wensley as *meditative mode*. Te leader and their associates understand the environment but they are not sufciently active when it comes to shaping a desirable future for the organisation in a way that would involve a clear and precise strategic intent as the backbone of strategy. External adaptation is the result of the organisation's dynamic adaptation to short-term and long-term changes in the environment. Major strategic decisions are rare and consequently, strategy has an *adaptive* character: the organisation gradually adapts to changes by following a *logical incrementalism* (for more detail, see Quinn, 1980).

Finally, high-intensity anticipation and high-intensity intention is associated with the *manoeuvring mode*. External adaptation is based on good knowledge of the ambience and an unquestionable plan or strategy that is to be realised. Excessive manoeuvring can get the organisation into trouble, especially in situations when strategic intent is not in harmony with the expectations of important actors from the environment or when it is perceived as Machiavellian (Wensley, 2003, p. 128).

#### **References**


Whittington, R. (2001). *What is strategy- and does it matter?* Tomson Learning.

Worden, S. (2003). Te role of integrity as a mediator in strategic leadership: A recipe for reputational capital. *Journal of Business Ethics, 46*(1), 31–44.

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# **5**

# **Strategic Direction**

### **Strategy as a Transnarrative**

Te domain of strategic leadership is primarily connected with strategic direction, which could be recognised as that which the organisation is trying to do and what it wishes to eventually become.

Te basic determinant of strategic leadership is the creation of a meaning structure and sensemaking with respect to common action and its purpose, relational networks between key actors, and activities that need to be taken. Construction of a reality and sensemaking on the organisation's path from the past towards the desired future are important elements of strategic leadership.

Our relationship with the passage of time can be best explained by comparing it to walking backwards: as we walk, our eyes are fxed on the past and our back is turned to the future, which is therefore always beyond our gaze—unknown, unclear, untouched, and uncertain.

An organisation is defned by the purposefulness of its members' actions. "Who are we, where are we going, and what are we supposed to become?" are the fundamental questions towards a defnition that the leaders need to adequately answer in order to eliminate disputes, uncertainty, and lack of understanding within the organisation.

Strategy is about focusing on what is relevant in time: it necessitates construction and, consequently, an interpretation of the future based on the understanding of the present. Present time, on the other hand, is a remnant of the past that we create and interpret retroactively in order to construct the future.

Tere is no clear rule here: sometimes the past is created and interpreted from the viewpoint of a desired and shaped future, and other times the construction of the future results from existing images that we have of the past. Te sense of organisational existence is constituted at the same time as the past, present, and expected future are constructed and interpreted.

Strategy is a deliberate efort to "delve into" and actually see the future while making those precarious steps with our backs turned to it; as noted by Cummings and Wilson (2003, p. 1), an organisation's strategy can be described as *its 'course', its onward movement in space in time, where it goes and where it does not go.* At the same time, it is an interpretation of reality: the way the collective members see and explain the organisation in the context of time.

Strategy relates to organisational destiny and important decisions and actions; it subliminates the alchemical magic of acting or thinking upon the essential questions that afect the collective. It connects the discovered and created meanings, gives them sense and congruence, and provides support in the attempt to make sense of the world so shaped.

Diferences in opinion and doubts regarding the essence and content of strategy have not yet been resolved and are still as debated as ever, probably with even greater degree of frustration. In this context, some renowned scholars, having surrendered to scepticism and almost completely discouraged, concluded that: *We simply do not know what a good strategy is or how to develop a good one* (Markides, 2000, p. vii), and that *the idea and practice of strategy has so many meanings that now it has none* (Franklin, 1998, p. 320).

It is interesting that, about forty years ago, somebody noticed that the Japanese have no word or phrase for "something" that could be broadly defned as "company strategy" (Pascale, 1982; as cited in Whittington, 2001, p. 28).

Borges (2001, p. 99) wrote: *After all, what are words? Words are symbols for shared memories. If I use a word, then you should have some experience of what the word stands for. If not, the word means nothing to you.*

Strategy is, on the one hand, a construct created to explain the behaviour and intentions behind such behaviour of people, organisations and other social entities in their interaction with the environment. It exists in the minds of those who attempt to explain the world around them, give it meaning and sense, recognise and defne purpose, and create a framework wherein one can infuence action in the world so explained.

Strategy is shaped by those who create it through social interactions, interpretations, and meanings ascribed to it. According to Weick (1987, p. 231), strategy is *a form of discovery of meaning that arises from actions that have been taken*. As in other situations, its content and meaning depend on the degree to which they have been arranged into *sensible, coherent confgurations*. Weick (1995) also asked*: "How can we know what we mean until we see what we build*?"1

According to Stacey (2011, p. xviii), strategy is *the emergence of organisational and individual identities, so that the concern is with how organisations come to be what they are and how those identities will continue to evolve*.

It is not possible, or necessary, to arrive at a singular defnition of strategy. It is important, however, to identify the outline of its defnition and to clearly determine the content associated with it. We could cleverly remark that strategy was not frst perceived in the real world and then defned, but rather that it was the other way around: frst it was defned and postulated, and only then was it "actually seen" in the reality of social ambience.

Strategy, like any other concept, is the "residue of metaphor" (Nietzsche, 1999, p. 13), but what happened to the metaphor?

As already emphasised in the second chapter, strategy is a *transnarrative* with clusters of variable meanings grouped around it: its sense and content vary depending on the situation and on the time, locality, and feld in which it is implemented.

<sup>1</sup>Weick's famous sentence "How can we know what we mean until we see what we build?" pertains to explaining the essence of sensemaking. In another book, one published earlier (Weick, 1979, p. 133), this sentence was phrased diferently: *How can I know what I think until I see what I say?*

Transnarrative is a neologism inspired by (but nevertheless completely diferent from) the familiar post-modernist concept of *meta-narrative* (or *meta-narration*), introduced by philosopher Jean-François Lyotard. Metanarrative can be summarised as the overall ("grand") scheme that explains knowledge and experience (like a narrative about smaller narratives which, by arranging them into conceptual models, pieces together an overall picture).2

Transnarratives are concepts that are ubiquitous across various segments of human activity and the understanding of which cannot be singularly defned. Tis inability to arrive at a precise defnition is not the result of insufcient or underdeveloped knowledge, nor is it the result of lack of (complete) insight into the matter. Transnarratives are *beyond* defnition, but they nevertheless lie within the scope of hermeneutics. Te meanings of these concepts draw closer and, at the same time, move further apart from one another; they exchange common "clues" and "constituents", but never actually converge or overlap completely; they create all kinds of diferent types of autonomous contexts which mirror side meanings.

Strategy can never achieve self-identity, nor can its scope of meaning be uniformly determined. Meanings of strategy converge and diverge at the same time; myriads of existing defnitions never fully overlap; some of them are contradictory and divisible, some are too broad, encompassing the extensive scope of determination, while others are too narrow, accentuating only one, insufciently comprehensive dimension of defnition.

Strategy is a plurality of social constructs about distinctive aspects of human existence; there is no invariable substance that it transcends. It is omnipresent, widespread and often inevitable; its sense and contents do not coincide in every situation as they are dependent on time, locality, and feld in which it is being implemented.

Te reality of strategy becomes part of the big picture, and the chaotic relations between the multitude of unexplained elements of an elusive reality that is beyond comprehension become irrelevant in the world of actuality.

<sup>2</sup> See, for example, Lyotard, Jean-François (1979, pp. xxiv–xxv). For a defnition of strategy as a transnarrative, see Tipurić (2014).

It is also a structure that establishes order in networks of meaning. Strategy is important because people only perceive selected pieces of reality (Lacan, 2008, p. 56), due to their own cognitive limitations and the complexity of everything that surrounds them. Strategy complements the incomplete, inconsistent and bare-boned human reality by flling it with important metaphors, and provides a reason for action not only after the fact but also before (Fig. 5.1).

Te creation of a simpler, more comprehensible world in which one can navigate more easily, without cognitive gaps and mental mess, requires undoubting decision regarding the determination of organisational existence.

**Fig. 5.1** Strategy between construction and interpretation

Strategy gradually emerges through collective understanding of the world and creates a foothold and guidance that encircle the collective with clusters of imprinted and interconnected meanings that justify their actions and mirror the sense behind them (Fig. 5.2).

Strategic direction arises in most cases based on the organisation's historical context and previous development path, its accepted guidelines and principles of action, available and newly-created resource combinations, as well as existing and expected impacts of environmental factors.

Strategy needs to provide a glimpse of the organisation's tomorrow; or, to be more precise, its tomorrow has to be explained and interpreted by strategy—by an imaginary picture of a desirable future, basic strategic directions, and other strategic actions that make such tomorrow possible.

**Fig. 5.2** Strategy as a structure for establishing order in networks of meaning

Understanding the organisation's environment cannot be complete or meaningful without exploration of the future, just like it is impossible to even begin thinking about strategy without making certain assumptions about what tomorrow will bring. Strategic leaders need to analyse the prerequisites for the organisation's continued existence in the future; they ought to take note of both the sudden and the slowly-occurring changes, and analyse the efects of individual factors on the environment that the organisation will fnd itself in.

In other words, strategic leaders attempt to monitor the organisational destiny and direct its main activities, moves and decisions toward the desired future, or toward an attainable picture of the organisation in a time that is yet to come. Tis kind of defnition derives from human nature: the intention to create the future is inherent in human existence and action, both individual and collective.

What is important in this context is sensemaking and sensegiving, recognising and orchestrating meaning, and in particular, creating convincing narratives and symbols within the organisation, which will add to the plausibility of its strategic direction.

Te sensemaking process involves three components: cues, frames, and ways in which cues and frames are connected. Frames are knowledge structures created in one's past, through socialisation, whereas cues appear in the present moment as it is being experienced. In and of itself, neither of them has any meaning. Tey contain rules and values and serve as a guide to facilitate understanding. Meaning is only created when people form a relation between frames and cues. In other words, connecting past experiences in the form of categories and frames with cues being perceived at the present moment, is what creates meaning.

Weick (1995) identifes six types of frames: *ideologies* as vocabularies of society, *categories*, which classify organisational practices (vocabularies of organizing), *paradigms* as vocabularies of work, *theories of action* (vocabularies of coping), *tradition* (vocabularies of predecessors), and *stories* (vocabularies of sequence and experience).

Formation of strategic direction needs to be diferentiated from planning as a classic managerial function, although those two activities are complementary and mutually connected.

Planning is focused on deduction, it brings order into the system, and does not rely on major changes. Formation of direction, on the other hand, is an inductive process in which leaders explore and fnd patterns, relations, and connections between things that can be used as building blocks in the creation of a desired future. Outcomes and results of planning are plans, whereas the results of creating direction are visions and strategies (Kotter, 1990).

### **An organisation's Purpose and Mission**

In an organisation, purpose acts as a kind of *social glue*: a logical and substantiated justifcation for its continued existence in the complex social fabric.

It is recognised in the basic principles of organisational action, its "higher ideals" so to speak, which serve as a motivational integrator for stakeholders and even more so as an inspiration for the management and the collective.

Purpose draws from organisational beliefs, the members' shared assumptions about the nature and character of the organisation's environment, and about what it should do to be successful.

Where key individuals and groups within the organisation do not share the same fundamental beliefs, the structure of the environment will be perceived and interpreted divergently; threats and opportunities will be assessed diferently, and this in turn will result in strategic management and decision-making becoming sluggish, obstructed, and relatively inefective. Perception, recognition and harmonisation of purpose is a prerequisite for existence and development of strategic direction.

On the other hand, purpose provides the power of leverage in the construction of collective identity and the core around which the ideological layers of the organisation are wrapped. It is possible for its integrating character to serve as a kind of a cloak concealing the intention of upholding existing social constellations and maintain the balance of power within the organisation.

Some authors even believe that the category of organisational purpose is a mythical construct that helps ideology-dependent organisations build a complex illusion that masks the existing exploitative reality and helps indoctrinate or "brainwash" members of the collective (Levy et al., 2003).

Organisational mission is the concept that is superordinate to organisational purpose.

Etymologically speaking, the word *mission* comes from the Latin word *mittere*, which means "to send." It is about "sending somebody somewhere", about sending them on a *mission* to do a task or fulfl an obligation.

Firstly, mission mirrors the fundamental purpose of existence which is unique and specifc to each individual organisational and deeply rooted in its history, specifcities and relations between key stakeholders. It is a kind of self-defnition of an organisation and it helps to identify its social task.

It should unequivocally defne the sense, the reasons for existence, and the identity of the organisation. Te beliefs and aspirations of the leaders, managers, and important stakeholders need to be manifested in it.

Secondly, mission provides guidelines about how the organisation is to cope with the passage of time: it can be understood as a general statement in which one should identify the present strategic position, principles of action, and other factors that move and direct the collective from the present towards the desired future.

A more comprehensive understanding of mission can be gained if answers to the following four questions are given: (1) Why does the organisation exist?, (2) What does it do?, (3) Whose interests and demands does it satisfy?, and (4) What are the core values on which it bases its existence?

Conventional wisdom places mission in the centre of strategy process. Mission creates context in which vision is shaped, strategic objectives defned, and strategic activities developed. It determines the activity, the markets and the technologies that are of particular importance to the organisation, and recognises the important elements of the organisation's history and the ways it interacts with actors in its environment. In the other words, a good mission provides a consistent framework for organisational action: it needs to be the basis for the development of the organisation's direction in the future. It defnes the boundaries within which strategic choices and actions are made and implemented, and an appropriate ambience for organisational development created.

A mission should also address core values and main priorities: it needs to give answers to questions about what the organisation really is like and what the desired and welcome directions of its further development actually are. It has to refect the interests, demands, and needs of key stakeholders. Te mission is a refection of the way the collective is woven into the ambience.

Organisations strive to having only a few core values that truly refect their deepest essence. Values are beliefs and opinions that are easily recognised in day-to-day activities of the collective. In some organisations, core values originate in strong personal beliefs of the founders or charismatic leaders, whereas in others they slowly form over time—for various reasons—eventually becoming a set of timeless value principles deeply rooted in the behaviour of people inside and outside the organisation.

Te role of mission is also connected with the development of a desirable culture and creation of organisational identity.

Mission has the function of ensuring *cultural cohesion* that enables the organisation to operate as a uniform collective. It comprises strict standards and values that infuence people's behaviour, their joint work, and the manner of keeping up with organisational objectives (Campbell & Yeung, 1991, pp. 10–11).

Creation of shared mental models and common values can help leaders, other managers and employees understand and interpret events the same way, and encourage them in the creation of the same, distinct language used by the organisation that they can all understand.

Organisational identity is closely connected with important aspects of organisational mission: it represents the organisation's members' *collective understanding* of the crucial aspects of that which sets them apart from others in their environment. It includes a set of objects and symbols that members perceive to be central, distinctive, and enduring to their organization (Albert & Whetten, 1985) and provides members with an essential lens for their interpretation and sensemaking about diferent events that occur during organizational life (Dutton & Dukerich, 1991).

It can also be described as a set of narratives that give sense to the organisation's continuity and that are intended to answer the question "Who are we as an organisation?" (Fiol, 1998). As Gioia (1998) stated, organisational identity actually determines the organisation by indicating what kind of organization it is and what makes it diferent from other entities in the environment. At the same time, it must not be forgotten that organisational identity has a dual nature: in addition to diference, it also points to similarity (Whetten, 2006; Ravasi, 2016).

Organisational identity is *socially constructed*: its continuity is maintained through conversations within the organisation (Narayanan et al., 2011). Conversation as a term involves language and rhetoric, narratives and stories.

Apart from that, mission gives legitimacy to organisational conduct.

It connects key actors in creating values that are in common interest and thus increases chances that the most important groups or members will trust the leadership, and also accept and support the organisation's strategic action.

Mission can inspire individuals to work together in a specifc way. Development of fundamental principles that drive organisational action is accompanied by emergence of the *esprit de corps* with great potential to motivate people in the long-term (De Wit & Meyer, 2010, p. 600).

Creating a sense of togetherness and focus on interests of the organisation as a whole can have a stimulating efect when it comes to overcoming or reducing inherent conficts between groups with contradictory objectives.

A mission may be well defned and enduring, widely accepted, and sufcient for achieving organisational aspirations. Moreover, even when desirable, a change of mission is not the least simple: it takes much efort and time to change, more or less successfully, the usages that the organisation's mission is based on.

## **Visioning**

Mission and vision are mutually connected and inseparable constructs that are both comprised in the category of strategic direction. Unlike mission, which primarily focuses on principles of action (by recognising purpose or the *raison d'être* of an organisation, its values and business philosophy, describing how one should act, and outlining the activities, management and desirable future direction), vision on the other hand represents a mental image of the desired future situation: a realistic, credible, and attractive future of the organisation (Stacey, 1997, p. 328).

Mission is the concrete cornerstone of the strategic process and the most important foundation for designing a strategic vision. Vision provides a glimpse of what the organisation could become in the near future (Grant, 2002, p. 60).

Vision is not a mystical, inexplicable or unattainable construct; it is supposed to paint a picture of the organisation's future and act as a symbol that facilitates development of a structure of meaning within the organisation. Vision indicates a transition from the present state to a desired future one within the framework outlined by the mission, and refers to a concentration of eforts of strategic leadership in the intention to develop and implement strategy.

Mintzberg et al. (1998) maintain that vision designates inspiration and the sense behind that which needs to be done; it is a general signpost that cannot be formulated in great detail, specifcally or clearly. Tis makes vision fexible, which allows strategic leaders to change it based on their experiences.

Vision gives purpose of action and it can be viewed as a rationale of the organisation, but also as a foundation for building commitment and inspiring stronger engagement of the organisation's members. A clear, stimulating, and plausible vision shows that there are no conficts within the organisation or any great doubts when it comes to questions such as "Where are we heading?" or "What do we want to become in the future?" It is the starting point of the process of strategic thinking and helps guide the organisation in the desired direction.

Vision can be shaped by entrepreneurs, leaders, managers, organisations, and groups of organisations.

Complexity, unpredictability, and ambiguity of future ambience make the need for a powerful vision even greater, in terms of it serving as an important lever in recognising and utilising the opportunities and challenges in the construction of organisational future.

Trough creation and communication of vision, strategic leadership builds the bridge between the present and the future (Bennis & Nanus, 1985).

A good strategic vision needs to provide signifcant detachment from the present situation. It should be more than a mere following of the trends or an uninspired facsimile of the present. It should be a supporting structure within which one recognises the distinctive principles of action and organisational aspirations. When, back in early 1900s, Henry Ford conceived his challenging vision of "a car for every family," most people saw it as only an incredible fantasy. And yet, this fantastical vision changed everything, and made the world what it is today.

Vision needs to inspire the creation of clusters of attractive meanings and expectations for actors, by setting (relatively hard to reach) challenges to be overcome in the creation of a desired future and strengthening of organisational integrity. It should be strongly impressed upon the members in order to create commitment and increase motivation in them; moreover, fexibility and openness are also required, as are attractiveness and even magnetism; in short, it has to be at the heart of organisational action.

Despite the fact that it should be challenging and ambitious, vision must not be the point of setting of on a journey to the unreachable and imaginary; it has to focus on a future that is sufciently distant but at the same time achievable through planning and acting in the present, and coherent enough to show an overall, comprehensive picture of an attainable future.

A vision has to be unique, distinct, and singular: it should be the element that distinguishes the organisation from others (Fig. 5.3).

It is interesting to consider the crucial role of integrity in intermediation and balancing out of the tension between strategic planning and organisational vision; in this context, integrity enables strategic leadership to function as a "coherent entity" (Worden, 2003, p. 38).

Tere are at least three important roles that vision plays in an organisation.

Firstly, together with the mission, vision constitutes strategic direction and defnes the space for organisational action. It serves as a framework for developing priorities, main objectives, and policies. It is the basis for implementation of all changes that are required. Moreover, it acts as a prerequisite for consistency in organisational conduct, considering that strategic decisions and actions have to be aligned with the vision. As

**Fig. 5.3** Strategic direction

insightfully pointed out by Grant, vision demotivates optimisation of each individual business decision by considering every permutation of possible versions of decisions (Grant, 2002, p. 28).

Secondly, vision strengthens motivation among members by giving a clear perspective of organisational development and creating important determinants in the construction of common mental models. It encourages them to efciently channel their activities in the strategic leaders' desired direction. Te objective of visioning is not only to provide clear guidance for shaping strategy but also to articulate organisational aspirations that can create motivation for ultimate efectiveness (Grant, 2002, pp. 29–30).

Tirdly, vision serves as an important means of communication aimed at important stakeholders. Vision statements and slogans create new and reinforce existing connections between important individuals and groups within the organisation and outside it.

In conclusion, a powerful and plausible vision can be an important element in helping members of the organisation accept necessary changes required to ensure future survival. Te very possibility of change is actually frightening and people need more than just a reason to move on from the present; they also need an idea of a better future.

### **Strategic Direction as a Symbolic Illusion**

Tings can be observed completely diferently, though. Mission and vision can be viewed as narratives that *need not* be in touch with organisational reality. Tey don't have to give answers to questions about selfdefnition, core values, or targeted organisational future, nor do they have to be the big, ambitious action plans like strategic intent is.

Teir role need not be one of placement in the process of strategy creation and implementation, nor does strategy itself have to be formalised the way it is usually understood in the processes of strategic management. Tis kind of rationalisation of strategic direction is only one of the possible options.

In fact, the purposefulness of organisational action has to have an anchoring point that may only be symbolic in nature. Strategic direction helps tie down bundles and strings of meanings around images, metaphors, pictures and stories that may not directly interpret the present or future organisational existence, but that nevertheless justify and legitimise organisation action.

It is *an illusion*, but one that does not obscure the subject-matter of organisational purposefulness. It envelops and permeates into decisions and activities of strategic leaders, justifying them in whatever form they may take. It does not attempt to explain the reason for acting or give a distinct picture of the future, but rather it generates memorable and unmistakable symbols that can be used as an encouragement to strategic leadership in all kinds of (often variable) organisational intents.

Te illusion is broad and elastic enough to allow the narration of rationality of performance *ex post*, but still sufciently plausible for a motivational web to be woven around it, in which members of the collective will be caught *ex ante*.

Terefore, there has to be a *support* of some kind on which the choices made by strategic leaders will be based, regardless of how realistic such support is or what it comprises.

Moreover, no matter how we understand strategy and creation thereof, it always paints a picture of stability in organisational conduct. On the other hand, *shaping strategy is generally connected with rapid and often discontinuous change* (Mintzberg, 1994, p. 240) and consequently there is greater need for a broad symbolic umbrella that will provide space for strategic leaders' action.

Strategy is an addition to the reality created in that space. It is inseparable from problem solving and social interaction within the organisation. Te goal is to construct an ambience in which leadership will be given sense through rhetoric, symbols and values, and which will be conducive to organisational cohesion, identifcation, socialisation, and indoctrination of members.

From this perspective, strategic direction is a cloak without any clearly visible content underneath. It is a broad identifer where that which is identifed changes depending on the aspirations of strategic leaders, and helps with integration and external adaptation of the collective. Te idea that things exist independently from perception and that the key task is to recognise and describe them, is not easily accepted. If something really does exist beyond our mental capacities, then such a thing is unfathomable and beyond comprehension. Strategic direction, within the meaning used in recent "strategy lingo," is certainly not one of those things.

Indeed, that which strategic direction determines or refers to often may be found missing, but that's not really too big of an issue: strategic leaders and other organisational actors create, or rather *reveal* reality by giving it meaning and enriching it; they experience and internalise it, and live within their own ideas about it. Tey function in an illusion of a global reality explained by reason, oblivious of the fact that they are actually the makers of it.

Enactment of reality *attenuates* a chaotic and uncertain ambience: interactions between members and their exchanges of their take on reality create a common language, and when it comes to language, everything is possible. Tus, through listening and telling stories, creating and sharing meanings, games, enactments, and ceremonies, things can *eventuate*

inside the organisation which we usually refer to as mission, vision, purpose, strategy, or alike.

One must not forget that language is not a means of describing the human condition—in fact, language *creates* the human condition. Te world we live in, which we perceive through experiences, is the product of language and, as a result, language not only describes an object, it creates it as well.

We do not live in reality; instead, we live inside our own ideas of what reality is—and these ideas are constructed in language. Tere can be no strategy without stories and myths, without acting and enacting, the paradoxical and the absurd, or without magic, imagination and illusion: in other words, without the things we have *decided* to refer to as *strategy* and which we communicate in diferent ways.

Metaphors and metonymies, as well as other fgures of speech, are places where we can fnd sparks, shadows, and other traces of strategy. Language is an important part of the story of strategy, and interpretation of meaning can play an important role in the creation of new knowledge.

Enactment of strategic leadership is often accompanied by the imprinting of symbols and stories that turn to narratives we can sometimes call "strategic direction" or by some other, similar name.

Te illusion of such constructed "common values," "organisational purpose," or "clear vision" can integrate the collective, reduce the use of control mechanisms, and enable the strategic leader to develop numerous interpretations that can be used to justify action planning and implementation, as well as some other of the leader's actions in the light of all possible circumstances that may occur. Tese constructs have to be distinctive and plausible, and they need to communicate powerful messages in order for their place in the organisational reality to be recognised and strategic leadership rationalised.

Finally, strategic direction has to be simple in expression. Cummings and Wilson (2003, p. 4) maintain that a good strategy (whether explicit or implicit) *animates* the organisation; they underline the importance of *images* in the simplifcation of a complex world, and argue that the *art of strategy lies both in the combination of framework, images or maps and choice of their focus (e.g., the big picture versus certain detail), toward mapping an organization's particular course.* Tey indirectly emphasise the importance of semiotics in creating strategic discourse, concluding that *further postmodern paradox is that simple strategic images have never been useful than they are in these increasingly complex times* (p. 26).

### **Ownership of Strategic Direction**

Strategy always has to be oriented towards the future: towards discovering, exploring and exploiting new potentials, resources and capacities, including opportunities and challenges that can contribute to survival in the long run.

Strategic direction is the starting point of strategy and the foothold of strategic leaders. It determines the space available for organisational action and major business decisions; it is a guide of sorts for interaction with the future environment. Its domain is broader than the strategic objectives; it includes distinctive principles of action and organisational aspirations, a vision of what the organisation's position should be at a future point in time. It is especially important in situations when the "rules of the game" are changing, or in other words, when innovative and visionary actions require a special kind of leadership and managerial skills.

It also helps members of the collective to make decisions and act with minimum formal monitoring or control mechanisms. Tis way, strategic leaders can focus on other matters, such as adapting the vision to suit the circumstances, or other (Rowe & Nejad, 2009). Besides that, strategic direction can help organisational leaders avoid the trap of dispersion of resources into too many directions or other pitfalls such as uncertainty or lack of clarity of planned objectives (Ansof, 1965, pp. 105–8).

Continuation and instrumentalization of strategic direction open up the interesting question of "ownership," or control of mission and vision of the organisation, whether these constructs are merely a symbolic illusion or an important part carved out of the strategic process.

Tis question may be posed like this: is the role of strategic leadership decisive when it comes to organisational sensemaking and determining the direction of action, or is strategic direction the result of collective intentionality, where it emerges as a consequence of the organisation's history, interactions of its members, and successful attempts at action that eventually turn out to be desired behavioural patterns?

Strategic direction can be created in several ways, with two extremes being identifable. Strategic leaders can be (1) *visionaries*, so-called freeriders who use the organisation as an instrument for achieving their own intentions and ambitions, or (2) *team players*, organisational actors who merely embrace the existing mission and vision, and accept the obligation of ftting them into organisational action.

In the former case, there is high probability of identifcation of collective with the leader, whereas in the latter there is great change of leader's identifcation with the collective.

It is widely understood that strategic leaders need to develop and/or raise awareness of the mission and vision that mirror organisational uniqueness, imprint them into organisational day-to-day activities, create adequate narratives and clusters of meaning, bring them closer to members of the collective and stakeholders, and use them as a guidance and inspiration in organisational action.

According to this view, the role of strategic leaders is key because one has to bridge the gap between the situation "as is" and the desired situation. Identifcation, discovery or formulation of mission, just like the creation of a strong and credible vision, help create a context in which strategic objectives are defned, versions of strategy shaped and evaluated, and strategic decisions made and implemented. In other words, strategic direction has to mirror the principles, the boundaries and the directions of action, while at the same time strengthening the organisation's members' commitment to performing their tasks and duties.

Some authors fnd that the defnition of strategic leadership implies an ability to project vision, believing that the key prerequisite for taking on the role of strategic leader is *conceptual capacity* necessary for good-quality visioning (Waldman et al., 2006, p. 360) or simply identifying strategic leadership with the leaders' capabilities, wisdom and experience in creating vision and making important decisions in a complex and uncertain environment (Guillot, 2003). Tis perspective is based on the idea that visioning is the primary task of strategic leadership (e.g., Lear, 2012) together with creating the preconditions for making vision, the desired future of the organisation, a reality.

"Ownership" of strategic direction requires distinctive transformation, integration and communication skills. Successful strategic leaders see *the big picture* and understand their environment; they know how to set the bar high and act accordingly over time; they are capable of motivating the members of the organisation and obtaining their consent for ambitious plans, and they know how to integrate their combined eforts and aspirations in the organisation's strategic action.

Leaders capable of articulating good visions are not magicians; they are strategic thinkers willing to take risks and depart from commonality and mediocrity (Kotter, 1990).

Imaginativeness and talent to see the world diferently are key qualities that strategic leaders should have when it comes to creating vision. Te magic of good vision lies in the imagination of the upper echelons, which is fuelled by purposeful gathering and creative analysis of important information, clever identifcation of key trends in the environment, and a business-minded attempt to defne new rules in the game of competition. Tey not only accept, reveal and/or construct organisational vision, but also incorporate social reality of the environment into which the organisation is inextricably woven (Worden, 2003).

On the other hand, some think that strategic leadership does not play a crucial role in shaping strategic direction, and that it may be created and developed in countless ways.

"Ownership" of strategic direction in such situations is not acquired through creative power and imagination of the leader through an indepth reformulation of purpose and direction of action, but rather it is the result of socio-political relations, power structures and other intraorganizational relationships (Fig. 5.4).

Strategic leaders strive to strengthen their position of power, primarily with a view of maintaining "ownership" of strategy and expanding their discretionary space in unforeseen situations, especially when business results are not at satisfactory levels (Tipurić, 2011, p. 357).

Strategy can be observed as a *power lever* in relationships between stakeholders, where its "usability" is not measured in business results but in the potential for stronger and deeper *entrenchment*) of top managers

**Fig. 5.4** Two types of "ownership" of strategic direction

(Tipurić, 2011, p. 12).3 Its content alone (in terms of a formalised statement used to communicate strategy between organisational actors) is not of crucial importance; much more important is its role as one of the "sources of power" of strategic leaders vis-à-vis other members within the organisation and outside it.

Furthermore, vision can also emerge elsewhere in the organisation, or even somewhere in its environment. It can be inherited, original, or

<sup>3</sup>Entrenchment is a group of activities that a top manager uses to strengthen his/her position within the corporation, thereby reducing the infuence of the board and major stakeholders. Tis is a deliberate, prudent activity by a top manager who, guided by his/her own interests, wishes to reduce the probability of being removed from the current position.

transferred. It can result from mimicry or transposition from another context. It can occur accidentally or under the infuence of institutional pressures.

Strategic leaders can also have limits imposed on them in the form of managerial discretion, contextual limitations or through overpowering support of the current direction on the part of important constituents.

Tey have to *own* the mission and vision, recognise purpose, create plausible interpretations, and give sense to organisational existence. Teir role is primarily to *integrate* direction into day-to-day organisational conduct, establish the mission and vision as beacons that will guide and coordinate the activities of all members individually and of the collective as a whole, and create a climate that will support the required change in strategic guidelines. In this context, they need to accept fundamental organisational values that are explicitly or implicitly comprised in the organisational mission.4

It is the task of strategic leaders to embody the distinctiveness of the vision, to legitimise it, and to align it with the organisational ambience (Nutt & Backof, 1993, p. 330) or to efciently connect strategy with organisational action in order to achieve the outcomes that promise an adaptive advantage and survival in the long term.

Tey must wisely and efciently communicate the vision and mission, frame the way organisational aspirations are perceived, and give sense to important patterns of organisational conduct. Moreover, they have to invest time and efort in establishing and maintaining a common perspective of the world by strengthening organisational culture and identity.

Strategic leaders have to position strategic direction, irrespective of the method it was created, as the pivotal point of their work, and in doing so they have to take into consideration an idea aptly pointed out by Rumelt (2011, p. 5): *Strategy cannot be a useful concept if it is a synonym for success.* In the same text, he also added: *Strategy is at least as much about what an organization does not do as it is about what it does* (Rumelt, 2011, p. 20)*.*

<sup>4</sup>Written mission and vision statements are primarily intended to communicate certain information within the organisation and outside it. A well-articulated mission statement has to provide an intelligible answer to the four mentioned questions and, together with the vision statement, clarify the long-term direction of the organisation. A vision statement usually begins with a motto or slogan which summarises its essence, followed by specifc, more comprehensive images of the desired future and foundations for formulating strategy and objectives.

Tis way of thinking about the role of strategic leadership additionally accentuates the meaning of strategy as a *phenomenon of focus*: a cognitive and behavioural efort in the selection of the important from the unimportant in the context of time.

Strategic leaders need to think about the future and analyse patterns of past successes and failures by comparing them with others. Te focus should always be on organisational change and on the setting of challenging determinants of development. In interaction with other members of the collective, strategic leaders need to construct the environment, develop strategic infrastructure, and orchestrate organisational meanings (Narayanan et al., 2011).

#### **References**


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# **6**

# **Strategic Leadership Between Hegemony and Ideology**

### **Hegemony and Leadership**

Te natural urge to dominate is incontrovertible in human communities. Tis urge is not equally expressed in everyone, but it nevertheless exists and endures as a constant in human history. Te need for power is the energising element of civilisation and often the main goal and sense of being of individuals and groups; an unquenchable desire that trumps all other human needs.

Fertile ground for "power games" is found in all human collectives: from the smallest, loosely connected groups of just a few individuals, to large countries, global political organisations and transnational corporations.

Collective action of any kind requires coordination, guidance and consistency that can only be provided by leadership. By taking on leadership roles in collectives, leaders exert crucial infuence on common action: they integrate, connect and motivate the members on the basis of access to available sources of power.

In this context, comparable with Child's (1977, p. 113) view on the political aspect of management, leadership can be defned as a system of power and authority in which various personal and group strategies are implemented.

It is a widespread belief that strategic management is *the most managerialist of the management specialties*: a modernist discipline with a clear accent on rational, linear and positivist determination, a continuation of *Tayloristic ideology of control* (Levy et al., 2001, pp. 1, 4; Levy et al., 2003, p. 92).

Strategy is thus reduced to a phenomenon of control, and strategic leadership to a *sui generis* emanation of it. Superiority is a prerequisite for control and the efort to achieve dominance is a rational action that may ensure integration, harmonisation and focus of members of a collective.

Te logic behind this approach is the aspiration to achieve success: strategic leadership provides decisive leverage in adapting the organisation to its current and future environment. Tere have been numerous studies that analysed this relation very closely, trying to develop models based on which the beneft of strategic leadership will be clearly and undisputedly recognised as contributing to cost-efectiveness, achieving competitive advantage and ensuring a better and more sustainable adaptation to the ambience, among other things. Tis has been confrmed by the results of many studies that looked into the correlation between the extent of achievement and efectiveness of an organisation lead by strategic leadership and certain attributes and characteristics of heads of the organisation and/or their cognitive structures, and/or the ways they make decisions, and/or the way they behave in interaction with other actors, both within the organisation and outside it.

Our proposition is somewhat diferent.

Strategic leadership is the ultimate consequence of the inevitable side of human behaviour that surfaces in smaller or larger groups: the interwovenness of power and dynamics of infuence with the intention to dominate and establish social control. Tis is what everything comes down to, irrespective of the various manifestations, hidden agendas and seeking of the "higher purpose" designed to obscure or distort the truth.1

From this perspective, supremacy can seem as the main objective of leadership. A radical interpretation of this presumption would be that a

<sup>1</sup>Our idea of discipline is based, among other things, on the concepts of supremacy and power. As underlined by Knights, the knowledge of management is never independent of the power exerted by managers and corporations (Knights, 2009, p. 109).

leader's objective is not to "provide good leadership" but to do everything they can to maintain a position of power in the collective.

Tis idea departs from the usual perspective of managerial disciplines that we are used to in the context of the dominant paradigm. Postmodernists believe that the views of advocates of modernism, focused on objectivity and reason, can be interpreted as a process intended to cloud and obscure the obvious legitimacy of existing social relations. Specifcally, in the context of an enterprise, this would pertain to the maintaining and strengthening of the position of certain stakeholders in the function of preserving existing power structures within the organisation and around it.

Organisational science plays an interesting role in the function of perpetuating the power of the managerial elite. In his book *Te Servants of Power*, Loren Baritz (1960) warned that, once the surface layers of this young discipline were lifted, the intention behind its research was to fnd the most efective means to exert control over employees with a view of further strengthening of managerial power.

Moreover, postmodernist deconstruction attempts to destroy the idea that the power attained and accumulated by organisational heads and other top managers as key agents in achieving the organisation's objectives is "natural." Giving more power to managers in the face of certain demands, owing to their ability to act rationally "in everyone's best interest", is only aimed at maintaining their supremacy and/or dominance over those who had given them the position they hold.

Te power of the managerial elite cannot be understood solely based on horizontal and vertical diferentiation of tasks in complex organisations. It has to be viewed as a way of refecting on and maintaining the structure and relations of power in the society (Willmott, 2005, p. 30).

Similarly, in a critical analysis of the feld of strategic management (using Giddens'2 criteria in his disambiguation and referring also to

<sup>2</sup>Giddens (1984, p. 25) defned social structures as rules and resources that afect one another in reproducing social systems and thus exist or efectuate themselves through repeated social practices. His *structuration theory*) involves two opposite processes (the duality of structure and action): on the one side, people's intentional action towards shaping social structures (their agency in this process) and on the other, the impact of existing social structures on moulding, limiting and facilitating of the behaviour of individuals (Giddens, 1979, 1984).

Habermas3 ), Shrivastava (1986, pp. 370–374) concluded that this discipline is indisputably ideologized; strategic discourse helps legitimise and reproduce the existing power structures and resource inequality in organisations and in the society as a whole.

Consequently, power is not only an instrument but also a key purpose of leaders' action which can ultimately lead to complete supremacy, or *hegemony*, where members of the collective willingly accept the leader's superiority, identify with the leader, follow the guidelines they set, and refrain from questioning the existing structures of organisational and social power.

Hegemony (Ancient Greek: *ἡγεμονία)* is a concept brought to general use by Italian Marxist Antonio Gramsci, referring to a complex web of conceptual and material arrangements that produce the fabric of daily life in a society (Alvesson & Deetz, 2005, p. 77). Te original meaning is connected with the supremacy achieved by a *polis* in political and military alliances of Ancient Greece, and in modern-day politics it pertains to supremacy of a social entity (state, nation, social class or other) which governs the conduct of other, weaker entities. In international relations, as emphasised by Norrlof (2015), it emphasises the ability of the hegemon to use voluntary or involuntary means to create a system of global relations in a period of time.

Hegemony mirrors the image of the world in a historic period, the constellations of power, the aspirations of people, and the permissible space for collective action. Te governing elite imprints its understanding of the social reality on everyone else in order to maintain the *status quo*. *Hegemony emerges as "common sense," that is "inherited from the past and uncritically absorbed" and reproduces "moral and political passivity"* (Gramsci, 1971, p. 333, as cited in Herrmann, 2017). It is explained as a situation where there is no noticeable competition in imposing one's own view of reality (Spears, 1999, as cited in Glăveanu, 2009).

It establishes a rounded and accepted system of asymmetry of power, an ideological framework, a distribution of social and organisational

<sup>3</sup> Shrivastava indicates the need for emancipation through acquiring *communicative competencies* of all actors, as suggested by Habermas, in order to enable participation in strategic discourse with the aim of eliminating interactional obstacles (Habermas, 1984; Shrivastava, 1986, p. 373).

roles, and it maintains the order of things, by helping with sense-making in an intersubjective reality. Organisational (and social) reality appears as the only given possibility; the ambience in which organisations exist seems perfectly normal and the superiority of others is seen as a natural thing.

Te meaning of hegemony lies in *the temporary universalization in thought of a particular power structure, conceived not as domination but as the necessary order of nature* (Cox, 1982, p. 38).

Schmidt (2018) highlights the relational aspect of hegemony, as it involves relationships between multiple actors in which at least one has the ability to dominate and control the activities of others.4 Controlling an actor's behaviour means creating a situation in which that actor gives a positive response to requests to change or continue with a type of behaviour that has been established by the person in control.

Relational determination indicates that hegemony is closely related to leadership, regardless of the form such leadership takes in various collectives.5

Within an organisation, hegemony gets an additional meaning. It refers to the members' and the entire collective's acceptance of the dominant organisational ideology and aspirations established by the managerial elite. It is supported by economic, cultural and regulatory structures and arrangements; it is based on contracts that regulate organisational relations, common methods of giving rewards, advocacy of special values and visions, and rules that have been adopted in order to maintain and further strengthen a position of power.

If we were to accept the clever idea that *organisations are refections of their leaders* (Hambrick & Mason, 1984), we could conclude that, in addition to the aforementioned, organisations are a refection of the structure of supremacy existing in the society, brought and multiplied by

<sup>4</sup>*Control* is a process in which a person (or group of persons or organisations) determine(s) the behaviour of another person (or group of persons or organisations) (Tannenbaum, 1968). In social relationships it emerges as the result of the process of achieving dominance of one actor over others. Te weaker participant has to follow suit and adapt their behaviour to the demands imposed by the dominant actor.

<sup>5</sup> Schmidt (2018) noted the defnition of hegemony found in *Te Cambridge Dictionary*, where it is defned as *the position of being the strongest and most powerful and therefore able to control others*.

the domination of a group that has the power of control. Acknowledgement of social and organisational acceptance of the role of strategic leaders and managers gives justifcation to existence of a superior position of technocratic elites and to hibernation of existing socio-political relations and structures.

Strategic leaders are *protectors* of existing social relations and inalienable representatives of the dominant view of reality. Teir task is to establish order in a symbolic universe, to eliminate any alternative ideas of the truth and discrepant discourses from the organisational space, and to develop and integrate the collective based on a system of values that tacitly or completely explicitly protects hegemonic relationships. Leaders have to be aware of the fact that they, just like all other social hegemons, must *transcend their interests so that they may become the interests of other subordinate groups too* (Moufe, 1979, p. 180, as cited in Jerbić, 2014, p. 69).

Hegemony, as must always be clear, is a mixture of coercion and consent. Nevertheless, coercion is only applied in extreme situations and exists more as a latent threat in the collective. Te consensual aspect of hegemony is sufcient in and of itself to ensure compliance of the majority (Cox, 1983, p. 164; Destradi, 2008).

In most cases, members of an organisation take hegemony as a given, just like they accept the strategic leadership of powerful individuals or groups; they neither resist being in a subordinate position nor attempt to change the situation. Tey usually beneft from accepting to be subordinated, in terms of either fnancial or non-fnancial benefts and/or strengthening of the feeling of belonging to the collective, including the feeling of one's own self-fulflment.6

Dominant ideas, myths, rhetoric and concepts shaped or represented by leaders are embraced by members of the collective as elements of their own discourses. As emphasised by Schmidt (2018), a key indicator of hegemony is the *degree of discursive incorporation of ideas inspired by the elite and the common sense of the masses*.

<sup>6</sup>For more details, see: http://slobodniflozofski.com/2017/12/hegemonija-kolektivno-djelovanje. html(accessed 30 June 2020).

Hegemony within organisations is also evident in cases when strategic leaders prepare and adopt decisions that are implemented by members of the collective without any opposition, even when they are harmful for them. Tis usually involves the creation of a vague higher cause or a common beneft as a justifcation for such action (Herrmann, 2017).

Ideology, organisational culture, and other arrangements can be perceived as a framework within which the supremacy of the managerial elite is efectuated. Narratives, rituals, ceremonies and symbols help strengthen the position of strategic leaders and encourage the self-renewal of their supremacy by deeply instilling ideology, and by indoctrination and socialisation of the members of the organisation. Instead of repression and coercion in the imposition of the will of the leader, what emerges is identifcation with the collective, feeling of belonging and connectedness among its members, which in turn encourages and strengthens togetherness ("us" against "all others"), and makes it possible to recognise personal and collective benefts of the present situation.

Naturally, it would be wrong to non-critically think of hegemony in terms of absolute comprehensiveness. Its existence in the organisation is inseparable from resistance to dominance felt by members of the collective. Group dynamics is always a refection of such resistance (Cindrić, 2020). It is formed by continual juxtaposition of acceptance and refusal of roles, norms, symbols and imposed understanding of reality; obedience and disobedience; belonging and lack of belonging; and alike. Te members' identity is thus constructed depending on the degree of resistance to the infuences exerted by leaders, whereas the level of socialisation depends on the level of acceptance of hegemonic relationships. Organisational and social innovations appear when such contradictions can no longer be reconciled in the existing hegemonic context Glăveanu, 2009).

A hegemonic relationship, as noted by Laclau and Moufe (2005, p. 59), comes down to *a relationship where a certain particular presupposes the presentation of a universal that is completely incommensurate with such particular*. From our perspective, particulars are leaders and followers in the organisation, and the universal is their common and harmonious action. As the two authors explained, hegemony paints a picture of a particular and its contaminated universal, claiming that: *(1) it lives in this*  *unresolvable tension between universality and particularity; (2) its function of hegemonic universality is not acquired for good, but is, on the contrary, always reversible.*

Te frst problem appears when organisational existence is not accompanied by sustainable fulflment of collective and individual objectives. Te gap between reality and expectations becomes greater, which eventually results in the *unveiling of hegemony*, the recognition of its true, selfrenewing purpose. Commitment and motivation among members of the collective disappears, ultimately leaving nothing but position-based power as the sole foothold of strategic leadership.

Tis situation cannot persist in the long run: one has to re-establish an ambience where the willing element will be a part of the organisational reality. Normally, this requires change in the upper echelons, or in other words, the inauguration of a new group of strategic leaders.

Another problem may arise when strategic leaders lose sight of the environmental factors, particularly in a complex, vague and dynamic environment, where there are strong challenges in terms of competing organisations. If leaders focus solely on strengthening their own power and personal prestige, they will inevitably be caught in the pitfall of strategic short-sightedness. An expected outcome of this kind of entrenchment is threatened survival of the organisation (Walsh & Seward, 1990).

Tis is, of course, an aberration in the hegemonic feld: a onedimensional, superfcial type of conduct that does not serve the function of maintaining social and organisational balance.

### **Power and Strategies of Infuence**

Power is extremely important for understanding strategic leadership, considering that it delimits the space for organisational action and explains the key relationships that develop between organisational actors.

It is an inevitable category when it comes to understanding social relations and structures. As pointed out by renowned twentieth century philosopher Bertrand Russell (1938, p. 12): *Te fundamental concept in social science is Power, in the same sense in which Energy is the fundamental concept in physics* (Fig. 6.1).

**Fig. 6.1** Power, Infuence, and Control of Strategic Leader Over Members of the Collective

Power is an asymmetrical relation between the behaviour of two or more individuals or other social entities, one that answers the question how a change in one of the individuals' or entities' behaviour changes the behaviour of the other (Simon, 1953).

Power, in the narrower sense, pertains to the degree of likelihood that, in a social relationship, individuals will succeed in imposing their will on others even in the event of resistance. Max Weber noted that *any true form of domination implies a minimum of voluntary submission, or rather an interest in obedience arising from either ulterior motives or genuine acceptance* (Weber, 1968, p. 212).

In the broader sense, power lies in creating discourse that, consisting of language and material practices and reasoning, organises institutions in the society and produces entities such as "leaders," "managers," "employees" or others (Alvesson & Deetz, 2005, p. 92).

Tere is a consensus in social sciences that the inherent nature of power is connected with the feeling of interdependence of social actors. Power can only exist when there is a relationship of inequality (imbalance) between the actors: when one entity depends on another.

Emerson (1962, p. 33) believed that there is a bond between those two phenomena that equalises their intensities: degree of power of A over B is the same as the degree of dependence of B on A. Tis idea has become quite infuential in organisational science, despite the issue inadequacy of empirical proof.

Dahl (1957) claimed that the extent of A's power over B is equivalent to A's ability to convince B into doing something A wants. Salancik and Pfefer (1978) noted that power can be easily recognised by its consequences—the ability of the person in the position of power (powerholder) to achieve the desired results, for the sake of ensuring their own survival, by accessing limited resources unavailable to other people.

Power is a latent ability to infuence actions, thoughts and emotions of other groups or individuals (Nord, 1976, p. 439, as cited in Ott, 1989, p. 420) and this is a substantial determinant of leadership.

According to this perspective, leadership is *realised power* manifested as an infuence on cognition and behaviour of others ("followers") and mirrored as their willingness to submit to another or their loyalty or commitment to another.

Power directly depends on uncertainty and changeability of the environment, complexity of tasks being performed, and on personalities of those that exert it and those that are subjected to it.

Tere are three determinants of power: (1) number and importance of variables based on which the followers' dependence on the leader is expressed, (2) degree of possible infuence based on existing sources of power, and (3) time frame in which the leader exerts power (Dahl, 1957). Power can be measured in the relationship between social entities through which it is expressed, taking into consideration that the potential for change in a follower's behaviour is directly related to the degree of such follower's dependence on the leader as the powerholder. Its degree is measurable based on success in changing the behaviours of others: the easier it is to achieve submission or loyalty among followers, the greater the degree of power exerted by leaders.

Furthermore, power has to be put inside the frame of the leaderfollower relationship. A ftting category for explaining the dynamics of that relationship is "elasticity of power," which can be defned as a relative change in the leader's power in connection with change of alternatives available to the followers (Robbins, 1989, p. 348).

Leaders can base their superior position on diferent sources of power. French Jr. and Raven (1959) developed a taxonomy of bases of power by considering answers to these two questions: (1) What determines the behaviour of the powerholder? (2) What determines the reactions of the recipients of such behaviour? In this context, they identifed fve bases (sources) of power: (1) reward power, expressed as the leader's ability to give rewards, (2) coercion power, expressed as the leader's potential to coerce the follower, (3) legitimate power, which is connected with having authority, (4) referent power, which pertains to identifcation with another, and (5) expert power, which is based on having certain expert knowledge. In line with that classifcation, two more types of sources of power could be noted: (6) informational power, which emerges from access to and possession of information (Raven et al., 1970) and (7) ecological power, which is explained as the leader's ability to manipulate the followers' environment (Tedeschi & Bonoma, 1972).

Firstly, reward power is based on the follower's ("B's") belief that the leader ("A") can reward them as a result of A's actual or merely perceived ability to access resources that are valuable for the follower. Follower dependence emerges when the follower perceives, presumes or believes that the leader can access or control something that can be seen as a reward from the follower's point of view.

Power increases in proportion with the magnitude of rewards that B perceives as obtainable from A, and with the degree of importance of such rewards to B. Te more important the reward to the follower, the more pronounced the power of the leader. Tis depends on the likelihood of the leader actually securing the reward the way the follower wishes it. Conforming behaviour, submission or commitment of followers is based on proper understanding of their needs and interests, realistic ofer of rewards that are ethically acceptable and reasonably incorporable in the ambience of leadership.

Secondly, if B believes that A is capable of punishing them, this means that A has the power of coercion over B (French Jr. & Raven, 1959). Tis power of A over B is primarily based on B's fear that the perceived sanction will be implemented (Robbins, 1989, p. 341). Consequently, its source lies in the follower's perception that punishment will ensue unless they do as the leader expects them to. Te degree of that power depends on the magnitudes of negative valence of the threat of punishment multiplied by the perceived likelihood that such punishment will be avoided through conforming behaviour.

Coercion of followers is certainly not the best way to go if one wishes to achieve strong cohesion, motivation, and uniformity in collective action. Coercion power can create resistance among the followers, encourage poor performance, diminish commitment, and lead to conficts in the organisation. It should only be applied if it is strategically important to achieve conforming behaviour of followers very quickly, when all other options have already been exhausted or where there are none.

Te diference between reward power and coercion power exists due to their diferent dynamics (French Jr. & Raven, 1959). Reward power, if implemented, increases the attraction and appeal perceived by B vis-à-vis A and decreases rejection, whereas coercion power decreases attraction and increases rejection.

Tirdly, the follower's perception of the leader being entitled to regulate their behaviour is the source of legitimate power. Tis power is rooted in believing that B is obligated to accept the infuence and fulfl the demands that A has imposed on them. French Jr. and Raven (1959) emphasise that this source of power is the most complex one.

Legitimate power is expressed in the form of formal or informal authority. Specifcally, power can be based on predefned rules, whether these are laws, contracts or other legally binding regulations and documents that give the leader the right to infuence others. Formal authority provides and defnes the space for expressing demands expected to be fulflled by followers. Tis type of authority is extremely important in bureaucratised structures with highly pronounced hierarchies where legitimate power is realised solely through position. On the other hand, legitimate power can emerge from unofcial authority that is the result of an informal relationship between the leader and the follower(s). It exists when B is willing to adjust their own behaviour to suit the demands established by A regardless of the fact that A has no legally defned authority. In such situations, followers perceive informal authority as the leader's legitimate power allowing them to regulate and infuence the followers' behaviour.

#### **6 Strategic Leadership Between Hegemony and Ideology**

Fourthly, power can also stem from the follower's identifcation with the leader. Identifcation is actually a feeling of oneness of B with A, or a desire to establish such identity: B interacts with the environment the way A does, mimicking A's behaviour and submitting to A's demands. French Jr. and Raven (1959) noted that referent power could be verbalised as follows: "I am like A and therefore I wish to behave like A does and believe what A does," or "I wish to be like A and I will be more like A if I behave like (or believe what) A does." Te greater the identifcation of B with A, the greater the referent power of A over B.

Despite the fact that use of referent power is usually successful, there are some limitations to this. Referent power decreases through overuse, extreme demands, and underestimating and irritating of one's partners in the organisation (Yukl & Wexley, 1985, p. 125).

Next, if a person perceives that the powerholder has some special knowledge or expertise on which their own success or the success of the collective hinges, the prerequisites are there for the development of expert power. Te degree of that power varies depending on the extent of knowledge in the relevant feld attributed by the follower to the powerholder (French Jr. & Raven, 1959).

Te follower evaluates the leader's expert knowledge based on general and absolute standards and in relation to the follower's own knowledge. Existence of power is not as dependent on the actual quality of knowledge the leader has as it is on the follower's perception of the role that such expert knowledge plays in achieving the follower's own businessrelated and other objectives.

Existence of an individual's expert knowledge is a prerequisite for the power that results in a primarily social infuence on the cognitive structure of others. If B receives expert advice from A and learns to operate without A's help, A's expert knowledge ceases to be a source of power. In fact, B's continued dependence on A's expertise is necessary in order for A to remain in a position of power. Where a once solved problem ceases to appear, expert power no longer exists (Yukl & Wexley, 1985, p. 122).

Furthermore, power can also be created when B perceives that A can provide information that B fnds inaccessible but relevant for their action. Informational power also exists when A, by emphasising the consequences of an action that B is not aware of a priori, succeeds in B accepting A's proposal.

French Jr. and Raven (1959) considered informational power to be a sub-type of expert power. Indeed, both powers appear to be very similar. However, Raven et al. (1970) found that the diferences between the two were not completely insignifcant. Informational power of A is based on B's acceptance of the logic behind A's arguments and not on the perception of A's expert knowledge.

In addition to that, ecological power in terms of manipulation via the environment can also be a source of power. Achieving control over as many factors that shape other individuals' environment as possible means being able to infuence their behaviour. Based on this aspect, Tedeschi and Bonoma (1972) noted that manipulative (ecological) power can also be identifed, in the case where A has the ability to control critical aspects of B's surroundings in a way that the potential newly-formed environment might result in a change in B's behaviour.

Creation of environment for other members of the organisation can certainly be a strong source of power. Use of manipulative power can have a signifcant infuence on submission of followers. It is mostly expressed in the control of information, restriction of alternatives, and other direct actions that modify the environment or afect the followers' perception of such environment. In this context, Pondy (1989, p. 227) referred to Oldham's expanded defnition of leadership (1974) *as any type of control that the leader has over the environment of a member of the group*.

Having power means being able to *infuence* the behaviour of others but not necessarily to also modify their behaviour. As such, power is a specifc resource than may but need not be utilised.

Hence, if A has the *capacity* to infuence B, we say that A has power over B, whereas if A does something that results in modifying B's behaviour, we say that A has an infuence on B (Cartwright, 1965).

Use of power results in changes in the degree of likelihood that an individual or group will adopt a desired behaviouristic change, which is defned as infuence (Hersey & Blanchard, 1988, p. 203). Leaders who have power have the potential to exert infuence in the collective. Consequently, infuence is a *kinetic* or *actually used* power (Siu, 1979).

Possible results of the process of leader's exerting of infuence can be generalised in the form of the following potential reactions of followers: (1) feeling of connectedness, (2) submission or (3) rejection.

Feeling of connectedness is a situation where the follower exhibits positive acceptance of the infuence exerted by the powerholder. Te follower fnds the leader's position and role to be desirable and acceptable for achieving of the follower's own goals.

In case of submission, there is no positive reaction or satisfaction among the followers. Teir behaviour is rational; they accept the control of another organisational actor because they either have no other choice, or because they believe it to be the least inappropriate solution for them and their own position.

Lastly, a person may reject infuence and the attempt to exert control, regardless of the consequences that may ensue, especially when they fail to see a rational explanation of the powerholder's actions in terms of achieving the common goal, or when they feel that their own personality is threatened, when they feel humiliated, or in other similar circumstances.

Results of the process of infuencing members of the collective directly depend on the sources of power on which the leader bases his or her infuence (Moorhead & Grifn, 1989, p. 364).

Infuence can be exerted directly or indirectly, depending on the way the powerholder approaches the realisation of his or her own potentials. For example, if the aim is to directly emphasise and infuence the submission of, or feeling of connectedness in the followers, the powerholder will implement direct strategies of infuence; if, on the other hand, such direct approach is not desirable, they will implement one of the indirect strategies.

*Direct strategies of infuence* are the following: (1) request and recommendation, (2) promise, (3) cautioning, (4) command, (5) threat, (6) positive normativism, (7) negative normativism, and (8) legalistic reference.7

By giving recommendations or requests, a leader wishes to establish control without generating an of-putting attitude or behaviour in the followers. In this context, the leader informs the follower that, in order

<sup>7</sup>After having analysed the various approaches with respect to the types of strategies of infuence (Raven et al., 1970; Tedeschi et al., 1973; Angelmar & Stern, 1978; Kipnis et al., 1980; Frazier & Sheth, 1985; Robbins, 1989), we identifed the most common direct and indirect strategies of infuence that leaders use in relation to their followers.

for their relationship to be good, the leader's dominant position has to be accepted (Raven et al., 1970). Firstly, a request is a strategy used when the holder of power does not wish to implicitly draw attention to the sources of their power and relies on simply asking for something in order to exert infuence. Secondly, the follower can receive the information (in the form of a recommendation) that their submission or commitment to the powerholder will ensure better achievement of goals.

Moreover, the leader can also promise certain rewards for the follower should they accept control (this is an attempt to exercise the power of reward). Similarly, if follower B perceives that leader A has the capacity to secure a reward for B, the prerequisites for exertion of A's power over B are created.

Tirdly, a leader can caution the follower, by making them understand the negative consequences that may ensue unless the leader establishes control (Tedeschi et al., 1973), or they may simply issue a command explicitly requesting that the follower submit immediately. A command sometimes includes a possible sanction for the follower, but not necessarily in the same way as it is included in a threat, which serves to inform the follower that a negative sanction will take place if they refuse to submit. A threat can have negative consequences on the follower's cognitive structure (stress, dissatisfaction, fear, anger, or other). Te source of the three mentioned strategies of infuence lies in the power of coercion.

Next, positive normativism is a situation in which the leader makes it clear to the follower that their submission is in line with organisational norms and rules of conduct. Te follower is made aware of the fact that all organisational members who are considered good and loyal comply with the rules and do what is expected of them. On the other hand, negative normativism is a situation where it is made clear to the follower that, unless they accept the leader's control and continue to disrupt and destroy organisational norms and rules, they will prevent the achievement of common interests and undermine the essence of collective action.

Te last of the listed direct strategies of infuence is legalistic reference. As the holder of legitimate power, the leader makes it known to the follower that there are certain legal standards involved in their relationship that require the follower's submission. By familiarising the follower with the existence of a legal relationship that implies implementation of control, the leader infuences the follower into accepting a subordinate position.

#### **6 Strategic Leadership Between Hegemony and Ideology**

*Indirect strategies of infuence*, on the other hand, are applied when one wishes to use informational, expert and referent power. Implementation of this type of strategies is also desirable when leaders have access to other sources of power and wish to intensify the efects of infuence. Tese are: (1) information exchange, (2) information control, and (3) modelling.

Information exchange is a type of infuence when the leader exchanges views and ideas with others with the intention of indirectly showing their own quality and knowledge (Raven et al., 1970). Te attempt is to highlight their own expertise (or references) so that the submission of followers would occur as a natural, logical process.

Furthermore, a follower can be infuenced by controlling the fow of information. Te leader can generate, select or reduce information with the aim of creating a perception in others that their submission is natural in the context of achieving better results. Information control has to be a long-lasting process if one wishes to successfully infuence others. It primarily comes down to creating an informational environment where the follower prefers the validity of information received from the leader compared to information obtained from other possible sources.

Finally, one can always apply the strategy of infuence via modelling. Tis is a situation where the leader shows examples to others to make them understand that the leader's control and infuence is desirable. Tis way, followers are familiarised with situations where expertise (or references, information, possibilities of reward or coercion, manipulation of the environment, or any other source of power) is presented as efective and useful in important organisational matters. Modelling creates a context where followers independently correlate the examples with desirable behaviour, observe analogies, and submit without coercion.

Regardless of their character or type, infuence strategies have a single major objective: to establish control over the behaviour of members of the collective in order to implement strategy and other planned activities and intentions of the leader.

Leaders need individuals who will follow them and be willing to accept leadership. Control can be observed through a causal chain that begins with the leader's access to sources of power and certain limited resources, continues with their exertion of infuence on followers, which in turn results in their feeling of connectedness or submission, and ultimately ends in active inclusion in common action.

More simply put, leaders always try to turn followers into the efectuators of their plans. Having power and successfully implementing some of the strategies of infuence are fundamental prerequisites for establishing control over members of the collective.

However, there are other ways to identify forms of mutual infuence in collectives.

For instance, Cialdini (2002) listed six instruments of persuasion (also referred to as key principles of infuence) in social interaction between people. Tese are: (1) the trap of commitment and consistency, (2) reciprocity, (3) authority, (4) liking, (5) scarcity principle, and (6) principle of social proof.

Te frst instrument is the *trap of commitment and consistency*. Perception of one's own consistency is inherent in most people. If a person commits to fulflling a minor obligation in a social relationship with another person or persons, they are much more easily persuaded to accept a larger commitment if this can be portrayed as consistent behaviour.

Te second instrument is *reciprocity*. Observing the intention to infuence a person, one can also observe the human tendency to feel obligated to somebody who has given us something.

Apart from that, based on the authority principle, if someone has *authority*, they can more easily infuence and persuade another to act.

Personal likeability and/or similarity can also be suitable instruments of persuasion (the *liking/similarity principle*).

Te ffth instrument of persuasion is the *scarcity principle*; this involves our instinct telling us that something that is not available in large quantities must be valuable (Taylor, 2006, p. 77).

Finally, the *social proof principle* (social validation) indicates how widespread the so-called herd mentality actually is. Instead of thinking things through, people "go with the fow" and follow the "herd" (the majority in the organisation or society) in accepting or submitting to an ideology and/or strategic leadership.

As Cialdini noted, authority, scarcity and social validation principles serve to enhance decision-making efectiveness; liking/similarity and reciprocity are principles that meet the goal of establishing and sustaining social relationships; whereas the commitment/consistency principle is relevant to the goal of managing the individual's self-concept and works because it modifes one's self-perception.

#### **Ideology and Instilling Beliefs**

Te idea that strategic leadership is supported by organisational ideology is not hard to defend.

Ideology is an *organic part of every social totality* (Althusser, 1969, pp. 231–232), one that creates space in which people operate, acquire an awareness of their position, and fght for their cause (Gramsci, 1959, pp. 19–23, 28–35, 38–39, 57, 90–92, 230–232; Ravlić, 2002). It is a system of collective beliefs, views, ideas, myths and concepts oriented toward representing, promoting, implementing and justifying special *patterns of social relationships and arrangements* (Hamilton, 1987, p. 38). Ideology is often the foundation for diferentiating between "us" (collective or group we belong to) and "them" (competitor group or generally the world beyond the boundaries of our group).

A social group is made strong by tightly intertwined bundles of members' beliefs woven into its ideology. Beliefs are deeply rooted views of the world conditioned by sociocultural milieu and history that create an interpretative and constructional tool for shaping the global reality (Van Dijk, 2006a). Ethereal ideas, with their appealing and deceptive simplicity, help constitute beliefs and create illusions of a singular, self-explanatory reality that is the only one that is true.

Ideology can also be observed as the *process of constructing and legitimising shared values* (Pesqueux, 2002) which gives sense to existing rules of behaviour, rationalises direction of action, connects the members, and acts as a foothold of collective action that is to be undertaken. It helps to preserve and stabilise social structures and represents the connective tissue of every collective.

Ideology is a *symbolic system* (Geertz, 1964) that refects a shared, valuebased perspective on reality. Tis is a *special type of cultural construct, one which gives clearly formulated, value-laden and guidance-providing interpretations of the world* (Ravlić, 2002) that cannot, in and of themselves, be observed through the right/wrong or true/untrue dichotomy, because they lack the elements that usually characterise science and ethics. Te basic level of ideology is not a deceptive illusion of reality *but rather a level of unconscious fantasm that creates our social reality* (Žižek, 2002, p. 55).

A strong ideology creates an *orthodoxy* (Ancient Greek: Ορθοδοξία), a set of accepted and unquestionable truths, as an element of an ideological dogma the questioning of which is not desirable, or even permitted.

An organisation has its own ideologies or concepts of the world: instilled, unquestionable bundles of symbols, views, beliefs and values that connect people by making them rely on organisational mission.

Ideology is a *system of representation* of ideas (Althusser, 1969): in it, one can recognise the character and actual essence of the organisation. It integrates the collective, unifes the member's views and perspectives, ties them frmly together in their action, and helps shape and strengthen the common identity and organisational culture. Existence of a common cognitive landscape shared by the leader and members of the collective makes it easy for them to understand and build the same ideas of reality.

Hegemony and ideology are two sides of the same medal: sophisticated tools in desubjectivisation of a person and their reducing to a mere fragment that is incomprehensible if observed outside the collective being.

Organisational ideology is not a construct that exists independent of civilisation, culture, space or time. It is indivisible from higher-level dominant ideologies; in fact, it is a constituent of such ideologies, a refection of power relations in a social feld; it serves to legitimise dominance of privileged structures in the society.

It is a mirror image of a constructed reality, often distorted and falsifed in the rooted-in collective perception that aims to establish itself as the truth; it gives a more or less convincing interpretation of organisational existence. Its instrumental position is beyond contestation: it is the means of manipulation towards achieving the desired modes of action in the development of permissible discourse of key organisational actors.

Bias is at the heart of every ideology that clouds reality by constituting a "world of incontestable truths" frmly based on value propositions, and not necessarily facts. Ideological glasses are not about factuality—they are about fervour. Selective and suggestive emphasising of information is followed by narratives that come with inevitable distortions, and reality appears as a uniform fabric of artifciality, with subjectivity and infatuation as its warp and weft.

Ideology has completely enveloped us once we feel no confict between it and reality. In the words of Žižek: *Ideology truly succeeds*  *when facts that appear contradictory to it at frst glance begin to serve as arguments in support of it* (2002, p. 39).

Te universe of meanings and explanations seems harmonious in the ideological play that is put on the stage, because any departures from accepted ideological footholds are clouded up and blurred, or are deemed an unprecedented heresy.

Ideology forms us. Bare facts as such never reach our cognitive landscape. Tey are *always covered up with a layer of hermeneutics to preserve virtue* (Taylor, 2006, p. 301).

Ideological layers that envelop an individual intertwine as supports for one another, creating a single system where the individual's conformism is a necessary consequence, and social power and desire to dominate are a solid core around which everything revolves.

Ideological hegemony includes all aspects of social existence and infuences the individual's awareness through creating a consistent system of beliefs that is accepted as a given across all levels of interaction. Power springs from complete control of reality—language, education, institutional forms, means of communication, economic organisation, as well as from continual, explicit and implicit justifcation of social ambience where ideology dominates. As underlined by Althusser (1971), ideology constitutes individuals, who will more or less submit to the existing order.

As long as there are no cracks or successful ideological shifts that serve to create upturn, the system remains congruent and unquestionable.

Discursive strategy that is woven into ideology is, according to van Dijk (2006b), an *ideological square*: a coordinated amplifcation of positive perceptions of an organisation and reduction of negative ones, but at the same time accompanied by amplifcation of negative perceptions and reduction of positive ones about others.

Organisational ideology is woven into the social feld; it is ftted into the ambience where the existing order of things is natural, self-explanatory, all-explanatory, and acceptable for organisational existence.

It *rationalises and legitimises* the organisation: it provides plausible explanations for behaviour in diferent situations and justifes its action in the network of other social entities. At the same time, it helps to distinguish the organisation from other entities in the environment.

Ideology is the *spirit and the soul that inspires, leads and controls the vision of an organisation* (Pesqueux, 2002). It gives a framework and guidelines for behaviour of organisational members; it determines the way they understand reality, reduces ambiguity and lack of clarity in interaction, defnes the available space for strategic leadership, and justifes the selected patterns of dealing with critical aspects of the organisation's survival. Ideology requires a special *language* with clusters of imprinted meanings that provide an explanation of organisational existence. Te substrate of culture is contained in a delimited language space, symbols and rhetoric of organisational day-to-day life.

Te convergence of perspectives on the world shared by members of the organisation is the consequence of organisational history and culture, and of the leader's strong or less strong infuence on ideology, rules, behaviour patterns, and decision-making methods.

Whatever the intentions and aspirations of strategic leaders, they cannot be implemented without involved and committed members who share the same beliefs and values. Sources of power and strategies of infuence, as already explained in the previous chapter, have to be observed in the context of organisational ideology that creates permissible space for organisational actors to operate in.

In some situations, there can be aspirations towards the so-called universalisation of organisational ideology, or in other words, the conversion of particular ideological frameworks into general, widely accepted, ideological perceptions (Eagleton, 1991, p. 58; van Dijk, 2006c). Expansion of parts of ideological substance beyond organisational limits is, in most cases, connected with creation of clearly distinguishable and memorable symbols, stories and practices that can ofer other people an acceptable, and at frst glance more attractive, image of their constructed reality.

In other words, ideology helps create social and organisational homogeneity, and facilitates action and exertion of the leader's infuence on others. Moreover, strongly imprinted ideology reduces the chances for spreading *heterodoxy* (Ancient Greek ετεροδοξία), which involves the questioning of long-standing beliefs, narratives and principles, as well as the undermining of ideological foundations on which the organisation rests.

It defnes the margins for permissibility of divergent behaviour: the stricter the doctrine, the faster and easier the heretic "missteps" and heterodoxies lead to exclusion and excommunication of members.

Nevertheless, ideology and its essence are not open pages of a book, as emphasised by Žižek (2002, p. 39), when he noted that *ideological reality is a social reality the very existence of which implies a lack of knowledge on the part of participants regarding its essence*.

Te hypostasis of ideology is hidden to organisational actors, who interpret it oblivious of its original content. Tis raises two questions that are not actually the subject of this part of the discussion. Te frst is the issue of disclosure of the true nature of existing social relationships, and the second is the deconstruction of the symbolic universe of ideology beyond its limits.

Paradoxically, leaders can exist even before the existence of any followers, if they have an ideology that is successfully imprinted in a social feld. Te process in which a leader nominates and designates followers before they even exist as such, is referred to as *interpellation*. Tis concept was introduced by Louis Althusser as the explanation of the process through which state apparatuses imprint subjects before they even exist, thus bringing them into social existence.

Strategic leadership continually emerges from ideology and it cannot be understood if observed separately from it.

Leaders and other persons in charge act either as guardians of existing organisational ideology, according to Mintzberg (1979, p. 43), or as challengers who attempt to imprint new ideological patterns, more or less divergent from those that have taken hold and become historically accepted.

Imprinted, fortifed and strengthened beliefs of members of the collective help leaders in their task of coordinating collective action in order to make strategic vision a reality. Aspirations and behaviours of leaders are determined by the ideological framework, and the success of their action is related to homogenisation of the collective, or in other words, with the achieved degree of integration, togetherness, and group identifcation.

Objectives of strategic leadership are the following: (1) achieve strong members' commitment to shared values and ideological principles, (2) instil in them the beliefs, and imprint on them the views held by the leader, (3) create uniformity or similarity in the way members of the collective observe and perceive relevant elements of reality, and (4) develop organisational culture that supports organisational ideology, as well as the strategic leader's aspirations, rhetoric, and behaviour patterns.

Successful imprinting of ideological beliefs increases loyalty, commitment and conformity of members; it strengthens the potential for motivation as a result of value congruence, by facilitating the achievement of defned objectives and expanding the leader's decision-making space. At the same time, members also beneft from this because the ideological space makes it easier for them to understand the ambience and interpret certain aspects of organisational action in a complex environment, by helping them build a feeling of belonging to the group, achieve selfrecognition, and connect with the ideas and actions of organisational heads, ultimately making them one with the collective.

Organisational ideology represents the collective spirit's circumnavigation of the illusion perceived as the true reality.

### **Socialisation and Indoctrination**

Organisational ideology is adopted and spread by socialisation and indoctrination of members.

Socialisation (Latin: *sociare*' meaning *unite*, *join*, *associate*) is the process in which members of the organisation accept a system of values, norms and behaviour patterns (Schein, 1968, p. 3), adopt the organisation's principles of action and discourse, as well as the rhetoric and language, group beliefs, culture, organisational symbols, myths and rituals. Tis is a learning process in which members more or less successfully become part of the collective, by taking on the elements of shared identity: they get to have similar understanding and idea of reality, and acquire a perspective shared with others inside the organisation.8

<sup>8</sup> Socialisation is a concept introduced by French sociologist Emile Durkheim, designating the process through which individuals acquire beliefs and a value system or social norms of a certain culture. Durkheim defned socialisation as "making persons social," emphasising the dominance of social conditions in shaping an individual. Available at: https://www.enciklopedija.hr/natuknica. aspx?ID=56923 (accessed 10 January 2020).

Socialisation and indoctrination are mutually connected categories. Whereas socialisation draws from cultural or educational learning, indoctrination (derived from Latin *doctrina*, teaching) is a purposeful and noncritical instilling of ideas, views and beliefs in order for an individual to become an object—an indivisible element of the collective.9 It can be defned as an endeavour of the organisation and its head people to impose the ideological principles on all their members, by any available means.

Overcoming of resistance to adoption of new beliefs is the precursor to those processes. Te greater an individual's cognitive network (in number and strength), the easier it is for them to resist infuence exerted by others. Abundance of cognitive landscapes in individuals makes it harder for them to be indoctrinated, and makes the process of socialisation more complex and demanding.

Socialisation is a means of protecting the collective from ideological aberrations. In the process of socialisation, one acquires knowledge in the form of "objective truths" that are internalised as "subjective truths", which have the power to shape an individual (Berger & Luckmann, 1992, p. 88). Apart from acquiring knowledge and experience, socialisation is also characterised by social interaction in which an entity is created by being moulded by the time period, culture, human community or collective.

Initiation into a collective is only completed when the individual becomes an indivisible part of the collective, when their perspective of the world is successfully interwoven with organisational ideology.

Indoctrination, just like learning in the process of socialisation, is aimed at adoption of certain beliefs. However, unlike socialisation, indoctrination promotes the adoption of those beliefs without the need for understanding them. Reference to it normally elicits a negative connotation, because it is associated with bigotry, unreserved acceptance of authority and established ideological dogmas.10

<sup>9</sup> indoctrination (from Latin): 1. Teaching, introducing to doctrine. 2. Forceful but purposeful imprinting of an ideology. 3. Intentional misleading of people into believing things that have not been scientifcally proven. Available at: https://www.hrleksikon.info/defnicija/indoktrinacija.html, (accessed on 21 December 2019).

<sup>10</sup> In his article "Propaganda: American Style," published in the *Propaganda Review,* Noam Chomski (1987) underlined: *For those who stubbornly seek freedom around the world, there can be no more urgent task than to come to understand the mechanisms and practices of indoctrination. Tese are easy to perceive in the totalitarian societies, much less so in the propaganda system to which we are subjected and in which all too often we serve as unwilling or unwitting instruments.* Available at: https://www.zpub. com/un/chomski.html (accessed 6 March 2020).

In organisation science, special attention was drawn to indoctrination by Henry Mintzberg (1979, 1983), who believed it to be one of key parameters of organisational design.

Te diference between indoctrination and socialisation by learning can also be explained by Habermas's categories of communicative and strategic action (Habermas, 1982, pp. 128–132, 382–285; Puolimatka, 1996).

*Communicative action* is directed on reason-based knowledge and judgement, as well as on fnding general principles that everyone involved believes to be valid. Truth and verifcation thereof form the basis for communicative action. It is based on openness and equality of participants. Logical reasoning should lead to consensual revelation of a common truth.

*Strategic action* refers to one actor's infuence on another. Te true intention behind the infuence can remain undiscovered if this is important for achieving the intended purpose. In social interaction, actors are not equal: one person is used as a means to fulfl the interests of another. Personal growth is not encouraged. Habermas's strategic action, just like indoctrination, does not trigger the normative function, unlike socialisation through learning.

Organisational ideology, as a multi-layered and permanent set of beliefs, values and selected perspectives, is not a structure than can easily be deconstructed from within. It does not depend on the truth, facts or rational conclusion; it strongly distorts the perception of reality and imprints bundles of meanings and interpretations in organisational existence.

One should not forget that ideology provides a possibility to include the irrational and all kinds of beliefs presented in *the most rational forms* (Pesqueux, 2002).

Indoctrination is the way an organisation formally socialises its members in its own interest (Mintzberg, 1983, p. 41) through programs and techniques that serve to standardise norms, rules, and regulations; that way, members can be trusted to make decisions and take actions in accordance with the organisational ideology (Martínez-León & Martínez-García, 2011).

Characteristics of indoctrination are complete singularity in direction, dogmatism, and lack of criticism in the transfer of the ideological feld. On the other hand, organisational socialisation is primarily an interactive process of learning through which new members come to understand the norms and roles they need to play in order to operate as part of the collective (Aleksić & Rudman, 2010, p. 242).

Indoctrination creates individuals who do not accept open and critical questioning of adopted norms and values; their perspectives of the world are impervious to plausible refutation of ideological principles or presentation of true facts that contradict the accepted system. Successful indoctrination results in passionate and committed members of the collective who strongly identify with the organisation and the strategic leader. Teir mind is closed for any *rational argumentation in the domain in which they had been indoctrinated* and for *the possibility that those beliefs are not true*, regardless of new knowledge or insights (Puolimatka, 1996).11 Tey are ideologically frmly anchored; they have a narrowed and false perception of reality; they do not question the beliefs, explanations and interpretations of meaning that were used to indoctrinate them.

Tis type of missionary-like commitment to the organisation facilitates leadership processes, but reduces collective mental elasticity and the value of having diferent perspectives, opposing ideas, and critical questioning of reality.

Limited indoctrination can also be permitted outside organisational limits in case of certain professions (attorneys, accountants, engineers, quality system experts, and other), especially if that contributes to the legitimacy of the organisation's future actions.

Indoctrination is normally associated with targeted propaganda, rituals and ceremonies, limited and closed set of information and knowledge, easy-to-remember stories, messages and symbols, inspiring lectures and meetings, and alike.

In some cases, indoctrination is a more successful form of instilling ideology than socialisation by learning, but not always. Tere are

<sup>11</sup> It should be noted that indoctrination and brainwashing are not identical concepts. Indoctrination can be seen as an "antinormative form of learning" in which no physical coercion is used, whereas brainwashing is normally characterized by elements of coercion, even torture (Puolimatka, 1996).

situations when socialisation by learning creates capable and able-tothink individuals who are better adapted to facing the challenges of collective action than indoctrinated individuals.

Socialisation and indoctrination are like twins: one activity should not exclude the other. Tey both help in homogenising and integrating the collective by aligning the individuals' values with those held by the organisation, and providing space for leaders in their eforts to implement strategic decisions more easily and efectively.

Te infuence of the leader is that much greater if there is a strong feeling of belonging and accepting of collective identity among the members, as an indivisible element of their self-defnition. Socialisation and indoctrination strengthen trust, connect the individual with organisational culture, and enhance the feeling of togetherness and mutual understanding. Successfully socialised or indoctrinated members are more loyal to the leader and the organisation, and they show lesser tendency to leave the collective.

Coordination is easier when there is a high degree of homogeneity in the collective, a strong feeling of belonging and identifcation of members with the organisation. Tis is especially important when there are pressures and threats coming from the environment and when harmony of the collective is crucial for overcoming them.

Socialisation and indoctrination further strengthen organisational ideology and prevent the questioning of its essence.

In conclusion, strategic leaders are representatives and guardians of ideology: they have to manage a comprehensive system of continual socialisation and indoctrination which will integrate the collective and create the prerequisites for successful organisational action. In addition to that, they should consider the need to preserve critical thinking in the collective, which puts them in a very demanding position. It is desirable to have co-workers who will be autonomous, aware of their own identity, and willing to think for themselves, as long as this does not threaten the integrity and ideological principles on which the organisation is based.

### **Identifcation**

Te leader's infuence on members is much easier to exert when members identify with the organisation and/or with the leader. Adoption of basic values strengthens the member's reliance on the organisation, which in turn increases commitment and the likelihood of engaged behaviour within the framework of the defned direction.

Identity is the personal footprint in collective predetermination; a multiple refection of the individual in a house of mirrors that creates the illusion of society. It obscures the truth about substantial emptiness and fragility of being: it is comparable to a palimpsest which the collective keeps overwriting, creating the illusion of a self-created free individual.

Collectivity determines the identity or part of identity of a person, their being and the way they construct, understand and change the world in which they exist.

Identity is, at the same time, a social need of an individual, without which such individual could not coexist with others. It does not exist in and of itself: establishing identity requires relation with other actors. One's ego establishes its identity through its mirroring in others (Žižek, 2002, p. 44). Another human being is that which can show it the image of its own comprehensiveness.

It is a measure of selfhood ("me"), it pertains to separation and distinction from others ("them" or "the others"), but at the same time it brings persons together and connects them: togetherness is created based on *sameness* ("us").

An individual has a *network of identities* that can be categorised on a personal, interpersonal and collective (social) level (Brewer & Gardner, 1996; Brickson, 2000), or on a personal, social and material level (Ashforth et al., 2008; Skitka, 2003).

Tere are several ways that the identity of members is infuenced by the collective. Two constructs need to be examined separately: organisational identifcation and identifcation with the leader.

Identifcation of members is an important element of collective homogenisation. Te greater the degree of identifcation, the more likely it is that the leader's infuence will be purposeful and successful, and the commitment of members more solid and durable. Identifcation creates committed members who surrender a part of their own self in order to feel secure in the warmth and protection of a group identity.

Organisational identifcation is a construct we understand as a process of cognitive connection between the defnition of organisation and defnition of one's self (Dutton et al., 1994). It can be described as a perception of equivalence of the individual and the organisation (Mael & Ashforth, 1992) or through perception of a degree of integration of key organisational identities with one's own identity (Ashforth & Mael, 1989; Dutton et al., 1994; Ravasi & van Rekom, 2003; He & Brown, 2013). It is a variable, fuid and inconstant category that changes over time and depends on a series of infuences and factors.12

Te greater the extent of organisational identifcation, the larger the degree of work performance, inclusion in organisational goings-on and work satisfaction felt by members of the collective (e.g. Dukerich et al., 2002; Riketta, 2005; Schuh et al., 2016; Van Knippenberg & van Schie, 2000).

Identifcation is encouraged by a defned set of shared principles and values, a distinctive mission and common activities that connect members by giving them a strong sense of belonging. Collective intentionality, which we discussed in the frst chapter of this book, is an important construct: it describes the power of togetherness that helps build a collective identity which serves as the gravitational force for fragile and changeable identities of the members. Identifcation with the organisation emerges through acceptance of shared beliefs, languages, intentions and interpretations of reality, whereas socialisation and indoctrination further strengthen those processes. All of this supports integration and cohesion processes and facilitates the anchoring of ideology as a support pillar in strategic leaders' action.13

<sup>12</sup>One has to diferentiate between the construct of organisational identifcation and organisational identity. Organisational identity is explained through self-defnition of the collective and it can be exemplifed by questions such as "who are we as a collective?" and "what do we want to become?" and by the answers to those questions (He & Brown, 2013).

<sup>13</sup> In many cases, organisations are complex systems that give their members the possibility of simultaneously belonging to various organisational units, groups or teams. Membership in organisations implies simultaneous existence of a larger number of diferent organisational identities (Chen et al., 2013). Identifcation with a higher organisational category (such as the organisation as a whole) is referred to as *superordinate identifcation*, whereas identifcation with units embedded in that category is called *subgroup identifcation* (Lipponen et al., 2003).

With their behaviour, leaders infuence followers and the level of their organisational identifcation, especially if they are characterised by styles of transformational or ethical leadership (Carmeli et al., 2011; He & Brown, 2013; Walumbwa et al., 2011). Tis applies in cases when collective members are very submissive and accommodating, and also susceptible to the symbols and narratives communicated by the leader.

On top of that, identifcation with the leader can be the result of their charisma and other qualities that make them a role model for others. Charisma emerges through personal identifcation of the follower with the leader, and through the follower's desire to imitate the leader (Crossan et al., 2008); it can also appear as a distinctive quality inaccessible to ordinary individuals.

Charismatic leaders draw people around them with the magnetic appeal of their aura. Tey are capable of motivating and inspiring others and, regardless of the intention and motivation, win them over to becoming their followers. Tere are no norms or rules that can explain the social relationship in which charismatic leadership emerges. It involves the creation of a relationship that contradicts formal authority; the core of the group is the emotional connection and loyalty to the leader, often interwoven with indoctrination and strong identifcation.

Consequences of charismatic leadership are primarily trust, admiration and respect exhibited by the followers, as well as a willingness to sacrifce their own interests in order to achieve the goals set by the leader (Waldman & Yammarino, 1999; House, 1991; Wang et al., 2012). Charismatic leaders have loyal followers that freely and usually unreservedly accept the leader's interpretation of reality, the values they underline, the instructions they give, and the patterns of behaviour they exhibit. Tis is, in Weberian terms, a "domination" over the followers, the source of which lies in certain exceptional qualities that the leader possesses.

Charismatic leadership leads to a culture in which cohesion of the collective is an important determinant and formal structures are of derivative signifcance. Specifcally, the leader's charisma clouds the chains of command incorporated in organisational structure. Weber (1968, p. 243) emphasised that in a situation where charisma is present*, there is no hierarchy; the leader only intervenes in a way that is general or in specifc cases when they fnd that their staf members lack the charismatic qualifcation required to perform a specifc task*. In such cases, lower-level managers identify with the leader and with how the leader behaves and operates, so there is no need to provide comprehensive systems for monitoring and controlling their work.

In short, socialisation, indoctrination and identifcation of members create the prerequisites for comprehensive and consistent organisational action, and integrate and strengthen the collective even more.

Tis can sometimes lead to the absurd, where content imprinted in identity networks helps create a desubjectivised "member" who only needs to be one of many, easily ftted building blocks in the structure that is the organisation. Tis results in the rooting in of a concept of leadership that may be compared to a beehive or an anthill, and in forgetting of the issue of alienation as well as natural human creativity and nonmechanical nature of human endeavours.

## **References**


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# **7**

# **Organisational Culture, Leadership Language and Integration of the Collective**

## **From Ideology to Organisational Culture**

Te way we see things and the world around us depends to a great extent on the social and cultural context that has shaped us and of which we are an indivisible part; it depends on our life experiences and the paradigm that outlines our values, interests, cognition, and discourses. Social interactions, culture, group belonging, and *"the sea of ideas in which we swim from birth*,*"* shape our ideas and our identities much more than we realize (Taylor, 2006, p. 218).

*It is beyond doubt that people,* as noted by Berger and Luckmann (1992, p. 69), *together produce a human environment, with the totality of its sociocultural and psychological formations*, and that *[m]an's specifc humanity and his sociality are inextricably intertwined. Homo sapiens is always, and in the same measure, homo socius.*

Social actors across diferent historic and cultural contexts and traditions perceive and shape their subjective environment diferently and form diferent patterns of interaction with that environment.

Our existence is woven into culture; culture constitutes and defnes us, delimits the space for development of our discourses, and determines the way we act, both individually and collectively.

Culture encompasses a complex set of institutions, values, perceptions, learned thinking patterns, opinions, behaviours, and practices that form the life of a group of people; it paints a picture of its heritage and history; it outlines the space in which the group exists, and it gives sense to its existence in time.

It is created over time, it cannot be replicated, and it is very hard to fully comprehend.

Culture encompasses multiple social layers and delineates all types of collectivity. It is identifed and imprinted across multiple levels; in this context, we can speak of a culture of a civilisation or of a time in which one lives, or of regional or national culture, as well as of various cultural circles and sub-cultures that people belong to, or of cultures of various collectives that encircle an individual's self, giving that individual the illusion of self-determination and social realisation as an entity.

Every organisation has its own culture, imbued with an ideological framework. It is constituted through social interaction: over time, collective characteristics and permanent attributes emerge, inseparable from the essence of the organisation and mutually interwoven in its inner workings. Culture is compressed in the forming press of organisational tradition and history.

Organisational culture mirrors the internalisation of a symbolic universe of collective action and acts as a frame for a fabricated reality: it provides the space for what is considered permissible and desirable in organisational actors' relations. It exists as collective cognition *sui generis*: organisational members share fundamental values, accept customary practices and norms, and develop similar expectations.

It can also be seen as a system of beliefs, understandings, and ways of thinking which is common to everyone in the organisation and implies a specifc, distinct form of behaviour. Culture persists through symbols and narratives, assisting in the members' self-perception and in the development of their perspective of the world beyond the organisational limits.

Culture is, therefore, *essentially composed of interpretations of a world and the activities and artefacts that refect these* (Mintzberg et al., 1998, p. 265). Tese interpretations become part of a world of symbols and meanings that tie members together in the social fabric of the organisation.

Culture difers from one organisation to another, comprising their inner identity delimited by ethical standards, rooted-in business principles, practices, unwritten rules of conduct, but also written internal policies that afect the management of human resources. It can be recognised in the style of life and work within the organisation. It is an important cohesive element of the organisation, one that invisibly strengthens its connective tissue.

Organisational culture is a cape that covers organisational ideology: it is hard to distinguish a clear boundary between the two.

Organisations with diferent cultures interpret their environment differently and ascribe diferent meanings to important constituents of that environment. Teir strategies are "anchored" in culture: they are socially constructed through historically and culturally determined change. Rules that govern strategy are less connected with the leader's and other strategy makers' cognitive framework and more so with cultural rules and norms existing on the organisational and social level.

Behaviour of members of the collective is delineated by culture. Culture of a group of people, as defned by Schein (2004, p. 17), is *a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.* According to him, culture formation is always *a striving toward patterning and integration, even though in many groups their actual history of experiences prevents them from ever achieving a clear-cut, unambiguous paradigm.*

Tere are three layers of organisational culture (Schein, 2004).

Te frst layer is comprised of manifested elements of culture that we recognise in symbols and organisational members' behaviour patterns. Stories and myths, language and slogans, methods and contents of internal and external communication, rituals, norms and customs—these are all observable elements of organisational culture. Tere are also ceremonies, styles and desired behavioural patterns, other physical manifestations such as ofce design or acceptable dress code, and all other things that can be identifed as diferentiating and self-determining organisational dimensions. Such artifacts include the collective's observable creations and collective action.

Te second layer of culture comprises espoused beliefs and values that provide clear guidelines for organisational actors' behaviour and action. Tey are not externalised and they do not exist in formal organisational documents or written procedures. Nevertheless, clues of their existence can be found and recognised in all forms of observable behaviour, primarily in stories retelling organisational history, or in metaphors and other narratives.

Te third layer of culture comprises basic underlying assumptions. Tese assumptions are deeply-rooted in the organisation, least observable, and not open to questioning. Tey rarely change: only in cases of radical organisational transformations when the organisation's survival is at stake, or when new social values develop.

Unlike Schein's approach, Hatch (1993) developed a *dynamic perspective* of organisational culture that should give answers to the question how culture is constituted from assumptions, values, artefacts, symbols and processes that connect them. Te cultural dynamics model comprises four simultaneous cognitive and social processes: manifestation (relation between assumptions and values), realisation (relation between values and artefacts), symbolisation (relation between artefacts and symbols), and interpretation (relation between symbols and assumptions).

Dynamic model defnes culture as a set of continued cycles of action and sense-making, clouded by cycles of shaping organisational images and identities. Culture is permanently renewed through socialisation, learning and indoctrination of new organisational members who gradually adopt well-established assumptions, beliefs and values, and accept certain rules of conduct.

It is not wrong to say that culture "distorts" a member's perception of reality. Every mind is endowed with the ability to reach an objective truth, according to epistemological tradition of Western philosophy (Descartes, Hume, Kant and others), provided however that such mind applies the right method and that, as noted by Gellner (2000, pp. 49–50) it resists *the seduction of cultural indoctrination*; after all, the Cartesian principle is that *the path to the truth leads through voluntary cultural exile*.

For organisational members this is an impossible mission: they are "short-sighted" because of the cultural lenses that afect their fundamental beliefs and create blindedness through entrenched assumptions that they have adopted and that are inevitable in their understanding of organisational reality.

Strategic leadership is inseparable from the cultural stage built on shared assumptions, symbols, language, and behaviour patterns.

Organisational culture has a signifcant impact on the enactment of strategic leadership: it creates the context in which the desired and the undesired leaders' behaviour patterns emerge, provides additional defnition of decision-making discretion, outlines the space available for leaders' action, and creates room for acceptable forms of intraorganizational interaction. It is a manifestation of the emotional organisational world: its content, on the other hand, can be one of the biggest obstacles in realising the strategic leaders' intention.

Strategic leadership is very dependent on culture because: (1) it establishes the rules of conduct (Weihrich & Koontz, 1994, p. 334; Greenberg & Baron, 1997, p. 471), (2) manages behaviour and guides the organisational members' action (Schermerhorn et al., 1991, p. 341) and (3) creates the prerequisites for learning and transferring knowledge, beliefs, and behaviour patterns over the course of time. Culture is directly associated with instilling beliefs and developing a desired perspective of the organisational members' world.

Organisational culture discourages radical change because its essence lies in consistency and infexibility that are based on shared beliefs and assumptions of members. It *de facto* limits the action of strategic leaders', who have to adjust their aspirations to the playing feld outlined by culture, or attempt to deal with the difcult and uncertain task of changing it.

Karl Weick (1995) made a lucid remark that an organisation does not actually have a culture but rather that the *organisation itself is a culture*, which makes changing it a very demanding, hard and uncertain task for strategic leaders.

Creating and implementing new strategies and managing the processes of organisational change is always associated with the question of character of the ambience in terms of how suited the current organisational culture is for any radical steps that the strategic leader intends to make. Culture draws strict boundaries around the space available for strategic leadership action.

Research shows that leaders of complex business organisations spend a sixth of the available working hours dealing with culture, which is primarily associated with organisational structure (Porter & Nohria, 2018).1 Tey can infuence organisational culture in countless ways: for example, from participating in corporate forums where shared values, beliefs and accepted norms are encouraged, to recognition and rewarding of members of the collective who deserve credit for strengthening that culture, and ultimately to explicit or implicit communication of their own example through model behaviour that is congruent with cultural determinants.

On the other hand, culture is not, and need not be, an instrument of personalised strategic leadership. As underlined by Shrivastava and Nachaman (1989, p. 64): *Some organizations can strategically lead themselves through their culture and/or structure.* In such situations, the cultural, structural and political forms of strategic leadership are enacted on all organisational levels.

Regardless of the complexity and difculty of the task at hand, strategic leaders have to get to grips with targeted change of organisational culture in situations when this is necessary to ensure survival and prosperity of the organisation. Tis requires an understanding of the processes and mechanisms of cultural change and how it is connected with the shift from old to new organisational identity, as indicated, for instance, by an ethnographic study based on the example of the leading breweries in the world, Carlsberg (Hatch et al., 2014).

Furthermore, networking and connecting of the organisation with other organisations also afects culture and its characteristics. Strategic leaders have to deal with signifcant challenges, for example, in situations of organisational mergers, when they have to reconcile diferent cultures or implement the usages of one organisational culture in the newly acquired part of the organisation.

Te idiosyncrasy of the cultural context in the organisation is undeniable, but we must not forget that it represents only a thin veil that is

<sup>1</sup>Te research started in 2006, within the Harvard Business School, as the frst comprehensive and detailed overview of the time certain CEOs spent in large and complex companies. A detailed analysis was performed of how 27 leaders, two women and 25 men, spend their work time, over a period of three months. Teir companies, most of which are listed, generated an average annual income of USD 13.1 billion during the observed period.

inseparable from the existing social order, ideology, hegemonic relationships, and power constellations surrounding the organisation.

To change a culture means to boldly tackle the actual sense of, and reason for, organisational existence.

#### **Networks of Trust**

Trust is an obligatory element of strategic leadership: it needs to be encouraged and developed as a kind of "glue" for the collective that helps leaders lead the organisation, particularly so in the world of great uncertainty, drastic environmental changes, and unexpected crisis situations that have marked and continue to mark our time.

Without trust there can be no stable society, sustainable institutions or social structures; there can be no commitment or proper participation and partnership in human activities; one cannot create or share visions or intentions; reservedness and resistance to collectivity grow; bonds get dissolved and collectives weakened and hibernated.

Trust speaks to us about the intimate inner world of a person who, to a greater or lesser extent, opens up in intertwining relations with others. Tis is a psychological condition where a social entity (*trustor or trusting party*) puts a greater or lesser degree of trust in a *trustee* (party to be trusted, which can be one or more individuals, a group or another type of collective, society, time period, or other). In other words, it indicates to what extent the trustor feels secure and willing to act based on the words, actions and decisions of the trustee (McAllister, 1995; Podrug, 2010).

Trust is determined by two cognitive processes: (1) the trustor's feeling of vulnerability, and (2) expectation of reliable conduct on the part of the trustee over a certain period (Rousseau et al., 1998; Simpson, 2007; Bošnjaković, 2016, p. 123). Vulnerability is connected with a potential loss that may result from trusting another, from the trustor's readiness to accept risk by forming a relationship with the trustee. Tere is a frm belief that vulnerability will not be exploited and that the trustor will not be threatened by the trustee's behaviour or actions (Jones & George, 1998).

At the same time, credibility is expected from the trustee: the trustor accepts the trustee's behaviour as appropriate and reliable, without any doubt or previous verifcation. Trust is the perception of a strong bond and a benevolence that makes us let our guard down and open up to others, believing it to be the way to obtain some beneft or eliminate a threat.

It is necessary for organisations to have a developed network of trust that connects its members and brings them closer to one another, thus making joint action possible. Networks of trust develop across all hierarchical levels, both vertically and laterally, and encompass all kinds of formal and informal organisational relations.

Leaders are usually the bridge and the centre of gravity of such a network of trust. Most of them are deeply aware that any irreparable loss of trust can shake up the collective, threaten its cohesion, and hinder the potential for integration.

In principle, we can observe trust through two relations; the leader's trust in the collective, and the collective members' trust in the leader. Both relations are important for integration of the collective and involve the risk and readiness to "go with the fow," an ability that is of exceptional importance when it comes to joint action.

Firstly, people choose whom to trust and who to respect (and under which circumstances), in which context they base their choice on the consideration of sources and evidence that would justify such trust. Respect and trust emerge in the trustor's cognitive process irrespective of the relations of formal authority, and as such they cannot be based on it.

Secondly, afective foundations of trust consist of emotional attachments between people who, by making emotional investments in trust relationships, exhibit true concern and care for the welfare of others, and who believe in the inherent virtue of such relationships and feel that those emotions are reciprocated (McAllister, 1995).

Trust is a sensitive thing and once it is broken, it is hard to fx. It was Nietzsche who so aptly put it: *I'm not upset that you lied to me, I'm upset that from now on I can't believe you*. Interestingly, this has also been very appropriately expressed in the (slightly adapted) words of Lady Gaga: *Trust is like a mirror, you can fx it if it's broken, but you can still see the crack in (its) refection.*

Organisational actors build complex relationships of trust, in which they play the role of trustors and trustees at the same time (Mayer et al., 1995). Strategic leaders put more or less trust in the collective, and in turn, members of the collective trust them to a greater or lesser extent.

Strategic leaders need to believe that members of the collective can be good associates in their work on making the defned vision a reality. In this context, they are the trustors who exhibit trust in individuals, groups, and units within the organisation. Trust in the collective is the *condicio sine qua non* for creating and implementing organisational strategy. Any hint of potential distrust must be eliminated in order to preserve collective harmony and congruence. On top of everything else, leaders take on the role of trustors in relations that extend beyond organisational boundaries: with external stakeholders, partners, institutions and other entities important for organisational existence.

Even more important is the reversible relationship in which strategic leaders appear as the trustees for members of the collective, who act as trustors, trusting them (more or less) to perform the underlying task. By putting their trust in leaders, members of the collective "surrender" to them and their ideas, plans and activities, which are important to both sides. Tey are willing to accept the risk of engaging in a relationship with the leader and, as underlined by Mayer et al. (1995), exposing themselves to the actions of the trustee without using any control mechanisms.

In other words, members of the collective form a network of trustors in the system of strategic leadership: they are willing to "make themselves vulnerable" because they have certain expectations, assumptions, or beliefs that the leader's behaviour will be positive and benefcial for them (Deutsch, 1958; Carmeli et al., 2011).

To make it clear, control and trust are two opposing mechanisms: a high degree of trust eliminates the need for control, regardless of the type of social relationship involved.2 From a strategic leader's perspective, this means that the trust that members of the collective have put in him/her, just like the trust he/she has put in the collective, will reduce the need for intensive control and facilitate implementation of common action (Fig. 7.1).

<sup>2</sup>Mayer et al. (1995, p. 712) defne trust as *making oneself vulnerable to the actions of the trustee, without monitoring or control, irrespective of the ability to implement such monitoring or control*. Te action has to be of some signifcance to the trustor. Being vulnerable means exposing oneself to risk, and in this context, trust is a willingness to take risks, rather than risk-taking *per se*.

**Fig. 7.1** Trust and Control in Relationships Between the Strategic Leader and Members of the Collective

Recognising mutual beneft is the basis for establishing trust between the leader and the followers. If we observe the relationship between two social actors, we can say that trust will grow (1) if both actors channel their planned outcomes toward what is best for the partner or the relationship, and (2) if the actors believe that their counterpart will also decide based on what is best for their mutual relationship, even if their personal beneft might be lesser (Simpson, 2007).

For leaders, this implies creation of a climate in which others will recognise the long-term importance of togetherness and common good, and where they will exemplify, through their own leadership, a departure from opportunism and selfshness towards common organisational interest, particularly in demanding situations in which they are exposed to pressures and threats that may potentially be harmful for the trustors.

A relationship-based perspective places trust inside the process of social exchange: the follower sees the relationship with the leader as the foundation of their interaction, in which parties operate (or should operate) with trust, good will, and a perception of mutual obligations applying to both actors. Te second perspective, the character-based one, shows trust as a positive perception experienced by the follower, where the leader's personality traits and character afect the follower's feeling of vulnerability in their mutual relationship (Dirks & Ferrin, 2002).

In both cases, the trustor's perception that the trustee will not betray their trust and disrupt the fragile and complex relationship in which they are entangled (in terms of hierarchical relationships and position-based authority) is very important.

A strategic leader should create an atmosphere conducive to building a network of trust with others.

As the trustee, the leader has to continually build such ambience of trust, and the members of the collective, as the trustors, have to avoid hindering the leader's eforts in a way that would result in trust that has been given becoming irreversibly lost, and they have to contribute to maintaining the perception of the leader's reliability.

Trust depends on: (1) previous experience and information about the leader that is available to members of the collective, and vice versa, and on (2) the degree of readiness to trust.

If members have positive previous experiences with the strategic leader, or reliable information about the leader's humanity, credibility, and previous work success, they fnd it easier to trust such leader and willingly accept his/her ideas and activities *ceteris paribus*. Research shows that trust in a leader grows in proportion with increased perception of the leader's capability and reputation in the community (Dirks & Ferrin, 2002).

Some people have greater and some have lesser tendency to trust others. Te theoretical construct that explains this is referred to as the *propensity to trust*, which determines how fast, how much, and for how long people give their trust to others. Propensity to trust is afected by life experiences and personality traits. Simpson (2007) noted that individuals who are more loyal and possess a great deal of self-awareness and selfconfdence are more prone to give trust and develop that trust over time. Diferences in people's propensity to trust are also found between diferent cultures (Hofstede, 2001).

Strategic leadership will be more successful if the majority of members of the collective are prone to trust others. Tat makes it easier for the leader to strengthen the important relationship-based aspects of leadership: encourage collaboration, develop communication, and promote honest behaviour (Carmeli et al., 2010, 2011).

Te leader's credibility makes members of the collective trust him/her more, and do what is expected of them. Trust develops based on the perception of the content communicated by the leader; a congruence between words and messages; a reputation of integrity and reliability, together with other elements that support the leader's credibility. Character and capability encourage trust in the leader.

Interpersonal trust has a positive correlation with the perception that the strategic leader is just and benevolent, and that his/her behaviour signalises good intentions (Young & Perrewé, 2000; Fulmer & Gelfand, 2012); it implies that the leader is capable of doing what he/she has committed to do (Perrone et al., 2003) and is able to communicate the shared vision (Dirks & Ferrin, 2002; Gillespie & Mann, 2004). Trust is also strengthened by the members seeing for themselves that the leader's behaviour is ethical (Bews & Rossouw, 2002).

Successful indoctrination and socialisation of members of the collective facilitates the giving of trust. Indoctrinated trustors unreservedly accept the leader's ideas and intentions, whereas socialised trustors have no reservations as long as the leader's actions are in line with fundamental organisational values.

Moreover, Fulmer and Gelfand (2012) emphasise that identifcation leads to greater trust in situations where members perceive certain similarities with the leader, if they identify with him/her through some common values, and/or if the leader represents a symbol in which the identity of the collective is recognised. Apart from cases of strong identifcation with the leader, the members' trust also increases in situations of highdegree organisational identifcation (Maguire & Phillips, 2008).

It is easier to develop trust if leaders are charismatic individuals with attractive messages and inspiring visions. More than anything else, followers have an emotional relationship with charismatic leaders; they can be blinded by their personalities and be at times oblivious to information that does not justify non-critical trust.

Some other leadership styles can also be correlated with greater follower trust. In this context, Fulmer and Gelfand (2012) noted that leadership is based on empowering followers, the same way that transformational, transactional, responsible and authentic leadership have a positive efect on the level of trust that members put in the leader.

Successful strategic leadership is based on multiple relationships of trust that develop among close associates and hierarchically (or spatially) distant individuals within the organisation.

Te essence of strategic leader's ability to develop and maintain trust lies in inspiring and motivating members of the collective. Trust strengthens loyalty and job satisfaction, increases reliability of communication channels and information, develops organisational commitment and pro-organisational behaviour, and reduces retention of and potential for dysfunctional intraorganizational confict. Apart from that, it improves the quality and speed of interaction and decision-making, and serves as an additional efectuator of organisational performance. Te greater the trust, the higher the likelihood that common action in the organisation will be successful.

Recent studies show that CEOs of large corporations spend as much as a quarter of their work hours in meetings intended to build and improve relationships within the organisation and outside it (Porter & Nohria, 2018). Most of them are aware of the fact that development of mutual trust facilitates communication and delegation, reduces the need for control and monitoring of activities, and increases the likelihood of success of collective action.

Renowned management author Stephen Covey noted that a low level of trust creates additional costs in organisational action. He underlined that: *When trust is low, in a company or in a relationship, it places a hidden 'tax' on every transaction: every communication, every interaction, every strategy, every decision is taxed, bringing speed down and sending costs up. My experience is that signifcant distrust doubles the cost of doing business and triples the time it takes to get things done.*<sup>3</sup> Covey also referred to results of a study conducted by Watson Wyatt, which showed that companies with a high degree of trust have 300% better performance indicators than those with a low degree of trust.

<sup>3</sup> See: https://www.leadershipnow.com/CoveyOnTrust.html (accessed 6 March 2020.)

## **Leadership Language and Rhetoric**

Te world we live in and experience is the product of language, and language not only describes a certain object, but also constitutes it. Language *creates* the human condition and it is one of the most important instruments of social infuence.

We do not live in reality but instead we live in our own idea about what reality is. Tat idea is enacted through common language; we are only able to understand reality through the discourse created by language.4 Derrida's famous "nothing outside the text" maxim (although often misinterpreted and taken literally) implies a separation of our being from the so-called "objective" reality and refers to the fact that we perceive and understand reality through the prism of the language in which it has been created.

Language is the means to construct leadership socially; it exists, as noted by Marturano et al. (2010) referring to Searle, only if there are certain types of beliefs and values present in social relations between people in which symbols play a central role. According to them, leadership is *enacted as* a linguistic process of production and it cannot be reduced to a personal trait or a result of the leader-follower relation.

Leadership is the process of creating a dialectic relationship between the person who leads and the one who is being led, in which process the leader's actions give others a reference point and various interpretations for meaningful actions that need to be taken (Smircich & Morgan, 1982, p. 262).

Leadership is characterised by a delicate relationship between action and language, and any analysis of social infuence, which represents the categorical core, has to begin with an analysis of language, as highlighted by Kelly (2008, pp. 767–768) who, paraphrasing Wittgenstein, noted that *leadership as a language-game is more than a spoken language—a language-game is an activity, it is a form of life. It follows that talking about leadership, writing about leadership, using the concept in any way, shape, or form is the product of some kind of action.*

<sup>4</sup>*Fields are greener in their description than in their actual greenness. Flowers, if described with phrases that defne them in the air of the imagination, will have colours with a durability not found in cellular life* (Pessoa, 2001, p. 36).

Leadership, like any other concept, derives its meaning not from any action, relation or condition that it signifes, but from the historical context of discourse—the language-game—in which the word is used. Tis means that our knowledge and understanding of leadership are more likely to be a product of linguistic conventions than the result of direct insight into empirical reality of leadership (Astley & Zammuto, 1992, p. 444).

In other words, a language space has been created (specifc vocabulary, rules and conventions of language) pertaining to leadership, and it is in that space that our understanding of this phenomenon develops. From this Wittgensteinian perspective, leadership can be viewed as a vague notion referred to as *family resemblance* between language games aimed at power and infuence (Fairhurst & Connaughton, 2014, p. 8).

Organisations can also be observed as *language constructs* of some sort (Ford, 2001, p. 329) or as constructs that mainly comprise *language concepts* that are shared by their members. Language is not neutral: it depends on meanings attributed to it by the members, irrespective of the intentions of the speaker or writer of the text referring to an aspect of reality.

If organisations are interpretation systems, as highlighted by Daft and Weick (1984, p. 294), then it is the leaders' and managers' job *to interpret, not to do the operational work of the organization*, just as it is their job to outline the space for understanding and sharing experiences and to shape the stories and myths intended to input clusters of meaning in the collective consciousness (Pondy & Mitrof, 1979, p. 30; Astley & Zammuto, 1992, p. 454).

Te exchange of experiences and story-telling makes it easier to understand the language and communicate the interwoven clusters of meaning around the organisation and its existence. As Pondy (1989, p. 229) claims, *it is not sufcient to enact a shared environment, it has to be talked about*.

Te infuence that strategic leaders exert in the collective cannot, therefore, be understood without language and the way it is used.

Language did not primarily originate as a means of information exchange, but rather as a means of maintaining cohesion in a group of people (Christakis & Fowler, 2011, p. 236).

Language connects the collective; it paints a landscape of understanding, creates the magic of togetherness, and facilitates identifcation. If leadership *per defnitionem* is a kind of social infuence, then language is the totality in which that infuence is enacted. Te boundaries between action and language of leadership are vague: meaning is constructed, maintained, destroyed and substituted by speaking and writing, or in other words, by language games that constitute leadership. Language, meaning and action cannot be observed as diferent from one another.

In this context, Pondy (1989, pp. 228–229) underlined that use of language is the least noticeable, the most-subtle and the most powerful method of exerting infuence that creates control over what other people do and, as far as leadership is concerned, it can be an important factor in the leader's success in strengthening their own credibility and better managing the process of infuencing others. Furthermore, he highlighted that one has to take a step back from behavioural determination based on the notion that leaders need to make sure followers do whatever they are expected to do. Change of the follower's behaviour is not a measure of success of leadership, but, as underlined by Pondy: *the efectiveness of a leader lies in his ability to make activity meaningful for those in his role set not change behavior but to give others a sense of understanding what they are doing, and especially to articulate if so they can communicate about the meaning of their behavior (p. 229).*

Strategy opens up the playing feld for language games.

By designing or recognising strategy, a specifc organisational language is created, one which is imbued with elements of organisational culture. Strategic leaders mediate and designate, ascribe meanings, and interpret reality. Teir rhetoric is an important foothold in the process of leadership: the world they tell stories about is given sense, and the decisions that are made or have been made are given rationalisation and justifcation.

Language is used to defne the ambience in which strategic leaders operate. Strategic leaders do not need to be just excellent strategists, their role is extended to the language space: they also have to have oratory skills, and create narratives and messages to connect and inspire members of the collective.

Strategic leadership cannot be understood without maximum communication inside the collective; through listening and story-telling, creating and sharing language-created meanings closely connected with the purpose and direction of organisational action. Reliance on language extends within and beyond the organisation, delimiting the space for strategic leaders' action.

Fairhurst and Connaughton (2014) listed two approaches to leadership communication: (1) transmissional approach to communication and (2) meaning-centred approach. Transmissional approach is about seeing leadership as a system, and communication as a variable or part of the process of leadership, or as a link to it, or a behavioural outcome of leadership. Te alternative perspective is based on the idea that language creates reality and that communication is at the centre of creation of meaning, which is a post-modernist, specifcally post-structuralist proposition.

Conger (1991, p. 32) noted that *leadership language* consists of two elements. Tese are: (1) framing, which represents a way of meaningful determination of organisational purpose in the messages communicated by the leader, describing the vision in an intrinsically appealing way and recommending a map of action; and (2) rhetorical crafting, which demonstrates the leader's ability to use a symbolic language in order to emotionally reinforce the messages communicated to the collective and outside it. Such messages provide guidelines for action that for the base of leadership, and the art of rhetoric enhances their memorability and motivational attraction.

Firstly, it is extremely important how strategic direction will be formulated and presented within the organisation and outside it. Te expression of strategic intent has to be simple, suggestive, conducive to togetherness, encouraging, and far-reaching in terms of its communicational scope. Messages and slogans have to be clear and targeted. We can speak of framing as an ability to separate the important from the unimportant: communicating the key elements of strategy and interpreting reality for members of the organisation in the constructs that constitute strategic leadership (mission, vision, intent, and alike).

From this perspective, frames are understandable and meaningful representations that outline purpose and that create space for action; they are intended to amplify values and beliefs held by members of the collective and guide them towards the defned goals. Successful leaders communicate through simple messages and they are capable of turning vision into slogans and symbols that are inspiring and easy to understand. Teir interpretation of reality has to paint a desirable picture of the future that is within reach if the advocated strategy is followed. As Nutt and Backof (1993, p. 329) underlined: *Leaders must dramatize importance to underscore the demands for transformation, making the strategic vision seem a viable and attractive way to change.*

True leadership skills lie in making sense of things and creating a language that is meaningful to a large number of people (Pondy, 1989, p. 230) and that brings the collective closer and more emotionally connected, especially in terms of building confdence and excitement about shaping a common future (Conger, 1991, p. 34). Tis comes down to *the use of language as a symbolic means of inducing cooperation in beings that by nature respond to symbols* (Burke, 1950, 1969, p. 43). Tis can be achieved, for instance, by recognising, emphasising or conjuring up an "external threat" in order to create additional cohesion and commitment in members.

We mentioned earlier that strategic leaders are not the only ones who can create vision. Similarly, Bennis and Nanus (1985) underlined a long time ago that vision is rarely the product of the leader's considerations; it is common for it to come from others in the organisation. We have also highlighted that the key role of strategic leaders lies in *legitimating vision* and accepting it as the basis for collective action. Leaders need to draw the members' attention to important issues and agendas; the goal is to create meaning through clear communication that is intended to encourage imagination and focus on action.

Tere are many types of messages that strategic leaders communicate to the collective and stakeholders beyond the boundaries of the organisation. Apart from confrming the vision and mission as well as the key elements of current strategy, leaders also have to plausibly communicate strategic initiatives, decisions, and other steps that require strong collective action, especially those that serve to achieve radical organisational transformation.

Te messages through which leaders communicate their expectations from the collective are those that have the greatest infuence. New business ventures, products, acquisitions, and other important events also represent a communication challenge for strategic leaders, just like all other circumstances that can be used to create a motivational environment in which togetherness and collective directionality toward certain objectives take centre stage.

Te second element of the language of leadership is rhetoric (Greek: *ῥητοριϰὴ τέχνη:* oratorical skill).

Messages are just as important as the way they are communicated. Strategy has to be plausible and strong communication-wise, and the rhetoric and language have to be powerful and distinct. One has to choose the language-based footprints and symbols that will best communicate the targeted content. Te goal is to amplify general trust in the strategic leaders' competence in order to generate a perception that the organisation greatly depends on their actions, and to facilitate better understanding and embracing of the vision they are advocating.

Te winning-over, emboldening and inspiring of the members of the collective is a task that requires strategic leaders' serious commitment in their efort to develop an efective communication strategic.

Top strategic leaders are narrators and orators. Tey are good at storytelling and creating other narratives that enhance the plausibility of action and encourage togetherness in fulflling organisational objectives. Metaphors and analogies also help portray the experiences and reality as experienced through the eyes of others.5

Te power of metaphor can inspire imagination and intellect, and amplify beliefs and values in the listener. Story-telling and giving real-life examples can become deeply instilled in the collective consciousness and give motivational momentum for organisational transformation. Feelings and emotions intertwine in language, and leaders are required to reach for them and discover them.

Consequently, they are excellent communicators, capable of rousing emotions both in members of the collective but also in the target audience outside the organisation. Te content of the message being communicated is important but not necessarily crucial; rhetoric is the art of seduction that creates a feeling of attachment and followership. A language of symbolism helps to adopt their discourse. Bryson and Crosby (1992, p. 21) pointed out that capable leaders are those *who may or may* 

<sup>5</sup>Davidson (2000, p. 295) says that metaphor represents the dreamwork of language and the way we interpret it says as much about us as it does about its creator… understanding a metaphor requires just as much imagination as making it, and there are just as few rules on how to go about it.

*not have positions of authority, but who inspire and motivate followers through persuasion, example, and empowerment, not through command and control*. Te real power of Martin Luther King was not in the fact that he "had a dream," but in his ability to explain it in a way that was expressive and emotional (Pondy, 1989, p. 230).

We must not forget the elements connected with sound, such as repetition, rhythm, balance, and alliteration (Conger, 1991, p. 42). Te way leaders accompany their words with sounds in their speeches has a signifcant infuence on followers and others around them.

When leaders clearly communicate their expectations from their coworkers and other members of the organisation, this reduces the possibility of misunderstanding, misinterpretation, and disorganised action. Research shows that clear communication of expectations is one of the most important leadership characteristics.6 As Cicero wrote: *Nothing is so unbelievable that oratory cannot make it acceptable.*

In summary, strategic leaders are creators of meaning who motivate and connect people in several ways: they create vision that relies on values of those afected by it; they include people in making decisions that are relevant for making vision a reality; they support staf eforts in the realisation of vision through coaching, feedback, and role modelling; they encourage people in their professional training and achieving of selfrespect; they recognise and award good performance (Kotter, 1990).

In all this, language defnes the space in which strategic leadership is manifested. Leaders interpret and shape reality, choosing the right messages and words to better explain strategy and objectives, and using rhetoric in order to encourage followers in joining them on the "journey to the future." Te basic purpose is the creation of a feeling of belonging and mutual participation in fulflling the organisational mission.

Many recognise communication as an important, or even the most important element of leadership. According to a 2018 LinkedIn poll that

<sup>6</sup> In a recent study, 56% of leaders found this characteristic to be among the most important ones (Gilles, 2006). Te study involved participation of 195 leaders from 15 countries, employed with 30 global organisations. Subjects were required to choose 15 of the most important leadership competencies from a list comprising 74 competencies in total. See: https://hbr.org/2016/03/themost-important-leadership-competencies-according-to-leaders-around-the-world?utm\_ source=linkedin&utm\_campaign=hbr&utm\_medium=social (accessed 10 November 2019).

asked business leaders "What do you think is the most important factor in leadership?", most of them (38%) named communication, whereas 24% said they would like to see better character.7

Study programs ofered by some of the world's fnest business schools place great emphasis on the importance of communication when it comes to leadership. In materials accompanying an INSEAD educational program, it was noted that CEOs might just as well be called "explanation, engagement or enlightenment ofcers," owing to the fact that their messages need to echo deeply with emotions, aspirations and desires that the target audience has to understand well.8

#### **Integration of the Collective**

Integration of the collective, together with strategic direction, external adaptation and outcomes, is a constituent of strategic leadership architecture. It is designed to establish *order*, or in other words, to unify and integrate the collective in all activities, so that it could advance in the desired direction. Careful harmonisation of all organisational activities is the imperative of strategic leadership.

Integration is an act in which mutually dependent individuals and groups, together with processes and structural units, constitute a single, well integrated unit. It can be understood as an interconnection and coordination between organisational parts (Barki & Pinsonneault, 2005) and as a *process of achieving unity of efort among the various subsystems in the accomplishment of the organisation's tasks* (Lawrence & Lorsch, 1969, p. 34). Specialisation of functions and tasks within an organisation demands a carefully designed and even more carefully implemented integration.

Another important aspect of integration is cohesion, which is defned as *a dynamic process that is refected in the tendency for a group to stick* 

<sup>7</sup>Learngage, https://www.learngage.com/ASPL.html (accessed 30 January, 2020).

<sup>8</sup> See: https://www.insead.edu/executive-education/open-online-programmes/leadershipcommunication-impact (accessed 30 January 2020).

*together and remain united in the pursuit of its instrumental objectives and/ or for the satisfaction of member afective needs* (Carron et al., 1998, p. 213).

Integration of the collective depends on the size, complexity and locational distribution of the organisation; in other words, on the amount of information and scope of activities that need to be done. Te more activities performed by the organisation, the greater the need for knowledge, information and special skills of its members; this means that integration- and coordination-related challenges are also greater.

Aberrant behaviour among members of the collective reduces changes for successful performance; focus in action is lost, there is insufcient coherence or internal connectedness inside the collective.

In small groups, people tend to coordinate their behaviour through unconscious actions, adapting to one another. In larger collectives, this may not be sufcient: it is necessary to establish standardisation instruments, encourage homogenisation, and develop activities that will support better integration of the members and give room for leadership as a strong integrating factor.

Leadership is a mechanism that serves to eliminate procedural and structural redundancies, guide and motivate staf, overcome obstacles, and utilise opportunities that emerge from the organisation's interaction with the environment.

It contributes to creating a climate of togetherness, strengthening collective integrity, inspiring members in their performance of tasks and targeted convergence of all activities.

Collective alignment empowers members and reduces their vulnerability and lack of resourcefulness in individual and group activities. It helps them to understand the mission and vision more easily; to embrace strategic direction as their own, and invest efort in making it a reality. It needs to encompass not only members of the collective but also all those who have an interest in the organisation and who take part in its outcomes, interests, and claims.

Ancient Greek historian Xenophon made it clear ages ago that *whichever army goes into battle stronger in soul, their enemies generally cannot withstand them*.

Furthermore, integration can also be the result of hegemony and completely unrelated with the instrumental determination of strategic leadership.

If we were to delve deeper into the analysis of the *real* position of strategic leaders and their relationship with others in the organisation, we cannot avoid looking into the key sociopolitical relations, their antecedents and consequences, as well as their manifestations in the behaviour of all important actors.

Te purpose and meaningfulness of the collective, when observed from this perspective, gets a diferent dimension, just like individual leadership-related processes.

Additionally, encouraging members to engagedly participate in organisational action is an important aspect of integration activities. Strategies of infuence result in greater or lesser control of the members' behaviour and help congregate them around the main task, whereas successful motivation leverages stronger commitment and identifcation as well as a stronger feeling of connectedness of members with the leader, and with the mission and vision of the organisation.

Strategic leaders need to be an inspiration to members of the collective. Te best ones among them are completely certain in knowing that in life, instead of doing nothing — to paraphrase Helen Keller — one has to be daring enough to embark on the adventure of creating a better future. Teir task is to instil the principles and values, set the bar high, develop directions of action, strengthen the bonds between members, and create unity in action.

Togetherness surpasses individual limitations and strengthens capacities many times over so that it becomes possible to set high aspirations targeted at the use of collective power in building a desired future for the organisation. Te most important thing is to embolden and motivate the members to act in order to create a strong collective synergy and a sense of pride in belonging to the group, as well as a feeling of mutual dedication and commitment among members. Strategic leaders need to continually build the *esprit de corps* and inspire membership by slogans, symbols and narratives that increase the degree of organisational identifcation and self-determination of the members as indivisible constituents of the collective.9

<sup>9</sup>Tere are numerous characteristics that are associated with inspirational leadership. For instance, research conducted by consultancy frm Bain & Co. identifed 33 distinct and tangible characteristics relevant for inspiration in the leadership process (Horwitch & Whipple Callahan, 2016). Te most important thing for the leader is centeredness, being at the centre of events and of the collective. See: https://www.bain.com/insights/how-leaders-inspire-cracking-the-code(accessed 10 January 2020).

If one aspires to be an inspirational leader, it is important to stop focusing on one's self and focus on the collective instead. Te most successful leaders are those who are capable of creating a common identity with members of the collective in shaping and communicating an inspiring vision (Haslam & Platow, 2001; Molenberghs et al., 2017).

Besides that, the leader's ability to spread positive emotions throughout the collective is also important. In this context, charismatic leaders are more successful than those who lack charisma (Ilies et al., 2006) because they have a greater capacity of transferring their own emotions on the followers in an interpersonal process referred to as *emotional contagion* (Hatfeld et al., 1994).

Inspirational leaders know how to paint a picture of a desired future, provide support to the members, and give them their trust. Tey lead by example and do so without holding back; they will even sacrifce their own interests for the sake of the collective.

Mahatma Gandhi is an example of an inspirational leader who inspired millions of people to act as one in peaceful protests against injustice, advocating togetherness, non-violence, love, and tolerance.

Te strength of any organisation lies in motivated and dedicated members. Willingness, selfess inclusion, greater efort and readiness to accept responsibility in fulflling organisational tasks are the prerequisites for success of any collective. Sharing emotions and a common destiny in the collective encourages members to put the common organisational interest before their own (Choi, 2006). Fulflling visions, coping with problems, and accepting common challenges—these are the elements of a creative energy that strategic leadership needs to inspire, showing by the leader's own example the importance of serving the organisation.

Te more important the vision for the identity or values of members of the collective, the more they will get engaged in making it a reality (Parker et al., 2010). In this context, one must consider the fact that efcient use of mechanisms of encouragement depends on the degree of members' perception that strategic leaders share the same identity with them (Ellemers et al., 2004) (Fig. 7.2).

Inspiration should not be confused with classic motivational instruments that rely on sources of power and strategies of infuence. Irrespective

**Fig. 7.2** Motivation vs. inspiration

of the diferences between them, they "push" members of the collective forward, linking results with some forms of extrinsic or intrinsic gains.

Inspiration is a positive emotional perception of being connected with a person, a symbol, or an imaginary future; in other words, it is the feeling of being drawn to something that touches people's hearts, minds or souls.

Te goal is to get a motivated and homogeneous collective held together by the mission and shared intentions. Strategic leaders have to create an atmosphere in which members will be united despite all their diferences, where they can learn to listen to one another and understand that diversity is richness, not a threat; where they can coordinate their eforts and wishes toward a common mission and vision, be proactive, inspire, and shift from reaction to action. Tis is how energy, enthusiasm and fexibility are introduced into the organisation, and team spirit strengthened as an inexhaustible power that enables the achievement of objectives.

Members who are inspired continue spreading the "inspiredness" throughout the collective: this way, motivational power spreads across the organisation.

Richard Branson developed an inspirational leadership style primarily focused on employees working in one of his many companies (more than 60 of which comprise the Virgin Group), communicating a clear and easy-to-understand message: *Loyal employees in any company create loyal customers, who in turn create happy shareholders.*

Humanitarian organisations are a good example for explaining the importance of inspiration in collective integration. For instance, Rotary International uses a new slogan and accompanying narratives each year to empower new strategic leadership and strengthen cohesion between more than 1,200,000 of its members. Tis kind of approach, together with their cooperation with other organisations and individuals, contributed to eradication of polio and increased the overall quality of life globally; this was achieved through countless activities the organisation engages in worldwide, in all felds of human activity. Being at the service of others is at the heart of Rotarianism, and benefaction, or charity, as *the only treasure that increases with sharing,* as so nicely put by Italian historian Cesare Cantù, strengthens friendship and gives meaning to organisational action.10 Tis applies to a great extent to other humanitarian organisations as well.

*Inspirational communication* seems particularly important as an instrument of integration of such organisations. It can be defned as *the expression of positive and encouraging messages about the organization, and statements that build motivation and confdence* (Raferty & Grifn, 2004, p. 332). Communicating such messages increases the organisation's appeal in the eyes of its members and has a positive impact on the degree of their identifcation with and feeling of loyalty to the organisation.

<sup>10</sup>Rotary International plays a huge role in serving others and promoting the highest and most valuable human and humanistic values: tolerance, peace, and friendship. Te organisation's mission is intended to inspire its members to committedly and selfessly serve others to make the world a better, more pleasant place, and to rely on friendship in building new bonds and creating unity among Rotarians worldwide. With their activities, Rotarians change the world for the better, encourage and promote the ideal of serving others, and connect with others who share the high ethical standards and cherish friendship as the backbone of the movement. Tey wish to be a pillar of support for the society at a time when humaneness should come before profts, and human compassion and caring for the needs of others the only way to stay true to one's self in the hard times that we live in.

Inspirational speeches strengthen the emotional connection and dedication between people. Tis brings to mind several speeches given by Winston Churchill during World War II, in which he encouraged the British in their unity in resisting Nazi Germany, or perhaps also Steve Jobs' famous 2005 Stanford commencement address.11 Tese are the kind of speeches that inspire and connect, and reveal a reality that may not be plain to see, instilling clear meanings, giving sense, and strengthening collective commitment.

All things considered, strategic leaders should convincingly communicate the elements of strategic direction to strengthen shared objectives, show trust in membership and *energise* the collective (Bass, 1985), but also to improve the organisation's recognisability and reputation (Joshi et al., 2009).

Good communication skills enable a strategic leader to be an inspiration and a driving force that will unite, encourage and activate the collective in their shared aspirations.

#### **References**


<sup>11</sup> See: https://www.youtube.com/watch?v=D1R-jKKp3NA (accessed 15 January 2020.)


Gellner, E. (2000). *Postmodernizam, razum i religija*. Naklada Jesenski i Turk.


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# **8**

# **Confgurations of Strategic Leadership**

## **1. Confguration Determinants**

Te situation determines the range of possible variants of strategic leadership. Te characteristics of the organization (its history, size, complexity, structure and processes, life cycle, power and corporate governance, organizational culture, etc.), same as the environment in which the organization is settled (structural determinants of the surroundings and the degree of turbulence in it, technology and innovation shifts, other characteristics of the trade, constellation and the strength of the competition, national culture, etc.), signifcantly impact the way strategic leadership is embodied.

Strategic leadership appears in diferent forms, depending on the situational and organizational characteristics. It is not possible to uniformly copy-paste strategic leadership structures and processes from one organization to the other.

Strategic leadership can, but doesn't have to be, associated with a single person or the upper echelons of an organization.

It can be concentrated or dispersed, i.e., centralized or decentralized in the collective; constant or variable; purpose-built or spontaneouslyemerging in relations between key actors; rigidly adhering to administrative rules or completely personalised.

Te diferences that exist between the types of strategic leadership can be better understood if we analyse the possible confgurations in which they occur. A confguration is a representation or form of a phenomenon, created as a distribution of elements in a set, i.e., the shaping of an entity on the basis of important characteristics. It is a conceivable, comprehensive and unambiguous unit that rounds up the variants of important characteristics and distribution of its constituents. It is a distinct pattern of a set of connected elements forming a recognisable harmoniousness of a phenomenon.

In line with the foregoing, confguration of strategic leadership is an imaginable abstraction of the ways in which coordination eforts in the collective are integrated. It depicts sense-making and sense-giving, sets the direction and builds a framework (*meta-leadership)* for all the activities and processes of management and leadership in the organisation.

Alternative confgurations act as boundaries around the space available to variants of strategic leadership and they are not the only forms of their manifestation. We see them as some sort of extremes the combinations of which appear signifcantly more often in organizational reality than it is the case when we speak of their "pure" form.

We have singled out important determinants when it comes to formation of strategic leadership confgurations.

Te determinants could be analysed in dichotomies: (1) personalized vs. depersonalized strategic leadership, (2) individual vs. collective strategic leadership, (3) concentrated vs. dispersed strategic leadership, (4) stable vs. interchanging strategic leadership and (5) linear vs. networkbased strategic leadership.

Determining their interrelations, recognizing seemingly irreconcilable contradictions and searching for ways to reconcile them so that they may coexist, helps to better understand the diferences between the basic confgurations and the environment where their combinations occur.

Relations relevant for strategic leadership can be observed across three directions: vertically (up and down the organisation), laterally (on the same level in the organisation), and externally (beyond the boundaries of the organisation).

*Vertical strategic leadership* includes direct relationships that leaders have with their immediate subordinates, as well as indirect relationships they have with every other person in the organisation, with whom they do not have direct contact within the chain of command.

*Lateral strategic leadership* is based on the infuence that the leader has on other leaders and other actors at the same or approximately the same organisational level (usually at the middle hierarchical levels) with the aim of achieving some of the defned objectives, strengthening their position within the existing power constellation, changing the power structure or encouraging joint action (e.g., lobbying, negotiation, coalition, etc.) in the interest of the group or the individual.

*External strategic leadership* is focused on relations with important factors outside the organisation, whether it is groups with vested interest in its survival (e.g., owners, investors, external board members, major suppliers, key customers and users, etc.) or other entities that may exert decisive infuence over its behaviour (country, local community, media, unions, etc.).

Te determinants help shape a few alternative generic confgurations and analyse (1) the relationship toward hierarchy and (2) the number of actors who assume the role and tasks of leadership.

Firstly, strategic leadership can follow a hierarchy, but it can also depart from it. A hierarchy can be understood as order based on superiority and inferiority in organisations, i.e., as a system for ranking individuals or groups based on their absolute or relative status. Te main characteristic of a hierarchy is the existence of formal authority: individuals or groups at lower levels have to follow the orders of those at higher hierarchical levels.

In an organisational hierarchy, the chain of command is clearly visible and leading from the top to the bottom of the organisational pyramid. In most cases, concentration and distribution of power within the organisation follows the hierarchical structure. At the organisation's apex, there is usually an individual or a group with the greatest authority and responsibility. Decision-making power can be held by the upper echelons of the organisation, or it may sometimes be decentralised toward the lower positions within the hierarchy.

Tree situations relevant for confguration can be identifed. Tese are: (1) positioning of strategic leadership at the top of an organisational hierarchy; (2) dispersion of strategic leadership roles and processes within the hierarchy; and (3) departure of strategic leadership away from the established hierarchy and hierarchical relationships.

Secondly, confguration of strategic leadership depends on the number of actors assuming the role of leader. Tree situations may be considered: (1) where an individual is tasked with strategic leadership (single-actor leadership); (2) where several persons assume the role of strategic leaders, and (3) where strategic leadership is assumed by a number of persons connected through a network (multi-actor leadership).

By considering their determinants and dimensions, fve generic confgurations of strategic leadership can be identifed: (1) egocentric strategic leadership; (2) horizontally distributed strategic leadership; (3) vertically distributed strategic leadership; (4) network of strategic leaders; and (5) collective strategic leadership.

### **2. Egocentric Strategic Leadership**

Common understanding of strategic leadership is based on the dominant position of one person at the top of the organisational pyramid who defnes the direction and designs a strategy, makes the most important decisions and has a crucial impact on the future of the collective. Examples of leadership of strong individuals in history who had totalitarian or autocratic power, such as pharaohs, emperors of China, Roman emperors, great military leaders, but also some powerful statesmen and entrepreneurs in recent centuries, show a structure in which one person is positioned as the centre of the collective reality.

Egocentric strategic leadership is a confguration with an extremely asymmetrical structure of power and infuence. As Northouse (2007) underlines, such strategic leadership involves powerful and charismatic individuals who make independent strategic decisions and infuence others in the implementation of those decisions.

One person, the strategic leader, has a decisive impact on the goingson in the collective and on the way it interacts with the environment. His/her role is crucial and unavoidable in all aspects concerning the organisation. He or she assumes the decisive role in defning the strategic intent and the direction of organisational development. Such leadership is mainly autocratic,1 but it can range from full totalitarian power to enlightened and inclusive domination of an individual which does not exclude consultations and two-way communication.

Egocentric strategic leadership is nowadays commonly associated with well-known entrepreneurs or managers who have had a signifcant infuence on modern-day business. A few examples of powerful leaders come to mind in this context: Henry Ford, who adopted every important decision and was extremely rigid in managing and supervising his associates; Walt Disney, who likewise made decisions independently and was very demanding of his employees, although he sometimes asked them to develop new ideas and concepts; Steve Jobs, who was a true autocratic leader who strongly insisted on complete loyalty and trust; Elon Musk, who holds the strategic direction and key choices in his hands in all of his companies. Regardless of the concentration of power and autocratic leadership style, they all had a powerful vision that fundamentally transformed the global economy; they showed incredible dedication to their work and made bold decisions that radically changed the world as we know it.2

Egocentricity creates a stage on which the collective becomes a demonstration of the leader's aspirations *sui generis*. Te leader makes all of the important decisions and demands that everyone in the organisation follow their rules and the direction they set. Tey shape the space for strategy, set the pace and direction of action, and create space for interpreting meaning relevant for organisational actors. In his interview with *Te New York Times*, former CEO of Cisco Systems, John Chambers, made this illustrative remark: *I'm a command-and-control person. I like being able to say turn right, and we truly have 67,000 people turn right*. 3

Egocentric strategic leadership is similar to "stars," one of the four main generic confgurations developed by Kriger and Zhovtobryukh

<sup>1</sup>Autocracy (from the Ancient Greek αυτοκρατία; *autos* – *self* and *krateín* – *power, strength*; autocrat »ruler with unlimited power«) literally denotes *self-rule*.

<sup>2</sup>For more details, see: https://qz.com/701895/the-best-companies-in-the-world-are-run-byenlightened-dictators/ (accessed 30 June 2020).

<sup>3</sup>For more details, see: https://qz.com/701895/the-best-companies-in-the-world-are-run-byenlightened-dictators/ (accessed 30 June 2020).

(2013) as part of the typology based on two key situational characteristics: internal complexity and environmental turbulence.4

Leadership ambience can be generalised and simplifed based on the above dimensions: the frst situation is one where there is a low level of internal complexity in an environment that is not overly variable and unpredictable; the second is a situation with low internal complexity associated with a high degree of turbulence beyond the boundaries of the organisation; the third involves high internal complexity embedded in a non-turbulent environment; and the fourth situation is characterised by high internal complexity associated with a high level of turbulence in the environment.5

"Stars" mainly appear in a placid, non-turbulent environment where there are no internal challenges due to the relative organisational simplicity. Such leaders are mainly characterised by a tendency to act as an autocrat when making strategic decisions, but not at all times. In certain situations, they may have the tendency to share power and control with others and they may adopt consultative and participative leadership styles. According to the authors, "star" leaders are most efcient in small and medium-sized organisations.

A suitable environment for the emergence of egocentric strategic leadership is developed in organisations which are the result of entrepreneurship; the kind with a simple, non-complex structure based on entrepreneurial decision-making; the kind that is not faced with an overly

<sup>4</sup>Kriger and Zhovtobryukh (2013) identifed four generic confgurations that are the most appropriate for each of the four situations of leadership ambience. Tey identifed "stars," "clans," "teams" and "leadership networks" as manifestations that imply fundamentally diferent forms of strategic leadership.

<sup>5</sup>Firstly, internal complexity is a distinct organisational characteristic that points to the level of intricacy and complexity of structural and process elements. It can be defned as the amount of information and coordination required in order for strategic leadership to be sufciently efective within the given environment. It grows proportionately to the size of the organisation, scope of operations and intensity of knowledge required for a collective action. Tere are simpler and more complex organisations: with lesser or greater interconnection of building blocks and various modes of interaction with the environment needed to transform inputs into outputs. Secondly, the situation beyond the boundaries of the organisation is characterised by a lower or greater level of uncertainty and environmental dynamics. Te organisational environment can be more or less turbulent, variable and predictable. It is sometimes possible to understand the structural determinants of the environment and their potential efects in the future; however, this is sometimes not possible at all due to turbulence, intensity and speed of changes.

**Fig. 8.1** Egocentric strategic leadership

complex and turbulent environment; and also in fragile organisations going through a period of severe crisis or facing a threat to their survival. Egocentric strategic leadership is a consequence of domination of a powerful organisational leader, entrepreneur or manager, and their dominance in the relationships of key interest groups (Fig. 8.1).

Successful strategic leaders create a world of new possibilities.

Dietrich Mateschitz, Austrian entrepreneur who created the energy drink company and megabrand Red Bull, is an example of a dominant strategic leader who created a business opportunity by identifying a niche not yet exploited in the market.6 Trusting his gut feeling and intuition, he dismissed strong recommendations of market surveyors and other consultants who advised against investing in an energy drink business. And he was not wrong. Today, the company is a global leader. In 2018, nearly 7 billion cans of Red Bull were sold in 171 countries around the world.

<sup>6</sup>Red Bull was jointly founded by Dietrich Mateschitz and Tai businessman Chaleo Yoovidhya in 1987. Today, Mateschitz is faced with two great challenges: the matter of succession, owing to the fact that the company depends on him too much, and the matter of the product's potential negative health efects.

His vision, creativity and way of thinking signifcantly afected global business. Before he started this business, the energy drink industry was a minor and negligible one, with very low market demands. Mateschitz de facto created a need for this type of product. In time, he became the personifcation of the business he runs. Over the course of his term of ofce, he has challenged entrenched views of business, avoiding bureaucracy and administrative systems whenever he could. Basing a brilliant marketing concept on an association with extreme sports (which he himself prefers), he has created a completely new market niche, with loyal consumers of his product growing in numbers incredibly quickly from one year to the next. Te recent business expansion into popular sports, such as football, has opened-up completely new challenges and additionally strengthened the corporate brand.

Red Bull greatly depends on Mateschitz and his leadership. It will be interesting to observe how the succession problem will be resolved in the future of the organisation, without sacrifcing innovation, high level of success and reputation that the company enjoys at the global level.

Egocentric strategic leadership can be successful or unsuccessful, depending on the leader's capabilities and numerous contingency factors. It is riskier than other leadership confgurations because the asymmetry of power results in no restrictions, authorisations or other flters being set in order to obstruct plans and actions that may have unwanted consequences and jeopardise the survival of the organisation.

Successful leaders should sooner or later achieve balance between the autocratic leadership style, autonomy in decision-making at lower hierarchical levels, and empowering employees. Secondly, they must be aware of the fact that a high level of centralisation of strategic decision-making is appropriate for entrepreneurship-focused organisations with simpler structures. A more turbulent environment and a horizontal business expansion (diversifcation) likewise decrease the potential and space for an individual to hold all the cards.

Interaction of powerful strategic leaders with members of the organisation occurs on two substantively diferent levels: (1) within a circle of only the closest associates, and (2) with other members of the organisation, through direct or indirect communication and diferent methods of exerting infuence.

Leadership in the immediate organisational environment (*close leadership*) is based on established formal and informal relations between the leader and their frst line of subordinates in the chain of command. Primary associates play the role of advisors and/or intermediaries who convey the leader's messages and intentions to remote parts of the organisation.

Strategic leaders also fulfl their role by bypassing the frst layer of followers in the organisational hierarchy. Teir audience are the "more remote" members of the organisation and they often have to address them. Such *distant leadership* (indirect leadership) requires the use of visions based on symbolism and ideology, high-quality narratives and convincing rhetoric (Hunt, 2004; Vera & Crossan, 2004; Waldman & Yammarino, 1999).

Both approaches should be wisely combined in order for the leader to have a signifcant infuence at the smaller and larger social distance within the organisation, taking into consideration all relevant factors that may afect the defned objectives, mode of operation, and performance of the organisation.

#### **3. Horizontally Distributed Strategic Leadership**

Strategic leadership may be distributed and shared among a number of persons within the organisation.

Collective leadership is a consequence of horizontal and/or vertical distribution of roles which creates a tightly-knit or loosely connected group in charge of the strategic process. By including multiple members of the organisation in the tasks of defning objectives and making decisions, leadership becomes a collective act in which good cooperation, open communication, mutual trust and respect are prerequisites for success.

A group of persons assuming the tasks of strategic leadership is generally referred to as the *dominant coalition* (Cyert & March, 1963) or the *inner circle* (Tompson, 1967). It includes actors who share the power to make important decisions. Multiple dependencies derived from possession of or access to limited resources or emerging from specialisation of functions commonly result in the formation of a coalition in the upper echelons of the organisation.

Horizontal "distribution" of the strategic leadership function at the highest level creates a *top management team*, which consists of a group of highest-ranking managers in charge of making strategic decisions, outlining the vision and mission of the organisation, developing and implementing the strategy and other activities of vital importance for the organisation.

Decisions of the top management team are a function of the human and social capital of its members. It is a group that is in most cases led by the CEO or the chairman of the board of directors.

In complex organisations, the leadership function is almost always a joint activity involving multiple people, which is why it is necessary to consider their *collective* cognition, abilities and interactions (Hambrick, 2007, p. 334). In addition to individual characteristics, capabilities and experience of team members, characteristics and group dynamics of the dominant coalition afect the strategic leadership process and consequently afect organisational performance (Hambrick & Mason, 1984; Hambrick, 2007; Finkelstein et al., 2009).

Organisations are refections of their leaders (Hambrick & Mason, 1984), which means that the character of the organisation's direction and mode of operation lies in the domain of personalised strategic leadership, and organisational outcomes are directly infuenced by the organisation's leaders' values and defned guidelines.

A group of people does not act as an individual: it has diferent behaviour patterns that depend on characteristics of the group and mutual interactions of its members. Sometimes, interchanging strategic leadership emerges when strategic challenges and problems of diferent kinds appear at the organisation top, and the task to tackle them is assigned to teams of top managers (or teams of top and middle managers), comprising managers from diferent functional or geographical units, and when there is a collective willingness to trust those most competent for the situation at hand to take the lead. We mentioned earlier that interchanging leadership implies organisational leaders continually swapping their roles depending on their knowledge of the problem, context and challenges.

Horizontally distributed strategic leadership is a consequence of development and expansion of an organisation.

It is not easy to fnd a large organisation relying fully on a single strategic leader. Large corporations are as a rule managed by management teams. Te larger and more complex an organisation, the greater the need to include a larger number of people in leadership and management tasks. For example, Walmart, Sinopec, Royal Dutch Shell and China National Petroleum, four of the largest companies by revenue in 2018, all have management teams at the organisation top, which collectively manage the operations of their respective corporations.7

Te board of directors of Alphabet, the parent company which manages the world's largest search engine, Google, comprises, in addition to the founders Larry Page and Sergey Brin and CEO Sundar Pichai, eight more members who jointly manage all strategic and business operations.

Based on recent research by the Crowe network, the Swedish industrial giants Atlas Copco and Volvo have the best strategic leadership in Europe.8 Atlas Copco has a nearly 150-year-long tradition of successful operation at the global level. Its board of directors is made up of 13 members, while its top management team is made up of 9 members. Volvo, which is owned by the Zhejiang Geely Holding Group, also has a board of directors consisting of 13 members, and a management team of 12 persons.

Strategic leadership in such companies is positioned in the upper echelon of the organisation, which assumes activities and tasks of establishing the direction, development and programming of strategy, market positioning, coordination of all activities and processes, maintaining and improving organisational culture, and establishing comprehensive control mechanisms. Tis implies collective action in designing objectives, creating a common vision and ideology, attracting human resources, and

<sup>7</sup>Apart from horizontal distribution, large companies are also characterised by vertical distribution of strategic leadership.

<sup>8</sup> In 2018, Crowe published the annual index of the top organisations in terms of leadership (Fortune 2000 list of the largest companies), which was calculated based on the assessment of efects of growth, diversity, boldness and innovation in the companies over a fve-year period. For more details, see: https://www.consultancy.uk/news/17744/the-50-global-companies-with-thebest-leadership-team (accessed 11 August 2019).

creating mental models and encouraging social construction of reality from the perspective selected by the head people in the organisation.

One of the constructs that can be used to describe horizontally distributed leadership is the category of *strategic shared leadership*. It includes relations within the dominant coalition, initiated and implemented by the head of the organisation or by a smaller group of strategic leaders within the organisation. Pitelis and Wagner (2019, p. 234) defne it as *leadership of the frm, involving the purposeful sharing of strategic decisions, and the process of making and taking these, between the dominant coalition that is initiated and implemented by a focal strategic leader or a small group of strategic leaders such as the CEO and Chair of the Board*.

"Sharing" in this category pertains to careful coordination and directing of the team by one focal leader acting as *primus inter pares*. In addition to that, this can lead to partial depersonalisation of strategic leadership. It is *"de-coupled from any one person, and can survive the absence of any one individual"* (Pitelis & Wagner, 2019, p. 236).

Top managers are rarely a homogeneous group. Most gain their position through long-term functional specialisation, during which they acquire specifc patterns of thinking and acting. It is natural for them to have diverse, often diverging interests and objectives, risk appetites and approaches to decision-making.

Positions of members in the upper echelons are almost never equal and balanced. Asymmetry of power is natural in such situations: it is never equally distributed nor are the infuences of members equal within the organisation and outside it. Some members have greater formal authority, others have greater informal infuence, while others again have better access to information and greater managerial or functional expertise. However, they act as a team: strategic leadership is a process by means of which they jointly manage and share responsibility (Fig. 8.2).

Egocentric strategic leadership can grow into horizontally distributed strategic leadership by following the development and growth of the organisation. Microsoft is known for Bill Gates and his innovative strategic moves from the founding of the company to the moment when he withdrew from the leadership position. Today, it is managed by a group of excellent managers led by CEO Satya Nadella; a group that, according

**Fig. 8.2** Horizontally distributed strategic leadership

to certain sources, employees see as a very mindful, trustworthy one, and one that makes decisions that will beneft everyone involved.9

Te level of efectiveness of the top management team's work is directly related to knowledge, skills and managerial abilities of its members. Good cooperation between members likewise has a positive efect on the performances of the team and helps build *collective strategic cognition* (Kriger & Zhovtobryukh, 2013, p. 415).

Horizontally distributed strategic leadership can be in the form of a "team," one of the generic confgurations of Kriger and Zhovtobryukh (2013), if the conditions of lower internal complexity are present in a turbulent environment. "Teams" are recognised in the horizontal distribution of the function of strategic leadership at the organisation top, between diferent functional and geographical units. Te authors also

<sup>9</sup>For more details, see: https://www.businessinsider.com/comparably-companies-with-bestleadership-teams-in-the-us-2019-6#4-microsoft-22 (accessed 30 June 2020).

refer to "collective leadership" in this context, which was a term used by Friedrich et al. (2011). Dynamic changes in the "leader–follower" roles in teams depend on the types of problems being solved; leadership position is assumed by those with the most knowledge and information.

Furthermore, irrespective of factors that are beyond their direct control and that can signifcantly afect performance, over time, successful top management teams distinguish themselves from unsuccessful teams, based on results achieved. Even though factors of luck and coincidence can help leaders perform their tasks in the short term, this cannot be the case in the long run.

Tere is no guarantee that team management will be efective and good. Enron and WorldCom had top management teams that led the companies into ruin and simultaneously eroded the trust in the business system through criminal and unethical behaviour. Similarly, the management of Volkswagen shaped a strategy intended to position the company as the world's largest automaker, overtaking Toyota, while turning a blind eye to the use of software that enabled Volkswagen to (unsuccessfully) cover up the actual levels of emissions in their diesel engines.

In certain other companies, teams were not good enough or there was groupthink efect,10 i.e., minimisation of discussion and presentation of individual ideas due to a desire for harmony or group cohesion. Te intention to agree at any cost and minimise disputes can lead to a clouded view of reality and non-critical adoption of decisions which are often suboptimal or irrational and which are not suitable for the challenges arising from the competitive environment. In other words, top management teams have oftentimes failed to fnd adaptable responses and their actions jeopardised the survival of organisations they were managing. Examples include the upper echelons of General Motors, British Petroleum and Encyclopaedia Britannica.

Overcoming disputes and dysfunction in action is imperative for establishing efective strategic leadership. Unlike individual strategic leadership, strategic leadership by a group of people creates additional costs that are incurred in the process of achieving group agreement and

<sup>10</sup>Groupthink efect was frst described by Irving Janis (1971), who analysed in detail the efect of stress on adoption of group decisions.

cohesion. Such costs should be lower than the benefts gained by dividing roles and taking collective action at the managerial top in order for horizontally distributed strategic leadership to be preferred instead of other confgurations.

#### **4. Vertically Distributed trategic Leadership**

Strategic leadership function can be dispersed if leadership roles are divided among persons who hold diferent positions in the hierarchical ladder. Tis is a step away from the widespread view of strategic leadership as a function belonging to an individual or the upper echelons of an organisation, located at the top of the organisation pyramid.

Tere is no doubt that the process and practice of strategic leadership can be divided within the organisation. As a result, it can no longer be observed solely as a set of intentions and activities undertaken by top managers, but must also be observed as a phenomenon inseparable from specifc organisational structure and other characteristics of the organisation.

In the broader sense, it can refect the division of labour and responsibilities; preventing mistakes that may occur due to limited information and insufcient capabilities of an individual or a small group of managers; utilising the capacities of a greater number of persons within the organisation and strengthening the perception of interdependence within the collective.

In the narrower sense, it arises as a consequence of organisational settings or decisions of the managerial elite aimed at empowering organisational actors at lower hierarchical levels in the leadership and management processes (divisionally and functionally) and at ensuring organisational adaptability and required speed of reaction to changes of market and other contextual conditions.

Mintzberg (1983, p. 102) noted that companies strive for greater selective decentralisation of production and marketing functions rather than of the fnancial and legal functions; further in the text, he quoted Lawrence and Lorsch (1967), who pointed out that the power of decisionmaking is placed on that organisational level where information is most successfully gathered. Key coordination mechanism in such situations is mutual adaptation with the use of intermediary links within the organisation.

Vertically distributed strategic leadership is found in very complex and diversifed organisations which interact in a variable and unpredictable environment. Decentralisation follows the organisation's horizontal expansion into various activities and into various markets. Delegation of strategic decision-making power to lower-level managers and creating an adaptable, market-oriented organisational structure seems like an appropriate choice in such situations.

Such form of decentralisation, which Mintzberg calls *parallel vertical decentralisation*, is based on organisation involving divisions or strategic business units in which middle-level managers supervise the business processes and results of their respective activity. Such organisational units are established with the aim of ensuring organisational integrity of a complex company, while simultaneously providing autonomy for adopting part of the strategic decisions at the level of individual businesses.

Vertical dispersion of power follows the organisational structure appropriate for large diversifed organisations with various activities which usually compete on international markets (Fig. 8.3).

Structure of strategic leadership follows such organisational arrangement.

Efective management of complex business systems requires that responsibility for some of the strategic decisions be delegated to a part of the middle management, as well as that a clear division of labour be established between such middle managers and the upper echelons. Tis is an organisational decentralisation which is not comprehensive and which includes a limited number of actors. Its result is the establishment of a *coalition of top and middle managers*, which becomes the holder of the strategic leadership function.

Tere are numerous examples of highly diversifed organisations in which strategic leadership is vertically distributed. Among others, these include General Electric, Johnson & Johnson, 3 M, Siemens, Bayer, BASF, Hitachi, Toshiba, Sanyo Electric and Honeywell.

Vertical distribution of strategic leadership can be observed in most global business systems. For example, the multinational pharmaceutical

**Fig. 8.3** Vertically distributed strategic leadership

company Novartis, whose products are available in 155 countries around the world, has two basic divisions, which include a large number of business units in around 50 locations: (1) Innovative Medicines, comprising the strategic business units Novartis Pharmaceuticals and Novartis Oncology, which sell innovative patented medicines intended to enhance health outcomes to the beneft of both patients and healthcare professionals, and (2) Sandoz, global leader in generic pharmaceuticals and biosimilars, as well as a pioneer in novel approaches to helping people around the world access high-quality medicines.11 Te complexity of operations and the related challenges, as well as broad market distribution, afect the structure of strategic leadership as a collective activity of top management and managers of strategic business units of Novartis.

Managers at middle hierarchical levels in such companies have considerable organisational power and great decision-making discretion. Tere is a clear division of labour and a direct hierarchical relationship between

<sup>11</sup> See: https://www.novartis.com/our-company (accessed 30 June 2020).

the upper echelons and the heads of strategic business units, which is usually mirrored in the implementation of supervisory mechanisms, the basis of which are planning and performance-monitoring systems. However, both of these organisational layers are actors of strategic leadership: they actively participate in the dynamic adaptation of the organisation to forces and changes in the environment.

It is interesting to note that horizontally and vertically distributed strategic leadership can appear in the form of "clans," one of the generic confgurations of Kriger and Zhovtobryukh (2013) which emerges in the conditions of a placid environment and high internal complexity. Tis is distributed and shared strategic leadership: from the top toward middle management levels in the organisational hierarchy. Clans are *functionally, and often geographically, separated units of the frm whose members have a sense of kinship based on common background, functions, jargon, norms, values and/or culture* (Kriger & Zhovtobryukh, 2013, p. 413). Tere is a clear hierarchical structure with a unique chain of command, with the clan leader at the top. Strategic leadership is shared among all clan leaders, who generally constitute the top management team. Clans mostly exist in organisations comprising strong foreign subsidiaries which have complex internal operations, but relatively weak centralised control from the central organisational unit.

## **5. Networks of Strategic Leaders**

Apart from distribution of strategic leadership with a formally established structure, leadership may also appear depending on the types of tasks and challenges that are defned or spontaneously emerge in the group or collective and that are not directly linked to hierarchy.

Dispersion of strategic leadership is sometimes accompanied by alternating leadership roles, and sometimes by very vague boundaries between those who are leaders and those who should follow leaders. In an organisation of this type, there are multiple strategic leaders who perform tasks concerning strategic direction, bringing people together and building commitment of the staf.

Including a larger number of actors into strategic leadership processes is found in organisations which have the characteristics of an *adhocracy*, or which are based on strong mutual connection between the members due to an inspiring organisational mission, and/or which function successfully without a strictly established chain of command.

In such organisations, the organisational structure is not the key stage on which leadership roles are played. Strategic leadership does not depend on relations connected with positions of power, administrative systems or any other established rigid structural relationships that are based on the chain of formal authority and responsibility. Strategic leadership model emerges from fulflling the basic purpose and vision and replaces the undisputed and strict hierarchical leadership with a *network of leaders* who act across the entire organisation (Bower, 1997).

Networks are created by connecting individuals in all organisational directions: vertically, horizontally and externally. Tey have a fnite number of nodes and several links of varying qualities, valences and values. Infuences of diferent individuals are exchanged within the network, depending on the tasks and situations the organisation is facing.

Networks of strategic leaders commonly appear when organisations exhibit an organic structure, selective decentralisation, high level of horizontal specialisation of tasks, and strong reliance on experts and specialists. Instead of standardisation and formal authority, the main coordination mechanism is mutual adjustment (Mintzberg, 1983, p. 254).

Consultancy companies and law frms develop and expand based on networks of leaders that are created based on meritocratic principles and strict selection of members. Partnership and seniority systems help identify and select leaders with a relatively signifcant ability to infuence the organisation's modes of interaction with the environment. Movie and production companies function in a similar way; they are collectives organised around projects which include equal members.

Strategic leadership does not have direct locus in an individual or an alliance of a small number of leaders; it mirrors the *process* in which creative and innovative leaders emerge and assume power with a high level of decision-making discretion.

Organisations adaptively respond to challenges requiring the engagement of a network of persons assuming leadership roles in the organisation. Tis form can expand beyond the boundaries of the organisation and grow into a decentralised leadership network far removed from hierarchy, with cooperative relationships with leaders and other important environmental factors.

In addition to the above, a decentralised leadership network can arise regardless of organisational extension—whether as a realised idea, project or spontaneous entity—by connecting persons with leadership skills and other competencies who interact and assume leadership depending on the problem, area or capability.

Finally, the existence of a network of leaders does not mean the absence of leaders with a formal organisational position at the top of the hierarchy. Teir role greatly difers from the classic leadership role, but it is not to be ignored (Hernandez et al., 2011). Formal leaders should primarily motivate and guide network members to realise their leadership potential. Teir task comes down to encouraging, creating, and maintaining networks of leaders, developing the capabilities of collective leadership and processes of achieving agreement on the common vision (Balkundi & Kilduf, 2006; Friedrich et al., 2011).

Tey are coaches, mentors and teachers who create an appropriate ambience in which others act. Tey difer greatly from egocentric leaders who assume great power and who are—in and of themselves—the centre of key organisation activities.

We fnd that the phrase "formal leader," which is used by most other authors, is unsuitable, as it does not denote the specifcity of the role. Te power of formal leaders primarily arises from the potential to create a suitable context in which the network of organisational leaders will function successfully.

A similar concept is a leadership network, a generic confguration recognised by Kriger and Zhovtobryukh (2013) as the response to high internal complexity and turbulent competitive environment. Strategic leadership in such conditions does not have a locus in an individual, but in a network of connected leaders which is created as a sort of dynamic cooperative system of interconnected and interdependent actors who infuence each other and thus coordinate the tasks, objectives and vision of the organisation (Kriger & Zhovtobryukh, 2013, pp. 418–9).

Further to their typology, the authors explained how the Ford Motor Co. developed from the "star" model, which existed at the time of Henry Ford, into the "clan" model, which marked 60 years of the company's history until the great oil crisis, during which time strategic leadership was redesigned into the form of a "leadership network" model. Tey also gave other examples: Apple's transition from the "star" model, which marked the early stage of the company's development, to the "team" model starting in 1985, and fnally the "leadership network" model as of 2007; and Honda, which was an example of the "star" model until the late 1980s (or in other words, during the time of Soichiro Honda at the helm), after which period strategic leadership consolidated into the form of a "leadership network."

Non-proft global organisations show the development of networks of leaders, which emerge as crucial elements in their existence.

Te chain of formal authority and direct supervision are not the dominant coordination mechanisms in such organisations, considering their purpose and reasons why new members join. Members alternate at formal leadership positions in order to prevent organisational leaders from entrenching in their positions. Strategic intent unites and inspires members, while standardisation of rules of conduct and the desired output help achieve organisational coherence and harmony. Strategic leadership emerges and is dispersed across the entire organisation in networks of large numbers of leaders who, regardless of formal relationships, take initiative, encourage change, create and manage activities and programs within the community.

Good examples include Lions, Rotary International and Kiwanis, global humanitarian organisations with numerous members working in several thousand clubs around the world. Te basis for their successful operation is a network of leaders at all levels who cooperate in charity projects at local and global levels. Leadership appears in the alternating form: terms of ofce last for one year and members are encouraged to assume leadership roles. Special attention is given to educating members regarding leadership in order to create leaders capable of shaping the future of the organisation and the community they belong to.

Organisations and social movements such as Medecins Sans Frontiers (Doctors Without Borders), Action Against Hunger, CARE, numerous movements fghting for rights of vulnerable groups and minorities, etc., likewise lean on networks of leaders.

Moreover, networks of business and political leaders are also established with a view of infuencing social developments. For example, the World Economic Forum has the ambition to bring together the world elite, as it *engages the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas*. 12 Similarly, Future Leaders Network brings together the next generation of political, economic and social leaders in Great Britain, aiming to *enable all young people to deliver positive impact in the world, by ofering young people from all backgrounds access to meaningful, purposeful and practical opportunities to develop their leadership skills so as to realise their full potential* (Fig. 8.4).13

#### **6. Collective as a Strategic Leader**

Unlike organisations and movements where, due to specifc internal and external situations, networks of leaders complement and sometimes swap leadership roles based on hierarchical relationships, there are organisations in which leadership indisputably has a fully collective dimension.

Members of a collective jointly assume the leadership role and there is no individual or group of leaders in charge, which is why it can be said that the collective *de facto* acts as a leader.

Unlike joint or shared leadership, in which personalities of individuals and their relationships play an important role, collective leadership is generally separate from any person and is not dependent on any person. Defned roles and rules of conduct, members' commitment to common values and their focus on democratic leadership ensure a framework in which the leadership structure can survive regardless of the contributions of certain individual members. Mechanisms and processes of democratic decision-making are embedded into the administrative system and procedures used to resolve issues and problems that may be imposed on the group.

<sup>12</sup> See: https://www.weforum.org (accessed 30 June 2020).

<sup>13</sup> See: https//futureleaders.network (accessed 30 June 2020).

**Fig. 8.4** Networks of strategic leaders

Such a confguration of strategic leadership may appear in organisations if the structure of formal authority and responsibility collapses, i.e., if the organisation becomes fully decentralised. Full decentralisation removes structural elements linked to chains of command and hierarchical positions, so that organisational leadership ceases to have a personalised dimension and emerges as a collective phenomenon.

Every or nearly every member of the organisation contributes as an actor to integral strategic leadership. Te collective is recognised from the outside as a coherent leadership entity, while internal group dynamics and processes of achieving agreement model diferent ways of internal coordination and dynamic interaction with the environment.

Individuals' initiatives appear from time to time and are tested in the processes of group harmonisation and decision-making, such as the *direct democracy model*, i.e., the model of voting on all important aspects of the organisation. However, once it becomes "property" of the collective, the initiative acquires a collective attribute and ceases to be associated with its proponent.

Depersonalisation of strategic leadership appears as a mode of operating and achieving agreement in various social networks where commonly used coordination mechanisms relying on position-based power cannot be imposed.

If a social network has the properties of a collective and clear rules regarding member conduct, e.g., a social initiative or movement not led by an individual or a group, a confguration of strategic leadership may emerge in which strategic leadership will be a collective asset. Te same goes for non-hierarchical organisations such as project groups, whose members are equal and wield approximately the same infuence.

It appears important to point out that such confguration of strategic leadership is oftentimes of a temporary nature, considering the (mostly) diferent abilities, tendencies and aspirations of members of the organisation. Symmetry of power, which is a natural consequence of collective leadership, generally does not last long: typically, there will be a person with leadership qualities who will wish to assume leadership or have a dominant infuence on strategic leadership processes (Fig. 8.5).

Cooperatives are organisational forms in which collective leadership often emerges as the optimal solution.

A cooperative is a voluntary, open and independent organisation led by its members; through the work and other activities of the cooperative, or through the use of its services, members rely on togetherness and mutual assistance to fulfl, improve upon and protect both their individual and common economic, social, educational, cultural and other needs and interests, and to achieve objectives for the attainment of which the cooperative has been established.

It would be difcult to enumerate all types of cooperatives. Tere are various consumers', producers', agricultural operators', workers' cooperatives, credit unions, and numerous other types of cooperatives. Regardless of the form, the strategic leadership function is common to all members of the cooperative, who base their actions on equality, fairness and solidarity.

**Fig. 8.5** Collective strategic leadership

Each member of the cooperative gets one vote and cooperation is the key basis of joint action; decisions are made based on a majority vote and the elected leaders are an extension of the members (Babić & Račić, 2011).14

Te cooperative form of organisation can also be a characteristic of large organisations that align collective leadership with confgurations of distributed strategic leadership.

Te Basque *Mondragón* is one such organisation made up of multiple autonomous and independent cooperatives competing on international markets and using democratic methods in their organisation; the objective is to create jobs, enable personal and professional development of employees and develop their social environment. It is a large network of

<sup>14</sup>Te authors noted that, according to (10-year-old) data of the European Commission, the European Union is home to 250,000 cooperatives, which include 163 million members and employ 5.4 million people. According to data of the UN and the International Co-operative Alliance, around 100 million people work in more than 750,000 cooperatives worldwide.

103 cooperatives, which own 154 branches and 24 integrated ofces, as well as 15 R&D centres, with more than 80 thousand employees on 5 continents. *Mondragón* is the leading Basque business group and the tenth largest in Spain.15

Strategic leadership of *Mondragón* is extremely democratic and dispersed. Te organisation is structured in 14 segments, each consisting of autonomous cooperatives active in similar or related activities. Governing bodies are the General Advisory, the Standing Commission and the Cooperative Congress. Te General Advisory, which is the key governing mechanism of the corporation, consists of vice-presidents in charge of each segment. It is important to emphasize that the decision-making responsibility lies on individual cooperatives, and not on the segment, which primarily has a coordination role. Cooperative Congress is the highest body, which defnes the common strategy for action in the network of cooperatives.

Te principle of *Mondragón* is that all decisions that can be adopted at lower levels actually be adopted there, and not at higher organisational levels.16 Participation is greatly encouraged, as is collective decisionmaking. Each member may become involved in the work of the governing bodies, provided that such member receives sufcient support by other partners in the Advisory, and performs his/her duty with no fnancial compensation. Likewise, any member can become a director, provided that the professional and managerial requirements that come with the responsibility of such position are met. Strategic leadership is depersonalised and the collective is always in charge, regardless of who performs the formal leadership functions.

<sup>15</sup>For more details about *Mondragón*, see Jurić (2016).

<sup>16</sup>Consistent application of subsidiarity is the basis of strategic leadership in such a large cooperative collective.

See: http://www.mondragon-corporation.com/CAS/Qui%C3%A9nes-Somos/Estructuraorganizativa.aspx (accessed 30 June 2020).

#### **7. Relationships between Generic Confgurations**

Generic confgurations rarely appear in their "pure" forms. Strategic leadership in an organisation is in most cases a combination of several settings and styles, which depends on many situational factors. Characteristics of a single confguration may be more dominant and identifable, but this is not a rule.

Dimensions used for identifying confgurations are (1) number of actors assuming the strategic leadership function and (2) relationship toward the chain of formal authority or the positions in organisational hierarchy associated with strategic processes.

As pointed out, egocentric strategic leadership denotes a situation in which the strong personality, ability and capacity of a single person fully direct organisational existence. Power is asymmetrically distributed across the organisation and decision-making is highly centralised. Leaders are identifable in the environment as distinct symbols of the organisation. Egocentric leadership cannot be turned into organisational capacity or routine; it can be a distinct competency of the organisation, but relying solely on it is risky.

Sooner or later, egocentric leadership is transformed into distributed strategic leadership.

Limitations of cognitive, information and action-related nature, environmental complexity, as well as growth and expansion of the organisation, eventually require the organisation to distribute the function of strategic leadership among multiple persons with managerial authority in the organisation. Strategic leadership is thus established as a group or organisational characteristic (Fig. 8.6).

Horizontally distributed and vertically distributed strategic leadership rely on formal positions in the organisation and on the chain of authority and responsibility, i.e., on the hierarchical structure of the organisation.

Horizontally distributed strategic leadership describes a coalition in the upper echelons, i.e., a top management team that jointly manages the strategic processes in an organisation.

**Fig. 8.6** Generic confgurations of strategic leadership

Vertical strategic leadership mirrors the decentralisation of the strategic function and the delegation of important decisions to important middle managers.

Both confgurations are based on the establishment of a *dominant coalition* that assumes a crucial role in leading the organisation. At frst glance, this is a good solution, but this is not always the case. Distribution of the leadership function decreases the costs of information in the long term, but it also increases the costs of negotiation and implementation (Kriger & Zhovtobryukh, 2013, p. 421). If there are multiple actors involved in strategic leadership activities, the number of situations in which it is necessary to deal with resolving potential disputes, coordinating, reaching an agreement and arranging all relevant aspects grows (Table 8.1).

Furthermore, departure from hierarchy is characteristic to organisations where strategic leadership is not linked to formal power and where proactivity and adaptability are associated with initiative, innovation, creativity and quick decision-making, regardless of administrative rules.



Building a network of strategic leaders helps shape the strategic intent and achieve consistent strategic implementation. Moreover, a network of leaders can be a spontaneously-emerging or a designed organisational entity created with the aim of extending social infuence and establishing agendas that may beneft both individuals and the society as a whole.

Finally, strategic leadership can be a collective matter in the true sense of the word. Joint action is embedded in organisational norms and can lead to complete depersonalisation of strategic leadership.

In such cases, the collective is both the object and the subject of leadership. Direction, connection and dedication of members are achieved through agreement, democratic decision-making and establishing settings in which the leadership process is broadly dispersed to all members, as is the case (for example) in smaller groups with symmetrical power or both small and large cooperatives with clearly defned rules that do not permit aberrations or concentration of position-based power.

#### **References**


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# **9**

## **Strategic Leadership from the Social Network Perspective**

#### **Social Network and Leadership**

Te collective can be seen as a place of interwoven interests that creates socio-political and economic relations within its boundaries and beyond; in this context, strategic leadership can be seen from a diferent perspective, as a relational and multi-level phenomenon that involves social processes connecting individuals and other social entities.

Whittington (2001, pp. 26–27) noted that *people's economic behaviour is embedded into a network of social relations that includes their families, country, professional and educational backgrounds, and even religious and ethnic groups they belong to*. As a result, a strategic leader's reality cannot be understood without understanding the *social embeddedness* of those afected by that reality (Granovetter, 1985; Whittington, 2001, p. 26).

Strategic leadership is interwoven with relational processes between actors operating at multiple organisational and interorganisational levels (Cullen-Lester et al., 2017). Te social processes that connect actors indicate the importance of network relations when it comes to leadership; or in other words, the need to develop and manage connections and relationships within organisations and beyond them (Carmeli et al., 2011).

Social networks are important when it comes to strategic leadership. Numerous empirical studies highlight the importance of network structures as factors connected with superior performance both of the organisation and of its managerial elite (Burt, 1992, 2005; Krackhardt & Porter, 1986; Mehra et al., 2001; Poppo & Zenger, 2002; Zaheer & Soda, 2009). Networks in which leaders themselves are embedded are key when it comes to individual and organisational efectiveness.

Te importance of understanding interactions between strategic leaders, organisational members and other important factors encourages the development of discourse that departs from a static, one-dimensional perspective of leadership.

A network is characterised by a particular kind of connection that is usually more important than the actors that constitute it. People's inevitable embeddedness in networks reveals the weakness of the perceived position of a "free individual." Tings that happen to others via networks can reach us and have a major impact on our lives. Te illusion of being separate from the all-encompassing social fabric in which everyone is mutually connected may help relieve anxiety for a while, but it often clouds the reality of an individual as merely a "node entity" in a myriad of social networks that are outside of their control.

Christakis and Fowler (2011, p. 38) underlined: *If we want to understand how society works, we need to fll in the missing links between individuals. We need to understand how interconnections and interactions between people give rise to wholly new aspects of human experience that are not present in the individuals themselves. If we do not understand social networks, we cannot hope to fully understand either ourselves or the world we inhabit*.

Direct networking has an information-based limit that is conditioned by evolution. On average, people take part in direct networks of no more than 150 individuals. Tis is the so-called *Dunbar's number*, which represents the cognitive limit to the number of people with whom one can maintain stable social relationships (Dunbar, 1993). Tis is a group of persons with whom one can continue a meaningful relationship after a time of absence without the need to re-establish the initial positions and viewpoints.

In larger networks, information that fows through the network gets fltered and modifed; the network does not have the characteristic of directness, and actors interconnect through others in a smaller or larger number of steps.

Networks can have shorter or longer paths between participants. Te shortest path is found in networks where all actors can reach everyone else via a single tie. Te longest paths never exceed fve or six steps, even in the largest of networks.

Unbelievable as it sounds, it is possible to easily reach anyone on the planet by making six or fewer social connections (steps), as demonstrated by the famous experiment conducted by social psychologist Stanley Milgram in mid-1960s, and later verifed by a similar experiment in the virtual world performed by Dodds, Watts and Muhamad by e-mail in 2002. Any person on the planet can be connected to any other person on the planet through a chain of no more than six individuals. Tis is referred to as *six degrees of separation*. 1

Te social network analysis helps to focus the lens through which we view networking of people on all levels. It gives a solid framework for analysis of various organisational phenomena at a micro-level (leadership, power, trust, teams, and alike) and at a macro-level (relationships between organisations and enterprises, strategic alliances, network management, and other) (Miles, 2012, p. 297).

A social network normally refects a cluster of same or similar ties. It is also possible to analyse diferent types of network relationships between the same actors, depending on the type of ties observed. Tis kind of multidimensional analyses can provide a better insight into contentrelated aspects of relationships between members, but they can also create confusion and unclarity when one attempts to arrive at an allencompassing interpretation.

Tere are many possible types of ties in social networks. Tey can be grouped in diferent ways, but for the purposes of this book, we have opted for the adapted taxonomy of four types of mutually interwoven ties

<sup>1</sup>Milgram's experiment was performed by sending a letter to several hundreds of persons in Nebraska, who were tasked with forwarding the letter to a personal acquaintance so that they in turn would forward it to a business man from Boston, who was thousands of kilometers away. Participants were instructed to send the letter to persons they believed would fulfl the task (reach the businessman) the fastest. On average, it took only six steps to complete the task (Christakis & Fowler, 2011, p. 33).

(Blau, 1964). We recognise social fabric held together by: (1) *hierarchical ties*, which refect the relationships of power and authority (managing director, sector director, head of department, or other); (2) *reference ties*, which validate status and/or identifcation-relevant relationships created by belonging to a special group (e.g., member of a supporters' group, university alumni, or member of a political or civil movement); (3) *social ties*, which refect emotional, afective and other ties (e.g., kinship, friendship, trust, advice-giving, information exchange); and (4) *exchange ties*, which show the market-based, fnancial, competition-related or other business relations between members of a network.

People don't usually think of themselves as of indivisible constituents of social networks. However, the reality proves otherwise, especially nowadays, when we are living in a world full of limitless potentials for networking in a virtual world, where relational one-dimensionality and tendency to over-infate has completely substituted the original quality of human relationships.

People are heavily infuenced by their relationships with others and by the structure of the network that they are part of (Granovetter, 1985). Network positioning defnes an individual's social position. Various positions inside the network either facilitate or hinder access to resources, and individuals who occupy the central position in the network have irreplaceable advantage (Gnyawali & Madhavan, 2001). Moreover, the structure of the network itself can facilitate or make it harder to reach resources, thus afecting the range of accomplishment available to the individual (Burt, 1992, 1997; Granovetter, 1973; Coleman, 1990).

Tere are two diferent perspectives on the social network construct.

Social network can be observed: (1) as a whole, i.e., as a sociocentric *network*, encompassing all its nodes and ties in their entirety (as shown in the hypothetical social network in Fig. 8.6) or (2) as an *egocentric network*, which outlines and analyses relationships between an individual and parts of the network formed around such individual as its centre.

For instance, if we observe a highway construction project with several construction companies participating in it, then a sociocentric network would represent the totality of relationships between all actors who are taking part in the project, interacting and communicating one another.

An association of MBA students also has the characteristics of a sociocentric network, just like a network of formal and informal ties that connect middle management in a company.

If, on the other hand, we observe ties between a CEO of a large food company that establishes and maintains relationships with everyone that the CEO comes into contact with in the course of doing business, then we are efectively analysing an egocentric network.

An egocentric network comprises a central node (the "ego"), other actors that surround it (the "alters" and all the ties that connect them (Borgatti & Foster, 2003). Everyone who comes into direct or indirect contact with the CEO represents their "alters" and acts as a constituent of their social network.

Detailed observation and breakdown of egocentric networks of strategic leaders can help understand how the leadership process is efected and how it can be improved.

Leaders are rarely able to directly reach every person who is important for the performance of their tasks. It is important to have high-quality connections and networks in order to build social capital that is so greatly needed in an age of information intensity and variability of the environment.

On a daily basis, leaders create, improve, maintain and change network structures within which diferent transactional relationship based on reciprocity are established. Needs, expectations and aspirations are developed and expressed in such networks. Networks can be built on power-based, interest-based and infuence-based relations, friendship bonds, exchange of services, data and information, etc. Besides the simple structures where simple, direct transactional dyads can be observed, complex network structures emerge from multiple relations that are not easy to grasp and conceptualise or systematically analyse (Fig. 9.1).

It is a common practice to observe networks established by leaders within and without the limits of the organisation, although some networks extend regardless of the fuid lines that by convention denote the division between the organisation and its environment.

**Fig. 9.1** Leadership network

### **Relational and Structural Embeddedness**

Tere is a myriad of all kinds of forms of social networks that difer by their main characteristics and levels of structural and relational network embeddedness.

*Relational embeddedness* indicates the content and quality of relations within the network, or as noted by Slišković (2014), it indicates whether there are: (1) afective or cognitive ties (McAllister, 1995; Chua et al., 2008; Casciaro & Lobo, 2008),2 (2) strong or weak ties (Granovetter,

<sup>2</sup>Afective ties are characterised by relationships between members that are based on socioemotional support (afective trust), whereas cognitive ties are characterised by relationships based on advisory support (cognitive trust).

1973), (3) positive or negative ties between members of the network (Labianca & Brass, 2006), (4) relationships based on similar or diferent perspectives (McPherson et al., 2001), and (5) hierarchical relationships with individuals in subordinate or superior positions (Chua et al., 2008).

It is particularly important to understand the concepts of weak and strong ties in a social network. Te strength of a tie depends on emotional intensity and history, interactional frequency, time and other resources invested, and relational reciprocity in the relationship between actors that are part of the network. Individuals cannot have too many strong ties, considering the restrictions of time and space. For this reason, the quality of their weak ties is of fundamental importance to the strength of their position and achieving an advantage within the network.

Weak ties are very useful for acquiring new information and knowledge (Granovetter, 1973), whereas strong ties are useful when it comes to transferring tacit knowledge (Hansen, 1999). People tend to interact and communicate more with those they feel strongly socially and emotionally connected to. Te level of emotional connection or commitment is extremely important because it infuences the actor's motivation to provide assistance or support to others and consequently *strong ties have greater motivation to be of assistance and are usually more readily available (compared to weaker ties)* (Granovetter, 1973, as cited in Slišković, 2014, p. 78).

Strong ties bring together and connect people within a group, while weak ties act as important bridges between groups (parts of the network) and important building blocks for extended social networks through which we acquire or disseminate resources in the form of information, knowledge, infuence, reputation or other.

Slišković (2014, p. 59) noted the argument of importance of weak ties made by Granovetter (1973). Person A has a group of close friends, but also a lot of acquaintances who mostly do not know each other. Each of those acquaintances has a small group of close friends of their own, which means that one such acquaintance - B - also has a connected group of close individuals who are not acquainted with A. Te connection between A and B (a weak tie) connects two separate groups of people and helps infuence and information spread within the network even beyond the narrow space limited by the boundaries of small groups. In other words, those who have no ties to their acquaintances will not have access to information from a remote part of their social environment and they will only be limited to sources of information obtained from their closest friends (Granovetter 1973).

People at the far reaches of our social universe, reachable only through weak ties, can be the source of important, idiosyncratic, inaccessible or completely new resources that are not available in the close-knit networks that surround us. Such resources are that much more valuable because they cannot be accessed independently through direct contact with persons close to us.

Leadership of larger organisations and social networks has to be based on developing and managing weak ties. Tey help expand the scope of the leader's infuence and enhance distribution of messages sent, but also provide better feedback on common action in remote organisational or network segments. It can be said that having a greater number of weak ties is a very desirable characteristic in persons who assume the role of organisational leaders.

Another fundamental characteristic is *structural embeddedness*, a characteristic of a social network that depends on the number and constellation of nodes and ties that are mutually interwoven to create its fabric.

Networks can be very small, with only a small number of nodes (e.g., a network of three individuals) but they can also be large (comprising, for example, hundreds of thousands or even millions of actors). Tey can be all-virtual or all-physical; or a combination of the two.

Moreover, networks also difer by their density and level of cohesion (Ahuja et al., 2012). Density pertains to the number of ties in a social network with respect to the maximum possible number based on the number of nodes. Te maximum possible number of ties in a network is *n*(*n −* 1) / 2, where *n* is the total number of nodes in a network.3

Density is a measure of cohesion in a social network: it indicates its internal connectedness and degree of interwovenness. Where social

<sup>3</sup>Tis applies to networks with non-directional ties, and when it comes to egocentric networks, the number obtained in the formula should be reduced by one to arrive at the total number of members in a network. In networks with directional ties, the formula for the number of ties is *n*(*n*−1).

networks are dense, it is more likely that members will share similar attitudes and perceptions of the leader.

Another important notion is *network robustness*, which measures *how difcult it is to disconnect the network by removing nodes or lines* (Borgatti et al. 2013, p. 155). Te more nodes we need to remove to disconnect the network, the greater the cohesion within it, and vice versa.

Dense networks are those in which leaders are surrounded by a large number of followers already on the frst relational level. Strategic leaders with strong charisma or potential to inspire others are networked with the collective members directly, creating strong emotional connections with them and skipping the intermediary nodes.

#### **Structural Holes in Networks**

Networks can be socially closed or open, exhibiting larger or smaller holes in their structure.

Socially closed networks are characterised by cohesion and strong ties, whereas open networks are characterised by numerous structural holes and weak ties between actors.

Closed networks have certain advantages and can be the source of social capital. Tey are characterised by the quick spreading of reliable, high-quality information, building greater trust, developing a sense of responsibility, greater level of cooperation and mutual assistance, fewer instances of opportunistic behaviour in the network due to reputational risk, and other (Coleman, 1988).

Slišković (2014, p. 68) noted: *Te fact there is more trust in closed networks means there is a greater threat of sanctions in case of breaking the norms within the network*, and cited Coleman (1990, p. 318) who underlined that *[r]eputation cannot arise in an open structure, and collective sanctions that would ensure trustworthiness cannot be applied* (Coleman, 1990, p. 318). Slišković further noted that this type of network gives its members greater reliability when it comes to exchanging information and thus reduces transactional costs of information validation.

We associate leadership in socially closed networks with situations that normally occur in smaller groups with mutual interactions of all members. Leadership of smaller work or project teams can be analysed, among other things, based on structural characteristics of that type of networks where there is a direct connection between the leader and the followers.

Tis possibility is eliminated in larger organisations and social networks. Te need to extend the scope of infuence and informational connectedness focuses attention to indirect ties that the leader has with the actors in the network. Besides, openness of networks is naturally prominent in larger collectives where social closing cannot be achieved even if there were an intention to do so.

Tat is why strategic leadership can never be based solely on networking in a tightly-knit group of close co-workers with whom one exchanges advice, information, ideas and other resources. Without the spreading of infuence across the entire organisation one cannot actually assume the role and tasks of strategic leadership.

*Structural hole theory* proposes that leaders should structure their networks by using a relatively low number of ties to reach diferent network constituents and create better access to resources and information (Burt, 1992). Tis is based on the assumptions of Granovetter (1973), who found that weak ties were more important than strong ties in situations when information and knowledge are shared within a network.

Structural holes exist when individual components of the network are not mutually connected in any other way except through ties found in special members of the network referred to as brokers. Social network brokers connect such unconnected structural components and hold the most infuential position in the network (Burt, 1992, 2000). Teir role as potential leaders emerges in and of itself from the position of an intermediary in the network.

Let us take the example of the two networks presented in Fig. 9.2. In the network shown on the left, the position and strength of the leader does not depend on the position in the network, because all members are mutually connected independently of the leader. Tis is a dense, socially closed and completely interwoven social network with the maximum possible number of ties between eight participants. Te position of the leader (represented by the black square) does not contribute to network

**Fig. 9.2** A socially closed and a non-redundant open network

efciency, and the leader does not exhibit a greater degree of centrality than other members. If the leader were to be removed from the network, that would not substantially change its structural determinants.

In the non-redundant open network, shown on the right, there are three separate network fragments that are mutually connected only via the leader (also represented by the black square). With three ties, the leader bridges the structural holes and connects the fragments into a single network that is completely dependent on the leader. Without the leader in the network, actors from the left fragment would not have any connection with actors from the central and right-hand fragments of the network, and vice versa. Te network as a joint entity would *de facto* be inexistent. Re-connecting the parts of a network torn as described above would create additional transactional costs in terms of additional time and efort required to establish the connections between the separate components.

Te network-based perspective of strategic leadership involves (1) developing, identifying and utilising weak ties and (2) appropriate spanning of structural holes in fragments of important social networks.

To paraphrase Burt (1992, 2000), strategic leaders need to be skilled intermediaries who bridge the structural holes between diferent parts of the social network in order to achieve maximum possible efects in the given circumstances.

Te leader's mission is to gain and maintain network advantage. If the leader connects separate components of the social network, then, according to theoretical postulates, they have better access to information and other resources than other actors do. Burt (1992) underlined that, in networks with numerous structural holes, *leaders and managers manage information better than if they were to control them through bureaucracy. Tat way, information fows more quickly among a larger number of people than would be the case if ofcial memos were sent*.

Burt argues that efciency and power are far removed from redundancy in networking, i.e., from additional leaders' networking with others with whom they are already directly connected. Efcient networks are directly connected by having non-redundant ties, and the best ones are those where each tie opens up the door to another social world. If direct ties cross structural holes in the social network, leaders strengthen their position and exert greater infuence, enjoy better access to resources and greater scope of information.

Successful bridging of structural holes ofers other benefts as well. Strategic leaders have greater social capital, better potential for coordination and infuence in the network, and a more comprehensive view of the overall situation; they can monitor information fow better, transfer information to diferent parts of the network faster, and recognise and resolve organisational issues more efciently.

Te position of a bridge in the network provides better prospects of innovation, growth and network infuence. Leaders holding those positions have a broader perspective, allowing them to see the bigger picture, and they have easier access to remote network worlds, compared to other actors. Te number of their connections does not have to be related to the position of the bridge or broker: many important weak ties are not easily noticeable by others in the network (Hoppe & Reinelt, 2010, p. 603). Normally, leaders who are at the same time network brokers enjoy a special status due to the reputation and infuence they have on members of their network (Burt, 1992; Lin, 1999; Slišković, 2014, p. 64).

Tis form of egocentric network implies, in an ideal network strategy, inclusion of fewer trusted associates with whom the leader maintains strong ties and who are in charge of bridging the mutually weakly connected or unconnected parts of the network, and of managing the relations in their own parts of the network (Burt, 1992, 2005).

To use strategic leadership jargon, well-connected managerial elites (e.g., boards of directors, teams of top managers or dominant coalitions) need to develop "network extensions" toward separate fragments, which get connected and integrated via their role as intermediaries.

Teoretical sources generally recommend the division of a social network into parts that do not overlap, in order to reap the benefts of social capital through intermediation of information and other resources between the divided groups (Balkundi & Kilduf, 2006).

Capable leaders need to position themselves in the network structure in a way that ensures maximum efects of networking. Te best leaders recognise the competitive advantage that lies in bridging holes in their networks and they tend to create new networks with many structural holes (e.g., Burt, 2000).4 Research goes in favour of this hypothesis, having shown that the most productive teams are those with strong internal cohesion and members who have their own networks with numerous structural holes (Reagans et al., 2003; Zaheer & Soda, 2009).

#### **Strategic Leadership Networks**

Leadership is *ipso facto* a type of social network characterised by processes of exerting infuence that connect members of that network (Carter et al., 2015).

Tere are numerous intertwining formal and informal social networks that surround strategic leaders. Tey participate in the construction of the leader's reality: they facilitate access to information, resources and available options, and expand the decision-making space.

<sup>4</sup> In their research, the authors concluded that successful US and French managers show a tendency to networks with a signifcant number of structural holes.

Formal networks are the result of contractually established or otherwise imposed lateral and/or hierarchical relationships, which are mostly based on certain imposed rules regarding the division of labour and activities, and on chains of formal authority and responsibility.

Informal networks are created voluntarily (without anything being imposed): the relationship between the leader and other participants involves the creation of cognitive relations (based on knowledge and information), and/or afective relations which involve some form of emotional connection (McAllister, 1995; Chua et al., 2008)

First and foremost, the social network creates room for the leader's and other actors' action, which is guided (to a great extent) by their shared interpretations of events and activities. Ties between members provide access to information in the process of discovering meaning and interpreting reality in circumstances that are not entirely clear (Weick, 1998).

Acceptance and adoption of a network-based perspective is a necessity for leaders: it is the prerequisite which, if missing, makes it impossible to make the right moves and make sense of the world beyond the boundaries of the network of close associates. As Balkundi and Kilduf (2006, p. 434) claim: *Leadership requires the management of social relationships. Starting with the cognitions in the mind of the leader concerning the patterns of relationships in the ego network, the organizational network, and the interorganizational network, social ties are formed and maintained, initiatives are launched or avoided, and through these actions and interactions, the work of the leader is accomplished*.

Networking and creation of social connections are some of the distinctive traits found in the best of leaders.

It is beyond contestation that a strategic leader is a true *homo dictyous* (network man), who has to contemplate the world around him by keeping in mind the characteristics and dynamics of social networks to which he belongs. Christakis and Fowler (2011, pp. 211–212) coined this very appropriate term (from Latin "homo" meaning man, and Greek "dicty" meaning network), to refer to a perspective that distances man from the pure selfshness inherent in Mill's *homo oeconomicus* model, and moves him toward selfessness, owing to the need to take into consideration the needs and welfare of all those around him.

Leaders have to be able to understand the existence, nature and structure of important ties within their social networks: not only those close to them and surrounding them, but also those that are remote from them, as well as ties between other relevant actors in the ambience in which their leadership is manifested.

Te method and quality of networking with others and the structural determinants of their social networks defne strategic leaders' relational and resource success. Teir efciency depends on the capacity to utilise and improve their relative positions in intra-organisational and interorganisational social networks. Networks of relationships and connections facilitate access to and creation of important resources, thus helping increase the leader's efciency and efectiveness (Burt, 1992, 1997, 2000).

Strategic leaders need to get involved in important social networks and delve into their essence in order to better infuence others and achieve their intentions and goals. If they are well-connected, they are more likely to have greater power in the network. Good position in the network can guarantee that they will need to invest less efort in getting people on board with the direction and patterns of action that they advocate.

Diferent layers of networking can be identifed among the upper echelons of an organisation.

*Te inner circle* is the network that the leader builds and maintains with actors with whom they are directly connected, in terms of physical presence. Tese are people with whom the leader directly communicates, interacts and exchanges ideas and information. In most cases these will be the leader's closes associates: a senior management team, a layer of managers with whom the leader communicates directly, various consultants, supervisors, major external partners, and friends. Te inner circle is mostly characterised by strong ties.

Te leader, alone or together with a handful of top managers, holds the central position and instruments of power in the inner circle. All other members of the collective are situated at the periphery of the social network.

A strategic leader can have either a small or a large inner circle. A large number of members of the inner circle increases the level of social capital if ties between members are based on positive emotions, exchange of knowledge and experiences, and expected synergy efects deriving from networking. On the other hand, a larger inner circle can cause certain negative efects as well.

Networking within the organisation involves not only the leader's direct ties but also indirect ones within the boundaries of the organisation.

Most actors in the network do not have direct access to the strategic leader, nor does the leader have such access to them. Relationships with members of the collective who are outside the inner circle are manifested twofold: via intermediaries who usually assume managerial roles in middle or lower management, or through direct impersonal communication via written messages or speeches intended to create an emotional connectedness and a feeling of togetherness. Tis encourages collective alignment and creates space for understanding and identifying with others, which facilitates the process of exerting infuence in the leader-followers network.

Inspiring visions and spirited narratives reach organisational members the easiest if they are communicated via developed communicational paths within the organisation. Te more developed those networks are, the greater the success in transferring and communicating important information within the collective. On the other hand, developed social networks provide the possibility of including more members in the processes of creating and shaping strategy, as well as obtaining important feedback before they are turned into organisational action.

In this context, one has to take into account the three degrees of infuence rule (Christakis & Fowler, 2011, p. 34). Everything a leader (or any other actor in a network) says or does afects the closest associates in the inner circle (frst degree), the contacts of those closest associates (second degree) and contacts of the closest associates' contacts (third degree). Beyond that network horizon of three degrees, the infuence gradually disperses and weakens, and insights into behaviour, feelings and information transferred via the social network diminish. Te opposite applies as well: the leader is under relative infuence of the closest three layers of the social network; beyond that, it is hard to expect any infuence on the leader.

If, for instance, a strategic leader has twenty close associates in his/her inner circle, who each have twenty associates or contacts of their own in their part of the network, who in turn have about twenty associates or contacts of theirs - this means that the leader's infuence reaches as many as 8000 people. Christakis and Fowler (2011, p. 34) underlined: *If we are*  *connected to everyone else by six degrees and we can infuence them up to three degrees, then one way to think about ourselves is that each of us can reach about halfway to everyone else on the planet*.

A good example of validity of the three degrees of infuence rule is evident in the method of operation of Rotary International. Te President of Rotary International communicates directly with more than 500 district governors through letters and presentations at conferences, with the aim of transmitting the slogans and key messages that are intended to unify and inspire the membership. Each of the governors transfers and interprets the information received to other presidents of Rotary clubs in their districts (a single district may comprise between 50 and 120 clubs: there are more than 33 thousand clubs worldwide). In the third degree, the club presidents are responsible for transferring and interpreting the information received to members of clubs in their own districts (between 20 and several hundred members per club). Trough these degrees of infuence, key messages reach more than 1,200,000 Rotarians.

Furthermore, networking beyond organisational boundaries is crucial considering the role strategic leadership plays in aligning the organisation with its present and future environment. External networks that leaders have with important environmental actors afect their actions. Belonging to professional and interest groups strengthens the leader's network connections and increases their social capital.

Te more social networks the leader participates in, the better their position in those networks and the greater the likelihood that they will be able to acquire the network resources benefcial for the organisation.

We fnd logical the presumption that there is great chance that the leader will be precisely the person who occupies the best position in the network and easier access to other infuential networks.

One should add, however, that networks are not stable and change almost on daily basis. Ties change or disappear, some actors disconnect, and centrality shifts. Moreover, in the overall social ambience, networks continually lose and gain importance depending on their relative position with respect to other networks, organisations, institutional arrangements and the society as a whole. Strategic leaders have to take into account those phenomena, considering that decreased importance of some networks or the severing of ties with important actors in networks

**Fig. 9.3** Layers of a strategic leader's networking

can diminish their social relevance and sometimes even threaten their positional survival (Fig. 9.3).

Organisations are infuenced by social networks created by the leader's external connections; networks enable them to acquire resources and information from their environment. Lateral connecting beyond the organisational boundaries helps to build their social capital.

We can list examples of connecting between members of boards of directors in several diferent companies.

External networking can be strengthened by board interlocks (interlocking directorates), which represent a unique mechanism of connecting of top management and organisations themselves.

#### **9 Strategic Leadership from the Social Network Perspective**

A *direct interlock* is the case when one or more directors of one company is also a member of the board of directors of the other company. Te organisations are directly connected because one person acts as a board member in both companies at the same time.

An *indirect interlock* is the case when directors of two (or more) diferent companies serve as members of the board of a third company. Te two organisations are in this case connected via those board members who both sit on the board of a third company.

Te network of connections based on interlocking directorates can be an important source of external social capital (Hillman & Dalziel, 2003). External social capital represents the board of director's external connections to other companies. Directors use board interlocks as a means of analysing the environment in order to access timely and relevant information (Useem, 1982), which is considered to be reliable because it has been obtained frst-hand through personal connections with other members of the business community (Carpenter & Westphal, 2001).

Mešin (2013) noted the results of a research according to which board interlocks expose leaders to various leadership and management styles, diferent managerial techniques, but also innovations, which means that they can be a valuable source of knowledge and experience (e.g., Haunschild, 1993; Young et al., 2001).

Networks into which leaders are included can be observed from one other perspective. Hoppe and Reinelt (2010) proposed an interesting taxonomy with four diferent possibilities of strategic leaders' networking.

Te frst type is referred to as *peer leadership networks*, where leaders share the same or similar identities, interests and afnities and give one another reliable information and advice in a safe ambience protecting them from aberrant behaviour or adverse consequences. Sincere relationships enable openness and development in discovering and exchanging important knowledge, advice and information, without any uncomfortable queries that could be raised within their own primary organisations and threaten their integrity or power based on position. In other words, these are voluntary alliances or networks that expand knowledge and broaden infuence. Examples of this type of network could be associations of general, fnancial or project managers, members of boards of directors or supervisory boards, and other.

Te second type are *organisational leadership networks*, where leadership is about "getting things done" (establishing directions, bringing people together, and building commitment), which implies the opening of new possibilities, focusing of collective attention, integrating and mobilizing resources, and inspiring others within the collective (LeMay & Ellis, 2007, as cited in: Hoppe & Reinelt, 2010, p. 607). According to the authors, these are informal networks of leaders (beyond the lines of formal authority and responsibility) that help raise the level of innovation, efciency, and productivity. Tis type of network usually involves lateral connections between heads of organisational units in their communication and exchange of ideas and information. Recently we have seen the popularity of so-called "tribal leadership" in the organisational structures of companies. Tis is a version of organisational leadership network that can raise the level of corporate innovativeness and help develop organisational agility.

Te third type are referred to as *feld-policy leadership networks*. In these networks, one attempts to infuence the ways problems arise and to identify approaches, standards and methods that can help solve those problems. Te objective is to mobilise the members of the network to act together to make their shared vision a reality. Te logic behind networking lies in development and implementation of innovative solutions to complex problems and members' active participation in key policyrelated decisions.

Te fourth type are *collective leadership networks* and they rely on selforganising members who share a common goal and who are capable of acting quickly and solving problems in a complex and turbulent environment within the network. Hoppe and Reinelt (2010) emphasise that collective leadership emerges from adaptable collective action of a group of leaders, directing the collective to achieving the common goal tacitly or openly agreed upon among the actors.

Finally, one should also point out the massive impact of the Internet when it comes to development and spreading of social networking in the virtual world, which also has a signifcant impact on leaders' networking.

Te scale of virtual social networks, the number of individuals they can reach, and increasing number of ties that could exist between them, is beyond anything anyone could ever have dreamed of. Tere is also the increased volume of information shared and the broadening of the scope of collective action (just think about some self-emerging social movements that reached global impact by connecting over the Internet, such as the *Black Lives Matter* movement, which reached global proportions after a policeman used unjustifed excessive force resulting in the sufocation of African American George Floyd in the USA in the summer of 2020).5

In such situations, leadership normally emerges through capillary action, so to speak, without coordination from a single place: it is the result of dynamics of network structures, the strength of the ties and motions that expand horizons and give sense to collective action in mutual interaction of a large number of actors occurring primarily online.

#### **Social Capital and Network Relationship Management**

Te identifcation of values brought into the collective by strategic leadership helps to recognise the importance of network relationships.

Novicevic and Harvey (2004) identifed four components of those values, which they referred to as *strategic leadership capital*. Tese are: (1) *human capital*, which is described as the productive potential of organisational leadership that is based on knowledge and skills and created and safeguarded through the leader-members relationship; (2) *social capital* as the sum of actual and potential resources that can be mobilised through membership in social networks of organisational actors (leader and followers); (3) *political capital*, recognised as the leader's ability to use their political skills to infuence others in the organisational context6 ; and (4) *cultural capital*, comprising long-standing dispositions and habits acquired from the leader in the process of socialisation in various settings, accumulated as valuable cultural symbols in organisational memory and tacitly passed on from one generation of leaders to the next.

<sup>5</sup> See more about the *Black Lives Matter* movement at https://blacklivesmatter.com/ (accessed 30 June 2020).

<sup>6</sup>Tere are two dimensions of political capital that can be defned: (1) reputational capital (leader is known in the network as someone who can make things happen), (2) representative capital, which refects the support of constituents and legitimacy obtainable or given to the leaders (López, 2002).

Social capital is strategic leaders' most important asset. It can be defned as the sum of existing and potential resources that are incorporated in, available in, or resulting from a network of relationships that an individual or social unit has (Nahapiet & Ghoshal, 1998). It indicates the value of relations that the leader can create and maintain with other actors within the organisation and beyond it.7

Social capital truly is capital because it can be used and mobilised, transformed into other forms of capital, and relied on in order to improve efciency. It requires maintenance and continual efort; unlike other types of capital, it increases as it is utilised, through greater attention being paid to maintaining relationships between people (Adler & Kwon, 2002).

Social capital is the least researched aspect of leadership (Brass & Krackhardt, 1999).

It is observed based on the concept of *social similarity*, as well as on the basis of the individual's personal social network and belonging to associations and groups relevant for achieving social infuence (Belliveau et al., 1996). It is formed in social networks, through reciprocity norms, helping one another and developing trust (Putnam, 2003, p. 2), and it is determined by the density and the overlapping of diferent horizontal networks of cooperation beyond the circle of primary groups (Šalaj, 2003).

It is connected with important resources that are comprised in relationships between people and that can signifcantly increase the efciency of their action. It emerges from formal and informal social connections, establishing of relationships of trust, and norms applying to collective action (Liu & Besser, 2003). Selfessness is the prerequisite for successful social bonding.

Social capital is manifested by having a secret network of more or less institutionalised relationships through mutual exchange of information and knowledge and/or mutual recognition, or in other words, through the ongoing obligations arising out of a sense of gratitude, respect and friendship or from institutionally guaranteed rights arising from belonging to a family, a company, a class or a school. (Bourdieu, 1985). Te network of relationships creates *a valuable resource for the implementation* 

<sup>7</sup>Te concept of social capital was originally elaborated by Robert Putnam in his infuential paper *Bowling Alone: Te Collapse and Revival of American Community*, written in 1995 and published as a book of the same name in 2000.

*of social relations, enabling its members collective ownership of capital, which entitles them to attain credit, in various conceptions of the word* (Bourdieu, 1985, p. 249, as cited in Slišković, 2014, p. 45). Bourdieu observes social capital frst and foremost as an instrument of domination of privileged groups in a society.

Everything that can be mobilised through the network for the purpose of creating value, just like the network itself when it serves this function, represents a constituent of social capital (Burt, 1992, 2000). A key characteristic of social capital is its dependence on the relationship: if, for example, an actor were to withdraw from a dyadic relationship with another actor, their social capital disappears as well (Brass & Krackhardt, 1999, p. 180).

Putnam (2003) diferentiates between two types of social capital: bridging capital and bonding capital. *Bridging social capital* is about bringing people from diferent social segments closer together, and it is based on reciprocity and information sharing, whereas *bonding social capital* strengthens homogeneity and solidarity and increases loyalty in a close-knit group or network fragment.

Social capital has a structural, relational and cognitive dimension (Nahapiet & Ghoshal, 1998). Dimensions represent conceptual simplifcations serving to facilitate understanding of this complex construct. In practice, manifestation of social capital involves complex interrelationships and partial overlapping between dimensions.

Te *structural dimension* pertains to the characteristics of the social system and relationship network as a whole. It describes the impersonal confguration of relationships between people and/or organisational units. It involves roles, rules and procedures, and other confgurational elements. It is a *tangible* component of social capital.

It is recognised by the characteristics of social networking: what a person's connections to others are like and how strong they are, and with how many other people they have contact. Structure indicates the value of the network. Specifcally, networks difer by character, appropriateness and basic characteristics (e.g., density and heterogeneity); as such, they can (to a lesser or greater degree) facilitate exchange and ensure access to actors who have special types of competencies, they can reduce transactional costs and increase the likelihood of common action to the beneft of everyone involved (e.g., Andrews, 2010; Ansari et al., 2012; Davenport & Daellenbach, 2011).

Te *relational component* refects the type of relationships that have developed between individuals over the course of the history of their relations (Granovetter, 1992) and that afect their behaviour. Te nature and quality of relationships comprises the relational component of social capital. Te following factors are important: trust, norms, sanctions, obligations, expectations, and identifcation between the actors involved. Relationships such as those of respect and friendship enhance, while distrust and confrontation reduce social capital.

Putnam (2003, p. 183) underlined the correlation between trust and cooperation in human relationships: *Te higher the degree of trust within a community, the greater the likelihood of cooperation. And cooperation in turn reinforces trust*. Social capital increases in proportion to the increase in the intensity of trust and cooperation, spilling over to remote actors via indirect ties in social networks.

In creating relational social capital, another element that is important besides the foregoing - is *connectivity*, or in other words, readiness to put the defned collective objectives before one's own (Lazarova & Taylor, 2009).

*Te cognitive dimension* pertains to characteristics of social capital that enable presentation, interpretation and creation of systems of meaning between people. It is important because of the efect of creating a common language, a shared identity, the use of metaphors and narratives within the organisation (Nahapiet & Ghoshal, 1998; Slišković, 2014), which all builds the foundation for communication between participants. In addition to that, cognitive social capital is also evident in the culture and it is expressed through common goals and visions shared by members of a collective (Inkpen & Tsang, 2005).

Social capital is the foothold of strategic leadership.

Strategic leaders have to be aware of the complex social networks that surround them. Tey must understand the characteristics and structures of their networks, ways to create and appropriate new value in them, and methods with which to strengthen key ties with their associates and other members of the network (for example, through respect, trust, exchange of information, and exerting infuence).

It is important that they are aware of the simultaneous existence of formal and informal networks. If, for example, they fail to perceive and understand informal organisational networks, a negative climate will be created and numerous problems could arise as a result (Krackhardt & Hanson, 1993). Conversely, excellent understanding of informal networks can, in and of itself, be the basis for their additional power and advantage over others in their environment (Krackhardt, 1990).

Moreover, they need to make appropriate decisions with respect to the networks, which will enhance their efciency. It is important to have the ability to understand structural determinants, as well as the ways one has to infuence and improve their relative position within the intraorganisational and inter-organisational social networks (e.g., Anand & Conger, 2007; Bartol & Zhang, 2007; Balkundi & Kilduf, 2006; Cullen-Lester et al., 2017).

A strategic leader's social capital is highly dependent on existing ties and actors embedded in the network. Withdrawal of important actors from the network has a direct impact on reduction of social capital (Brass & Krackhardt, 1999). Apart from that, members' moving up the organisational ladder, lateral shifting within the organisation, or leaving the organisation are events that require special attention when it comes to network relationships.

Leaders have to make sure to develop appropriate strategies for building and utilising relationships within networks, but also to provide certain elasticity when networks get torn or become irrelevant. In this context, Ibarra and Hunter (2007) highlighted the need for developing operational, personal and strategic networks which leaders have to be build or become members of.

Balkundi and Kilduf (2006, pp. 423–424) underlined that being an efcient leader in the collective means being aware of: (1) key relationships between actors in the collective; (2) the extent to which those relationship involve embedded ties including kinship and friendship; (3) the extent to which social entrepreneurs extract value from their own personal networks in order to facilitate (or threaten) the achievement of organisational objectives; and (4) the extent to which the social structure of the collective involves cleavages between diferent factions.

Centrality in the network is one of the key characteristics of social capital. Achieving the central position in the network is a necessary prerequisite for leadership. Tis is based on two possible strategies: (1) connecting with other actors who hold the central position via strong ties, and (2) creating connections between other, mutually unconnected actors by using weak ties (Brass & Krackhardt, 1999).

Te strong ties strategy secures the central position in the network for the leader, by connecting them with close and trusted associates who have many direct ties of their own; this way leaders indirectly acquire good access to remote sections of the network.

Te weak ties strategy helps bridge network gaps and connects fragments of the social network by bridging structural holes; it helps in the acquiring of non-redundant information and new ideas that can support organisational management. Te importance of this strategy is all the greater in an ambience characterised by quickly-occurring technological changes, virtualisation of every segment of social life, and increased overall uncertainty in the environment.

Both strategies have to be implemented simultaneously in order to maximise their efects.

Not all networks are good, nor is networking always useful in and of itself. Some leaders rely on poorly structured networks, which reduces the efciency of their work. Cross and Tomas (2011) noted that strategic leaders should carefully manage their networks and build them in a way that ensures access to all kinds of information and expertise, good-quality feedback on their own actions, as well as to powerful individuals and persons who assist them and give them a sense of purpose.

Actual and assumable resources contained in and derived from social networks are the substance of a strategic leader's social capital, but they are not sufcient as such. Building new and improving existing social networks is a constant imperative, just like careful management of complex network relationships.

Cross and Prusak (2002) underlined the usefulness of social network analysis in helping managers understand informal networks in organisations and make smart investments in the development of their network structures. Anand and Conger (2007) proposed four strategies that leaders can use to modify their networks: (1) seeking connections with other, informal leaders, (2) actively managing social connections, (3) interacting with others in friendly exchange, and (4) meeting people with complementary skills that could beneft from mutual cooperation.

In summary, a leader's keen observations of social movements and structures of their social connections infuence the success of their action (Balkundi & Kilduf, 2006), and the multiple networks they build within the organisation and outside it facilitates access to important information, knowledge, infuence, and opportunities, and also mitigate risks (Tipurić, 2011).

Te main question is how to determine the proportion that relying on hierarchy (formal authority chain) should bear to using social networks in implementing organisational change as the central element of strategic leadership. Te answer to this question depends on the situation and the characteristics of the organisation, but we know that creating networks and managing network relationships is inevitable. Te most successful strategic leaders make signifcant investments in social networks: they improve existing networks, strengthen their own position in them, and develop new network structures than can be benefcial for them in the performance of their primary task.

#### **References**


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# **10**

# **Facing Tensions in Strategic Leadership**

## **Paradoxes and Incongruities in Leading Organisations**

Strategic leadership is constantly faced with challenges in managing and decision-making, usually in circumstances that are vague, variable, and uncertain. With the exception of the rare occasions when it is possible to fnd the optimal solution to a problem, situations where one has to choose between a set of discrete options or fnd solutions on a curve of possibilities, are encountered on daily basis.

It is marked by extraordinary challenges when it comes to overcoming complex contradictions and marrying up hardly compatible ideas, constructs, and behaviour patterns while at the same time implementing different directions of action. Tat is not an issue whenever it is possible to select, in the given conditions, a solution that is "satisfcing", meaning that we make an adaptive decision which creates the prerequisites for improvement compared to the initial situation.

Serious temptations emerge when contradicting factors appear to be true at the same time and—as such—generate tension in leaders' actions (De Wit & Meyer, 2005). Tis is a situation of paradox (in Greek: παράδοξος), involving two equally valued but completely opposite and diferent ideas (directions, characteristics, or behaviours) which make such situations impossible or very difcult to understand.1

Storey and Salaman (2009) underlined those paradoxes are a *systemic characteristic of social organisations* which are by nature complex and contradictory, with many emerging conficts, tensions and conficting goals and decisions. Tis characteristic gives organisations better chances of adapting to a fast-changing, complex, and uncertain environment.

First-class strategic leadership is characterised by very particular skills: from cognitive elasticity and ability to think dialectically, to tolerance of contradictions and discrepancies.

Paradoxes and incongruities are undoubtedly the defning characteristics of organisational ambience, and it is the strategic leader's task to overcome them, orchestrate the organisational tensions and develop mechanisms that will contribute to the organisation's better embeddedness in the present and future social context.

Organisational adaptation is often the result of combining the uncombinable in dealing with contradictions and conficts in an attempt to create additional quality necessary for survival and operational success. An example of a paradoxical situation in which strategic leaders fnd themselves is aspiring to organisational stability and change at the same time (e.g., Pettigrew et al., 2001; Taylor-Bianco & Schermerhorn, 2006).

Considering that there is no logical, internally consistent method of integrating contradicting elements, strategic leaders have to create the space in which diferent approaches will be accepted simultaneously and where possible but radical solutions for facing unknown challenges will not be dismissed.

An illustrative presentation of organisational paradoxes, dilemmas and conficts was given by Cameron and Quinn (1988, p. 11), explaining the opposing pressures that leaders have to deal with in their intent to establish organisational efectiveness. Teir *competing values framework* refers to some crucial, but contradictory organisational values and directions that leaders have to accept and know how to deal with. Te concept of *behaviour complexity* is underlined as being especially important, as it

<sup>1</sup>Cambridge Dictionary, https://dictionary.cambridge.org/dictionary/english/paradox (accessed 30 June 2020).

refers to the leader's ability to simultaneously assume competing and contradictory leadership roles (Quinn, 1989).

Contrasting concepts, such as (1) fexibility and control in the organisation or (2) internal vs. external focus, indicate that there are natural organisational tendencies that appear as the key dimensions of the competing values framework. Organisational dilemmas and conficts can be identifed in a series of other dichotomies as well, such as for instance: (3) adaptability and stability, (4) communication and growth, (5) productivity and employee morale, and (6) value of human resources and rational planning. All six dichotomies depict how organisational leaders are torn between opposing choices, which can be illustrated by four models: (1) human relations model (how to win the members' loyalty), (2) open systems model (how to adapt to the environment and expand), (3) internal process model (how to consolidate and have continuity) and (4) rational goal model (how to maximise output).

Apart from the tensions listed by Cameron and Quinn (1988), one can also identify numerous other dilemmas and contradictions that organisations are faced with. For example, these include choosing between: incremental or discontinuous innovation, exploration or exploitation of resources, learning systems based on feedback and feed-forward (Vera & Crossan, 2004), and tensions between focus on the present or on the future, or choosing between competing or cooperating with others, and so on (e.g., Evans & Doz, 1992; Child & McGrath, 2001).

#### **Strategic Leadership Tensions Framework**

Conficting discourses, concepts, interests, understandings, or aspirations lead to much organisational tension and many paradoxes that strategic leaders have to deal with on daily basis.

Kriger and Zhovtobryukh (2013) underlined that organisational leaders have to continually balance between seven seemingly opposing demands: (1) continual adaptation of the formal organisation (organisational design, including structure) and informal organisation (informal networks and personal relationships based on shared history and group beliefs within the organisation); (2) harmonisation of actual behaviour and decisions of the managerial elite, who act as important role-models for most of the members of the organisation, with accepted organisational values and culture (congruence between actual behaviour and values of the organisation); (3) adaptation of the internal organisation (including both formal and informal organisation) to the continually changing environment; (4) relationship between short-term and longterm investments; (5) balancing between local market and integrated global markets; (6) relationship between explicit and tacit knowledge; (7) balancing between decisions based on reason and those based on intuition.

Furthermore, by reviewing the results of a large-scale research looking into how CEOs of major companies operate, Porter and Nohria (2018) diferentiated between six dimensions which involve dualities that strategic leaders constantly have to account for. Tese involve: (1) balancing between direct action (setting goals, strategic decision-making, participating in meetings, and alike) and indirect action through other individuals (based on strategy, culture and processes that efectively integrate the collective and motivate members); (2) fnding the right measure between relationships, focus and time spent with internal factors (members of the collective) and external ones (a myriad of external stakeholders); (3) balancing between proactive action (visioning, targeted directing and strategizing) and reactive action (responding to unexpected events and crisis situations); (4) dichotomy between the leverage enjoyed by leaders (based on their position and control of resources, which gives them great power) and the constraints that emerge from the collective (the need to send the right messages and connect others); (5) diference between the leader's tangible work (such as shaping strategy and organisational structure, allocating resources, selecting key people) and symbolic activities that communicate norms, shape values and imprint meaning in organisational life; and (6) relation between infuence based on formal power (authority) on the one hand and legitimacy based the leaders' character and trust they earn from the collective as a result of their demonstrated values, fairness and commitment.

As evident from the described conceptualisation, there is an entire ocean of contradictions and conficting constructs for organisational leaders to swim and brave the waves in.

Leaders don't always have the same understanding of reality and perspective of the type and nature of their connection with the organisation. Teir motives and behavioural patterns can be fundamentally diferent; it is also possible for internal tension to develop between the extremes that afect their choices and directions of organisational action.

Complicated situations, unexpected events and controversies are all parts of their day-to-day work, and the way they deal with them is what defnes their substance. It is not uncommon for them to encounter situations in which contradictory and/or mutually exclusive factors both appear true at the same time. Tey fnd themselves stretched between multiple extremes and torn between choices that are very hard to make. Besides that, tensions also appear when diferent leadership styles based on completely diferent leadership principles are combined in the organisation.

How to prevail the seemingly unprevailable and combine the seemingly uncombinable is the core issue of the most important challenges of strategic leadership.

We have identifed what we believe to be six key tensions that strategic leaders face, and we have presented them here to facilitate better understanding of the possible extremes in their action. Tese are: (1) the doubt that we perceive as tension between aligning the organisation with one's own self and one's own interests on the one side and adjusting oneself and one's actions to suit the interests of the organisation on the other; (2) the dilemma between transactional and transformational leadership; (3) choice between one-dimensionality and multifacetedness of strategic leaders' goals in choosing the direction and mode of operation of the organisation; (4) the time factor when it comes to the dilemma between short-term and long-term perspective in creating organisational future, as well as (5) tensions between exploration and exploitation processes in the organisation (ambidexterity), and (6) contrasts between logical and creative thinking about strategy, or in other words, hesitation in deciding whether to establish order or to give freedom and permit chaos in organisational behaviour (Fig. 10.1).

Tese tensions show that strategic leaders are torn between collectivist and individualistic behaviour, and destined to a dilemma between relying on the present or focusing more on the future.

**Fig. 10.1** Strategic leadership tensions framework

### **Balancing between Opportunistic Behaviour and Serving Others**

Tere are two opposing lines that demonstrate the basic relationship between the leader and the collective.

Firstly, leaders can create a new (or adapt the existing) collective in order to establish a context in which their own goals will be pursued through infuencing and engaging others. Te organisation is perceived as an *instrument* used to realize the leader's intentions.

Conversely, leadership can be understood as a function of the collective tasked with directing and connecting members and building their commitment in order for the collective to survive and successfully complete their mission in the environment. Te leader acts in the collective's common interest and serves the organisation and its objectives.

Tis kind of tension is present, more or less intensely, in all collectives.

Based on the frst line, leaders aspire to adapting the organisation to themselves, seeing it (as already noted) as its own *mental refection* (Hambrick & Mason, 1984), or in other words, as a means of ensuring their own social recognition and personal gain, and a manifestation of their power in the social fabric they are woven into.

Te organisation is subsidiary: it is the long arm of its leader, who imposes upon it their own understanding of the world, and places their own aspirations and intentions before all others. It is the means to fulfl the leader's strategic intent and the social mechanism used to materialise the leader's *footprints* in the environment. In such situations, strategic leaders are motivated by opportunism: they are guided by their own interests and wish to maximise personal gain.

Te agency theory is a suitable framework in which one can analyse opportunistic behaviour of strategic leaders.

Te collective (or another external entity, such as the owners, community or society, for example) may be defned as the *principal*, and the strategic leader as the *agent*. Te problem arises because the principal is unable to fully and costlessly supervise the agent's actions. More specifcally, according to the postulate of the agency theory, owing to the nature of his position, the agent is not directly interested in maximising gain for the principal. Te principal, on the other hand, does not directly participate in the activities that are intended to maximise their personal gain by achieving the best efects of agency. Te principal can never be sure that the agent is working in the principal's best interests and, as a result, has to fnd a way to make sure that the agent's behaviour is focused on fulflling and protecting the principal's goals.

Te agency problem emerges if the leader works against the interests of the principal (the collective or some other social entity that assumes this role) (Eisenhardt, 1989). Te leader will opt for such level of efort invested in performing a task as is required to maximise their own personal gain irrespective of the consequences for the collective.

Existence of contradictory objectives and informational asymmetry are the core elements when it comes to using the agency theory, whereby its essence lies in ofering a contract that will maximise the gains for the agent and minimise the costs for the principal. Consequently, it is necessary to develop mechanisms of control, supervision and incentive to ensure that the leader acts in the interest of the principal. Eisenhardt (1989, p. 61) underlined: if the costs of supervising the agent are not excessive, then it is best to have a *behaviour-based contract*. If supervisory mechanisms are too costly, then it is better to have an *outcome-based contract*, because that ensures convergence of objectives.

As some studies have shown, where there is no control or motivation, managers will work only in their own best interests (Tosi et al., 2003).2 On the other hand, there is a problem that emerges as a result of control: it actually strengthens individualism, curbs pro-organisational behaviour and diminishes credibility, and consequently destroys trust in the principal–agent relationship (Argyris, 1964).

Te assumption of egoistic interests is controversial, but the arguments supporting it are hard to disprove (Roberts et al., 2005). Plausibility of this premise is based on the fact that self-serving behaviour has become widespread and generally accepted in the Western culture. Te advocates of the agency theory believe that most people, in most situations, act in their own personal interests.

Is that always the case? According to the other approach, leaders may exhibit radically diferent behaviour: they may be dedicated to the collective and far removed from opportunistic ideas. Teir role comes down to fulflling organisational needs and providing for the organisation's present and future; they guide, coordinate, inspire and motivate members in order to make common interests of the collective a reality.

Tis idea is based on the premise that strategic leaders are committed to *serving* the organisation, they are not selfsh and see the common interests as a matter of priority.

Tis type of leader is characterised by collectivist behaviour. Longterm benefts for the organisation are the priority of their action; their own goals and interests are subsidiary, as are the interests and goals of other individuals or groups within the organisation or beyond it. Leaders

<sup>2</sup>Research conducted by Tosi et al. (2003) showed that: (1) if left uncontrolled, managers will independently choose accounting policies that will ensure better presentation of their results; (2) unless additionally motivated, managers will make investment decisions that will be suboptimal for the owner and that will minimise the manager's exposure to risk.

build trust and develop commitment to the organisation, which ultimately results in fulflment of normative and instrumental organisational objectives.

Discord between fulflling one's own goals and serving the organisation can be overcome by the deconstruction of opportunistic behaviour as the natural and the only rational choice leaders have.

One method of deconstruction is provided by the stewardship theory, which rejects the main premise of the agency theory that leaders and managers are always selfsh opportunists motivated by their own interests, ready to turn each situation to their own advantage (Davis et al., 1997).

Te starting point of the stewardship theory is the premise of *proorganisational* and collectivist behaviour of leaders and other managers who experience more gratifcation in *serving* the organisation than in pursuing only their own personal agendas.

Te theory holds that the leader will maximise their own utility function through action that will ensure the organisation's success. By investing efort in fulflment of organisational objectives, the leader can ensure that their own personal needs are satisfed, which means that the utility of pro-organisational behaviour, as the theory postulates, signifcantly exceeds the utility of individualistic behaviour.

As underpinned by Hendry (2004, p. 210), a strategic leader is motivated by the need for achievement and the responsibility for ensuring organisational success. Te leader is perceived as one of the organisation's indivisible constituents, sharing its values and mission, embracing strategy as their own, and accepting responsibility for its fulflment. Comments or discussions about the organisation will be taken very personally, and organisational success will likewise be perceived as the leader's own.

In a sense, this is a *merging* of social entities: the strategic leader's strong identifcation with the organisation erases the boundaries between their respective objectives and the dilemma of instrumentalization becomes meaningless. Research has shown that leaders exhibiting greater identifcation with the organisation are more likely to act as stewards (Vargas Sanchez, 2004).3

<sup>3</sup>Confrmed hypothesis that a stewardship relationship is more likely to develop if the manager exhibits a higher degree of identifcation with the organisation. As cited in: Vargas Sanchez, Sanchez, 2004).

Te strategic leader's objectives are identical to those of the organisation, so there is no need for additional motivational factors: success is a direct function of the leader's competence, the organisation's quality and governance structures, and the environmental impacts that are beyond their control. Tere is no room here for the agency theory: if assumptions of diferent objectives and informational asymmetry are given lesser relevance (or even removed from the equation), the agency problem becomes trivial.

Unlike the opportunistic leader that needs to be incentivised in order to exhibit pro-organisational behaviour, the collective trust in a stewardtype leader reduces the need to control or incentivise their action to ensure that it remains consistent with organisational objectives. Any form of control can be counter-productive because it undermines proorganisational behaviour and decreases the steward-type leader's motivation.

Collectivist behaviour can lead to extremes where the interests and welfare of the followers and the collective are put above the personal interests of the strategic leader, who is, in some cases, even willing to sacrifce themselves for the common good.

Te type of leadership that is completely focused on others is referred to as *servant leadership*. Key elements of this kind of leadership are the following: altruistic mission to serve others and an empathic sensitivity to their needs (Searle & Barbuto, 2011); strengthening and development of human resources, humility, authenticity, interpersonal understanding, guidance and helpfulness (Van Dierendonck, 2011); sharing of status and power for the common good of every individual involved, the organisation, and everyone that the organisation serves (Smith et al., 2004).4

Respect for collective members, leading by example, building a community, striking a balance when it comes to relationships with

<sup>4</sup> Some authors note that there is problem with the defnition of the construct of servant leadership (Avolio et al., 2009). It has been found to be similar to transformational leadership, but with some diferences: servant leadership is focused more on egalitarianism and creating organisational cultures that foster the members' personal development; it is better suited for a stable and static environment, unlike transformational leadership, which is best suited for a dynamic ambience (Smith et al., 2004; Crossan et al., 2008). Moreover, servant leadership is connected with greater job satisfaction, care for others, greater commitment of members of the collective (Avolio et al., 2009) and perceived better efectiveness of team work (Irving & Longbotham, 2007).

stakeholders, and a strong accent on interpersonal relationships, all characterise servant leadership.

Organisational support for realisation of this type of strategic leadership implies an adequate organisational structure, culture, policies, and activities based on cooperation, support and empowerment. Decentralisation of decision-making, participation, transparent and twoway communication, complete availability of information across all organisational levels are only a part of organisational support that is necessary for servant-type leaders to ensure overall welfare in the long run.

Te assumption of servant-like behaviour of strategic leaders and other managers is not easy to grasp in a world that is cruel, where self-serving behaviour is an acceptable social pattern and the main motivation for many individuals. Serving others emerges as a phenomenon that comes with civilisational development, shaking the foundations of the neoliberal paradigm of selfshness and self-interestedness that is balanced by the omnipresent market instrument.

Collectivist discourse does not imply negation of the individual, their freedom or needs, but rather a recognition of mutual dependence and responsibilities we have to one another and to the society as a whole.

A growing awareness of socially responsible behaviour, climate change and the need to save the planet has played a role in reinforcing the idea that the individual is not the centre of the universe.

From the perspective of frst-class strategic leaders, it is clear that working in the interest of the collective has to be balanced with fulflling one's own goals. Tis is the kind of tension that leaders are faced with and forced to overcome on daily basis.

#### **Transactional vs. Transformational Leadership**

Transactional and transformational leadership represent broad *metacategories* that encompass diferent leadership approaches based on diferent principles and assumptions in the context of relations between organisational actors (Bass, 1985; Yukl, 1981).

Tese concepts were established by Burns (1978) when he explored the diferences in leadership styles of political leaders.5 As he sees them, these are non-overlapping and completely opposite approaches to leadership. However, studies have shown that transactional and transformational leadership can hardly be separated as fully distinct constructs, owing to a high degree of their mutual interrelation (e.g., Judge & Piccolo, 2004; Vera & Crossan, 2004).

*Transactional leadership* is based on having an implicit agreement between the leader and the followers that ensures the achievement of individual and collective goals. It can be defned as a process in which the leader secures reward-based transactions for the followers in order to motivate them to act (Carter & Greer, 2013; Smith et al., 2004).

Transactions between the leader and the followers are at the centre of this leadership style, as are unbiasedness, agreement and mutual beneft.

Te essence of transactional leadership lies in fair exchange: followers commit to and deliver results (desired behaviour, expected performance) and in return they receive "payment" in the form of rewards (which can be direct or indirect, e.g., incentives, praise, or other). (Bass, 1985, 1988; Yukl, 2006).

Leaders defne objectives, articulate explicit agreements based on expectations about what collective members need to do, about the way they should be rewarded for their efort and commitment, and about ensuring constructive feedback so that all members can be focused on getting the job done (Bass & Avolio, 1993). Teir reputation is based on respecting transactional obligations (Bass, 1985, 2003).

Mutual agreement ensures and guides the kind of conduct that will generate benefts for everyone involved. Te actors' motivation lies in

<sup>5</sup> James MacGregor Burns (1978) introduced and elaborated on, based on the original idea of James V. Downton from 1973, two opposing concepts that describe leadership styles, which he referred to as "transforming leadership" and "transactional leadership". *Transforming leadership*, as he saw it, creates some major changes in the world, bringing change to people and organisations, afecting a shift in their perspective on reality, and creating a context in which new expectations and aspirations can emerge. It is characterised by the leader's personality, their willingness and capacity to change and build an inspiring vision and objectives. *Transactional leadership* is a completely diferent style of leadership, mutually exclusive with transforming leadership, relying on exchange of services and benefts between the leader and the followers. Bernard M. Bass (1985) improved upon Burns' concepts and changed the name from transforming to transformational leadership.

working in their own interests (Bass, 1988), and the crucial elements of the relationship are reciprocity and the time horizon in which transactional efects are visible (Yukl, 2006; Sashkin & Sashkin, 2003).

Transactional leadership is, in and of itself, passive and reactive, connected with exchange-based relations and transparent chains of command. Planning, organising and controlling are focused on a short-term period. Te leader is expected to fully analyse all important issues and to have an in-depth understanding of the situation inside and beyond the organisation, while the followers are expected to exhibit willingness and knowledge in performing the tasks delegated to them. Another important factor is the setting of unambiguous standards of performance and expectations (Bass, 1985, 2003).

Reliance on power and authority is an important assumption of transactional leadership. Te main management mechanism is *management by exception*, which involves rewarding the followers for good performance in fulflling the terms of the agreement (Avolio et al., 1999).6

Transactional leaders aspire to strengthen the organisation's culture, strategy and structure in stable conditions (Vera & Crossan, 2004). Personal development of the followers is not their primary focus; instead, they focus on fair compensation for the job done or efort invested in performing a task.

Te main downsides of this style of leadership are, among other things, potential for manipulation and lack of inspiration in the collective's actions (Carter & Greer, 2013).

On the other hand, *transformational leadership* is based on authenticity and motivational capacity to inspire the organisational members to follow the leader and enthusiastically perform the tasks and jobs in the collective interest. Te prerequisite for leadership success is a distinct vision accompanied by the leader's personal values and strong character.

Transformational leadership has to encourage others to be committed to working to the beneft of the organisation (Yukl, 2006). It can be understood as a distinct type of strategic leadership that emphasises the organisational members' transformation and integration of individual

<sup>6</sup>Transactional leadership style is closely connected with the path–goal theory developed by House and Mitchell (1974).

and group interests (Pawar & Eastman, 1997). Tis is a process in which, as initially noted by Burns (1978), *leaders and followers help one another reach a higher degree of morale and motivation.*

Leaders create an environment in which generating gain for oneself is not the only motivator; they bring followers together and help them understand the context in which they operate; they also reinforce the members' identifcation with them (the leaders), with the organisation or simply with an appealing notion around which collective action is developed. Tey also integrate the collective by their own example.

Transformational leadership is not individualistically oriented: the collective is at the centre and everything revolves around it and its beneft.

Transformational leaders help others overcome their own opportunistic interests in order for the "higher common goals" to be fulflled, in the form of a powerful and plausible strategic purpose created or advocated by the leaders (Sashkin & Sashkin, 2003; Vera & Crossan, 2004). Tey encourage followers toward self-actualization and other higher-level goals.

A challenging, attractive and powerful vision is the cornerstone of transformational leadership, as are determination and an ability to connect vision, strategy and the set of required actions in a way that is easy to understand and implement. A leader should have the communication skills to communicate the strategic vision in a way that is understandable, precise, powerful and attractive.

Transformational leadership should include and bring people together, which means that it is important to build trust and optimism in the collective regarding the organisational strategy. Tat helps the followers identify more easily with the organisation's values, mission and vision, as has been confrmed by some empirical research (e.g., Epitropaki & Martin, 2004). It afects the mindset of the people inside the organisation and the overall organisational culture, which additionally reinforces the main elements on which such leadership has been built. It spreads optimism about the objectives and gives meaning to organisational action.

Strategic leaders are often the role models when it comes to ethical behaviour and they earn people's trust due to their values, self-sacrifce and commitment. Te followers feel trust, admiration, loyalty and respect for the leader and they are willing to invest more efort than usual. Te leader-followers relationship can be described as a bonding process (Sashkin & Sashkin, 2003).

Understanding and accepting the purpose of common action helps members invest maximum efort in performing their tasks, but it also helps reinforce their identifcation with the organisation and participation in the collective identity. Tis is a leadership style that gives every member of the collective more space to take risks, learn, think independently, and be creative, and it also encourages the fnding of new solutions to existing organisational problems and the improvement of the current strategy.

Transformational leader stimulates the followers to come up with new and unique ways to deal with external and internal challenges and creates an ambience in which change is welcomed and desirable. Tey successfully motivate the members of the collective to invent and innovate in organisational action. Openness of communication and empathy help the leader defne goals and tasks that will be easier to understand, especially if an organisational environment has been created where individual or team contribution is valued and appreciated.

Transformational leadership integrates charisma, inspiration and intellectual stimulation, and takes the individual into consideration with a view of increasing the degree of enthusiasm and achieving satisfaction in raising the level of organisational success. Moreover, it is capable of overcoming organisational inertia and increasing the chances of the organisation's better adaptation to its environment (Agle et al., 2006).

Tere is much empirical evidence in support of that leadership style being connected with the followers' dedication to the organisation, satisfaction, motivation and performance (e.g., Bass, 1998; Nemanich & Keller, 2007; Walumbwa et al., 2004). Furthermore, the leader's compassion and self-confdence are critical determinants of leadership success (Vera & Crossan, 2004). Accent is also on follower development (Northouse, 2007), morale and shared values (Bass & Steidlmeier, 1999) and on the ability to develop vision and inspire others to follow it (Goldman & Casey, 2010).

Bass (1985) summarised key activities of a transformational leader: (1) the leader has to successfully motivate members of the collective and infuence their development, (2) reinforce ethical standards in the organisation, (3) create a work ambience with clear values, priorities and standards, (4) build a culture of acting in the common interest, (5) put emphasis on authenticity, cooperation and open communication in the collective, and (6) act as mentor and coach and delegate decision-making powers to others in the organisation.7

In another source, Bass (1997) noted that one should not be misled into thinking that this kind of approach has to *a priori* be participative. He underlined in particular that transformational leadership can be directive (more autocratic) or democratic, depending on the context in which it emerges.

Transformational leadership is especially important when the organisation needs radical changes that can only be implemented with committed joint efort of all members of the collective.8

Tere are numerous examples of successful transformational leaders. One of them is Danone CEO Emmanuel Faber, who, right after being nominated in 2014, initiated a radical organisational transformation from a food & beverage conglomerate to a corporation oriented to products promoting healthy and sustainable eating habits among families and supporting sustainable agriculture. Danone disinvested its production of biscuits and beer, while at the same time expanding its dairy products core business, establishing (through a USD 17 billion acquisition) a new strategic unit (Nutritia), which integrates baby food and protein and health products and generates almost thirty percent of total revenue (Anthony & Schwartz, 2017). Changes of that magnitude were only possible with a transformational leader such as Faber.

Te greater the uncertainty and volatility of the environment, the more it is safe to assume that transformational leadership will be more

<sup>7</sup>For more details, see: https://www.cio.com/article/3257184/what-is-transformational-leadershipa-model-for-motivating-innovation.html (accessed 30 June 2020).

<sup>8</sup>Tere is much intrigue, but also controversy, in presumptions about existence of a connection between a person's genetic predispositions and transformational leadership. Results of one study show that 49% variance in transformational leadership can be explained by genetic factors (Chaturvedi et al., 2011). Wang et al. (2012) noted the results of another study according to which leadership is associated with rs4950, a single nucleotide polymorphism (SNP) residing on a neuronal acetylcholine receptor gene (CHRNB3) (De Neve et al., 2013). Such ambitious research has only had a very limited scope so far, owing to the elusiveness and vagueness of the construct of leadership and the construct of transformational leadership.

efcient than transactional leadership (Bass et al., 2003), owing to an organisational culture founded on proactivity, empowering the members of the collective, and innovativeness (Smith et al., 2004). Similarly, transformational leadership is better accepted by members of the collective in conditions of crisis because traumatic situations activate emotion centres in the brain, which are more easily stimulated by visions and dreams inspired by transformational leaders (Crossan et al., 2008).

According to this belief, transactional leadership has the advantage in a stable and predictable environment and in the context of a short-term horizon. Actual efects of transformational leadership become evident in the long term, for example trust (Bass et al., 2003) and a stimulating organisational culture (Geyer & Steyrer, 1988).

It is a widespread belief that transactional leadership is associated with existing cultural arrangements, whereas transformational leadership continually challenges the assumptions on which organisational culture rests.

As far as organisational learning is concerned, it is hard to directly associate with the observed leadership styles. Organisational learning processes can be started both in transactional and transformational leadership, depending on numerous situational factors (Vera & Crossan, 2004).

Nevertheless, a comparison of these two leadership styles and the results of the research show that the two are intertwined and interrelated. Bass (1988) suggests that a leader can have only one, both, or neither of these leadership styles, and that this depends on the leader's own character, organisational characteristics, and the environmental and time-related conditions. Numerous studies have confrmed this hypothesis, having demonstrated that individuals may at the same time exhibit the characteristics of both styles, to diferent extents, which explains (to some degree) the empirically proven high correlation between the constructs used to measure those styles.

If we were to delve deeper into the generative mechanisms that determine those styles, we would see that having clear standards, expectations and trust in the leader, which are the foundations of transactional leadership, also appears as an indispensable prerequisite for transformational leadership. Moreover, consistent observance of transactional arrangements encourages development of trust, reliability and an image of consistency that is attributed to transformational leaders as well (Shamir, 1995; Vera & Crossan, 2004).

Te perspective which compares the transactional and transformational leadership styles side by side is useful for understanding strategic leadership and, as underlined by Cannella and Monroe (1997), it contributes to a more realistic perception of top management. Unfortunately, there have not been many empirical studies focusing on transactional and transformational leadership styles at the strategic level of an organisation, and we have not been able to fnd even one study focusing on their comprehensive and detailed comparison.9

#### **Single Objective vs. Multiple Objectives**

Te purpose of leadership lies in successfully envisaged and implemented collective action, in furtherance of the objectives that are defned and intended to be fulflled. Without easy-to-understand objectives, leadership becomes an irrational phenomenon.

Strategic leadership is, at its core, a process of shaping and expanding the picture of the organisation's future with the members of the collective, encouraging and motivating followers, and performing activities intended to bring about changes that will support the organisation's strategy (Elenkov et al., 2005).

Strategic leaders are focused on strategic direction and intent: what the organisation tries to do and what it wishes to become in time. Te basis of their action is a transposition of vision into a set of strategic objectives that are to be fulflled through organisational action. Tese are the highest-level objectives: they impact the organisation's overall ability to survive, as well as its direction of development, and appear as a translation of strategic intent into defned frameworks of action. Tey are intended to operationalise organisational direction and are defned as desired future conditions that the organisation intends to achieve with

<sup>9</sup>One study, for example, demonstrates that there is a connection between transformational characteristics of leadership of CEOs and observable measures of organisation performance (Zhu et al., 2005).

rational use of available resources. Tey are an important element of that which the leader has envisaged or accepted as the starting point of organisational strategy. Tey are necessary for strategic decision-making: they determine the direction that the organisation will take, prepare the ground for strategic action, and defne measures of strategic success.

Strategic leaders are faced with the problem of fguring out which objectives will be placed at the centre of collective action.

Tere are two opposing perspectives in this context: (1) the neoclassical, which sees the organisation as an instrument used for achieving economic objectives, and (2) the stakeholder perspective, which perceives the organisation as a refection of multiple interests and alignment with its environment.

Te "mother of all objectives" from the point of view of the neoclassical perspective is pretty straightforward. Successful leadership is only possible if there are clear and unambiguous objectives and if there is coherent control of the achievement of those objectives. Proft maximization is either the objective from which all other objectives derive or it is itself a derivative of the objectives that serves to balance out security and success of business operations.

Te usual framework for setting strategic objectives is *proftable growth*, which should be the result of strengthening the market and competitive position, development of strong technological and innovation potential and capacities, excellent management of the company's resource base, and development of human resources. Tis objective is achieved by having superior resources that make it possible to incur signifcantly lower costs or to have sustainable diferentiation advantage over a longer period of time.

Proftable growth is a category that depends on the relationships between owners and strategic leaders. Owners aspire to proft maximisation, while leaders and managers aspire to maximisation of the growth rate. Proftability drops when high growth rates are the result of inappropriate use of cash fow by the managers (especially in case of bad investments or acquisitions that generate no added value). Objectives are the result of negotiations, agreement, compromise and/or mutual manifestation of power. Te degree of targeted growth of the company is restricted, in any case, by realistic expectations and demands of the owner as regards minimum acceptable proft rates on the one hand, and the leader's and manager's risk appetite and aspirations regarding desirable growth rates on the other.

Tis kind of one-dimensional objective justifes the economic essence of the company and places action inside a rational frame in which strategic leadership, in its "strategizing", has to rely primarily on "economizing". Strategic decision-making mostly comes down to a comprehensive process of selecting actions that will generate maximum proft with desired growth rates. Hence, the logic of strategy lies in creating a competitive advantage that will make it possible to achieve above-average proftability in the long run.

Such traditional discourse instrumentally directs the life and reality of the organisation more toward efciency and efectiveness than toward analysing and incorporating social and environmental values (Levy et al., 2003, p. 97).

Organisational purpose, on the other hand, cannot be reduced merely to technical economic rationality. In the business world, strategic leaders are no longer solely in charge of maximising the wealth of the owners, but they are also expected to fulfl the ever-greater expectations of stakeholders (Carter & Greer, 2013).

Stakeholders are the individuals and groups that are capable of infuencing the achievement of organisational objectives and—based on the symmetry of infuence—the individuals and groups that organisations themselves can infuence in turn, by achieving their objectives (Freeman & Reed, 1983).

In other words, organisations are not distinct integrated entities with a clear, unambiguous objective, but rather they are coalitions of groups and individuals who all have diferent and often contradictory interests and goals.

Te advocates of the stakeholder approach believe that the wealth generated by the organisation belongs to all acquirers of critical resources that directly contribute to increasing its capacity to generate that wealth. Tey underline that, if we observe economic operators, mere maximisation of proft becomes unacceptable from a moral point of view; the capacity to generate wealth for the shareholders cannot be the only measure of success, nor can its purpose be to maximise the function of any other stakeholder's objective (Tipurić, 2006, 2011).

Existence of a large number of constituents that afect the survival of organisations, the interwovenness and multifacetedness of their interests and demands, as well as the diversity of and conficts between expectations of suppliers of critical resources, all indicate that organisational objectives that strategic leadership has to aspire to are multi-dimensional.

Conficting objectives create great organisational tension that is only additionally amplifed by pressures coming from the environment. Te role, action and position of strategic leadership depends on the constellations of power of stakeholders; on the structures of power and infuence, interactions and shifts in negotiation positions. Moreover, one must not forget the importance of stakeholders when it comes to legitimation of the leader's decisions and actions.

Considering that interests of diferent groups are divergent (it is often the case that not even the interests of the same groups are homogeneous), and strategies employed by stakeholders to maximise the function of their own objectives are diferent, the diferences in power and infuence that each group manifests toward the organisation create a context in which strategic leaders can reafrm their position and make the targeted function operate to their own beneft, or to some other end, as they see ft. Tey have the ability, often under the guise of active management of stakeholder relations, to change the structure of power inside the organisation in a way that makes it possible for them to build or reinforce their dominant position (Cof, 1999).

Strategic leaders are pressured by diferent interests and demands of stakeholders. Setting strategic objectives is, among other things, a sort of political process that involves plenty of (often exhausting) balancing, negotiation, bargaining and trade-ofs between key groups within the organisation. Constellations of power in the organisation and around it have a signifcant infuence on the content of strategic objectives and the positions strategic leaders take in the process.

Finally, besides the relationships with key organisational stakeholders, strategic leaders also have to deal with the broad context in the process of defning objectives. Firstly, organisations are often parts of an ecosystem that comprises multiple interconnected institutions and organisations that have a signifcant impact on their existence. Secondly, objectives have to be aligned with interests of the society and the cultural inheritance brought by civilisational progress.

In short, the role of the managerial elite cannot be limited solely to ensuring proft-maximising action. Te main objectives are efciency, growth and survival, but provided that there is no value-destroying in the environment. Proft has to be created in a socially acceptable and responsible way, respecting the interests of all stakeholders without whose support survival and purpose of the company would be brought into question.

Te era of growing social responsibility keeps bringing new challenges that cannot be reduced (merely) to a power game. One has to align, mediate between and reconcile difering interests, and design management mechanisms in a way that will ensure organisational prosperity and protect fair return on investment for key stakeholders.

When organisational objectives are unclear and ambiguous (defned by interests, needs, demands and expectations of diferent stakeholders), it is not easy to specify the *exact* task of strategic leaders and other managers, nor can outcomes be measured easily or judged by any fxed standards (Eisenhardt, 1989).

A question that should sometimes be raised is to what extent could existence of confict between a multitude of objectives undermine their role in the leadership process. Jensen (2001) noted that *having multiple objectives cannot serve as an objective,* but we cannot agree with this argument, even though we acknowledge the problems that strategic leaders are faced with in reconciliation of and compromising between objectives, which often implies a lengthy process of bargaining and negotiating between important individuals, their coalitions, and important stakeholders inside the organisation and beyond it.

Tis perspective leads to the conclusion that a strategic leader should be a mediator that balances the interests of various stakeholders, relying on proftability, market value, quality of products and services, development and stability of the staf, the community and the market (Bass, 2007). Strategic leadership of this new age requires simultaneous focus on multiple interests of the collective and its environment in the context of passage of time.

#### **Short-Term vs. Long-Term Perspective**

Strategy means looking into the future and into the past at the same time: the time factor is a key element in it.

Strategy is about focusing on what is important at a given time: it necessitates frst construction and then interpretation of the future from the point of view of the present and the past. Te actuality of strategy becomes part of the bigger picture, and the chaotic relations between a multitude of inexplicable elements of an elusive reality beyond our comprehension become irrelevant in the world in which we exist.

Te meaning of strategy is *relative*: the construction and interpretation of the past (why not call it "reading into the past") infuences the way future is formed; but at the same time, it afects the way leaders shape and interpret the future, the way past is perceived and understood. As already mentioned, the present is a remnant of the past retroactively created and interpreted by strategic leaders to construct the future.

Strategic leaders can base their actions on the present, the past or the future. Tey can also have a shorter or longer time horizon in their aspirations and modes of operation in the future. Tis depends on various characteristics of the environment (dynamism, unpredictability, turbulence), but also on the leaders' personality and the skills they have.

Hofstede (2001, p. 359) put the diferences between those approaches into a cultural context: long-term orientation refers to encouraging virtues oriented toward future rewards, especially perseverance and frugality, whereas short-term orientation is about cultivating virtues that are connected with both the past and the present, especially by respecting tradition and fulflling social obligations.

Strategic leadership defnes objectives for relatively long periods; however, this is not always the case. In some situations, extremely (existentially) important objectives may also pertain to a shorter period (e.g., crisis conditions, hypercompetition, sudden shocks, and alike), while in others, the time horizon considered by strategic leaders may be fve or ten years, or longer, with far-reaching consequences of the decisions they make at the present.

Te problem arises as a result of the need to observe the present from the perspective of a desired future.

It is easy to see the tension continually weighing down on strategic leaders: being torn between (1) what needs to be done right now in response to immediate pressures and challenges, and (2) the things the leader passionately aspires to and that occupy their imagination when thinking about what tomorrow may bring. A paradox emerges between the usual methods of constructing the reality as it is and reshaping future conditions in the ambience through fulflment of superior, challenging visions.

Leaders can focus on strategic planning, which implies a sophisticated organisational process with developed procedures and complex analytical techniques. Creating scenarios is another way of potentially stretching the time horizon so that tasks could be focused on visioning. However, environmental variability and complexity reduce the potential and usability of planning as a reliable guidance for organisational action, and consequently, the ability to adapt quickly and strategic resourcefulness appear as important traits found in only the best of leaders.

Tis tension has been noted in literature and it has served for arriving at various classifcations.

For example, Rowe (2001) referred to "managerial leadership" when speaking of the kind of leadership that is sensitive to and reliant on both the present and the past, and of "visionary leadership", thinking of the kind only focused on the future.

Managerial leadership is based on managing day-to-day operations and focusing on short-term objectives and observed results. Te attitude towards the objectives is a passive one: objectives emerge from demands that developed in the past, not from aspirations or imagination. Order and stability are the cornerstones of this kind of leadership, and so is control across all segments of the organisation. Leaders see themselves as the conservators and regulators of the existing order of things. Tey are focused on managing transactions and making sure that standard operating procedures are followed.

Visionary leadership, on the other hand, is proactive and focused on shaping the future; it is characterised by reliance on beliefs and values, willingness to take risks, and sharing the leaders' own view of the future with others in the collective. Visionaries have the ability to infuence collective members in order for them to accept the far-reaching consequences of leadership. Tey are convinced that their choices make a diference in their organisations and surroundings.

Teir strong suits are networking and social capital, non-linear thinking, communication skills and successful encouraging of identifcation and loyalty of members. On the other hand, they have a perception of being separate from their surroundings. Tey operate in organisations, without really belonging in them.

Te orientation on the past and present is undoubtedly in confict with acting prospectively and being oriented toward the future. Leaders are continually faced with this tension and with the dilemma of choosing between acting in the short or in the long term. Tose who are capable of articulating a long-term vision and managing day-to-day operations with the requisite sense of detail are few and far between.

First-class strategic leaders successfully combine the characteristics needed for managerial and visionary leadership (Rowe & Nejad, 2009).10

Tis entails an ability to cope with the paradox of time: strategic leaders are capable of integrating those two dimensions into a unique competence of top-quality leadership. Tey encourage innovations and manage change, but at the same time they provide for organisational stability and system organisation. Teir goal is sustainable organisational development.

Tey use and exchange tacit and explicit knowledge on the individual and organisational level, and use linear and non-linear thinking patterns. Tey have great positive expectations regarding the performance they expect from their superiors, co-workers, subordinates, and themselves.

Teir skill is being able to focus on the short and on the long term at the same time, and to take operational and strategic responsibility for the organisation's actions.

#### **Logical vs. Creative Thinking**

Strategy is, ipso facto, tension between the prudent and the inventive, continually meandering, moving between analysis and synthesis, and back again.

<sup>10</sup>For more details, see: https://iveybusinessjournal.com/publication/strategic-leadership-shortterm-stability-and-long-term-viability/, (accessed 30 June 2020).

*Logical thinking* is an indispensable attribute and trait of successful strategists: well-implemented strategic analysis and rigorous testing of propositions of values of individual and group models can prevent the construction and maintenance of erroneous interpretations and models of reality in which the organisation is placed (De Wit & Meyer, 2010, p. 60). In this context, strategy can be defned as *a coherent set of analyses, concepts, policies, arguments, and actions in response to important challenges we are faced with* (Rumelt, 2011, pp. 5–6).

To establish order in the organisation means to build systems of control in all organisational segments. Te goal is to achieve stability and prevent behaviour that goes outside the defned framework; leaders attempt to monitor and stay informed of everything, leaving nothing to chance.

On the other hand, logical consistency and analytical intensity cannot substitute creativity and inventiveness in shaping strategies. Structuredness, non-discrepancy and certainty rarely accompany strategic action. Strategies are mostly formulated in new, insufciently familiar and inadequately defned conditions, in contexts characterised by poorly structured elements and high uncertainty.

Logical thinking and information interpreted based on existing paradigms cannot explain the leaps of imagination that often open up new perspectives on reality, or construct a completely new reality. Mintzberg (1994, p. 77) noted that *if strategy is about outsmarting the competitors, or simply depositing the organization in a secure niche, then it is a creative phenomenon dependent more on redrawing lines than on respecting them*.

A successful strategy is, frst and foremost, imagination and an exploration process: creative individuals' visionary creativity turned into organisational action.

A departure from logical, consistent and non-contradictory reasoning can be fertile ground for new strategic pathways and for fnding space in which the organisation can achieve greater advantage in the long run (Fig. 10.2).

*Creative thinking* is an ingredient without which there can be no talk of superior strategy. Creative and innovative solutions, new business and resource combinations, original business models, redrawing of the lines when defning activities, identifying new market niches and

**Fig. 10.2** Logical and creative strategic thinking

entrepreneurial "destruction" of the rules of the game—are all becoming increasingly important and in fact irreplaceable in the new circumstances emerging as a result of revolutionary industrial and market developments that are changing the world around us from the bottom up. In such conditions, strategy has to be diferent, distinct and singular.

Te problem is that creative thinking is often based on breaking existing rules and norms, going beyond imprinted ideas and long-standing systems of reasoning present in an activity. Tis kind of *lateral thinking* leads to new knowledge without objective proof or previous arguments that would go in favour of an idea, design, intent, plan or action "making sense" (De Bono, 1970, p. 61).11

However, this deviation may only be of temporary character: establishing a new strategic framework requires continual refnement and improvement; this is accompanied by a structuring of the context (to a greater or lesser extent) and reconnecting of individual elements of the situation into new representations and accepted interpretations, which leads to logical thinking and analytical consistency gaining importance once again.

<sup>11</sup>Logical thinking is what De Bono (1970) referred to as *vertical thinking*, whereas he referred to creative thinking as *lateral*.

Consequently, there is no single answer to the question if (and when) strategic leadership is a creative or analytical process; or in other words, to what extent it is the result of strategic thinking or of imagination and inventiveness. Tis is a strong tension, and one that persists.

### **Control vs. Autonomy**

Te tension between control and autonomy is also characteristic of the challenges of strategic leadership. It can be additionally illustrated by asking the question to what extent strategy results from deliberate planning carried out and monitored by strategic leaders, and how much from continual adaptation and organisational learning where the collective plays an important role and which is manifested in incremental improvements.

Strong control on the part of the strategic leader implies the establishment of a framework in which other members of the organisational have little freedom to act.

Strategic leaders play a key role in creating strategy, by making crucial strategic choices that are aligned with the patterns of the organisation's embeddedness in its environment. Strategy is the result of their conscious eforts, rational and calculated decisions about how to deal with the primary issues of the organisation's self-determination, competitiveness, and survival. Tey primarily impact the development trajectory, attempting to predict future events, develop alternative possible scenarios, and create good-quality strategic plans aiming to paint a picture of the organisation's desired future. Organisational members have an instrumental role in common action: they are to implement the leader's ideas and intentions.

Hence, a strategic leader guides the collective members' actions and inspires them to achieve the defned objectives; integrates coordination eforts in the performance of activities; helps solve major disputes and disagreements; encourages members to perform to the best of their abilities; gives sense to moves made and activities performed so far, in the light of an envisaged future or set of principles that justify organisational collectivity.

Transformation of a designed strategy into action happens in the context of a formal process that includes activities of strategic planning and programming, budgeting and managerial adjustments, which all takes place in numerous meetings and strategic workshops. Tis kind of strategic design is characterised by top-down processes inside the organisation.

In such processes, a distinct organisational language is created, containing symbols and networks of meaning that are monitored by strategic leaders and are beyond the control of other participants in intraorganizational goings-on. Teir rhetoric is given a strong foundation, their interpretations of the ambience are given sense, and the decisions they make are explained by a specifc rationalisation.

On the other hand, the main mission of strategic leadership can also be fulflled by creating a stimulating ambience in which there will be no all-encompassing control mechanisms that would regulate the organisational members' conduct. Absence of control can unblock and unleash ideas and lead to discovering new methods of solving problems.

Giving freedom to associates means allowing them to self-organise, experiment, develop unusual and diferent ideas and initiatives and potentially depart from the "normal" (usual) course of organisational events.

Tat way, strategic leaders release energy, creativity and entrepreneurial potential locked in the organisation. Consequently, they need to permit *some mess and disorder* to achieve the synergy efects (De Wit & Meyer, 2010, p. 488). Tis can be a paradoxical situation where the means create an end that is the opposite of what was expected and intended (Storey & Salaman, 2009).

It is an indisputable fact that much of what we refer to as strategy need not be the result of any actions, decisions or aspirations of strategic leaders. In any organisation, strategies are (more or less so) created without any *master plan* or *grand design* created by the managerial elite.

In many situations, strategies are created in bottom-up processes; they come as a result of actions and behaviours that were not initially planned and that need not be (and often are not) coordinated from the top towards the bottom of the organisational pyramid. Tey emerge from a series of unrelated activities, without any conscious eforts, or through accumulation of daily adjustments made in organisational routines (Quinn, 1980; Mintzberg & McHugh, 1985). Tey can also emerge as the result of trial and error, or as the efects of a successfully adopted philosophy of learning by doing. Tey can appear spontaneously, suddenly and unexpectedly—sometimes even completely accidentally: beyond any logical or defned guidelines.

\* \* \*

In conclusion, strategic leaders should be successful in simultaneously grasping and solving paradoxical situations and overcoming seemingly insurmountable organisational tensions that emerge in the space between the need to control and the desire to include more participants in the strategic process. Successful strategy is the result of long and intense negotiations, agreements and compromises, and it involves many individuals and groups inside the organisation, with the managerial elite playing the key role.

Strategic leaders' role in both cases is extremely important: they are the initiators, catalysts and coordinators that have to manage the space in which strategy is formulated and implemented.

Regardless of the tensions and paradoxes, strategic leadership has to legitimise organisational aspirations; it creates an impressive illusion flled with symbols and stories of collective existence.

Te role of strategic leadership is changing, as are approaches to organisational strategy: what is required is less planning and control, but more adaptability, learning and improvising (Crossan et al., 2008). Collective mental models have to be constructed that will be based on simplifcation of a complex reality and acceptance of uncertainty as an inevitable element in the decision-making process. Strategic fexibility is becoming an imperative, and leaders' imaginativeness and innovativeness are the prerequisites for progress.

Furthermore, the society needs capable, humble and moral leaders who can successfully respond to ever-emerging new socioeconomic, demographic and geopolitical challenges.

Strategic leaders have to be responsible, committed and creative in fnding solutions that will be good not only for the future of the organisation, but also for the future of the entire civilisation and our planet. Teir task is to release people's potentials and strengthen togetherness and a synergy of knowledge and action to contribute to creating a better world. Tis can only be achieved through decisive departure from selfshness, creation of open dialogue and networking of partnerships with institutions.

#### **References**


performance impact. *Journal of Leadership & Organizational Studies, 18*(1), 107–117.


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## **Index1**

**A**

Adaptationist discourse, 107 Adaptive leadership, 43, 69 Adhocracy, 235 Agency problem, 287 Authority, 3, 12, 164 Autocratic leaders, 16 Autonomy, 308–311

#### **B**

Bases of power, 157 Behavioural complexity theory, 8 Behaviour-based contract, 288 BHAG, 84 Board of directors, 227 Business model, 101

**C**

Centrality in the network, 274 Ceremonies, 153 Change management, 70 Charismatic leaders, 177 Charismatic leadership, 7 Clans, 234 Coercion power, 157 Coercive isomorphism, 105 Cognition, 96 Cognitive dimension, 272 Cognitive institutions, 103 Cohesion, 50 Collective, 2, 33, 246 action, 34, 147 alignment, 206 intentionality, 33, 34

<sup>1</sup>Note: Page numbers followed by 'n' refer to notes.

Collective (*cont*.) leadership, 19, 225, 230 leadership networks, 268 norms, 33 as a strategic leader, 238–242 Collectivity, 31 Common values, 137 Communication, 204 Competing values framework, 282 Competition, 102 Complexity theory, 43 Conceptual capacity, 139 Confguration of strategic leadership, 218 Conficting objectives, 301 Control, 308–311 Cooperation, 36, 102 Cooperatives, 240 Coordination, 36, 174 Core competencies, 60 Core values, 130 Corporate governance, 63 Correctness, 75–76 COVID-19 pandemic, 101 Creative thinking, 306 Cultural capital, 269 Cultural cohesion, 130 Culture, 72–74, 186

#### **D**

Decentralisation, 42 Decentralised leadership network, 236 Decisionist leader, 15 Deinstitutionalisation, 106 Dense networks, 257 Density, 256

Depersonalisation, 42 Depersonalisation of strategic leadership, 240 Depersonalized leadership, 41–43 Diférance, 56n1 Direct interlock, 267 Direct strategies of infuence, 161 Distant leadership, 225 Distributed leadership, 46 Diversity, 76 Division of labour, 233 Dominant ideas, 152 Duality of leadership, 43 *Dunbar's number*, 250 *Dynamic perspective* of organisational culture, 188

#### **E**

Ecological power, 157 Egocentricity, 221 Egocentric network, 252 Egocentric strategic leadership, 220, 221, 228, 243 Emotions, 33 Enacted, 69 Enacted environment, 73 Entrenchment, 140 Environment, 93 Environmental complexity, 94 Environmental dynamism, 94 Environmental turbulences, 94 Environmental unpredictability, 94 Environment modelling, 97–102 Epimeleia, 41n8 Equality, 76 Era model, 98 *Esprit de corps*, 34, 131

Ethics, 75, 76 Evolutionary perspective, 81 Exchange ties, 252 Expert power, 157 External adaptation, 77 External strategic leadership, 219

**F**

Fairness, 87 Fiedler's contingency model, 8 Field-policy leadership networks, 268 Follower, 3 Follower-focused, 3 Followship, 24 Formal authority, 15, 21 Formal networks, 262 Framing, 201

**G** Game theory, 36n4 Generic environment model, 99 Groupthink efect, 230

**H** Hegemonic relationship, 153 Hegemony, 150, 153 Hermeneutics, 124 Hierarchical ties, 252 Hierarchy, 38 Holographic leadership, 22 *Homo oeconomicus*, 110 Horizontal leadership, 21 Horizontally distributed strategic leadership, 225–231, 243 Human capital, 269 Humaneness, 75

**I** Identifcation, 175–178 Identifcation with the leader, 17 Identity, 60, 175 Ideological hegemony, 167 Ideology/ideologies, 74–75, 127, 153, 165, 166 Ideology of control, 148 Implicit leadership theories, 9 Indirect strategies of infuence, 163 Individual leadership, 19 Indoctrination, 15, 171, 173 Industrial age, 38 Infuence, 70, 161 Informal authority, 15 Informal networks, 262 Informational infuence, 17 Informational power, 157 Information control, 163 Information exchange, 163 Inner circle, 225, 263 Inspiration, 208 Inspirational communication, 210 Inspirational leaders, 208 Institutional entrepreneurs, 106 Institutional isomorphism, 105 Institutional pressures, 102–107 Institutions, 102 Instruments of persuasion, 164 Integration of collective, 82–83, 205 Integrity, 5 Interactional and transactional environment, 100, 101 Interchanging leadership roles, 23–24 Interpersonal trust, 196

**K** Koinonia, 32

#### **L**

Language, 72–74, 96, 189, 198, 200, 204 constructs, 199 games, 200 Lateral strategic leadership, 219 Lateral thinking, 307 Layers of organisational culture, 187 Leader-focused, 3 Leader-member, 8 Leader roles, 10 Leadership, 1, 198 capacity, 83 framework, 48 language, 201 outcomes, 77 skills, 6, 202 style, 7 traits, 5 Leading, 38 Leadship, 24 Legitimacy, 103 Legitimate power, 157 Liking/similarity principle, 164 LMX theory, 10 Logical incrementalism, 118 Logical thinking, 306

#### **M**

Macroenvironment, 100 Management, 38, 147 Managerial discretion, 142 Managerial elite, 57, 302

Managerial leadership, 304 Managerial perspective, 80 *Manoeuvring mode*, 118 McGregor's X and Y theories, 7 Meandering mode, 117 Meditative mode, 117 Members' identity, 153 Mental models, 71, 96 Mental refection, 287 Meta-leadership, 218 Mimetic isomorphism, 105 Mission, 60, 129 Modelling, 163 Motivation, 37 Multiple objectives, 302 Myopic mode, 117 Myths, 73, 152

#### **N**

Narratives, 153 Natural selection, 109 Negative normativism, 162 Neo-Darwinian discourse, 107 Network-based perspective of strategic leadership, 259 Networks, 235, 250 of identities, 175 robustness, 257 of strategic leaders, 234–238, 246 of trust, 191–197 of trustors, 193 Non-redundant open network, 259 Normative infuence, 17 Normative institutions, 103 Normative isomorphism, 105

#### **O**

Objective environment, 95 Ontology of leadership, 1–24 Organisational action, 65 Organisational aspirations, 142 Organisational conduct, 131 Organisational culture, 73, 186 Organisational ecology, 109n3 Organisational hierarchy, 219 Organisational identifcation, 176 Organisational identity, 130 Organisational ideology, 166, 172 Organisational leadership networks, 268 Organisation's purpose, 128–131 Orthodoxy, 166 Outcome-based contract, 288 Ownership of strategic direction, 138–143

#### **P**

Paradigms, 127 Parallel vertical decentralisation, 232 *Path-goal theory*, 8–9 Peer leadership networks, 267 Perceived norms, 33 Personalized leadership, 41–42 Planning, 128 Political capital, 269 Position of corporate control, 39 Positive normativism, 162 Power, 70, 74–75, 149, 154, 232

#### **R**

Rationality, 135 Reciprocity, 164 Reference ties, 252 Referent power, 157 Regulatory institutions, 103 Relational component, 272 Relational embeddedness, 254 Relational leadership theory, 11 Relationship-based perspective, 194 Reputation, 12 Responsible leadership, 85 Responsible waste management, 87 Reward power, 157 Rhetoric, 73, 152 Rhetorical crafting, 201 Rituals, 153

#### **S**

Scarcity principle, 164 Scenario planning, 114 Scenarios, 114 Self-confdence, 5 Self-leadership, 46 Sensegiving, 72, 127 Sensemaking, 57, 71–72, 127 Servant leadership, 7–8 Shared leadership, 21 Shared values, 165 Situational leadership, 8 Situation-focused, 3 Skill-based approaches, 5 Social capital, 59, 269 Social constructivism, 9 Social group, 31 Social identity theory, 2 Social infuence, 17 Socialisation, 170 Social judgment, 6 Socially-constructed reality, 67 Social network, 251 Social network analysis, 274 Social network and leadership, 249–253 Social networks, 69, 250 Social responsibility, 76 Social ties, 252 Social value, 64 Sociocentric network, 252 Stakeholder perspective, 299 "Star," 237 Stewardship theory, 289 Stories, 127 Story-telling, 73, 199 Strategic action, 172 Strategic alliances, 46 Strategic anticipation, 117 Strategic behaviour, 58 Strategic changes, 94 Strategic choices, 55 Strategic decisions, 55 Strategic direction, 77, 121, 133 Strategic discourse, 138 Strategic ft, 116 Strategic intent, 76–77 Strategic leaders, 142 Strategic leadership, 55 Strategic leadership architecture, 77 Strategic leadership capital, 269 Strategic leadership tensions framework, 283–285 Strategic management, 55 Strategic objectives, 84 Strategic shared leadership, 228 Strategic thinking, 58 Strategic vision, 133 Strategy, 55–58, 113, 122 Strategy as a transnarrative, 121–128 Strong ties, 255 Strong ties strategy, 274 Structural dimension, 271 Structural embeddedness, 256 Structural holes, 257–261 Structural hole theory, 258 Structure of the network, 252 Subjective environment, 95 Supremacy, 148 Symbols, 153, 189 Systemic characteristic of social organisations, 282 Systemic perspective, 111

#### **T**

Technical rationality, 75 Technocratic elites, 152 Tensions, 285 Teory of evolution, 108 Terapeuo, 41n8 Togetherness, 207 Tolerance for control, 13 Top management, 39 Tradition, 127 Trait theory, 5 Transactional, 7 Transactional leaders, 293 Transactional leadership, 292 Transformational leader, 295 Transformational leadership, 7, 293, 294, 296 Transnarrative, 124 Trap of commitment and consistency, 164 Triple bottom line concept, 85 Trophḗ, 41n8 Trust, 110, 191, 192, 195, 257

**U** Unrestricted human agency, 104 Upper echelons, 60, 228

**V**

Value-based leadership, 7 Vertical leadership, 21 Vertically distributed strategic leadership, 231–234

Vertical strategic leadership, 218, 244 Virtual social networks, 268 Vision, 79 Visionary leadership, 304 Visioning, 131–135

**W**

Weak ties, 255 Weak ties strategy, 274