Strategic Leadership: Definition, Types And Examples
“We are stubborn on vision. We are flexible on details.” This Jeff Bezos quote gives us a glimpse into the…
November 8, 2021 | 4 mins read
“We are stubborn on vision. We are flexible on details.” This Jeff Bezos quote gives us a glimpse into the mind of a strategic business leader. All business leaders have their own approach on how work is or should be done. Such an approach is needed to solve everyday business problems.
More often than not, strategic business leaders bring fresh insight and outlook to every problem. However, strategy involves more than mere ideas. It requires an understanding of organizational mission, knowledge of systems and careful thought. For a strategic leader, strategy and leadership should go hand-in-hand. They must be able to see the big picture and focus on results more than the methods.
For organizations to be profitable, their leaders must be in sync with the organization’s mission and strategic objectives. Regular employees may need to wear the leadership hat in certain cases. For these employees to perform such a role effectively, it’s important that they have some knowledge of the company’s strategic direction.
This is where strategic leadership plays a vital role in any organization, whether B2C or B2B. So, let’s understand the definition of strategic leadership and the different types.
Strategic leadership is defined as the ability to influence others to voluntarily make day-to-day decisions that enhance the long-term viability of the organization while maintaining its short-term financial stability. (W. Glann Rowe, 2001).
Strategic leaders possess the ability to streamline processes, increase productivity, foster innovation and create an environment of creativity and initiative among employees. In today’s disruptive environment, such leaders ensure that their company maintains a competitive edge.
For strategic leaders to add value to the company, they must first understand the core mission of the company. They must align the company’s activities with its mission. They must have a clear idea of who the company’s customers are and how to add value to their lives.
Strategic leaders can innovate by involving everyone in the process and minimizing pushback. They are the avant-garde who start new trends, exploit new opportunities and tackle challenges with poise. They create examples of strategic leadership for others to follow.
As per Ireland and Hitt (1999), there are six components of strategic leadership enhancing organizational performance:
There are three well-defined types of strategic leadership. Let’s delve into them:
The transactional leaders ensure that everyone has clearly understood the expectations regarding the processes and the outcomes. They balance strategic management and leadership by measuring individual performances and motivating employees to improve performance. They use incentives such as enhanced pay, promotion and bonuses for good performance. However, they may also punish bad performance through reduced pay or job loss. Such a leading strategy may yield results but not always the optimum ones.
Most leadership styles, however, incorporate this type of strategic leadership to some extent. The degree to which a leader relies on this style determines whether he/she fits the definition of a transactional leader.
Transformational leaders combine strategy and leadership and use their vision to guide the actions and behaviors of the employees. They bring about a change in individuals as well as the organization. Such a leading strategy involves influencing others to transform themselves. The focus of this leading strategy is the benefit of the organization. The transformational leader makes their team recognize responsibilities and identify goals, and enhances their confidence. This type of strategic leadership is adaptive and inspires action.
Charismatic leaders work their charm to persuade others. Charismatic leaders have the drive and passion to get their work done. While charismatic leaders share quite a few similarities with transformational leaders, the focus of their work is a change in the status quo and not necessarily a change in the organization.
There are many examples of strategic leadership. Let’s have a look at some:
Amazon stock went up by 225% in the initial half of the last decade and since then, it’s risen by 650%. This phenomenal increase can be attributed to the strategic management and leadership of Jeff Bezos. His strategy focused on things that don’t change. Instead of short-term gains, he has focused on long-term growth. He emphasizes the importance of intuition, research and profound knowledge of the market—especially the trends that drive it.
Steve Jobs, the co-founder of Apple Inc., was a charismatic leader of the personal computer era. He led Apple Inc. to fully embrace his vision with key differentiating strategies: customer service, simplicity, ease of use and priority towards innovation.
Elon Musk, the co-founder of PayPal and founder of SpaceX, is the early investor and CEO of the electric car Tesla. He is best described as a transformational leader who combines strategy and leadership and believes there is always a better way to do something.
A strategic leader sees many steps ahead and is always future-oriented. They’re in sync with the organization’s vision and believe in transparency and effective communication. They foster a culture of problem-solving, believe in delegating and have genuine empathy for others.
If you wish to add these defining characteristics of strategy and leadership to your profile, join Harappa’s High Performing Leaders course. This is an application-oriented course that will help you influence clients, take risks, manage crises, communicate impactfully and foster diversity. The course will help you become an example of strategic leadership yourself. Sign up with Harappa now and transform your personal and professional life.