Session 3 : Reading 1

PURPOSE OF LEADERSHIP
(Instructor Note by Dr. (Col) P.S James)

Man is a goal seeking animal. His life only has meaning if he is reaching out and striving for his goals.

-Aristotle

Introduction

Leadership has been discussed from time immemorial. Several authors have distinguished it from
management too. 85 million results for a search on the term ‘leadership’ might make it look very
important but issue is not whether it is important or not, but what its purpose is and in our study
what its purpose is in the business context. In this note we highlight the purpose of leadership is
Direction setting, creating alignment and creating engagement. This is also the overarching theme
of the course in leadership.

Radical Shift in Perspective of Leadership

We have studied leadership from trait, contingency and several other perspectives for decades. But
these do not explain the ever changing leadership scenario and how to deal with it. Therefore we
have to have a radical view of the purpose of leadership. Till about mid 1970s, the entire idea of
leadership was more focused on internal efficiency. But Japanese foray into the world of
commerce, changed the thinking in US. Russia, the competitor of US was still in the grip of
communist philosophy and did not need much leadership in the commercial context. China was still
in the womb and India not yet conceived. Yet, Japanese hypercompetition changed the American
mindset and there was a belief that business had to reinvent itself if it has to be successful. There
was a firm belief that it was inadequate to have cost efficient methods and profitability. This meant
that for business leaders to be successful they have to have an external focus rather than an
internal one.

With this a new purpose, leadership began to emerge in the commercial world. While the core
theme may still be competitive advantage, they realized that to create it they had to explore
external markets and newer products. Thus organizations realized that they had to deliver today’s
results and cater for the future simultaneously. Should this be done by division of labor between
‘internally focused manager’ and ‘externally focused leader’? Could it be done by converting the
narrowly focused, controlling, mechanistic managers into champions of change?

This would probably make you ask whether promoting new products and services or better
processes are all that there is to leadership. Anyone can do it regardless of the roles. For example
an employee of Sony invented the play station, which the top managers at first rejected on the
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premise that Sony does not make toys. He was showing bottom up leadership through his thought
leadership and was setting example. Such examples are plenty in the business world. Google,
Microsoft, iphone, Suzlon wind power, carbonBaazaar.com which trades carbon credits etc. are just
a few examples in the millions that go unrecorded. Does this have anything to do with motivating
employees to work harder? Perhaps very little. These came about not because the employees were
induced to work harder but the employees were permitted to think in a different and new
direction. What it means is that employees have to be motivated or inspired to contribute towards
a direction. Thus direction setting is the first and foremost purpose of business leadership today.

Direction Setting

The question is what direction setting is? Direction setting is intended to increase the employee’s
performance by giving him a goal in the right direction. But in doing so, the organization has to
keep looking at the external environment that is changing. This means that we have to keep an eye
on the future path that we want to tread and orchestrate the path even as we walk in the current
path. We can therefore say it is about preparing the future road which is a different one rather
than an improved current road on which we are walking and which we keep improving anyway.

Leaders do it by collecting dissimilar views and ideas from various sections of the organization and
the outside world and synthesize them into an attractive new whole. This is of course called
building the vision. Since the vision is about a new attractive goal by treading a new path, the
employees have to be motivated or given strong reason to do that and therefore the vision has to
be attractive. But an enigma that troubles us all is whether the vision is for the shareholder who
have put the money in or for the employees? While the debate on this will perhaps be never be
settled in the near future, I tend to take the view that a vision is primarily for the employees as it
gives them a clear idea of the path to prosperity and growth which they want to follow. Employees
follow you not because they ‘have to follow’ but because they ‘want to follow’. If we accept this
new reality, the question that will emerge in the minds of all aspiring leaders is ‘how do I make him
want to follow’? This is done through direction setting (never mind whether you call it vision
statement, mission statement and so on).

Forecasting business and developing strategic plans is the key to direction setting. All leaders have
to be good in this. A good leader has to create forwarding looking plans all the time. This
necessarily means a clear understanding of the external realities in which the plans will be
executed. This exercise will also depend of the state of the organization i.e. whether it is a start up,
successful or struggling one.

 In a start up, the energy is directed towards and emerging technology, a significantly
differentiated product or services. There are a lot of experts and everyone expects everyone
else to contribute significantly. Individual aspirations are tied to it. Vision is implicit in the

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 idea of the formulation of a new organization and everyone feels it and therefore there may
not be an explicit vision statement.
 Successful Organizations. Here the shareholder and the employees have a sense of
achievement and they feel satisfied with the way they have gone about doing things. They
have profits and therefore prosperity too. The only thing that they are concerned about is
how to sustain it. This often is a daunting challenge because it is easier to lead people in a
crisis than in a successful situation. Nevertheless, in a hypercompetitive world, turnarounds
of situations do happen and therefore, the organization has to often move in a different
direction to retain and increase success and prosperity. It is therefore important and equally
difficult to set direction in successful organization.

 Struggling. Struggling organizations are ones which are falling or failing. Here it is easy to
lead since evolution has ensured that in a crisis man comes up with innovative ideas to
survive. The challenge here is for the leader to be sure that his unconventional idea is going
to create results and that the other contending ideas are to be set aside for a while. Here
once again vision helps as it becomes a benchmark to evaluate the ideas and set aside the
not so relevant ones.

We say that vision must be 1) differentiating, compelling and yet believable, 2) it must project a
bright future, 3) it must be inspirational and motivational and 4) it should bring meaning to the
work of the employees. Why do we say all these? The reason is that it is not enough to set direction
but we have to create alignment and engagement in order that the set direction is achieved.

Creating Alignment

Every business leader and particularly those on top and in charge of teams, departments etc,
should continuously make effort to align the organization and its employees not only to the vision
and mission but also to the strategy and tactics that the organization follows. Alignment is the
process by which the actions are connected to the vision and results. It is about the employees
understanding the same thing as the leader does and taking actions that create the synergy.
Ultimately the organizational success depends on the ability of leaders to facilitate complete
organizational alignment regarding several areas such as:-

 Alignment with Vision, Mission, Values and Purpose. To align the values, leaders should
define these and how these are brought into action. It implies defining the acceptable and
unacceptable behavior and sharing them with all including repeating the core values. It also
means reinforcing it through reward and punishment, auditing them and seeking suggestion
to improve compliance. The alignment to the vision and mission is done by making
strategies, goals and objectives and thereafter linking it to the individual employee’s goals
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 through performance targets, performance incentives for achieving the targets and also
negative reinforcements such as holding back promotion, incentives, increments etc for
non-compliance. Contingent pay perhaps the most popular tool used for this.

 Aligning with the Business Model. In order to make the direction successful, all should be
aligned to the business model. Employees should not only comprehend how the company
makes its profits, but also the reason for serving a particular customer segment, the way it
is done, the areas that it intends to serve in future and how this will enable growth and
prosperity.

 Aligning the Differentiators, Environment and Expectations. This means having a clear
idea of how the company is differentiated from others and conveying that to the employees
so that in turn they can explain this to the customers. It means encouraging the employees
to leverage the differentiators, identifying the emerging competition in the differentiated
areas and seeking suggestion to improve the differentiation. Aligning to the environment
would imply that the leaders create the awareness of the business environment so that the
employees are able to appreciate it and take necessary actions. Aligning the expectations is
about clearly defining the expectations of the organization from the employees and
enabling him to achieve it through provision of resources such as budget, training and so on
and includes the accountability aspects.

 Aligning Leadership, Teamwork and Corporate Culture. Aligning leadership is about

defining who is expected to exhibit leadership, the preferred styles, providing learning
support for it, and giving feedback on it. Aligning teamwork is about creating cross
functional teams if required, giving them decision powers and resources, accepting the idea
of delegation and continuous improvements to the system. Aligning the corporate culture is
important to make the process of alignment effective. While symbols, rituals, behavior are
all important, it is important that all understands what the corporate stands for and how
the culture is created. 3M for example will have innovation as corporate culture; someone
else may have discipline and so on.

Alignment is the most critical action that a leader has to take. But alignment will not take place on
its own. As a leader one has to create the alignment. How does he do that? He does it through
creating engagement.

Creating Engagement

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If we go through the alignment actions that are required, we will find that it involves having serious
and frequent engagement with people. Therefore we can say that alignment will not happen unless
we have 1) contact, 2) communication and 3) connections which are the 3 Cs of engagement.

 Contact. It is not possible to keep the team aligned unless you have frequent contact with
them. They are going to do their best with what you give them. Hence it is necessary to
provide resources. While several resources can be distributed in an impersonal way, it is the
resource of time that makes the difference. If you don’t spend time with them, they are
going to make decisions you are uncomfortable with and this happens not because they
want to but because they don’t know of it. It is the responsibility of the leader to initiate
this contact. This can be done through regular one on one meeting, staff meetings, modern
computer aided methods, social networking and of course walking around. So important is
this that ‘management by walking around’ has almost become a management style and
topic of discussion.

 Communication. It is not enough to have contact. You have to communicate with your
people. Let us not assume that the people can read your mind. They need to know what you
expect and need to understand the mission and vision. Therefore beyond the written vision
and mission, we need to verbalize it over and over again. In addition, if you don’t like
something, you need to speak up and the dialogue should take place in real time. Often this
happens after things go too far and it reaches a level of conflict and then everyone is trying
to manage the conflict. Effective leaders will avoid conflict by communicating in time.

 Connection. Communication is also not enough. For true alignment to take place, you have
to gain the trust of the people. They should feel connected to the leader and feel
committed to leader’s vision and his success and success of the team. Often leaders think
that they are entitled to it by virtue of one’s employment; but this is not true. As we saw
earlier, one can buy the presence but not the heart. You have to earn it. To create true
alignment, the people have to be engaged with you, the work, the organization etc.

We have now seen that creating alignment is not possible without creating engagement and
creating a vision without alignment is useless because it will not take place on ground.

Conclusion

The above discussion leads us to the fundamental role of a leader and that role is to set direction,
create alignment and create engagement.

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