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Strategic leadership for the 21 century

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Business Horizons (2010) 53, 437—444
EXECUTIVE DIGEST
Strategic leadership for the 21st century
Michael A. Hitt a,*, Katalin Takacs Haynes a, Roy Serpa b
a
Mays Business School, Texas A&M University, 4113 TAMU, College Station, TX 77843-4113, U.S.A.
b
Texas Manufacturing Assistance Center (retired) & Texas A&M University (retired)
1. Assessing the crystal ball
We are on the precipice of an epoch–—a distinc-
tive, exciting, and challenging time for orga-
nizations. My focus is on twenty-first century
organizations and the characteristics required
for survival and long-term success. To begin,
consider that you are a member of the board of
directors of a major corporation in the year
2010–—thirteen years in the future. What do you
believe will be the characteristics of business
organizations in this year? What strategies will
they employ? How will they be structured?
How will they manage their human capital?
(Hitt, 1998, p. 218)
In the above quote from a presidential address to
the Academy of Management, it was projected that
the 21st century would bring significant changes,
due primarily to the rapid development of new
technologies and increasing globalization. In fact,
the changes were expected to produce significant
turbulence and uncertainty in the context in which
firms had to operate and compete. This type of
context, in turn, dictates a particular style of
leadership at the top of organizations, and the
design and implementation of new strategies to
help organizations cope with rapid changes and
uncertainty in their industries and general environ-
ment. The purpose of this Executive Digest is to (1)
* Corresponding author.
E-mail address: mhitt@mays.tamu.edu (M.A. Hitt).
0007-6813/$ — see front matter # 2010 Kelley School of Business, Indiana University. All rights reserved.
doi:10.1016/j.bushor.2010.05.004
www.elsevier.com/locate/bushor
examine the predictions made for the 21st century,
(2) identify what has occurred in the first 10 years
of this new century, and (3) recommend ap-
proaches to the strategic leadership of organiza-
tions needed for survival and success as the 21st
century progresses.
2. The competitive landscape
projected for the 21st century
In the late 1990s, several projections were made
regarding the type of environment that executives
and organizations could expect in the 21st century.
For example, Hitt, Keats, and DeMarie (1998)
described characteristics of the new competitive
landscape, suggesting it would be driven by the
continuing technological revolution and the increas-
ing globalization of business and economic activity.
In particular, the new, Internet-based technologies
being developed at the time were increasingly ac-
cepted and used in the 1990s. The Internet, de-
scribed as the ‘‘new information highway,’’ provided
information in a manipulable form available to many
across the world in almost instantaneous fashion.
Largely driven by the Internet were the increasing
rates of technological change and diffusion; the
growing emphasis on knowledge intensity (e.g.,
emphasizing knowledge for competitive advantage);
and the emergence of positive feedback industries,
where returns accumulate at an increasing rate,
building on the new knowledge created (Bettis &
Hitt, 1995). Moreover, the rate and effects of
438
technological changes were heightened by techno-
logical convergence.
Globalization enhanced the development of
cross-border relationships and the number of mul-
tinational–—or transnational–—firms, many based in
emerging markets, as well as developed markets.
Globalization occurred not only in markets for goods
and services (outputs), but also in the supply chain,
as firms increasingly sourced activities in their value
chains to companies in other countries. Therefore,
globalization resulted in a complex network of re-
lationships across country borders, with enhanced
interdependencies among organizations in many
parts of the world–—and, consequently, between
countries and their economies. These changes alone
were expected to amplify the challenges experi-
enced by top executives of large and small orga-
nizations, while simultaneously enhancing their
opportunities for growth and development.
3. Characteristics of the new
competitive landscape
The new competitive landscape projected for the
21st century included increasing strategic disconti-
nuities and disequilibrium conditions; a blurring of
industry boundaries; hypercompetitive markets; an
extreme emphasis on price, quality, and customer
satisfaction; a growing emphasis on innovation and
continuous learning; and, finally, changing employ-
ee expectations and careers (Hitt et al., 1998).
Strategic discontinuities are largely triggered by
new and highly valuable technologies that drastical-
ly reduce the value of current technologies and
cause major changes in markets, or even create
new markets while eliminating old ones. Disconti-
nuities can also be created by major economic
changes, such as those that occurred in Japan during
the late 1980s through the 1990s. New technologies
and major shifts in economic activity, along with
hypercompetitive markets and blurring of industry
boundaries, created significant challenges for man-
agers. These challenges required managers to bal-
ance the need for stability to conduct planning and
make decisions with the need for flexibility to adapt
to a dynamic environment.
Partly because of changes in markets and tech-
nologies, many firms were beginning to compete
across existing industry boundaries. For example,
television, telecommunications, and utility compa-
nies were competing across these three industry
boundaries. In this same environment, software
companies were providing financial services, and
auto manufacturers were developing large insur-
ance operations while at the same time offering
EXECUTIVE DIGEST
financing. Major industrial firm General Electric
focused more on services in the 1990s, and accord-
ingly received a majority of its revenues during the
period from services–—as opposed to traditional
manufacturing–—businesses.
The changes explained above, along with increas-
ing globalization, contributed to the development
of hypercompetitive markets. Firms had begun to
compete in multiple markets: both goods and ser-
vices markets, as well as multiple geographic mar-
kets across country boundaries. These actions led to
more current and potential competitors in any given
market, and many of those competitors were more
resourceful, thereby increasing the challenges for
domestic competitors.
Porter first introduced his generic strategies of
cost leadership and differentiation in the early
1980s (Porter, 1980, 1985). He argued that firms
should not attempt to implement both strategies
simultaneously. The conflicting requirements to be a
cost leader and achieve a competitive advantage
derived from the differentiation of products, could
likely cause companies to become ‘‘lost in the mid-
dle’’ and be unable to successfully realize either a
cost leadership or a differentiator strategy. Yet, the
growing emphasis on price, quality, and satisfaction
of consumer needs, along with the substantial in-
creases in competitive rivalry (hypercompetition)
and new technologies as a means of achieving
efficiency while simultaneously differentiating
products, has led firms to develop an integrated
low cost-differentiation strategy (Hitt, Ireland, &
Hoskisson, 2011).
All of these factors enhanced the importance of
innovation. For example, the continued develop-
ment of new technologies places pressure on all
firms to engage in continuous innovation. In addi-
tion, increasing emphasis on knowledge as a major
source of competitive advantage enhances the im-
portance of continuous learning. Therefore, firms
were expected to focus on learning, building knowl-
edge, managing knowledge flows (e.g., diffusion of
new knowledge throughout the organization), and
increasing investments to create innovation.
The emphasis on knowledge changed the type of
employees that were highly sought. This presented
challenges for managers because they needed work-
ers with specific types of knowledge, in particular
people with engineering and technological exper-
tise. Labor markets became highly competitive in
light of the ‘‘knowledge worker,’’ driving up com-
pensation and labor costs to attract and keep valu-
able employees. The problems of the dynamic labor
market and enhanced employee mobility were ex-
acerbated by the aging of the workforce in the
United States and in many other countries around
EXECUTIVE DIGEST
the world. Therefore, some projected that the labor
supply was likely to be inadequate in quantity and
skills (knowledge stocks), adding to the challenges
faced by leaders of major companies.
4. Strategic leadership capabilities
Hitt et al. (1998) and Ireland and Hitt (1999) de-
scribed the capabilities needed for effective strate-
gic leadership in the new competitive landscape
expected for the 21st century. They argued that
effective strategic leaders had to: (1) develop and
communicate a vision, (2) build dynamic core com-
petencies, (3) emphasize and effectively use human
capital, (4) invest in the development of new tech-
nologies, (5) engage in valuable strategies, (6) build
and maintain an effective organizational culture,
(7) develop and implement balanced controls, and
(8) engage in ethical pratices.
4.1. Develop and communicate a vision
First, strategic leaders–—hopefully in concert with
others in the organization–—must develop a vision
and communicate that vision broadly, to help guide
the formation and implementation of strategies to
achieve that vision. This form of guidance is im-
portant to establish the direction of the organiza-
tion for its growth, types of products, and market
focus, and to achieve the desired targets. Without
the guidance provided by a vision, organizations
can become chaotic and are unlikely to be as
successful.
4.2. Build dynamic core competencies
A core competence is a major capability to perform
important tasks (e.g., a function) quite well, and
makes a valuable contribution to a firm’s competi-
tive advantage. A dynamic core competence
implies that the firm continues to develop and
update the competence to be the leader, or at
the forefront, in that capability. It also implies that
the firm is prepared to develop a new competence
to replace an existing one when necessary to
maintain a competitive advantage, and/or to build
a new advantage.
4.3. Emphasize and effectively use human
capital
An emphasis on human capital suggests that strategic
leaders attract and retain the absolute best employ-
ee talent available, and continue to develop employ-
ee skills and capabilities (e.g., through training),
439
rewarding staff skill development and using that
talent in the best ways for the organization.
4.4. Invest in the development of new
technologies
Effective strategic leaders take the actions neces-
sary to remain at the forefront of new technology,
developing it internally or obtaining it externally.
They must also exploit the technology to ensure that
the firm operates in the most efficient way possible.
4.5. Engage in valuable strategies
In the late 1990s, engaging in valuable strategies
generally implied exploiting new global market op-
portunities, engaging in appropriate cooperative
strategies, and–—as noted earlier–—using an inte-
grated low cost-differentiation strategy.
4.6. Build and maintain an effective
organizational culture
Developing and maintaining a healthy organization-
al culture should be a priority of strategic leaders. A
healthy culture places emphasis on core values of
innovation, learning, and valuing human capital and
team actions.
4.7. Develop and implement balanced
controls
Control systems help organizations manage finan-
cial capital and govern practices ensuring that po-
tential courses of action are evaluated through a
positive moral filter. The right types of controls
can influence and guide actions in appropriate
ways. Effective strategic leaders establish controls
that facilitate flexible and innovative employee
behaviors to help the firm maintain and/or gain a
competitive advantage.
4.8. Engage in ethical practices
Strategic leaders play a critical role in establishing
ethical practices throughout the organization. Ef-
fective strategic leaders place a strong emphasis on
honesty, trust, and integrity in the decision-making
process and in the implementation of those deci-
sions. The core values of honesty, trust, and integ-
rity serve as moral filters through which potential
courses of actions can be evaluated. These norma-
tive values must be instilled in managers and em-
ployees throughout the organization so that they are
clearly understood and observable through their
decisions and actions.
440
Given the recommendations explained, the
question now becomes: What has happened in
the first 10 years of the 21st century? What have
organizations experienced, and what has the
environment wrought? What types of strategic
leadership were exhibited, and were they effective?
We examine these issues next.
5. The first decade of the 21st century
The first decade of the 21st century has been highly
turbulent, as predicted. Some of the turbulence has
occurred due to increasing globalization and in-
creasing technology. Yet, the turbulence has also
been exacerbated by other factors that had a major
influence on many business activities. For example,
there has been substantial political volatility, ex-
emplified by major terrorist attacks. Perhaps the
most severe of those attacks occurred on September
11, 2001. The attacks on the World Trade Center in
New York and the Pentagon in Washington produced
a significant loss of lives, and changed the political
and business landscapes for many decades to come.
These acts and this day of infamy produced substan-
tial turmoil in the financial markets and led to two
major regional wars in Iraq and Afghanistan, one of
which continues today. Of course, terrorist acts
and/or attempts have continued throughout the
first 10 years of the new century. These acts have
changed the way we do business on a global basis,
creating problems with global supply chains, delays
in travel, and interruptions in communications.
We have also experienced two major economic
downturns during the first 10 years of the 21st
century. The first came early on, and was largely
the result of overvaluation of new Internet-based
companies. The downturn led to a correction in the
valuation of these assets. The significant downward
spiral in the stock market valuations and reduction
in business activities led to the loss of billions of
dollars by investors and to losses of many jobs. Yet,
we recovered from this economic downturn to reach
new highs in economic growth, which was enjoyed
by many countries across the globe. Unfortunately,
substantial problems emerged–—especially in the
financial services industries–—precipitating a new
and very serious economic downturn. In fact, some
believe that we were on the verge of potential
economic disaster in the United States. The eco-
nomic crisis spread throughout the world, partly
because international business leaders and corpo-
rations imitated actions of those in the U.S. These
problems were exacerbated by global economic
interdependencies, poor strategic leadership, and
lack of adequate oversight by formal institutions
EXECUTIVE DIGEST
established by the U.S. and national governments in
other major countries. The problems also suggest a
lack of proper oversight by corporate boards of
directors.
The inability to deal with the environmental
turbulence suggests highly ineffective strategic
leadership. There are several reasons for such
poor strategic leadership, including emphasis on
short-term returns, to the exclusion of long-term
performance; an inappropriate prominence of
stockholders, almost to the exclusion of other stake-
holders; hubris and personal greed driving strategic
decisions; and unethical, sometimes even illegal,
practices. Observers have argued for some time that
top executives were too short-term oriented and,
yet, partly because of the influence of stockholders
and stock values, executives have continued to
emphasize short-term returns over longer-term per-
formance. In fact, the short term has become even
shorter in recent years. In the 1990s, many sug-
gested that executives focused too much on annual
returns, to the exclusions of investments that lead
to longer-term growth and prosperity for an organi-
zation. Yet, in the first 10 years of the 21st century,
many executives began making decisions based on
quarterly returns with the intent of maximizing
stock price, primarily to satisfy stockholders and
investors. Part of the reason for this behavior is
related to the way executives were incentivized
and their emphasis on personal gain–—to enhance
stock price in order to exercise stock options at a
premium. Stockholders are clearly important, but
should they be more important than customers and
other critical stakeholders that influence the suc-
cess of a firm?
According to Hayward and Hambrick (1997), hubris
is defined as exaggerated pride of self-confidence.
When executives exhibit hubris, they are prone to
take excessive risks (Haynes, Campbell, & Hitt, 2010)
because they believe that they are better equipped
to overcome specific firm and environmental chal-
lenges. Hubristic managers believe that their abili-
ties are superior to those of their peers, and that they
can consequently make more risky strategic and
financial decisions. It has been shown, however, that
acquisition decisions (for example) made by manag-
ers with hubris have not produced higher perfor-
mance or better integration of the companies, but
rather have led to losses in shareholder value due to
excessive premiums (Hayward & Hambrick, 1997). In
practice, the extreme risks and their consequences
can also be observed in the strategic actions taken
and major investments made by top U.S. financial
services firms executives during the first decade of
the 21st century. Those undue risks led to the demise
of some major companies, such as Lehman Brothers,
EXECUTIVE DIGEST
and to bankruptcies and substantial government
loans made to stave off the losses of other financial
institutions.
Aside from hubris, people in strategic leadership
positions at many major financial services firms also
exhibited greed. According to Haynes et al. (2010),
greed is defined as the excessive pursuit of material
wealth. Greed motivated some executives to oppor-
tunistically pursue strategies that were based on
excessive self-interest, rather than increasing firm
performance. Although some degree of self-interest
can be expected–—for example, to motivate individ-
ual managers in using their talents and capabilities
for the service of the firm and in benefiting society
(Smith, 1937)–—excessive self-interest in the form of
greed guides actions that benefit only the individual
manager. Self-interest becomes greed as increases
in executive benefits exceed the marginal returns
provided to shareholders and to society at large.
This assumes that all resources held by a company
should add more to shareholder value than required.
In the past decade, many managers have exhibited
greed by using the opportunities their company and
the regulatory environment provided to build their
own personal wealth, rather than to generate re-
turns to stakeholders–—including shareholders–—by
building dynamic capabilities.
A particularly dangerous combination of manage-
rial traits is hubris and greed. Hubris can motivate
managers to take excessive risks, but greed comple-
ments this activity because as the stock price in-
creases, managers receive a substantial boost in
personal compensation. The hefty bonuses awarded
to top management in many firms that failed, or were
on the verge, due to the strategic actions taken by
executives also suggest that they were driven by
greed. Strategic actions that had a substantial nega-
tive effect on the firm, including serious performance
declines and sometimes the company’s demise,
are indications of suboptimal decision-making and
destruction of shareholder value. In the popular pay-
for-performance paradigm of executive compensa-
tion, then, the logical extension of a decrease in
performance is a decrease–—not an increase–—in pay.
Going beyond hubris and greed, evidence sug-
gests that in some of these companies, executives
acted unethically. For example, it has recently been
noted that Lehman Brothers may have managed its
accounting reports to hide the firm’s serious finan-
cial problems. Of course, other examples exist–—
including Bernie Madoff–—where unethical practices
were even more severe and reflect illegal activity.
Interestingly, problems of hubris, greed, and
ethics have been observed in each of the last several
decades. For example, approximately 40 major U.S.
companies were accused of making improper pay-
441
ments to win overseas contracts in the 1970s. Addi-
tionally, it was suggested that the decade of the 1980s
was representative of ultimate greed, whereby im-
mediate profits were sought regardless of the effects
on society. Ethical problems continued in the 1990s
and into the 21st century. In fact, Brief, Dukerich,
Brown, and Brett (1996) found that 47% of the exec-
utives they interviewed stated a willingness to com-
mit fraud by understating write-offs that would
reduce company profits. More recently, we learned
that large corporations have allowed the predating of
stock options to increase the value of compensation
paid to their executives. Clearly, the problems that
have been experienced over a number of decades
represent a failure of strategic leadership.
6. The way forward
The strategic leadership of many companies in the
last several decades has failed to achieve the prom-
ise of organizations and has, in fact, brought the
U.S. and world economies to the precipice of fail-
ure. However, we believe that the potential for
positive strategic leadership not only exists, but is
indeed the way forward. The recommendations for
effective strategic leadership presented in the late
1990s, and summarized herein, remain relevant and
important. While we will again highlight some of
those points, we also offer a few new ones to
communicate the opportunities and potential for
effective strategic leadership.
Undoubtedly, there is still need for top execu-
tives to develop, communicate, and work toward a
vision for the organization. Its importance cannot be
overstated. Doing so helps firms to overcome the
short-term orientation practiced in the past. Addi-
tionally, a vision provides direction that can guide
the strategies designed and implemented, and pro-
vides targets for major strategic actions. While
many in an organization could help develop a vision
and integrate it, the development of an effective
vision requires the leadership of those at the top of
the organization: the strategic leaders.
Also, strategic leaders must have a global mind-
set. This means that the decisions they make and the
problems they encounter and attempt to solve must
be faced with an understanding of how the organi-
zation fits within a global competitive landscape.
This is true even if the firm only competes domesti-
cally and/or locally, because all firms are affected
by global events and likely face competitors that are
based in other countries; that is, global multina-
tionals (Javidan, Steers, & Hitt, 2007).
The global economy has changed in major and
irrevocable ways. Over the last two decades and
442
especially in the last 10 years, several large emerg-
ing economy countries have become major actors on
the worldwide stage. Often, these are referred to as
the BRIC countries: Brazil, Russia, India, and China.
Over the next several decades, these nations
are projected to become even larger contributors
to the global economy. For example, China is ex-
pected one day to surpass the United States and
Japan as the largest economy in the world; India’s
economy is likely to become one of the largest, too.
In fact, predictions suggest that three or perhaps
all four of the BRIC countries are likely to be among
the top 10 economies in the world by the year 2050
(Hitt & He, 2008). Recently, both China and India have
become major sources of supply for many firms based
in western countries, whereas Russia and Brazil pro-
vide access to critically important natural resources
such as oil and iron. In coming years, these countries
will be a home base for major multinational corpo-
rations that serve many markets throughout the
world.
Due in part to the new global competitive land-
scape and the enhanced competition that most
companies face, firms must be more innovative
and entrepreneurial. This means that firms need
to find a way to be alert to and identify opportu-
nities when they exist, or develop opportunities in
new markets by creating novel products or services
that satisfy a need in the consuming public (Alvarez
& Barney, 2007). To do so, strategic leaders must
develop and maintain a culture that fosters and
encourages innovation, and invest in the develop-
ment and exploitation of innovation (Pellet, 2008).
Currently, such cultures exist in firms like IBM and
Apple. For example, IBM obtained just under 5,000
new patents in 2009 alone (LeVine, 2010), surpass-
ing all other firms in the world. For its part, much of
Apple’s current success can be attributed to the
company’s unwavering commitment to innovation
and to commercializing that innovation to satisfy
customer needs. Apple’s success was the reason
Steven Jobs was selected as the CEO of the decade
in the first 10 years of the 21st century (Lashinsky,
2009).
We also understand that new economic growth is
largely spurred by innovation, and especially en-
trepreneurial behavior and the creation of new
firms. A recent study sponsored by the Kauffman
Foundation showed that a primary driver of eco-
nomic growth is entrepreneurship. For example,
young high growth firms–—referred to as gazelles–—
comprise less than 1% of all companies, but generate
approximately 10% of all new jobs each year. These
firms add about 88% of new jobs each year, whereas
the average firm in the economy adds only 2% to 3%
(Weitekamp & Pruitt, 2010). Therefore, in addition
EXECUTIVE DIGEST
to the innovation produced by large resource-rich
firms such as IBM and Apple, new young entrepre-
neurial firms such as White Rock Pearl Co.
(www.whiterockpearl.com) are important for con-
tinued economic health and development.
Undoubtedly, good strategic leaders manage
their resources effectively. For example, they must
build the resource portfolio of a firm; meaning that
they have to acquire valuable resources and contin-
ue to develop them, as well as delete some less
valuable resources over time. They then must inte-
grate or bundle those resources to create valuable
capabilities, some of which become core competen-
cies. Finally, they must develop a strategy to lever-
age and, therefore, exploit those capabilities to
gain a competitive advantage (Sirmon, Hitt, &
Ireland, 2007). Clearly, managing the financial capi-
tal of an organization is a highly important dimen-
sion of a top executive’s job. Yet, perhaps the most
value can be created through human capital and
social capital (Burt, 2010). Consider that the most
unique resource any organization has is its human
capital. Knowledge is critical for gaining and sus-
taining a competitive advantage, and an organiza-
tion’s knowledge largely resides in its human capital
(Hitt, Bierman, Shimizu, & Kochhar, 2001; Hitt,
Bierman, Uhlenbruck, & Shimizu, 2006). In support
of this notion, Ed Breen, CEO of Tyco, contends that
companies beat competitors by out-thinking them.
He suggests that ideas are the basis of winning
competitive battles because companies compete
with their brains, as well as their brawn. Anne
Mulcahy, former chair of the board of Xerox and
former CEO–—who turned around the fortunes of the
company–—argues that people are the primary fac-
tor in success. She suggests that a primary reason for
Xerox’s turnaround in performance was the ability
to attract high-quality employees, motivate them,
and keep them in the fold (Breen, 2007).
Social capital is also highly critical to the success
of all organizations. This means that relationships
with customers, suppliers, other partners, and
stakeholders in general are vital. In fact, a portion
of any executive’s human capital is also her social
capital. Social capital not only provides access to
markets, but also access to important complemen-
tary resources. For example, it supplies information
about markets, such as customer needs and desires.
Too, it may provide access to new technology, new
knowledge that can be used in creating new tech-
nology, and other types of innovations. It can facili-
tate access to key suppliers and/or governmental
units that regulate or oversee these markets. There-
fore, an effective strategic leader must capably
manage the human capital and social capital of
the organization. Finally, execution is absolutely
EXECUTIVE DIGEST
critical to the success of an organization and, there-
fore, to effective strategic leadership. In other
words, effective strategic leaders get things done
and they get them done correctly.
7. The future
The past is but the beginning of a beginning.
H.G. Wells (Peter, 1979, p. 123)
While many mistakes have been made and strategic
leadership has failed in numerous organizations, the
future still provides opportunity. In the face of
continued environmental volatility, strategic lead-
ers must be strategically flexible. Paul Nutt (2002),
who has studied executive decisions over many
years, suggests that more than 50% of corporate
decisions fail. To avoid such failure and to benefit
from the opportunities available, strategic leaders
must carefully manage resources and build effective
human and social capital to create a nimble organi-
zation that is able to shift strategic actions quickly
to stay ahead of competitors. Such flexibility is
required to be proactive, rather than reactive to
others’ competitive actions.
In addition, it is absolutely crucial that strategic
leaders engage in ethical practices. Arthur Levitt
(2004), former chair of the U.S. Securities and
Exchange Commission, which has broad powers of
oversight in regulating and governing corporate
activity, suggested the following:
These huge paydays bolster a system in which
executives have incentives to manage the num-
bers for short-term gain and personal payout,
and not manage their businesses for long-term
growth and shareholder value. Exorbitant com-
pensation feeds the worst instincts and egos of
powerful CEOs, fueled by their desire to win at
all costs and resulting, too often, in the cutting
of ethical corners. (p. 22)
In this statement, Levitt touches on several prob-
lems noted previously in this article, such as hubris,
greed, short-term focus, and ethical problems. He
suggests that changing this is well beyond the power
of any regulatory organization and requires a change
in societal culture. Therefore, we need to develop
and reinforce a culture in which strategic leaders
understand that they must act in the best interests
of their stakeholders, uphold the moral values
of the corporation, and act in unselfish and ethical
ways. This is a tall order, but if we can do it in our
education systems, emphasize it through the media,
and reinforce it through the incentive systems we
provide top executives encouraging them to act in
443
the right ways, there is hope for effective strategic
leadership. Sharon Allen (2008), Chair of the Board
of Directors for Deloitte LLP, summarizes it well: ‘‘I
like to think of ethical principles as carved in stone.
Compliance requirements can change. Ethics en-
dure.’’
Effective strategic leaders have to operate under
conditions of uncertainty. As such, they must view a
volatile environment as presenting opportunities
and employ an entrepreneurial mindset that allows
them to identify and exploit those opportunities in
contexts with significant ambiguity (McGrath &
MacMillan, 2000). To do this in such a turbulent
environment over the coming decades will require
that strategic leaders exhibit the characteristics
described herein. If not, Hamel (2007) argues stra-
tegic leaders that manage in ways indicative of the
past several years will produce failure, perhaps for
the whole organization. In fact, Hamel suggests that
others who are exercising more effective strategic
leadership and thus are more innovative will take
the markets, the best employees, and even the
assets of the firms with poor strategic leaders. Thus,
effective strategic leaders should manage in the
way Andy Grove, former CEO of Intel, recom-
mended. Based on his experiences at Intel and
the ways he built the firm into a highly successful
organization, Grove (1996) suggested that ‘‘only the
paranoid survive.’’ These leaders get the right–—or
proper–—things done, and they get them done cor-
rectly and swiftly.
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