Leadership and strategic change

15.1 Introduction

Amazon, the internet retailer, has been led by founder Jeff Bezos for a quarter of a century.
Bezos lays down ‘Fifteen Leadership Principles’ for the 630,000 people who work for his
company around the world. According to these principles, Amazonians should ‘Think Big’,
‘Dive Deep’, follow a ‘Bias for Action’ and ‘Have Backbone’. Such principles have helped
Bezos lead Amazon’s massive strategic change from online bookstore to diversified technology
giant, with interests ranging from cloud infrastructure for business to mobile phones.

The theme of strategic change runs through much of this book. Part I of this book examined
pressures for strategic change arising from the organisation’s environment and its internal
position; Part II looked at the kinds of strategic option that might form part of strategic change,
such as diversification, internationalisation or innovation. However, central to strategic change is
the leadership task of ensuring that people deliver whatever strategic options are finally chosen.
While this leadership role is most often associated with chief executives it may, in fact, occur at
different levels in organisations: other senior managers and middle managers often take
leadership roles in change as well. Indeed, at Amazon, the company’s leadership principles are
supposed to be followed by all.

Figure 15.1 provides a structure for the chapter. The chapter opens (Section 15.2) by explaining
different roles of leaders and different leadership styles. A key task of leadership is strategic
change. Leaders need to address two issues in co nsidering their approach to change. First,
they have to understand the organisational context, the extent to which it is receptive or resistant
to change: Section 15.3 particularly addresses the forces blocking or facilitating change. Second,
leaders have to identify the type of strategic change required: Section 15.4 differentiates types of
change according to speed and scope. Understanding the context, and identifying the required
type of change, should help leaders select the appropriate levers for change: Section 15.5
considers levers ranging from symbolic management to political action. Section 15.6 draws
many of the issues together by considering common reasons for the failure of strategic change
programmes and pointing to the importance of informal change.
15.2 Leadership and strategic change

Leadership is the process of influencing an organisation (or group within an organisation)

in its efforts towards achieving an aim or goal. Without effective leadership the risk is that
people in an organisation are unclear about its purpose or lack motivation to deliver the strategy
to achieve it. Leadership is associated particularly with strategic change. For example, Harvard
Business School’s John Kotter argues that ‘good management’ is about bringing order and
consistency to operational aspects of organisations, such as quality and profitability of products
and services. Leadership, ‘by contrast is about coping with change’. Thus strategic change is a
crucial underlying theme in this discussion of leadership.

15.2.1 Strategic leadership roles

While leading strategic change is often associated with top management, and chief executives in
particular, in practice it typically involves managers at different levels in an organisation.

Top managers

There are three key roles that are especially significant for top management, especially CEOs, in
leading strategic change:

 Envisioning future strategy. Effective strategic leaders at the top of an organisation need
to ensure there exists a clear and compelling vision of the future and communicate clearly
a strategy to achieve it both internally and to external stakeholders. In the absence of their
doing so, those who attempt to lead change elsewhere in an organisation, for example
middle managers, are likely to construct such a vision themselves, leading to internal
incoherence.
 Aligning the organisation to deliver that strategy. This involves ensuring that people in
the organisation are committed to the strategy, motivated to make the changes needed and
empowered to deliver those changes. In doing so, there is a need for leaders to build trust
and respect across the organisation. It can, however, also be necessary to change the
management of the organisation to ensure such commitment, which is a reason why top
teams are often reshuffled at points of strategic change.
 Embodying change. A strategic leader will be seen by internal and external stakeholders
as intimately associated with a strategic change programme. A strategic leader is, then,
symbolically highly significant in the change process and needs to be a role model for
future strategy (see Section 15.4.5 below on symbolic levers for change).

Middle managers

A top-down approach to managing strategy and strategic change sees middle managers as mere
implementers of top management strategic plans. Here their role is to ensure that resources are
allocated and controlled appropriately and to monitor the performance and behaviour of staff.
However, middle managers have multiple roles in relation to strategy. In the context of managing
strategic change there are four roles to emphasise:

 Champions of strategic issues. Middle managers are often the closest to market or
techno- logical shifts that might signal the need for strategic change. They are also well-
placed to be able to identify likely blockages to change. Accordingly, middle managers
must gain the attention of senior management for strategic issues that are less visible to
the top of the organisation, and win senior managers’ commitment to appropriate
strategic actions. In other words, middle managers must often ‘sell’ strategic issues to top
management, getting their buy-in in order to push strategy forward.
 ‘Sense makers’ of strategy. Top management may set a strategic direction, but how it is
explained and made sense of in specific contexts (e.g. a region of a multinational or a
functional department) may effectively be left to middle managers. If misinterpretation of
that intended strategy is to be avoided, it is therefore vital that middle managers
understand and feel an ownership of it. They are therefore a crucial relevance bridge
between top management and members of the organisation at lower levels.
 Adapters to unfolding events. Middle managers are uniquely qualified to reinterpret and
adjust strategy because they have day-to-day responsibility for implementation.
 Local leaders. Middle managers symbolise and embody change, just like top
management, but do so at a local level. This can be particularly important in decentralised
organisations, such as chains of retail stores or multinational corporations.

Recognising the leadership role of middle managers can help balance the heroic, top-down and
individualist image often associated with leaders, particularly in Anglo-American business
cultures. Of course, middle managers can be heroic individuals. However, because they do not
have the power or legitimacy of top managers, middle managers are often obliged to adopt more
collective or collaborative approaches to leadership. Leaders may need to harness the support
and ideas of colleagues in teams. Many top managers also prefer this collaborative approach. In
other words, leaders are not always individualistic. There are different styles of leadership.

15.2.2 Leadership styles

Leaders tend to adopt characteristic ‘styles’ of behaving and intervening. These leadership styles
are often categorised in two broad ways:

 Transformational (or charismatic) leaders emphasise building a vision for their

organisations, creating an organisational identity around collective values and beliefs to
support that vision and energising people to achieve it. Organisational founders are often
particularly charismatic (i.e. personally inspiring). Evidence suggests that this approach
to leadership is beneficial for people’s motivation and job performance, and is
particularly positive for wider business performance when organisations face uncertainty.
  Transactional leaders emphasise ‘hard’ levers of change such as designing systems and
controls. The emphasis here is more likely to be on changes of structures, setting targets
to be achieved, financial incentives, careful project management and the monitoring of
organisational and individual performance.

In practice, transformational and transactional leadership styles are two ends of a continuum,
with many feasible points between. Leaders typically combine elements of the two styles, rather
than identifying exclusively with one (see Illustration 15.1). Indeed, the notion of situational
leadership encourages strategic leaders to adjust their leadership style to the context they face. 10
In other words, there is not just one best way of leading: appropriate leadership style changes
according to the specific demands of the situation. The next two sections examine two aspects of
such situations: contexts of change and types of change.