Strategic Leadership:

Creating a Learning
Organization and an Ethical
Organization.
chapter 11

Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill

Education .
 Learning Objectives
11-2

LO11.1 The three key interdependent activities in

which all successful leaders must be continually
engaged.
LO11.2 Two elements of effective leadership:
overcoming barriers to change and the effective use
of power.
LO11.3 The crucial role of emotional intelligence (EI)
in successful leadership as well as its potential
drawbacks.
 Learning Objectives
11-3

LO11.4 The importance of developing competency

companions and creating a learning organization.
LO11.5 The leader’s role in establishing an ethical organization.
LO11.6 The difference between integrity-based and
compliance-based approaches to organizational ethics.
LO11.7 Several key elements that organizations must have to
become an ethical organization.
 Learning from Mistakes
#-4

 Synthes, a medical device maker headquartered in West Chester, Pennsylvania.

 2012 four corporate officers responsible for illegal actions.
 2002-2004 Synthes trials Norian bone cement, product used to VCFs.
 Food and Drug Administration(FDA) barred the use of Norian.
 Synthes forgot the FDA approved and began promoting Norian.
 Result: Three patients died, Synthes had to pay $23.2 million,& four executives
send to prison.
 sold to Johnson and Johnson for $20 billion in June
2012.
 Learning from Mistakes
#-5

 What might be the underlying problem at Synthes that

caused such disregard for the law?
 Hansjorg Wyss was the founder and CEO of Synthes .
 Wyss played an intimidating, hands-on role in managing the company and owned a
50 percent share of it.
 Nothing went past Wyss without his input or approval.
 Wyss strategy was to persuade a few doctors to do the procedure on their own and
then the company would try to popularize the Norian product.
 Wyss insisted, without any explanation, that no clinical study would be undertaken.
 Strategic Leadership
11-6

To both create and implement proper

strategies, firms must have strong and
effective leadership.
Leadership is the process of transforming organizations
from what they are to what the leader would have them
become.
Successful leaders are
Proactive – dissatisfied with the status quo
Goal oriented – visualizing successful futures
Focused on the creation & implementation of a creative
vision – understanding the process
 Strategic Leadership
11-7

Exhibit 11.1 Three Interdependent Leadership Activities

 Strategic Leadership
11-8

 Setting a direction requires the ability to scan the

environment for knowledge about
 All stakeholders
 Salient environmental trends & events
 Then integrate that knowledge into a strategic vision of
what the organization could become
 A clear future direction
 A framework for the firm’s mission & goals
 Leading to enhanced employee communication,
participation, & commitment
 Strategic Leadership
11-9

 Designing the organization requires building mechanisms to

implement the leader’s vision and strategies through
 Structures & teams
 Systems & processes
 Lack of appropriate design could cause problems
 Managers who don’t understand their responsibilities
 Reward systems that are not motivating
 Inappropriate financial systems
 Insufficient integrating mechanisms
 Strategic Leadership
11-10

 Nurturing an excellent and ethical organizational culture is a key

leadership activity, requiring that managers & leaders
 Accept personal responsibility for developing & strengthening ethical
behavior
 Consistently demonstrate that such behavior is central to the mission &
vision of the firm
 Develop & reinforce
Role models
Corporate credos & codes of conduct
Reward & evaluation systems, policies & procedures
 Strategic Leadership:
11-11
Overcoming Barriers to Change
 Leaders must overcome barriers to change
 Organizations are prone to inertia, slow to learn, adapt, & change
because of
 Vested interests in the status quo
 Systemic barriers
 Behavioral barriers
 Political barriers
 Personal time constraints
 Strategic Leadership:
11-12
Effective Use of Power
 Leaders must make effective use of power
 Influence other people’s behavior
 Persuade them to do things they otherwise would not do
 Overcome resistance & opposition
 Sources of power
 Organizational bases of power
Legitimate, reward, coercive, information
 Personal bases of power
Referent, expert
 Strategic Leadership:
11-13
Effective Use of Power

Exhibit 11.2 A Leader’s Bases of Power

 Strategic Leadership:
11-14
Emotional Intelligence
 The valuable traits of successful leaders:
 Technical skills – like accounting, operations research
 Cognitive abilities – like analytical reasoning, quantitative analysis
 Emotional intelligence – like self-management, managing relationships
with others
Self-awareness, self regulation, motivation, empathy, social skills
 Strategic Leadership:
11-15
Emotional Intelligence

Exhibit 11.3 The Five Components of Emotional Intelligence at Work

Source: Reprinted by permission of Harvard Business Review. Exhibit from “What Makes a Leader,” by D. Goleman,
January 2004. Copyright © 2004 by the Harvard Business School Publishing Corporation; all rights reserved.
 Emotional Intelligence: some potential
Drawbacks and Cautionary Notes
#-16

 Some potential drawbacks and cautionary notes:

 Have empathy for others
 Astute judges of people
 Passionate about what they do, and they show it
 Create personal connections with their people
 Developing Competency Companions
and Creating a Learning Organization
#-17

 Leaders need to reflect on the skills and how they build and extend
their skill set.
 Concept of learning Organization
Charles Handy, author of “The Age Of Unreason and The Age of Paradox.
 Learning and Change involve questioning of an organization’s status
quo or method procedure.
 Strategic Leadership:
11-18
A Learning Organization

Exhibit 11.4 Key Elements of a Learning Organization

 Inspiring and Motivating People
11-19
with a Mission or Purpose
 Successful learning organizations
 Create a proactive, creative approach to the unknown
 Actively solicit the involvement of employees at all levels
 Enable all employees to use their intelligence & apply their
imagination
 A learning environment involves
 An organization-wide commitment to change
 An action orientation, applicable tools & methods
 Empowering Employees at All
11-20
Levels
 Successful learning organizations empower employees at all levels
 The leaders/managers roles involve
 Becoming coaches, information providers, teachers, decision-makers,
facilitators, supporters, or listeners
 Soliciting individuals’ input, valuing others’ ideas & initiatives
 Providing for trust, cultural control, & expertise at all levels
 Accumulate & Share Internal
11-21
Knowledge
 Successful learning organizations accumulate & share internal
knowledge
 The firm shares information:
 Customer expectations & feedback
 Financial information
 Business goals
 How key value-creating activities are related to each other
 The firm allocates rewards based on how effectively employees use this
information
 Gather & Integrate External
11-22
Information
 Successful learning organizations gather & integrate external
information
 Firms must recognize opportunities & threats, both general & industry-
specific
 By using the Internet
 By using trade journals & membership in professional organizations
 By doing both competitive & functional benchmarking
 By asking customers
 The Status Quo & Enable
11-23
Creativity
 Successful learning organizations challenge the status quo & enable
creativity
 Leaders must bring about useful change
 Forcefully create a sense of urgency
 Establish a “culture of dissent”
 Foster a culture that encourages risk-taking & learning from mistakes
Formalize forums for failure; move the goalposts; bring in outsiders; prove
yourself wrong, not right
 Strategic Leadership:
11-24
Creating an Ethical Organization
 Ethics deals with right and wrong
 Ethical beliefs come from religion, ethnic heritage, family practices,
community standards, educational experiences, friends & neighbors
 Organizational ethics promote an operating culture & determine
acceptable behavior
 Ethical beliefs come from the values, attitudes, & behavioral patterns of
leadership
 Strategic Leadership:
11-25
Creating an Ethical Organization
 The ethical orientation of the leader is a key factor in promoting ethical
behavior
 Integrity & ethical values
 Shape behaviors
 Provide a common frame of reference
 Act as a unifying force
 Have a positive effect on employee commitment & motivation to excel
 Can create value & a competitive advantage
 Integrity-Based Versus Complience-based
Approaches to Organizational Ethics
11-26

 Ethical frameworks for integrity include:

 The compliance-based ethics program
 Prevents, detects, & punishes legal violations
 The integrity-based ethics program
 Enables ethical conduct
 Examines organization’s and members’ core guiding values, thoughts, &
actions
 Defines responsibility & aspirations for ethical conduct
 Strategic Leadership:
11-27
Creating an Ethical Organization

Exhibit 11.5 Approaches to Ethics Management

Source: Reprinted by permission of Harvard Business Review. Exhibit from “Managing Organizational Integrity,” by
L. S. Paine. Copyright © 1994 by the Harvard Business School Publishing Corporation; all rights reserved.
 Strategic Leadership:
11-28
Creating an Ethical Organization
 Interrelated elements of a highly ethical organization include
 Ethical role models
 Corporate credos & codes of conduct
 Ethically-based reward & evaluation systems
 Consistently enforced ethical policies & procedures
 Strategic Leadership:
11-29
Creating an Ethical Organization
 Ethical role models
 Must be consistent in their words & deeds
 Their values & character must become transparent to an organization’s
employees
 They must take responsibility for ethical lapses within the organization
Courageous behavior by leaders helps to strengthen an organization’s
ethical environment
 Strategic Leadership:
11-30
Creating an Ethical Organization
 Corporate credos & codes of conduct
 Provide a statement & guidelines for norms, beliefs & decision-making
 Provide employees with clear understanding of the organization’s
position regarding behavior
 Provide the basis for employees to refuse to commit unethical acts
 Contents of credos & codes of conduct must be known to employees
 Strategic Leadership:
11-31
Creating an Ethical Organization
 Reward & evaluation systems can either support or undermine an
ethical orientation
 Support by creating an evaluation system that rewards ethical thinking
Actions are consistent with words; follows through on commitments;
readily admits mistakes
 Undermines by rewarding results regardless of how they were achieved
Intense competition encourages falsification of scores
 Strategic Leadership:
11-32
Creating an Ethical Organization
 Carefully developed policies & procedures can help guide ethical
behavior
 By specifying proper relationships with customers & suppliers
Through global sourcing guidelines to identify conflicts of interest
 By encouraging employees to behave ethically
Through effective communication, enforcement, & monitoring
Through sound corporate governance practices
#-33

Terima Kasih