Leadership for strategic change

Nancy E. Landrum
New Mexico State University, Las Cruces, New Mexico, USA
Jon P. Howell
New Mexico State University, Las Cruces, New Mexico, USA
Lori Paris
New Mexico State University, Las Cruces, New Mexico, USA

Keywords
Organizational change, Introduction Leadership and organizational
Strategy, Turnarounds, turnaround
Organizational design, As business environments become
Teams, Leadership increasingly competitive and complex, In studies of leadership behavior, there has
organizations must be alert and flexible to historically been a belief in a universal
Abstract manager who could adapt to any situation
Organizations in need of strategic
remain competitive. Complacency within an
organization can lead to inertia. (Bass, 1985). Another stream of research has
turnaround often seek charismatic
leaders to lead change efforts. Organizations that do not remain suggested that different leaders have
With the growing popularity of
competitive will often begin a gradual different characteristics and the leader
democratizing workplaces, team- should be matched to the organization's
based approaches to strategic downward trend in financial performance
needs. This approach is reflected in Fiedler's
change are emerging. The litera- and must be revitalized for continued
ture on each of these change Contingency Theory of Leadership
survival.
approaches is reviewed. Several Effectiveness (Fiedler, 1967) and in many
When an organization is in need of a
research propositions are offered other contingency models (Hersey and
which suggest that strategic strategic turnaround, charismatic
Blanchard, 1977; House and Mitchell, 1974;
teams can be a better choice than leaders are frequently put in charge.
charismatic leaders for turning Stinson and Johnson, 1975; Vroom and
Effective charismatic leaders are often
around an organization. The Yetton, 1973; Yukl, 1998).
capable of communicating a vision and
authors also note the need for These contingency or situational theories
future research to compare the mobilizing the energy necessary for a
propose that effective leadership depends on
effectiveness of charismatic lea- turnaround.
ders with the effectiveness of the situation and that some match between
Many organizations are also creating the leader behaviors and the situational
strategic teams in planning and
initiating strategic change. teams of employees to accomplish work characteristics of the organization and
goals. These companies give increasing followers is optimum (Hersey and Blanchard,
amounts of responsibility to these teams by 1977; House and Mitchell, 1974). ``The focus in
allowing them to be self-managed or situational approaches to leadership is on
assigning them the authority to plan and observed behavior, not on any hypothetical
implement strategic change (Emery and inborn or acquired ability or potential for
Purser, 1996). In some instances, entire plants leadership. The emphasis is on the behavior
have been built around work teams (Lawler, of leaders and their group members
1986) (followers) and various situations'' (Hersey
As organizational designs move away from and Blanchard, 1993, p. 116).
bureaucracy and toward democracy and the Consistent with the contingency or
use of teams, we must look at the situational models, many writers have
effectiveness of this design in planning and suggested we should match managers to the
implementing strategic change for entire strategic needs of the firm (Gerstein and
organizations. Teams are often effective Reisman, 1983; Leontiades, 1980, 1982; Life,
at adapting to rapidly changing 1986; Szilagyi and Schweiger, 1984; Wissema
Received: August 1999 et al., 1980). Efforts of these scholars have
Revised/Accepted: environments (Barker, 1993; Manz and Sims,
January 2000 1987). In turbulent business environments focused on identification of the company
when an organization is facing an uncertain situation and characteristics of the strategy
future, can a team lead a strategic that must be implemented. Writers have then
turnaround as effectively as a charismatic attempted to match these to characteristics
Leadership & Organization leader? that a leader must have in order to
Development Journal successfully implement the organizational
21/3 [2000] 150±156 strategy.
The current issue and full text archive of this journal is available at
# MCB University Press As an example, Hoffman (1989)
[ISSN 0143-7739] http://www.emerald-library.com
characterizes a turnaround as a cycle during
[ 150 ]
Nancy E.Landrum, which the firm shows declining financial and skills required of a leader as being:
Jon P. Howell and performance followed by a recovery. strong analytical and diagnostic skills, a high
Lori Paris Hoffman (1989) reviewed 17 studies of energy level, be an excellent business
Leadership for strategic
change corporate turnaround strategies and he noted strategist and risk taker, handle pressure
Leadership & Organization that the strategies typically involved one or well, have good crisis management skills,
Development Journal all of the following components: and be a good negotiator.
21/3 [2000] 150±156 restructuring of leadership and the Some writers indicate that charismatic
organization/culture, cost reduction, asset leaders can fail at turnaround strategies. For
redeployment, a selective product/market example, Nadler and Tushman (1989) believe
strategy, and repositioning. Hoffman cited that charismatic leadership is necessary but
Bibeault's (1982) study of the connection not sufficient for strategic change. They
between leadership and strategy in which postulate that charismatic leadership must
Bibeault noted that strong leadership was the be accompanied by instrumental leadership
single most important factor for successful (leader behaviors which are instrumental in
turnaround strategies. Hoffman also found implementing the change), without which
that most turnarounds which he reviewed the charismatic leader will fail. So while
were headed ``by growth-oriented and theorists like Anantaraman (1993) suggest
entrepreneurial managers . . . [with] that strategic change of an organization is so
experience in the firm's industry or in a completely encompassing that it requires
variety of industries, self-confidence, task- charismatic leadership to be successful,
orientation, and ability to inspire confidence Nadler and Tushman (1989) believe that
in others. . . . [They were] characterized by: charismatic leadership alone is not enough.
task immersion, being highly visible, and Indeed, Meindl et al. (1996) suggest that we
using political skills'' (Hoffman, 1989, p. 59). have come to idealize and romanticize the
The change strategists in Bibeault's (1982) abilities, accomplishments, and impacts of
studies also worked to reform the leaders.
organizational culture by providing a new Although charismatic leaders may have
perspective on the situation, changing the qualities necessary for turning around
attitudes, instilling a sense of fairness, organizations, it has been shown that
coaching, and building shared goals charismatic leaders can be damaging to
(Hoffman, 1989). Many of these leader organizations and followers (Hogan et al.,
characteristics and behaviors have been 1990; Janis, 1989; Post, 1986). For example,
attributed to charismatic leaders (Shamir et Janis (1989) noted that charismatic leaders
al., 1993). can lead followers into groupthink and cites
Burns' (1978) transformational leader as an example John F. Kennedy and the
``style'' has been studied by many researchers Cuban missile crisis. Charismatic leaders
under a variety of labels (Bass, 1985; Bennis have also been accused of being narcissistic
and Nanus, 1985; Conger and Kanungo, 1987; (Hogan et al., 1990; Post, 1986). Post stated that
House, 1977; Kuhnert and Lewis, 1987; the charismatic leader ``requires a
Sashkin, 1988; Shamir et al., 1993; Tichy and continuing flow of admiration from his
Devanna, 1986). Behaviors and traits of the audience in order to nourish his famished
transformational leader include empathy, self. Central to his ability to elicit that
need for power, good rhetorical skills, admiration is his ability to convey a sense of
intelligence, and consideration for others. grandeur, omnipotence, and strength'' (Post,
The effect of this leadership style is that it 1986, p. 679). Examples include Jim Jones,
inspires or motivates followers, gains Adolph Hitler, Ayatollah Khomeini and
commitment from followers, changes Reverend Sun Moon (Post, 1986). Howell and
attitudes, beliefs, and/or goals of individuals, Avolio (1992) refer to this ``dark side'' as the
changes norms of the organization, makes ``unethical charismatic'' and describe these
subordinates feel they are being treated as individuals as controlling, manipulative and
individuals, helps individuals see problems self-promoting. Conger (1996) suggests that a
in new ways, communicates and transmits a leader's vision, communication and
vision of the organization. Burns (1978) sees impression-management skills, and
the transformational leader as reflecting the managerial practices could lead to negative
traits and behaviors that are necessary for outcomes. It may be that these dark or
initiating change. These are the same effects unethical characteristics of the charismatic
of the charismatic leader (Bass, 1985). leader can jeopardize and even sabotage the
Gerstein and Reisman (1983), on the other turnaround efforts of a firm.
hand, identify the main organizational needs With a few exceptions (Howell and Costley,
for a turnaround as rapid, accurate problem 2000), leadership researchers have been
diagnosis and correcting short-term and conspicuously silent about charismatic or
long-term problems. They identify the traits transformational leaders adapting their style
[ 151 ]
Nancy E.Landrum, to fit a specific organizational situation. flexibility and responsiveness into their
Jon P. Howell and House (1996) believes that effective leaders organizational systems. We believe that this
Lori Paris
Leadership for strategic use those behaviors with which they are would best be achieved through an emphasis
change most comfortable rather than using the full on team structures.
Leadership & Organization range of leadership behaviors. If this is true,
Development Journal how can charismatic leaders be flexible and
21/3 [2000] 150±156
adaptive to the needs of an organization A key question
during turbulent times that necessitate
major change? An alternative may lie with The research and theories described thus far
groups of individuals that collectively lead us to the following question: Are
possess the necessary skills and behaviors to charismatic leaders really needed for
design and carry out a major organizational strategic change? While researchers such as
change. Burns (1978), Bass (1985) and others believe
so, other researchers (Emery and Purser,
1996; Weisbord, 1992) believe we can
accomplish the task with teams of employees.
Team processes and change Charismatic leaders can repudiate the past
In contrast to those who would match a and thereby act as a revolutionary force
charismatic leader to an organization in need (Weber, 1947), which is an important factor
of a turnaround strategy, some advocate a for strategic change (Bass, 1985; Burns, 1978).
team-based approach (Emery and Purser, But charismatic leadership is not without its
1996; Weisbord, 1992; Weisbord and Janoff, problems. As discussed earlier, there is a
1995) or a bottom-up approach (Clarke and dark side to charismatic leadership.
Meldrum, 1999). The team-based approach A second problem with charismatic
referred to here involves using employees leadership involves leadership succession.
from all levels of the organization, including We have seen instances of organizations
management, to design and implement the being turned around by charismatic leaders,
vision and the strategic plan. These teams of such as Chrysler under the direction of Lee
individuals may be responsible for the Iacocca and General Electric under the
overall strategic direction of the organization guidance of Jack Welch. But how would the
and are called strategic teams. results have changed if either Mr Iacocca or
Emery and Purser (1996) suggest ways to Mr Welch were suddenly unable to fulfill
guide organizations in changing from a their duties? How would the special qualities
bureaucratic organizational structure to a and knowledge that they possess be passed on
more democratic structure in which power to the subsequent leader? These successful
and decision making are diffused throughout turnarounds may have stalled if either Mr
the organization. The new democratic Iacocca or Mr Welch had suddenly been
structure allows teams (as opposed to a single unable to fulfill his leadership role. Further,
leader) to plan and lead strategic change the results of the turnaround may be difficult
through the process of a Search Conference. to maintain once the charismatic leader exits
The Search Conference model involves the organization.
groups of employees from all levels of the These problems arise when any one person
organization in planning and implementing is in sole control of strategic knowledge in an
large-scale organizational change and creates organization. Weber (1947) stated that
an organization characterized by flexibility charisma belongs to the leader and the leader
and continuous learning. Additional team- alone. Charisma could be ``awakened'' and
based approaches are discussed and ``tested'', but it could not be ``learned'' or
compared in Weber and Manning (1997). ``taught'' (Weber, 1947, p. 364). If Weber was
Collins and Porras (1994) predict that correct, then when a charismatic leader
companies will organize themselves to be less leaves, it may be impossible for the ensuing
dependent on charismatic leaders. They leader to take his/her place through
suggest it is a myth that a company needs a inheriting the charismatic leader's
visionary leader. ``A charismatic visionary characteristics, behavior, and knowledge. If
leader is absolutely not required and, in fact, the leader has significantly damaged the
can be detrimental to a company's long-term organization, the effects may be difficult to
prospects'' (Collins and Porras, 1995, p. 64). repair.
Further, they also suggest that companies A self-managed work team or group has the
will turn their focus away from building ability to share knowledge among many
strategies and toward building processes to people and does not rely solely on the
become an enduring institution. In other characteristics or behaviors of one
words, future organizations will seek to individual. This is primarily because a self-
become visionary companies by building managed work team or group is able to
[ 152 ]
Nancy E.Landrum, acquire power, information, and knowledge effective in deriving and implementing a
Jon P. Howell and as tasks and decision-making functions are turnaround strategy.
Lori Paris Using the word team does not imply a
Leadership for strategic moved to lower levels of the organization
change (Lawler, 1986). An organization undergoing a group of people without leadership. On the
Leadership & Organization turnaround is in a critical position. Losing a contrary, many teams have leaders outside
Development Journal charismatic leader could be devastating to the group and many rotate leaders within the
21/3 [2000] 150±156
the success of the leader's strategy and the group. The premise behind work teams is
organization, thus sharing power, that employees become empowered and must
information, and knowledge among many accept responsibility and accountability for
members of a team can act as a safeguard. their actions (Moravec et al., 1998).
There is a lack of research comparing the Empowerment is key to team effectiveness.
outcomes or success rates of strategic change Kirkman and Rosen (1999) found that team
implemented by teams versus charismatic empowerment is a more powerful predictor
leaders. Does one approach lead to more of team effectiveness than self-management
immediate or greater results? Does reliance alone.
on a charismatic leader create an Work teams, according to Moravec et al.
organization dependent upon its leader? Does (1998), also ``resemble more of a process than
the team-based approach create a learning a structure. As such, they evolve, change
organization capable of quick change? course, make adjustments and grow'' (p. 3).
If Emery and Purser (1996) are correct, Their success is in their flexibility and
redesigning organizational structures to be ability to make adjustments quickly.
democratic learning organizations should Hackman (1987) described a normative model
make them more flexible and effective in the that should be implemented to foster group
long run. Employee work teams have also effectiveness and to allow the team to evolve
been shown to increase productivity, and adjust as needed. His model suggests that
proactiveness, customer service, job the design of the work group should facilitate
satisfaction, organizational commitment and the group's performance as a unit, the
team commitment (Kirkman and Rosen, organizational context should support the
1999). Furthermore, it is suggested that teams operation of the group, and the outcomes of
are superior to individuals in their the interaction among group members
judgments and problem solving (Bass and should be synergistic.
Stodgill, 1990; Hennefrund, 1985; Koehler and Not only can an empowered team create
Pankowski, 1996; Lawler, 1986; Pfeffer, 1999) better decision making, but this also allows
and share a greater resource of knowledge power, guidance, and direction to be
(Lawler, 1986). This suggests the following redistributed from upper echelon executives
proposition. to people at all levels throughout the
Proposition 1. Strategic change by teams organization. In an organization where
will be longer lasting and more responsive in power is widely distributed, a single
the future than strategic change initiated by charismatic leader may no longer be
a charismatic leader. required to initiate strategic change. We
suggest that there are specific organizational
conditions where team leadership should be
Conditions for effective strategic better than individual leadership. This leads
teams to the following proposition.
Proposition 2. Teams can effectively plan
Can a team approach fare better if the
and initiate strategic change efforts in
organization's culture does not emphasize a
organizations where power is widely
charismatic leader? According to the
distributed and/or the culture does not
literature, decision making by a team can be
emphasize a charismatic leader.
superior to decision making by an individual
leader (Lawler, 1986; Bass and Stodgill, 1990)
regardless of a leader's attributes. ``Teams
permit employees to pool their ideas to come Teams as leadership substitutes
up with better and more creative solutions to and enhancers
problems'' (Pfeffer, 1999). It follows that this The next question is whether a team can
logic would also apply to turnaround moderate the impact of leadership in
strategies. Not unlike charismatic leaders, strategic change efforts. Can a team approach
teams can ``inspire employees to connect substitute for or enhance charismatic
with the company's vision in a very personal leadership?
way'' by allowing them to affect key issues There are documented examples of how
and develop their leadership skills (Moravec teams have demonstrated flexible leadership
et al., 1998), thus enabling the team to be in numerous organizations. Todd La Porte,
[ 153 ]
Nancy E.Landrum, Gene Rochlin and Karlene Roberts (LaPorte launched his campaign to prevent Chrysler's
Jon P. Howell and et al., 1989) reported how teams of air traffic bankruptcy to save the jobs of thousands of
Lori Paris controllers work to direct traffic into the San Chrysler employees. He was well supported
Leadership for strategic
change Francisco Airport. The experience and by teams of competent individuals within the
Leadership & Organization training of controllers in closely-knit work company. These conditions also existed when
Development Journal teams effectively substitute for the Mahatma Ghandi led India's drive for
21/3 [2000] 150±156 leadership of their hierarchical superiors. In independence from the British. Influential
the ``. . . white heat of danger, when the whole groups of followers worked hard to help him
system threatens to collapse. . ..'' the close realize their vision for India. In these
working relationships among competent situations, groups and teams of effective
colleagues makes the difference. Controllers followers saw their charismatic leaders as
frequently redirect operations by ignoring effective strategy makers, and they worked to
orders from managers who are not on the enhance the favorable effects of these leaders.
front line. This suggests another proposition:
Tracy Kidder (1981) described how a team Proposition 4. Effective teams can enhance
of highly skilled and dedicated computer the efforts of a positive charismatic leader in
engineers at Data General interacted with implementing strategic change.
one another intensively over a period of
months to design a faster computer than the
competition. Their leader provided them Conclusion
with information, specifications and
resources and they designed and built the If Collins and Porras' (1994) predictions about
computer by themselves. In the Columbus, the decreasing dependence of organizations
Ohio Police Department, the creation of two- on charismatic leaders and growth in team-
based structures are accurate, it becomes
person patrol units, supplemented by field
critical that we know whether organizations
training officers, substituted for the guidance
can successfully execute strategic changes
and leadership traditionally provided by
without the guidance of a charismatic leader.
hierarchical leaders.
Diversification, globalization and
Each of these organizational situations
technological innovation have caused many
involves a rapidly changing environment
business organizations to change rapidly.
where teams of individuals effectively direct
The need for continued flexibility is clear.
their own efforts to deal with new
Lewin's (1964) model of change as ``freeze,
information and to achieve organizational
unfreeze, refreeze'' is no longer adequate in
goals. Charismatic leadership may not be
our competitive environments. Change
needed in organizations that value
cannot be so static, it must be fluid. Teams of
independence and self-management among
multi-talented and diversified individuals
employees. Also, employees who are well
could be the answer to strategic planning and
educated and egalitarian are less likely to
change for the future. Charismatic leaders
surrender decision making to a charismatic
may not be the universal remedy for
leader (Howell and Costley, 2000). These
organizations in need of turnaround. While
characteristics often describe employees in
charismatic leaders can still effect change,
learning organizations that emphasize self-
perhaps team-led strategic change will be
managed teams. These teams may block
better oriented to future business needs in
charismatic leadership when the group
rapidly changing and complex environments.
members perceive the leader as uninformed,
More research is needed regarding the
narcissistic, or as using followers or the
conditions under which teams (or individual
organization for the leader's own personal
charismatic leaders) are a better or worse
ends. This suggests the following proposition:
choice for leading strategic change.
Proposition 3. Effective self-managed teams
can block and replace (substitute for) the
effects of ``dark'' charismatic leaders and can
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