Managing Strategic Change; The Role of Symbolic Action

As our understanding of processes of strategic management develop, it is clear that the problems of managing major shifts in strategy, which organizations face on occasions, are of a different order to the typically incremental strategy development they follow. It is also recognized that these problems are closely linked to cognitive and cultural dimensions of organizations. Research on the management processes associated with more fundamental strategic change is still sparse, but suggests that it requires substantial cognitive shifts in which intervention, often by new corporate leaders, and political and symbolic, as well as more substantial action, is likely. This paper draws together the author's and other research in related fields, to formalize explanatory models, which link organizational inertia of strategy, more fundamental strategic change, and in particular the symbolic management activities of corporate leaders as strategic change agents.     

Monitoring the monitor: Enabling strategic change when the former CEO stays on the board

Firms often retain their former CEOs on the board after succession to benefit from the former CEOs’ firm-specific expertise. However, their presence can inhibit successor CEOs from implementing meaningful strategic change, as the former CEOs seek to preserve their personal legacy and may see the strategic landscape differently, especially when the successor CEO is hired from outside the firm. Using a strategic leadership interface perspective, we propose that board members can alleviate this potential tension and enable strategic change. To test our theory, we focus on a subsample of succession events: when the former CEO stays on board as chair and the successor CEO is an outsider. This scenario is likely to result in strategic tension and cognitive differences between these two organizational leaders. We find that in such situations, boards with a higher proportion of outside directors experience greater post-succession strategic change; we find no effect in other succession scenarios. We isolate legacy conservation as a motivating factor by showing that the effect manifests for divestitures but not for acquisitions.     

Strategic leadership in organizational crises: A review and research agenda

Of all actors involved in managing an organizational crisis, strategic leaders play a particularly central role. However, the growing scholarship on the impact of strategic leaders in crisis situations is characterized by a high degree of fragmentation, considerably hindering the generation of parsimonious theory and practically useful insights. To address this issue, we conduct a systematic multidisciplinary literature review that spans the research streams on strategic leadership and organizational crises. For each type of strategic leader—Chief Executive Officer (CEO), top management team, and board of directors—we identify the different applied theoretical lenses and highlight commonalities and differences between studies and their insights. We use our review to derive an integrative conceptual framework that guides future research. Our exploratory review unveils that, while each type of strategic leader plays a significant role in a crisis context, the perspectives taken and the resulting evidence vary: as for the CEO, research focuses on social evaluations—for instance, based on the CEO's appearance—as well as agency-theoretic considerations—particularly, financial incentives. Regarding the top management team, research mostly adopts a managerial and organizational cognition lens, focusing on characteristics such as personality and human capital. Lastly, for the board of directors, agency-theoretic considerations again dominate the scholarly conversation, especially studies of board independence. Overall, we review and organize a rich but patchy research landscape, and we derive ample opportunities for novel theoretical and empirical inquiries into strategic leaders and their role in managing organizational crises.     

What is strategic leadership? Developing a framework for future research

We attempt to bring clarity to the concept of strategic leadership and guide its development by reviewing and synthesizing the existing management literature on how top managers and board directors influence organizations. We propose a new definition of strategic leadership and offer a framework organized around the essential questions of what strategic leadership is, what strategic leaders do, why they do it, and how they do it. To answer these questions, we organize our review around the eight functions strategic leaders serve, the key attributes of strategic leaders, the theories scholars have used to relate these functions and attributes to outcomes, contextual factors, and the organizational outcomes that strategic leaders affect. We identify how strategic leadership research is concentrated in five streams that rarely interact with each other, and offer suggestions for connecting these streams. Our review provides a big picture of what is known about individuals at the top levels of organizations and highlights the key areas where future investigation is essential.     

Matching Managers to Strategy: Further Tests of the Miles and Snow Typology

This paper integrates prior research on strategic leadership by building on the concept of alignment to explain the performance impact of top managers. Using the Miles and Snow (1978) typology as a theoretical framework, several hypotheses are tested on a sample drawn from three distinct industries. The results show that organizations that are able to achieve an alignment between managerial characteristics and strategic direction perform better than firms where such an alignment is absent. Further, it was found that the strategy-manager match explains a greater proportion of variance in performance than industry membership, organizational age and firm size. Taken together, these findings provide persuasive evidence about the impact that an organization's leaders exert in driving performance outcomes and demonstrates the validity of the administrative dimension of the Miles and Snow typology.     

Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal

In this qualitative study, we explore how incumbent firms in traditional industries build dynamic capabilities for digital transformation. Digital transformation has been defined as the use of new digital technologies, such as mobile, artificial intelligence, cloud, blockchain, and the Internet of things (IoT) technologies, to enable major business improvements to augment customer experience, streamline operations, or create new business models. In making sense of digital transformation, we discovered that leaders in various industry circles use the term inconsistently to describe various strategizing and organizing activities; in addition, the term has gained limited scholarly attention as a context for study of strategic change. Drawing on senior executives' experiences with leading digitalization projects at incumbent firms, we propose a process model comprising of nine microfoundations to reveal the generic contingency factors that trigger, enable, and hinder the building of dynamic capabilities for digital transformation. Our findings reveal that digital transformation is an ongoing process of using new digital technologies in everyday organizational life, which recognizes agility as the core mechanism for the strategic renewal of an organization's (1) business model, (2) collaborative approach, and eventually the (3) culture.     

Charisma and organizational change: A multilevel study of perceived charisma,commitment to change,and team performance

What makes people perceive a leader as charismatic, and how do team leaders obtain performance outcomes from their followers? We examine leaders in times of organizational change and investigate the mechanisms through which leaders' change-promoting behaviors are associated with team performance. In a multilevel mediation model, we propose that the indirect relationship between change-promoting behaviors and team performance is sequentially transmitted through followers' perceptions of charisma and followers' commitment to change. A study of 33 leaders and 142 followers provides empirical support for the model, using multilevel structural equation modeling to analyze top-down relationships between leaders and followers and bottom-up relationships between followers and team outcomes. Results suggest that team leaders are perceived as more charismatic when they engage in change-promoting behaviors. These behaviors facilitate team performance through individual followers' perceived charisma and commitment to change.     

The social construction of strategic coherence: Practices of enabling leadership

The construction of “strategic coherence,” defined as the development of a system of mutually compatible meanings among organization members about desirable organizational directions, is clearly a crucial issue for organizations. Yet, how to achieve it is in part an open question. While previous studies have considered how strategic coherence may emerge across top levels of management through strategic planning activities and negotiations among senior leaders, we know much less about the contribution of other actors and processes behind the scenes (in non-strategy roles). Drawing on an ethnographic study of a public hospital's planning and project management practices, this paper therefore focuses on the bundles of practices, people and tools through which strategic coherence can emerge across different levels and sectors in mundane activities. We build on the concept of “enabling leadership”, grounded in practice theories of leadership, as our analytical lens. The study reveals how strategic coherence is socially constructed by practices of ‘fueling’, ‘shaping’ and ‘entwining’ mutually compatible meanings, in interactions among diverse people and tools. We propose a grounded model of the construction of strategic coherence as the progressive socialization of meanings about organizational direction that is not just administered from the top, nor naturally emergent from the grass-roots, but that is a collective and inherently socio-material accomplishment of enabling leadership.     

Proactivity Directed Toward the Team and Organization: The Role of Leadership, Commitment and Role-breadth Self-efficacy

Employees' proactive behaviour is increasingly important for organizations seeking to adapt in uncertain economic environments. This study examined the link between leadership and proactive behaviour. We differentiated between organizational leadership and team leadership and proposed that transformational leadership by team leaders would enhance commitment to the team, which would predict team member proactivity. In contrast, transformational leadership by leaders of the organization would enhance commitment to the organization, which we expected to predict organization member proactivity. Transformational leadership on both levels was expected to increase employees' role-breadth self-efficacy, the confidence necessary to engage in proactive behaviour. Our results demonstrate the importance of leadership as an antecedent of proactive work behaviour and suggest that leadership at different levels influences proactivity via different mediators. Transformational team leaders seem to facilitate proactivity by increasing employees' confidence to initiate change. Transformational organizational leaders on the other hand increase proactivity by enhancing employees' commitment to the organization.     

How leadership matters: The effects of leaders' alignment on strategy implementation

Research has confirmed that leader behavior influences group and organizational behavior, but we know less about how senior leaders ensure that group and organizational members implement their decisions. Most organizations have multiple layers of leaders, implying that any single leader does not lead in isolation. We focused on how the consistency of leadership effectiveness across hierarchical levels influenced the implementation of a strategic initiative in a large health care system. We found that it was only when leaders' effectiveness at different levels was considered in the aggregate that significant performance improvement occurred. We discuss the implications of these findings for leadership research, specifically, that leaders at various levels should be considered collectively to understand how leadership influences employee performance.     

Scenarios,Real Options and Integrated Risk Management

In the 1970s, scenario planning gained prominence as a strategic management tool. Scenario planning encourages managers to envision plausible future states of the world and consider how to take advantage of opportunities and avoid potential threats. In the last decade, finance researchers have developed real option analysis as a way to value investments under uncertainty. Scenario planning and real option analysis have complementary strengths and weaknesses as tools for managers making strategic investment decisions under uncertainty. We combine these two approaches in an integrated risk management process. This process involves scenario development, exposure identification, formulating risk management responses, and implementation steps. We advocate a corporate-level perspective on managing risk that takes into consideration the full range of exposures across a firm’s portfolio of businesses. In contrast with the predominant emphasis on quantitative analysis in the real option literature, this study illustrates qualitative assessment of real options.     

Exploring team mental model dynamics during strategic change implementation in professional service organizations. A sensemaking perspective

The purpose of this paper is to provide a deeper process understanding of team mental model dynamics in a context of strategic change implementation. To do so, we adopt a change recipient sensemaking perspective with the objective to identify salient determinants of team mental model dynamics. We aim to contribute to the managerial and organizational cognition literature by identifying critical micro-foundations that shape team cognition and interpretation processes during strategic change implementation. This adds to the field’s understanding of the under-researched collective dimension of strategic processes in general and strategic change implementation more specifically. Through an explorative case study conducted at a professional service organization, we identified five determinants of team mental model dynamics: coherence between ostensive and performative aspects of organizational routines, equivocality of expectations, dominance of organizational discourse, shifts in organizational identification and cross-understanding between departmental thought worlds. Case findings reveal that implementation processes of strategic change become intricate and difficult if change recipient sensemaking is not effectively acted upon. The five determinants identified require adequate managerial attention in order to avoid slipping into organizational inertia. As a consequence, professional workers are unable to ‘drop their tools’ and fail to integrate the strategic change effort in updated team mental models.     

Strategic leadership for exploration and exploitation: The moderating role of environmental dynamism

This study advances prior theoretical research by linking transformational and transactional behaviors of strategic leaders to two critical outputs of organizational learning: exploratory and exploitative innovation. Findings indicate that transformational leadership behaviors contribute significantly to adopting generative thinking and pursuing exploratory innovation. Transactional leadership behaviors, on the other hand, facilitate improving and extending existing knowledge and are associated with exploitative innovation. In addition, we argue that environmental dynamism needs to be taken into account to fully understand the effectiveness of strategic leaders. Our study provides new insights that misfits rather than fits between leadership behaviors and innovative outcomes matter in dynamic environments. Hence, we contribute to the debate on the role of strategic leaders in managing exploration and exploitation, not only by examining how specific leadership behaviors impact innovative outcomes, but also by revealing how the impact of leadership is contingent upon dynamic environmental conditions.     

Personality, perceptions and retrenchment decisions of managers in response to decline: Evidence from a decision-making study

Drawing on the strategic leadership and leadership cognition literature, we develop a theoretical framework linking personal characteristics of strategic leaders with their perceptions of organizational decline and retrenchment activities. Our hypotheses are tested using a sample of 110 experienced MBA students in a scenario-based study. The findings of this exploratory study suggest that strategic leaders' perceptions of the severity of a firm's decline play an important role in the recommendation of extensive retrenchment activities in response to decline. However, perceptions of the severity of decline vary substantially across decision makers and are influenced by an individual's locus of strategic control, functional background and maturity. The study's findings that perceptions of decline and planned responses to decline vary substantially and predictably across individuals are discussed in light of existing theory and practice.     

The impact of positivity and transparency on trust in leaders and their perceived effectiveness

A critical challenge facing today's organizational leaders is gaining their followers' trust and having them view leaders as effective in addressing turmoil and change. Using a downsizing scenario as the context, this field experiment examined how a leader's positivity and transparency impacted followers' perceived trust, defined in terms of willingness to be vulnerable, and effectiveness of their leader. To test the hypotheses, 304 participants were randomly assigned to one of the four conditions of high (low) leader positivity × high (low) leader transparency. Results of our mixed methods study indicated both the leader's level of positivity and transparency impacted followers' perceived trust and evaluations of leader effectiveness. Besides limitations and suggestions for future research, we conclude with the practical implications that positive, transparent leaders may have on building trust and perceived effectiveness among their followers.     

What skills do physician leaders need now and in the future?

The role of the physician leader is moving beyond traditional medical staff issues. A recent national survey of physician leaders shows a growing need for education on specific technical, leadership, and practical skills. The results reveal the medical leadership skills that physician executives consider important today, and provide a window to the future about the skills that will be important tomorrow. Physicians say they need training now in quality assurance, clinical benchmarking, decision-making, and strategic planning. And when they gaze into the future and see the rapid changes throughout health care, they say they'll need more training in communication, organizational change, effective listening, and systems thinking.     

Leadership for organizational adaptability: A theoretical synthesis and integrative framework

One of the biggest challenges facing leaders today is the need to position and enable organizations and people for adaptability in the face of increasingly dynamic and demanding environments. Despite this we know surprisingly little about this topic. In this paper we provide a theoretical synthesis and integrative review of research from strategy, organization theory, innovation, networks, and complexity to provide a framework of leadership for organizational adaptability. Our review shows that leadership for organizational adaptability is different from traditional leadership or leading change. It involves enabling the adaptive process by creating space for ideas advanced by entrepreneurial leaders to engage in tension with the operational system and generate innovations that scale into the system to meet the adaptive needs of the organization and its environment. Leadership for organizational adaptability calls for scholars and practitioners to recognize organizational adaptability as an important organizational outcome, and enabling leadership (i.e., enabling the adaptive process through adaptive space) as a critical form of leadership for adaptive organizations.     

Social Structures and Resistance to Strategic Change: British Manufacturers in the 1980s1

This article examines the refusal of two UK manufacturers to adapt their strategic ‘repertoires’ to the recessionary and structural changes of the 1980s. From being industry leaders in 1980, both companies were relegated to overseas control by the end of the decade. Developing both institutionalist and contextualist approaches to organization, the article argues that this fatal resistance to change derived from the deep social structural roots of these two companies' politics and cultures. Conservative managers were able to defy new capitalist logics by drawing upon alternative social structural sources of power, legitimacy and inspiration. The article concludes by considering the implications of this plural structuring of organizations both for organizational theory and for the management of change in practice.     

Charismatic leadership in resistance to change

In Weber's writing and in leadership theory, charismatic leadership is associated with social change. However, the importance and desirability of charismatic leaders in change processes can be questioned, as well as the notion that charismatic leaders are invariably proponents of change. There are documented cases of charismatic leaders in religious and political contexts who have opposed ongoing change and proposed restoring tradition. This paper reports on two historical, qualitative case studies of charismatic leadership in an organizational setting, studies that demonstrate that charismatic leadership can also act in resistance to change and in defense of the status quo. The analysis indicates that the influence processes involved are basically the same as in charismatic leadership in general. It suggests that impending change can challenge the interests and values of established groups and thus create a crisis that stimulates the formation of charisma in opposition to change.     

The Effects of Transformational Leadership on Organizational Performance through Knowledge and Innovation*

Today's information and knowledge society requires new leaders who can confront a reality based on knowledge and foster innovation to achieve improvements in organizational performance. However, organizations sometimes fail to achieve sustainable competitive advantage due to their limited understanding of the relationships between these strategic variables. To date, very little research has analysed the direct and indirect relationships between these variables. Our study seeks to fill this research gap by analysing theoretically and empirically how the leader's perceptions of different intermediate strategic variables related to knowledge (knowledge slack, absorptive capacity, tacitness, organizational learning) and innovation influence the relation between transformational leadership and organizational performance. Based on the literature, we develop a theoretical model that shows the interrelations between these variables. We then test the model using data from 408 Spanish organizations, discuss the findings and provide several implications for business practitioners.