The role and impact of strategic leadership on organizational performance – Strong Advice

The role and impact of strategic leadership on organizational performance

An introduction to Strategic Leadership

The need to meet stakeholders’ expectations and demands for organizations to meet multidimensional performance target is a challenge that strategic leaders and their top management teams face every day. Strategic leadership has increasingly become more critical and complex as the array of stakeholders expectations continue to grow.

The strategic leader is not only charged with the responsibility of meeting the ever expanding needs for sustainability initiatives and customers’ demands, they are also responsible for the high-level navigating and aligning of the entire organization to win in the market place. This is such a complex and difficult task and we’ll share our insight on how to deal with this in a different article. Despite the difficulty and complexity of this role, it is important to understand that it has great organizational and societal impact if handled skillfully.

This understanding begins to beg the following questions: What does it take to succeed as a strategic leader? What are some values and leadership styles that are needed by these types of leaders in order to achieve triple bottom line performance? In this series of discussions, we shall be expounding on the questions above and try to include relevant skills-set needed to thrive in this role. To begin this discussion, let’s try to answer the question:

What is Strategic Leadership?

Sound knowledge and understanding of strategic leadership is essential for an enriched discussion of the subject. Different schools of thought have made different attempts at defining strategic leadership as it relates to the different contexts in which it was postulated.

According to Finkelstein in Suzanne (2013), strategic leaders are executives who have overall responsibility for organizations, their characteristics, what they do, how they do it and the overarching impact of such on the triple bottom line of such organizations. This definition explained the scope of strategic leadership to include CEOs, the heads of business units, top management teams, board of directors, and dominant coalitions that may exist in such organizations. While this definition is good especially in defining the scope of strategic leadership, we at Strong Advice believe some essential element of strategic leadership is missing in this way of looking at strategic leadership.

Cannella, an academic researcher, provided a more complete definition of strategic leadership. She defined it as being concerned with the entire scope of activities and strategic choices of individuals at the pinnacle of organizations. This is more acceptable by us because its emphasis were duly placed the relational aspect of strategic leadership in terms of the interplay of strategy and concrete actions or activities that take place.

Strategic leadership is differentiated from lower-impact leadership because of its greater breadth, seeming passiveness in the day to day activities and the long lasting effects it has on the organization. Strategic leadership is concerned with the leadership “of” an organization as opposed to the leadership “in” an organization. So the focus of this discussion is on those that have overall responsibility for organizations which would include CEOs and the various dominant coalitions that exist.

We recognizes that the roles of Strategic leadership, top management and line managers are sometimes played by the same individuals in SMEs. So some of the things we say here will apply to those individuals that player such complex leadership roles also.

How do Strategic Leaders affect organizational performance?

Although earlier researches argued that leadership has secondary role relative to environmental influences on overall organizational performance, a plethora evidence exist in more recent ones to demonstrate the significant influence of a leader’s values and leadership styles on intermediate outcomes like a thriving sense of common purpose, job satisfaction and organizational culture.

At Strong Advice, we have lots of evidence from our field experience that proves high-level executives’ experiences, personalities, values and cultural perspectives greatly color how they make sense of the world around them and interpret situations they face. In turn, these affect their choices. Of course their choices have great effect on the performance of the organization. This we have seen to be evident for instance in the propensity of an organization to take risk. If the strategic leadership is risk averse, a culture that encourages risk taking will not thrive in such an organization.

Multidimensional impact of Strategic leadership

The traditional view of organizational performance focuses mostly on financial performance which makes it difficult to see the overstretching impact of strategic leadership. But we shall for the purpose of this discussion broaden our parameter of measuring an organization’s performance to include what is currently used in the industries.

Since, strategic leaders manage a diverse set of stakeholders, it is important to measure their performance and impact based on the values they create for these various stakeholders. The notion of value creation suggests that organizations should not only be concerned with short-term financial performance, but instead should be devoted to creating a shared value for society. A good evidence of this is the shift of corporate governance from just profit maximization to the inclusion of social and environmental performance indicators (triple bottom line).

If you want to see a holistic positive transformation in organizations, spend significant time in developing the strategic leaders of such organizations. If you need help with that, contact us on info@strongadvice.ae.

Bookmark this page and keep visiting us as we unpack this discussion on the role of strategic leadership in overall organizational performance.

Next article- The impact of a strategic leader’s values on their organization

Comments (5)

  1. Intelligent work..something’s missing though..I would ve preferred u included d references for further reading..thnx!

  2. Strong Advice- Styles of Strategic Leadership

  3. Strong Advice- The Impact of a Strategic Leader's Values on their Organization

  4. Unlocking the power of self-awareness and using the keys to engage effectively with others: Part 2- Strong Advice

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