Leadership Models

Leadership models help us to understand what makes leaders act the way they do. The ideal is not to lock yourself in to a type of behavior discussed in the model, but to realize that every situation calls for a different approach or behavior to be taken. Two models will be discussed, the Four Framework Approach and the Managerial Grid.

Four Framework Approach

In the Four Framework Approach, Bolman and Deal (1991) suggest that leaders display leadership behaviors in one of four types of frameworks: Structural, Human Resource, Political, or Symbolic.

This model suggests that leaders can be put into one of these four categories and there are times when one approach is appropriate and times when it would not be. That is, any style can be effective or ineffective, depending upon the situation. Relying on only one of these approaches would be inadequate, thus we should strive to be conscious of all four approaches, and not just depend on one or two. For example, during a major organization change, a Structural leadership style may be more effective than a Symbolic leadership style; during a period when strong growth is needed, the Symbolic approach may be better. We also need to understand ourselves as each of us tends to have a preferred approach. We need to be conscious of this at all times and be aware of the limitations of just favoring one approach.

Structural Framework

In an effective leadership situation, the leader is a social architect whose leadership style is analysis and design. While in an ineffective leadership situation, the leader is a petty tyrant whose leadership style is details. Structural Leaders focus on structure, strategy, environment, implementation, experimentation, and adaptation.

Human Resource Framework

In an effective leadership situation, the leader is a catalyst and servant whose leadership style is support, advocating, and empowerment. while in an ineffective leadership situation, the leader is a pushover, whose leadership style is abdication and fraud. Human Resource Leaders believe in people and communicate that belief; they are visible and accessible; they empower, increase participation, support, share information, and move decision making down into the organization.

Political Framework

In an effective leadership situation, the leader is an advocate, whose leadership style is coalition and building. While in an ineffective leadership situation, the leader is a hustler, whose leadership style is manipulation. Political leaders clarify what they want and what they can get; they assess the distribution of power and interests; they build linkages to other stakeholders, use persuasion first, then use negotiation and coercion only if necessary.

Symbolic Framework

In an effective leadership situation, the leader is a prophet, whose leadership style is inspiration. While in an ineffective leadership situation, the leader is a fanatic or fool, whose leadership style is smoke and mirrors. Symbolic leaders view organizations as a stage or theater to play certain roles and give impressions; these leaders use symbols to capture attention; they try to frame experience by providing plausible interpretations of experiences; they discover and communicate a vision.

Managerial Grid

The Blake and Mouton Managerial Grid, also known as the Leadership Grid (1985) uses two axis:

1."Concern for people" is plotted using the vertical axis
2."Concern for task or results" is plotted along the horizontal axis.

They both have a range of 0 to 9. The notion that just two dimensions can describe a managerial behavior has the attraction of simplicity. These two dimensions can be drawn as a graph or grid:

Most people fall somewhere near the middle of the two axis — Middle of the Road. But, by going to the extremes, that is, people who score on the far end of the scales, we come up with four types of leaders:

◦Authoritarian — strong on tasks, weak on people skills
◦Country Club — strong on people skills, weak on tasks
◦Impoverished — weak on tasks, weak on people skills
◦Team Leader — strong on tasks, strong on people skills

The goal is to be at least in the Middle of the Road but preferably a Team Leader — that is, to score at least between a 5,5 to 9,9. In addition, a good leader operates at the extreme ends of the two scales, depending upon the situation.

Authoritarian Leader (high task, low relationship)

Leaders who get this rating are very much task oriented and are hard on their workers (autocratic). There is little or no allowance for cooperation or collaboration. Heavily task oriented people display these characteristics: they are very strong on schedules; they expect people to do what they are told without question or debate; when something goes wrong they tend to focus on who is to blame rather than concentrate on exactly what is wrong and how to prevent it; they are intolerant of what they see as dissent (it may just be someone's creativity), so it is difficult for their subordinates to contribute or develop.

Team Leader (high task, high relationship)

These leaders lead by positive example and endeavor to foster a team environment in that all team members can reach their highest potential, both as team members and as people. They encourage the team to reach team goals as effectively as possible, while also working tirelessly to strengthen the bonds among the various members. They normally form and lead some of the most productive teams.

Country Club Leader (low task, high relationship)

These leaders predominantly use reward power to maintain discipline and to encourage the team to accomplish its goals. Conversely, they are almost incapable of employing the more punitive coercive and legitimate powers. This inability results from fear that using such powers could jeopardize relationships with the other team members.

Impoverished Leader (low task, low relationship)

These leaders use a “delegate and disappear” management style. Since they are not committed to either task accomplishment or maintenance; they essentially allow their team to do whatever it wishes and prefer to detach themselves from the team process by allowing the team to suffer from a series of power struggles.

The most desirable place for a leader to be along the two axes at most times would be a 9 on task and a 9 on people — the Team Leader. However, do not entirely dismiss the other three. Certain situations might call for one of the other three to be used at times. For example, by playing the Impoverished Leader, you allow your team to gain self-reliance. Be an Authoritarian Leader to instill a sense of discipline in an unmotivated worker. By carefully studying the situation and the forces affecting it, you will know at what points along the axes you need to be in order to achieve the desired result.

Concepts of Leadership

Concepts of Leadership

Good leaders are made not born. Good and effective leaders develop through a never ending process of self-study, education, training, and experience. In order to inspire others into higher levels of teamwork, there are certain things you must be, know, and, do. These do not come naturally, but are acquired through continual work and study. Good leaders are continually working and studying to improve their leadership skills; they are NOT resting on their laurels.

What is leadership?

Leadership is a process by which a person influences others to accomplish an objective and directs the organization in a way that makes it more cohesive and coherent. Leadership is a process whereby an individual influences a group of individuals to achieve a common goal.

Leaders carry out leadership process by applying their leadership knowledge and skills (Process Leadership). Actions of leaders are influence by the traits they possessed (Traits Leadership).

While leadership is learned, the skills and knowledge processed by the leader can be influenced by his or hers attributes or traits, such as beliefs, values, ethics, and character. Knowledge and skills contribute directly to the process of leadership, while the other attributes give the leader certain characteristics that make him or her unique.

Skills, knowledge, and attributes make the Leader.

Four Factors of Leadership.

Leader
You must have an honest understanding of who you are, what you know, and what you can do. Also, note that it is the followers, not the leader or someone else who determines if the leader is successful. If they do not trust or lack confidence in their leader, then they will be uninspired. To be successful you have to convince your followers, not yourself or your superiors, that you are worthy of being followed.

Followers
Different people require different styles of leadership. For example, a new hire requires more supervision than an experienced employee. A person who lacks motivation requires a different approach than one with a high degree of motivation. You must know your people! The fundamental starting point is having a good understanding of human nature, such as needs, emotions, and motivation. You must come to know your employees' be, know, and do attributes.

Communication
You lead through two-way communication. Much of it is nonverbal. For instance, when you “set the example,” that communicates to your people that you would not ask them to perform anything that you would not be willing to do. What and how you communicate either builds or harms the relationship between you and your employees.

Situation
All situations are different. What you do in one situation will not always work in another. You must use your judgment to decide the best course of action and the leadership style needed for each situation. For example, you may need to confront an employee for inappropriate behavior, but if the confrontation is too late or too early, too harsh or too weak, then the results may prove ineffective.

Also note that the situation normally has a greater effect on a leader's action than his or her traits. This is because while traits may have an impressive stability over a period of time, they have little consistency across situations (Mischel, 1968). This is why a number of leadership scholars think the Process Theory of Leadership is a more accurate than the Trait Theory of Leadership.

Various forces will affect these four factors. Examples of forces are your relationship with your seniors, the skill of your followers, the informal leaders within your organization, and how your organization is organized.

Business Strategy: Value Chain Analysis

Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Influential work by Michael Porter suggested that the activities of a business could be grouped under two headings:

(1) Primary Activities - those that are directly concerned with creating and delivering a product (e.g. component assembly); and

(2) Support Activities, which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake all primary and support activities.

Value Chain Analysis is one way of identifying which activities are best undertaken by a business and which are best provided by others ("out sourced").

Linking Value Chain Analysis to Competitive Advantage

What activities a business undertakes is directly linked to achieving competitive advantage. For example, a business which wishes to outperform its competitors through differentiating itself through higher quality will have to perform its value chain activities better than the opposition. By contrast, a strategy based on seeking cost leadership will require a reduction in the costs associated with the value chain activities, or a reduction in the total amount of resources used.

Primary Activities

Primary value chain activities include:

Primary Activity

Inbound logistics: All those activities concerned with receiving and storing externally sourced materials.

Operations: The manufacture of products and services - the way in which resource inputs (e.g. materials) are converted to outputs (e.g. products)

Outbound logistics: All those activities associated with getting finished goods and services to buyers

Marketing and sales: Essentially an information activity - informing buyers and consumers about products and services (benefits, use, price etc.)

Service" All those activities associated with maintaining product performance after the product has been sold.

Support Activities

Support activities include:

Secondary Activities

Procurement: This concerns how resources are acquired for a business (e.g. sourcing and negotiating with materials suppliers)

Human Resource Management: Those activities concerned with recruiting, developing, motivating and rewarding the workforce of a business.

Technology Development: Activities concerned with managing information processing and the development and protection of "knowledge" in a business .

Infrastructure: Concerned with a wide range of support systems and functions such as finance, planning, quality control and general senior management .

Steps in Value Chain Analysis

Value chain analysis can be broken down into a three sequential steps:

(1) Break down a market/organisation into its key activities under each of the major headings in the model;

(2) Assess the potential for adding value via cost advantage or differentiation, or identify current activities where a business appears to be at a competitive disadvantage;

(3) Determine strategies built around focusing on activities where competitive advantage can be sustained

Business Strategy: Mc Kinsey Growth Pyramid

Introduction

This model is similar in some respects to the well-established Ansoff Model. However, it looks at growth strategy from a slightly different perspective.

The McKinsey model argues that businesses should develop their growth strategies based on:

• Operational skills
• Privileged assets
• Growth skills
• Special relationships

Growth can be achieved by looking at business opportunities along several dimensions, summarised in the diagram below:

• Operational skills are the “core competences” that a business has which can provide the foundation for a growth strategy. For example, the business may have strong competencies in customer service; distribution, technology.

• Privileged assets are those assets held by the business that are hard to replicate by competitors. For example, in a direct marketing-based business these assets might include a particularly large customer database, or a well-established brand.

• Growth skills are the skills that businesses need if they are to successfully “manage” a growth strategy. These include the skills of new product development, or negotiating and integrating acquisitions.

• Special relationships are those that can open up new options. For example, the business may have specially string relationships with trade bodies in the industry that can make the process of growing in export markets easier than for the competition.

The model outlines seven ways of achieving growth, which are summarised below:

Existing products to existing customers

The lowest-risk option; try to increase sales to the existing customer base; this is about increasing the frequency of purchase and maintaining customer loyalty

Existing products to new customers

Taking the existing customer base, the objective is to find entirely new products that these customers might buy, or start to provide products that existing customers currently buy from competitors

New products and services

A combination of Ansoff’s market development & diversification strategy – taking a risk by developing and marketing new products. Some of these can be sold to existing customers – who may trust the business (and its brands) to deliver; entirely new customers may need more persuasion

New delivery approaches

This option focuses on the use of distribution channels as a possible source of growth. Are there ways in which existing products and services can be sold via new or emerging channels which might boost sales?

New geographies

With this method, businesses are encouraged to consider new geographic areas into which to sell their products. Geographical expansion is one of the most powerful options for growth – but also one of the most difficult.

New industry structure

This option considers the possibility of acquiring troubled competitors or consolidating the industry through a general acquisition programme

New competitive arenas

This option requires a business to think about opportunities to integrate vertically or consider whether the skills of the business could be used in other industries.

Game Theory as Strategic Management Tool

Game Theory
Game theory is a reasoned attempt to predict behavior. It applies in situations where an individual's success in making choices depends on the choices of others.

Imagine if you can predict or anticipate what your competitors are going to do, you probably be in a competitive position to outdo your rivals by implementing better moves to conquer the market. This is the essence of Game Theory.

Game theory studies competitive and cooperative behavior in strategic environments, where the fortunes of several players are intertwined. It provides methods for identifying optimal strategies and predicting the outcomes of strategic interactions.

The field of game theory began around 1900 when mathematicians began asking whether there are optimal strategies for parlor games such as chess and poker, and, if so, what these strategies might look like. The first comprehensive formulation of the subject came in 1944 with the publication of the book Theory of Games and Economic Behavior by famous mathematician John von Neumann and eminent economist Oskar Morgenstern. As its title indicates, this book also marked the beginning of the application of game theory to economics.

Since then, game theory has been applied to many other fields, including political science, military strategy, law,
computer science, and biology, among other areas.

Game Theory Strategy
The idea of business as a game, in the sense that a move by one player sparks off moves by others, runs through much strategic thinking. It is borrowed from a branch of economics (game theory) in which no economic agent (individual or corporate) is an island, living and acting independently of others.

In sectors where firms compete fiercely for market share and customer loyalty, this stylised progression of moves closely parallels actual behaviour.

Seeing business life as a never-ending series of games, each of which has a winner and a loser, can be a handicap. In business negotiations, for example, with external suppliers or customers, or with trade unions or colleagues, it can be unhelpful if participants see it only in terms of a victory or a loss. For that way one party has to walk away feeling bad about the outcome. In some non-western cultures the aim is different. The negotiation process is steered towards a win-win outcome, one with which both parties can be reasonably content.

Core Competencies Strategy

Core competencies are those capabilities that are critical to a business achieving competitive advantage. The starting point for analysing core competencies is recognising that competition between businesses is as much a race for competence mastery as it is for market position and market power. Senior management cannot focus on all activities of a business and the competencies required to undertake them. So the goal is for management to focus attention on competencies that really affect competitive advantage.

The main ideas about Core Competencies were developed by C K Prahalad and G Hamel. The central idea of core competency was that over time companies may develop key areas of expertise which are distinctive to that company and critical to the company's long term growth.

The core areas of expertise may be in any area but are most likely to develop in the critical, central areas of the company where the most value is added to its products.

Core Competencies are not seen as being fixed. Core Competencies should change in response to changes in the company's environment which is constantly changing. They are flexible and evolve over time. As a business evolves and adapts to new circumstances and opportunities, so its Core Competencies will have to adapt and change.

Identifying Core Competencies

Prahalad and Hamel suggest three factors to help identify core competencies in any business:

a. Provides potential access to a wide variety of markets: -
The key core competencies here are those that enable the creation of new products and services.

b. Makes a significant contribution to the perceived customer benefits of the end product: - Core competencies are the skills that enable a business to deliver a fundamental customer benefit.

c. Difficult for competitors to imitate: - A core competence should be "competitively unique" where the product is difficult to imitate.

Resources that are standardised or easily available will not enable a business to achieve a competitive advantage over rivals.

Critical Success Factors (CSF)

Critical Success Factors are the essential areas of activity that must be performed well if organization wants to achieve their mission, objectives or goals for your business or project.

Critical Success Factors helps to create a common point of reference to help you direct and measure the success of your business or project. As a common point of reference, CSFs help everyone in the team to know exactly what's most important. And this helps people perform their own work in the right context and so pull together towards the same overall aims.

The idea of CSFs was first presented by D. Ronald Daniel in the 1960s. It was then built on and popularized a decade later by John F. Rockart, of MIT's Sloan School of Management, and has since been used extensively to help businesses implement their strategies and projects.

Rockart defined CSFs as:
"The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization's efforts for the period will be less than desired."

He also concluded that CSFs are "areas of activity that should receive constant and careful attention from management."

Critical Success Factors are strongly related to the mission and strategic goals of your business or project. Whereas the mission and goals focus on the aims and what is to be achieved, Critical Success Factors focus on the most important areas and get to the very heart of both what is to be achieved and how you will achieve it.

Below are the summary steps that will help you identify the CSFs for your business or project:

Step One: Establish your business's or project's mission and strategic goals.

Step Two: For each strategic goal, ask yourself "what area of business or project activity is essential to achieve this goal?"

Step Three: Evaluate the list to find the absolute essential elements for achieving success – these are your Criticial Success Factors. As you identify and evaluate CSFs, you may uncover some new strategic objectives or more detailed objectives. So you may need to define your mission, objectives and CSFs iteratively.

Step Four: Identify how you will monitor and measure each of the CSFs

Step Five: Communicate your CSFs along with the other important elements of your business or project's strategy.

Step Six: Keep monitoring and reevaluating your CSFs to ensure you keep progressing towards your aims. Indeed, whilst CSFs are sometimes less tangible than measurable goals, it is useful to identify as specifically as possible how you can measure or monitor each one.

To make sure you consider all types of possible CSFs, you can use Rockart's CSF types as a checklist.

•Industry – these factors result from specific industry characteristics. These are the things that the organization must do to remain competitive.
•Environmental – these factors result from macro-environmental influences on an organization. Things like the business climate, the economy, competitors, and technological advancements are included in this category.
•Strategic – these factors result from the specific competitive strategy chosen by the organization. The way in which the company chooses to position themselves, market themselves, whether they are high volume low cost or low volume high cost producers, etc.
•Temporal – these factors result from the organization's internal forces. Specific barriers, challenges, directions, and influences will determine these CSFs

Source: www.mindtools.com

Six Principles of Blue Ocean Strategy

There are six main principles that guide companies through the formulation and execution of their Blue Ocean Strategy in a systematic risk minimizing and opportunity maximizing manner.

The first four principles address Blue Ocean Strategy formulation:

1. Reconstruct market boundaries. This principle identifies the paths by which managers can systematically create uncontested market space across diverse industry domains, hence attenuating search risk. It teaches companies how to make the competition irrelevant by looking across the six conventional boundaries of competition to open up commercially important blue oceans. The six paths focus on looking across alternative industries, across strategic groups, across buyer groups, across complementary product and service offerings, across the functional-emotional orientation of an industry, and even across time.

2. Focus on the big picture, not the numbers. Illustrates how to design a company's strategic planning process to go beyond incremental improvements to create value innovations. It presents an alternative to the existing strategic planning process, which is often criticized as a number-crunching exercise that keeps companies locked into making incremental improvements. This principle tackles planning risk. Using a visualizing approach that drives managers to focus on the big picture rather than to be submerged in numbers and jargon, this principle proposes a four-step planning process whereby you can build a strategy that creates and captures blue ocean opportunities.

3. Reach beyond existing demand. To create the greatest market of new demand, managers must challenge the conventional practice of aiming for finer segmentation to better meet existing customer preferences. This practice often results in increasingly small target markets. Instead, this principle shows how to aggregate demand, not by focusing on the differences that separate customers but by building on the powerful commonalities across noncustomers to maximize the size of the blue ocean being created and new demand being unlocked, hence minimizing scale risk.

4. Get the strategic sequence right. This principle describes a sequence which companies should follow to ensure that the business model they build will be able to produce and maintain profitable growth. When companies meet the sequence of utility, price, cost and adoption requirements, they address the business model risk and the blue ocean idea they created will be a commercially viable one.

The remaining two principles address the execution risks of Blue Ocean Strategy.

5. Overcome key organizational hurdles. Tipping point leadership shows managers how to mobilize an organization to overcome the key organizational hurdles that block the implementation of a blue ocean strategy. This principle deals with organizational risk. It lays out how leaders and managers alike can surmount the cognitive, resource, motivational, and political hurdles in spite of limited time and resources in executing blue ocean strategy.

6. Build execution into strategy. By integrating execution into strategy making, people are motivated to act on and execute a blue ocean strategy in a sustained way deep in an organization. This principle introduces, what Kim & Mauborgne call, fair process. Because a blue ocean strategy perforce represents a departure from the status quo, fair process is required to facilitate both strategy making and execution by mobilizing people for the voluntary cooperation needed to execute blue ocean strategy. It deals with management risk associated with people's attitudes and behaviors.

Article Source: www.blueoceanstrategy.com
Picture Source: http://www.ecomaxmc.com/blog/?p=10

The Marketing Environment - Environmental Forces Affecting Marketing

The marketing environment involves factors that, for the most part, are beyond the control of the company. Thus, the company must adapt to these factors. It is important to observe how the environment changes so that a firm can adapt its strategies appropriately to meet the needs and wants of the target markets.

Some of the environmental forces includes: -

Competition: Competitors often “creep” in and threaten to take away markets from firms. Note that while competition may be frustrating for the firm, it is good for consumers. Competition today is increasingly global in scope.

Economics: Some firms in particular are extremely vulnerable to changes in the economy. Consumers tend to put off buying a new car, going out to eat, or building new homes in bad times. In contrast, in good times, firms serving those needs may have difficulty keeping up with demand. In short, economic boom and bust affects demand for goods and services across different market segments.

Political: Businesses are very vulnerable to changes in the political situation. For example, because consumer groups lobbied the Parliament, more stringent rules were made on the terms of car leases. The tobacco industry is currently the target of much negative attention from government and public interest groups.

Legal: Firms are very vulnerable to changing laws and changing interpretations by the courts. McDonald’s, for example, has been sued by people who claim that eating the chain’s hamburgers caused them to get fat. Some impacts of the legal environment:

Firms are significantly limited in what they can do by various laws—some laws, for example, require that disclosures be made to consumers on the effective interest rates they pay on products bought on installment.

Changes in government's regulations and rules related to import and export of goods may have impact on firms across all sectors in the market.

Technological: Changes in technology may significantly influence the demand for a product. For example, the Internet is a major threat to travel agents.

Social: Changes in customs or demographics greatly influence firms. More women work outside the home today, so there is a greater demand for prepared foods. There are more unmarried singles today. This provides opportunities for some firms (e.g., fast food restaurants) but creates problems for others (e.g., manufacturers of high quality furniture that many people put off buying until marriage). Today, there are more “blended” families that result as parents remarry after divorce. These families are often strapped for money but may require “duplicate” items for children at each parent’s residence.

Service Marketing

What is Service Marketing?

Services marketing is marketing based on relationship and value. It may be used to market a service or a product.

What are the characteristics of Service Marketing?

1.The buyer purchases are intangible
2.The service may be based on the reputation of a single person
3.It's more difficult to compare the quality of similar services
4.The buyer cannot return the service
5.Service Marketing mix adds 3 more p's, i.e. people, physical environment, process

When one markets a service business, one must keep in mind that reputation, value, delivery of service and follow-through are keys to a successful marketing.

Why Service Marketing is Important Today?

1. It helps to establish better relationship with customers
2. As service is intangible, the challenge for the service marketer is to somehow make her services stand out from the crowd. Because service marketing is so prolific, marketers must think of ways to communicate the benefits of the service they offer in language that reflects consumer need and value.
3. Service marketing enable customers to provide feedback for firms to continuously improve services in order to stay competitive.
4. Service marketing helps to retain customers and creates loyalty.