Excerpt from:
The Dream Weavers:
Strategy Focused Leadership in Technology Driven Organizations

John J. Sosik, Pennsylvania State University; Don I. Jung, San Diego State University; Yair Berson, Polytechnic University and Shelley D. Dionne & Kimberly S. Jaussi, SUNY- Binghamton


Chapter 1, Part 1. pages 3 - 22. Copyright 2004 by Information Age Publishing
All rights of reproduction in any form reserved.


CHAPTER 1: STRATEGY-FOCUSED LEADERSHIP
Focusing on and Weaving the Dream

It takes a lot of courage to show your dreams to someone else.
-Erma Bombeck

Executive leaders of technology-driven organizations are responsible for connecting people, processes and technology to create performance excellence. Rapid advances in technology have provided executives with numerous novel business models and voluminous amounts of potentially relevant strategic information. Yet, as Nobel-prize winning economist Herbert Simon once noted, "a wealth of information creates a poverty of attention." This poses complicated challenges for executives who must display leadership that focuses their organizations' attention on strategies that add value for their stakeholders. In the pages that follow, we systematically introduce and explain the concepts, behaviors and tactics executives need to display outstanding leadership for successfully navigating in intense and complex technology-dependent industries.

CHALLENGES FOR EXECUTIVE LEADERS

Ever since he was young, Michael Hagan dreamed of one day starting his own company. His dream became a reality in 1995 when Hagan co-founded VerticalNet to create online communities enabling companies to collaborate and conduct business with one another over the Internet. Since then he has been riding the turbulent and troubling seas of managing startup companies in a technology-based information economy. His rise to success at VerticalNet was fast and furious due to his highly effective strategic leadership skills. Hagan hired Mark Walsh, a charismatic and innovative individual, as CEO to launch VerticalNet's initial public offering (IPO) and to develop the initial business plan. As a result, VerticalNet had a successful IPO in February 1999 and by January 2000 its stock closed at $172 a share. Expectations were high and the future looked bright.

But by the end of 2001, VerticalNet took a nosedive. It experienced a dramatic reduction in new business opportunities and accumulated over $800 million in debt. Its stockholders and employees lost their confidence. The company laid-off a quarter of its employees, and was described by analysts as "not being focused on what they want to do." Walsh was ousted as CEO, and then the company gained and lost another high-profile CEO, Joe Galli (formerly of Amazon.com and Black and Decker). With almost all of its stock value disappearing, Hagen wondered if he could ever find a CEO with the strategic leadership required to keep VerticalNet from fading into the distant horizon. If so, what were the chances that this new CEO would be able to successfully implement it? What kind of leadership capability would be needed to support the strategic plan? Would the company's technology and employees support it? And how would it affect the company's customers, suppliers and shareholders?

The uncertainty posed by these questions prompted Hagen to assume the helm at VerticalNet, only to relinquish his leadership status as CEO and Chairman of VerticalNet in late 2001. In 2003, he re-emerged as CEO and Chairman of Nutri/System, Inc., a 32-year old diet and weight loss company. In his new role, Hagen faces a fresh set of leadership challenges including hiring the right people, developing a new marketing strategy, redesigning product offerings, and bolstering a strong brand name with technology.[1]

Unfortunately, this is not an isolated example of leadership challenges faced by executives in today's highly tumultuous and complex business environment. These challenges are especially apparent in the technology- dependent industries. These industries function in high velocity environments, characterized by immense turbulence, that pose critical challenges for leaders.[2] Given the rapid changes in technology development, product life cycles are significantly shorter and competitors can easily imitate products or services. Effective executives must translate these challenges to opportunities. Such leaders need to know how to recognize the unique resources they have and utilize these resources to achieve competitive advantage.

Many corporate boards and executives face strategic leadership challenges similar to those faced by Michael Hagen, especially after an initially successful stage of turning an innovative idea into a profitable product. More disconcerting is the mounting evidence that ineffective strategic leadership can destroy not only an organization's economic capital (accumulated stock value), but also its social (business relationships with customers, suppliers and partners), intellectual (knowledge, skills and abilities of employees), and reputational (intangible wealth related to goodwill and brand equity) capital.[3] Other organizations are finding it difficult to harness the power of advanced technology to assist executives to develop and implement new business strategies, despite the widely heralded promises of such technology and its documented success in some business settings.

In this book, we address these important issues by reporting the results of a comprehensive leadership research project based on structured interviews conducted in both the United States and Israel with 75 executive leaders, their followers, and the organizational cultures they have helped to create. Our executive leaders are CEOs, CIOs, CFOs, and other key executives of small, medium and large organizations that depend on advanced technology to support their mission to adapt to the rapid rate of economic, societal, and technological change required for performance excellence. These organizations represent a wide variety of industries and services, including telecommunications, computers, information technology, professional services, biotech and life sciences, manufacturing, finance, and others. You will recognize many of the organizations by name such as General Electric, Qualcomm, The Vanguard Group, and Barclays Global Investors. There are numerous other organizations in our sample with which you are probably familiar that we have used pseudonyms for because they requested anonymity.

Our aim in writing this book was to summarize practical lessons learned from executive leaders of technology-driven organizations on how to spur performance excellence. The lessons are presented using a variety of descriptive narratives provided by executives that are grounded in a robust research study which tests firmly established leadership models in these firms' upper echelons. Research has shown that these models allow top decision makers to transform the strategic assets of organizations (i.e., people, technology, information, operations) into successful corporations and that it is possible to use these models to train managers for institutionalizing change-oriented and innovative leadership and organizational development.[4] Readers interested in learning more about our sample, methodology and research models are referred to the Appendix. It is our hope that the lessons learned in this book will provide you with a solid foundation in strategy-focused leadership on which you can enhance your career and dramatically improve your organization's effectiveness-no matter what type of business you lead or manage in today's technology- based environment.

THE NATURE AND IMPORTANCE OF STRATEGY-FOCUSED LEADERSHIP

Imagine that you are the commander of an exploratory vessel on an expedition to Antarctica. What type of leadership role is expected of you? First and foremost is to define what your mission or basic purpose should be, including the focus of the work to be carried out, the reason the expedition exists, and the constituencies it is designed to serve. In other words, you are responsible for developing and articulating to your crew a compelling and motivating reason why you are undertaking your journey. You must also help determine your crews' objectives or goals that must be met along the way to attain your overall strategic goal. These include charting your course, employing the latest technology required for the expedition, supplying your ship with adequate food, tools, and supplies, training your crew, ensuring proper cooperation and communication among crewmembers, and motivating your crew through crises and safeguarding their welfare. You also need to adjust your strategic objectives based on changes in land, air, and sea conditions or unexpected emergencies, while commanding loyalty and commitment from your crew. In essence, you must engage in leadership that is strategy-focused.

Such were the leadership requirements for Sir Ernest Shackleton, the British polar explorer who with his 28 crewmembers in 1907 became trapped in the Antarctic ice 1,000 miles from civilization with zero contact from the outside world. While trapped, the men ate seals, shot their dogs and cats for food, played footer, and watched in depression and horror as the ice slowly crushed their ship the Endurance into a useless pile of wooden scrap. For 15 months, Shackleton and his crew faced and endured starvation, insanity, potential death and every other hardship possible, but his valiant and confident leadership inspired a fierce will to survive, and in the end all crewmembers returned home alive.[5]

But did Shackleton exercise good strategy-focused leadership? His voyage of endurance may also provide an example of poor strategy-focused leadership because his failure may have been entirely of his own making. For example, Shackleton and his journey were mainly driven by his ego rather than effective strategy and/or acceptable logic when it came to developing his mission as described in this newspaper classified ad:
    Men wanted for hazardous journey. Small wages, bitter cold, long months of complete darkness, constant danger. Safe return doubtful. Honor and recognition in case of success.
More importantly, his expedition was plagued by obsolete and inappropriate technology, inadequate planning and resources, poor preparation, failure to develop the skills for his crew necessary to reach their goal, and a mistaken belief that strength of character and determination were enough to overcome an under-funded, overambitious and ill-conceived mission.[6] How many of today's leaders similarly lead their organizations to new levels of heroic failure, instead of competent and consistent success? In today's technology-driven business environment, executive leaders must possess the right set of tools and adequate resources to implement effective strategies and beat the competition.

Just as Shackleton and his crew were subjected to daunting conditions, today's technology-driven organizations operate in unstable, challenging and complex business environments. And indeed, like Shackleton, some leaders of technology-driven organizations used their influence on followers to inspire and motivate them to deal with the risks by promising success and fame. For example, many leaders of "dot-com," or Internet companies, motivated their employees by offering them stock options and promising them quick financial success, rather than focus on achieving long-term strategic goals.[7]

When organizational environments are highly complicated and uncertain, competent strategy-focused leaders who motivate and guide processes yielding organizational success are needed and appreciated more than ever. These are the leaders whose strategy has both an internal and external focus. Their strategy considers employee selection and development, goal setting, communicating and rewarding, problem solving and resource utilization systems, while focusing on trends in the relevant industry and overall global business environment and potential strategic alliances. Such leaders gain more discretion from their awareness of these environmental conditions and from their excellent relationships or connections with their followers, business partners, customers, suppliers and technologies.[8]

But how does one acquire the skills associated with strategy-focused leadership? How should we measure this leadership process and the effectiveness of its outcomes? There is always meeting the revenue and profit numbers. There also is integrated communications with organizational stakeholders. Innovation and harnessing the power of new technology are also important. Another measure is a work environment or culture in which leadership is shared with organizational stakeholders. Continuous process and people improvement and expanded knowledge bases are also outcomes associated with such leadership.

In essence, strategy-focused leaders are at the "helm of the ship." They first "dream" or envision dramatically different and successful outcomes and then "weave" or form excellent relationships or connections within and between their organizations' social systems, comprised of customers, suppliers, partners and other constituents, and technology systems, comprised of equipment, machinery, tools, information, software, and know-how. They create, adapt and disseminate organizational strategy and build a learning-oriented and innovative organizational culture that is so essential in technology-driven settings. They also cultivate highly motivated employees within the organization to achieve these objectives, to ensure failsafe navigation through fair or stormy seas. Relationship building, employee development, and development of the firm's financial market value are essential for balanced success over the long-term business operation.[9] Therefore, we define strategy-focused leadership (SFL) as a series of processes that determine the degree to which organizations are effective in making fundamentally sound connections between people, technology, work processes and business opportunities aimed at adding economic, social, and intellectual capital for shareholders, society and employees, respectively. Employee and relationship development, technology adaptation/integration, and financial asset accumulation are the goals that strategy-focused leaders hope to attain through specific leadership processes.

STRATEGY-FOCUSED LEADERSHIP VERSUS STRATEGIC LEADERSHIP

Much of what we know about leadership in organizations up until 1980 was concerned with supervisors and middle managers. In recent years the attention of leadership scholars has shifted to executives who can exert a strong influence on the strategy and performance of organizations. We would like to clearly define and differentiate our concept of SFL from a more commonly used term, "strategic leadership." The phrase "strategic leadership" emerged from work on strategic management and consists of the following:
  1. determining strategic direction;
  2. exploring and maintaining core competencies;
  3. developing human capital;
  4. sustaining an effective organizational culture;
  5. emphasizing ethical practices; and
  6. establishing balanced organizational controls.[10]
Notice that these components of strategic leadership focus primarily on actual strategy formulation. While formulating strategy is a critical part of a strategic leader's job, it has been the focus of a great deal of research that looks at how leaders formulate strategy and whether or not they make sound strategic decisions.

Our work diverges from "strategic leadership" by not focusing on strategy formulation per se. Instead, we focus on what effective leaders actually do in order to produce a strategy-focused organization. We examine items 3 through 6 describing strategic leadership, and add several other critical aspects such as focusing on the core message and strategy; disseminating the strategy in the organization; developing and sensitizing employees to strategic issues; integrating the right people, technology and strategy; building ownership and trust; and reinforcing the core message and strategy by linking leadership and key performance indicators. By engaging in these processes, a strategy-focused leader will succeed in creating an organization capable of effectively implementing strategic plans and adapting to the turbulent organizational environment. Thus, our work on SFL, while overlapping with a subset of strategic leadership, examines in great detail a broader set of processes that create an organization capable of effectively implementing strategy to yield dramatic increases in intellectual, social and economic capital.

In order to understand how SFL processes impact an organization's intellectual, social, and economic resources, and how it contributes to create a successful organizational culture, it is instructive to review what we already know about strategic leadership, organizational culture, and performance. In other words, what does research tell us regarding the relationship between strategic leadership, organizational culture, and performance?

What We Know (and Don't Know) about Strategic Leadership

The answer to that question requires a comprehensive review of the emerging field of strategic leadership. Results of our review suggested the following key conclusions.
  1. Organizations become a reflection of their top managers. The decisions made by senior executives, mostly top management teams and CEOs, have an impact on the bottom line of their organizations.[11] Organizations achieve strategic advantage by having access to unique resources. One such resource is the organization's leaders. Strategic leaders create a competitive advantage for their organizations by conveying a sense of organizational meaning or purpose, which helps maintain or redefine institutional integrity and focus under conditions of uncertainty. Although we know that executives make a difference, we do not know how their interaction with their followers helps them implement their strategies and influence their organization's performance.[12]
  2. We have evidence that the most senior executives of an organization are responsible for making strategic decisions. Indeed, early writers focused on the upper echelons of the organization. However, as we noted above, today's organizations operate in a complex environment that requires managers from all levels of the organizations to be actively involved in strategic decision making. Therefore, these managers need to possess the skills and influence necessary to make such decisions. Our unique sample that consists of interviews with executives and managers from a number of highly successful organizations in technology-driven industries confirm that while executives can provide an overall vision, managers of units within the organization provide the detailed strategic plan for their employees. Early research deemphasized the strategic role of mid-level management and has not examined the mechanisms by which strategic decisions are disseminated. Therefore, we intend to elaborate on these issues.
  3. The leadership of top executives is a big missing piece in organizational research. Many studies explore the leadership style of supervisors or mid-level managers but neglect to focus on top executives' behavior.[13] Our book explores in detail the dynamics of top management teams at some of the world's biggest corporations. Unlike previous work, we combine descriptive information with detailed accounts by top managers and their direct reports.
Until recently, the strategic leadership field has relied upon the "upper echelon perspective."[14] Its primary focus was on top executives, their backgrounds and experiences, their relationship with their board of directors, and a variety of other factors that impact the strategic choices and ultimate direction of the organization. Studies of demographic and cognitive (related to thinking) characteristics of top executives and top management teams have shed light on our understanding of upper echelon issues.[15] While these upper echelon studies have produced important and valuable knowledge regarding strategic choices based on top management team demographics and composition, this focus is limited in its ability to view strategic leadership as it relates to the implementation and management of strategy at all levels throughout the organization.

To expand the knowledge base regarding the world of strategic leadership, we consider our notion of SFL as a process, and examine how it is transferred and implemented throughout the organization. Rather than taking a singular focus regarding the demographic and cognitive factors that influence senior executives' strategic plans, we examine the alignment of strategies and visions for successful implementation and creation/development of a strategy-focused organization. Our view is more consistent with contemporary views of strategy, which consider the day-to-day decisions of not only the leader, but everyone in the organization.[16] We are concerned with the leader's ability to influence and impact the decisions of every person within the organization in such a way that those decisions work toward maintaining immediate financial stability, while enhancing the long term viability of the organization.

All leaders devise strategies they feel will take their organization toward their vision, and thanks to the current field of strategic leadership research, we have a decent understanding of top management characteristics that lead to different strategic choices. What is much more complex and not well defined is how a leader should align his or her organizational practices and processes to effectively implement the strategy selected to maximize the organization's potential. In looking at these alignment practices and processes, we attempt to bridge the gap that exists in the strategic leadership literature between top executive characteristics, strategic choices, and successful organizational performance.

From our review of the existing academic literature on strategic leadership, it appears that we still know little about what specific leadership behaviors are used by executive leaders in their quest to motivate their individual employees, project teams, business units and overall organization to achieve performance excellence. Therefore, in this book, we provide answers to various issues on SFL with the following questions in mind.
  1. Do executive leaders generally view their leadership styles in a similar fashion as their direct reports? To the extent that self-deception is a common source of executive career derailment as experienced by CEOs the likes of Gerry Dicamillo of Polaroid, Jill Barad of Mattel and Desi Desimone of 3M,[17] finding answers to this question is important to the viability of an executive's career.
  2. Does the common conclusion of most studies that leaders need to be very active hold at the executive levels?
  3. Are passive forms of leadership used more frequently in the upper echelons of organizations?
  4. How can leaders utilize their ability to create emotional bonds with their followers to promote organizational strategy and its implementation?
  5. Can transaction-based forms of leadership also be effective if implemented correctly?
It has also been unclear regarding the types of organizational cultures that are associated with leaders who engage in these behaviors. Therefore, we posed the following questions as well:
  1. What impact do these cultures have on how followers perceive their leaders to act?
  2. Do these cultures correspond to the typical leadership styles of executives?
Finally, also unknown are specifics on the types and content of vision and mission statements (which we refer to as "core messages") that these leaders create.
  1. Which core messages are more successful?
  2. How are they crafted and communicated to organizational stakeholders?
  3. How do they relate to the environment in which the organization operates?
  4. How do they help followers derive important personal meaning out of their routine and mundane work processes?
These are just a few of the questions that we will attempt to answer throughout this book.

A MODEL OF STRATEGY-FOCUSED LEADERSHIP

Scientific studies answer their research questions by framing them within a model of what is presently known about the phenomenon under investigation. These models are then expanded based on what is found in the investigation so that a better description and understanding of the processes associated with the phenomenon can be obtained. Because the study described in this book and its results are based on such a rigorous scientific investigation, the phenomenon of interest is SFL in technology-driven organizations. Therefore, we present our model of SFL as illustrated in Figure 1.1.

Our model describes the processes by which executives first envision strategy to take the raw inputs provided by their environments (e.g., people, technology, ideas, opportunities) and then weave them into a integrated patterns or systems of social, technical and intellectual resources. These patterns ultimately produce dramatically higher levels of financial performance, customer satisfaction, knowledge, communication, improvements in their people and processes and shared leadership. As shown in Figure 1.1, these processes involve dreaming about success (i.e., recognizing and initiating trends, focusing on the core message and strategy), adjusting the right pattern (i.e., selecting and developing people in line with the strategy, integrating the right people and technology), weaving the fabric of success (i.e., creating ownership and trust, "translating" organizational strategy to employees, supporting innovation and learning), and realizing the dream (i.e., reinforcing the core message and strategy, re-focusing the shape of future success).
Dreaming About Success

To dream about success, executives must recognize and initiate trends and focus on the core message and strategy. Trend recognition and initiation involves strategic networking and partnering and external monitoring. These processes are described in Chapter 3. Networking and partnering with customers, suppliers, industry partners and even competitors provides information regarding the wide range of events and trends that are likely to influence an executive's organization. This information is essential for realizing where the organization currently is and creating a vision of where it needs to go strategically in the future. Executives need to engage in environmental monitoring or scanning of key factors to assess the strengths, weaknesses, opportunities and threats that define their organizations' current and future positions. These factors include markets, economic conditions, demographics, technology, international politics, and socio-cultural trends.[18]

An example of this SFL process is radio station WARM in Scranton, Pennsylvania. In 1957, WARM was a little known broadcasting outlet owned by a future governor of Pennsylvania. It was powerful, 5000 watts at 590 on the AM radio dial, but no one paid much attention to its traditional mix of big band hits. Then, in early 1958, WARM was sold to the Susquehanna Broadcasting Company which sent Art Carlson to Scranton to turn sleepy WARM into what became known to hundreds of thousands of listeners as "The Mighty 590."

Carlson was a former New York advertising executive with a talent for recognizing trends and an ear for what great radio should sound like. In his first few weeks after arriving in town, he often lunched at a local diner and noticed that people tended to play certain popular rock and roll songs on the jukebox over and over. He also noticed that the people loved to discuss local news, sports and the weather. Carlson's ability to monitor the environment galvanized his vision and strategy for WARM: broadcast using echo chamber technology; use friendly and funny fast-talking disc jockeys who, when not on the air, are making connections with the listeners at live-promotional broadcasts and dances; play 40 popular rock and roll records; use a set of short vocal melodies called jingles; and present quality newscasts, sportscasts and weather forecasts.

Carlson's strategy worked practically overnight. Ratings multiplied within months and by the early 1960s, an unheard-of sixty percent of the radios in WARM's market (dubbed "WARMland" by the disc jockeys) were tuned to 590. WARM dominated its market until alternative broadcast technologies such as FM and the Internet overran AM radio by the year 2000. Thanks to Carlson's ability to recognize and initiate trends, his core message resonated throughout WARMland as an entire generation grew to know and love WARM.[19]

Focusing on the core message and strategy involves crafting and inspiring commitment to a vision and is described in Chapter 4. Crafting a compelling vision linked to a business strategy directs, guides, and motivates organizational members to work together for the good of the organization. Without guidance and motivation, employees lack direction and tend to pursue their own personal interests, sometimes at the expense of the organization's mission. Effective strategy-focused leaders know how to formulate a vision that will involve guidance regarding long term goals, but will also inspire other managers and employees to take an active role in initiating strategies for their units. A solid business strategy addresses what employees need to do in order to contribute and how an organization will attain its long-term goals through their collective efforts. An appealing and evocative vision inspires organizational members by conveying the ideal future of the organization, what it hopes to become in the eyes of its board, organizational members, and other stakeholders. The most successful visions are created jointly by leaders and their followers, exemplify ethical and pro-social values, and are shared with all organizational stakeholders. For example, Apple Computer's CEO Steven Jobs' vision of the role technology will play in schools of the future illustrates this process.
    Obviously, the computer has changed from a device of computation into a device for communication in the last few years. Now, its primary purpose is to be a tool and center for communication, whether it is distant communication over the Net or communication with other kids in your class by bringing in a video report made with iMovie. Our vision is that we have just begun. This is the tip of the iceberg of what we can do with these tools.[20]
Inspiring commitment to the vision and to challenging projects fosters the determination, willpower, and self-confidence required for effective employee and group performance. Commitment is an important motivational force that drives the extra effort needed to see projects through to their successful completion. Research indicates that commitment can be built through inspirational leadership that adds significant meaning to tasks, links employee's self-images to the successful completion of tasks, and shows how contributing toward the greater good may be morally uplifting.[21] Under such leadership, employees' routine tasks and mundane work processes become an important mission that they have to accomplish under any circumstances for the good of the organization. For example, Herb Kelleher, former CEO of Southwest Airlines, describes how commitment can be created:
    The important thing is to take the bricklayer and make him understand that he's building a home, not just laying bricks. So we take the building a home approach: This is what you're doing not only for yourself but for society: giving people who'd otherwise not be able to travel the opportunity to do so; making it possible for grandparents to see their grandchildren for the holidays, or for a working mom to take her son to see the World Series - for less than the cost of a ticket to the game. We constantly hold up examples of customer experiences and of employee efforts to make a difference.[22]
Adjusting the Right Pattern
To adjust the right pattern, executives must select and develop people in line with the strategy and integrate the right people and technology to support the strategic plan. Selecting and developing people in line with the strategy involves selecting the right followers and accelerating their development into leaders and is described in Chapter 5. Executives are beginning to recognize their employees as key strategic assets required to achieve organizational objectives stated in their strategic plans. Since employees provide the knowledge, skills and abilities (KSAs) required to attain these objectives, it is essential for strategy-focused leaders to systematically review their human resource requirements to ensure that the required human resources, with necessary KSAs, are available when and where they are needed.[23]

When these requirements are not met, strategy-focused leaders then must go through selection processes that match potential employees' personality and skills with the job requirements and organizational culture. A recent study co-sponsored by the American Society for Training and Development and Society for Human Resource Management was conducted to see how organizations use employee growth and career development initiatives to attract, retain and develop workers. The study identified Dow Chemical Company, Edward Jones, Great Plains, LensCrafters, Sears & Roebuck, Southwest Airlines, and South African Breweries as "exemplary practice" firms that have organizational infrastructures in place to support human resource efforts to attract and develop employees, and position or role competencies to provide employees with an understanding of the KSAs they need to acquire in order to advance. Because these organizations' cultures are unique and they commit significant resources (money, technology, development opportunities, people support) to employees, they focus strongly on communicating their strategy, mission, and vision to potential employees in order to find people who will be a good match.[24]

Even when requirements are met, strategy-focused leaders must continually nurture their employees to higher levels of KSAs through mentoring, delegation, and learning programs. For example, Proctor and Gamble CEO Alan G. Lafley has introduced a dramatic culture-shift by transforming the executive cafeteria on the top floor of its Cincinnati headquarters into a new training center that will develop the KSAs of P&G employees from around the world. According to Lafley, "I have made a lot of symbolic, very physical changes so people can understand we are in the business of leading change."[25]

Integrating the right people and technology involves team-building, team-leadership and aligning social and technology systems and is described in Chapter 6. Promoting collaboration within and between teams is essential in today's business environment given that nearly half of all U.S.-based organizations use teams as a basic building block for performing work.[26] Teams are used not only to harness the collective knowledge, skills and abilities of employees for solving complex problems, but also to form alliances with customers, suppliers and former competitors in joint-ventures. Given the highly complicated nature of today's job requirements due to advanced technologies, developing and maintaining high performing teams is one of the most strategically important responsibilities that strategy-focused leaders must carry out successfully. The importance of this function was noted by Joseph Deitch, CEO of Commonwealth Financial Network, a leading investment brokerage firm.
    Company success in this challenging economy turns on the abilities of the CEO and human resources professionals to attract great people, establish great goals, and build great teams. Establish lots of teams and leaders. This engenders passion and pride in project ownership, not to mention more productive brainstorming and effective consensus building.[27]
Properly fitting social and technology systems in organizations is a major strategic leadership challenge that has produced poor results so far. A recent study reported that 40 percent of all information technology (IT) development projects are cancelled before completion and that the primary factor accounting for their failure is a lack of SFL.28 A separate study found an inverse relationship between the amount of money spent on IT projects and their success rates, with projects costing less than $750,000 achieving a lackluster 55 percent success rate, and projects costing between $5 and $10 million achieving a dismal 7 percent success rate.[29] More successful development, assimilation, and adoption of technology system into the firmly entrenched social systems of organizations, with their longstanding cultures, reward systems, trust issues, and reporting structures, will require leaders to pay close attention to the congruence between how the technologies are intended to be used by their designers and the traditional ways of conducting work embedded in the social system.

For example, the rapid development in IT is creating fundamental changes in the work processes in organizations. With advances in information and telecommunication technologies, more employers are offering flexible work arrangements for their employees such as telework. Flexible work schedules based on telework can increase employees' satisfaction and productivity as well as organizational performance. However, it is important to note that top management's awareness of potential benefits and problems that can result from telework has been shown to be a key factor for successful implementation of telework processes. In other words, top management's keen interest in embracing new technology is vital to organizational success under current business environment. That's because the extent that the development, implementation, and assimilation of technology into organizations is expected to increase as technology becomes a common medium for strategic leaders and their followers to interact in the future.[30]

Weaving the Fabric of Success

To weave the fabric of success, executives must create not only financial but also emotional/psychological ownership based on mutual trust and respect. They do it by sincerely conveying the goals as well as the challenges their organizations are facing. In effect, strategy-focused leaders "translate" their analysis of the business environment and their consequent strategic decisions to employees in the organization. This role of "leaders as buffers" becomes critical in technology dependent environments, where high uncertainty could harm employees' functioning. It is in these kinds of environments that emotional/psychological bonding is so critical.

They also must actively support organizational innovation and encourage self-learning processes. Creating ownership and trust involves gaining the commitment to the strategy and the trust of employees and is described in Chapter 7. Inspiring commitment among employees requires executive leaders to manage the impressions they make on others, to display a certain "stage presence," to project an image of confidence, power and trustworthiness, and to role model exemplary and ethical behavior that personifies organizational values.[31] As illustrated in the Shackleton expedition example, inspiring commitment by projecting a confident image is especially important during stressful times of hardship and uncertainty, when organizational members can lose faith in the mission and become de-motivated.

Inspiring commitment to organizational strategy by developing a workforce that is sensitive to market or other environmental changes is necessary for creating an empowered workforce. To empower means not only to give employees the authority to make decisions, but also to develop or bolster their confidence needed to identify what it takes to complete their work successfully. Confidence is based on one's knowledge of a task or subject area, one's ability to perform, and possessing the skills required by the requisite task. Such efforts are very difficult to sustain given the rapid changes in technology and employee skills required to keep up with such changes. These challenges are more devastating due to the economic, market and financial conditions that are dynamic and sometimes downright hostile. Our research indicates that gaining commitment to strategic goals requires that leaders challenge, mentor and coach employees, while displaying the highest levels of ethical standards in their behavior and decision-making. Leaders who use open communication channels and are effective listeners have followers who are more familiar with the organization's goals. Lee Kranefuss, CEO of Barclay's Global Investors Individual Investor business unit, recognizes the importance of communicating organizational strategy to empower employees:
    I spend a lot of time and I would argue the need to spend even more, talking about goals of the group and organization. I feel, in the absence of information, employees have the tendency to speculate and embellish on the pieces of information they do have. I want to ensure everyone is on the same page. We have spent so much time and effort building this high-functioning organization; we need to empower its most valuable component, the people.[32]
Supporting innovation and learning involves creating cultures that value change and adopt new ways of doing things and is described in Chapter 8. Facilitating organizational learning is a critical function that strategy-focused leaders have to play in today's highly complex and turbulent work environment, with its ever-changing competition, economic conditions, financial markets, technology advances, customer/client preferences, supplies of raw materials, services and labor, and governmental regulations. It is impossible for them to keep up with these conditions without leveraging the collective knowledge and skills of all members of the organization. To overcome this dilemma, many of today's most successful organizations, such as General Electric, Lockheed Martin, Vanguard, Qualcomm, and Unisys, are transforming themselves into learning organizations in which people at all levels, individually and collectively, are continually increasing their capacity to produce results they really care about. In these highly successful high-tech organizations, knowledge sharing and management are central to their innovative business operations and organizational culture. Leadership of such efforts requires the intellectual stimulation of all organizational members. Harriet L. Fader, CAE, president and CEO, Diabetes Association of Greater Cleveland notes that:
    A learning environment, in my opinion, is like a wonderful garden where people thrive because they have an opportunity to grow. By challenging your staff and expanding their skills, you create a more loyal staff and reduce turnover. In today's rapidly changing world, you need experienced staff members to be successful.[33]
Realizing the Dream

To realize the dream, executives must reinforce the core message and strategy and re-focus the shape of future successes. Re-enforcing the core message and strategy involves creating and sustaining strong organizational cultures, which reflect the shared behaviors, norms, and expectations of its members. This process is described in Chapter 9. For example, several organizations based in West Point, New York (e.g., www.PlatoonLeader.org and www.CompanyCommand.com) have used technology to facilitate organizational learning for the U.S. Army. The Army is changing its structure and culture to provide agile capabilities and adaptive processes powered by world class network-centric access to knowledge, systems and services. Their intent is to create a more enterprising, open, participative and collaborative culture adapted to the Army's more distributed and geographically dispersed theater of operations.[34]

Developing intellectual and social capital to support innovation and organizational change requires aligning the organization's overall goals for development with those of specific business units, groups and employees. The challenge for strategy-focused leaders is to align the often disparate personal, group, and unit agendas that have become incongruent or conflicting due to politics, self-centered motives and ethical lapses in judgment. Realigning employee's personal values according to organizational mission for higher levels of congruence has been linked to many positive outcomes that help the organization perform more effectively. In our experience, this usually consists of a solid goal-setting and reward system that encourages innovation and personal development. Richard King, CIO of Everfast, Incorporated, a privately held company in the niche home fabric and furniture retail market, highlights how goal alignment can be linked to building intellectual capital:
    The goals of our IT organization are formulated subordinate to the goals of the business. By doing this we have achieved a very good alignment with the corporate goals. Our goals are communicated periodically during regular meetings, they are also communicated in scope definition of projects and communicated as part of each employee's annual review. During the review process each employee is required to evaluate their performance and objectives relative to the goals of the company and the department.[35]
Re-focusing the shape of future successes involves assessing, opportunities, people, process and performance over time in relation to the organization's mission and strategy and is described in Chapter 10. A growing number of executives in organizations such as ABB, British Airways, British Telecom, Coca-Cola, Electrolux, Volvo and Xerox have recognized a need to mobilize and utilize their intellectual and human resources in addition to their tangible and financial assets. This recognition has given rise to the adoption of a more balanced approach to measuring the key success factors of organizational performance in relation to strategy. Traditionally, organizations measured their success primarily in terms of financial outcomes (e.g., stock price, net income, earnings per share, return on investment).

More recently, organizations have realized that financial success is a function of the development of human resources, the continuous improvement of organizational processes and relationships within and outside of the firm, and customer satisfaction. As a result, they are being held responsible by organizational stakeholders for maximizing the accumulated market value of the firm by concentrating on the SFL processes described above.36 For example, Jack Welch, former CEO of General Electric, added over $321 billion dollars of market value to GE between 1981 and 1998 by focusing organizational strategy, relentlessly driving continuous improvement, and championing organizational development initiatives.[37] These examples illustrate that various functions that strategy-focused leaders perform are critical for achieving organizational success because they directly impact organizational effectiveness by identifying, designing and monitoring the key performance indicators that add to its economic value over time.

Assumptions of Our Model

The SFL model that we described above is based on several key assumptions. First, SFL is a system made of components that influence each other in a dynamic but predictable way. These include the executive leader, his or her followers, the organization and its culture, structure and operational processes, and the strategic situation. Particularly important is the strategic situation, which includes all the potential environmental and organizational stimuli that influence each of the SFL processes previously described.[38] Examples of environmental stimuli include degree of competitor hostility, unpredictability of competitor market activities, quality of supplier relationships, customer preferences, growth opportunities, rate and type of changes in technology, rate of innovation in industry products, amount of research and development in the industry, needed diversity in production and marketing methods to cater to different customers, and legal, cultural, political and economic constraints. Examples of organizational stimuli include followers' inclinations towards development along with their present KSAs, organizational culture, organizational structure (e.g., degree of formalization, centralization, professionalism, hierarchy), reward systems, employee orientation and socialization systems, work structures and preferences (e.g., individual versus team), and the leadership legacy left behind by previous executives. Aspects of the strategic situation are described in Chapter 2.

Second, the core message or vision drives everything in the organization in the sense that the SFL processes of recognizing and identifying trends and focusing on the core message and strategy propel the leadership processes that add economic value for the organization.39 In other words, vision and its derivative organizational mission serve as the stimulus for developing SFL processes that ultimately lead to increased economic value for all organizational stakeholders. However, the vision needs to be adapted to the environmental and organizational stimuli so that it is meaningful, practical, compelling and consistent with environmental conditions.

Third, no two SFL systems are alike because no two organizations and their internal and external environments are alike. However, we will identify several strategies for developing the type of SFL that may be effective based on specific situations of the wide array of organizations in our study. The lessons derived from the wide range of organizations studied here and the technology they deploy to support their mission should be vital information for readers who are interested in harnessing the potential of SFL.

The tumultuous and unpredictable conditions of the business environment today, the challenges of succeeding in the Information Age, and the new organizational structures and business strategies that have emerged all demand that executive leaders take a hard look at the extent to which their SFL system contributes toward the development of economic, social and human capital. All the evidence points to the conclusion that developing sound SFL is the best way for executives to prosper today in the uncertain future. We now turn to setting the stage for SFL today and in the future by reviewing specific trends in the business environment, paying particular attention to how technology can enhance an organization's strategic situation.