Configurations of Strategic Leadership

Abstract

This chapter focuses on the issue of unambiguously determining the phenomenon of strategic leadership. The configurations of strategic leadership depend on the situational characteristics or organizational characteristics. Further, the construct of egocentricity and egocentric strategic leadership is a configuration with an extremely asymmetrical structure of power and influence. This chapter provides insights on horizontally and vertically distributed egocentric strategic leadership. Apart from the distribution of strategic leadership with a formally established structure, leadership may also appear depending on the types of tasks and challenges that are defined or spontaneously emerge in the group or collective and that are not directly linked to hierarchy. Networks of strategic leaders commonly appear when organizations exhibit an organic structure, selective decentralization, high level of horizontal specialization of tasks, and strong reliance on experts and specialists.

1. Configuration Determinants

The situation determines the range of possible variants of strategic leadership. The characteristics of the organization (its history, size, complexity, structure and processes, life cycle, power and corporate governance, organizational culture, etc.), same as the environment in which the organization is settled (structural determinants of the surroundings and the degree of turbulence in it, technology and innovation shifts, other characteristics of the trade, constellation and the strength of the competition, national culture, etc.), significantly impact the way strategic leadership is embodied.

Strategic leadership appears in different forms, depending on the situational and organizational characteristics. It is not possible to uniformly copy-paste strategic leadership structures and processes from one organization to the other.

Strategic leadership can, but doesn’t have to be, associated with a single person or the upper echelons of an organization.

It can be concentrated or dispersed, i.e., centralized or decentralized in the collective; constant or variable; purpose-built or spontaneously-emerging in relations between key actors; rigidly adhering to administrative rules or completely personalised.

The differences that exist between the types of strategic leadership can be better understood if we analyse the possible configurations in which they occur. A configuration is a representation or form of a phenomenon, created as a distribution of elements in a set, i.e., the shaping of an entity on the basis of important characteristics. It is a conceivable, comprehensive and unambiguous unit that rounds up the variants of important characteristics and distribution of its constituents. It is a distinct pattern of a set of connected elements forming a recognisable harmoniousness of a phenomenon.

In line with the foregoing, configuration of strategic leadership is an imaginable abstraction of the ways in which coordination efforts in the collective are integrated. It depicts sense-making and sense-giving, sets the direction and builds a framework (meta-leadership) for all the activities and processes of management and leadership in the organisation.

Alternative configurations act as boundaries around the space available to variants of strategic leadership and they are not the only forms of their manifestation. We see them as some sort of extremes the combinations of which appear significantly more often in organizational reality than it is the case when we speak of their “pure” form.

We have singled out important determinants when it comes to formation of strategic leadership configurations.

The determinants could be analysed in dichotomies: (1) personalized vs. depersonalized strategic leadership, (2) individual vs. collective strategic leadership, (3) concentrated vs. dispersed strategic leadership, (4) stable vs. interchanging strategic leadership and (5) linear vs. network-based strategic leadership.

Determining their interrelations, recognizing seemingly irreconcilable contradictions and searching for ways to reconcile them so that they may coexist, helps to better understand the differences between the basic configurations and the environment where their combinations occur.

Relations relevant for strategic leadership can be observed across three directions: vertically (up and down the organisation), laterally (on the same level in the organisation), and externally (beyond the boundaries of the organisation).

Vertical strategic leadership includes direct relationships that leaders have with their immediate subordinates, as well as indirect relationships they have with every other person in the organisation, with whom they do not have direct contact within the chain of command.

Lateral strategic leadership is based on the influence that the leader has on other leaders and other actors at the same or approximately the same organisational level (usually at the middle hierarchical levels) with the aim of achieving some of the defined objectives, strengthening their position within the existing power constellation, changing the power structure or encouraging joint action (e.g., lobbying, negotiation, coalition, etc.) in the interest of the group or the individual.

External strategic leadership is focused on relations with important factors outside the organisation, whether it is groups with vested interest in its survival (e.g., owners, investors, external board members, major suppliers, key customers and users, etc.) or other entities that may exert decisive influence over its behaviour (country, local community, media, unions, etc.).

The determinants help shape a few alternative generic configurations and analyse (1) the relationship toward hierarchy and (2) the number of actors who assume the role and tasks of leadership.

Firstly, strategic leadership can follow a hierarchy, but it can also depart from it. A hierarchy can be understood as order based on superiority and inferiority in organisations, i.e., as a system for ranking individuals or groups based on their absolute or relative status. The main characteristic of a hierarchy is the existence of formal authority: individuals or groups at lower levels have to follow the orders of those at higher hierarchical levels.

In an organisational hierarchy, the chain of command is clearly visible and leading from the top to the bottom of the organisational pyramid. In most cases, concentration and distribution of power within the organisation follows the hierarchical structure. At the organisation’s apex, there is usually an individual or a group with the greatest authority and responsibility. Decision-making power can be held by the upper echelons of the organisation, or it may sometimes be decentralised toward the lower positions within the hierarchy.

Three situations relevant for configuration can be identified. These are: (1) positioning of strategic leadership at the top of an organisational hierarchy; (2) dispersion of strategic leadership roles and processes within the hierarchy; and (3) departure of strategic leadership away from the established hierarchy and hierarchical relationships.

Secondly, configuration of strategic leadership depends on the number of actors assuming the role of leader. Three situations may be considered: (1) where an individual is tasked with strategic leadership (single-actor leadership); (2) where several persons assume the role of strategic leaders, and (3) where strategic leadership is assumed by a number of persons connected through a network (multi-actor leadership).

By considering their determinants and dimensions, five generic configurations of strategic leadership can be identified: (1) egocentric strategic leadership; (2) horizontally distributed strategic leadership; (3) vertically distributed strategic leadership; (4) network of strategic leaders; and (5) collective strategic leadership.

2. Egocentric Strategic Leadership

Common understanding of strategic leadership is based on the dominant position of one person at the top of the organisational pyramid who defines the direction and designs a strategy, makes the most important decisions and has a crucial impact on the future of the collective. Examples of leadership of strong individuals in history who had totalitarian or autocratic power, such as pharaohs, emperors of China, Roman emperors, great military leaders, but also some powerful statesmen and entrepreneurs in recent centuries, show a structure in which one person is positioned as the centre of the collective reality.

Egocentric strategic leadership is a configuration with an extremely asymmetrical structure of power and influence. As Northouse (2007) underlines, such strategic leadership involves powerful and charismatic individuals who make independent strategic decisions and influence others in the implementation of those decisions.

One person, the strategic leader, has a decisive impact on the goings-on in the collective and on the way it interacts with the environment. His/her role is crucial and unavoidable in all aspects concerning the organisation. He or she assumes the decisive role in defining the strategic intent and the direction of organisational development. Such leadership is mainly autocratic,¹ but it can range from full totalitarian power to enlightened and inclusive domination of an individual which does not exclude consultations and two-way communication.

Egocentric strategic leadership is nowadays commonly associated with well-known entrepreneurs or managers who have had a significant influence on modern-day business. A few examples of powerful leaders come to mind in this context: Henry Ford, who adopted every important decision and was extremely rigid in managing and supervising his associates; Walt Disney, who likewise made decisions independently and was very demanding of his employees, although he sometimes asked them to develop new ideas and concepts; Steve Jobs, who was a true autocratic leader who strongly insisted on complete loyalty and trust; Elon Musk, who holds the strategic direction and key choices in his hands in all of his companies. Regardless of the concentration of power and autocratic leadership style, they all had a powerful vision that fundamentally transformed the global economy; they showed incredible dedication to their work and made bold decisions that radically changed the world as we know it.²

Egocentricity creates a stage on which the collective becomes a demonstration of the leader’s aspirations sui generis. The leader makes all of the important decisions and demands that everyone in the organisation follow their rules and the direction they set. They shape the space for strategy, set the pace and direction of action, and create space for interpreting meaning relevant for organisational actors. In his interview with The New York Times, former CEO of Cisco Systems, John Chambers, made this illustrative remark: I’m a command-and-control person. I like being able to say turn right, and we truly have 67,000 people turn right.³

Egocentric strategic leadership is similar to “stars,” one of the four main generic configurations developed by Kriger and Zhovtobryukh (2013) as part of the typology based on two key situational characteristics: internal complexity and environmental turbulence.⁴

Leadership ambience can be generalised and simplified based on the above dimensions: the first situation is one where there is a low level of internal complexity in an environment that is not overly variable and unpredictable; the second is a situation with low internal complexity associated with a high degree of turbulence beyond the boundaries of the organisation; the third involves high internal complexity embedded in a non-turbulent environment; and the fourth situation is characterised by high internal complexity associated with a high level of turbulence in the environment.⁵

“Stars” mainly appear in a placid, non-turbulent environment where there are no internal challenges due to the relative organisational simplicity. Such leaders are mainly characterised by a tendency to act as an autocrat when making strategic decisions, but not at all times. In certain situations, they may have the tendency to share power and control with others and they may adopt consultative and participative leadership styles. According to the authors, “star” leaders are most efficient in small and medium-sized organisations.

A suitable environment for the emergence of egocentric strategic leadership is developed in organisations which are the result of entrepreneurship; the kind with a simple, non-complex structure based on entrepreneurial decision-making; the kind that is not faced with an overly complex and turbulent environment; and also in fragile organisations going through a period of severe crisis or facing a threat to their survival. Egocentric strategic leadership is a consequence of domination of a powerful organisational leader, entrepreneur or manager, and their dominance in the relationships of key interest groups (Fig. 8.1).

Fig. 8.1

Egocentric strategic leadership

Successful strategic leaders create a world of new possibilities.

Dietrich Mateschitz, Austrian entrepreneur who created the energy drink company and megabrand Red Bull, is an example of a dominant strategic leader who created a business opportunity by identifying a niche not yet exploited in the market.⁶ Trusting his gut feeling and intuition, he dismissed strong recommendations of market surveyors and other consultants who advised against investing in an energy drink business. And he was not wrong. Today, the company is a global leader. In 2018, nearly 7 billion cans of Red Bull were sold in 171 countries around the world.

His vision, creativity and way of thinking significantly affected global business. Before he started this business, the energy drink industry was a minor and negligible one, with very low market demands. Mateschitz de facto created a need for this type of product. In time, he became the personification of the business he runs. Over the course of his term of office, he has challenged entrenched views of business, avoiding bureaucracy and administrative systems whenever he could. Basing a brilliant marketing concept on an association with extreme sports (which he himself prefers), he has created a completely new market niche, with loyal consumers of his product growing in numbers incredibly quickly from one year to the next. The recent business expansion into popular sports, such as football, has opened-up completely new challenges and additionally strengthened the corporate brand.

Red Bull greatly depends on Mateschitz and his leadership. It will be interesting to observe how the succession problem will be resolved in the future of the organisation, without sacrificing innovation, high level of success and reputation that the company enjoys at the global level.

Egocentric strategic leadership can be successful or unsuccessful, depending on the leader’s capabilities and numerous contingency factors. It is riskier than other leadership configurations because the asymmetry of power results in no restrictions, authorisations or other filters being set in order to obstruct plans and actions that may have unwanted consequences and jeopardise the survival of the organisation.

Successful leaders should sooner or later achieve balance between the autocratic leadership style, autonomy in decision-making at lower hierarchical levels, and empowering employees. Secondly, they must be aware of the fact that a high level of centralisation of strategic decision-making is appropriate for entrepreneurship-focused organisations with simpler structures. A more turbulent environment and a horizontal business expansion (diversification) likewise decrease the potential and space for an individual to hold all the cards.

Interaction of powerful strategic leaders with members of the organisation occurs on two substantively different levels: (1) within a circle of only the closest associates, and (2) with other members of the organisation, through direct or indirect communication and different methods of exerting influence.

Leadership in the immediate organisational environment (close leadership) is based on established formal and informal relations between the leader and their first line of subordinates in the chain of command. Primary associates play the role of advisors and/or intermediaries who convey the leader’s messages and intentions to remote parts of the organisation.

Strategic leaders also fulfil their role by bypassing the first layer of followers in the organisational hierarchy. Their audience are the “more remote” members of the organisation and they often have to address them. Such distant leadership (indirect leadership) requires the use of visions based on symbolism and ideology, high-quality narratives and convincing rhetoric (Hunt, 2004; Vera & Crossan, 2004; Waldman & Yammarino, 1999).

Both approaches should be wisely combined in order for the leader to have a significant influence at the smaller and larger social distance within the organisation, taking into consideration all relevant factors that may affect the defined objectives, mode of operation, and performance of the organisation.

3. Horizontally Distributed StrategicLeadership

Strategic leadership may be distributed and shared among a number of persons within the organisation.

Collective leadership is a consequence of horizontal and/or vertical distribution of roles which creates a tightly-knit or loosely connected group in charge of the strategic process. By including multiple members of the organisation in the tasks of defining objectives and making decisions, leadership becomes a collective act in which good cooperation, open communication, mutual trust and respect are prerequisites for success.

A group of persons assuming the tasks of strategic leadership is generally referred to as the dominant coalition (Cyert & March, 1963) or the inner circle (Thompson, 1967). It includes actors who share the power to make important decisions. Multiple dependencies derived from possession of or access to limited resources or emerging from specialisation of functions commonly result in the formation of a coalition in the upper echelons of the organisation.

Horizontal “distribution” of the strategic leadership function at the highest level creates a top management team, which consists of a group of highest-ranking managers in charge of making strategic decisions, outlining the vision and mission of the organisation, developing and implementing the strategy and other activities of vital importance for the organisation.

Decisions of the top management team are a function of the human and social capital of its members. It is a group that is in most cases led by the CEO or the chairman of the board of directors.

In complex organisations, the leadership function is almost always a joint activity involving multiple people, which is why it is necessary to consider their collective cognition, abilities and interactions (Hambrick, 2007, p. 334). In addition to individual characteristics, capabilities and experience of team members, characteristics and group dynamics of the dominant coalition affect the strategic leadership process and consequently affect organisational performance (Hambrick & Mason, 1984; Hambrick, 2007; Finkelstein et al., 2009).

Organisations are reflections of their leaders (Hambrick & Mason, 1984), which means that the character of the organisation’s direction and mode of operation lies in the domain of personalised strategic leadership, and organisational outcomes are directly influenced by the organisation’s leaders’ values and defined guidelines.

A group of people does not act as an individual: it has different behaviour patterns that depend on characteristics of the group and mutual interactions of its members. Sometimes, interchanging strategic leadership emerges when strategic challenges and problems of different kinds appear at the organisation top, and the task to tackle them is assigned to teams of top managers (or teams of top and middle managers), comprising managers from different functional or geographical units, and when there is a collective willingness to trust those most competent for the situation at hand to take the lead. We mentioned earlier that interchanging leadership implies organisational leaders continually swapping their roles depending on their knowledge of the problem, context and challenges.

Horizontally distributed strategic leadership is a consequence of development and expansion of an organisation.

It is not easy to find a large organisation relying fully on a single strategic leader. Large corporations are as a rule managed by management teams. The larger and more complex an organisation, the greater the need to include a larger number of people in leadership and management tasks. For example, Walmart, Sinopec, Royal Dutch Shell and China National Petroleum, four of the largest companies by revenue in 2018, all have management teams at the organisation top, which collectively manage the operations of their respective corporations.⁷

The board of directors of Alphabet, the parent company which manages the world’s largest search engine, Google, comprises, in addition to the founders Larry Page and Sergey Brin and CEO Sundar Pichai, eight more members who jointly manage all strategic and business operations.

Based on recent research by the Crowe network, the Swedish industrial giants Atlas Copco and Volvo have the best strategic leadership in Europe.⁸ Atlas Copco has a nearly 150-year-long tradition of successful operation at the global level. Its board of directors is made up of 13 members, while its top management team is made up of 9 members. Volvo, which is owned by the Zhejiang Geely Holding Group, also has a board of directors consisting of 13 members, and a management team of 12 persons.

Strategic leadership in such companies is positioned in the upper echelon of the organisation, which assumes activities and tasks of establishing the direction, development and programming of strategy, market positioning, coordination of all activities and processes, maintaining and improving organisational culture, and establishing comprehensive control mechanisms. This implies collective action in designing objectives, creating a common vision and ideology, attracting human resources, and creating mental models and encouraging social construction of reality from the perspective selected by the head people in the organisation.

One of the constructs that can be used to describe horizontally distributed leadership is the category of strategic shared leadership. It includes relations within the dominant coalition, initiated and implemented by the head of the organisation or by a smaller group of strategic leaders within the organisation. Pitelis and Wagner (2019, p. 234) define it as leadership of the firm, involving the purposeful sharing of strategic decisions, and the process of making and taking these, between the dominant coalition that is initiated and implemented by a focal strategic leader or a small group of strategic leaders such as the CEO and Chair of the Board.

“Sharing” in this category pertains to careful coordination and directing of the team by one focal leader acting as primus inter pares. In addition to that, this can lead to partial depersonalisation of strategic leadership. It is “de-coupled from any one person, and can survive the absence of any one individual” (Pitelis & Wagner, 2019, p. 236).

Top managers are rarely a homogeneous group. Most gain their position through long-term functional specialisation, during which they acquire specific patterns of thinking and acting. It is natural for them to have diverse, often diverging interests and objectives, risk appetites and approaches to decision-making.

Positions of members in the upper echelons are almost never equal and balanced. Asymmetry of power is natural in such situations: it is never equally distributed nor are the influences of members equal within the organisation and outside it. Some members have greater formal authority, others have greater informal influence, while others again have better access to information and greater managerial or functional expertise. However, they act as a team: strategic leadership is a process by means of which they jointly manage and share responsibility (Fig. 8.2).

Fig. 8.2

Horizontally distributed strategic leadership

Egocentric strategic leadership can grow into horizontally distributed strategic leadership by following the development and growth of the organisation. Microsoft is known for Bill Gates and his innovative strategic moves from the founding of the company to the moment when he withdrew from the leadership position. Today, it is managed by a group of excellent managers led by CEO Satya Nadella; a group that, according to certain sources, employees see as a very mindful, trustworthy one, and one that makes decisions that will benefit everyone involved.⁹

The level of effectiveness of the top management team’s work is directly related to knowledge, skills and managerial abilities of its members. Good cooperation between members likewise has a positive effect on the performances of the team and helps build collective strategic cognition (Kriger & Zhovtobryukh, 2013, p. 415).

Horizontally distributed strategic leadership can be in the form of a “team,” one of the generic configurations of Kriger and Zhovtobryukh (2013), if the conditions of lower internal complexity are present in a turbulent environment. “Teams” are recognised in the horizontal distribution of the function of strategic leadership at the organisation top, between different functional and geographical units. The authors also refer to “collective leadership” in this context, which was a term used by Friedrich et al. (2011). Dynamic changes in the “leader–follower” roles in teams depend on the types of problems being solved; leadership position is assumed by those with the most knowledge and information.

Furthermore, irrespective of factors that are beyond their direct control and that can significantly affect performance, over time, successful top management teams distinguish themselves from unsuccessful teams, based on results achieved. Even though factors of luck and coincidence can help leaders perform their tasks in the short term, this cannot be the case in the long run.

There is no guarantee that team management will be effective and good. Enron and WorldCom had top management teams that led the companies into ruin and simultaneously eroded the trust in the business system through criminal and unethical behaviour. Similarly, the management of Volkswagen shaped a strategy intended to position the company as the world’s largest automaker, overtaking Toyota, while turning a blind eye to the use of software that enabled Volkswagen to (unsuccessfully) cover up the actual levels of emissions in their diesel engines.

In certain other companies, teams were not good enough or there was groupthink effect,¹⁰ i.e., minimisation of discussion and presentation of individual ideas due to a desire for harmony or group cohesion. The intention to agree at any cost and minimise disputes can lead to a clouded view of reality and non-critical adoption of decisions which are often suboptimal or irrational and which are not suitable for the challenges arising from the competitive environment. In other words, top management teams have oftentimes failed to find adaptable responses and their actions jeopardised the survival of organisations they were managing. Examples include the upper echelons of General Motors, British Petroleum and Encyclopaedia Britannica.

Overcoming disputes and dysfunction in action is imperative for establishing effective strategic leadership. Unlike individual strategic leadership, strategic leadership by a group of people creates additional costs that are incurred in the process of achieving group agreement and cohesion. Such costs should be lower than the benefits gained by dividing roles and taking collective action at the managerial top in order for horizontally distributed strategic leadership to be preferred instead of other configurations.

4. Vertically Distributed trategic Leadership

Strategic leadership function can be dispersed if leadership roles are divided among persons who hold different positions in the hierarchical ladder. This is a step away from the widespread view of strategic leadership as a function belonging to an individual or the upper echelons of an organisation, located at the top of the organisation pyramid.

There is no doubt that the process and practice of strategic leadership can be divided within the organisation. As a result, it can no longer be observed solely as a set of intentions and activities undertaken by top managers, but must also be observed as a phenomenon inseparable from specific organisational structure and other characteristics of the organisation.

In the broader sense, it can reflect the division of labour and responsibilities; preventing mistakes that may occur due to limited information and insufficient capabilities of an individual or a small group of managers; utilising the capacities of a greater number of persons within the organisation and strengthening the perception of interdependence within the collective.

In the narrower sense, it arises as a consequence of organisational settings or decisions of the managerial elite aimed at empowering organisational actors at lower hierarchical levels in the leadership and management processes (divisionally and functionally) and at ensuring organisational adaptability and required speed of reaction to changes of market and other contextual conditions.

Mintzberg (1983, p. 102) noted that companies strive for greater selective decentralisation of production and marketing functions rather than of the financial and legal functions; further in the text, he quoted Lawrence and Lorsch (1967), who pointed out that the power of decision-making is placed on that organisational level where information is most successfully gathered. Key coordination mechanism in such situations is mutual adaptation with the use of intermediary links within the organisation.

Vertically distributed strategic leadership is found in very complex and diversified organisations which interact in a variable and unpredictable environment. Decentralisation follows the organisation’s horizontal expansion into various activities and into various markets. Delegation of strategic decision-making power to lower-level managers and creating an adaptable, market-oriented organisational structure seems like an appropriate choice in such situations.

Such form of decentralisation, which Mintzberg calls parallel vertical decentralisation, is based on organisation involving divisions or strategic business units in which middle-level managers supervise the business processes and results of their respective activity. Such organisational units are established with the aim of ensuring organisational integrity of a complex company, while simultaneously providing autonomy for adopting part of the strategic decisions at the level of individual businesses.

Vertical dispersion of power follows the organisational structure appropriate for large diversified organisations with various activities which usually compete on international markets (Fig. 8.3).

Fig. 8.3

Vertically distributed strategic leadership

Structure of strategic leadership follows such organisational arrangement.

Effective management of complex business systems requires that responsibility for some of the strategic decisions be delegated to a part of the middle management, as well as that a clear division of labour be established between such middle managers and the upper echelons. This is an organisational decentralisation which is not comprehensive and which includes a limited number of actors. Its result is the establishment of a coalition of top and middle managers, which becomes the holder of the strategic leadership function.

There are numerous examples of highly diversified organisations in which strategic leadership is vertically distributed. Among others, these include General Electric, Johnson & Johnson, 3 M, Siemens, Bayer, BASF, Hitachi, Toshiba, Sanyo Electric and Honeywell.

Vertical distribution of strategic leadership can be observed in most global business systems. For example, the multinational pharmaceutical company Novartis, whose products are available in 155 countries around the world, has two basic divisions, which include a large number of business units in around 50 locations: (1) Innovative Medicines, comprising the strategic business units Novartis Pharmaceuticals and Novartis Oncology, which sell innovative patented medicines intended to enhance health outcomes to the benefit of both patients and healthcare professionals, and (2) Sandoz, global leader in generic pharmaceuticals and biosimilars, as well as a pioneer in novel approaches to helping people around the world access high-quality medicines.¹¹ The complexity of operations and the related challenges, as well as broad market distribution, affect the structure of strategic leadership as a collective activity of top management and managers of strategic business units of Novartis.

Managers at middle hierarchical levels in such companies have considerable organisational power and great decision-making discretion. There is a clear division of labour and a direct hierarchical relationship between the upper echelons and the heads of strategic business units, which is usually mirrored in the implementation of supervisory mechanisms, the basis of which are planning and performance-monitoring systems. However, both of these organisational layers are actors of strategic leadership: they actively participate in the dynamic adaptation of the organisation to forces and changes in the environment.

It is interesting to note that horizontally and vertically distributed strategic leadership can appear in the form of “clans,” one of the generic configurations of Kriger and Zhovtobryukh (2013) which emerges in the conditions of a placid environment and high internal complexity. This is distributed and shared strategic leadership: from the top toward middle management levels in the organisational hierarchy. Clans are functionally, and often geographically, separated units of the firm whose members have a sense of kinship based on common background, functions, jargon, norms, values and/or culture (Kriger & Zhovtobryukh, 2013, p. 413). There is a clear hierarchical structure with a unique chain of command, with the clan leader at the top. Strategic leadership is shared among all clan leaders, who generally constitute the top management team. Clans mostly exist in organisations comprising strong foreign subsidiaries which have complex internal operations, but relatively weak centralised control from the central organisational unit.

5. Networks of Strategic Leaders

Apart from distribution of strategic leadership with a formally established structure, leadership may also appear depending on the types of tasks and challenges that are defined or spontaneously emerge in the group or collective and that are not directly linked to hierarchy.

Dispersion of strategic leadership is sometimes accompanied by alternating leadership roles, and sometimes by very vague boundaries between those who are leaders and those who should follow leaders. In an organisation of this type, there are multiple strategic leaders who perform tasks concerning strategic direction, bringing people together and building commitment of the staff.

Including a larger number of actors into strategic leadership processes is found in organisations which have the characteristics of an adhocracy, or which are based on strong mutual connection between the members due to an inspiring organisational mission, and/or which function successfully without a strictly established chain of command.

In such organisations, the organisational structure is not the key stage on which leadership roles are played. Strategic leadership does not depend on relations connected with positions of power, administrative systems or any other established rigid structural relationships that are based on the chain of formal authority and responsibility. Strategic leadership model emerges from fulfilling the basic purpose and vision and replaces the undisputed and strict hierarchical leadership with a network of leaders who act across the entire organisation (Bower, 1997).

Networks are created by connecting individuals in all organisational directions: vertically, horizontally and externally. They have a finite number of nodes and several links of varying qualities, valences and values. Influences of different individuals are exchanged within the network, depending on the tasks and situations the organisation is facing.

Networks of strategic leaders commonly appear when organisations exhibit an organic structure, selective decentralisation, high level of horizontal specialisation of tasks, and strong reliance on experts and specialists. Instead of standardisation and formal authority, the main coordination mechanism is mutual adjustment (Mintzberg, 1983, p. 254).

Consultancy companies and law firms develop and expand based on networks of leaders that are created based on meritocratic principles and strict selection of members. Partnership and seniority systems help identify and select leaders with a relatively significant ability to influence the organisation’s modes of interaction with the environment. Movie and production companies function in a similar way; they are collectives organised around projects which include equal members.

Strategic leadership does not have direct locus in an individual or an alliance of a small number of leaders; it mirrors the process in which creative and innovative leaders emerge and assume power with a high level of decision-making discretion.

Organisations adaptively respond to challenges requiring the engagement of a network of persons assuming leadership roles in the organisation. This form can expand beyond the boundaries of the organisation and grow into a decentralised leadership network far removed from hierarchy, with cooperative relationships with leaders and other important environmental factors.

In addition to the above, a decentralised leadership network can arise regardless of organisational extension—whether as a realised idea, project or spontaneous entity—by connecting persons with leadership skills and other competencies who interact and assume leadership depending on the problem, area or capability.

Finally, the existence of a network of leaders does not mean the absence of leaders with a formal organisational position at the top of the hierarchy. Their role greatly differs from the classic leadership role, but it is not to be ignored (Hernandez et al., 2011). Formal leaders should primarily motivate and guide network members to realise their leadership potential. Their task comes down to encouraging, creating, and maintaining networks of leaders, developing the capabilities of collective leadership and processes of achieving agreement on the common vision (Balkundi & Kilduff, 2006; Friedrich et al., 2011).

They are coaches, mentors and teachers who create an appropriate ambience in which others act. They differ greatly from egocentric leaders who assume great power and who are—in and of themselves—the centre of key organisation activities.

We find that the phrase “formal leader,” which is used by most other authors, is unsuitable, as it does not denote the specificity of the role. The power of formal leaders primarily arises from the potential to create a suitable context in which the network of organisational leaders will function successfully.

A similar concept is a leadership network, a generic configuration recognised by Kriger and Zhovtobryukh (2013) as the response to high internal complexity and turbulent competitive environment. Strategic leadership in such conditions does not have a locus in an individual, but in a network of connected leaders which is created as a sort of dynamic cooperative system of interconnected and interdependent actors who influence each other and thus coordinate the tasks, objectives and vision of the organisation (Kriger & Zhovtobryukh, 2013, pp. 418–9).

Further to their typology, the authors explained how the Ford Motor Co. developed from the “star” model, which existed at the time of Henry Ford, into the “clan” model, which marked 60 years of the company’s history until the great oil crisis, during which time strategic leadership was redesigned into the form of a “leadership network” model. They also gave other examples: Apple’s transition from the “star” model, which marked the early stage of the company’s development, to the “team” model starting in 1985, and finally the “leadership network” model as of 2007; and Honda, which was an example of the “star” model until the late 1980s (or in other words, during the time of Soichiro Honda at the helm), after which period strategic leadership consolidated into the form of a “leadership network.”

Non-profit global organisations show the development of networks of leaders, which emerge as crucial elements in their existence.

The chain of formal authority and direct supervision are not the dominant coordination mechanisms in such organisations, considering their purpose and reasons why new members join. Members alternate at formal leadership positions in order to prevent organisational leaders from entrenching in their positions. Strategic intent unites and inspires members, while standardisation of rules of conduct and the desired output help achieve organisational coherence and harmony. Strategic leadership emerges and is dispersed across the entire organisation in networks of large numbers of leaders who, regardless of formal relationships, take initiative, encourage change, create and manage activities and programs within the community.

Good examples include Lions, Rotary International and Kiwanis, global humanitarian organisations with numerous members working in several thousand clubs around the world. The basis for their successful operation is a network of leaders at all levels who cooperate in charity projects at local and global levels. Leadership appears in the alternating form: terms of office last for one year and members are encouraged to assume leadership roles. Special attention is given to educating members regarding leadership in order to create leaders capable of shaping the future of the organisation and the community they belong to.

Organisations and social movements such as Medecins Sans Frontiers (Doctors Without Borders), Action Against Hunger, CARE, numerous movements fighting for rights of vulnerable groups and minorities, etc., likewise lean on networks of leaders.

Moreover, networks of business and political leaders are also established with a view of influencing social developments. For example, the World Economic Forum has the ambition to bring together the world elite, as it engages the foremost political, business, cultural and other leaders of society to shape global, regional and industry agendas.¹² Similarly, Future Leaders Network brings together the next generation of political, economic and social leaders in Great Britain, aiming to enable all young people to deliver positive impact in the world, by offering young people from all backgrounds access to meaningful, purposeful and practical opportunities to develop their leadership skills so as to realise their full potential (Fig. 8.4).¹³

Fig. 8.4

Networks of strategic leaders

6. Collective as a Strategic Leader

Unlike organisations and movements where, due to specific internal and external situations, networks of leaders complement and sometimes swap leadership roles based on hierarchical relationships, there are organisations in which leadership indisputably has a fully collective dimension.

Members of a collective jointly assume the leadership role and there is no individual or group of leaders in charge, which is why it can be said that the collective de facto acts as a leader.

Unlike joint or shared leadership, in which personalities of individuals and their relationships play an important role, collective leadership is generally separate from any person and is not dependent on any person. Defined roles and rules of conduct, members’ commitment to common values and their focus on democratic leadership ensure a framework in which the leadership structure can survive regardless of the contributions of certain individual members. Mechanisms and processes of democratic decision-making are embedded into the administrative system and procedures used to resolve issues and problems that may be imposed on the group.

Such a configuration of strategic leadership may appear in organisations if the structure of formal authority and responsibility collapses, i.e., if the organisation becomes fully decentralised. Full decentralisation removes structural elements linked to chains of command and hierarchical positions, so that organisational leadership ceases to have a personalised dimension and emerges as a collective phenomenon.

Every or nearly every member of the organisation contributes as an actor to integral strategic leadership. The collective is recognised from the outside as a coherent leadership entity, while internal group dynamics and processes of achieving agreement model different ways of internal coordination and dynamic interaction with the environment.

Individuals’ initiatives appear from time to time and are tested in the processes of group harmonisation and decision-making, such as the direct democracy model, i.e., the model of voting on all important aspects of the organisation. However, once it becomes “property” of the collective, the initiative acquires a collective attribute and ceases to be associated with its proponent.

Depersonalisation of strategic leadership appears as a mode of operating and achieving agreement in various social networks where commonly used coordination mechanisms relying on position-based power cannot be imposed.

If a social network has the properties of a collective and clear rules regarding member conduct, e.g., a social initiative or movement not led by an individual or a group, a configuration of strategic leadership may emerge in which strategic leadership will be a collective asset. The same goes for non-hierarchical organisations such as project groups, whose members are equal and wield approximately the same influence.

It appears important to point out that such configuration of strategic leadership is oftentimes of a temporary nature, considering the (mostly) different abilities, tendencies and aspirations of members of the organisation. Symmetry of power, which is a natural consequence of collective leadership, generally does not last long: typically, there will be a person with leadership qualities who will wish to assume leadership or have a dominant influence on strategic leadership processes (Fig. 8.5).

Fig. 8.5

Collective strategic leadership

Cooperatives are organisational forms in which collective leadership often emerges as the optimal solution.

A cooperative is a voluntary, open and independent organisation led by its members; through the work and other activities of the cooperative, or through the use of its services, members rely on togetherness and mutual assistance to fulfil, improve upon and protect both their individual and common economic, social, educational, cultural and other needs and interests, and to achieve objectives for the attainment of which the cooperative has been established.

It would be difficult to enumerate all types of cooperatives. There are various consumers’, producers’, agricultural operators’, workers’ cooperatives, credit unions, and numerous other types of cooperatives. Regardless of the form, the strategic leadership function is common to all members of the cooperative, who base their actions on equality, fairness and solidarity.

Each member of the cooperative gets one vote and cooperation is the key basis of joint action; decisions are made based on a majority vote and the elected leaders are an extension of the members (Babić & Račić, 2011).¹⁴

The cooperative form of organisation can also be a characteristic of large organisations that align collective leadership with configurations of distributed strategic leadership.

The Basque Mondragón is one such organisation made up of multiple autonomous and independent cooperatives competing on international markets and using democratic methods in their organisation; the objective is to create jobs, enable personal and professional development of employees and develop their social environment. It is a large network of 103 cooperatives, which own 154 branches and 24 integrated offices, as well as 15 R&D centres, with more than 80 thousand employees on 5 continents. Mondragón is the leading Basque business group and the tenth largest in Spain.¹⁵

Strategic leadership of Mondragón is extremely democratic and dispersed. The organisation is structured in 14 segments, each consisting of autonomous cooperatives active in similar or related activities. Governing bodies are the General Advisory, the Standing Commission and the Cooperative Congress. The General Advisory, which is the key governing mechanism of the corporation, consists of vice-presidents in charge of each segment. It is important to emphasize that the decision-making responsibility lies on individual cooperatives, and not on the segment, which primarily has a coordination role. Cooperative Congress is the highest body, which defines the common strategy for action in the network of cooperatives.

The principle of Mondragón is that all decisions that can be adopted at lower levels actually be adopted there, and not at higher organisational levels.¹⁶ Participation is greatly encouraged, as is collective decision-making. Each member may become involved in the work of the governing bodies, provided that such member receives sufficient support by other partners in the Advisory, and performs his/her duty with no financial compensation. Likewise, any member can become a director, provided that the professional and managerial requirements that come with the responsibility of such position are met. Strategic leadership is depersonalised and the collective is always in charge, regardless of who performs the formal leadership functions.

7. Relationships between Generic Configurations

Generic configurations rarely appear in their “pure” forms. Strategic leadership in an organisation is in most cases a combination of several settings and styles, which depends on many situational factors. Characteristics of a single configuration may be more dominant and identifiable, but this is not a rule.

Dimensions used for identifying configurations are (1) number of actors assuming the strategic leadership function and (2) relationship toward the chain of formal authority or the positions in organisational hierarchy associated with strategic processes.

As pointed out, egocentric strategic leadership denotes a situation in which the strong personality, ability and capacity of a single person fully direct organisational existence. Power is asymmetrically distributed across the organisation and decision-making is highly centralised. Leaders are identifiable in the environment as distinct symbols of the organisation. Egocentric leadership cannot be turned into organisational capacity or routine; it can be a distinct competency of the organisation, but relying solely on it is risky.

Sooner or later, egocentric leadership is transformed into distributed strategic leadership.

Limitations of cognitive, information and action-related nature, environmental complexity, as well as growth and expansion of the organisation, eventually require the organisation to distribute the function of strategic leadership among multiple persons with managerial authority in the organisation. Strategic leadership is thus established as a group or organisational characteristic (Fig. 8.6).

Fig. 8.6

Generic configurations of strategic leadership

Horizontally distributed and vertically distributed strategic leadership rely on formal positions in the organisation and on the chain of authority and responsibility, i.e., on the hierarchical structure of the organisation.

Horizontally distributed strategic leadership describes a coalition in the upper echelons, i.e., a top management team that jointly manages the strategic processes in an organisation.

Vertical strategic leadership mirrors the decentralisation of the strategic function and the delegation of important decisions to important middle managers.

Both configurations are based on the establishment of a dominant coalition that assumes a crucial role in leading the organisation. At first glance, this is a good solution, but this is not always the case. Distribution of the leadership function decreases the costs of information in the long term, but it also increases the costs of negotiation and implementation (Kriger & Zhovtobryukh, 2013, p. 421). If there are multiple actors involved in strategic leadership activities, the number of situations in which it is necessary to deal with resolving potential disputes, coordinating, reaching an agreement and arranging all relevant aspects grows (Table 8.1).

Table 8.1 Dimensions of generic configurations of strategic leadership

Furthermore, departure from hierarchy is characteristic to organisations where strategic leadership is not linked to formal power and where proactivity and adaptability are associated with initiative, innovation, creativity and quick decision-making, regardless of administrative rules.

Building a network of strategic leaders helps shape the strategic intent and achieve consistent strategic implementation. Moreover, a network of leaders can be a spontaneously-emerging or a designed organisational entity created with the aim of extending social influence and establishing agendas that may benefit both individuals and the society as a whole.

Finally, strategic leadership can be a collective matter in the true sense of the word. Joint action is embedded in organisational norms and can lead to complete depersonalisation of strategic leadership.

In such cases, the collective is both the object and the subject of leadership. Direction, connection and dedication of members are achieved through agreement, democratic decision-making and establishing settings in which the leadership process is broadly dispersed to all members, as is the case (for example) in smaller groups with symmetrical power or both small and large cooperatives with clearly defined rules that do not permit aberrations or concentration of position-based power.