Strategic Competitiveness in the 21st Century

Review of Ireland and Hitt’s Classic Article:

Ireland, R.D., and Hitt, M.A., (2005) ‘Achieving and maintaining strategic competitiveness in the 21st century: The role of strategic leadership’, Academy of Management Executive, 19,4, 65-77 (Reprinted from AME 1999, 13,1)

Strategic Leadership has become an important element within the field of leadership studies. An article written in the 1990s represents a perspective of two experts in the field and has been widely cited. The authors had previously completed a study of performance studies of high-growth entrepreneurial firms, and drew on their findings of ‘the new competitive landscape’

Defining Strategic Leadership

According to Ireland and Hitt

Strategic leadership is defined as a person’s ability to anticipate, envision, maintain flexibility, think strategically, and work with others to initiate changes that will create a viable future for the organization

The Lone Ranger Leader

The broad thrust of the article is that changing environmental conditions in the late decades of the 19th century were met with a shift in behaviours of organizations and organizational leadership. Furthermore, the authors argue that ‘being able to exercise strategic leadership in a competitively superior manner facilitates the firm’s efforts to earn superior returns on its investments’

In ‘the new competitive landscape ..in the 21st century, the ability to build, share and leverage knowledge will replace the ownership and/or leverage of assets as a primary source of competitive advantage’ (64). As a consequence a shift was occurring away from The Lone Ranger or as Senge termed it The Corporate Hercules concept of the Great Leader to The Great Group.

From The Great Leader to The Great Group

The concept of the great group was introduced by Warren Bennis in his text Organizing Genius: The Secrets of Creative Collaboration. Ireland and Hitt drawing on Bennis and Charles Handy argue that

“[Great groups] usually feature managers with significant profit and loss responsibilities, internal networkers… Top managers …have shifted the locus of responsibility to form adaptive solutions from themselves to the organization’s full citizenry.”

The authors write of corporations becoming learning communities, a view shared by learning theorists such as Etienne Wenger and organisational experts such as Charles Handy.

Towards 21st Century Strategic Leadership

The paper describes six components of the emerging strategic leadership approach:

Strategic Vision: Establishing a creative vision through a Top Management Team (a special kind of Great Group). Some role-model leaders quoted are rather reluctant to depart from the older view that “the only person who can do that is the CEO”.

Developing Core Competences: Particularly important is privately owned knowledge. Viable firms are increasingly dependent of nurturing the knowledge base throufh encouragement of innovation enquiry.

Human Capital: This is a broader version of the assets within the firm’s ‘entire workforce or citizenry’ (70). The efforts of the TMT will be increasingly directed to nurturing and talents of all employees.

Sustaining Culture: Successful firms are associated with a culture which enhances positive reactions to challenges of change.

Ethical Practices: The importance of establishing ethical norms is noted (and some subsequent ethical pitfalls anticipated, prior to Enron and the 2008-9 Finanacial Crisis).

Balanced Controls: The older idea of top-down control through objective financial demands is replaced by a more complex balance of strategic and financial controls. The new conditions call for strategic ‘information based exchanges ..with emphasis on actions rather than outcomes [which] encourage lower-level managers to make decisions that incorporate moderate and acceptable levels of risk.’

The Leadership Model Evaluated

Ireland and Hitt provide a valuable integrative analysis of views of the successful 21st century organisation embedded in its fast-changing, turbulent and global environment. It is no surprise that some of the leaders cited for their practices are no longer considered role models. That in a curious way supports as much as weakens the broader conceptualisation provided in the article.

A close reading suggests that the model is more an ideal to be explored and tested than a strongly evidence-based description of emerging practices. When leaders offer quotes about ethics, or participative, team-based strategic leadership, the management scientist in me warns of the difference between espoused theories and theories in use (as Argyris puts it).

Readers may also want to go a little further than the authors in considering that the implication of the ‘pure’ Great Groups model would be to challenge the older idea of the CEO as primary agent for setting corporate direction. Nevertheless, the article provides a powerful summary of a conceptualisation of ‘what might be’, a roadmap for strategic leadership into the future.

Update

During the Ukraine crisis attention was drawn to this post for insights into Putin’s leadership style. Is he acting out The Lone Ranger in its ‘great hero to the great group’ splendor?

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3 Responses to Strategic Competitiveness in the 21st Century

  1. davidburkus says:

    Great post. It’s so hard to find leadership bloggers who really incorporate good writers and theories into their work. Thanks for what you do.

  2. […] Parkfield has renewed its working practices in a way which seems unlikely to have happened without the influence of Ian Smith’s leadership style and strategic decision-making. I left the surgery musing on the nature of entrepreneurial leadership, technology, and people skills needed in successful business renewal. […]

  3. Interest in the post at the height of the Ukraine crisis. Is someone adding the Lone Ranger style to those attributed to Putin?

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