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Volume I, Issue I (2017) pp. 36-44
STRATEGY FORMULATION AND ROLE OF LEADERSHIP
Publication No. SM-17-I-IV
Wajahat Anwaar Bukhari1
[email protected]
Riphah International University, Islamabad.
Abstract
Leadership performs different tasks during the strategic management processes. These tasks
include caretaking, strategic planning, decision making, motivation, risk management, evaluation,
power exercise, motivation, loyalty and responsibility, along with many others. Leadership
provides the basis for the strategic thinking which provides the vision that helps in the strategy
formulation process. Leaders work as strategists and try to analyze the situation and formulate the
strategy to achieve the objectives of an organization. Leaders first set out the objectives and then
analyze internal and external environment in the strategy formulation process so that they may
implement the formulated strategy effectively. A leader also performs the role of a decision maker,
a collaborator, an evaluator, an analyzer, and a risk taker. Strategy formulation within the
organizations is an important task of a leader. This paper presents the review of leadership role in
strategy formulation.
Keywords: Leadership, Strategy Formulation, Strategy Implementation
Introduction
The role of leadership in an organization has been one of the most utmost concerns of many
researchers. Leaders are known to be visionary, charismatic and influential personalities and provide a
shared vision and direction for the growth and success of the organization to determine where the
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organization is heading and what its purposes are (Noe, Hollenbeck, Gerhart, & Wright, 2006). Leadership
plays an important role in the strategic management processes and strategy formulation (Johnston, &
Marshall, 2016). Leadership serves as a link between the soul and body for an organization. The aims and
challenges of the leadership are to remain strong but not rude, to remain bold but not weak, to be proud but
not arrogant, to be humble but not timid and, to be bold but not bully (Azhar, Ikram, Rashid, and Saqib,
2013).
The sheer commitment of the leader enables an organization to acquire success by making different
efficient decisions for the strategy formulation (Yukl, Gordon, and Taber, 2002). Important strategies can
only be formulated and implemented by using a responsible leadership which ensures the effectiveness of
their decisions (William, 1998). Leadership should forecast the needs of the organization carefully and
make the effective decisions and plans to meet the changing organizational needs (Maccoby, 2001).
Strategic leadership provides the direction and vision to formulate strategies for the organization
and the purpose is to direct the employees towards the change process in the organization (Grant, 1991).
Most of the times, leaders examine the internal and external atmosphere of the organization to assess the
need for change (Yukl, 2002). Once the leaders have formulated the strategy then they direct people towards
the need for a change. Generally, a leader plans and implements the operational activities within an
organization. Another task of a leader is to ensure learning in the organization. They also direct their
subordinates to perform tasks in the organization effectively (Mason, 2011).
Leadership also motivates the employees to work together to achieve organization’s mission and
vision. Most of the leaders’ tasks include strategy formulation and implementation (Ireland, & Hitt, 1999).
Leaders implement strategic vision and mission according to the goals and objectives set within the
organization, implement those strategies and then finally evaluate the implemented strategies (James, and
green, 2005).
The process of strategy formulation involves changing the thinking styles of the people (Gattorna,
2015). The employees of the organization are properly conveyed about the need for a change so that they
can reflect a positive behavior towards the change process (Grant, 2016). The purpose of the leaders is to
find out the strategic gaps in the organization so that proper strategies can be formulated and implemented
(Fairholm, 2004). The leaders need to introduce the need for a change in the organization which can only
be achieved by creating the adaptable culture within the organization. With the development of suitable
culture strategy, formulation and implementation become easy tasks (Fourie, 2010). Evaluation systems are
also created by the leaders at every stage in the same context (Venohr, 2007).
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Study Objective
The main purpose of this research paper is to find out the role of leadership in the process of strategy
formulation. The study aims at exploring the existing literature on the required characteristics of leaders
that contribute in developing effective strategies for the organization. This paper presents the review of the
existing literature and integrates the leadership role with the formulation of strategy. Finally, the conclusion
is presented in which outcomes of the study are discussed.
Significance of the study
Charismatic personality of a leader is highly important for the success of any organization. Leaders
have to develop and implement strategies according to market and industry needs (Flemes, 2016). This
research is significant for managers because it helps them in developing effective strategies. This research
will help managers in adopting and changing their strategies. The research is also significant for industries
because it will help them in adopting strategies that have a significant role to play in their success.
Literature Review:
Leadership is a behavior which enforces the people to formulate goals and objectives of the
organization and motivate the employees to contribute effectively towards achieving the objectives of the
organization. A leader plays an important role in ensuring the efficiency and effectiveness of the
organizational success (Jooste, & Fourie, 2009). A leader supports the employees of the organization. A
leader should treat everyone equally, and there should be no discrimination. A leader should appreciate the
involvement of everyone (Appelbaum, St-Pierre, & Glavas, 1998). It is considered as the responsibility of
the leader to establish strong relationships within the organization, both at horizontal and at vertical level
(Simons, 1990). The leader should involve everyone in the strategic management process as it is positively
related to the overall performance of the organization (Schaap, 2012). The commitment of the leader helps
in achieving the vision of the organization. And most important of all the objectives of a leader should be
to integrate organizational strategic goals and objectives and to achieve this objective, organizational power
should be used accurately, honestly and with loyalty. The leader should also have a clear idea of the
organizational need for change and the capabilities of the organization (Sami, Qamar & Khalid, 2011).
The performance of an organization is dependent on the strategies which are used to reach to the
organizational vision. The role of the leadership is to develop the strategies which are aligned with the
vision to enrich the capacities and capabilities of the organization to perform well according to the needs
of the organization (Torraco, & Swanson, 1995). Today, the business environment changes rapidly.
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Therefore, leaders try to formulate flexible strategies so that responsiveness can be ensured in the
organizational change process. Decision making is the core essence of the strategic management process,
and it is influenced by the leadership (Tone Hosmer, 1982). Leadership also facilitates the whole complete
process which starts from the conceptual framework of strategy formulation and reaches till the evaluation
process (Rothaermel, 2015). Therefore, strategy implementation is purely dependent upon the efficiency of
decision making. Leadership influences three main functions of the organizations which include 1) Vision
2) Strategies and 3) Values. These three functions affect the overall functioning of the organizations and
create a culture of the organization. The leader must introduce a clear understanding of the organizational
vision to all the employees (Child, 1972). Every employee of the organization should know about his / her
future in the organization. The vision should be simple and easily understandable. Vision is basically the
hub of the strategic management process (Mosia, and Veldsman, 2004).
Leadership is held responsible for the making of strategies to achieve a vision. Strategy formulation
is the road map to reach the vision, and the road map should be focused and clear (Aragón-Correa, GarcíaMorales, & Cordón-Pozo, 2007). The leaders should correlate the vision and the process of strategy making
to develop a culture of learning within the organization by furnishing the clear values to the employees of
the organization (Gattorna, 1998). The values lead the organization towards the right direction by
demonstrating the behavior of the set of values. The vision and the strategies of the organization should
reflect these values of the organization (Gioia, & Chittipeddi, 1991). When the leader has a clear idea about
the importance of these values in the organization, then process of strategy formulation and the
implementation of these strategies becomes easy. The leader has an important role to involve employees in
the strategic management process so that the responsiveness to the organizational change process can be
ensured (Jonminerich, 2008)
Strategic leaders make and then execute the business plan to get the positive outcomes. They play
an important role for the success of the organization. The leaders perform different roles in an organization.
If a leader is dynamic, then situations also become dynamic. Actually, leaders set the goals and provide the
vision to reach to the long term as well as to the short term organizational objectives (Schneider, 1989).
When leaders have developed the vision, then their aim shifts towards the strategy formulation where they
try to involve everyone to ensure the execution of strategic plans. Leaders are responsible for showing their
own commitment as well as their subordinate’s commitment. Their duty is to provide the resources and to
motivate the employees to implement the strategies. And then, they evaluate the whole process and find the
gaps for the purpose of improvement (Gawer, & Cusumano, 2002).
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Leaders try to identify the problematic situations. They also work as strategists and they try to
analyze the situation and formulate the strategy to achieve the objectives of the organization (Jackson,
1992). Leader is an entrepreneur who serves as the mobilizer in the organization. They create and produce
the resources for the execution of the strategies. They also promote the talent to develop the team of the
key players for the process of change implementation (Garavan, Watson, Carbery, & O’Brien, 2016). They
develop a long-term commitment of every employee towards organizational objectives. A leader also aligns
the organization with the national and international perspectives through the use of global thinking
(Jackson, 1992). A leader also creates a healthy environment within the organization which supports the
change process in the organization. A leader also works as a disturbance handler. The performance of whole
organization depends upon the leader (Loren and Matthew, 2008).
Strategy Formulation and Strategy Implementation
Leaders need to identify the need for change to have the strategy formulation. So, they need a
proper scanning of the environment of the organization (Jon, 2008). The strategic process starts with the
scanning of the environment and the analysis of the situation. Leaders try to find out the different suitable
ways to transform the vision of the organization into realistic goals and objectives (Waldman, Siegel, &
Javidan, 2006). Leaders first set out the objectives and then analyze internal and external environment in
the strategy formulation process. Then the leaders set out the targets to be achieved to bring the change in
the organization (Rothaermel, 2015). And then, they formulate the strategy. Strategy formulation is
basically the planning and strategy of the future (Chatman, 2010). Strategy implementation is a process
through which planned strategies are converted into the real actions which focus on achieving the aims and
objectives of the organization (Fouire, 2009 & Norton, 2001).
Role of Leadership in Strategy Formulation and Implementation
Leadership exerts an important role in strategy formulation and implementation. Strategic
management process is related with the vision of the organization (Scott, 2004). Then strategic management
process establishes a culture where everyone knows his / her responsibilities and values of the organization.
And these values deliver the direction towards organizational goals (Mosia, 2004). The leaders introduce
values and cooperative culture in the organization. The leaders provide a base line for strategy formulation
and also, they ensure the proper implementation of this strategy (Fairholm, 2004). Leaders have a duty to
bring innovation with the use of strategic thinking in strategic management process for performance
evaluation to ensure the competitive edge.
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A leader works as a change driver within any organization. The main role of a leader is to simplify
the process of strategic change in organization (Appelbaum, St-Pierre, & Glavas, 1998). A leader has the
ability to stimulate the organization to bring the change in the organization and most of the people within
the organization hate the change process (Flemes, 2016). Therefore, the leader helps in creating an
environment which is feasible to bring change in the organization (Ireland, Hitt, Bettis, Porras, & Auld,
1987). The leaders identify the need for change and then create a culture which is supportive for the change
and then formulate strategies for the change management process. The leaders are considered as the change
agents and without the help and support of the leaders, the change would be impossible to implement
(Caldwell, 2003).
Another important function of the leaders is decision making. Leaders make important decisions
which help in achieving the vision of the organization, so decision making role is also of great importance
(Jansen, Vera, & Crossan, 2009). Leaders ensure the proper functioning and working of the organization.
So the leaders decide the tasks and then choose the most appropriate person to achieve the task. The strategic
management process is dependent upon the decision making of the leaders. Leaders also decide how to
achieve the organizational goals and objectives. They also decide which strategies are to be implemented
and how these strategies would help in achieving goals (Korsgaard, Schweiger, & Sapienza, 1995).
A leader performs the role of a collaborator. Strategy formulation basis is provided by the
leadership. Leaders require the resource collaboration to implement the strategies efficiently and effectively
for the purpose of collaboration. Therefore, leaders always try to provide the best resources. Also, the
leaders collaborate with others to provide the required resources (Waldman, Javidan, & Varella, 2004).
Leaders create the network and align with the organizational internal and external environment.
Leader performs the role of an evaluator and the performance evaluation of the employees is most
important in strategic management process. Therefore, a leader performs the role of an evaluator (Mellahi,
Frynas, Sun, & Siegel, 2016). Usually, the evaluation process means that how well the strategies are
formulated and implemented. Basically, the evaluation process provides the basis for the continuous
improvement in the strategic management process (Aragón-Correa, García-Morales, & Cordón-Pozo,
2007). Evaluation process also recommends changing the policies and procedures according to the need of
the situation. Evaluation process not only involves the evaluation of the strategic management process but
also the performance evaluation of the employees of the organization so that effectiveness of the reward
system and punishment system can be ensured (Waldman, Javidan, & Varella, 2004).
Conclusion
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SCIMASS (Scientific Journal of Management and Social Sciences) Volume I, Issue I (2017)
In the end, it can be simply said that leadership is a task of great responsibility. Leaders ensure the
efficiency and effectiveness in the strategic management process. Leadership provides basis for the strategic
thinking which provides the vision that helps in the strategy formulation process. A leader aligns the
organization with the environment of change. After the decision of change making, the leader moves
towards the strategy implementation process. A leader aims at achieving the vision through the execution
of the strategy which has been formulated. A leader aligns the vision of the organization with the goals and
objectives of the organization so that the organization would be able to compete with the dynamic
environment efficiently and effectively. Leaders also train and motivate the employees to reach to the
organizational vision. Leaders also evaluate the whole strategic management process to ensure the
effectiveness of the whole process which helps in finding the flaws and reframing strategies according to
the changing needs. The evaluation process suggests continuous improvement processes in the
organization. Leadership is the core essence of the organization which ensures the success of the
organization.
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