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Strategic Leadership

Updated on April 12, 2024
Article byShrestha Ghosal
Edited byShrestha Ghosal
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Strategic Leadership?

Strategic leadership is a leadership type that focuses on introducing and implementing practices that allow a business to adapt to the changes in the market. It sets a business apart from its competitors and enables the business to meet dynamic business needs. This leadership type incorporates various management styles.

Strategic Leadership

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These leaders emphasize the importance of creating a shared vision for the organization and integrating the efforts of all employees to reach a common goal. They help streamline operations, promote innovation and creativity, motivate employees, and boost productivity. The leaders also promote a sense of unity in the organization.

Key Takeaways

  • Strategic leadership is a leadership type where individuals set a shared vision and objectives for the organization, which help them design, implement, and execute strategies that help the organization adapt to changes in the market.
  • These leaders must be great communicators, empathetic listeners, and open-minded, and they must promote continuous learning and development. They must allow the employees to undergo training that would help them enhance their skills.
  • This leadership style promotes a sense of unity in the organization. However, implementing this leadership can take a lot of work, which may hinder growth in the business.

Strategic Leadership Explained

Strategic leadership is a form of leadership that specializes in developing and executing strategies that allow a company to react to market changes. These leaders focus on the necessity of developing a shared vision for the organization and coordinating the activities of all employees to achieve a single objective. It helps a company stand out from the competition and adapt to changing market demands. 

This style of leadership integrates several management styles. The leaders are responsible for facilitating operational efficiency, encouraging creativity and innovation, inspiring the employees, and increasing output. They allow employees to put forth their ideas and enable them to work on their personal growth and development. Moreover, these leaders use a rewards system to acknowledge an employee’s contribution to the company. They help a business employ sustainable business practices and make optimum use of the available resources.

Characteristics

The characteristics of strategic leadership are as follows:

  • These leaders must be good communicators. They must clearly communicate the goals and visions to the employees. The leaders must practice empathy and be able to listen carefully to the employees.
  • The leaders should be interested in others. They must interact with everyone with an open mind and encourage them to come forward with their unique ideas. Such leadership demands individuals to promote innovation and newer problem-solving techniques.
  • This leadership style encourages individuals to anticipate the future and build strategic plans based on those predictions. The leaders must gather knowledge from various sources and recognize the competition.
  • One of the significant characteristics of strategic leadership is that such leaders must advocate continuous learning. They must encourage the employees to undergo training and development initiatives to enhance their skills, which would amplify their contribution to the organization.

Types

The types of strategic leadership include the following:

  • Authoritarian leadership: This leadership type sets expectations and outlines the results.
  • Participative leadership: Participative leadership includes involving the team members in the decision-making process.
  • Delegative leadership: This style involves delegating tasks and responsibilities to the team members.
  • Transactional leadership: This style includes rewarding or penalizing the team for their efforts in completing a task.
  • Transformational leadership: These types of strategic leadership occur when a leader employs a vision to influence and persuade the employees to meet the organizational objectives.
  • Servant leadership: The servant leadership style focuses on helping the workers meet their needs. It allows the employees to grow and aids in enhancing their performance.

Examples

Let us study the following strategic leadership examples to understand this leadership style:

Example #1

Suppose Jess started a cafe where he started employing people with disabilities. He encouraged such individuals to take part in various business activities that suited their interests. This action made him stand out in the community and placed his cafe substantially ahead of his competitors. Moreover, Jess provided his employees with medical benefits that were tailored to meet their specific needs. He also made the cafe disability-friendly by incorporating accessibility. Jess made a difference with his visions and created a meaningful business that helped the community. This is a strategic leadership example.

Example #2

First Bank, a subsidiary of First Bancorp, revealed its changes in strategic leadership in an announcement on November 15, 2023. It is the largest community bank that is headquartered in North Carolina. The bank introduced modifications in its leadership structures with the aim of accomplishing its strategic goals effectively. Adam Currie was announced as the President of First Bank and would report to Mike Mayer, the reigning CEO of the Bank and the President of First Bancorp. Furthermore, Elizabeth Bostian, the CFO of First Bank, would continue to direct all the financial management operations.

Advantages And Disadvantages

Some advantages of the strategic leadership style include the following:

  • This leadership promotes goal-oriented thinking. It focuses on combining daily activities with future business needs.
  • It promotes unity and empowerment among employees. This leadership style helps in conflict resolution and promotes collaboration between the various departments in the organization. It integrates the efforts of the employees to meet the common organizational goals.
  • Such leadership fosters clear communication. It helps provide employees with clarity about their duties, roles, and responsibilities. 
  • These leaders develop an organizational structure that enhances strategic decision-making. It helps all the employees and domains stay on the same page and work towards a unified vision and objectives.

The disadvantages of the strategic leadership style are:

  • Implementing a strategic plan, aligning it with the organizational goals, and following it can be a time-consuming and resource-intensive process. It may increase expenses for the organization. This leadership may not be suitable for small businesses that operate with limited resources.
  • This leadership focuses on the future of the business. It does not cater to the current problems and challenges in the organization effectively.
  • The leaders may not be able to predict the future accurately. Their plans may not be able to address the changes in the business environment successfully.
  • Attaining flexibility in the organization is a complex process. This leadership may introduce changes that the employees may resist. It will lead to discontentment among the workers in the organization.

Strategic Leadership vs Strategic Management vs Operational Leadership

The differences between the three are as follows:

Strategic Leadership

  • This leadership type involves creating a vision for the organization and taking measures to achieve the set goals and objectives.
  • Such leaders focus on developing strategies that help the organization sustain itself in a dynamic business landscape.
  • The leaders have a forward-thinking approach and enable the business to adapt to the changes in the market and stay relevant.

Strategic Management

  • Strategic Management is a set of rules and practices that organizations implement to stand out in a competitive financial environment. This management assists the business in achieving its goals and objectives. 
  • The process includes several components: identifying challenges in the organization, devising a strategy to solve them, and finally, implementing the strategy effectively.
  • It helps increase market visibility, enhances profitability, and allows a business to track its progress.

Operational Leadership

  • This is a type of leadership that entails the growth, management, and implementation of business operations. It includes the supervision of the production process, employees, and financial expenses.
  • It focuses on the safety of the production process, the standard of the products and services offered, and the effective management of operational expenses. 
  • This leadership aids in directing the essential functions of the business.

Frequently Asked Questions (FAQs)

1. How to develop strategic leadership skills?

Improving these leadership skills involves various practices like being a straightforward leader and delegating duties and responsibilities among the staff. It includes supporting a work environment that encourages change and new ideas. These leaders must possess good listening skills and be great communicators. They must also provide learning and development opportunities to the employees and promote innovation. However, demonstrating a positive attitude in the workplace enhances this leadership.

2. What are strategic leadership competencies?

Some competencies in this leadership type include forming strategic alliances, creating and managing changes effectively, and handling problems imaginatively. It also involves setting a goal or a vision for the future of the organization and encouraging empowerment among the employees. Additionally, it includes effective governance and negotiation skills. Furthermore, roles like project management, service delivery, and managing stakeholder relationships are essential elements of this leadership’s competencies.

3. At what organizational level would strategic leadership be appropriate?

This leadership is suitable for the top level of an organization. Strategic decision-making and leadership are responsibilities that lie at the upper levels of the business process. The top-level executives and management perform activities and practices that enhance this leadership type in the organization.

This article has been a guide to what is Strategic Leadership. We explain its examples, characteristics, types, advantages, and comparison with strategic management. You may also find some useful articles here –

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