There are many arguments to support the idea that a leader can make a significant difference to the long term success of an organisation. Leadership influences almost every aspect of business strategy, and the nature of effective leadership varies from business to business. Leadership is a complex concept and the characteristics of effective business leaders have been studied for many years in order to try to find the ideal profile. One of the most popular definitions is that leadership is a quality some people possess that allows them to rule, affect and lead other people.
That quality consists of a person’s charisma, power of thought, intellectual potential, organizational talents, and sense of responsibility. There are four classic leadership styles; authoritarian, paternalistic, democratic, and laissez-faire. Factors that affect leadership styles are some of the following: manger’s experience, nature of the business problems, type of organisation, skills and experience of subordinates etc. Richard Branson, as the ‘face’ of Virgin is a successful and highly influential leader.
He has been practically a household name in the U. K. or the past 20 years and is also well respected in the business world. Branson is known for his unique character and leadership styles, one who is not afraid to take risks, and believes that people are the foundation to his company’s success. He is definitely a democratic leader. He truly feels that getting other peoples input and listening to what people have to say are a core value to him. However, he is unlikely to make a significant difference to the long term success of Virgin because he is so diversified, with many talented employees who specialise in their respective areas.
Virgin is perhaps also less dependent on its leader because it comprises numerous independent businesses. There are many separate decision makers and not just one leader. Another successful business leader is the CEO of Starbucks, Howard Schultz. His goal was to battle the dropping sales of the U. S. coffee shop chain and bring Starbucks to a fresh level. He intended to provide clear direction through leadership and take a contingency approach in organizational behaviour. Starbucks leadership team is among the best when it comes to global market.
Schultz looked for employees who are team player and have passion to work for Starbucks. He took care of employees and treated them with respect. He has created a unique culture in Starbucks in which entrepreneurship and empowerment, quality and service define values of leadership. Schultz gave more power to employees in decision making and also flexibility to choose their own working hours. He honoured the feedback from the employees in Starbucks therefore it shows that Schultz had democratic style of leadership in Starbucks. It became apparent just how much Starbucks would suffer without him when he actually left.
During his eight year absence, Starbuck’s performance deteriorated significantly and it was apparent that his departure had severely damaged the business. Upon his return he swiftly identified the problem; Starbucks had focused too much on rapid growth at the expense of quality. Schultz gave an emotional speech to all his employees and then proceeded to shut down stores and replace executives. The immediate improvement in the company’s performance shows that a successful leader can make a real difference to the success of a business. The leaders of companies such as Zappos have created the right culture for corporate aims to be achieved.
Zappos consciously creates and reinforces its corporate culture. The work environment provided for employees won’t attract every job searcher and it’s not for every employee. But, the people who fit the corporate culture thrive working for Zappos. The company defined its corporate culture with its ten core values. The HR and management systems developed, employee job descriptions, the hiring process, on-the-job training and the day-to-day work environment remind and reinforce these values with employees, visitors, customers, and partners. Managers are key at Zappos for promoting the company culture.
Zappos has a culture book that is written by employees every year. It details how people feel about the Zappos culture and how they reinforce and develop the culture every day. This ‘home’ culture has been very successful and had been the right culture in order for the company’s corporate aims to be achieved. However, leaders that have always been successful do not always achieve the business’s corporate aims. Terry Leahy, former CEO of Tesco is a good example of this, and despite their best efforts and huge capital investment Tesco has not been able to conquer the USA market and have decided to exit this market.
Leahy is poised to lose out on more than ? 10m in share awards because of the company’s decision to pull out of the US. This would make it impossible for Tesco to ever hit the targets in the US required for the shares to vest, meaning Sir Terry will miss out on his share awards. Sir Terry transformed Tesco from Britain’s second biggest retailer to the second biggest retailer in the world during his tenure. However, in his book, Mangement in 10 Words, he accepts it will have been “my responsibility as CEO” if the US venture failed.
The cost of exiting the US for Tesco will be a write down of about ? 1bn. The drop in profits and the exit from the US are a setback for Tesco. Sometimes leaders fail to achieve the corporate aims of the business because of external factors (Pestle). Government interference, the economic climate, change in social trends or legal issues can all affect how a business operates. It will also depend on whether the company has the resources to secure success, finance, the right people and resources etc. Howard Stringer, former CEO of Sony is a good example of this.
Sony’s board believed that Stringer could cut through an insular culture, one in which engineers made many decisions without regard to outside market considerations. Stringer failed to see that consumer electronics would become commodities, many of them produced inexpensively in Korea and China. Sony’s brand was not powerful enough to offset new, quality products sold by competitors at lower prices. Stinger also failed to push Sony into the smartphone business as it flourished in 2007 with the release of the Apple iPhone. Instead he created a joint venture with Ericsson as a means to grab market share, which was unsuccessful.
To conclude, it is not always possible for a CEO to achieve the business’s corporate aims because businesses operate in a dynamic environment and it will depend on so many other factors. If they have appropriate resources, the right skills, support of staff and stakeholders, the right culture, etc. , it will help but the external environment will also play a big part. Although the departure of a leader may affect business performance in the short term, as employees and customers adjust to new people, practices, and services, in the long term the business will not be significantly affected provided careful planning has taken place.
Steve Jobs, the former CEO of Apple, is a good example. He was widely recognised as the face of Apple and intrinsically linked to the brand. However, the strength of the brand stems from exceptional style, design, marketing and operations strategy-the leader is only a part of the equation. The loss of Jobs is unlikely to have a significant negative impact on Apple’s performance in the long run.