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The principles of management are drawn from a number of academic fields, principally, the fields of leadership, entrepreneurship, and strategy. LeadershipIf we can find both management and leadership described as getting things done through others, then leadership should be further defined by the social and informal sources of influence that you use to inspire action taken by others. It means mobilizing others to want to struggle toward a common goal. Great leaders help build an organization’s human capital, then motivate individuals to take concerted action. Leadership also includes an understanding of when, where, and how to use more formal sources of authority and power, such as position or ownership. Increasingly, we live in a world where good management requires good leaders and leadership. While these views about the importance of leadership are not new (see “Views on Managers Versus Leaders”), competition among employers and countries for the best and brightest, increased labor mobility (think “war for talent” here), and hyper-competition puts pressure on firms to invest in present and future leadership capabilities. In essence, the two terms should be interchangeable in order to meet the increasing demands of life in the 21st century; in reality, this is not always the case. P&G provides an example of this shift in emphasis to leadership as a key principle of management. For example, P&G recruits and promotes those individuals who demonstrate success through influence rather than direct or coercive authority. Internally, there has been a change from managers being outspoken and needing to direct their staff, to being individuals who electrify and inspire those around them. Good leaders and leadership at P&G used to imply having followers, whereas, in today’s society, good leadership means followership and bringing out the best in your peers. This is one of the key reasons that P&G has been consistently ranked among the top 10 most admired companies in the United States, according to CNN Money (2008). Whereas P&G has been around for some 170 years, Google was considered another winning firm in terms of leadership after only a decade. Both firms emphasize leadership in terms of being exceptional at developing people. Google topped Fortune’s 100 Best Companies to Work for many years. Google’s founders, Sergey Brin and Larry Page, built a company around the idea that work should be challenging and the challenge should be fun (Google, n.d.). Google’s culture is probably unlike any in corporate America, and it’s not because of the ubiquitous lava lamps throughout the company’s headquarters or that the company’s chef used to cook for the Grateful Dead. In the same way, Google puts users first when it comes to online service, Google espouses that it puts employees first when it comes to daily life in all of its offices. There is an emphasis on team achievements and pride in individual accomplishments that contribute to the company’s overall success. Ideas are traded, tested, and put into practice with a swiftness that can be dizzying. Observers and employees note that meetings that would take hours elsewhere are frequently little more than a conversation in line for lunch and few walls separate those who write the code from those who write the checks. This highly communicative environment fosters productivity and camaraderie fueled by the realization that millions of people rely on Google results. Leadership at Google amounts to a deep belief that if you give the proper tools to a group of people who like to make a difference, they will. Views on Managers Versus LeadersMy definition of a leader…is a man who can persuade people to do what they don’t want to do, or do what they’re too lazy to do, and like it. Harry S. Truman (1884–1972), 33rd president of the United States You cannot manage men into battle. You manage things; you lead people. Grace Hopper (1906–1992), Admiral, U.S. Navy Managers have subordinates—leaders have followers. Chester Bernard (1886–1961), former executive and author of Functions of the Executive Being an engaged leader means you must be reflective while staying in the fray – the hectic, fragmented, never-ending world of managing. Henry Mintzberg (1939-), Canadian management professor and researcher The first job of a leader is to define a vision for the organization…Leadership is the capacity to translate vision into reality. Warren Bennis (1925–), author and leadership scholar A manager takes people where they want to go. A great leader takes people where they don’t necessarily want to go but ought to. Rosalynn Carter (1927–), First Lady of the United States, 1977–1981 EntrepreneurshipIt’s fitting that this section on entrepreneurship follows the discussion of Google. Entrepreneurship is defined as the recognition of opportunities (needs, wants, problems, and challenges) and the use or creation of resources to implement innovative ideas for new, thoughtfully planned ventures. Perhaps this is obvious, but an entrepreneur is a person who engages in the process of entrepreneurship. We describe entrepreneurship as a process because it often involves more than simply coming up with a good idea—someone also has to convert that idea into action. As an example of both, Google’s leaders suggest that its point of distinction “is anticipating needs not yet articulated by our global audience, then meeting them with products and services that set new standards. This constant dissatisfaction with the way things are is ultimately the driving force behind the world’s best search engine” (Google, n.d.). Entrepreneurs and entrepreneurship are the catalysts for value creation. They identify and create new markets, as well as foster change in existing ones. However, such value creation first requires an opportunity. Indeed, the opportunity-driven nature of entrepreneurship is critical. Opportunities are typically characterized as problems in search of solutions, and the best opportunities are big problems in search of big solutions. “The greater the inconsistencies in existing service and quality, in lead times and in lag times, the greater the vacuums and gaps in information and knowledge, the greater the opportunities” (Timmons, 1999). In other words, bigger problems will often mean there will be a bigger market for the product or service that the entrepreneur creates. We hope you can see why the problem-solving, opportunity-seeking nature of entrepreneurship is a fundamental building block for effective principles of management. You may have heard the term intrapreneur. Often we think of entrepreneurs as people who start their own businesses, so the title intrapreneur was framed to refer to those who participate in entrepreneurial activities within an existing organization. Employees who use their skills and creativity to expand their employers’ business can still be referred to as entrepreneurs, and are in fact applying the same principles. Leaders and managers will want to encourage and empower employees to think outside the box to take advantage of existing opportunities or create new ones. For further information about intrapreneurship, go to Intrareneurship, Explained, or Why You Should Become an Intrapreneur. StrategyWhen an organization has a long-term purpose, articulated in clear goals and objectives, and these goals and objectives can be rolled up into a coherent plan of action, then we would say that the organization has a strategy. It has a good or even great strategy when this plan also takes advantage of unique resources and capabilities to exploit a big and growing external opportunity. Strategy, then, is the central, integrated, externally-oriented concept of how an organization will achieve its objectives (Hambrick & Fredrickson, 2001). Strategic management is the body of knowledge that answers questions about the development and implementation of good strategies. Strategic management is important to all organizations because, when correctly formulated and communicated, strategy provides leaders and employees with a clear set of guidelines for their daily actions. This is why strategy is so critical to the principles of management you are learning about. Simply put, strategy is about making choices: What do I do today? What shouldn’t I be doing? What should my organization be doing? What should it stop doing? Synchronizing Leadership, Entrepreneurship, and StrategyFigure 1.4.1: “A Woman in Black Blazer Talking to Her Colleagues” by Alena Darmel, Pexels License.You know that leadership, entrepreneurship, and strategy are the inspiration for important, valuable, and useful principles of management. Now you will want to understand how they might relate to one another. In terms of principles of management, you can think of leadership, entrepreneurship, and strategic management as answering questions about “who,” “what,” and “how.” Leadership helps you understand who helps lead the organization forward and what the critical characteristics of good leadership might be. Entrepreneurial firms and entrepreneurs, in general, are fanatical about identifying opportunities and solving problems—for any organization, entrepreneurship answers big questions about “what” an organization’s purpose might be. Finally, strategic management aims to make sure that the right choices are made—specifically, that a good strategy is in place—to exploit those big opportunities. We have spent the last two years going through a pandemic, and are currently in the midst of Russia’s attack on Ukraine. Today’s leaders must be made of tougher stuff than they have in the past because they need to be able to keep up with life at the speed of light, balance a multitude of competing priorities, and pivot on a dime when a crisis hits. Adaptability and resiliency are key to survival, for leaders and their organizations. The consulting firm McKinsey & Company addresses How leaders can adapt to a very different future. You may also be interested in McKinsey’s interviews with several top business leaders called, Leadership Matters. One way to see how leadership, entrepreneurship, and strategy can come together for an organization—and for you—is through a recent (disguised) job posting from Craigslist. Look at the ideal candidate characteristics identified in the following Help Wanted ad—you don’t have to look very closely to see that if you happen to be a recent undergrad in the field of business, then the organization depicted in the ad is looking for you. The posting identifies a number of areas of functional expertise for the target candidate. You can imagine that this new position is pretty critical for the success of the business. For that reason, we hope you are not surprised to see that, beyond functional expertise, this business seeks someone with leadership, entrepreneurial, and strategic orientation and skills. Now you have a better idea of what is involved with key principles of management. We’re hiring a chief of staff to bring some order to the mayhem of our firm’s growth. You will touch everything at the company, from finance to sales, marketing to operations, recruiting to human resources, accounting to investor relations. You will report directly to the CEO. Here’s what you’re going to be asked to do across a range of functional areas in the first 90 days before your job evolves into a whole new set of responsibilities: Marketing
Sales
Finance and Accounting
Operations
HR and Recruiting
Production and Product Development
The Ideal Candidate Is…
The principles of management are drawn from three specific areas—leadership, entrepreneurship, and strategic management. You learned that leadership helps you understand who helps lead the organization forward and what the critical characteristics of good leadership might be. Entrepreneurs are fanatical about identifying opportunities and solving problems—for any organization, entrepreneurship answers big questions about “what” an organization’s purpose might be. Finally, as you’ve already learned, strategic management aims to make sure that the right choices are made—specifically, that a good strategy is in place—to exploit those big opportunities. Attribution“Leadership, Entrepreneurship, and Strategy” in Principles of Management by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted. ReferencesGoogle. (n.d.). Ten things we know to be true. http://www.google.com/intl/en/corporate/tenthings.html Hambrick, D. & Fredrickson, J. (2001). Are you sure you have a strategy? Academy of Management Executive 15(4), 48-59. CNN Money. (2008, March 3). America’s most admired companies. https://money.cnn.com/magazines/fortune/mostadmired/2008/index.html Timmons, J. (1999). New venture creation: Entrepreneurship for the 21st century (5th ed.). Richard d Irwin. Is the central integrated externally oriented concept of how an organization will achieve its objectives?A strategy is the central, integrated, externally oriented concept of how a firm will achieve its objectives.
What do you mean by externally oriented planning?The externally oriented planning is used to search for untapped or emerging market opportunities. From the point of view of an objective outsider, managers compare and contrast product offerings between those of their own companies and those of the competitors.
What is the concept of strategy explain?A strategy describes how the ends (goals) will be achieved by the means (resources). Strategy can be intended or can emerge as a pattern of activity as the organization adapts to its environment or competes. It involves activities such as strategic planning and strategic thinking.
What is corporate strategy and business strategy?Basically, a business strategy focuses on how a company plans to compete in a market, while a corporate strategy focuses on the markets it wants to enter and the businesses it wants to compete with.
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