Strategic Leadership – An Organizational Skill in Change Management

Introduction

According to Barker (2001) and Alvesson (2004), the success of any organization depends on the choices made by its leaders as well as commitment to achieving organizational goals. Strategic leadership is one of the most critical concepts in modern organizations because of the unpredictable nature of the modern business environment (Mullane, 2002; Robbins, et al., 2010; Bass, 1998). This concept of management creates a competitive advantage through strategic initiation of changes, maintaining flexibility, and the ability to anticipate future events.  Strategic leadership has become a major subject of interest for organizational behavior experts due to its increasing importance in the modern business environment (Robbins, et al., 2010; Rowe, 2001; Simmons, 2007). It is difficult for an organization to be sure about its competitiveness in the future without strategic leadership. Arnone and Stumpf (2010) observe that this type of leadership acts as a perfect link between organizational effectiveness and leadership effectiveness. However, strategic leaders continue to operate under immense pressure as most organizations demand for immediate results (Thompson et al. 2007; Collins, 2001; Belasen & Frank, 2008). The leaders operate in a dynamic environment with changing priorities and conditions, but it is important for them to find a perfect balance. This paper will evaluate the strategic leadership and change issues arising in an organization; propose approaches to manage the issues, and make recommendations on improvements in the management of change process. The leader of choice in this discussion is Elon Musk of Tesla Motors.

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Strategic Leadership and Change Issues at Tesla

Elon Musk is the current product architect and CEO of Tesla Inc. He is among the most notable strategic leaders in the world, and Tesla has been able to experience tremendous growth under his leadership (DeBord, 2017; Korosec, 2017).  He is the founder of other successful companies such as Zip2, X.com, and SpaceX. Gassée (2017) observes that under his leadership, Tesla came up with new strategies that would improve the company’s profitability and sustainability. Tesla’s new strategies include increasing the number of vehicles produced by year from 50, 000 to 5000,000 by 2020, making Tesla a renewable energy enterprise, as well as entering the high-end of the market (Hruska, 2017). However, increasing production by more 500% in the next two years is considered to be the most strategic change at the organization.  It is important to point out there are quite a number of change issues that have come up as a result of Tesla’s new strategies. To begin with, the number of injuries in Tesla factories has increased as employees strive to meet the high production targets (Hruska, 2017). Second, the company faces stiff competition from other car manufacturing companies such as Ford, Audi, and GM.

The electronic vehicles market continues to become very competitive with the entry of new players that have well established brands. The companies produce cheaper models that are more attractive to most buyers. For instance, Tesla’s model costs $71,000 while the Chevrolet Bolt that is produced by GM costs $36,000 (Hruska, 2017). Third, EV’s still face competition from gasoline powered cars as there have been no significant developments in the battery technology in the recent past (Weinberger, 2017). This means that gasoline powered cars will continue to dominate the market. According to Weinberger (2017), the high production targets have led to delivery delays because the company relies on a single manufacturing plant and a few suppliers. Other challenges the company is facing include a culture damage and competition from China.

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Leadership Theories

Transformational Leadership

This leadership theory was developed in 1978 by James McGregor Burns and later modified by Bernard Mass (Alimo-Metcalfe & Alban-Metcalfe, 2001; Kotlyar & Karakowsky, 2007). This type of leadership leads to high levels of motivations and morality as it encourages a mutual corporation between leaders and followers. It emphasizes on organizational integrity and long-term goals as a way of ensuring sustainability. The developers of this theory believed that it is difficult for an organization to achieve any form of cruces with corporation and emphasis on morality (Alimo-Metcalfe & Alban-Metcalfe, 2001). The theory is suitable for an educated population and helps reduce conflicts with an organization. The leader gets a lot of support from followers hence providing stability within an organization.

Also, it is important to understand that transformational leadership is suitable for a well structured organization as it guarantees success and predictability (Garcıa-Morales et al., 2008). Some of the shortcomings associated with this theory include overdependence on a leader; conformity can be confused with cooperation, discourages individual initiatives, and over-enthusiasm that may cloud judgment. According to Garcıa-Morales et al. (2008), transformational leaders are more proactive and implement new ideas that may be beyond the organizational culture. Elon Musk has the qualities of a transformational leader as he believes in affirm believer in organizational and operational integrity. His transformational leadership has made Tesla to be one of the leading producers of EV’s in the world.

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Transactional Leadership

The theory was developed for the first time in 1947 by Max Weber and is often referred to as a managerial style of leadership (Hargis et al. 2001). The theory is based on fundamental elements of management such as short-term planning organizing and controlling. Leaders applying this type of leadership style appeal to the individual interests of each employee through directing, controlling, and motivating (Hargis et al. 2001; Weihrich et al. 2008). Leaders derive their power from formal responsibility and authority. Followers are expected to follow the leader’s instructions while motivation is achieved through punishments and rewards (James & Joseph, 2001). Moreover, transactional leaders operate within the organizational culture and are more responsive than proactive.

Proposals to Manage Tesla’s Change Issues

The first issue being faced by Tesla is inadequate production capacity to meet its new production targets.  This issue can be managed increasing the number of production plants, adopt incremental targets based on existing capacity, setting up more assembly lines for copper, and identifying multiple suppliers. As a transformational   leader, Elon Musk came up with Model S that was a complete departure forms the Tesla’s organizational culture.  This is a major risk as it is never easy to understand a new audience. The company should invest in comprehensive market research before introducing new products into the market. Other important strategies for managing change issues at Tesla include; adopting a management style of leadership, forming partnerships with new inventors like Uber, and focusing on innovation to deal with competition from gasoline powered vehicles. The company should find a perfect balance between transformational leadership and transactional leadership.

Change Models

The ADKAR Model

This is a goal focused change management model that advocates for a sequential approach in managing change (Calder, 2013). There is a need to create awareness, enhance participation and identify the right behavior and skills required to successfully implement the required.  According to Calder (2013), the model is based on four premises that include; Awareness, Desire, Knowledge, Ability, and Reinforcement (ADKAR). According to this model, organizations that want to achieve their overall goals must consider achieving cumulative goals (Calder, 2013). According to Hiatt (2006), long-term and sustainable change can only be achieved through progressive implementation on a daily basis. The model is suitable when implanting new projects. A company like Tesla can effectively manage the ongoing change by adopting this model of change management. For instance, increasing the production targets should be done sequentially to attain sustainable change. This will involve increasing the production capacity in relation to the new targets. According to this model, change can only be sustained through added reinforcement.

Levin’s change Management Model

The Kevin Levin change model is based on the assumption that most people like to stay in their safety or comfort zones (Kreitner & Kinicki, 2007). As a result, three major stages should be considered when implementing change. According to Collins (2005), the first stage is the unfreeze stage is meant to make employees understand the need for change and at the same time prepare them psychologically for change. The second stage is the change or transition stage where employees are introduced to the proposed change (Kreitner & Kinicki, 2007; Reiss, 2012). This stage needs a lot of reassurance and motivation from the change leaders. The third and final stage is the refreeze stage that involves full operation under the new guidelines after successful implementation ad acceptance of change (Kreitner & Kinicki, 2007). Musk proposes major changes at Tesla and the best way to manage these changes is by adopting Levin’s change model. There is a need to prepare both the employees and the new target market for the model S project.

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Recommendations on improvements in the management of change process at Tesla

As mentioned earlier, Tesla has to adopt a sequential change process when implementing large projects such as an increase in its production capacity. Planning is very essential when it comes to change management, and it seems like there was lack there was lack of adequate planning when introducing the new changes at the company. Step by step planning will help the company address the issue of production capacity before full implementation of the new project.  The company can ensure a steady stream of revenue by forming strategic partnerships with other car manufacturers. In addition, Tesla should improve both internal and communication to keep employees, customers and other important stakeholders well informed about the company’s strategies and plans. The effectiveness of the company’s managers will determine whether the change process will be successful or not. Moreover, there is a need for a company like Tesla to initiate people-centered changes to minimize resistance to change and enhance cooperation. Finally, strategic leadership calls for change leaders to hold discussion with all the stakeholders before introducing any structural changes.

Conclusion

Strategic leadership is a new management concept that focuses on creating future competitive advantage through making voluntary decisions and influencing others to achieve a common purpose. Elon Musk is a strategic leader has been able to spearhead a complete turnaround of Tesla through his strategic and transformative leadership style. Change management models such as Levin’s model and the ADKAR model are meant to help organization to effectively manage the change process.