Sectoral Strategic Leadership

Sectoral Strategic Leadership

“Who” are sectoral strategic leaders and “why” do they matter? The second part of this

question (the “why”) was already answered when the concept sectoral strategic outcomes was

discussed. In the previous section, strategic management (as an applied discipline) and strategic

leadership were theoretically linked via the resource-based view of the enterprise. As with the

previously-discussed strategy related terms, the term sectoral has been added to the term strategic

leadership to reinforce the reality that strategic leadership is equally applicable to the for-profit

and not-for profit sectors (Phipps & Burbach, 2010) and the public sector (Nutt & Backoff, 1993).

Sectoral differences are to be explored in the pages that follow. It is important to note, here, that

educational leaders are expected to have strategic leadership competencies at either the higher

education levels (Neuman & Nueman, 1999) or the K-12 level (Babo & Ramaswami, 2011;

Williams & Johnson, 2013). More specifically, these competencies must be sectorally (for-profit,

public, and not-for profit sector) and industrially (Higher Ed or Education K-12) specific given the

unique sectoral reality that is experienced in the education industry.

While the education industry is the ultimate focus of this literature review, strategic

leadership theory is a theory that scholars from the for-profit sectoral community derived from the

resourced-based view of strategic management. Therefore, definitions of strategic leadership as

derived from authors in the for-profit community are set forth first here. According to Ireland and

Hitt (2005), “strategic leadership is defined as a person’s ability to anticipate, envision, maintain

flexibility, think strategically, and work with others to initiate changes that will create a viable

future for the organization” (Ireland & Hitt, 2005, p. 63). Rowe (2001), while recognizing Ireland

and Hitt’s (2005) definition, reworked their definition to include the concept of voluntary decisionmaking

and the need for leaders to focus on the present as well as the future. Rowe’s definition is

as follows: “Strategic leadership is defined as the ability to influence others to make day-to-day

decisions that enhance the long-term viability of the organization while maintaining its short-term

financial stability” (Rowe, 2001, p. 81).

The above stated definitions are sectorally neutral; however, they do not reflect the

uniqueness of the public or not-for profit sectors. Definitions from both sectors were sought out for

the purpose of this literature review. Nutt and Backoff (1993) set forth a succinct definition of

strategic leadership that is equally applicable to both the governmental and not-for profit sectors.

According to Nutt and Backoff (1993), “strategic leadership can be thought of as a process of

guidance that sets a new strategy in place” (Nutt & Backoff, 1993, p. 324). They supplemented this

definition by stating that the “ultimate test of strategic leadership is to realize change of enduring

value” (Nutt & Backoff, 1993, pp. 324-325).

For the purposes of this literature review, “sectoral strategic leadership” is the exercise of

strategy related competencies (Stumpf & Mullen, 1991) by authorized stakeholders and by those

leaders at the apex (“who”) of a sectoral strategic enterprise (“where”) (Boal & Hooijberg, 2001).

The first three figurative chairs at the strategy table are reserved for the board, the top executive

(e.g., the CEO, Superintendent, or President), and the top management team (e.g., vice presidents).

Such sectoral strategic human resources are held accountable to and are given varying degrees of

responsibility for executing contemporary sectoral strategic management processes (Stumpf &

Mullen, 1991). These processes are completed by executing the appropriate style and by thinking

and acting strategically (“how”) (Stumpf & Mullen, 1991) and influencing (Hughes & Beatty,

2005) with the aim of realizing sectoral strategic outcomes (“why”) over the long term while

keeping an eye on the short term financial situation (Rowe, 2001). While the majority of the

aspects of sectoral strategic leadership presented above have already been discussed in this

manuscript, the “how” aspect of sectoral strategic leadership is considered in section two of this

chapter, while the “who” aspect of sectoral strategic leadership is considered below.

Significant sectoral differences exist when considering strategic leadership from each

sectoral perspective. All sectoral differences are evident when considering the education industry,

however. Sectoral strategic leaders, in their quest for sectoral strategic outcomes, must consider

each of four categories of strategic leadership differences. For education institutions in the nonprofit

sector and the public sector, four additional figurative chairs (four of the seven situation

chairs in Figure 4) need to be added to the metaphorical table to account for these differences. The

first additional symbolic chair is reserved for the public. The secret nature of for-profit strategic

decision-making is not exercised in either non-profit (Courtney, 2002) or public sector

organizations. Thus, strategic management process elements must be adapted for this reality

(Joyce, 2004). The second, third, and forth additional chairs are the unique form of governance that

is utilized in the education industry. The second additional symbolic chair is unique to the

education industry in that faculty in American higher education participate in governance through

what is referred to as “shared governance,” a “set of practices under which college faculty and staff

participate in significant decisions concerning the operation of their institution” (AFT Higher

Education, 2006, p. 4). The third extra chair is for students (Morrill, 2013), and the fourth extra

chair is for lay trustees (people who do not work in the education industry) (Hermalin, 2002).

Each of the above-mentioned four categories of stakeholders with a figurative chair at the

strategy table represent significant departures from those practices deployed by for-profit sector

organizations, where secrecy is valued, where authority is not constrained (Nutt & Backoff, 2009),

and where there is greater linkage between compensation and performance (Scott & Falcone,

1998). This lack of constraint is also evident in payment practices at the board level and in sectoral

risk orientation. While public board members, at least in some instances, receive minor stipends

for board service (Arndt, 2013), the difference between public, for-profit, and non-profit sector

board compensation is drastic. For-profit board members receive significant compensation and

stock awards, while non-profit board members not only serve for no compensation but also are

expected to make donations to the organization (Epstein & McFarlan, 2011). Notwithstanding

these substantial sectoral differences, sectoral strategic leaders need to fully understand their

respective sectoral reality and must master strategy related competencies (Stumpf & Mullen,

1991).

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