THE NON-SEXY TYPE OF LEADERSHIP THAT REALLY MATTERS
By IMD Professors Robert Hooijberg and Dan Denison, John Antonakis, and Nancy Lane - November 2014
Transformational leadership entails setting a vision, being charismatic, and inspiring employees to perform better. Transactional leadership is concerned with ensuring that employee efforts are aligned with those of the organization by using incentives and disincentives, or carrots and sticks.
Because transformational leadership focuses on the big picture and the inspirational part of leadership, and transactional leadership concentrates on enforcing obligations, there is a huge "non-sexy" area of leadership that remains underrepresented in both research and in educational programs — instrumental leadership.
What is instrumental leadership?
Instrumental leadership focuses on the "whats" and "hows" of leadership: the nitty-gritty details. It has two main dimensions. The first, strategic leadership, consists of understanding an organization's environment, and identifying its strengths, weaknesses, opportunities and threats. This part also involves strategy formulation and implementation as well as setting policies and goals.
The second dimension is work facilitation, which helps followers achieve their goals through clarifying how to get there, providing the required resources, monitoring performance and correcting errors in a constructive way.
In executive education, it is much more fun for both participants and professors to focus on developing an inspirational vision and strategy rather than making difficult instrumental decisions.
Why does it matter?
Leaders frequently do not think through strategic decisions nor act in ways which are consistent with their organizations' vision and strategy. Included in these leaders are those who formulated these very visions and strategies.
This misalignment can result in a number of problematic situations in which organizations are being run by charismatic leaders, whose visions are unrealistic or whose decisions do not match their company's strategy and environmental conditions.
For example, investment banker Jean-Marie Messier took control of a French water and sewage company and transformed it into the diversified media giant Vivendi. He was charming and charismatic and tried to sell video and music services for mobile devices before the advent of the smartphone and the needed cellular infrastructure. Vivendi lacked the knowhow to see his vision through; he was ousted as CEO, and about €100 billion in shareholder wealth vanished—to put this into perspective, it was more money than that of the Enron scandal1. This is one extreme example of how the lack of instrumental leadership can be problematic for businesses.
Leaders must remain attuned to what is happening in real time, both inside and outside the organization, and not just blindly deliver and execute "visions". Although it is not as sexy as setting a vision and being charismatic or being a great mentor and motivator, instrumental leadership is essential in order for activities related to vision and strategy to have any real meaning and to ensure that the company stays in business.
How do we know?
Domain-specific expertise, an important ingredient of instrumental leadership, is often given short shrift. But research in this area, conducted by us, as well as on similar area "expert leadership", shows that leaders who have significant industry experience are more effective than those who do not. According to Professor Amanda Goodall's extensive research, having experts as managers predicts better performance across different domains such as Formula One and basketball teams as well as hospitals. Similarly, Professor John Antonakis's research clearly shows that deep knowledge of the nuts and bolts of the business you are leading makes a big difference to organizational effectiveness outcomes and matters more than both transformational and transactional leadership. The results of Professor Robert Hooijberg's organizational culture research, with IMD Professor Dan Denison, on how well companies translate their vision and strategy into action, also showcases the importance of instrumental leadership.
This research also shows that whereas there is a significant relationship between transformational leadership and effectiveness, the effect of instrumental leadership is much more important. Given the attention paid to transformational leadership in research and management development, and the lack of attention paid to instrumental leadership, these results should give business leaders a much-needed wake-up call.
How can we implement instrumental leadership?
The current focus on transformational and transactional leadership must not outweigh the non-sexy role of instrumental leadership. Managers must cultivate the needed knowhow to develop true expertise over time, which depends on how they have been developed. They should draw upon all styles to lead: make tough choices, have difficult conversations, hold people accountable, ensure intra-organizational alignment and follow through on vision delivery. The challenge for leaders is to ensure that their visions are aligned with their choices and to establish processes that are consistent with their vision. They often feel ill-prepared, under- or unsupported and face conflicting interests. Yet, instrumental leadership is essential for capturing the full value of transformational leadership and vision implementation.
Developing instrumental leadership requires rolling up your sleeves and making sure that the nuts and bolts are in place. Although this requires experience and dedication, the payoff in terms of effective leadership is worth it.
Robert Hooijberg is professor of Organizational Behavior at IMD. He is the Negotiating for Value Creation program Co-Director and teaches in the Strategic Finance (SF) and Orchestrating Winning Performance (OWP) programs.
Dan Denison is Professor of Management and Organization at IMD. He teaches in the OWP program.
Nancy Lane is Research Associate and Executive Coach at IMD.
John Antonakis is professor of organizational behavior at the University of Lausanne.
1 See: Johnson, J., & Orange, M. (2003). The man who tried to buy the world: Jean-Marie Messier and Vivendi Universal (1st American ed.). New York: Portfolio.