The Importance of a Vision in Today’s Business Organisation

The following paper will attempt to describe what leadership actually is and what role a vision plays within the concept of leadership.

Structured into three parts in the first some of the major theories about leadership will be summarised to continue in the second chapter with the significance of a vision for an effective leader.

The third part, as a case-in-point, will begin outlining leadership within the strategy of DELL Inc. and Michael Dell’s role as the founder and leader in DELL’s 30 year’s history as one of the world’s leading IT companies to finalise with some recommendations and annotations for Michael Dell.

Leadership, what is it? Leaders have been around for thousands of years and yet we are still unable to define leadership in just a few words that we all could agree on. Probably that is because leadership is in a continuous process of development and evolution and, more than what it seems to be, it is strongly depending on how it is been looked at. Leadership is a highly complex concept and the many applications and results that it creates depend very much on the context in which it is being observed.

The following will, in the first two chapters, attempt to carve out the significance of a vision within the concept of leadership and therefore will begin with a short overview of different leadership theories.

In the final chapter this paper will furthermore have a closer look at strategy at DELL Inc., Michael Dell’s leadership style while founding and leading DELL Inc., taking it public in 1988 and private again 2013 in the largest corporate privatization in history and finally give recommendations and annotations.

From Caesar to Napoleon and from Nelson Mandela to Martin Luther King, there may be as many styles to lead as there are leaders. To evaluate the concept of leadership different styles to lead will be examined and essential questions will be answered to clarify to whether a particular leadership style makes a leader particularly suited to leadership.

s  What makes a leader a leader?

s  Is there such thing as a born leader?

s  If leaders are not born as such, do they actively become leaders or are they made leaders?

s  What is first, the leader or the followers?

Among the early theories about leadership is the idea that leaders are born as such and not made leaders. The assumption was that leadership qualities are inherent and probably hereditary. Later from these naturalistic approaches the trait theories, still assuming leaders are born as such, rose. In contrast to behavioural theories trait theories do not look at a leader’s behaviour but argue that effective leaders share a number of common personality characteristics, or ‘traits’ that naturally qualifiy them as leaders. Kirkpatrick and Locke (1991, p. 48) argue that “key leader traits include: drive […]; leadership motivation […]; honesty and integrity; self-confidence […]; cognitive ability; and knowledge of the business”. Though obvious these traits and characteristics pose a major role in good leadership Ralph Stogdill (1948, p. 64) concluded in 1948 that “A person does not become a leader by virtue of the possession of some combination of traits” because his research showed that there are no universally existing traits identical in business, political and military leaders.

In 1939 the German Psychologist Kurt Lewin (Lewin, et al., 1939) argued that leadership works best in a participative environment. He identified three main leadership styles:

§  Autocratic - The leader informs what must be done. Most or all decisions are made by the leader without involvement of employees.

§  Democratic - Some decision-making powers are given to employees while the final decision is still made by the leader.

§  Laissez-faire or delegative - This being a rather relaxed leadership style, almost all decision-making-control is given to staff. While granting independence this may only work on employees that are also responsible for maintaining control of their work and at a particular skill-level, where they do not need a push from superiors.

In 1960 Douglas McGregor (1960) contrasted on two theories on human motivation and management; he called these Theory X and Theory Y.

 Figure 1: Theory X and Theory Y mapped on Maslow's Hierarchy of Needs

While theory X assumes that employees generally have no ambition or incentive to work because they dislike working and avoid responsibility, employees need to be forced and threatened to deliver what is needed, directed, controlled and supervised at every step. Theory Y on the other hand describes a de-centralized, participative style of management assuming employees are generally creative and happy to work and in fact seek responsibility as a self-motivation to enjoy working.

McGregor noticed that X-Type workers usually are the minority but for example in large scale production environments, X Theory management may be unavoidable.

According to Robert Blake and Jane Mouton (Gill, 2011, p. 72) and their leadership model from 1964, the best style to lead is the ‘Team-Management-Style – High-Production/High-People’. Understanding the organization's purpose and the employee’s commitment to the organization’s success leads to high satisfaction and motivation and therefore to high results.

 Figure 2: The Blake-Mouton Leadership Grid

The Hersey-Blanchard Situational Leadership Theory (Gill, 2011, p. 80), first published in 1969, elaborates that, depending on the maturity of the team members, different styles need to be used.

Figure 3: Hersey-Blanchard Situational Leadership Theory

They argue that a more directing approach should be used while working with immature employees and with a growing maturity of the people a more participative, delegating style is adequate. As there are no teams and team members that are created equal they argue that leaders are more effective when their leadership is based on the groups or individuals they are leading.

In their book ‘Primal Leadership’ Goleman, Boyatzis and McKee (2001) described six distinct emotional leadership styles. While two of their styles – ‘Coercive’ and ‘Pacesetting’ – can create tension and therefore should only be used carefully in specific situations, the other four styles – ‘Authoritative’, ‘Coaching’, ‘Affiliative’ and ‘Democratic’ – have the positive outcome of promoting harmony.

 Figure 4: Goleman's Leadership Styles (2001)

According to Goleman (2001) the six styles should be used interchangeably, adapting to the specific situation and the needs of the people that have to be handled.

After having explained and described several leadership styles and theories and still not having answered the question what leadership actually is we will have closer look at Theodore Hesburgh’s claim that a vision is the essence of leadership:

The very essence of leadership is [that] you have a vision. It's got to be a vision you articulate clearly and forcefully on every occasion. You can't blow an uncertain trumpet.

Therefore it is important to realize that just because someone holds a position of leadership, that doesn’t necessarily mean they should. Isn’t leadership without a vision just management?

Leadership may be described as the process of maximising the efforts of others by social influence and the provision of direction while management could be defined as the ability to get things done through other people in order to achieve the organisational goals. By the creation and communication of a vision effective leaders do the ‘right things’ whilst managers do ‘things right’ (Bennis & Nanus, 1985, p. 21). While Leadership and Management cannot be seen as equivalent terms, Kotter (1990, p. 103) emphasised that “leadership and management are two distinctive and complimentary activities” that may both be necessary for success and Mintzberg, throughout his work, concludes that leadership is far from being separate and distinct from management but just one dimension of a multifaceted management role:

… ever since the distinction was made between leadership and management – leadership somehow being the important stuff and management being what surgeons call the scut work – attention focused on leadership. My view is that management without leadership is disheartening or discouraging. And leadership without management is disconnected, because if you lead without managing, you don’t know what’s going on. It’s management that connects you to what’s going on. We can make the distinction between leadership and management conceptually, but in practice I don’t think we should. (Mintzberg, as cited in Mangelsdorf, 2009)

Warren Bennis (1989) summarised the key differences between a leader and a manager quite clearly:

 Figure 5: Differentiation Manager/Leader

It appears that vision plays a major role in most leadership models and theories. In the broadest sense a vision is the ability to see, a picture that is imagined, a dream, may it be political, religious or in the business sense, that someone wants to become true and therefore dedicates a certain amount of effort to it. So indeed it appears true that a vision is essential for leadership as, following Warren Bennis, a leader without a vision would effectively be only a manager.

In 1978 James McGregor Burns (1978) established the ideas of transformational and transactional leadership. The transformational model was further developed by Bernard Bass (1985) in 1985. The four components are sometimes referred to as the four I’s:

§  Idealized Influence – Leading by example; while the leader is considered as a role model, he therefor is admired

§  Inspirational Motivation – Leading by inspiring and motivating employees

§  Individualized Consideration – Leading by demonstrating genuine concern for the individual needs of employees.

§  Intellectual Stimulation – Leading by requiring innovation and creativeness

Combining the first two constitutes the leader’s individual ‘charisma’. Although transformational leaders are often wrongly considered as being ‘soft’ they actually constantly challenge their employees to thrive for higher performance.

There are three general assumptions in transformational leadership: People will follow a person who inspires them, people with vision and passion can achieve great things, and injecting enthusiasm and energy is the way to get things done. Within the concept of transformational leadership the creation and constant perpetuation of a vision is indispensable. The ability to convince and inspire people of this vision, appealing to their values and motivate them to deliver this vision, making it their own, makes a real leader and distinguishes a leader from a manager. Real leaders lead by example, being admired by their followers they create valuable and shared goals by inspiring and motivating their followers.

However, besides a vision Father Hesburgh added one other thing to the essence of leadership. Jimmy Carter (Wofford, 2015), the 39^th president of the United States of America, once asked Father Hesburgh 'How can you advise anybody to be a leader of a great nation?' and he answered, 'Be human'.

Michael Dell is neither a born leader nor a management professional. He never studied leadership or management and it is very doubtful that in the early 1980s he had a strategy at all. What he had was a vision and the strong will to compete with IBM. His way in doing business was learning by doing. Chapter three in his book is titled ‘Learning the hard way’ (Dell, 1999, p. 35). He was keen enough to make mistakes and take lessons learnt as the hard way to learn. To take it that way his strategy was seeking advice, surround himself with only the best people and learning from everyone around him.

Within the first eighteen months of business DELL had to move to larger facilities six times as their business was growing much quicker than Michael Dell had ever expected. It is not that he considered a growth strategy from the beginning, he was forced into growing bigger and bigger due to the immense demand. From his college dorm room where he started business in 1984 they ended up after five other locations in a 30,000-square-foot building the next year which grew too small again by 1987. Michael Dell’s vision to compete with IBM, producing cheaper and keeping the inventory low, was revolutionary at that time and within only a few years’ time DELL indeed was a serious competitor to IBM.

It was not only Walker’s mentorship that made Dell a public speaker. Today he is well known for speaking in a quiet, reflective manner, motivating people by his charisma and positive aggressiveness.

Michael Dell’s successful leadership can be seen as result of four major strengths:

Ø  His powerful vision of the future and his unique business philosophy.

Ø  He is a hard worker with a clear goal and focus on it.

Ø  His strong sense for innovation.

Ø  His understanding of responsibilities and the importance of work-life-balance.

Michael Dell’s employees praise him and his tactics. What people like and respect about Dell is his honesty and integrity.

Dell led the company for almost 20 years as CEO and was well known amongst his staff for making other people feel important and appreciated, providing a vision and inspiration for the future but also for demanding from his people not less as he himself is willing and able to give. After he decided to step back in 2003 Kevin Rollins took over his post as CEO. Although he was brought on board by Michael and he still describes him as a “great business partner and friend” (Lohr, 2007) and his contributions over the years are looked upon with great respect, he was not able to fulfil Michael Dell’s role. Rollins was seen as the foremost practitioner and advocate of the Dell model, even when pushing the same buttons no longer worked. Subsequently in 2007 the director’s board of DELL agreed that Michael Dell is required to re-take the position as CEO.

Analysing Dell’s leadership shows changes in the way he leads and has led. In his early life he was autocratic and it was him to make the decisions. He became participative when he started sharing management and reaching out to hire high-profile managers. He had a unique approach to leadership when he and Rollins led DELL together, both in the position as CEOs. When he introduced the leadership board in 2007 he showed again his willingness to share power and seek other people’s advice.

I’ve always tried to surround myself with the best talent I could find. When you’re the leader of a company, be it large or small, you can’t do everything yourself. The more talented people you have to help you, the better off you and the company will be. (Dell, 1999)

It occurs that the way Dell changed his style to fit the circumstances is a situational leadership style. However, his influence on people more results from his characteristics than from his leadership style. Similarly to Steve Jobs in his early years, who was nervous, nerdy and almost appeared to be clumsy, they both grew with their responsibilities and both became not only charismatic persons but finally became great leader through their charisma. All that points more to a transformational leadership style. It is his characteristics that resulted in people giving him credibility, trust and confidence. DELL staff developed a sense of loyalty that goes beyond what an average leader gets back from his employees. The trusting and open climate he created by helping and empowering others to be successful, by encouraging them to do more is the result of his idea of creating a ‘Company of Owners’.

Michael Dell not only provides his people with inspiration and requires them to be inspirational, he too shows ethical behaviour founding the ‘Michael & Susan Dell Foundation’ to improve the health and education of children worldwide. DELL was recognized in 2014 and 2015 as one of the World’s Most Ethical Company by the Ethisphere Institute (2015).

In 2007 Michael Dell returned as CEO and since then he repeatedly emphasized that the Dell model “is not a religion” and he, who was once known as a man by-the-numbers, a short-term-thinker, seems now to be planning many years ahead. He changed his way by introducing a new leadership board. He again delegated power and shared decision making. Since then Dell introduced a lot of changes. David Yoffie from Harvard Business School (Lohr, 2007) said: “This is going to be about changing the way they do business at many levels.” Dell stepped beyond his selling-direct-model and again forged retail agreements with WalMart, Carphone Warehouse and even Tesco. He started acquiring business, Alienware, ACS, EqualLogic, Perot Systems and just recently EMC to name just few. With the acquisition of Zing Systems they finally stepped into the section of hand-held-devices. Though more than 80 percent of its sales is from corporate customers Dell accepted that they need to focus more on the consumer market to stay on top. In point of marketing they came up with a new slogan: “One Company, One Brand, One Beat” giving the brand a makeover. “Hey, we’ve got a lot of work to do and we’re just getting started”, Steve Lohr (Lohr, 2007) from the New York Times quotes Dell. And he got started.

The company’s core business always was server solutions, PC business being called dead from several sides, DELL focussed on getting into the mobile and tablet market. Given the strong presence of Apple’s iPad and Samsung’s Galaxy that failed in 2011. DELL faced an enormous process of change in the past eight years shifting their strategy away from low-margin PCs towards higher-margin systems and services for corporate customers.

“At DELL, we never talk about ‘managing change’ or ‘dealing with change’ because change is all we‘ve ever known. […] change promotes growth” said Michael Dell (1999, p. 214). However, he emphasized that planning for and communicating clearly opportunities is the way to encourage employees to embrace change without fear “There’s no risk in preserving the status-quo, but there’s no profit, either” (Dell, 1999, p. 222).

In 2013 Dell, shortly before the 30^th birthday of DELL Inc., completed the largest corporate privatization in history. "You can't keep doing the same thing and expect it to keep working. We had to do something different." (Foster, 2014)

Michael Dell is not only open for change, he knows how to plan and communicate for it. “Dell went public because the company needed capital” (Dell, 2015). Without dividends and buybacks, he will have increased cash-flow and without the public markets to worry about, he has much more flexibility to keep their growth strategy going.

‘In China, for China’ is DELL’s newest strategy. Until 2020 they want to invest $125 billion in China demonstrating their long-term commitment to the Chinese market, propelling the strategy of ‘massive entrepreneurship and innovation by all’.

Michael Dell, an accomplished business man for more than 30 years. He started with $1000 and became a billionaire within ten years, he knows the ups and downs in business and life. What advice or recommendation could a college student possibly give him?

DELL built its reputation as a leading technology provider through listening to customers and developing solutions that meet customer needs. They were always focused on providing long-term value creation through the delivery of customized solutions that make technology more efficient, more accessible, and easier to use. DELL are focused on improving their core business, shifting their portfolio to higher-margin and recurring revenue streams over time, and maintaining a balance of liquidity, profitability, and growth. Consistently focusing on generating strong cash flow returns, allowing them to expand capabilities and acquire new ones. Michael Dell very clearly follows an intense growth strategy, shown with the China 2020 strategy. To keep that strategy on track the continuous perpetuation and development of the vision is mandatory. Everyone within DELL needs to know where they are going and why. Almost 20 years ago Michael Dell advised:

“Mobilize your people around a common goal. Help them to feel a part of something genuine, special, and important, and you’ll inspire real passion and loyalty.” (Dell, 1999, p. 119)

Having met Michael Dell about ten years ago during a team night out in Dublin South where DELL Inc. is situated he appeared very down-to-earth and the short conversation was rather refreshing. “Where is your beer” he asked and ordered me a new one. In his book he wrote that he does not want his interactions planned, “I want anecdotal feedback. I want to hear spontaneous remarks” (Dell, 1999, p. 117). In the early years he hang out with his engineers, later he tried to keep touch with employees as much as possible which was much appreciated. Of course DELL has grown into an organisation where most employees have never met their boss, however, my advice to him is to keep meeting the people, keep the contact to the soldiers on the front, and spread the vision to the people. Keep on doing what you did while becoming what you are.

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