Background

This section describes the changing global business landscape and shows the relevance of strategic leadership practices in this context. Additionally some of the challenges facing South Africa will be described and finally the problematic nature of the lack of strategic leadership practices in South African organisations are illustrated.

1.2.1 LEADERSHIP IN CHANGING TIMES

Wegner & Petty (1998:169) stated that: “Change is the order of the day in organisations. Commitment to continuous change is expected; it is ever present as the goal. The action bias is “pro-innovation. The notion that change is good, desirable or inevitable, regardless of costs and consequence, is still the implicit theory. However, also implied is the belief that change must be accomplished without any lessening of day-to-day performance. In other words, leaders and people in organisations are expected to both change and perform well at the same time”.

The regulatory focus theory of Higgens (2000:12) argues that: “When a regulatory fit is achieved between individual regulatory styles and the regulatory context of organisations, people can and will experience and maintain positive motivation for change. Consequently, leaders who understand this premise and incorporate it into their leadership theories should find that organisational change is better implemented, more highly valued and more successful overall”.

The model for strategic leadership in organisational change is conceptualised by the study on regulatory focus theory (Brockner & Higgens, 2001) and regulatory fit

(Higgens, 2000). The study of Higgins, et al. (2003:57) asserted that: “Strategic leadership of organisational change manages the paradox of change and stability by embracing positive self regulation - the process by which individuals formulate goals that are concurrent with their individual preferences and the styles and strategies they use to attain over time. When members in an organisation experience a compatible fit through positive self regulation in the change environment, they become fully motivated to support the change goals. The strategic leadership responsibility, therefore, includes both positive self regulated change behaviour and the creation of an internal environment that supports eagerness and vigilance in positive self-regulated change behaviour”.

Global mega-trends are leading to increasing levels of complexity, dynamism and uncertainty in the corporate environment (Bullinger, Lentes & Scholtz, 2000). In an uncertain economy, organisations need effective strategies that will enable it to thrive (Cap Gemini, Ernst & Young, 2000). Traditional leadership approaches have been rendered insufficient by the rapid changes in the knowledge economy (Leibold, Probst & Gibbert, 2002). Businesses need to practice systemic innovation in this fast-changing, knowledge-driven global business landscape in order to remain competitive (Beinhocker, 1999; Pascale, 1999).

1.2.2 THE ROLE OF STRATEGIC LEADERSHIP

Strategic leadership means that leadership in the organisation should focus on the future, to create excitement for the future, as well as for what is happening today.

A primary goal of a strategic leader is to gain a better understanding of the business conditions, the environment and other aspects that identify the challenges of the future.

In their review of the strategic leadership literature, Boal & Hooijberg (2001) made the distinction that theories of leadership are about leadership “in” an organisation but that strategic leadership is of leadership “of” the organisation. Strategic leadership is marked by a systemic concern for the whole organisation, its evolution, changing aims as well as the selection, development and maintenance of the requisite resources and capabilities to enable it to compete. They proposed

a direct link between strategic leadership effectiveness and organisational effectiveness.

1.2.3 STRATEGIC LEADERSHIP IN SOUTH AFRICA

In his speech at the launch of the presidential strategic leadership development conference in Pretoria, July 2000, the former President of South Africa, Mr. Thabo Mbeki, confirmed that the challenges of developing strategic leadership must occupy the collective mind of the entire nation, and that ways should be found to extend this important process to other sectors of the South African society (Mbeki, 2000). Accordingly, the Presidential Strategic Leadership Programme will serve to nurture a leadership which can lead and perform its work in a professional and holistic way.

According to former President Mbeki, strategic leadership entails: “The training of new leadership which is equipped with functional competence within a particular area of work and at the same time is able to understand the bigger picture.

Leadership who has the ability to combine service delivery with strategic vision is the future of our country” (Mbeki, 2000:3).

For the caring South African society to emerge and be sustained, above all it falls on the public service leadership in partnership with civil society to create a sense of community that must be cemented by the reality of people working together as a nation for a better life. Leaders in the public service as well as the private sector will have to be more imaginative in their thinking and more creative in their practices, remaining conscious at all times of the demands placed on them by public, by business and civil society (Mbeki, 2000).

Robinson (see Human Capital Management, 2005/6:22), MD of Learning Resources in South Africa, confirms that leadership is never easy. “In the South African context,” says Robinson, “where there are the additional pressures of equity and empowerment, the number of leaders undergoing transition in a company in any one year could be as high as 50 percent. How these prospective

leaders manage the initial transition period will largely determine their success or failure in their new positions”.

Sipho Ngidi, Director of Corporate HR at Standard Bank (see Human Capital Management, 2005/6:23), agrees with Robinson’s view. He believes that three separate incidents were responsible for reinvigorating the bank’s brand franchise.

“Firstly,” says Ngidi, “a few years ago the attempted takeover by Nedcor pinpointed serious gaps in our management efforts and efficiencies. It was a wakeup call for all of us to look at the future from a strategic leadership perspective. Secondly, we had made a few less than successful inroads into emerging markets outside our borders, and thirdly, there was the arrival of Jaco Maree as CEO. He looked at the business from a new angle and put forward a strong case for change. Maree argued that: “We needed to look at the whole organisation as a high performing system to improve the customer experience”

(see Human Capital Management, 2005/6:23).

According to UNISA Professor of Business Leadership, Stella Nkomo (see Human Capital Management, 2005/6:23), all is not quite that simple. Nkomo says: “In South Africa, we have multiple stakeholders. We have to weave between black empowerment, employment equity and affirmative action. This can only be grown and sustained if there is a balance between short-term and long-term needs. No book can give answers to the issues we face. This is a unique situation, and very complex. It requires risk-taking and courage. Our leaders need to be bold, imaginative and creative in their thinking” (see Human Capital Management, 2005/6:23).

Apart from the above, other challenges facing South Africa are to develop sustainable economic growth, to improve its international competitiveness, and to build the country’s capacity for innovation. Such an economy will have the capacity to generate wealth (Rwigema & Venter, 2004).

The previous section has already demonstrated the role that strategic leadership can play to create economic growth. This study has specifically focused on the role businesses organisations can play to improve South Africa's internal

challenges as well as international competitiveness; and the importance of building the country’s capacity for strategic leadership.

1.2.4 SOUTH AFRICA AND INTERNATIONAL COMPETITIVENESS

Organisations do not exist in isolation, but form part of a broader global environment characterised by rapid and uncertain change. Leaders of organisations play a determining role in ensuring that their organisations adapt to changing environments in order to succeed and survive (Amos, 2007).

South Africa needs to improve its international competitiveness if sustainable economic growth and development is to occur (Porter, 2004). The world’s economies are in the process of being transformed and integrated as a result of globalisation (Hough, 2004). A major factor of competitiveness identified by businesses, is the increased need to operate globally (Gamble & Blackwell, 2002).

South African businesses too have experienced intensified competition (Visser, 2003) and the need to build a sustainable competitive advantage.

Competitiveness at the level of the enterprise is of utmost importance since it affects the profitability, survival and future development of the enterprise (Porter, 2004). The management of technology, innovation and information has emerged as a key requirement for success in the 21^st century (NRF, 2004). This view is supported by research conducted by the World Economic Forum (Porter, 2004;

Claros, Altinger, Blanke, Drzeniek & Mia, 2006), authors of the Business Competitiveness Index (BCI). According to the BCI, which examines the micro economic foundation of country prosperity, South Africa was ranked 27^th out of 101 countries in 2004. The profile of South Africa fits those of other middle-income countries, and therefore faces similar competitive challenges. The main competitive challenges of middle income countries are to build brands, to expand regional and international markets, to increase the professionalism of employees, management and executives (Porter, 2004).

1.2.5 BUILDING THE CAPACITY FOR STRATEGIC LEADERSHIP AND FLEXIBLITY

The environment that surrounds organisations is becoming increasingly turbulent (Eisenhart, 1989), it is expected that the focus of strategic leadership is the implementation of absorptive ability and adaptive capacity² (Heifetz & Laurie, 1997).

Absorptive ability is the ability to recognise new information. Hedberg (1981:56) confirmed that: “Since knowledge and learning are distributed throughout the organisation, absorptive capacity occurs at both the individual and organisational levels”. South Africa is a young nation with a new democracy that has been isolated from the rest of the world for many years. The ability of leaders to lead their employees into the future is therefore of importance, as leaders in such positions have the competence to change or reinforce existing strategies within their organisations in South Africa.

To be successful in the tasks and role of strategic leadership, leaders need to have the ability to think strategically and to be emotionally intelligent (Amos, 2007). They must have a range of behaviours available and the wisdom to apply the right combination of behaviours at the right time. Leaders also need to be able to apply transactional or managerial leadership and transformational or visionary leadership and to be capable of applying the philosophy of African leadership.

Pieter Cox, recently retired CEO of Sasol, for instance is such a leader. He played a determining role in ensuring the success of his organisation with the emphasis he placed on strategic leadership. Leadership occurs at all levels within an organisation, with the best organisations having strategic leaders at all levels, but it is the top level executives, like Sizwe Nxasana, previously CEO of Telkom, who are ultimately responsible for the survival and success of their organisations (Amos, 2007).

According to the National Research Foundation (NRF, 2004) the capacity for science and technology in South Africa has not been adequately translated into

2 Absorptive and adaptive leadership capability will be discussed in more detail in Section 3.2.5.

successful and dynamic enterprises. A sound scientific and technological base, from which wealth-creating technological innovations and applications can develop, is essential to improve economic growth in South Africa, which operates in an increasingly global competitive landscape.

Continuous research and development is a curtail requirement for the development of future leaders in a country to be competitive in a global environment. The Department of Science and Technology recently conducted a survey to determine the intensity of Research and Development (R&D) expenditure in South Africa. The R&D expenditure as a percentage of GDP is the most widely used indicator of the economic competitiveness of countries (OECD, 2003). The results of the survey showed that South Africa’s gross R&D expenditure is 0.76 percent of GDP. The R&D expenditure of Sweden, the leader in the OECD (Organisation for Economic Co-operation and Development), is equivalent to 4.27 percent of GDP. Even though South Africa has a higher R&D intensity (0.76% of GDP) than many other developing countries, it needs to keep pace with competitor countries where R&D expenditure is increasing rapidly. The goal of the South African government is to improve the figure to 1 percent of GDP by 2009 (Department of Science & Technology, 2004).