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BACKGROUND

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BACKGROUND

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Introduction
Manager is defined as a formal directorship authority in transforming organizational resources towards opportunities (Kotter, 2001). On the other hand, leadership means the ability of influencing individuals and organization towards the achievement of goals (improvement). It focuses on the holistic scope: creating vision that everyone understands and wants to follow. Managers must not necessarily have leadership skills in them, and a leader may or may not have any formal authority. "Management is doing things right; leadership is doing the right things", (Drucker, 1994). However, to become an extraordinary leader in the nature of current situation, it requires combination of both: thus, Quinn et. al, (2011) put it as managerial leaders. In most circumstances, both leadership and management are equally important as a leader knows whats best to do; a manager knows merely how best to do it, (Adelman, 1989). The aim of this essay is to evaluate the concept of great leadership based on views and opinions from several business scholars. The essay will focus in business organization setting, and use the experiences of two chosen business leaders to demonstrate the comparison and contrast of managing the complexities of business, the paradoxes of management, and the challenges of leadership.

Part 1: The Complexities of Business

Business is entities that do transaction with the motive of profit, and it requires a business model that indicates a whole structure about the vision, mission, objective, and how the operation is to be conducted to achieve business organizations goals. The concept may sound simple but the complexity lies within every process from managing resources, converting it into profit and strategizing the organizations growth. To succeed, managerial leaders in a company must have exceptional understanding on the theory of business, and do a better job of communicating those understanding.

1.1 Theory of Business

Theory in business is an assumption of evaluating; who your customers are and their demands, what are the benefits that your company can provide to customers and how, and what are the core competencies of your company. Great business leaders need to ensure that the business has an outstanding financial performance, and to achieve that, they must understand about how the business can thrive in the face of ever-changing consumer demands and ever-increasing competition. From Michael OLearys leadership experience in Ryanair, it shows clearly that a great business managerial leader needs to have an exceptional understanding on theory of business. He technically understood how the airline industry works, and further developed the low-cost business model that

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uses receipt from other business streams (i.e.: on board shopping, internet gaming, car hire and hotel bookings) to replace the ticket revenue from selling airline seats. In contrast, in some situations, Jack Welch did not have any knowledge in businesses that GE had invested. However, he understands the principles of business are to deal with resources and focus in the area of employees core competencies (i.e.: investment in NBC Universal). As a result, he creatively managed to incorporate the business synergy from that investment to improve the value of GE as a conglomerate. During his tenure at GE, the company's value rose 4000% and was the most valuable company in the world for a time.

1.2 The 4 + 2 Formula

Aside from exceptional understanding on the theory of business, business leaders need to further implementing the 4+2 Formula (suggested by Nohria et. al, 2003) to ensure a successful business. The four primary management practices (key areas) that drive high performance in organizations include strategy, execution, culture and structure. It will then need to be supported by any 2 elements from secondary management practices: talent, innovation, leadership or mergers and partnership.

4 Primary Management Practices Strategy Execution Culture Structure

+ Any 2 of Secondary Management Practices Talent Innovation Leadership Merger and Partnership

Figure 1: The 4+2 Formula. Source: Nohria. N, Joyce. W & Roberson. B, 2003, What Really Works, Harvard Business Review.

General Electric and Ryanair have outstandingly demonstrated primary management practices. For examples: Both companies have the same type of structure practice where they eliminated bureaucracy system and implemented less formality between employees. Bureaucracy does not inspire ideas and makes a company less competitive as it requires unnecessary approvals. In GE, they often held informal meetings and get together, while Michael OLearys casual appearance clearly indicated that Ryanair does not tolerate bureaucracy system. Strategy practice: In GE Company for instance, the management had shown to their stakeholders (internal and external), that they will only keep their business portfolios for subsidiaries that ranked at #1 or #2 best in their respective industries. Ryanair on the other hand, focused more on lowering costs to increase profit margin. The company negotiates for everything and pays as less as possible for their operation and overhead costs.

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Execution practice: Ryanair delivers the products and services based on what the customers pay. In exchange for cheap fares, the company offers minimal customer service.. In contrast, at GE, the execution practice focuses on internal process. Jack Welchs 4Es wrapped in a P leadership principle: (Energy, Energize others, Edge, Execution and wrapped in a Passion), indicates his seriousness in demanding high productivity rate from GEs employees.

Culture practice: both companies motivate their employees by providing them an opportunity to earn more and to receive high rewards such as bonuses and share scheme through the pay-for-performance strategy. It creates a culture that is more geared towards the recognition of individual performance.

Most of successful business organizations have common styles in primary management practices, but factors in their secondary management practices may differ. To conclude this section, it is noted that in order to become a great business managerial leader, the first important benchmark is, he or she must be able to manage the complexities of business and delivers outstanding results for the company by implementing 4+2 Formula.

Part 2: The Paradoxes of Management

Paradoxical means a seemingly absurd or contradictory statement or proposition which when investigated may prove to be well founded or true (Oxford Dictionary, 2012). To succeed, a great managerial leader needs to have extraordinary opinions that challenge the common belief (status quo), and reflect well with paradoxical challenges. It is clear to see the value in many of the theories of organisation and management practice has evolved and developed over this past century. The best theory is depending on the managerial leaders ability to apply general theoretical frameworks accordingly. One of the theories is Competing Values Framework.

2.1 Competing Values Framework (CVF)

Below is the CVF, combining with 4 Primary Management Practices that has been discussed earlier:

Figure 2: Competing Value Framework. Source: Cameron, Quinn, DeGraff, Thakor, 2007, Competing Values Leadership: Creating Value in Organizations.

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People: Ryanair has implemented flat hierarchical structure within the company and against the bureaucracy system. Ryanair does not recognize the contribution of trade unions as the company offers high rates of pay (pay-for-performance strategy) and a generous share scheme (more than the unions will bargain for, and more than employees at Aer Lingus) with expectation of higher levels of productivity in return. External Issue: Ryanair enjoys a strong media profile by making confrontations with the government, various authorities and even their competitors. The company successfully changed flying for only the elite" to be available for everyone, and makes public believe that Eindhoven airport is the same as Amsterdam airport. Production: The 10-70-20 discrimination principle has motivated GEs employees to increase their productivity. Each year, the bottom 10% will be fired, 70% will be issued a warning letter to improve, and only 20% will receive rewards (promotions or bonuses). Discrimination helps GE differentiates their winners (the ones who drove growth in GE). Internal Process: Welch adopted Motorola's Six Sigma quality program in late 1995. Among the benefits of Six Sigma is the decrease in defects that are allowed to reach the customer (Adams Six Sigma, 1999).

Part 3: The Challenges of Leadership

The discussion now goes further to focus on the challenges that arise from the nature of the leadership, and what are the best leadership practices to solve it. That is answering of what leaders need to do and why others should be led by leaders?

3.1 Leadership Traits

The leadership traits theory by (DuBrin and Dalglish, 2003), suggests a one size fits all approach: focusing on perception of leadership rather than measuring the persons actual performance. This approach focuses on the type of person that makes the best managerial leader. It consists of: Personality Traits As for Michael OLeary, he has high sense of humour and self-confidence (personality) as being extravagantly outspoken in criticizing how incompetence the Irish government is. He also has a massive ego. Motivational Traits His achievement in transforming Ryanair into a market leader in the aviation industry motivated other airline companies to follow his strategy (motivational traits). In fact, he did not mind being copied as he believes in healthy competition. Cognitive Traits He is also an imaginative person (cognitive) with seemingly nutty thoughts to make air travel cheaper, like the idea of pay toilets and flying with a solo-pilot. The leadership traits theory, however, contradicts with Goffee and Jones (2000) emphasis that highlights the idea of being yourself, and discover your own authentic styles of leadership as suggested by George et. al, (2007). It is the responsibility of the managerial leaders to establish direction rather than following instruction set by others.

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3.2 Leadership Practices

Better managerial leaders must have proactive roles by questioning why others must be led by them. In order to define their leadership authenticity, the excellent leaders need to engage with these leadership practices (Kouzes and Posner, 2007): 1. Model the way: Welch acts as a role model, and set other people up for success. He sometimes went down to the grass root level (production line) just to encourage them to do better. He joined General Electric in 1960, worked as a junior chemical engineer and moved up the ranks to become GE's youngest chairman and CEO in 1981. 2. Inspire a shared vision: Welch communicated his vision and persuaded others to commit to it. His concept to GEs subsidiary companies was simple: to be the #1 or #2 best in their respective industries. It was clearly communicated throughout the organization, thus, reminded the employees to be more focused and not waste effort for unnecessary operations. 3. Challenge the process: Welch cut bureaucracy and encouraged GEs employees to speak-out ideas to champion innovation and challenge the conventional way of doing business. GE has challenged the common investment portfolio of energy and resources companies by shifting the main operation in other areas like in technology infrastructure (General Imaging, GE Healthcare) and in financial services industry (GE Commercial Finance, GE Insurance). 4. Enable others to act: GE fosters collaboration and get people to work together, thereby strengthening others. Welch encouraged and empowered GEs employees to take risks (take a swing concept) and learn from mistakes and successes. He emphasized what he called the edge in his executives: the ability to make tough yes or no decisions. GEs 10-70-20 principle has been the important reason for employees to work efficiently. 5. Encourage the heart: GE rewards individual contributions, and celebrate group accomplishments. Aside from firing bottom 10% of under-performance employees, he rewarded those in the top 20% with bonuses and stock options. He also expanded the broadness of the stock options program at GE, from only for top executives to nearly one third of all employees.

Conclusion
As a conclusion, the key factor to become an excellent managerial leader is through credibility. Credibility is earned, not conferred by title or position. To build credibility, leaders need to walk their talk. Conquering yourself is the first step to building credibility, (Sun Tzu). Conquering yourself means learning about yourself, (Kouzes and Posner, 2007).

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References:
Cameron K. S., Quinn E., DeGraff J., Thakor A. V., 2007, Competing Values Leadership: Creating Value in Organizations (New Horizons in Management), Edward Elgar Publishing, ISBN10: 1847204953, ISBN-13: 978-1847204950. Drucker P., 1994, The Theory of the Business, Harvard Business Review, September-October. DuBrin A. J., & Dalglish, C., 2003, Leadership, an Australasian focus, Milton, Qld., Australia: John Wiley and Sons Australia. George B., Sims P., McLean A., and Mayer D., 2007, Discovering Your Authentic Leadership, Harvard Business Review, February. Goffee R., and Jones G., 2000, Why Should Anyone be Led by You?, Harvard Business Review, September. Adelman K., 1989, The Great Universal Embrace, Arms Summitry - A Skeptics Account, Simon and Schuster, 1989, ISBN: 0671672061, United States. Kotter J., 2001, What leaders really do, Harvard Business Review, December. Kouzes B., and Posner J., 2007, The Leadership Challenge, 4th edition, Jossey-Bass, Chapter One: the Five Practices of Exemplary Leadership. Lowe J., 2008, Jack Welch Speaks: wit and wisdom from the worlds greatest business leader, John Wiley & Sons. Nohria N., Joyce W., and Robertson B., 2003, What Really Works?, Harvard Business Review, July. Oxford Dictionary, 2012, viewed on Tuesday, 10 April 2012, at: (http://oxforddictionaries.com/definition/paradox). Quinn R., Faerman S., Thompson M., McGrath M., St Clair L., 2011, Becoming a Master Manager, Fifth Edition, John Wiley & Sons. Ruddock A., 2007, Michael OLeary: A Life in Full Flight, Penguin Ireland, ISBN-10: 1844880559, ISBN-13: 978-1844880553, 27 July 2007. Sun Tzu, The Art of War Spirituality for Conflict, annotation and translation by Thomas Huynh, Sky Light Illuminations, 2008 First Printing. Welch J., 2001, Jack, Headline, London.

Wikipedia, viewed between Saturday, 7 April 2012 to Tuesday, 10 April 2012, at:
- (http://en.wikipedia.org/wiki/Jack_Welch) - (http://en.wikipedia.org/wiki/GE) - (http://en.wikipedia.org/wiki/Michael_O%27Leary_%28businessman%29) - (http://en.wikipedia.org/wiki/Ryanair)

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