Leader, leadership and value creation

Introduction

The word leader is seen by everyone as something that we all want to be, certainly there are people who bring this title from childhood and we see how from childhood they are the "leaders" of their group of friends, then they are at school and continue to cultivate this adjective in their jobs.

In this, our 21st century, the word leader has regained importance in companies. It takes people capable of directing and making their subordinates make a difference in the face of so much competition and innovation that we find in the markets.

Globalization has undoubtedly been a very important tool for all countries, as it allows us to diversify and take our products to previously unimagined limits, but it requires us to be up-to-date in terms of technology, creativity and innovation and for that we need a person capable of achieving the objectives.

Our mentality in this regard is that it is not about being a leader because you inherited the power or you vote to obtain the leadership. To be a leader is to assume responsibility and consider strategies that will lead to developing the company, ensuring that the work team can move towards achieving the proposed results and differentiating our products or services in this world of competitiveness.

Leader of the 21st century

The obligation to prepare for a digitized and globalized future has highlighted the need for a new and different leadership, innovative, passionate, sensational. These are leaders who have a dream and unique ideas and who represent a real competitive advantage. The average traditional leader will not survive into the next millennium. If we want to be competitive, we have to adopt the last taboo, to build from emotion and imagination.

The world-class corporations of the 21st century will utilize constantly evolving collectives of talented, passionate and diverse individuals. The leaders of these will shape what is, in essence, the collective genius. As the competitive environment has fundamentally changed, strategic talent management is the key to gaining competitive advantage. Managing job matching and the way individuals work in the organization is fast becoming a fundamental leadership dilemma. Leadership has become the task of creatively harnessing the tension between opposing forces. This is already evident, and as we enter the new millennium, the implications of leading and living in a world full of duality, dilemma and paradox will become more obvious.

According to Starr R. Levine, value-based leadership qualities will help leaders learn, adapt, and respond positively in the new millennium. Points motivated by intimate values that build relationships of trust through effective communication. The leader, by the very nature of these qualities, focuses on pushing people and organizations forward, teaching their employees and increasing their competence. In this chapter, Levine presents seven principles that define the elements of the successful transition from the 20th century to the 21st century.

Creating value

Manifesto of the management of the new millennium.

The managers of most companies regard each other as competitors, and in fact they are. But in a sense, companies try to make big profits. The market unleashes the forces that drive prices down to the level of variable costs. Companies are trying to grow, to diversify, to globalize, to become big and powerful.

Market forces work to break them down, to make them more insignificant and to strip them of all power. The ultimate competitor of any company, large or small, is not another company, but the market. A company does not survive or prosper any more than when it can beat the market, and it loses its right to exist when this is not the case.

If this all seems too abstract or theoretical, remember all the advice you've received recently: Give your managers strong performance-based incentives, introduce market-based transfer pricing into your business. In all these cases, it is about efforts to transfer the rules of the market to your organization, to make it look more like the market. Of course, you must do some of these things if you want to adopt healthy habits.

If imitating the market is so bad, why is it advisable to do it so insistently? Why are companies so focused on their competitors? What alternatives are there? We believe that the answers to these questions lie in assumptions about individuals and institutions that have caused many to maintain this vision of management, managers collectively adopting a very different philosophy of management.

This philosophy, based on an alternative set of assumptions about both individuals and institutions, gives us very different beliefs about the role of the company in society, about the relationships between employers and employees, and about the functions of management and management. your demands as a profession. Above all, it postulates a very different moral contract between the individual, the company, and society.

Companies find themselves in the middle of a set of competitive forces that cast each one against all the others. Thus a company is seen in competition not only with its direct competitors, but also with its suppliers, with its customers, and with any other potential competitors who threaten to overcome the barriers that prevent them from entering the company's business, or with finding substitutes for the company's products or services, hence the conclusion that the

Management is to encourage the power of the company over its suppliers and customers and find ways to keep current and future competitors at bay, in order to protect the strategic advantages of the company and to get the most out of them.

The essence of this simple theory is that a company thrives the most when it is best able to capture the value embedded in its products and services. Your goal, then, is to focus on how best to capture all of the value in your environment. The problem is that others, both competing customers and suppliers, want to do the same. If there is genuine, free competition, companies cannot make profits above the market value of their resources.

The purpose of the strategy, therefore, is to prevent such open and free competition: to aim for the largest piece of the pie, while preventing others from doing the same.

For society, the more competition there is between companies, the better. But since competition is a battle for ownership, the lesson for the individual company is clear: restrict competition to preserve maximum value for oneself. But since competition is a battle for ownership, the lesson for the individual company is clear: restrict competition to preserve maximum value for oneself.

Companies as creators of value

The contrast between these two views of the company is evident when we compare the management approaches of Norton and 3M, with those of Westinghouse and ABB. Norton and Westinghouse managers Vivian in the zero-sum, dog-eat-dog world of traditional strategic theory. When they found a company that created an attractive product or line of business, they bought it. When they found that the market for a given product was too competitive for them to dictate terms to their buyers and suppliers, they sold those businesses. His way of managing was fundamentally focused on the appropriation of value not only in front of his customers and suppliers, but in front of his own employees.

At 3M and ABB, by contrast, a different management philosophy prevailed. While Norton sought to develop increasingly sophisticated strategic resource allocation models, 3m's entire strategy was based on the logic of creating value through continuous innovation. The same equipment supply business that Westinghouse was leaving as unattractive was rejuvenated by ABB, in part because of its investments in productivity and new technologies to improve the functionality of its products or their adaptation to new markets.

The difference between these companies is not just that 3M and ABB are focused on innovation and improvement, while Norton and Westinghouse are that this difference in goals stemmed from very different beliefs about the company. The managers of Norton and Westinghouse thought of their companies in terms of the market: they bought and sold businesses, created internal markets where they could, and treated people according to the rules of the market. They got what they wanted through market-shaped incentives. People began to behave as if they were in a market.

By thinking of their companies in terms of the market, Norton and Westinghouse convinced themselves to be the victims of a market logic in which everything

What they could do was strive to be more effective in everything. Its strategy was totally focused on improving productivity and reducing costs. Its structures to control behavior rewarded autonomy, while refining its elaborate systems to monitor performance, in order to eliminate the smallest sources of waste. But that could not produce innovations and not because they did not want it to be so explicitly, but simply because the market logic that they adopted internally only serves to improve the efficiency of existing activities.

The company that wants to change innovation and new value is generally asked to produce a certain level of reduction, that is, to sacrifice some efficiencies, in order to allocate resources to activities that do not produce the greatest immediate benefits and this is so because there are a certain deep-seated conflict between trying to extract the highest possible productivity from existing activities and a willingness to make short-term efficiency sacrifices in order to invest in innovations. Even innovations that break new ground often start their lives at a disadvantage over existing alternatives, and only reach their past potential over time. The problem is that when people act alone, and only in their own interest, the company loses its true essence as an institution of modern society.

In a market where behavior is relatively less hampered, people are encouraged to carry out solo and all economic exchanges in which they clearly see individual gains. Because markets are purposeless and visionless in their own right, they can ruthlessly suppress inefficiencies by allocating resources from a wide range of alternatives and continually adjusting and reallocating them to new alternatives as they emerge. In fact this is the essence of market strength. But when operating in the market people tend to avoid those transactions whose success depends on the action of others, particularly if those others have more attractive alternatives and are encouraged to pursue them.

Companies and society

During the 20th century, corporations have gained an enormous amount of social legitimacy, which has been both a cause and a consequence of their collective success. In the midst of a general decline of other institutions (political parties, churches, the community, even the family unit) business corporations have emerged as perhaps the most influential institutions in modern society, not only because of the fact that they create and distribute a Much of its wealth, but also for having provided a social context to most people and having acted, therefore, as a source of individual satisfaction and social help.

But in the last decades of the century, corporations and their managers suffer from a profound social ambivalence. Most of the managers we have encountered believe that their main role is to create value, and they are far from thinking that their companies are agents of destruction of social welfare.

Su culpa reside en su falta de voluntad para afrontar explícitamente el papel que sus empresas juegan en la sociedad, o para articular una filosofía moral para su propia profesión. Y mediante este acto de omisión han dejado que sean economistas, científicos, periodistas políticos, etc., quienes definan el orden normativo que conforma las opiniones públicas sobe ellos mismos y sobre sus instrucciones. Estas percepciones, a su vez, han sucedido a muchos directivos a pensar en sus empresas en términos muy estrechos y en proceso, les han convertido en victimas inconscientes de la lógica apropiación del valor y han debilitado su capacidad para crear nuevo valor para la sociedad.

This new moral contract of creating value for society is not only more satisfying for managers but also a more effective basis for protecting and expanding their companies. The problem with the value appropriation strategy is that it is ultimately a self-defeating posture. It's like a strategy of staying behind the tide, and like the tide, the ability of others to overcome a company's defenses cannot always be kept in check. With such a strategy the company finds itself more and more cornered, since the appropriation of value requires more effort each time until in the end there is no value left to appropriate. Such companies, by thinking of themselves as a market, end up succumbing to the market.

Create values for people

Relations with the employees of companies that are governed by the concept of being economic entities that appropriate value are also based on appropriation rules. The staff becomes a resource from which the company can extract value to achieve its economic objectives, like any other of those that participate in the unfair exploitation of workers. But in countries that have a legal infrastructure in the field of employment and at least some external form of labor market, this generally translates into something more benign. With this contract, the company guarantees its employees the job, in exchange for their willingness to diligently carry out the assigned tasks and abide by the strategies, rules and regulations established by the management.

The traditional employment contract

Thinking about the job security offer as exploiting people goes against common sense, because that is not how this agreement came about, nor how most employees and employers think of this relationship. But while it may seem generous, this relationship of exchanging security for loyalty has historically allowed companies to extract the greatest possible value from their employees.

People cannot be made an object of property, like machines. But as with machines, people achieve their maximum value for the company when they specialize in their affairs and activities. When more specific are the knowledge and training of the employee for the unique set of clients, technologies, equipment, etc. Of the company, the more productive and efficient the company will be in everything it does.

When there is no job security, employees are hesitant to invest their time and energy in acquiring specialized knowledge and training that may be very useful to the company, but may have very limited value outside of it. When there is no long-term security of association, companies lack the incentive to commit resources to helping employees specialize in the specific skills that matter to them.

Job security provides a viable basis for both making such investments. The company benefits directly from such specialization, in terms of efficiency and productivity. But also indirectly because the more the employee specializes in the unique activities of the company, the less attractive they will be to another potential employer. This not only makes employees less mobile but also reduces their market value and allows the company to pay you less and demand loyalty from you.

But exploitative or not, this contract defines a viable relationship. Employees develop the knowledge and special skills required by the employer's business, thereby increasing the efficiency of the company, but reducing their training and mobility.

While the company takes the responsibility of guaranteeing employment for life, employees pledge loyalty and obedience, allowing managers to create strategies and implement them efficiently.

The traditional relationship between company and employee has another problem more closely related to the impact on employee motivation and behavior. Contracts that exchange obedience for employment create a climate of dependency that is antithetical to the distributed assignment of responsibility for performance, demanded by the new competitive environment, likewise the law of lords and servants that is implicit in the old psychological contract does not They already accept many people, especially young people in a changing social context. Young people are not willing to forget their creativity, their initiative and their autonomy in exchange for the right to live in a golden cage.

The new moral concept

The new management philosophy has to be founded on a different moral contract with staff if it is to resolve this tension. In this contract, each of the employees assumes the responsibility of performing as “the best in class” for the company to which they belong, and undertakes to undergo a continuous learning process that is necessary to be able to maintain that performance in the midst of continuous change. In return, the company undertakes to ensure not dependence on job security but the freedom of each individual to work as they deem most convenient.

This new moral contract is more than a twist on the old human resources policies of companies to justify layoffs, it represents a fundamental change in management philosophy, which goes from seeing staff as a corporate asset whose value can be appropriated, to consider it as a responsibility and a resource to add value. Its adoption implies rejecting the paternalism and even the arrogance that underlies lifetime employment contracts. By recognizing that only the market can guarantee employment and that market performance flows not from the omnipotent wisdom of top management, but from the initiative, creativity and capabilities of employees.

Responsibility to perform brings even more uncomfortable demands. Those who work at the end of the line can no longer wait for senior management to make unpleasant but necessary decisions… They are the ones who have to take the initiative when it comes to reducing assets, what to cut costs when they skyrocket and what to take the decision to increase productivity or reduce staff when they see that the same work can be done with fewer people. Rationalization cannot continue with job cuts every ten years, decided by a company-wide senior management program, but rather a regular activity as part of the continuous improvement process and carried out by employees who are at the end of the line.Companies have to struggle to assume that accepting these stark expectations is totally different from mimicking the market. These actions must be aimed at protecting and improving the employability of individuals both to increase the productivity and efficiency of the company

The new moral contract, inversion of the assignment of responsibility.

9. Conclusions

As we investigate more about the topic of management, we can find that we can apply it to a number of activities.

It does not matter what type of business we dedicate ourselves to or the geographical location of our organization, including the department for which we work, it is necessary to know how to lead.

We have to be able to do it in the best possible way, proposing higher goals, not settling for the evolution of businesses and their products, the world is increasingly changing and it is necessary to go one step ahead of the competition.

To be a leader you need a lot of attributes, and not physical ones, you need to have a lot of capacity and desire to improve. Previously, the peoples believed that their leaders were born being leaders, that they had it in their blood, today we know that being a leader is showing oneself capable of facing challenges. You must have an open mind to change and be able to propose global strategies and

totalizers.

The good leader knows how to compensate his subordinates and he knows that to achieve his objectives and strategies it is not enough to have himself, he needs to work as a team, he needs to commit his team so that together they will be able to evolve and take their company beyond the limits. prospects.

We can conclude by saying that a leader accepts authority because he knows he is capable of moving forward, of presenting strategies in the most difficult moments of his company and that he will always know how to support and coordinate his work team, being aware of the globalized world in which they compete and knowing bring your products and services ahead of the competition.