“The Key to Successful Business Today is Leadership”

Today I would like to post an essay question that I completed a couple of years ago. I have been looking into Leadership recently and because of that I found this old essay I wrote, which goes over the basics of Leadership and why it is important in business, and also why it isn’t. This is quite a long read, so I have split it up into sections to make it more relaxing. Enjoy and I hope you can get something from it.

“The Key to Successful Business Today is Leadership”. To What Extent Do You Agree With This View?

What is Leadership?

Leadership is what determines how a business should be lead and also how it will be lead. Leadership will begin with the main leader of the business, but then also be further down the business within each department, as there will be managers and higher-ups who control what their subordinates do to achieve the objectives of a business. Leadership also involves the ability to motivate staff so that they work harder and better results are achieved.

Why is Leadership Important?

Leadership is a very important factor in today’s business world. Having a strong leader can help to motivate staff and lead to gains in this department such as lower labour turnover, absenteeism levels and it can also increase labour productivity which in turn can lead to a quicker turn around in producing goods or carrying out services. Consequently this can help to build a reputable brand image which in the long run will help a business become more successful due to it being seen as a better brand. As shown by the recent loses announced by British Airways, the motivation for employees is very important. The loss of £401 million in 2009 shows that a strong leader is needed to motivate staff. Although one of the main reasons for this loss was the recession and ultimately the loss in business class passengers, which accounted for 50% of their revenue before the downturn, in my opinion the demotivated staff couldn’t have helped because having staff like this led to many strikes and disputes, which created a bad image for the company and therefore made it even less likely for people to use BA to fly abroad. A solution to this would have been to have a stronger leader who could have coped with the sudden downturn and change in demand. With a strong leader confidence could have been kept within the company and therefore people would have kept working hard and ultimately they wouldn’t have suffered as much as they did. Due to the leadership issues at BA in the short-term they have suffered greatly from demotivated staff and therefore a loss in brand image, in the long-term this will lead to a slower restart of the business after the recession and in turn it will be very hard to return to their strong brand image due to people seeing the company being led poorly.

Is The Leadership Definition Correct?

However, you have to ask the question what is leadership? Although there is a clear definition we have to look at how much we can link leadership with everything else. For example, one of the main reasons Domino’s have done so well in the recession is because they offer a mid-range product which people are willing to have instead of going out for a meal. As well as this they have done an aggressive marketing campaign, costing £18 million, which has allowed them to increase their revenue by £56 million from 2008 to 2009 and therefore increase their profits by £6 million. Consequently this has increased their sales by 39% in 2010. However, how much can we link this to the leadership of the business? The leader would have probably chosen to do this kind of strategy, but ultimately, they haven’t done all of the work, such as making the marketing campaigns. This done by the staff lower down who have to decide on the marketing mix and model they will be using. They will also be the people who carry out all of the primary and secondary market research.

In my opinion this shows that leadership is needed to get the right idea through the company, but to be successful a good team is needed underneath the leader. Without a good team beneath, even with the best leader, you can’t achieve the objectives which are being set out.

When is Leadership Important?

On the other hand, I also believe that leadership matters more in certain times of the business cycle. For example, in recent times there has been one of the worst recessions in decades and this has meant that leadership has been even more important than useful. In my judgement this has been because there is a lot less confidence within businesses and consequently this means that leaders are looked upon even more to create decisions. This is especially shown within ITV who appointed a new leader because the company was suffering greatly due to a 10% fall in advertising on TV and also a loss in market share due to there being many more channels to compete with. Doing this would hopefully lead to greater hope and therefore lead to employees working harder and a new direction for the company. As when a new leader comes in, so do new ideas. In the short-term this can lead to higher productivity and therefore reduced costs, which should help to increase profits. It will also help to build the brand image of ITV, as more publicity will be created. However, in the long-term it probably won’t make any difference because in my opinion, going back to some of my previous points, there are many other factors which affect the successfulness of a company. They may have a new leader, but that doesn’t mean the market they are in has changed, as a leader can’t affect the external influences on a company, such as where we are in the business cycle and what competitors are doing.

As well as this, it also doesn’t mean that the culture of the company has changed. The culture of a business is just as important as the leadership in my opinion. If there is a strong culture to meet the objectives and therefore be successful, the business is more likely to succeed. This is shown by John Lewis who have a very strong work culture, due to the business being a partnership and therefore each employee gets a percentage of their salary as a bonus, therefore they have been able to be successful without having to just rely on the leader.

What is Success?

We also need to question what each business determines as a ‘successful business’. If the success of the business in one stakeholder’s eyes is a high profit, such that they get good dividends, then good leadership will probably be vital. However if a stakeholder such as a pressure group has success down as protecting the environment, then a good leadership for the business may not be as important. Therefore a successful business is different in everyone’s eyes and therefore a statement as the one in the question can’t really be used to look at the overall picture of businesses, instead it must be different for each market, level of competition and each type of business. We can not use it collectively.

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Image: photostock / FreeDigitalPhotos.net