For this week you should read Chapters 11 & 12 in the textbook and review the Chapter 11 and Chapter 12 PowerPoint presentations.

This week’s focus is on the critical role of emotional intelligence (EI) in effective strategic leadership. EI refers to an individual’s capacity for recognizing one’s emotions and those of others.

Emotional Intelligence is a Key Leadership Trait In previous weeks, we focused on “what leaders do and how they do it.” This week, we address “who leaders are.” That is, we focus on individual attributes instead of leader behavior. It is important to point out that these two issues are highly related because successful leaders possess valuable traits that enable them to engage effectively in activities to create value for their organization.

Although there have been countless studies of leader traits (e.g., integrity, maturity, energy, intelligence), we address one that has really garnered a lot of attention in both the academic and business presses: Emotional Intelligence (EI). This concept has been popularized by Daniel Goleman who has published best-selling books. Goleman defines EI as the capacity for recognizing one’s own emotions and those of others.

Recent studies have found that effective leaders have a high level of EI and that EI is a better predictor of life and career success than IQ (intelligence quotient). The five components of EI are:

Self-Awareness, Self-Regulation, Motivation, Empathy, and, Social Skill

These five components are briefly summarized in EXHIBIT 11.3 in your text.

Globalization is another reason for the increasing importance of empathy (one of the five elements of EI) for business leaders. Cross-cultural dialogue can often result in miscues and misunderstandings. Empathy is a valuable antidote. Managers who have it are attuned to subtleties in body language. They can hear messages beneath the words being spoken. Further, they have a deep understanding of the existence and importance of cultural and ethnic differences.

For example, consider the case of an American consultant whose team has just presented a proposal to a Japanese client. When dealing with fellow Americans, the team was accustomed to being bombarded with questions after such a proposal. However, this time it was greeted with a long silence. Most of the members of the team interpreted the silence as disapproval and were ready to leave. However, the lead consultant gestured them to stop. Although he was not very familiar with Japanese culture, he was able to read the client’s face and posture and sensed not rejection but interest – even deep consideration. He was correct. When the client finally spoke, it was to award the consulting firm with the job.

Reference
Goleman, D. 1998. What makes a leader? Harvard Business Review, 76(6): 93-102.

There are some potential drawbacks of EI; don’t confuse the role of each trait. Below are a few flipsides of the benefits of its essential components if taken in the wrong context.

1. Effective leaders have empathy for others (leaders may confuse empathy with sympathy and fail to make “hard decisions”)
2. Effective leaders are astute judges of people (leaders may rely too much on their judgment and dismiss others’ insights)
3. Effective leaders are passionate about what they do, and they show it (passion may prevent leaders from other possibilities and ignore realities that others see)
4. Effective leaders create personal connections with their people (if there are too many unannounced visits, it may lead to fear of micromanagement.)

Corporate entrepreneurship (CE) refers to building entrepreneurial businesses within existing corporations. It has two primary aims: the creation of new venture opportunities and strategic renewal. In this section, we address corporate growth and renewal via internal venture development.

All the factors that influence the strategy implementation process – corporate culture, leadership, features of organizational structure, and rewards and learning systems – will affect how corporations engage in internal corporate venturing.

In some large corporations, the spirit of entrepreneurship permeates every part of the organization. It is found in companies where the strategic leaders and the culture together generate a strong impetus to innovate, take risks, and seek out new venture opportunities.

Firms using a focused approach typically separate the corporate venturing activity from the other ongoing operations of the firm. That is, CE is usually the domain of autonomous work groups that pursue entrepreneurial aims independent of the rest of the firm.

Two forms – new venture groups (NVGs) and business incubators – are among the most common types of focused approaches.

The following article describes one type of highly focused entrepreneurial environment – Samsung’s VIP Center where innovative ideas and engineering problems are addressed with great intensity and speed.

Corporations often form new venture groups whose goal is to identify, evaluate, and cultivate venture opportunities. These groups typically function as semi-autonomous units with little formal structure. A NVG’s mandate often extends beyond innovation and experimentation to coordinating with other corporate divisions, identifying potential venture partners, gathering resources, and, in some case, actually launching the venture.

Business incubators are designed to “hatch” new businesses. They are a type of corporate new venture group with a more specialized purpose – to support and nurture fledgling entrepreneurial ventures until they can thrive on their own as standalone businesses.

A culture of entrepreneurship is one in which the search for venture opportunities permeates every part of the organization. Everyone is attuned to opportunities to leverage the assets and capabilities of the corporation to create new businesses.

After reading this week’s material answer ONE (1) of the following questions in this forum:

1 – In your own words, define Emotional Intelligence (EI) and describe the key elements of EI and discuss how it differs from Intelligent Quotient (IQ). Why is EI so important to successful strategic leadership? Do you think that EI or IQ is more important for effective leadership and/or management? Give an example of a leader you have known with high EI and explain your selection.

2 – What are the differences between focused and dispersed approaches to corporate entrepreneurship? Explain.

3 – Explain the difference between proactiveness and competitive aggressiveness in terms of achieving and sustaining competitive advantage.