Some people think that being a leader of a company means doing nothing and only following how other people work. However, this supposition is completely wrong. Effective leadership is a key to the financial success of any business. A leader should choose the most appropriate leadership style, design a strategy for organizing subordinates and teach them to be task-oriented in performing their duties. This essay analyzes the case study of the Toyota Company and activities of its former leader, Hiroshi Okuda. It strives to prove that, though Okuda was fired from the post of a president, his successful leadership style had significantly contributed to making the company one of the leaders in the global car market.
All people are different; thus, when they become leaders, they adopt different leadership styles. Iqbal (2011) states that the concept of leadership is as old as the history of humanity is. Many years ago, people needed a leader in order to rule their unions; nowadays, every company requires a strong leader for successful development. The notion of leadership has deeply penetrated into the consciousness of people and has been associated with organizational success (Iqbal, 2011). Many scholars engaged in categorizing the leadership behavior. One of the best classifications was offered by Kurt Lewin and discussed in the book by Iqbal (2011). This classification includes the following leadership styles:
1. Authoritarian or autocratic leadership. When a leader is authoritarian, he or she makes all the decisions in a company. A team (staff) does not take any part in the decision-making. Under such conditions, the leader is called a dictator. This person gives orders to subordinates and tells them how to act in any situation. He or she closely supervises own workers all the time. Such a dictator is an ideal option for those employees that do not show any initiative and prefer staying passive. A complicated working environment, in which people are often conflicting and cannot make common decisions, is perfect for an autocratic leader.
2. Participative or democratic leadership. It is an opposite of the discussed above authoritarian style as here, a leader involves the team in decision making process (Iqbal 2011, p.11). In such a manner, he or she does not closely supervise subordinates. This style is most appropriate to responsible and highly professional workers, who are well-organized.
3. Laissez-faire or free rein leadership. In this case, a leader is formally designated as such. In practice, such a person gives own subordinates maximal freedom in decision making; thus, they can create and follow their policies and methods. This leadership style is suitable for those employees that possess leadership qualities and assume responsibility for any results of their work. The working environment, which is characterized by the high-level competition and independence of the staff, is good for such a leader.
4. Transformational leadership. In this style, leaders and followers make each other advance to a higher level of moral and motivation (Iqbal 2011, p. 11). A transformational leader has an ability to inspire trust and loyalty in followers (Zagor?ek, Dimovski & ?kerlavaj 2009). One uses shared values and a common vision to build an effective business relationship with own employees. If the atmosphere among workers is trustful, and they all are ambitious and hard-working individuals, this leadership style is the best option (Iqbal 2011).
Another leadership style, discussed by Zagor?ek, Dimovski, and ?kerlavaj (2009) is transactional, which is based on rewards, which a leader offers to subordinates according to results of a performed task. In such a manner, there are five basic leadership styles, and a leader may choose any of them, depending on the working environment and the team. The most important thing for a leader is to define correctly which style would be the most appropriate, because changing the formed leadership strategy is complicated.
Hiroshi Okudas Leadership Style
The analyzed case study by Robbins, Bergmann, Stagg, and Coulter (2006) is a valuable material for understanding Okudas leadership style. Such epithets as tough, radical and aggressive prove that the ma preferred autocratic leadership, which was determined by his actions, He had overstepped the boundary at times with his blunt demands for change. (Robbins et al. 2006, p. 2). However, it is impossible to state that his style worsened the situation in the company. On the contrary, he managed to implement a number of significant innovations, occupied the job positions, which other individuals refused at the beginning of his career, protected the Japanese car industry from any restrictions of the government, and overcame some challenges caused by the tax legislation in the country (Robbins et al. 2006). The authoritative leadership style received a new interpretation due to Okudas approach. Some strong and radical measures, which were applied by the leader, neither violated rights of his employees nor made them completely passive in making decisions. The truth is that the companys staff needed some radical incentive for starting to reform the system, which was gradually proving to be ineffective.
It is worth noting that Okuda closely communicated and cooperated with car designers and managed to reduce the time of the release of new models dramatically, What once took 27 months was shortened to 18 months (Robbins et al. 2). This fact is a clear proof that Okuda used some elements of the transformational leadership as he was the one to inspire his employees to work better. Cole (2011) correctly notes that Okuda was the architect of an ambitious global growth strategy, known as the 2005 vision. Toyotas workers were passive not because of lacking some professional qualities, but because they were lost in the fight with strong competitors and were not sure of how to satisfy expectations of the Japanese. Okuda was a leader, who could find the solution to these issues.
The only question, which may arise in this context, is what was wrong with a complex leadership style of Okuda, as he was removed from the post of a president of Toyota. Robbins, Bergmann, Stagg, and Coulter (2006) indicate two reasons as an explanation of this event. First of all, Okuda was considered to be overstepping the allowed limits of the Japanese business culture by his constant desires of radical changes. Secondly, the founding family of Toyota was indignant at the fact that Okuda refused to give any financial help to other members of the Toyota keiretsu. In line, there were no complaints of Okudas strategic leadership or his actions, which were focused on improving the image of the company in the global marker or its financial situation. In turn, complaints were not objective and were conditioned by trite Japanese traditions of doing business. Though Okuda was a contradictory personality as he was considered by the Japanese, his contribution to the Toyotas development can be hardly underestimated.
Hersey and Blanchards Situational Leadership Theory
With the aim to understand why leaders apply different leadership styles in their teams, it is worth distinguishing between leadership styles and leadership theories. The autocratic and transformational styles, which were discussed above, characterize Okudas behavior. A situational leadership theory can also confirm that Toyotas leader did his best and took the most radical measures for the company in order to preserve and increase its market share. The named theory was initially formulated by Hersey and Blanchard (McCleskey 2014). Situational leadership theory proposes that effective leadership requires a rational understanding of the situation and an appropriate response (McCleskey 2014, p.118). Hersey and Blanchard asserted that a personality of a charismatic leader and a stable group of followers were not enough for an effective leadership model for the performance of all tasks. For a task-oriented leader, it is important to adjust own style to the level of maturity and preparation of subordinates. Such a leader should correctly distribute the tasks among substitutes, define the roles, and create organizational patterns. The second conception of the situational leadership theory is that a leader should be relation-concentrated. One should establish healthy and friendly relationships among workers and resolve their conflicts. Some scholars also named this leadership approach as a behavioral theory (McCleskey 2014). In such a manner, the situational leadership theory is flexible and effective, and its application can make a leader successful.
In line with the discussion of Okudas leadership style, it is worth noting that the man employed the foundations of the situational leadership theory in his actions. Moreover, he understood how important it was for a leader to make decisions, which were appropriate to certain situations. Besides the mentioned fact of his arguments with the government concerning the decline of the Japanese car industry, he always was able to manage to change conditions and position of the company in the market. He revamped Toyotas long-standing promotion system based on seniority, adding performance as a factor (Robbins et al. 2006, p.2). His actions were not accepted by the Japanese society and workers, who were used to the traditional business organization. Nevertheless, the leader understood that in order for Toyota to be fully recognized in the world market, the company had to prioritize its quality and performance. Okudas ability to overcome any obstacles, even by sacrificing some values of Toyota, which had existed for many years, was commonly recognized by the Japanese. The most important part of his actions and decisions is that Okuda did not fully rely on his authoritative leadership style. He used some concepts of the situational leadership theory, as well. He adapted his radical reforms to the surrounding environment; as a result, they turned out to be extremely successful for the company (Robbins et al. 2006).
Transactional and transformational leadership
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The terms of the transactional and transformational leadership have been already concisely discussed in this work. With the aim of the exact differentiation, some comments should be given concerning the difference of the two. In such a manner, the transactional theory is based on rewarding the doer of an action (employee) for performing own duties well. If one is not responsible and fails to do some task, a transactional leader can easily substitute a reward with some sanction or punishment. A negative characteristic of this leadership style is that it does not inspire workers to perform the task enthusiastically and become committed to the main objective (Zagor?ek, Dimovski & ?kerlavaj 2009). Therefore, long-term outcomes of this leadership style are more favorable than the long-term consequences.
Transactional leadership can be considered from three perspectives: (1) contingent reward leadership, when a leader concentrates on clarifying the roles and task requirements to workers and provides them with some material or psychological rewards; (2) active management by exception, when the leaders goal is to ensure the compliance of the performed work with standards; (3) passive management by exception is a context, in which a leader waits until some mistakes are committed and takes some actions afterwards (Zagor?ek, Dimovski & ?kerlavaj 2009). Some elements of transactional leadership style were used by Okuda. The considered case study does not include any information about the financial or psychological rewards, which Okudas workers received. However, it is possible to notice that Toyotas leader did not wait for mistakes to be committed, but saw the errors of the companys administration and corrected them as soon as possible. Therefore, Toyota needed some revelations of the transactional leadership, and Okuda could skillfully use them.
To compare, the transformational leadership style, which is based on the inspiration of workers, makes them subordinate their individual interests to the interests of the group (Zagor?ek, Dimovski & ?kerlavaj 2009, p. 148). In the case of transformational leadership, special attention is given to the activities of separate employees with the purpose of developing a common basis. Besides being an architect of the Toyotas new business strategy, Okuda inspired his workers by the own strong personality. He stated, Everyone wanted to give up. But I restarted the project and led it to success (Robbins et al. 2006, p.1). Okuda promoted a set of values, which were valuable for any successful business development, and this method was his expression of the transformational leadership style.
To conclude, it is worth noting that choosing an appropriate leadership style is extremely important for any head manager. The choice depends on the working environment of a company and the level of the employees preparation. Some world-known companies, including Toyota, have managed to reach a high level of the economic development and overcome a number of serious challenges. A complex leadership style of the companys president, which included the traits of authoritative, transformational, and transactional leadership, as well as some revelations of the situational leadership theory, was successful. Hopefully, some leaders of big-scale enterprises will follow this example and understand how important it is to evaluate a situation correctly, distribute the tasks wisely, and use appealing incentives in order to form a strong team.
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