Leadership Intelligence: How to Get there?

Procedia - Social and Behavioral Sciences 75 ( 2013 ) 52 – 61

1877-0428 © 2013 Published by Elsevier Ltd.Selection and peer-review under responsibility of The Second International Conference on Leadership, Technology and Innovation Management doi: 10.1016/j.sbspro.2013.04.007

2nd International Conference on Leadership, Technology and Innovation Management

Leadership intelligence: how to get there? Aleksandras Vytautas Rutkauskas a*, Viktorija Stasytyteb

a,bVilnius Gediminas Technical University, Sauletekio ave. 11, SRC-605, Vilnius LT-10223, Lithuania

Abstract

There are fields of business intelligence activities, as well as functions of leadership, through which the used resources can increase business value. If those resources are financial they must become capital which could be measured by its efficiency, risk and so far. For a problem to solve the adequate portfolio ideology is used. The potency of separate assets is combined into a system, not only for the highest result to obtain, but also for the most effective usage of resources. The task is solved using the stochastic optimization technique. The effect of each component of functional leadership portfolio or each business intelligence asset is a random variable and can be expressed as a probability distribution. Choosing the best possibility out of the possible options the overall greatest effect of intelligent leadership portfolio can be obtained.

2012 Published by Elsevier Ltd. Selection and/or peer-review under responsibility of 2nd International Conference on Leadership, Technology and Innovation Management Keywords: Functional leadership, Business intelligence activities, Adequate portfolio, Markowitz random field.

1. Introduction

Before starting a discussion about leadership intelligence, there is a need to define leadership itself and analyse its origin. Leadership is a process by which a person influences others to accomplish an objective and directs the organization in a way that makes it more cohesive and coherent. This definition is similar to Northouse's (2007)

ple to move together

* Corresponding author. Tel.: +370-52-744862; fax: +370-52-744861. E-mail address: [email protected]

Available online at www.sciencedirect.com

© 2013 Published by Elsevier Ltd.Selection and peer-review under responsibility of The Second International Conference on Leadership, Technology and Innovation Management

53 Aleksandras Vytautas Rutkauskas and Viktorija Stasytyte / Procedia - Social and Behavioral Sciences 75 ( 2013 ) 52 – 61

in common: people (group of people) and the influence of the subject (the leader). The search for the characteristics or traits of leaders has been ongoing for centuries. History's greatest

philosophical writings from Plato's Republic to Plutarch's Lives have explored the question "What qualities distinguish an individual as a leader?" Underlying this search was the early recognition of the importance of leadership and the assumption that leadership is rooted in the characteristics that certain individuals possess. This idea that leadership is based on individual attributes inspired the development of Trait theory of leadership.

The trait theory was explored at length in a number of works in the 19th century. Scientists came to the

conclusion that leadership was inherited. In other words, leaders were born, not developed. In the late 1940s and early 1950s, however, a series of qualitative reviews of these studies (Bird, 1940; Stogdill, 1948; Mann, 1959) prompted researchers to take a drastically different view of the driving forces behind leadership. In reviewing the extant literature, Stogdill and Mann found that while some traits were common across a number of studies, the overall evidence suggested that persons who are leaders in one situation may not necessarily be leaders in other situations. Subsequently, leadership was no longer characterized as an enduring individual trait, as situational approaches posited that individuals can be effective in certain situations, but not others. This approach dominated much of the leadership theory and research for the next several decades (Jago, 1982; Northouse, 2007).

2. -

The long-standing conceptualization of leadership, both among researchers and the general public, is that it is a leader-centric or individual level phenomenon. When asked to define leadership, it is difficult not to think of a single individual providing direction and inspiration to a group of followers. Among the three main ways of defining leadership, as a person, role, or process (Yukl, 2009), it is most often studied in terms of the person (Hunter, Bedell-Avers, and Mumford, 2007; Rost, 1993). In reality, however, leadership rarely plays out at only the individual level. Rather, leadership is a complex, dynamic process in which the behavioral roles that often fall under the leadership umbrella may be taken up by multiple individuals (Gronn, 2002) and exchanged across the leader and team level (Dansereau and Yammarino, 1998; Day, Gronn, and Salas, 2004).

Speaking about the collective leadership, it is worth to provide its definition: it is a dynamic leadership

process in which a defined leader, or set of leaders, selectively utilize skills and expertise within a network, effectively distributing elements of the leadership role as the situation or problem at hand requires (Friedrich et al., 2009).

Given the shift towards a role perspective of leadership, there has been significant advancement in

work on both the sharing or distribution of the leadership role (Gronn, 2002; Hiller, Day, and Vance, 2006; Pearce and Sims, 2002) and the interaction between leaders and team processes recognizing that there is an important interplay between the leader and the members of a team (Day, Gronn, and Salas, 2004; Taggar, Hackett, and Saha, 1999). The development of these theories has been an important step in understanding the complexities of leadership.

Conceptualizing leadership as a role, and a role that can be selectively distributed among individuals

within a team depending on the expertise required, is a critical theoretical transition given several


important trends in modern organizations. Specifically, organizations have seen an increased use of teams (Zaccaro et al., 2001), more problems that are rapidly emerging and complex (Hannah and Lester, 2009; Mumford et al., 2000), and an increase in the importance of innovation and adaptability (Friedrich et al., 2010). The benefit of applying collective leadership with regard to these organizational developments is analysed in a number of studies on research and development teams (Drazin, Glynn, and Kazanjian, 1999; Mumford et al., 2002) and top management teams (Carmeli and Schaubroeck, 2006).

However, some leadership studies often focus on a division of responsibilities, rather than a leader, or

core leadership team, selectively utilizing expertise within a network, they are critical in demonstrating the benefit of leadership not residing entirely in one individual. This is a central tenet of collective leadership.

It is important to note that simply having multiple leaders, or a top management team, is not sufficient

for positive team and organizational outcomes. Rather, it is the sharing of information, collaboration, and joint-decision making among leaders that is critical. It is anticipated that the effects observed in this study with regard to behavioral integration are related to, and provide support for, the proposition that collective leadership will arise within a network through the effective exchange of information and integration of behavioral roles.

Along with the insights presented above, there is evidence to support the proposition that the

utilization of diverse expertise and information within a team or network is critical to team and organizational performance. In a recent effort along these lines, Boone and Hendricks (2009) evaluated collaborative behaviors, effective information exchange, and decision making decentralization within top management teams in relation to the functional diversity of the team. The findings indicate that functional diversity, or varied expertise among members of the top management team, was beneficial unto itself for firm performance. However, the benefits of the diverse expertise were even greater with increased collaborative behaviors and accurate information exchange among team members. Just as the Carmeli and Schaubroeck (2006) study demonstrated that simply having multiple leaders was not sufficient and that behavioral integration was critical to the process, the findings in this study demonstrate that diverse expertise within the network is not entirely sufficient for increasing team performance but, rather, is enhanced through effective information exchange.

The findings reviewed thus far indicate that not only is collectively sharing the leadership role

beneficial to team performance but also that the utilization of diverse expertise within a team is also important. Thus, it is anticipated that collective leadership, defined as a leader's, or a set of leaders', selective utilization of expertise within a network, would be related to critical team outcomes.

3. From Collective Leadership to Functional Leadership

3.1. Definition and Composition of Functional Leadership

One perspective of leadership, the functional leadership approach, specifically addresses in broad ionship to the team (Fleishman et al., 1991; Hackman and Walton, 1986; Mumford

et al., 1993). This perspective defines leadership as social problem solving, where leaders are responsible for (a)

diagnosing any problems that could potentially impede group and organizational goal attainment, (b)


generating and planning appropriate solutions, and (c) implementing solutions within typically complex social domains (Fleishman et al., 1991; Mumford et al., 1993; Connor-Boes, and Costanza, 1995).

However, the definition of functional leadership suggests the following dependency if the group is

successful, then the leader can be defined as effective. Or, any action by the leader is effective if the group succeeds. Zaccaro et al. (2001) suggests several points that may counter this concern. First, the leadership processes that should contribute to effective group performance are dictated by the performance requirements posed by the group task, group environment, and properties or attributes of the team as a whole and its individual members.

Zaccaro and Klimoski (2001) describe seven contextual imperatives that drive the nature of

organizational leadership: cognitive, social, personal, political, technological, financial, and staffing. At the team level, these imperatives call for specific leader activities that are likely to be instrumental for group success, and alternatively define particular leadership responses that will not contribute to group performance. Thus, group effectiveness can be theoretically defined in particular contexts and circumstances as a function of specific leadership actions. In other words, not just any leadership action contributes to group effectiveness. A critical task for researchers in team leadership, then, becomes the definition and validation of the contextual influences that enhance the efficacy of some leadership actions and diminishes others.

Alternatively, we do not mean to argue that group effectiveness can be explained entirely by leadership action. Member capabilities and skills are likely to explain a large amount of variance in team effectiveness, beyond the influence of team leadership. Likewise, leader effectiveness does not always translate into team effectiveness. Team composition and environmental or resource constraints may severely mitigate leader influence and result in team failure despite leadership efforts. Thus, the central premise of functional leadership theory is that team circumstances prescribe certain necessary leadership activities for success, while negating the utility of other activities. Indeed, effective team leaders often possess skills in defining what the critical leadership activities and responses are for particular team situations (Zaccaro, 2002)

3.2. Leader Performance Functions

The perspective of leadership as functional social problem solving suggests a core of basic requisite leadership functions that are linked to the effective generation, selection, and implementation of problem solutions (Zaccaro et al., 2001):

Information search and structuring; Information use in problem solving; Managing personnel resources; Managing material resources.

Information search and structuring evaluation,

and organization of information regarding team goals and operations. Information sources exist both role requirements are most evident.

Information use in problem solving information to

problem solving in the service of team goal attainment. After a team mission or goal is established, the


leader identifies task needs and requirements, develops and evaluates possible solutions, and plans the implementation of selected solutions. Here, the team leader is responsible for translating an assigned mission into a workable plan that utilizes available team resources and accomplishes several objectives for the team (Fleishman et al., 1991; Hackman and Walton, 1986).

The remaining two leader performance dimensions, managing personnel resources and managing

material resources, include leadership activities involved in the actual implementation of developed plans and solutions. These activities are perhaps the most prominent responsibilities of organizational team leaders, particularly at lower company ranks. Managing personnel resources involves obtaining, motivating, coordinating, and monitoring the Thus the leader responsibilities extend beyond the motivation and orchestration of collective action. Leaders are also responsible for training and developing the personnel resources under their command (Zaccaro et al., 2001).

Solution implementation also requires that team leaders procure adequate material resources for team

action (Hackman and Walton, 1986). This activity is often neglected in most classifications of leader performance functions (Fleishman et al., 1991). However, the lack of such resources will cripple team efforts, regardless of the motivation of team performance strategies (Hackman and Walton, 1986).

4. Where Functional Leadership Meets Business Intelligence

The leader performance functions described in chapter 3 and construction of team problems, generation of appropriate solutions, planning the implementation of the best-fitting one, and coordinating and monitoring solution implementation. These functions represent how effective leaders respond when facilitating team goal attainment, particularly in complex and dynamic environments (Mumford et al., 1993). They also represent a good starting point for describing how leaders facilitate team effectiveness.

The described leader performance functions information search and structuring, information use in

problem solving, managing personnel resources, managing material resources, according their nature are similar to business intelligence assets. In fact, business intelligence assets are strongly related with information and resource management, because they are the key factors influencing organizational excellence, like leadership performance functions, which also seek to improve organizational performance through more effective leadership.

Talking about business intelligence assets, we can note that business intelligence is a means for adding

value in production or service delivering process. Commonly it is accepted that business intelligence activity can be applied to the following business purposes in order to drive business value: measurement, analytics, reporting/enterprise reporting, collaboration/collaboration platform, knowledge management (Rutkauskas et al., 2011).

Do business intelligence assets exist? To find an answer to this question the definition of the word

It is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. For a marketer, an asset

that gets better the more you invest.


As it was mentioned before, nowadays there is a possibility to drive business value also through the business intelligence activities, so we assert that business intelligence activities are the means which help to provide and generate benefits and could be treated as assets in a construction of portfolio of business intelligence assets. Business intelligence assets could be accepted as the elementary business intelligence activities.

It is not easy to define what are the main business intelligence activities. Some scientists are sorting

business intelligence activities as: reporting, analytical process, statistical analysis, forecasting, and data mining. Other pointed out five key business intelligence activities: planning, measuring, analysis,

. A typical business intelligence solution includes data sources where transactional data is accumulated,

data warehouses/data marts, reporting and visualization tools, as well as predictive analytics and modeling (Brannon 2010).

The business intelligence cycle defines the basic steps of the business intelligence process, and

consists of four phases (Muller et al., 2010):

Planning and direction: in this phase the business intelligence cycle is structured; Collection of data: in this phase the necessary data sources are identified and data is collected. After

that the collected data can be converted, edited, aggregated, and stored in a structured way; Analysis of data: in this phase the data is used to produce information, by providing context to the

collected data, or by discovering patterns and connections in the data; Distribution of information: in this phase the produced information is forwarded to the right people

in an appropriate format. After a short review of business intelligence activities the conclusion should be made that all existing

and different business intelligence activities is possible to minimize and can be sorted into three main groups: planning and data mining, analytical processing and reporting.

5. Integral Business Intelligence Needs for Optimal Resources Distribution

There are fields of business intelligence activities, as well as functions of leadership, through which the used resources can increase business value. If those resources are financial they must become capital which could be measured by its efficiency, risk and so far.

For a problem to solve the adequate portfolio ideology will be used. As we see the concept of portfolio

is very diverse, but almost in all cases there is a possibility to find out the way to connect the potency of separate assets into a system, not only for the highest result to obtain, but also for the most effective usage of resources. It is a major economic problem and progressive development motto. The idea of portfolio solution method, formed by H. Markowitz (1952) serves as a stochastic optimization technique. Based on this technique stochastic optimization problem was solved. It is interesting to mention that the idea of portfolio and search method of optimal portfolio could be successfully used in nonlinear stochastic optimization.


The effect of each component of functional leadership portfolio or each business intelligence asset is in fact a random variable, the particular value of which is not known. The effect can be different in various situations. However, a after analysing a big enough number of hypothetical situations, a trend of effect values can be established, constituting a probability distribution of leadership portfolio effects. In order to reveal the dependences and consistent patterns of the mentioned probability distributions, the procedures described in the next chapter should be performed.

6. The Use of Adequate Portfolio for the Optimal Distribution of Business Intelligence and Leadership Resources

The process of adequate portfolio formation for optimal resource distribution should have the following steps:

1) The initial step it is the search for Markowitz portfolio (Markowitz 1952), consisting of possible -

deviation. 2) In order to reflect not only the mean but also all the possibilities, not only the information provided

standard deviation quintiles 1, section a) and the set of its efficient frontiers (Fig. 1, section b) is analysed.

Fig. 1. Markowitz portfolio of three assets. (a , (b) The set of efficient frontiers

3) In order to achieve evidence how information is reorganized, conforming to the canons of the

formed Markowitz random field (Fig. 2, section a) 1,

coordinate r (reliability) is included. The final result of these transformations is expressed in the so-called efficient surface (Fig. 2, section a) (Rutkauskas 2006) named after the Markowitz efficient frontier (Markowitz 1952).

Fig. 2 illustrates how a change (growth) of portfolio standard deviation changes the business

intelligence assets or is a member of the corresponding family of random variables.


Fig 2. (a) Efficient surface, (b) The best possibility choice

To talk about the formed structurcorresponding to the survival function, there exists a random variable, and practically every utility

-measurable function. Efficient surface is the source of exceptionally important and universal information on inve

Fig. 2, section b illustrates how to select the optimal (according to utility function) solution. The

unique solution is found, because the efficient surface and utility surface are convex regarding to each other.

Applying a certain forecasting system and from the possible options choosing the best possibility

overall greatest effect of intelligent leadership portfolio can be attained.

7. Conclusions

The research of business intelligence and leadership develops new acceleration and diversity, asking for integrated business intelligence and leadership understanding and better management.

The portfolio idea probably meets in the best way the need not only to integrate the separate opportunities of business intelligence and functions of leadership, but also to allocate existing resources between various activities in a rational way. Portfolio idea is one of the appropriate methods to solve almost the most important nowadays dynamic activities problem how to reconcile pursued efficiency and risk.

Business intelligence processes, as well as functions of leadership are expressed in stochastic way, as the environment in which the processes take place. For perception and management of these processes, it is necessary to use stochastic optimization ideas and techniques.

The effect of each component of functional leadership portfolio or each business intelligence asset is a random variable and can be expressed as a probability distribution. Choosing the best possibility out of the possible options the overall greatest effect of intelligent leadership portfolio can be obtained.


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