Leadership and Innovation and SMEs

#### **Chapter 4**

## Strengthening Innovative Leadership in the Turbulent Environment

*Iffah Budiningsih and Tjiptogoro Dinarjo Soehari*

#### **Abstract**

Recently, in the Digital Transformation era that is trigger by technology, Industry 4.0 is a transformation process that leads to company changes that disrupt and affect all business processes. In the current transformation phase, leaders must have the ability to manage digital transformation processes and new digital organizations that are emerging which are changing in a volatile (turbulent) business environment. The discussion in this chapter book includes a content analysis of several leadership characters that are very influential in anticipating turbulent environmental changes, which include: leadership in the turbulent era, innovative leadership, leadership with high integrity, leadership with high EQ. The dynamics of the external environment such as economic, political, social, cultural, scientific, and technological changes very rapidly which will have an impact on the business environment: customers, suppliers, competitors, investors, government/law, and interest groups. The external environmental turbulence must be anticipated by all institutions by strengthening leadership so that leaders and their followers can create innovative products, processes, collaborations, communication, and have emotional intelligence that can capture the substance of the problem objectively and arouse the spirit of participation of all parties. Another very basic thing is a leader who has strong integrity, which is trustworthy, honest, moral, and has the credibility to produce solutions to various business problems so that in the end it produces excellent performance according to stakeholder expectations. Leaders need to proactively manage change through strengthening innovative ideas, creating new things as the key to creating a prime competitive advantage for the company. The leader is a figure who must be able to continuously adapt to the dynamics of the rapid development of the environment and market, supported by human resources, superior organization, and the right systems and procedures to achieve organizational goals.

**Keywords:** leadership, innovation, integrity, emotional intelligence (EQ )

#### **1. Introduction**

The rapid development and rapid spread of digital technology and especially industry 4.0. significantly changing business processes, business models, customer relationships, and operations leading to destructive changes in all business structures. Digital transformation management is a huge challenge for organizations

today. Strong leadership is of paramount importance to an organization/institution/ company, both profit-oriented and non-profit-oriented, to face the rapidly changing environment to produce a competitive advantage in crises that might hit the organization/institution/company. Types of leadership are many: e.g., transactional leadership, managerial leadership and, transformational leadership. In application, one does not always refer to one of the concepts. Therefore, the present paper will not discuss further the concept of leadership. Rather, it focuses on discussing how to strengthen the leadership to solve problems that might occur due to rapid environmental changes or turbulence. Such as the industrial revolution 4.0, namely the existence of technology disruption which implies a new culture, such as human-machine communication; connection: global village; smart robots; internet of things; 3D Printers; driverless cars, big data; online/virtual education. This has the impact that many jobs involve science, technology, engineering, and math skills, the internet of things, lifelong learning. In [1] Leadership characteristics 4.0 include: (a) responsive leadership; (b) swarm leadership; (c) learning and innovation leadership; (d) open leadership; (e) agile leadership; (f) participatory leadership; (g) leadership networking; (h) trust leadership; (i) digital leadership; and (j) collaborative leadership.

The strategic policy to cope with a turbulent change of environment requires a strong leader with innovative ability, high integrity, and high emotional intelligence. Creativity and innovation are regarded as essential to have to compete. Such are not easy aspects to learn, as they are related to several matters: (a) product innovation to generate new products as well as process innovation for more efficient and effective production activities to generate lower prices with better quality; (b) communication innovation with the elements of business such as supplier, distributor, regulator; (c) collaboration innovation with customers, distributors, suppliers, regulator, and involved community members. The results of research by [2] explain that developing creativity (innovation) in organizations requires the level of emotional intelligence of the leader, and this supports previous research, namely that there is a positive influence between the emotional intelligence of the leader and the level of creativity of his subordinates. A leader is also required to have strong integrity as the figure that upholds honesty, openness, objectivity, not abusing power and authority, and upholds the important values of the organization/company. The main role of a leader is to lead one's subordinates towards the objectives of an organization/company that is responsive to a dynamic change of environment. According to [3] leader integrity is important because it plays an important role in the decision process used by followers when deciding who they will follow, whom they will trust, to whom they will be loyal and committed, and ultimately to who they will appear. The importance of a leader's integrity can lie in its positive influence on the leadership process and the positive organizational outcomes it achieves. Perspective leadership is employee-centered leadership, that is, there is consistency between words and actions, increases follower trust, and helps in predicting behavior to follow.

Leaders who lack integrity will not provide a basis for followers to infer consistency between their actions and words. According to [4] explains that the possibility of a leader being able to perform effectively. They are two important things that need to be tested, the first: integrity as a core executive in the context of the overall personality; the second: active participation of leaders using a wide range of possibilities to provide solutions to various conditions and challenges. Based on the findings of [5], integrity is the most important character strength for the performance of top-level executives, but what is interesting from this finding is that it has nothing to do with the performance of middle-level managers. The irony of this statement can provide insight into why there are ethical failures on the part of managers when they are promoted to executive leadership? This may happen because

#### *Strengthening Innovative Leadership in the Turbulent Environment DOI: http://dx.doi.org/10.5772/intechopen.100456*

managers generally focus their work on a technical level that prioritizes hard skills, so they may often lack the integrity to perform effectively at a higher level. The ability to handle problems is a key component of personality that adds to predictive accuracy about how a leader may perform under a leadership role especially when the future conditions of the business are unpredictable. In a turbulent work environment, high integrity leaders offer stability by providing clear positive values for followers to identify which can encourage followers' willingness to promote a good organizational image and also to adapt to dynamic changes and take initiatives to increase effectiveness. Overall organizational activities.

Moreover, a leader must also have a high level of emotional intelligence as the figure that is capable of managing the emotions of oneself and other people, grasping a piece of clear and objective information, guiding the thoughts and actions of other people, coordinating resources, and acting as motivator and catalyst to achieve organizational success. That said, the achievement of organizational objectives benefits from a leader who has high emotional intelligence. According to [6] explaining that over the last two decades, emotional intelligence has become a point of concern, especially related to leadership. Empirical findings have confirmed that the EQ dimension is more necessary to achieve leadership effectiveness with successful coping with stress in the workplace than IQ. Several previous studies revealed that emotional intelligence is significant in social situations, IQ is very important in cognitive tasks; Undoubtedly, IQ is an important and key element of leadership, but research shows that emotional intelligence (EQ ) is more important for leaders in different contexts, namely to be able to be more successful and be able to cope with stress in the workplace. A leader who does not have sufficient emotional intelligence will have wider consequences, namely resulting in lower employee engagement and higher turnover rates. While it is possible to excel in technical work, if a leader cannot communicate effectively with his team or subordinates or collaborate with others, his technical skills will be neglected.

In [7] opine that the phenomenon of a turbulent environment approves the idea that employees must have a sense of belonging to the organization/company; employees must also bear multiple roles as a leader for oneself as well as a businessperson. That being mentioned, every employee is demanded to have optimal managerial and entrepreneurship competence as the strategic element of organizational success. The role of a leader is to mobilize all resources to achieve the objectives. In [8] Points out that in a business strategy, the essential aspect is to offer better values to the customer in comparison with the competitors, in the form of a product/ service that has the lowest cost and is sustainable; however, at present, there are competitors from all over the world that can provide optimal service to the customers, that said, the single strategy of price competitiveness may not be as strategic as it was used to be but has to combine with other strategies. To formulate an effective strategy, a leader must be informed of all information all over the world and analyze the correlation with organizational needs and the resources owned to provide a fast and appropriate response on the business condition. No leader can guide the company to be competitive without understanding the commercial, social, economic, political, and technological impact in a global scope. Strategy in an organization is the main factor for a leader to observe one's scope globally as well as to observe the needs of the organization to operate effectively and efficiently to develop competitiveness. A company's strategy involves the decision to make regarding the prioritized business to be focused on and what business is to be abandoned. The analysis encourages the leader to mobilize all resources to innovate in the product, process, organization, communication, and collaboration effectively and efficiently; such conduct must be supported by a leadership that has high integrity and emotional intelligence to develop competitiveness.

The discussion in this chapter book includes a content analysis of several leadership characters that are very influential in anticipating turbulent environmental changes, which include: introduction, leadership in the turbulent era, innovative leadership, leadership with high integrity, leadership with high EQ. Some of the dominant leadership characters are suspected in the era of turbulent environmental change to be predictors of successful leadership. The writing of this article is a literature study using the content analysis method. The limitation of this chapter book is that it only partially discusses leadership characteristics that can anticipate turbulent environmental changes, namely: innovative leadership, leadership with integrity, and high emotional intelligence.

#### **2. Leadership in the turbulence environment**

In [9] point out that environment consists of internal, industrial, and societal environment. The internal environment comprises internal factors in an organization/company, viz.: human resources, organization, organizational culture, and others. Meanwhile, industrial or business environment consists of stakeholders, suppliers, employee/labor unions, competitors, trade associations, communities, creditors, customers, special interest groups, working partners, and others, while societal environment relates to ideology, politics, economy, social, culture, security, and science and technology of a country. Moreover, a turbulent environment is an environment that undergoes a change that might disrupt the activities of an organization/company. In [10] argues that when turbulence occurs, a leader must make assumptions, create new norms, values, and work procedures in facing the disruption. A turbulent environment can lead to a new organizational culture that might result in negative emotions if the elements of the organization are unprepared to face the turbulent environment. The turbulent period requires an increased intensity of learning of the occurring problems, the impacts, and how to manage the negative impact that might occur. According to [11] when a turbulent organizational environment changes, due to changes in technology and new values, the emergence of sustainable innovation will be able to provide sustainability benefits or generate profits within the organization.

A turbulent environment could also lead to a high level of anxiety; therefore, a strong motivator to lower the anxiety as well as to learn the possible outcomes. This also requires the care and knowledge sharing towards fellow organization members regarding management of anxiety that might occur to manage the turbulence in the environment. This shows that a leader must be creative and innovative in conducting a situational analysis with strong assumption, high integrity, and high emotional intelligence to acquire the aspiration of the subordinates as well as to interact with the subordinates to tackle the changes in the environment. Turbulence is commonly unique/specific; therefore, the management must consider the aspects of turbulence. For instance, the monetary turbulence in 1997 was managed by applying a much-interest rate. Regarding this, a question might appear: will the next turbulence be managed by the same method? The answer to the question is uncertain since the demands of the environment have changed from the problems of the number of money supply and the principle of currency demand vs. supply to other demands. One example is the balance of industry or the advancements in the real sector, in which cost leadership is the main strategy that requires a minim-interest rate. The reason is that the real sector and monetary sector are becoming closely related and require a strong integration in the policies in both sectors as an innovative policy. According to [2] in the past two decades, acquisition and divestment activities were strategic activities for business leaders who were expected to increase

#### *Strengthening Innovative Leadership in the Turbulent Environment DOI: http://dx.doi.org/10.5772/intechopen.100456*

productivity, increase efficiency, increase innovation and market share, but several research results showed a failure to achieve this goal because it is contrary to belief and tends to harm the organization because it inhibits creativity and innovation.

A leader's quality is reflected in one's ability to conduct an in-depth assumption regarding the main issues related to the external environment. A leader's assumption is also reflected in the turbulence regarding internal integration. The best moment to easily observe the internal condition of an organization/company is when a conflict occurs between the employees. There are many elements of organizational culture that are related to hierarchy, authority, and power that can influence the behavior of employees; that said, the resolution of the conflict must always be re-established and evaluated by referring to the common consensus. It is a challenge for the leader to test the truth of one's assumptions in front of one's subordinate. A leader may emphasize that one is not the best one by showing tolerant behavior and encourage the subordinates when in an argument to think about whether or not to obey him/her. In a turbulent environment, innovation becomes essential; it is stimulated by the ability to identify, grasp, and utilize any opportunity. Innovation does not only relate to creating new products, opening a new market, but also establishing communication and collaboration, offering new solutions in giving service, and developing an organization/company. An organization/company must always continue to be productive and competitive; regarding this, it depends on human resources that can create innovative and sustainable ideas. Therefore, a leader of an organization requires to be able to inspire and motivate one's subordinates.

A leader must feel dependent on one's subordinate to know what is the best; one must also request to the subordinate not to obey him/her if they feel that they are right. Regardless, the subordinates might not fully obey the concept due to the factors of authority and power that are embedded within a leader. In this regard, the leader is demanded to be creative, innovative, have strong integrity (credible, trustworthy, intelligent, and insightful), as well as having the high emotional intelligence to communicate and integrate the subordinate's potentials.

#### **3. Innovative leadership**

Creativity goes along with innovation; that said, innovation requires creativity, as it is the main factor of innovative behavior [12]. In [13] elaborate that the complexity of innovative behavior involves three processes: (a) recognition of problems and formulation or adoption of new solutions and ideas; (b) formulation of alternatives to express the solution/idea, establishing legitimacy and seeking support from internal and external elements of the organization; and (c) creation of prototype or model to be tested. Further, [14] argues that innovative behavior serves as a grounding for an individual to achieve a maximum outcome in organizational work. This is because innovation significantly contributes to the enhancement of the competitiveness of an organization by which drives the institution to act differently beyond its limit. With that being said, an innovative person tries through his or her limitation to optimize new ideas and concepts, resulting in a better product and service. Another study by [13] shows that organization of learning, knowledge-sharing, and organizational commitment simultaneously contribute 62% to the achievement of innovative behavior in employees; in this regard, the three factors are regarded as a dominant factor to predict and strengthen the innovative behavior of employees.

Moreover, [14] explain that entrepreneurship leadership and creativity are the dominant factors of innovative behavior. Technically, entrepreneurship leadership is the ability to coordinate one's subordinates to create new ideas that orientate towards the future, indicated with the efforts of:


As a dominant factor of innovation, creativity is the capability of turning imaginative ideas to generate new products/services. A person with high creativity is indicated with characteristics as follows:


Innovative behavior is commonly directed to discover, produce, introduce, and apply new "products", either regarding ideas, solutions, or beneficial technology for human activity to indicate the effort to seek for the opportunity, develop ideas, and search for support to implement new ideas. Strong leadership influences the innovation of an organization/company [15]. In line with that, according to [16] the leadership has a strong influence on the innovation ability of a micro-enterprise business.

Process innovation is the factor that can reduce production cost; this is in line with the business strategy of price competitiveness that is applicable in facing a sharply competitive market in such a digital era. Companies that fail to innovate will suffer from difficulties when the prices fall while the fixed cost is un-reducible; they will also find it difficult to position the differential competitiveness on the products/services generated, resulting in drawing the product back from the market. In [17] opine that creativity and IT training significantly influence the innovative behavior of the employees. Such a notion indicates that a leader should support the development of the employees' creativity to encourage innovative behavior. Further, [18] elaborate that the function of a leader is to move the organization so that that all individuals are free to realize their motivation potential to achieve the organizational objectives. There are main variables of a leader's level of effectiveness:

• A leadership that meets the expectation, needs, and competence of one's subordinates;


For a leader, innovation and communication are essential to encourage the participation and collaboration of the subordinates, either internally or externally. In [19] point out that communication to promote the participation of other parties requires considering these aspects:

First: To be successful,


Second: Causes of failure:


In [20] indicates that communication is an essential aspect for a leader to achieve the expected performance; that said, these aspects are of significance to consider:


In [20] points out the positive and negative indicators of the variable of communication.

Positive indicator of communication:


Negative indicator of communication:


About relation to collaboration, [20] indicate that a strong collaboration requires strong teamwork from each member of the organization/company; the aspects are:


*Strengthening Innovative Leadership in the Turbulent Environment DOI: http://dx.doi.org/10.5772/intechopen.100456*


Moreover, [20] points out the positive and negative indicators of the variable of collaboration.

Positive indicator of collaboration:


Negative indicator of collaboration:


Strategy in an organization is the main factor for a leader to observe one's scope globally as well as to observe the needs of the organization to operate effectively and efficiently to develop competitiveness. A company's strategy involves the decision to make regarding the prioritized business to be focused on and what business is to be abandoned. The analysis encourages the leader to mobilize all resources to innovate in the product, process, organization, communication, and collaboration effectively and efficiently; such conduct must be supported by a leadership that has high integrity and emotional intelligence to develop competitiveness.

#### **4. The leadership that has high integrity**

The term "integrity" derives from English, which means complete and thorough. According to [21] integrity means thinking, saying, behaving/acting properly and correctly, and upholding the code of ethics and moral principles. In other words, someone's actions are always consistent with the existing values and codes of ethics. According to [3] integrity is one of the main attributes of a great leader and the concept of consistency of actions, values, methods, measures, principles, expectations, and results; or in other words a deep commitment to doing the right thing for the right reasons, regardless of the circumstances. In [22] Propose indicators of integrity, which involves:


Generally, people with high integrity are reliable, trustworthy, uphold moral principles, and consistent in realizing the characteristics into one's daily activities without the feeling of shame to express what s/he believes. Commonly, a person with high integrity possesses the traits of intelligence, honest, resilience, trustworthiness, responsible, have self-control, and loyal. Integrity is an absolute requirement for a leader to run the organization effectively and efficiently to achieve the organization's vision and missions. That said, competence, insight, quick and accurate decision-making, as well as uphold ethics and morality are required so that the success achieved is not solely for personal and organizational purposes but also integrated as all stakeholders' success. Integrity can also be referred to as the commitment to accomplish a task correctly and ethically by upholding the values and norms that apply in the business environment without coercion to achieve optimum performance.

Integrity also correlates with credibility and trust; a leader with high integrity is supposed to be credible, trustworthy, and have a strong analytical ability to decide whether something is right or wrong, staying true to one's principles, maintain confidentiality, encourage ethics when discussing business and work, as well as maintaining a commitment to conduct a follow-up on the agreed matters. Credibility comprises two essential aspects, i.e., skills and trust [23]. A leader will be left behind by one's subordinates if they lose trust towards the leader and assume that the leader:


*Strengthening Innovative Leadership in the Turbulent Environment DOI: http://dx.doi.org/10.5772/intechopen.100456*


According to [24] Propose that to develop trust with the subordinates is to maintain the trust level. Moreover, to build trust is to:


According to [4] A leader who is strong in this element will be aware of their emotions, motivations, and weaknesses. They have an open heart to receive input from various sources. They gather what they know about themselves and their situation to gain a deep understanding of the possibilities that are open to them. Meanwhile, leaders who have low integrative capacity have poor focus, blinding them to information that is inconsistent with their understanding of their limited worldview. If they have little awareness of their motivations and moods, they will tend to misunderstand the motivations of others as well. They tend to deal with events one at a time, fail to see the relationship between them all, and are unable to extrapolate them into the future. In the world of work, a concrete manifestation of integrity is a good performance. Integrity and skill go hand in hand, which leads to better performance. In the absence of competence or skills, it is difficult to demonstrate integrity itself, and conversely, competence or skills without integrity will be difficult to form good performance. Integrity truly manifests itself through the success achieved by utilizing abilities and skills.

The previous aspects are the example of alternative actions to build trust in one's subordinates. In [20] argued that integrity is a core value that must be applied by all staff regardless of the nature of their role to work honestly, openly, objectively

#### *Leadership - New Insights*

in applying the values adopted by the institution for all staff. Moreover, [20] points out the positive and negative indicators of the variable of integrity.

Positive indicator of integrity:


Negative indicator of integrity:


In regards to integrity, [25] the key in carrying out the task of creating stability requires credibility and trust. That said, it is impossible to create stability without the trust gained from all stakeholders. Further, [25] also adds that the strategic characters that a leader must possess, include:


A breakthrough to change or fix problems on a large scale and fundamentally is not a short-term oriented process; rather, it is a whole optimal process to

#### *Strengthening Innovative Leadership in the Turbulent Environment DOI: http://dx.doi.org/10.5772/intechopen.100456*

understand the reasonings. It is not revolutionary, but it prefers a discourse of deep discussion and reflection. As elaborated by Abdullah, the essential values of character and behavior to develop to improve the performance of an organization/ company, include competence, integrity, transparency, accountability, and togetherness. To realize these values, several elements are needed:

Organization:


Human resources:


A leader's integrity must be proven with one's ability to formulate the appropriate policies. In [19] argues that the formulation of the appropriate policies requires people who have strong competence and integrity as well as the ability to maintain and develop professionalism, such as:


The integrity of a leader must be equipped with attributes that support it. The summary of leadership attributes, as proposed by [26] are as follows:

a.Determining the direction of the organization, with dimensions as follows:

• Dimension: Understanding what is happening on the output, with indicators of (a) showing strong customer orientation; (b) thinking deeply and look carefully at the new possibilities that will emerge; (c) possessing the vision, skills, and resources needed to build networks outside of their home base; (d) utilizing resources for process innovation that can increase customer productivity; (e) consistently clarifying the clarity of organizational direction, and; (f) demonstrating full responsibility towards the environment without any compromise.


b.Mobilizing individual commitment, with dimensions as follows:

	- Dimension: Building organizational infrastructure, with indicators of (a) demonstrating the ability to unite formal leadership, resources, and unite activities harmoniously across various project clusters; (b) establishing the ad hoc leadership required by each cluster of projects; (c) aligning and ensuring the harmony between the organization and its strategy; (d) actively communicating information to all employees; (e) being fully committed to the long-term strategy by building an institution that can generate added

value; (f) providing the necessary impetus and resources for continuous progress; (g) creating enthusiasm for all parties to support the achievement of business targets/goals.


d.Demonstrates personal character, with dimensions:


move forward; (l) dealing effectively with complex, ambiguous, and contradictory situations; (m) looking for consideration of alternatives that may be contradictory.

Further, [26] summarize the dimensions of the survey results on Leadership Effectiveness as follows:


effectively and efficiently, especially for core personnel; (c) recognizing and rewarding achievements, creating a positive, conducive and comfortable work environment; (d) fully utilizing the differences of team members (culture, ethnicity, and gender) to achieve business success.


Further, [27] suggests that indicators of effective leadership in an era of dynamic and rapid environmental change are: (a) be able to move subordinates; (b) challenge the subordinates to produce outstanding innovations; (c) have charisma and use it effectively and efficiently; (d) encourage and facilitate subordinates to think rationally and be able to overcome all problems that arise in carrying out their duties; (e) create a proper working climate so that the subordinates feel like an integral part of their leader.

The integrity of the leader plays a very important role in preventing corruption in an organization/institution/company. In [28] explained the results of their research in a government institution that the integrity of the leader plays an important role in its function as a perpetrator of corruption prevention because it has the potential to weaken the prevention of corruption if it is not accompanied by strengthening organizational culture, internal control, and competence in preventing corruption. The programs that need attention to support the prevention of corruption are developing and strengthening leadership in an integrated manner regarding organizational culture, internal control, competence, and leadership as an instrument for preventing corruption. All these aspects in an integrated manner have a significant influence on preventing corruption. Without an increase in organizational culture, internal control, competence, and integrated leadership, corruption prevention tends to be ineffective.

#### **5. Leadership that has high emotional intelligence**

According to Goleman in [29] suggests that emotional intelligence is a person's ability to motivate oneself to:


The research results of [30] show that EQ is the most decisive predictor of a leader's successful performance in the workplace. Several other studies have shown that there is a positive relationship between leaders' EQ levels and employee satisfaction, retention, performance, and income. In a later article in the Harvard Business Review, Goleman wrote that it is very important for leaders to have a high EQ to be successful; but that doesn't mean IQ and technical skills are irrelevant, they are both entry-level requirements for executive positions. Hard skills tend to correlate with IQ, while soft skills have an association with Emotional Intelligence [31]. It is argued that hard skill approaches are less significant to success attainment in workplaces. Currently, some companies are in high demand for prospective employees who are competent in soft skills, although they have low hard skills; however, companies expect that the candidates' hard skills can be improved through training. Hard skill improvement is not that complex compared to shaping a person's character to meet the needs of a company or organization. Although hard skills are one of the important keys in workplaces, soft skills significantly determine the success of employees.

In general, Emotional Intelligence is a skill of a person to understand his or her emotion and other people's emotion, resulting in adaptability. This notion correlates with soft skill concepts, where it is regarded as a characteristic of an individual that allows him or her to interact, socialize, and collaborate with others. The skills are essential for a leader to lead his or her subordinates. For instance, teachers are a leader in their small community at a school. Having high Emotional Intelligence will help teachers direct their students, especially in the current situation where all learning activities are online-based and the absence of emotional bonds between teachers and students is inevitable. Teachers' presence, especially in elementary schools, is of paramount importance, since no technology or educational platform can replace teachers. Online learning oftentimes hinders the teachers from monitoring their students' progress. This condition further emphasizes the significance of forming emotional bonds between teachers and students. This is crucial, specifically for elementary school teachers and pre-school teachers. Similarly, having high Emotional Intelligence contribute to the way a leader in a workplace-copes with their subordinates' problems, ranging from the problems to comprehend vision, mission, and strategies of a company, limitations of systems and procedures, limited work hours, facilities, and working tools, and conflicts among workers. Leaders with high Emotional Intelligence can help their subordinates in providing coaching and counseling sessions to motivate their fellow workers and encourage them to formulate solutions. In [32] mentions several abilities that a leader should possess before providing training to his or her subordinates:


*Strengthening Innovative Leadership in the Turbulent Environment DOI: http://dx.doi.org/10.5772/intechopen.100456*


In [27] proposes several aspects of Emotional Intelligence in a leader.


In [33] mention Leaders should have the high Emotional Intelligence to understand the characteristics of their subordinates, thus allowing them to identify and balance the needs of themselves and their subordinates in terms of cognition, action, and decision. Emotion is a short, strong reaction encompassing joy, excitement, surprise, anger, sadness, despair, disappointment in responding to an event or someone. A person's feeling affects the performance of an individual or a group. On that ground, a competent leader should be able to manage the emotion of all team members. Leaders can help promote a positive atmosphere to the team by


Emotional Intelligence enhancement for subordinates needs to be performed through emotional contagion. This process occurs when the leader transfers and influences all subordinates or when a subordinate motivates other fellows. In some cases, expressing negative emotions, such as expressing anger and disappointment, can help leaders cope with irresponsible employees by criticizing inappropriate behavior. Nevertheless, the leaders should apply the approach with precaution.

In [33] describe the term "Emotional Intelligence" is the ability of oneself to understand and express his or her emotion, allowing the individual to take advantage and manage his or her emotion and other people's emotion. Emotional Intelligence can affect the change in an organization. Further, Emotional Intelligence controls the emotional reaction of employees towards job insecurity and the way the employees cope with stressful situations. Emotional Intelligence involves the process of emotional regulation to control anxiety and other negative emotional reactions to result in positive emotions. Negative emotions are detrimental to the performance of employees. On that ground, emotion regulation and control are required to manage positive emotions at workplaces.

Almost all people have different skills in comprehending other people's emotions by their facial expressions, although seven types of universal emotion can be identified from seeing other people's faces regardless of race, culture, ethnicities, ages, sexes, and religions. Those emotions may cover joy, sadness, fear, surprise, anger, humiliation, and disgust. Understanding other people's emotions are central to the communication process, establishing and building relationships, negotiating, collaborating, and many other managerial tasks. Effective communicators

#### *Leadership - New Insights*

need to recognize emotions by seeing facial expressions. Reports have revealed that Emotional Intelligence, including identifying emotions from facial expressions, can be trained. For successful managers, Emotional Intelligence skills required for managing their subordinates involve:


In [33] argue that leaders need to take into account their subordinates' feelings and respect their opinions; these are among the aspects of Emotional Intelligence. Leader-subordinate relationships are seen from mutual trust and respect and two-way communication. When implementing the approach of initiating structure behavior, leaders are urged to explain the responsibilities of the subordinates and everything that the leaders expect from them. Leaders are also demanded to develop communication channels and determining which methods are applicable to succeed in workplaces. Three adaptive abilities are integral to Emotional Intelligence [34, 35].


#### **6. Summary**

In the coming days, leadership seems to move toward a teaching organization in which it functions to foresee changes and diverse knowledge, skills, and abilities of human resources and enhance an institution's performance. The momentum of the institution determines the success of an institution in the competitive, globalized era to change or adapt to its business or industrial environment. A leader is demanded to be responsible for directing every attempt to cope with issues and ensure the vision's clarity. Further, a leader is required to conceptualize an organizational climate that promotes the employees' independence and, at the same time, the employees aware of their responsibility. Involvement in strategic planning processes will cultivate the sense of belonging of employees. To further optimize the motivational process, one should consider the implementation of innovative leadership. This type of leadership effectively encourages employees, specifically in turbulent conditions; it focuses on products, processes, organization, communication, and collaboration. Provided in **Figure 1** are the approaches to strengthen innovative leadership for survival solutions in turbulent situations. The contribution of the above discussion is expected to provide a reference for designing curriculum and training of leadership and guideline for similar studies.

*Strengthening Innovative Leadership in the Turbulent Environment DOI: http://dx.doi.org/10.5772/intechopen.100456*

#### **6.1 Innovation**

Charisma is essential for a leader to direct his or her subordinates in coping with turbulent situations. Further, charismatic leaders can facilitate their team members to reason in formulating solutions. Below are the tasks of leaders in dealing with problematic atmospheres.


#### **6.2 Integrity**

Leaders with integrity can deal with problems, build trust, and integrate all interests of stakeholders by upholding morals and ethics. Provided below are the aspects of integrity that a leader should possess.


#### **6.3 Emotional intelligence**

Emotional Intelligence is central to coping with turbulent situations. The following are the significance of Emotional Intelligence in workplaces.


### **6.4 Policies and measurements in facing turbulent environment**


The Diagram of Innovative Leadership Strengthening for Survival Solution in Turbulent Environment (**Figure 1**).

Turbulence Environment. By Soehari (2021).

**Figure 1.** *The Diagram of Innovative Leadership Strengthening for Survival Solution in.*

### **Author details**

Iffah Budiningsih1 \* and Tjiptogoro Dinarjo Soehari2


\*Address all correspondence to: iffah\_budiningsih@uia.ac.id

© 2021 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

*Strengthening Innovative Leadership in the Turbulent Environment DOI: http://dx.doi.org/10.5772/intechopen.100456*

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#### **Chapter 5**

## Optimizing Innovative Leadership and Followership

*Neil E. Grunberg, Erin S. Barry, Michael Morrow-Fox and Maureen Metcalf*

#### **Abstract**

Leadership and followership development are increasingly recognized as important in all fields of the workforce. The Innovative Leadership Model helps leaders increase self-understanding and optimize the performance of organizations by focusing on Leader Type, Developmental Perspective, Resilience, Situational Analysis, and Leadership Behaviors and Mindsets. The Leader-Follower Framework identifies key elements – Character, Competence, Communication, Context – to guide the development of individual leaders and followers across four psychosocial levels – Personal, Interpersonal, Team, Organizational. Each of these approaches has value and has been applied in various settings and contexts. The present chapter offers a new insight relevant to leadership by combining these two perspectives and their component elements. Understanding and developing each of these elements will optimize effective leadership and followership in a wide range of situations and settings.

**Keywords:** innovative leadership, leader type, developmental perspective, resilience, situational analysis, leadership behaviors and mindsets, leader-follower framework, character, competence, communication, context, personal, interpersonal, team, organizational

#### **1. Introduction**

Development of individuals as leaders is important in all fields of the workforce. Within teams, in addition to the diversity of the individual team members (including leaders and followers), uniqueness of team members, individual goals, communication styles, differing leadership and followership styles, and so on introduce challenges to true teamwork and must all be considered to optimize goal achievement of individuals, teams, and organizations [1–3].

Leadership influences individuals, teams, and groups by enhancing behaviors (actions), cognitions (perceptions, thoughts, beliefs), and motivations (reasons behaviors and cognitions) to achieve common goals. Leaders are aspirational, inspirational, provide resources, and remove barriers to optimize the success of followers, organizations, and the people served by organizations. Leaders must continuously attend to and align all elements of the systems within which they operate to adapt and respond to changes from within and outside the system. Followership refers to the actions of individuals who are not in leadership roles. Followers are members of a team or group who contribute (or not) to the team; align (or not) with the vision of the leader, and adapt (or not) to the situations and to other members of the team. Effective followers are essential to achieve goals and can influence all members of the team, including their leaders [4–9].

Day [10] distinguishes between leaders and leadership, such that "leader" refers to human capital and intrapersonal knowledge, skills, abilities, attitudes, and attributes, and "leadership" refers to social capital, interpersonal relationships, and organization culture. The same distinction can be made for followers and followership.

Innovative leaders engage their intentions and actions with those of their followers within the organization's culture and systems to reach the organization's objectives and goals and those of the people it serves. Innovative leaders consider and serve the interests of the organization and its members. Leaders influence followers, teams, and the whole organization. Followers can influence leaders, other followers, teams, and the entire organization. Innovative leaders and followers adapt and develop themselves and their organizations to optimize effectiveness within changing environments or context (physical, psychological, social) [11, 12].

There are many different models and approaches for leader and leadership development. Some focus on the development of leaders [9, 10, 13–19] and followers [20–28] *per se*, whereas others focus on leadership and followership in practice or on the organizational or systems levels [29–32]. There is value to both levels of development to achieve optimal performance of individuals within organizations and systems.

Recently, we have merged two models to address all of these needs for health care leadership [12]. The Innovative Leadership Model helps leaders increase self-understanding and optimize the performance of organizations by focusing on Leader Type, Development Perspective, Resilience, Situational Analysis, and Leadership Behaviors and Mindsets. The Innovative Leadership Model focuses on development perspective and growth of individuals to serve organizations and systems. The Leader-Follower Framework identifies key elements – Character, Competence, Communication, Context – to guide the development of individual leaders and followers across four psychosocial levels – Personal, Interpersonal, Team, Organizational [5, 7]. The Leader-Follower Framework focuses on the elements relevant to meaningfully development and performance of individual leaders and followers. The inclusion of key aspects of these two models may offer a valuable new insight into optimizing. Each of these approaches has value and has been applied in various settings and contexts. The present chapter offers new insights into how integrating these approaches can optimize innovative leadership and followership in a wide range of situations and settings.

#### **2. Innovative leadership and followership**

Leadership impacts people strategically and tactically, effecting change in intentions, actions, cultures, and systems to move organizations forward in ways that improve the lives of the people it serves while considering the interests of the organization's members and stakeholders. Innovation refers to novel ideas, processes, and advancements that contribute to and shape organizations and people. Meaningful leadership and innovation are inextricably connected. Merging leadership with innovation encourages and, perhaps, demands transformational personal and organizational growth [33, 34]. **Table 1** presents contrasts between traditional leadership and innovative leadership.

Innovative leadership and followership mean that leaders and followers influence and contribute by engaging personal intention/character and action/competence/ communication with the organization's culture, systems, and context. Innovative leadership and followership can improve organizations and the lives of the people it serves by considering the interests, needs, and goals of the organizational members and stakeholders. Innovative leaders consistently deliver results using [35–37]:


#### **Table 1.**

*Traditional vs. innovative leadership [11, 12].*


Innovative followers embrace, embody, and contribute to all three of these approaches.

#### **2.1 The value of innovative leadership and followership**

Innovating/elevating leadership and followership means to successfully adapt in ways that allow optimal performance, even within the changes and complexity of an organization or system. Conceptually, individuals integrate ideas and perspectives from many leadership and followership principles and concepts, and from developmental, communications, and systems theories [38, 39]. Innovative leaders and followers recognize and critically examine themselves and their organizations' cultures and systems during various circumstances. It is valuable for individuals to focus on the needs and mission of the organization, system, and cultures to which they contribute. In addition, individuals should recognize how they contribute to something larger than themselves.

#### **2.2 Defining what innovative leaders and followers do**

Innovative leaders utilize their advanced developmental capability to facilitate transformational ideas and approaches that enable innovation [33, 34, 36]. They are aware of and focus on others and the organizations/systems in which they operate. Behaviors of developmentally mature innovate leaders and followers who grow developmentally and in organizational effectiveness include (**Table 2**):


**Table 2.**

*Behaviors of innovative leaders and followers.*

#### **3. Merging innovative leadership and the leader-follower framework: New insights**

To optimize innovative leadership and followership, we offer the merging of two conceptual models. The "Innovative Leadership Model" [11, 12] and the "Leader-Follower Framework" [5–7] complement each other and overlap with a differing depth of emphasis on essential leadership and followership elements and processes. Together they provide new insights into a broadly inclusive structure to develop optimal leadership and followership. These two approaches recently have been applied together to optimize the development of innovative leaders in health care [12, 40]. Yet, they also can be applied more broadly to enhance the innovative leader and follower development in all settings.

**Figure 1.** *Overview of the innovative leadership model.*

*Optimizing Innovative Leadership and Followership DOI: http://dx.doi.org/10.5772/intechopen.99860*

The Innovative Leadership Model is a five-element roadmap to becoming an innovative leader [11, 12]. The elements of the Innovative Leadership Model are (**Figure 1**):


**Figure 2.** *The leader-follower framework.*

The Leader-Follower Framework [5, 7] includes four "C" elements:


that apply across four psychosocial levels:


The Innovative Leadership Model and Leader-Follower Framework are valuable to develop both as leaders and as followers. To be an effective leader, you also must be willing and able to develop followers. It is essential for leaders and followers to understand, develop, and know when and how to lead and follow (**Figure 2**).

#### **3.1 Elements of innovative leadership**

The Innovative Leadership Model [11, 12] focuses on:


The Innovative Leadership model addresses: Leader Type, Developmental Perspective, Resilience, Situational Analysis, and Leadership Behaviors and Mindsets.

**Leader Type** refers to the core predispositions, traits, and attitudes of each person. These attributes influence who we are as a leader, our responses to stress, and how other people (including followers) experience our leadership. There are several valuable tools to help describe our Leader Type: Enneagram [41]; Myers Briggs Type Indicator (MBTI) [42, 43]; Revised NEO Personality Inventory (NEO-PI-R) [44]; True Colors [45]; Big Five Personality Test [46]. The DISC Profile [47] and StrengthFinder 2.0 [48] provide additional, useful information relevant to Leader Type.

Self-awareness is the practice of engaging in self-reflection and achieving clarity of insight. Internal self-awareness refers to our own understanding of ourselves, whereas external self-awareness refers to understanding how others perceive and understand us. Self-understanding, understanding how others perceive us, and the extent to which perceptions about ourselves are accurate and compatible with others' perceptions play a pivotal role in our effectiveness and leader-follower relationships. Self-aware individuals possess high levels of emotional intelligence; self-regulate behaviors, cognitions, and emotions more effectively depending on the situation; and continually evaluate their impact on others [49–53]. These attributes allow self-aware individuals to become more versatile, adaptive, and may perform better. The ability to use deep self-reflection relies on developing self-understanding and self-awareness, features of emotional intelligence. Self-understanding and self-awareness allow us to expand our perspective and to understand others better. A clearer understanding of ourselves and others can help build interpersonal, team, and organizational effectiveness. Feedback from trusted colleagues, family members, and friends in psychologically safe contexts is extremely valuable to develop self-awareness. Leader Type is an aspect of Character.

**Developmental Perspective or Developmental "Maturity"** refers to stages of personal development that include perspectives, experiences, and capabilities to make the meaning necessary to execute change initiatives [35, 36], solutions to complex problems [54, 55], and organizational transformations [38, 56]. Developmental Perspectives affect how we view our roles, how we interact with other people, and how we solve problems. In other words, this perspective can be described as "meaning-making," or how we make sense of experiences using the Leadership Maturity Framework (LMF). The LMF considers cognitive complexity, emotional

#### *Optimizing Innovative Leadership and Followership DOI: http://dx.doi.org/10.5772/intechopen.99860*

competence, and behavior and holds that we can progress through maturity levels as we learn and evolve. Moreover, more mature or evolved individuals are more effective at leading complex organizations in times of change. In contrast, individuals at an earlier level of developmental maturity rely on rules to make decisions and determine appropriate courses of action, whereas individuals at later stages use their values to guide decision-making and to determine what actions to take.

Developmental growth occurs as other capabilities expand in our lives. By understanding and building upon our Leader Type and Character, we can continue to grow, increasing access to and capacity for additional skills and capabilities. That is, we can develop our capacity to build beyond the basic skills we have now by moving through more progressive stages. The successful individual has a broad repertoire of mindsets and behaviors and can select the most appropriate ones depending on the context.

**Resilience** reveals how much disturbance we can withstand before breaking [57] and also refers to the ability to adapt to change while continuing to be both fluid in approach and driven toward attaining strategic goals [58]. Addressing and strengthening resilience is critical to manage stress and increase capacity to function in stressful environments and situations.

Innovative leaders and followers must adapt to volatile, uncertain, complex, and ambiguous (VUCA) situations and demands while maintaining physical, psychological, and emotional health to have the resilience essential for success. They must build and sustain flexibility, adaptability, and focus; regain balance after disorienting situations; and be able to support and inspire others. Resilience can inspire and positively impact others.

Resilience requires physical and psychological health, a clear sense of life purpose, emotional intelligence, and strong supportive relationships. For most people, enhancing resilience requires personal change. Our view of resilience has four categories: maintaining physical well-being, managing thinking, working from the heart, and harnessing the power of connection. These categories are interlinked and all must be present and in balance to create long-term resilience. Maintaining resilience is essential to success. Improved resilience is accompanied by clearer thinking and greater positive interactions with others. Investing in resilience supports the entire organization's effectiveness [12]. Resilience is a transcendent leadership Competence.

**Situational Analysis** involves understanding and adapting to Context; aligning and balancing self, individual action, organizational culture, and organizational systems; and performing to achieve the best outcomes [12]. This multi-pronged approach provides a complete and accurate view of events and context to create alignment across the Innovative Leadership Model on an ongoing basis. Understanding an organization's culture and systems is essential to determine how to adapt our behaviors. We must understand the context and adjust to the situation and to the organization's mission and goals.

In addition, innovative leaders and followers communicate with teammates and stakeholders relevant to the mission and goals of an organization. Effective communication requires "making meaning" of what is happening based on context, translated into words that senders and receivers mutually understand. We sense, receive, and convey messages verbally and non-verbally. Situational analysis allows us to make more informed decisions, and also helps to optimize performance within oneself, teams, and the broader organization.

**Leadership Behaviors and Mindsets** refer to leadership knowledge, skills, and attitudes and the resulting behaviors [12] or Competence and mindset or meaning making. The mindsets inform effective behaviors. These behaviors are essential and measurable because they are the objective actions that leaders and followers take to impact organizational success. Effective behaviors of leaders and followers

determine individual and team performance, team cohesiveness, individual and team morale, and organizational success. Conversely, ineffective behaviors of leaders and followers lead to poor performance, poor cohesiveness, poor morale, and organizational dysfunction or failure.

Knowledge of the key concepts described in the Innovative Leadership Model and associated skills and practice result in effective leadership behaviors and mindsets – the objective actions that leaders take to impact individual, team, and organizational success. Knowledge and practice of these same concepts result in effective followership behaviors. These behaviors align with the idea of developmental maturity and specify critical behaviors and mindsets associated with the most effective leaders in complex and dynamic situations. Therefore, it is important to understand the critical leadership and followership behaviors relevant to you and your organization. With this understanding, you can determine where you excel and where you need to refine your skills.

It also is relevant to consider and to develop your mindset to exercise effective leadership and followership behaviors. **Table 3** lists seven mindsets and associated behaviors that effective leaders and followers put into action regularly [12, 59].

#### **3.2 Leader-follower framework**

To develop as innovative leaders and followers, it is helpful to reflect upon, consider, and continuously develop Character, Competence, Context, and Communication across the four psychosocial levels – Personal, Interpersonal, Team, and Organizational [5–7].

**Character** is the "who" of leaders and followers. It includes all aspects of who we are psychologically (self-awareness, honesty, integrity, trustworthiness, reliability, personality, values, biases, leader type, developmental maturity, resilience) and physically (demographics and physical attributes). Self-awareness includes internal self-awareness (i.e., our own awareness of the many aspects of our Character) and external self-awareness (i.e., our awareness of how others including peers, followers, supervisors, stakeholders, friends, strangers, family members, perceive us and all aspects of our Character and the extent to which the perceptions of ourselves and others are consistent or inconsistent). Understanding oneself is essential to innovative and effective leadership.

**Competence** is the "what" of leadership and followership. It includes what we know and do concerning role-specific knowledge and skills relevant to our specific role or job (e.g., as a parent, administrator, health care professional, attorney, entrepreneur, teacher, carpenter, artist, athlete, etc.). Competence also includes transcendent knowledge and skills relevant to all roles and positions (e.g., critical thinking, problem-solving, motivating others, emotional intelligence, conflict resolution). The leadership and followership behaviors described above are examples of the practice and execution of competence. Leader type, resilience, and developmental maturity all impact ability to exercise the behaviors associated with successful leadership and followership. Competence reflects knowledge, skills, and applications.

**Context** is the "when" and "where" of leadership and followership. It refers to when and where leadership and followership occurs, physically (i.e., time of day, climate, nutritional state, tiredness), psychologically (i.e., behavioral health, biases), socially (i.e., size of the group, group dynamics), culturally (i.e., cultural values, practices, attitudes, beliefs), and situationally (i.e., what's happening around us as well as stress). Context is the meta-framework that contains the individual and the organization at any point in time. The leader must consider the entire context and apply Situational Analysis to make decisions while being able to align



#### **Table 3.**

*Examples of innovative Mindsets and Behaviors [12, 59].*

all elements of individuals and the organization on an ongoing basis. Followers also should be aware of and work to align elements of individuals and the organization to optimize performance.

**Communication** is the "how" of leadership and followership. It includes sending and receiving information verbally (oral and written) and non-verbally (body language, facial expressions, paralanguage). Communication is separated from competence because it is such a key component of successful leadership and followership behaviors. It is critical to recognize that the purpose of communication is to achieve understanding. Moreover, the key to effective reception of communications as leaders and as followers is embedded in the word "listen"; that is, rearranging the letters spells "silent" – how we should listen to others to truly hear what is being said.

Leadership and followership operate at four psychosocial Levels:

**Personal** refers to the individual and focuses on self-awareness (internal and external), knowledge and skills appropriate for one's role, effective communication, and appropriate situational awareness. Unless we understand and work to develop all leadership aspects of ourselves, we will be in no position to be innovative or effective for others. Focusing on personal development is particularly important of early stages of Developmental Maturity.

**Interpersonal** refers to dyadic relationships, such as leader-follower, supervisor-supervisee, teacher-student, athlete-coach, parent–child, spousespouse. Interpersonal focuses on working and communicating effectively and respectfully with other individuals in all situations, understanding the other individual, knowing how one is perceived, and applying appropriate knowledge and skills in relationships with others. It is important to adapt to each individual with whom we interact to optimize innovative leadership and followership.

**Team** refers to a small group of people with complementary skills who are committed to common goals. Teams build shared values, trust, and cohesiveness, work together, communicate effectively in various situations, understand team dynamics, and respond appropriately. Optimizing team performance and relationships among all members of the team poses a substantial challenge because it requires understanding and interacting with every individual in that group and with all combinations of members of this group.

**Organizational** refers to large groups, institutions, and systems. It focuses on vision and mission and understanding systems, processes, and various cultures. Innovative and effective leadership at the organizational level requires advanced Development Perspective. In addition, leadership and followership at the organizational level requires consideration of the needs and goals of the large group, system, and culture, rather than on the individual members of the group.

#### **4. Relating the leader-follower framework to the innovative leadership model**

**Leader Type**: It is important to recognize and understand "who" you are, "what" you do, "when and where" you do it, and "how" you do it. "Who" you are, including core values, attitudes, beliefs, and the relevance of your demographics (including age, gender, physical characteristics) that contribute to your experiences and how others respond to you, is **Character** in a broad sense. "What" you do, including role-specific actions and behaviors as well as transcendent behaviors (including decision making, problem-solving, conflict resolution, emotional intelligence) is **Competence**. "When and where" you lead (**Context**) refers to physical, psychological, social, cultural, and situational aspects. "How" you do it focuses on **Communication**, both sending and receiving. Effective leader style (e.g., authentic, democratic, servant, transactional, transformational) depends and should adapt based on all of these "C" elements. Effective follower style (e.g., along dimensions of commitment to the team and mission, alignment with the leader's vision) also depends on adapting all four of the "C" elements.

**Developmental Maturity**: Developmental maturity level influences the breadth of perspective, mindset, meaning-making capability, and focus both as a leader and follower. In the early development stages, the focus is on our own, or "**Personal**," growth and expertise. Interactions with other individuals (including team members, peers, supervisors, patients, etc.) and how to optimize those dyadic relationships are "**Interpersonal**." As leaders and followers expand and increase their developmental perspectives, they widen their perspectives and interactions and become more effective working with small groups of people who work together for common goals and interact at the "**Team**" level. Broadening developmental maturity to focus on large groups, organizations, systems, and cultures is required at the "**Organizational**" level.

**Resilience**: The extent to which one can adapt to various physical, psychological, socio-cultural, and economic stressors (**Context**) and maintain focus and performance (i.e., resilience) depends on **Character**, **Competence**, and **Communication**. Resilience also depends on "**Context**" – physical, psychological, and social environments and factors that are inside and outside us, including physical and psychological well-being, the situations we face, and the extent to which we can adapt, continue, and grow.

**Situational Analysis**: This fourth element applies who we are (**Character**), what we do (**Competence**), and how we do it (**Communication**) in various situations, influenced by organizational culture and systems. i.e., when and where (**Context**).

**Leadership Behaviors and Mindsets**: The fifth element includes our mindsets and actions – that is, what (**Competence**) and how (**Communication**) – and are related to who (**Character**), what (**Competence**), when and where (**Context**).

### **5. Putting it all together**


### **6. Conclusions**

In the book, *Innovative leadership for health care* [12], we developed a conceptual structure for merging the Innovative Leadership Model and the Leader-Follower Framework to health care. This structure can be applied more broadly to leadership and followership. The section below summarizes the major points of this structure relevant to individuals, teams, and organizations.

### **6.1 Know thyself**

Both the Innovative Leadership Model and the Leader-Follower Framework emphasize the importance of self-awareness. **Leader Type** refers to core predispositions and attitudes. **Character** is more extensive than Leader Type and also includes physical and psychological makeup. Understanding our Leader Type and Character allow us to leverage strengths and help guide our development planning. These concepts also can be used to better understand and develop ourselves and others as followers and to recognize that there are times and situations when we each should lead and when we each should follow.

#### **6.2 Develop your capabilities**

**Developmental Perspective and Maturity** refer to psychological and emotional capabilities to influence less defensively, more strategically, more inclusively, and more sustainably. We each need to continually develop our knowledge and skills – **Competence** includes role-specific knowledge and skills as well as and general knowledge and skills that transcend particular roles. Additionally, **Resilience** is an ongoing practice that facilitates maintaining balance, energy, and perspective when adapting to challenges while learning, growing, and persisting. Combining advanced developmental maturity, a high degree of competence, and strong resilience allows us to influence our team members (**Interpersonal), Teams**, **Organizations**, and communities powerfully, productively, and innovatively.

#### **6.3 Evaluate your influence**

**Situational Analysis** is the process of aligning context and desired results by evaluating the self, actions, systems, and cultures. **Context** delves into the situation deeper by being aware of the physical, psychological, social, and cultural environments around us. Context occurs across four psychosocial levels: **Personal** contexts which are psychological and biological aspects; **Interpersonal** contexts which are dyadic relationships and interactions; **Team** contexts which are small groups with common goals; and **Organizational** contexts which include larger groups, institutions, and systems.

#### **6.4 Execute your influence**

**Leader Behaviors** are the observable skills and actions (Competence). One of the most essential behaviors individuals execute to influence outcomes is **Communication***.* Communication includes sending and receiving information, verbally and nonverbally, and must emphasize understanding to contribute optimally to achieve goals.

Combining the Innovative Leadership Model and the Leader-Follower Framework perspectives and their component elements provides new insights for leader and follower development. Understanding and developing each of these elements will optimize effective leadership and followership in a wide range of situations and settings.

### **Conflict of interest**

The authors declare no conflict of interest.

### **Disclaimer**

The opinions and assertions contained herein are the sole ones of the authors and are not to be construed as reflecting the views of the Uniformed Services University of the Health Sciences or the Department of Defense.

### **Author details**

Neil E. Grunberg1 \*, Erin S. Barry1 , Michael Morrow-Fox<sup>2</sup> and Maureen Metcalf<sup>2</sup>

1 Department of Military and Emergency Medicine, Uniformed Services University of the Health Sciences, Bethesda, MD, USA

2 Innovative Leadership Institute, Columbus, OH, USA

\*Address all correspondence to: neil.grunberg@usuhs.edu

© 2021 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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#### **Chapter 6**

## Spirituality Leadership Applications in Small and Medium Enterprises (SMEs)

*Ahmad Rafiki, Miftahuddin and Atika Rizki*

#### **Abstract**

This chapter aims to explore the spirituality leadership applications in small and medium enterprises (SMEs). The essence of leadership is crucial in managing the SMEs to achieve effectiveness and efficiency, although the employees would be in small number. Spirituality is not new concept and would be implemented in the modern organizations including the SMEs. The theory of spiritual leadership is also discussed together with the antecedents of spirituality in organizational behavior and its application in modernity context. Spirituality gives an impact to the performance of the organization and improves employees' motivation. An empirical study is required to see the contributions of spirituality in business operation in general.

**Keywords:** spirituality, leadership applications, SME

#### **1. Introduction**

Small and medium enterprises (SMEs) are considered as the backbone of a country because they are related to every aspect of economic and community life. SMEs are also seen as growth engines for economic and social transformation in a country. Nevertheless, there are real limitations faced by SMEs including insufficient employees, lack of financial resources, lack of experience and educational background, and lack of managerial knowledge.

The contribution made by SMEs reaching the micro and macro levels cannot be separated from the successful management of SMEs by effective leaders [1]. The leadership behavior or style of SME leaders is a key element and has a direct influence on organizational performance, competitive advantage, and the success of SMEs [2]. According to Avolio et al. [3], leadership plays an important role in organizational development and growth. Organizational leaders generally consider all business plans and decisions in an effective and timely manner. Leadership becomes more important when faced with new or changing situations. Various micro, small and medium enterprise (MSME) literatures have shown that weak and insufficient leadership skills are a major factor in the failure of SMEs. Therefore, SMEs need to develop their leadership behavior to bring the company through all situations, both calm and crisis.

Over time, the concept of leadership has been discussed and studied in a variety of different theories, approaches, and styles [4, 5]. However, there are no universally accepted concepts and definitions due to differences in organizational forms and contexts [6]. It is also not easy to define the concept given the size of the subject and the general conventions about field analysis.

Earlier Bass [7] states that the definition of leadership is closely related to the efforts of various possibilities. While Hirtz et al. [8] stated that leadership is a process by which managers for the purpose of directing their subordinates in order to work toward the company. The concept of leadership is also with stimulants and motivations that motivate people to achieve together [9]. This is in line with the statement of Hersey et al. [10] that the essence of leadership involves purpose through people.

Meanwhile, there is one concept called spiritual leadership that is rarely implemented, but it is crucial to be applied by the small and medium enterprises, which usually have a limited number of employees. How this concept could be applied? This would be questioned, and thus, this study aims to explore the application of spirituality leadership in small business. Moreover, this chapter will discuss the essence of leadership, the spiritual leadership theory, antecedents of spirituality in organizational behavior, spiritualism in modernity content, and conclusion.

### **2. Literature review**

#### **2.1 The essence of leadership**

Leadership can be seen as a group process, personality attribute, art of encouraging gratification, exercise of influence, certain types of actions or behaviors, forms of persuasion, power relations, and instruments for achieving goals [7, 11]. According to Kotter [12], without leadership, the possibility of mistakes will increase and decrease the chances of success. Leadership enables collaboration, reduces conflict, contributes to creativity, and plays a role in integrating people even if not physically. Alas et al. [13] also look at leadership in terms of individual traits, leader behavior, interaction patterns, role relationships, follower perceptions, influence on followers, influence on task goals, and influence on organizational culture. This view focuses on the relationship between leaders and followers, but not on what conditions must exist for an effective leader to emerge or develop [14].

Kouzes and Posner [15] emphasize leadership issues on leadership methods, how to build and articulate a vision and values, develop strategic awareness and approach to team building. Specifically, the five leadership practices highlighted by Kouzes and Posner [15] are as follows:


*Spirituality Leadership Applications in Small and Medium Enterprises (SMEs) DOI: http://dx.doi.org/10.5772/intechopen.102910*

Leadership practice is often associated with the applied leadership style. However, the rapid changes in the environment, communication technology, and the development of community paradigms require the application of a leadership style that is in accordance with these changes. One option in solving these problems is a transformational leadership approach. Transformational leadership is comprehensive and integrated leadership ability for individuals, groups, and organizations to produce transformations marked by changes at every stage of activity. Transformational leadership is developed to deal with change by transforming individual paradigms and values within the organization to achieve organizational goals and vision.

Transformational leadership was first proposed by Downton [16], which was later developed by a sociologist in the field of politics, Burns [17]. Burns [17] connects the role of leadership with followers. As a leader, the task of a leader is to encourage the enthusiasm of his followers to achieve common goals. Transformational leadership has characteristics that emphasize intrinsic motivation and the development of followers [18]. The aspects of transformational leadership are characterized as follows:


In addition to transformational leadership, there are other leadership styles that can also be applied in organizations including MSMEs, namely transactional leadership. Transactional leadership is known as a leadership style that motivates and encourages obedience by followers or subordinates through rewards and punishments. With this system the leader can keep subordinates motivated at least in the short term. This leadership style often occurs when someone takes the initiative in making contact with others to exchange things of value [19]. Bass [7] also revealed that transactional leadership is characterized by the provision of assessment through rewards, recognition, salary increases, and career advancement for members who perform well and vice versa, namely the provision of punishment for poor performers. Therefore, transactional leadership is often considered effective in achieving organizational goals [20].

Literally, transactional means "a transaction or exchange." Transactional leadership is concerned with exchanges or transactions between leaders for the desired result by fulfilling the desires of the leader and the expectations of followers, which involves a promise or commitment and trust. Transactional leaders also accommodate the interests of their subordinates by providing incentives, honors, and promises to subordinates who have successfully fulfilled the commitments of leaders or organizations. Transactional leadership is able to encourage followers to perform in accordance with the wishes of the leader in the hope of obtaining rewards and rewards. Transactional leadership also facilitates subordinates to recognize obligations for work and goals to be achieved [21].

Sedarmayanti [22] classifies transactional leadership into:


#### **2.2 Spiritual leadership theory**

The spiritual dimension in leadership studies produces a concept referred to as spiritual leadership. For the first time, the phrase "spiritual leadership" was used in an article titled "Spiritual Leadership: Meeting Whole-Self Needs at Work." Several studies have stated the importance of spiritual values in organizations. Spiritual values in leadership are able to motivate and inspire employees in building the vision and culture of the organization and create employee commitment to the organization, which in turn also has an impact on increasing job satisfaction and employee performance. Spiritual leadership theory represents a paradigm shift in the study, research, and practice of leadership that can expand transformational and charismatic theory through ethical and value-based perspectives. According to Fry [23], spiritual leadership includes the following tasks:


*Spirituality Leadership Applications in Small and Medium Enterprises (SMEs) DOI: http://dx.doi.org/10.5772/intechopen.102910*

There are several concepts about this spiritual leadership style [23], including:


Spiritual leadership style in building organizational culture can be done in four steps as follows:


**Figure 1.**

*Spirituality representative schemes in management literature. Source: Pandey et al. [26].*


Ubaydillah in Muajiz [24] defines spiritual intelligence with intelligence that elevates the function of the soul as an internal device that has the ability and concern to see the meaning behind the reality as it is. Spiritual intelligence is closer to the enlightenment of the soul. Heaton et al. [25] suggested a distinction between two constructs in spirituality, both pure and applied. Pure spirituality refers to an inner experience of pure self-awareness that is quiet and boundless, general praise of perceptions, thoughts, and feelings. An example of pure spirituality in Eastern culture is the technique of meditation. The term "applied spirituality" refers to the source of practical wisdom application and the result of which automatically arises from genuine spirituality's experience (**Figure 1**; and **Table 1**).

The Spirituality Research by Pawar [27] draws from various literatures that can reflect various attentions on spirituality in the workplace, namely:

	- Focusing on the definition and operationalization of spirituality in the workplace [31–34].
	- Provide a profile of the area of spirituality research in the workplace, and provide an outline guide to the direction and methodology of studies on spirituality [35–38].


• Describe the manifestation of spirituality at work in organizations [39].

#### **Table 1.**

*Methods of research on spirituality in organizations. Source: Heaton et al. [25].*

*Spirituality Leadership Applications in Small and Medium Enterprises (SMEs) DOI: http://dx.doi.org/10.5772/intechopen.102910*


It is not easy to find empirical research on spirituality. Most of the writings on spirituality still revolve around the concept and methodology of spirituality. Two empirical studies that discuss spirituality are identified. The first is the study of Kolodinsky et al. [46], and second is Muajiz's research [24]. These two studies represent research abroad and research within the country. While Kolodinsky et al. [46] conducted an empirical test of the effects of spirituality in the workplace.

Muajiz's research [24] examines the effect of auditor training, emotional intelligence, and spirituality on auditor performance at the Directorate General of Taxes. The results showed that training, emotional and spiritual intelligence had a significant positive effect on the performance of auditors either partially or simultaneously. Spiritual intelligence has the greatest influence compared with the other two independent variables. However, the three variables above only have an effect of 23% on auditor performance while 77% are influenced by other factors not examined.

Muajiz's research [24] divides spiritual intelligence into three dimensions:

	- a.Love of God
	- b.Better life motivation
	- c.Self-understanding as a spiritual being
	- d.Be bold in the truth
	- e.The feeling of always being watched by God
	- f. Patience
	- a.Contribution to the welfare of others
	- b.Family ties between people
	- c.Love for living things
	- a.Adherence to ethics and morals

#### **2.3 Antecedents of spirituality in organizational behavior**

Pawar [27] states that there are four concepts as the forerunners of the concept of spirituality in organizations that have a concern for transcendent self-interest as discussed in spirituality in the workplace. The four concepts that have preceded spirituality are transformational leadership, organizational citizenship conduct, organizational support, and procedural fairness, all play a role in the workplace. These four concepts have emerged a decade earlier than spirituality in the workplace. Workplace spirituality emerged in the 1990s, while the four concepts described above emerged in the 1980s. This demonstrates that these four ideas are pioneers of workplace spirituality, as well as providing different explanations for the research of spirituality in the workplace, and also assisting the discussion of spirituality at work in the broader study of organizational behavior. However, the four preceding concepts are not the cause of the emergence of spirituality in the workplace. Transformational leadership is the leader's capacity to inspire and encourage subordinates to accomplish more than expected and for higher internal benefits. This kind of leadership encourages followers to strive for transcendental objectives rather than self-interest and toward self-actualization rather than just pursuing stability. Below are the elements of the concept of transformative leadership [47]. The five factors are:


The term "organizational citizenship behavior" (OCB) was coined in 1983 through a study conducted by Bateman and Organ and also by a Smith study in the same year. This is based on what Organ said that measuring employee performance may not cover the overall performance that he actually does [27]. In other words, it does more than what it is supposed to do. This is done because it is driven more by an internal motivation called self-transcendence, rather than personal gains. Five aspects of OCB exist: altruism, conscientiousness, civic virtue, sportsmanship, and politeness. These dimensions represent the many ways in which workers pursue profit is not just to collect values and direct rewards for themselves. This shows that

#### *Spirituality Leadership Applications in Small and Medium Enterprises (SMEs) DOI: http://dx.doi.org/10.5772/intechopen.102910*

the concept of spirituality in the workplace seems to share the concept of employee transcendence in the OCB concept.

According to Eisenberger et al. [48], the notion of perceived organizational support reflects that organizations are concerned with employee values, wellbeing, and contributions. If employees perceive organizational support for them, then they will also provide benefits for the organization. This is called the norm of reciprocity, one party will repay the kindness of the party who has given him kindness as well. To a certain extent, this is also related to self-transcendence as well as spirituality in the workplace. This is proven by empirical results, where perceived organizational support has a significant effect on lower absenteeism and employee innovation behavior. This perceived organizational support consists of operational items referring to such things as hearing employee concerns, providing assistance when employees experience problems, and will not be replaced by other employees because there are other people who can replace them with cheaper salaries. From these indicators it appears that the organization is trying to give a sense of being part of the organizational community. Being part of an organizational community is one aspect of spirituality in the workplace and reflects self-transcendence [27]. The concept of procedural justice (perceived fairness) and the procedures used to make this procedural justice are self-interest models and group-value models [27].

According to the self-interest model, the presence of fair processes guarantees that people's personal interests and desired outcomes are safeguarded. While the group-value model argues that individuals will follow the interests of their groups in order to accept the group toward themselves so as to have a psychological impact on their identification as part of the group. This can be seen as meeting the needs of the employee community with a sense of being part of the community. Therefore, procedural fairness may be seen as a means of ensuring a sense of belonging to the community. So that procedural justice can facilitate the self-interest of employees' transcendence. Therefore, the concept of procedural justice in the study of organizational behavior is connected to workplace spirituality [27].

#### **2.4 Spiritualism in modernity context**

Spiritualism is not synonymous with religion, but has views and doctrines similar to or close to religion. It is said that spiritualism is a philosophy, doctrine, or (sort of) religion that emphasizes the spiritual aspects of everything. So the basis of spiritualism is the view that spirit is the essence of life and that the spirit is (eternal) and not destroyed by the death of the body or by body. Spiritualism is a religion for people who do not embrace it as religion formally, but at the same time emphasized that belief (spirituality) is based on belief religion.

Now when modern humans want spirituality and meanings of deeper life, they separate it from the things that are underlying spirituality, namely religious rules. Freeing spirituality of religion and science is an act of which both will lead to emptiness and inequality. Because spirituality without the ultimate goal of the Creator has only become a psychological spirituality that will arrive at a state of emptiness, calm, peaceful but no relative and practical things, which benefit others.

According to Comte [49], in the modern society, the religion becomes abandoned. But in reality this opinion is not entirely true. The modern society actually makes people are looking for spiritual values for themselves. Spirituality in fact is not only always related to religion and God, but spirituality also functions as a psychological solutions, obsession, or temporary spiritual need for some of them. Their curiosity about what spirituality is, they only use as a solution to a problem that they cannot deal with only with a ratio but requires their knowledge of their spirituality.

The high passion for the world of spirituality cannot be separated from the construction of modernity. Modernity offers a life of luxury and ease of living for humans, but this kind of life makes people seem to have lost direction and purpose of spirituality in their lives. Modernity makes them finally looking for a spirituality within themselves. This is due to a lack of knowledge about spirituality. They do not seem to find satisfaction in themselves because of their lack of spirituality even though they have a good life with an abundance of luxury and seem to have an easy life.

Spirituality does not only refer to the meaning of religion and God, but spirituality also refers to several aspects, such as referring to nature. Human awareness to restore a natural beauty, which is increasingly being eroded due to the rapid development of modern times. Human awareness of spirituality with nature will make the nature become beautiful again as in previous times. The awakening of spirituality is very much needed in this modern era in order to be able to rebuild what has been damaged and what has been lost due to the development of modern times.

#### **3. Conclusion**

The spirituality gives another view in the process of decision-making. Spiritual leadership's goal is to instill the beliefs, attitudes, and behaviors necessary to inspire oneself (intrinsic motivation) and others in order to attain a feeling of spiritual survival as well as to create vision and harmony of values through individuals, empowered teams, organizational levels and assist development in terms of psychological welfare and organizational commitment. While a spiritual leadership style refers to a person who occupies a leadership position must be able to increase the effectiveness of his leadership with high ability to use a situational style, which means a different style in different situations and conditions.

The SMEs will receive benefits on the leaders' role in their organization. Leaders could have 2–3 followers as it exists in the small business, but leaders could manage more than three followers. However, leading few people is easier than many people. In other words, the leaders in small business must be able to influence others to achieve the business goals easily and faster. The essence of leadership in SMEs is shown obviously, and it is would be an important factor to control the SMEs to obtain stability or continuity in their business operations. Leaders are not managers, thus their contributions are helpful to have better performance.

This study expectedly will add literature on leadership context as well as the spiritual leadership. Practically, the application of the spirituality leadership is real and adaptable. It is not always to be associated with the religion teachings but beyond that, it is applicable in various types of organizations particularly the small business. However, a real case in an organization and empirical study is needed to be conducted to see all elements of spiritual leadership play their respective roles.

*Spirituality Leadership Applications in Small and Medium Enterprises (SMEs) DOI: http://dx.doi.org/10.5772/intechopen.102910*

### **Author details**

Ahmad Rafiki\*, Miftahuddin and Atika Rizki Universitas Medan Area, Medan, Indonesia

\*Address all correspondence to: hahmadrafiki@gmail.com

© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Section 3
