STRATEGIC MANAGEMENT

PROJECT REPORT

Enriching the Concept of Strategic Leadership Drawing Insights from

Panchatantra and Bhagwat Gita

(23 Aug, 2015)

Indian Institute of Management, Lucknow

Submitted to:

Prof. Sabyasachi Sinha

Submitted By: Group-7, Section A

PGP30177 Hetvi Vashi | PGP30151 Nandita Gupta | PGP30153 Virat Nilangekar | PGP30167 Sakshi Jain

PGP30172 Shwetha Subramanian | PGP30236 Varsha Gidwani

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Acknowledgement

We would like to take this opportunity to express our profound gratitude and deep regards to our guide Prof.

Sabyasachi Sinha for his exemplary guidance, monitoring and constant encouragement throughout the course

of this project. The help and guidance given by him shall carry us a long way in the career on which we are

about to embark.

We also take this opportunity to express a deep sense of gratitude to the entire Gyanodaya staff for helping out

in searching for valuable information and resources, which helped us in completing this task through various

stages. We are obliged to our friends for their valuable support and cooperation during the entire period of our

project.

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Executive Summary

This report highlights the importance of strategic leadership in business performance and how strategic

leadership knowledge can be enhance by the learnings of Bhagvad Gita and Panchatantra. Strategic skills

aren’t important not only to achieve growth but also to deal with the tough times, when resources are scarce,

it is equally important to ensure that the resources are directed in the right areas. Various theories have been

developed in last few years based on the learning of Gita and Panchatantra, five of such theories are talked

about in the report.

1. Authentic leadership is a term coined for self-actualized individuals who are transparent in their act, their

leadership style encourages their followers to not only follow but to be their own leaders. Jack Welch,

made GE reach great heights and brought a lot of positive and radial reforms under his leadership.

2. Spiritual leadership derives its concept from Bhagvad Gita where Krishna teaches Arjun how to build

one’s character on three foundations of morality, stewardship and community. South west airlines have

adopted the concept of spiritual leadership through various measures.

3. Transformational leadership style focuses on the potential of the team members and motivating them so

as to achieve the goal. Bhagvad Gita requires us to think, act and influence others in ways that promote

the enduring success of the organization.

4. Servant leadership, highlights the qualities of a good leader in giving service to others, taking all aspects

and stakeholders into consideration thus promoting sense of community and delegating power and

sharing risks with team members.

5. Upper Echelon theory highlights the importance of top management in company’s performance.

Bhagvad Gita sites the how the directed leadership of Pandavas led them to their desired results while

Kauravas leadership resulted in their own destruction. Strategic leaders acts in way to balance the

tension between success in day to day tasks and success in long term.

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Contents Acknowledgement ............................................................................................................................................. 2

Executive Summary ........................................................................................................................................... 3

Introduction ........................................................................................................................................................ 5

Spiritual Leadership Theory............................................................................................................................... 7

Transformational leadership .............................................................................................................................. 8

Servant Leadership Theory .............................................................................................................................. 10

Upper Echelon Theory ..................................................................................................................................... 12

Conclusion ....................................................................................................................................................... 14

References ........................................................................................................................................................ 15

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Introduction

Strategic leadership capabilities include: Absorptive capacity, capacity to change and managerial wisdom

influences strategy. These capabilities helps in undertaking strategic leadership tasks like determining the

grand vision, developing, maintaining and exploiting the competencies, developing human capital,

sustaining effective corporate culture, emphasizing ethical practices and establishing strategic control, all

this helps in achieving sustainable competitive advantages.

Hindu mythological writing Bhagvad Gita mentions the concepts of self-leadership (Self exploration &

development) while stories of Panchatantra gives insight of all the above three mentioned strategic

leadership capabilities. Panchtantra stories inculcated these basic values in Indians since their childhood.

They teach us the basic sense of self control and self-actualization. They also teach us to believe in oneself,

set realistic goals and taking the blame upon our self in case things go wrong.

When an individual works in an organization, several aspects of corporate structure and functions tends to

undermine a person’s moral responsibility. Organizational culture and norms, commitment goals and

pressure to conform makes the exercise of personal integrity very difficult. In such a case moral principle

provide a conceptual framework guiding people in making a moral judgement. Bhagvad Gita also underlines

a fact that person has a choice in action but never in its outcome. Many fraudulent acts has taken place in

industry because of the immoral behavior of their leaders, eg. being Satyam is a company which had won

many awards for corporate governance was blamed of forging the bank statement and brining the World

Bank officials. Enron and WorldCom, the telecom behemoth, shocked the business world with their

unethical and illegal operations.

Many leadership theories of present are inspired from the preaching’s of Bhagvad Gita and Panchatantra.

Few of them are discussed below:

Authentic Leadership

Authentic leadership is a relatively recent term coined for the self-actualized individuals well aware of their

weaknesses, strengths and their emotions towards their colleagues and followers. They act in a transparent

manner at all times, whether in public, in small groups or with individuals. They are never afraid of

admitting their fears and mistakes and exhibit a very positive leadership style. This leadership style is

gaining popularity because it has been observed that the ethics and behavior of a leader greatly influence and

are readily adopted by the followers. These leadership concentrate on two aspects, encouraging the followers

to perform well, as well as encouraging them to not just follow, but be their own leaders.

Authentic leadership encompasses both transactional as well as transformational components of decision

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making of leaders and followers who conduct ethical and moral decision making. There are 3 major kinds of

values which have been identified as relevant to probing authentic leadership. They are:

Moral Values: kindness & selflessness.

Modal Values: morality, truthfulness, dependability & reliability

End Values: safety, fairness, impartiality, and community

The stories of the likes of the Lion and the Rabbit, Fox and the lion etc. in Panchatantra teaches us that the

leader should be impartial and should not think highly of himself, otherwise he can be easily fooled, leading

to not only his but the organization’s downfall as well.

Researchers have identified four major behavioral characteristics of authentic transformational leadership

style. They are also known as the “4I’s”, and are mentioned below:

Idealized influence

Inspirational motivation

Intellectual stimulation

Individualized consideration

The following figure summarizes the effect of the moral and ethical behavior in terms of the 4Is and 3 values

of the leader on his/her followers. The leader’s values, emotions and actions affect that of the followers’ and

ultimately, affects the group ethics. This in turn, again gives a boost to the leader to act and encourage an

even wider team and colleagues, thus ultimately resulting into overall gain.

Under the leadership of Jack Welch, General Electric reached great heights and became one of the most

successful companies in the world. While Jack Welch, himself brought a lot of positive and radical reforms

in the company, at the same time, he always encouraged his employees to come up with new ideas, welcome

changes, think universally, and believe in delivering best results. This was evident as many of the GEs

employees later became CEOs or headed top positions in other businesses.

Figure 1 Authentic leadership model

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Spiritual Leadership Theory

Since the 1980s, a lot of attention has been paid to developing new theories that have paid attention to the

emotional, moral and subjective values and qualities such as faith, patience and humility which had thus far

been ignored in leadership theories. Spiritual Leadership leads to improvement of morale, reduction of stress

and leads to increased productivity, employee retention which ultimately leads to better performance at work,

more efficiency and higher stock price.

Figure 2 The Spiritual Leadership Model

Although this is a newly developed field, the concepts have been ingrained since times memorials in Indian

society, as children through Panchatantra that imparts moral values and later, through Gita that teaches us to

apply spirituality in our lives. It defines spirituality as Deivi Astras that is a moral code of values such as

letting go of one’s ego, always keeping the goal in mind, working towards the general good. The application

of these techniques enable self-governance and a workplace were the team can function freely without the

leader thus leading to broad accountability. The teachings of the Gita thus similarly redefine leadership. In

the Gita, Krishna inspires Arjun to even fight against his role models, teachers and family though preaching

of spiritual values.

In the Gita, Krishna teaches Arjuna how to build one’s character and also the root cause of failure and

methods to avoid it. The battle of Kurukshetra is symbolic of the inner conflict in man. Krishna outlines

qualities of a good leader and human – to be merciful, obedient, truthful, equitable, magnanimous,

mild-mannered, clean, simple, charitable and peaceful. He should not be greedy or possessive but instead be

steady and determined and free of the six bad qualities (Kama, Krodh, Lobh, Moha, Mahd and Mathsariya.

(Bhagvad Gita, Chapter 16, Verses 1-3). Kurukshetra is also about mind control. Every manager or

employee, is fighting his own battle, his own Kurukshetra. The Gita helps us to regulate our senses, control

our minds and gain spiritual strength.

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The three foundations for spiritual leadership as defined by Gita are morality, stewardship and community.

Leading organizations such as South West Airlines etc. have responded to the emergence of spiritual

leadership by measures such as increasing the awareness on religious diversity, providing spiritual counsel

to employees, and conducting yoga, feng shui and taichi classes and other stress management practices and

promoting charity by allowing for volunteer activities or granting leave for charity work (Cash & Gray,

2000). The Gita provides a clear guidance on how to implement Spiritual Leadership as the steps taken by

Krishna to inspire Arjun

• Krishna embodies in Arjun the need to win the war to win over evil as his ultimate goal. The first step of

spiritual leadership is to incorporate a vision embedded in a corporate culture and ensure widespread

acceptance of the vision amongst all stakeholders. The Gita tells us to develop a visionary perspective in

the work we do. It tells us to develop a sense of larger vision in one’s work for the common good.

• Commitment to becoming one’s best self. This requires renunciation of one’s egos and desires. The Gita

advises us to renounce all personal desires and fight free from all mental fevers. This leads to dedication

and results in the right action being done with a sense of complete detachment. This according to Gita

which will lead to killing of Ego and one becoming one’s best self.

• This automatically leads to the third step of doing well for the larger community and a commitment to

serving others. The larger good would not only include the shareholders but also the less fortunate as

part of CSR activities of the firm. This leads to a sense of mutual trust and concern for not only people

and but also organizational goals and the vision.

• This leads to a work environment that encourages openness, fairness, individuality and creativity;

leading to an innovative and creative workspace. This creates an atmosphere of interpersonal integrity

where no member is threatened by the others. This also leads to encouragement of group unity,

teamwork and sharing all of which leads to achievement of the ultimate goal of the organization

Transformational leadership

Transformational leadership involves building team and developing people who are motivated and skillful

enough to achieve organization’s objectives and thus achieving growth. What helps transformational

leadership to stand out from rest of the leadership styles is that it is based on the belief that though goals are

important, the means are more important and focusing on means deployed to achieve goals would help

develop sustainable culture.

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Transformational leadership is about delivering extraordinary performance with the help of ordinary group. It

emphasizes on the importance of ethics and values while pursuing the goal. A transformation leader develops

his team members such that he leaves rich legacy behind. James MacGregor Burns describes transformational

leadership as a leadership style that identifies potential of the team members and search for their motivations.

They show trust and confidence in their team. Such leader achieves extraordinary performance from team

members by tying follower’s motivation with organization’s goals.

According to Bass and Avolio (1994) transformational leadership philosophy is based on four pillars.

1) Inspirational Motivation: This principle emphasizes importance of encouraging activities that provide

meaning to the followers. It aims to create team spirit, enthusiasm and optimism in team members. It implies

helping team members understand the vision and emphasizing why it is important to achieve the goals.

Vision inspires team members and thus get them committed to shared goal of the organization.

2) Idealized Influence: It describes performing activities, accumulating knowledge and following principles

that result in follower’s admiration and respect. It emphasizes moral and ethical behavior on the part of a

leader. Such leader derives its charisma from follower’s trust in the leader’s character and activities.

3) Intellectual Stimulation: it implies encouraging team members to come up with new ideas. It focuses on

finding creative solutions to issues. It develops sense of personal responsibility and creates interest in the

task at hand.

4) Individualized Consideration: It implies giving importance to each member of the team. It is important

for the leader to take into consideration team member’s needs and growth. The activities should be planned

in such a way that each team member feels value addition. This character requires leader to have high

emotional quotient.

Transformational Leadership and the Teachings of Bhagvad-Gita

Bhagvad Gita provides framework for building up mindset of effective leader. The Guna leadership theory

from Bhagvad Gita explains that there are three Gunas

Sattva (awareness): It emphasizes purity of character. It is free of evil. This guna implies wisdom,

goodness and love for knowledge.

Rajas (dynamism): Rajas implies ego, restlessness, craving, greed and passion.

Tamas (inertness): It implies delusion, ignorance, heedlessness, inertia and confusion

Guna are fundamental constituent of human being. Transformational leaders have dominant Sattvic guna.

For an individual, it is possible to develop Sattvic nature. Comparison of transformational leader

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characteristic and Sattvic performers reveal that

1. Transformational leaders work as agents of change. Bhagavad-Gita states that the world is in a state of

constant flux and change is permanent. So the Sattvic leader has to accommodate such change and not

follow the existing practices without reason.

2. Transformational leaders are courageous. These leaders take risks in order to make sure that objectives

are achieved. Fearlessness is an essential virtue that adorns these individuals. Bhagavad-Gita state that

Sattvic humans perform their actions without any fear.

3. The transformational leaders believe in their team members. Bhagvad Gita states that all living beings

have divine spark in them. Sattvic person knows this and hence respects all human beings. He belived

every person has something good to offer and it can help in achieving the shared objective.

4. The transformational leaders have strong minds. Sattvic persons cast off their weakness of heart when

performing duties. They should remain strong in the face of the odds.

5. Perform duty and set an example for others to follow. The concept of duty is given great importance in

the Bhagavad Gita. Duty in the organizational context goes beyond contractual agreement in the

employment relationship. Both employer and employee need to understand their duties in order to create

good working relationship and harmonious industrial relations.

6. Self-duty: The Bhagavad-Gita stresses that it is important to control mind and regulate one’s behavior.

Before leading other, the person would lead his activities and behavior effectively. It involves managing

emotions and self-control. It is necessary to know one’s duty and be clear about one’s vision.

Servant Leadership Theory

Servant leadership theory has gained interest in recent years. Many organizations have employed servant

leadership principles for organizational management. The most important priority of servant leadership is

service to others, taking all aspects and stakeholders into consideration thus promoting sense of community

and delegating power and sharing risks with team members.

To understand this theory in more detail we take a look at founding principles of the theory.

1. Service to Others: This implies leader taking role of servant when communicating with its followers.

This principle believes that effective team work can be achieved by encouraging collaborative (helping)

approach to the task instead of exercising power or actions which are taken in self-interest. By

displaying humility, the leader tries to bring out greatness in others.

2. Holistic Approach to Work: This principle stands for the belief that work exists for person as much as

person exists for work. It promotes that leader should encourage followers by encouraging them to show

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full potential. This can be achieved by effective sharing of power and risks. This activity also creates

trust among team members.

3. Promoting a Sense of community: Servant theory argues that only collective efforts of all team members

can achieve organizational goals. Hence it is necessary to establish feeling of unity among team

members. Servant leader should take prime role in developing such ‘community’ culture.

4. Sharing of Power in Decision-Making: This activity encourages followers to realize full potential. Trust

of the leader in team member is a great motivator. It creates sense of responsibility. An effective servant

leader nurtures participatory behavior in the followers and help them become servant leaders.

To effectively execute actions based on above principles the servant leader should have following

characteristics.

1. Listening

2. Empathy

3. Healing

4. Awareness

5. Persuasion

6. Conceptualization

7. Foresight

8. Stewardship

9. Commitment to growth of people

10. Building Community.

Any leadership theory should be supported with empirical evidences. The theory has come under fire from

academicians due to lack of empirical evidences. However, we find some evidences supporting this theory in

the Indian mythology. In Mahabharata, Sri Krishna could have won the war by himself. However, he chose

to become charioteer of Arjun and guided him throughout the war. We believe this is the most befitting

example of effectiveness of Leader becoming a servant. By clarifying moral and physical doubts of Arjun

Sri Krishna helped him realize his true potential. In Bhagvad Gita, it has been said that Work is necessary for

all human beings. Humans can’t exist without work. However, it is necessary to perform work as a duty and

not because of self-interest. This argument in Bhagvad Gita also supports the principles of servant theory.

Another key characteristic of servant leadership is a leader’s humility. Srikrishna was not concerned with

followers receiving credit for winning the war and establishing moral and dharmic empire. By enabling his

followers, delegating responsibilities to them he made them important players in achieving the goal. Having

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cultivated ideal qualities in the followers Lord Krishna ensured good legacy after him. Essentially by

assuming position of servant to the followers, it became easier for Krishna to transfer knowledge and

guiding followers when they face moral issues in practical scenarios. Such was the instance when Arjuna got

demotivated and Sri Krishna guided him.

Figure 3 Role of servant leadership in knowledge creation

Upper Echelon Theory

The basic concept behind the upper echelon theory is that every firm is mere a reflection of its top

management. It reflects the background, knowledge and expertise of the top people in the firm. The different

situations of the firm such as opportunities, threats, alternatives, outcomes of the decision are seen and

judged by the top management from their individual lenses. This brings a bias in decisions for the firm based

on the values, principles, experience and personalities of the top managers. This theory is very useful for

examining effects of top management team’s composition and diversity in knowledge onto the outcomes of

decisions taken. This leads to an inference that to understand the strategy one need to understand the

management first.

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Figure 4 Concept of Upper Echelon Theory

(Source: Adapted from Hambrick and Mason (1984), Finkelstein and Hambrick (1986))

This theory shows that to have an effective and strategic organization the top management should consist of

the people with best knowledge, diverse functional expertise, moral values and ethics. This leads to the

concept of having diverse top management. Cognitive diversity leads to profitability.

The knowledge territory of upper echelon theory can be characterized as fragmented and unchartered owing

to the heterogeneity and behavioral diversity of the executive people. Organizations that wish to attract,

retain, and benefit from diverse talent of its people should always begin with increasing the diversity of their

senior management. Study shows that certain firms after restructuring their top management increasing the

diversity experienced a better performance. This leads to certain characteristics that a person in top

management should have.

1. Directed leader

2. Knowledgeable

3. Action oriented

4. Ethical

5. Having a long term vision

6. Influencing

7. Motivating

8. Modest

The top management should have the long term vision knowing the strengths of every team member. It

should give the credit of success to all the members in the team. It should be able to take the right decisions

at the right point of time. It should be able to influence the right working culture of the organization having

fearlessness, self-control, honesty, accountability, modesty, absence of greed, envy and pride, fairness etc. It

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should think about not just affecting individual life but society as a whole.

In Mahabharata, the ultimate leader was Krishna who envisaged the victory of good over evil which was the

final outcome of the war. Also, leaders such as Pandavas and the diversity of their expertise helped them win

the war. On the other hand, Kauravas were full of vices and this was reflected in the strategic moves that

they took. The directed leadership of Pandavas led them to their desired results while Kauravas leadership

resulted in their own destruction. Pandavas with the directed leadership of Krishna and their own diverse

expertise could win the war.

Conclusion

All these strategic leadership theories discussed above clearly shows the importance of morals and ethics in

achieving success in business. From the age of Mahabharata, where Krishna guided Pandavas for a win over

Kauravas and Panchatantra stories, which are more than two thousand years old, all emphasizes the

importance of strategic leadership qualities for ensuring the balance between short term as well as long term

success. Researchers and academicians have adopted all these learnings from Bhagvad Gita and

Panchatantra and developed theories for today’s business leaders to imbibe and guide their followers.

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