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In his book, Operations Management, author William J. Stevenson indicates that modern business organizations have three, basic functional areas: finance, marketing, and operations. A fundamental association exists between these functional areas resulting in significant interfacing and collaboration. This effort involves exchange of information and cooperative decision making (Stevenson, 2011). Indeed, Roy indicates that, “the rationale of having these functional areas work together is the increased likely hood of developing a plan that will work and one that everyone can live with” (Roy, 2005 pg 154). The interaction between functional areas is a necessary dynamic which helps overcome information processing challenges and lends itself to both formal and intuitive strategic decision-making, particularly when variables are capricious, and facts are limited and clearly don’t point the way to go, This is also true because, as , Sadler-Smith, Burke, Claxton and Sparrow indicate, intuitive strategic decision-making varies with job level; senior managers are typically more intuitive than middle or lower-level managers (Hodgkinson, Sadler-Smith, Burke, Claxton & Sparrow, 2009).  For example, an interface between marketing and operations may exist to provide a business with an understanding of its markets from both perspectives. Research by Ruekert and Walker, Jr. support this assertion, and led to the development of their theoretical framework for examining how and why marketing personnel interact with personnel in other functional areas in planning, implementing, and evaluating marketing activities. Their model demonstrates that effective performance of the marketing function requires a variety of transactional flows between functional areas. These flows include resource flows of a primarily financial nature, work flows, and assistance flows. Work flows refer to the parts of a specific function being divided between the marketing department and other functional areas, while assistance flows describe technical and staff services (Ruekert & Walker, Jr., 1987).  The model succeeds particularly in the area of interrelated functional decisions such as where to divide the market into segments, which segments to target, what goods and services to offer each segment, what promotional tools and appeals to employ, and what prices to charge all reflect the marketing strategies.

With respect to the research above, it’s been my experience that the interaction between the different functional areas of an organization is often contentious, but equally vital to the success of decision-making process. Simply put, a marketing department reflects the interests and wishes of clients while also monitoring and analyzing emerging challenges posed by competitors and opportunities and threats related to trends in the external environment. All of these factors, ultimately, help shape the strategic goals of an organization. Operations helps determine the feasibility and the means with which to meet these strategic goals based on the resources available while the financial segment provides a forecast of how much it will coast to reach the goals. In this way, all functional areas play a crucial role in influencing strategies formulated at higher levels in the organization.

Hodgkinson, G. P., Sadler-Smith, E., Burke, L. A., Claxton, G., & Sparrow, P. R. (n.d.). Intuition in organizations: Implications for strategic management. (2009). Long Range Planning, 42, 277-297.

Dr. Roy, R. N. (2005). Modern approach to operations. Daryaganj, New Delhi : New Age International (P) Ltd., Publishers.

Ruekert, R. W., & Walker, Jr., O. C. (n.d.). Marketing’s interaction with other functional units: A conceptual framework and empirical evidence. (1987). Journal of Marketing, 51, 1-19.

Stevenson, W. (2011). Operations management. (11 ed., Vol. 148). New York: McGraw-Hill/Irwin.

Transformational leadership, as defined by Bernard M. Bass, is leadership based on “stimulation and inspiration of followers to achieve both extraordinary outcomes and develop their own leadership capability” (Bass & Riggio, 2005). This is in contrast to the more traditional transactional leadership model, which relies on an exchange of one thing for another; i.e. hard work for praise and/or compensation. The transformational leader accomplishes inspiration by, “responding to individual followers’ needs by empowering them and by aligning the objectives and goals of the individual followers, the leader, the group, and the larger organization” (Bass & Riggio, 2005). In order to accomplish performance improvement and, ultimately, true innovation, the transformational leader must establish an infrastructure, or foundation, which elevates the strategic capabilities in an organization. This is increasingly relevant in healthcare, where organizations are feeling the pressure of the transformational imperative and must respond to constant change. It’s been my personal experience, and I’m sure there is research to support this, that simply rewarding an individual for their efforts results in moderate outcomes. However, when employees are empowered to make decisions and be an integral part of the change process, there is of a sense of ownership implied and the process improvement is much more rapid and efficient. For those that are versed in transactional leadership, this approach can be difficult to adopt because it is a break from the “my way or the highway” mentality. This is important, particularly in healthcare, where the emphasis now is moving to a more team-based approach driven by metrics.

References

Bass, B. M., & Riggio, R. E. (2005). Transformational leadership. Psychology Press.