1. Leadership Equation. Functional Theories of Leadership. The Firm’s Success Equation

2. The Leadership Equation 1. “Leadership equals 2. Energy (generates internal and external motivation, self and group efficacy) 3. Attachment (creates cohesion, group identity, commitment to missions) 4. Direction (establishes direction, value, missions, and goals) 5. Strategy (devises strategies to achieve goals) L = E + A + D + S (the leadership equation)” (Source: “Leadership – The Leadership Equation”)

3. The Management Equation “1. Planning (strategic, tactical, action, and contingency planning) 2. Organizing (groups, roles, procedures, work flow) 3. Leading (motivating, empowering) 4. Controlling (efficiency, quality, standards, continuous improvement) 5. Assessing (overall evaluation and changes) M = P + O + L + C + A (the management equation)” (Source:Ibid.)

4. “Leadership Control Theory in Social Systems” “1. Leadership is the significant part of the group’s control system. 2. Leadership is the effective brains of the group determining action. 3. Leadership creates synergy or the alignment of group forces. 4. Entropy is random group action (poor alignment or conflicting goals). 5. Positive and negative feedback loops can assist or hurt leaders. 6. Leadership creates optimal adaptation to the environment. 7. Leadership creates energy, propulsion, direction, and persistence. 8. Leadership can destroy a group or help it evolve in positive directions. 9. Leadership requires an interaction of leading and following. 10. Leaders motivate followers using intrinsic and extrinsic means.” (Ibid.) (Ibid.)

5. Models of Group Systems “1. Internal Process (leader is a protector of the internal capital core) (conservator, expander, resource protector, and coordinator roles) 2. Rational (leader is rationalizer of production) (producer, production engineer, and director roles) 3. Open-system (leader adjusts the group to its environment) (innovator, transformer, risk taker, and broker roles) 4. Natural systems (leader is a social psychologist) (mentor, coach, counselor, and group facilitator roles)” (Ibid.) (Ibid.)

6. The Firm’s Success Equation (FSE) The firm’s success depends on achieving “returns above their next best use”[i]. [i] Phelan, Stevan E., op. cit., p. 31 The firm’s success depends on achieving “returns above their next best use”[i]. [i] Phelan, Stevan E., op. cit., p. 31[i] Achieving competitive advantage depends on the way that firm succeeds in “employing” those unique corporate capabilities for getting so-called “quasi-rents”. The issue is that successful corporations manage not only to incorporate new resources (e.g. land, capital, labor) but, also, new capabilities. Achieving competitive advantage depends on the way that firm succeeds in “employing” those unique corporate capabilities for getting so-called “quasi-rents”. The issue is that successful corporations manage not only to incorporate new resources (e.g. land, capital, labor) but, also, new capabilities. FSE = Q(Capital, Labor, Land), where: FSE = Q(Capital, Labor, Land), where: Q = quasi-rent The function of leadership is based on building certain “technical or management sub-system which integrates diverse technologies, processes, resources and know-how to deliver products and services which confer sustainable and unique competitive advantage and added value to an organization.” (Tampoe 1994) The function of leadership is based on building certain “technical or management sub-system which integrates diverse technologies, processes, resources and know-how to deliver products and services which confer sustainable and unique competitive advantage and added value to an organization.” (Tampoe 1994)