Leadership, Governance and Strategy
What you must understand
SBL tests judgement, not recall. For leadership, know the difference between transactional leadership (targets, rewards, management by exception) and transformational leadership (idealised influence, intellectual stimulation, individualised consideration). Be able to match a leadership style to a scenario: a turnaround needs direction-setting and decisiveness; a knowledge firm needs empowerment and distributed leadership. Understand stakeholder mapping (power/interest grid) and Mendelow's matrix for engagement strategy, and the cultural web for diagnosing whether strategy fits culture.
Governance concepts: agency theory and the separation of ownership from control; the board's role in strategy, oversight and accountability; executive vs non-executive directors and independence; board committees (audit, remuneration, nomination); and the principle of comply or explain. Know the difference between conformance (governance) and performance (strategy) roles of the board.
Strategy: the rational planning model versus emergent strategy; Porter's generic strategies (cost leadership, differentiation, focus); Ansoff's matrix; and the SAF framework (suitability, acceptability, feasibility) for evaluating strategic options.
Traps
- Confusing governance failure with poor performance: a profitable company can still be badly governed.
- Recommending a cost-leadership strategy to a firm with high fixed costs and a premium brand.
- Describing a leader's style without linking it to the scenario evidence.
- Ignoring stakeholder resistance when evaluating feasibility.
Worked rule of thumb
When asked to evaluate a strategic option, run SAF in order: does it fit the environment and capabilities (suitability)? Do returns, risk and stakeholder reactions make it acceptable? Can we resource and deliver it (feasibility)? Then recommend, with a reason tied to the case.