Strategic Leadership And Implementation Of Strategy In Commercial Banks In Kenya

The high failure rate in strategy implementation points to the fact that strategy implementation is not an easy task, and strategic leadership is one of the key drivers of strategy implementation. The banking sector in Kenya has over the past decade performed well, a feat attributable partly to effective regulation and partly to effective strategy implementation in the banks. The study aimed at investigating the influence of strategic leadership on the effective implementation of strategy in the commercial banks in Kenya. To achieve this, a positivism philosophical framework was adopted. The research design applied was causal-explanatory in nature. The main theory adopted for this study is the Strategic Leadership Theory. The study used both primary and secondary data. Primary data was collected, using a self-developed, self-administered questionnaire, from a census that entailed 406 respondents comprising the strategic leadership in the 40 commercial banks. The primary data was collected directly from the respondents using the survey-monkey tool by sending an email with the questionnaire, tracking the responses and following up with reminders to the non-responsive respondents. The secondary data was collected from the Central Bank of Kenya website using the secondary data collection tool. For primary data, a total of 194 survey responses were received, giving a response rate of 48%. 

The study found that each of the seven actions that characterize strategic leadership had significant influence on strategy implementation in the banks in Kenya. The seven actions of strategic leadership studies were determining strategic direction, maintaining and exploiting core competencies, developing human capital, developing social capital, sustaining an effective organizational culture, emphasizing ethical practices and establishing balanced organizational goals. The study also examined to what extent environmental complexity moderated the relationship between strategic leadership actions and the effective implementation of strategy in the commercial banks in Kenya and found that none of the constructs of environmental complexity had a significant influence on the implementation of strategy. The key conclusion of this study is that Strategic Direction and Organization Controls which explain 37.7% of the variance, significantly influence Strategy Implementation in the Banks in Kenya, with Core Competencies, Human Capital, Social Capital, Organization Culture, and Ethical Practices being insignificant. 

Based on the findings, the study recommends that banks should have the vison/mission/strategic intent clearly defined and understood by staff through involvement of all, use incentive compensation to align action to strategy, facilitate meaning making of changes to achieve envisioned future through communication, avoid too much commitment to the status quo and go for change and calculated risks, and hiring CEOs whose personality is inclined towards strategic change, to determine the strategic direction of the bank.  

On core competencies, the study recommends that the banks should encourage sharing of resources across units in Kenya and outside, build new capabilities into core competencies, leverage their resources, have core competencies understood at strategy formulation and emphasized at implementation. On human capital, the banks should leverage human capital resources to create competitive advantage, involve leaders in the learning experience whether failure or success, employ effective training and development programs to build the knowledge and skills to perform leadership tasks, during downsizing the banks should enhance investment in training and development. On social capital, banks should invest in strong social capital to enable pursuit of new opportunities while reinforcing existing advantages, build relational capital which is essential for regionalization and develop managerial ties. 

The study recommends that the banks develop a culture that is unique hence difficult to imitate, that encourages strategic thinking and pursuit of entrepreneurial opportunities, that is sensitive to ethical considerations, and that complements its chosen strategy. On ethical practices, the study recommends the need for mechanisms to reward acts of courage in reporting wrongdoing, developing codes of ethics that must be enforced, encouraging unit members to exhibit collective moral emotions and acting collectively ethical, resisting temptations to act unethically for short term personal benefits, and embracing stakeholders‘ ethical concerns in decision making process. On organization controls, the study recommends the banks incorporation of sustainability issues in their strategy formulation process, creating a balance between strategic control and autonomy for the various units, and use of a strategic tool like Balanced Scorecard to achieve balance between strategic controls and financial controls.