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In this video, we are talking about leadership and how to navigate organizational change through sense making, authenticity, and strong relationships.

First, let's review our learning objectives. We want to:

Understand how sense making and sense giving help leaders guide organizations through complex changes by providing clarity and shared meaning.

Explore how authentic leadership fosters trust, transparency, and long-term success in organizational transformation.

Examine how leader–member exchanges enhance relationships between leaders and followers to drive commitment and performance.

Let's start with an example. Consider Ford around 2006–2007, when the company was nearly bankrupt. Ford hired a new CEO, Alan Mulally, in 2006. He developed a new vision called "One Ford," aiming to unify the company's global operations, streamline production, and focus on core brands. He implemented cost-cutting measures, increased efficiency, and fostered a culture of collaboration and accountability. As a result, during the 2009 financial crisis, Ford was the only American automaker that avoided government bailouts and became profitable again. This successful transformation was largely due to Mulally’s new vision and how he communicated it.

Strategic change involves altering the way organizational members think and act. It is about changing current modes of cognition and action to take advantage of opportunities, cope with environmental threats, and influence stakeholders to accept a new vision. Strategic change can be realized through sense making and sense giving.

Sense making is the construction of new meaning frameworks to understand the nature of intended strategic change.

Sense giving is the process of attempting to influence others' sense making to promote a preferred redefinition of organizational reality.

There are four stages of sense making and sense giving:

Envisioning: Leaders create a guiding vision, making sense of the need for change.

Signaling: Leaders communicate (sense giving) the new vision to stakeholders.

Revisioning: Stakeholders interpret (sense making) the proposed vision, trying to understand its meaning.

Energizing: Stakeholders respond (sense giving) and attempt to influence how the vision will be realized, creating organization-wide commitment to action.

From this, we see that initiating and leading change involves leaders first making sense of the situation, then giving sense to others. This raises the question: what is leadership?

Research shows that after decades and thousands of studies, no single style or personality profile defines all great leaders. This is good because it prevents people from imitating a standard “cookie-cutter” style. Instead, it encourages leaders to be authentic.

Authentic leadership means leaders demonstrate passion for their purpose, practice their values consistently, lead with both heart and head, and establish meaningful relationships. They have the self-discipline to achieve results.

Components of authentic leadership include:

Self-awareness: Understanding how others perceive you and seeking feedback to improve.

Relational transparency: Being open and honest, admitting mistakes, and communicating authentically.

Internalized moral perspective: Aligning actions with core beliefs and values consistently.

Balanced processing: Considering others' viewpoints and being receptive to differing opinions before making decisions.

Authentic leadership benefits both leaders and followers. For leaders, it supports ethical leadership, positive role modeling, and psychological well-being. For followers, it leads to empowerment, identification, improved job performance and satisfaction, organizational citizenship behavior, increased trust, engagement, and happiness at work.

These outcomes highlight the importance of the relationships between leaders and followers. The leader–member exchange (LMX) model explains how relationships between managers and employees form and develop over time. The quality of these relationships affects turnover intentions, organizational citizenship behavior, job performance, job satisfaction, role clarity, and perceptions of fairness.

Leader–member exchange quality depends on characteristics of followers, characteristics of leaders, and interpersonal interactions (such as perceived similarity, trust, and willingness to understand each other’s perspectives).

In summary:

Leaders use sense making to help teams navigate change, providing frameworks that bring clarity.

Effective leaders show authenticity, aligning actions with values, and fostering trust.

High-quality leader–member exchanges promote better communication, collaboration, and performance, driving organizational success.

Thank you for watching.

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