Leadership: The Foundation Of Strategy

Leadership: The Foundation Of Strategy

Strategy execution will only be as good as an organization’s leadership.

There are probably thousands of books and millions of articles about strategy, many specifically about strategy execution. Highly capable consultants spend hours researching the “secrets” of why strategies succeed or fail. Prominent business school professors teach thousands of students on the same topic. Yet in my experience all of these theories can be boiled down to one word: leadership.

These experts tell us that strategies will succeed if everyone in the organization understands the decisions and actions for which they are responsible. Or that important information about changing competitive issues gets shared rapidly, or that decisions are made quickly and not second-guessed so that the focus is on execution. But how do these tasks get accomplished? By the leaders!

In the beginning

Most strategic planning sessions go something like this: After months of research and planning, the executive team presents a well-crafted presentation highlighting an external environmental analysis, an internal strengths/weaknesses/opportunities/threats (SWOT) assessment, a handful of strategic priorities and actions planned to carry them out, and a high-level forecast of financial expectations. The board questions and comments, the CEO responds and then the directors approve the plan. Management leaves the session with strategic directives to follow and expectations to be met.

A year later, when the company has only made modest gains in achieving the new strategies, what happens? Blame is placed, excuses are made and adjustments to the strategic priorities are made to tone down expectations. And the cycle continues for another year.

When strategy implementation fails, many companies are perplexed. The market was ripe, the opportunities attractive, the weaknesses identified were manageable and the strategies seemed well-thought-out and solid. But when the expected results don’t materialize, the board and management enter a state of pandemonium, scurrying around trying to understand what went wrong.

Strategy will not succeed in a vacuum, and it’s my experience that too few organizations have the courage to address the heart of the issue: that they started on a shaky foundation by not understanding leadership’s skills and ability to execute new strategies. This is a major oversight that dooms many strategic plans to failure.

The link between leadership and strategy

Executives who are leaders in corporate strategy create something new and innovative, have an action orientation, focus on execution and know how to craft sustainable strategies. Leaders launch new products, expand into new markets or find new ways to operate more efficiently. They create a new vision of the future of their organizations and demonstrate out-of-the-box thinking.

Good leaders also bring execution skills to strategy. I’ve often said that a mediocre strategy that is well-executed will still achieve better results than a great strategy that is poorly executed. These leaders can inspire others to achieve higher levels of performance, mostly by leading through example. Leaders communicate the vision of the company’s future state via the new strategy in terms that everyone can understand. Employees know how their job fits into the strategy.

Also, good leaders bring a focus on sustainability to strategy. Many leaders create a strategy du jour every three years, while successful leaders think about creating strategies to achieve long-term profitable growth that will last the company for 100 years. This could be a focus on consistently delivering excellent service to customers; training, developing and retaining talented employees; a corporate culture that balances work and home; finding ways to be good environmental stewards while conserving resources; and helping improve the communities in which they operate.

Bridging the leadership gap

Unfortunately, sometimes directors and leaders fail to recognize that the bigger the leap or more radical the shift in strategic direction, the larger the disparity between existing leadership’s skills, experience and capabilities and what will be required to execute the new strategies. It’s important to compare what will be required to execute the new strategies with the abilities that exist today, otherwise strategic planning is nothing more than wishful thinking.

Failing to evaluate leadership’s capabilities before launching new strategies is simply setting up the strategic plan for failure. The most obvious problem is time management, because existing executives become overburdened with additional responsibilities, which leads to poor execution of the new strategies and eventually to disappointing results. In addition, over time this pattern becomes a vicious cycle of burnout and turnover. In other words, failing to address a leadership gap is not a recipe for success.

First things first

So to ensure that strategies are executed successfully rather than slowly die on the vine, start with leadership. Don’t develop strategies in a vacuum and ignore the fact that they require certain leadership skills, experience and capabilities to be accomplished. Either create strategies that are within the existing leadership team’s bandwidth or hire leaders with the capacity to carry out strategies that are a leap.

Leadership is usually the real difference between dreaming about capitalizing on exciting opportunities and actually reaching their promised potential. Directors and C-suite leaders should always analyze the gap between what they have and what they need in leadership capabilities and time, and they must make closing the gap just as important as the strategies. Then leadership will become integrated with strategy development and will be the foundation upon which strategy execution is built.

Mark W. Sheffert (mark@manchestercompanies.com) is founder, chairman and CEO of Manchester Companies Inca., a Minneapolis-based performance improvement, board governance, and litigation advisory firm.

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