Companies love to label or typecast leaders over time. As an executive coach and former CHRO, I wish I had a dollar for every time we labeled a senior leader as not being “strategic” enough to get to the next level. Some consultants often use elaborate assessments to create a false sense of precision of their potential. Often when succession planners and executive assessment pros cannot articulate improvement opportunities, we default to the generic, “he lacks a strategic mindset” excuse. Strategic focus is the most mystical and illusive leadership capability in the corporate world, but we need to better understand, define, and develop what it means when we say our leaders need to be more strategic.
In early 2016, leadership research firm DDI evaluated more than 15,000 assessments they administered over the past several years and "strategic direction" was listed among the weakest areas for CEOs, executives, and senior leaders. Similarly, think-tank leadership firm Center for Creative Leadership (CCL) published a report in 2015 entitled The Leadership Gap and outlined “strategic planning” as one of the greatest weaknesses in leaders today.
This research mirrors client experiences we have witnessed. Not surprisingly, we have a client now in which we are assessing strengths and gaps for the top executives in the company, and you guessed it—strategic focus is one of the largest gaps in addition to building organization talent. Clearly, research and practice demonstrate that senior leaders need to understand strategic leadership. More importantly, to help them develop this competency we need to demystify what this means.
What Is Strategic Leadership?
To be strategic, it does not mean you must be a Harvard M.B.A., an out-of-the-box thinker, the company contrarian, or that you cannot execute and deliver business results. Strategic leadership is truly a mixture of skill, behaviors, and perspectives. It is a balance of science (e.g., data analytics) and art (e.g., curiosity). From our experience, strategic leaders demonstrate the following:
- Curiosity for external trends, patterns, how money is made, and about people
- Challenges status quo and poses disruptive questions
- Continually weighs short-term and longer term decisions and implications
- Takes a broad perspective and considers multiple options
- Regularly balances the interests of all stakeholders such as investors, customers and employees
- Maintain self-awareness of personal strengths, weaknesses and behavioral tendencies
At the end of day, thinking and acting strategically is the ability to use current trends and information to inform future outcomes as well as identify and decide on trade-offs for competing needs to move a business forward. Agility as a leader is very important. It is unreasonable (and maybe ineffective) for anyone to operate only at a strategic level. Leaders do need to execute plans and deliver results!
Research shows that successful business leaders effectively flex from strategy to tactics. One client describes strategic leaders as those who can "zoom in" and "zoom out" easily. We know that driving execution is a greater predictor of profitability and growth than any other leadership behavior. To navigate today’s unpredictable and volatile world, however, having a results orientation alone will not guarantee long-term success.
Why Is Strategic Leadership So Important?
In addition to being a catch all for labeling leadership gaps that we do not understand, there are two contributing factors as to why thinking and acting strategically has become more important and prevalent: Business volatility and lack of development.
First, a significant contributor to the need for more strategic behaviors in leaders are the dynamic environmental factors leaders face today. Economic volatility, uncertain markets, global competitors, rapid changes in technology, and evolving workforce expectations have made leaders jobs more unpredictable and difficult than ever. One formula for business success will not work, therefore agility is critical.
We have seen most of our clients abandon five-year strategic plans and look at the world through a 24-month lens. Leaders are increasingly expected to identify new opportunities, options and alternatives to environmental circumstances they may only vaguely understand. No scenario exists where business heads merely execute in a predictable environment and be successful. Rather they are forced to evaluate a deluge of incomplete, sometimes contradictory information to identify new markets and products that do not even exist today for customers who don’t even know they need them yet.
A second factor that contributes to the gap that exists today is the current approaches we use to develop and prepare leaders. Let’s be honest, we reward and promote the typical high potential that is smart and gets results. If I am the highest performing sales person, I make more money or become a manager. If I am the most efficient accountant and find the greatest productivity gains, I might become a controller. The programmer that develops software that is a big seller often becomes the IT manager.
We are not identifying, recognizing or promoting strategic thinking early in people’s careers. Past performance in execution is not a great predictor of future performance in leading strategically. Many leadership academy companies have excellent management training programs that focus on leading people, global economies, and financial acumen. You will find little formal development for these aspiring executives on thinking strategically, decision-making agility, anticipating change, developing alternatives, or market trending.
We assess and develop future leaders on managing through predictable times. In corporations today, we all too often wait until employees are in the c-suite or have been identified as a succession candidate then we cast the leader as great executer but is not strategic enough. Didn’t we reward and promote this person earlier on the results they achieved?
Identifying Strategic Leadership
When assessing and developing executives to build their strategic capabilities, we tend to focus how well they can apply those previously described behaviors across four broad categories:
Market. How do you stay current on market, technology, regulatory, and global trends? Where have you incorporated data analytics to identify patterns to anticipate the future? Have you identified key market drivers? Do you have a realistic view on competitive strengths, gaps, and movements?
Business. Do you know how and where money is made in your value stream? How are you leveraging various functions across the organization? How do you weigh and make investment tradeoffs? How well do you understand levers to pull to drive growth or profitability?
Organization. Do you understand the capabilities required for your business? How are you building those capabilities? How are you personally invested in developing key talent in the organization? How are you aligning the organization?
Self. Do you truly know your strengths and weaknesses? How do you seek feedback from others? How do you compensate for gaps in expertise? Are you continually trying to develop your skills or expertise?
While becoming a true strategic leader is a tall order for many aspiring executives, and even current CEOs, it is critical given the unpredictability and complexity markets we operate within—whether globally or locally. Companies no longer develop five-year strategic plans due to the volatility of a variety of economic, social, and political factors. This places a greater premium on strategic behaviors than elaborate vision statements and strategic plans. Today we must we clarify what we mean and better prepare our leaders to navigate the uncertain future.
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