Strategic Leadership: A Synthesis
Over the last few weeks, I’ve been sharing insights from my sabbatical project on strategic leadership. Here—partly as a test to myself—I wanted to synthesize the lessons on how organizations can maximize their chances of achieving their strategic goals.
Here it goes:
In the academic literature I’ve read, what’s most often cited as the fundamental strategic concept is creating a competitive advantage—some value that your organization, based on a hard-to-replicate combination of activities, can provide to customers that other organizations cannot.
It’s somewhat obvious, but worth underscoring that the competitive advantage should be on a dimension that matters to customers, since they are the ones who provide resources to the organization through their decisions. And what matters to customers—both functionally and emotionally—can only be known by continually observing and asking them.
The best organizations apply a similar focus to the value they’re providing to employees and key suppliers, who also must choose them over other opportunities. The leaders of these organizations know it will only succeed when everyone who has to commit their time or resources wants it to succeed.
The entire thesis of HBS professor Felix Oberholzer-Gee’s book Better, Simpler Strategy is: figure out what customers, suppliers, and employees value, and deliver that. Honestly, one could do far worse!
Assuming an organization's competitive advantage does not come from an economically or legally privileged position—e.g., monopoly, patent protection, having captured land that happens to have immense oil reserves beneath it—competitive advantage is derived from and is sustained by the choice to be great on the dimensions that matter, even at the expense of mediocrity in other areas.
It’s impossible to do everything, or do everything equally well.
For an organization to make those tradeoffs effectively, it takes more than a decision of the CEO and senior team; rather, it takes everyone in the organization to make aligned and coherent choices that support the main strategy. At minimum, that means avoiding tactics that work at cross purposes (for example, one team rowing the boat East with another rowing West).
Ideally, teams would make reinforcing decisions. My team’s actions make your team’s actions more effective, and both of our actions support excellence on the critical capabilities.
Unless the organization is a dictatorship, reaching a state of alignment is easier when its routines go beyond the tactics of coordination—the whats of prioritization and resource planning. Optimally, these routines also drive ongoing alignment on the whys of the strategy—e.g., the logic of how customers’ needs, what’s happening in the market, and what we’re guessing will happen in the future translate to what we need to do today.
When everyone understands that, they’re much more likely to effectively implement the strategy with creativity and empowered initiative because they intellectually and emotionally support it. This common understanding has the added advantage of reducing the need for senior leaders to tightly monitor, control, and badger people to stick to the strategy.
Simple communication supports those goals.
Strategy is, fundamentally, a series of guesses about the future. Due to the nature of guessing and because the facts about the world that inform our guesses change over time, strategy processes must be dynamic and rigorous. The most effective strategy processes aim to test assumptions, to generate new insights about the customer, the market, and the organization, and then to spread those insights across the organization.
This is more likely to happen with operational routines that are themselves strategic in that they trigger rigorous reflection, enable robust conversation across divisions and levels of the organizations, and are forward-looking.
Having a simple plan also makes it easier to update the strategy as the organization learns or as the unexpected happens.
Because the world is changing, and organizations need continual investment in the capabilities that create their competitive advantage, organizations shouldn’t be so tightly managed as to hinder experimentation. The mavericks need protection, and people need the time and space to tinker with things that might fail…er, “create learning.” As Jeffrey Pfeffer and Robert Sutton quote one CEO as saying in The Knowing-Doing Gap, “We try a bunch of stuff, we see what works, and we call that our strategy.”
Of course, none of this really addresses how one sorts through the myriad of possible strategies and selects the “right” one. That’s beyond the scope of this effort, and it’s also where strategy gets to be the most complex, especially in fast-moving industries.
My focus here was what leaders can do to have a better chance of actually achieving whatever strategy their organization chooses. Another way to read this would be: things to investigate if the team isn’t implementing all of its strategic goals.
Unfortunately, while these tactics are well sourced—the literature review started with strategy professors at leading business schools—they aren’t conclusive. The main tenor of even the most rigorous research sounds like: “We think these things work based on observing organizations that have done well, but there’s no guarantee that if you took the exact same moves, it would work out the same for yours.”
There’s a certain alchemy of the right strategy, culture, people, timing, and luck that’s behind getting this stuff right.
All that said, I’d love to hear your perspective, especially where you’d disagree or see something missing!
A Couple of Reflections
First, this research path was prompted by observing several organizations struggle to implement their strategies effectively. I also suspected that when I was helping organizations with their strategic plans that we were sometimes focused on the wrong things. In a sense, this was an effort to ground myself on those challenges.
The result: In the coming year, I’m almost surely going to shift my work away from helping teams create strategic plans. This work has convinced me that most of the leverage is in helping teams and organizations be more strategic in reality, not just have a better plan on paper.
Second, because I do a lot of work in the nonprofit sector, it’s hard not to wince at those places where the ideal strategy moves are structurally difficult for nonprofits.
For example, the strategy literature is heavy on references to building unique organizational capabilities. Yet, by definition, most nonprofits don’t generate excess funds from operations (i.e., serving their customers well) to make those investments. If they did, these would already be for-profit businesses!
Worse, investments in capabilities are often the least attractive things for funders. As a result, many nonprofit leaders are, as one person put it to me, on a constant fundraising treadmill where short-term needs dominate. That makes everything about good strategy more difficult.
I don’t have solutions in mind (only hypotheses) but this is surely going to be an area for further study.
Leadership Wisdom
Washington Post columnist Sally Jenkins on why recently fired Jacksonville Jaguars coach Urban Meyer was not a good leader:
“The good NFL coaches begin exchanges with the fundamental mind-set that their players want to be great — and if their effort flags it’s usually because they’re discouraged by poor working conditions or a boss they don’t trust. The phrase ‘locker room talk’ is associated with crudity, and there’s no question that exists. But the conversational tone within a championship NFL organization is highly nuanced, too, and the best NFL coaches speak the truth — in a language of diagnosis and distinction, not excessive recrimination or blame-shifting. Above all, they understand that the best performances don’t come from demand but rather from mutual belief in one another’s work.”