Leadership Blog

Get What You Like or Like What You Get

An article carried by McKinsey made us think again about an important aspect of strategy shaping. Given our role as facilitators and advisors on strategy it raised a huge question about how far the biases of the leader or facilitator of a strategy influences not just the form, but crucially, the eventual content, of an organisation’s strategy.

As we say, “Make sure to get what you like, or you will have to like what you get.”

This is all a scary thought. Choose a different leader of process (internal or external) and you get a different strategy. Now isn’t that something to add to your risk register? Choosing strategy requires tough choices and what emerges depends on who is making those choices.

What the article said was that of course many companies choose an executive to guide their strategies. It argues that, “the weaknesses of traditional strategic planning - characterised by a lockstep march toward a series of deliverables and review meetings according to a rigid annual calendar - have been amplified by the importance of agility in a rapidly changing world.”

The starting point should be thinking differently about what it means to develop great strategy: less time running the planning process and more time engaging broader groups inside and outside the company, going beyond templates and calendars, and mirroring the dynamism of the external environment.

But this isn’t enough. Achieving real impact today requires strategists to stretch beyond general strategic planning to developing at least one of a few key strengths such as:

• Having some authority, in partnership with other senior managers, to reallocate corporate resources to match the strategy

• A role in building strategic capabilities at key places in the organisation (get more people, at all levels, involved in developing and implementing strategies)

• Looking identifying and investigating real business-development opportunities – not just suggesting broad themes and leaving them hanging for others to pick up.

There is a growing recognition that traditional strategic planning processes are insufficient to absorb the shocks and disruptions to markets and to stimulate the ongoing deliberation that a top-management team requires. The real need is match and not mismatch a new focus to strategic needs going forward.

We all need to rethink the approach to strategic planning and to embrace a more frequent strategic dialogue involving a focused group of senior executives, with board backing. Effective organisations seem to be transforming strategy development into an ongoing process of leadership conversations that include budget-reallocation meetings conducted periodically throughout the year.

The McKinsey article’s authors have found that organisation’s that consider themselves “very effective developers of strategy,” and that “enjoy higher profitability than their competitors”, are twice as likely to review strategy on an ongoing basis (as opposed to say annually or every three to five years). They are constantly on the alert. They know that, “no strategy survives contact with reality”.

The best strategists, it is argued, have a professional credibility that extends well beyond a traditional process-facilitation role. The leadership characteristics associated with good strategy are varied and categorised into five main types, with some estimate of how often many strategists fall into these categories:

1. Architect (40%) - A fact-based rationalist

2. Mobiliser (20%) - Involves and builds capability in others

3. Visionary (14%) - Trends, to next big thing

4. Surveyor (14%) - Alert to shocks and disruption and how to respond

5. Fund Manager (14%) - Reallocates and rebalances in accordance new portfolios.

They are all good strategists but what you see and get is what will emerge in the process. So, choose carefully who leads on strategy as that is a determining factor on what type of strategy that emerges.

We agree that having explicit conversations about expectations and the division of roles and responsibilities for strategy across the executive team will improve its dynamics and make the organisation more effective.

A critical place to start is deciding whether the strategist will shape and run the process that generates the strategy or will instead take responsibility for crafting the strategy itself on behalf of the senior team. A related issue for the CEO, board, and other executives concerned with the quality of the organisation’s strategic direction is who owns the organisation’s resource-reallocation and strategic capability-building efforts.

The complexity of today’s strategic landscape places a premium on good strategy. And just as crafting strategy requires tough choices, so does choosing the type of strategist you employ.

The good news is that strategists have a range of powerful options for adding value to their organisations, and nearly 90 percent of the strategists responding to the McKinsey survey thought they were effective at the elements of the role they prioritised.

The bad news is that over time it’s easy for mismatches to develop between those areas of focus and an organisation’s strategic needs. By identifying those mismatches and reprioritising accordingly, strategists, chief executives, and other members of the senior team can boost the chances of developing a winning strategy.

 

 

 

 

 

 

New Thinking on Team Dynamics

An article on group dynamics with good lessons for leaders of teams and boards caught our eye this week.  It is by acclaimed Harvard academics Sunstein and Hastie who draw on a deep well of research to substantiate their findings.

Our interest is in the learning for leadership.  Without dwelling on the research itself we have drawn together the key learning points for leaders who need and want better decision making from groups, teams and boards.

The goals for most teams is to aggregate information and wisdom held by individuals and avoid the twin perils of groupthink and social loafing i.e. going along with the crowd and not voicing disagreement and holding back on effort or contribution because others push to take the lead.   What can a leader do about this?

The six suggestions in the article are:

1.Silence the leader: Leaders can put others off by expressing their views tooBetter to hold your views back and listen to others.  Make clear your desire to hear all views and uniquely held information.

2.Trigger Critical Thinking:  people need to know it is alright to have contrary views and making this absolutely clear and modeling this will encourage others to speakA leader can use a prior task to model this, perhaps for an unimportant matter – people are then more likely, in the same meeting, to follow this pattern once established in their minds.

3.Reward Group Success: Encourage the idea that individual contributions are welcome and that it is group success that mattersDemonstrate that there is less to gain as an individual and more to gain if the group succeeds.

4.Assign Roles: When people know that they and others have assigned roles, to provide input and advise on a particular subject or with specialist knowledge,  then they freely do so and therefore share information and opinions theyThis reduces withholding.  Everyone then knows that everyone else has something to contribute and they eagerly await that contribution rather than lose it in the shadow of the loudest voices.

5.Appoint a Devil’s Advocate: An old tactic maybe but highlySomeone or indeed the entire group, has full permission to take a contrary view in the interests of the group.  If needed it provides a cover or cloak to make criticism acceptable and certainly not personal. It reduces the power of social pressure and limits self-silencing.

6.Establish a Contrarian Sub Group: This is an interesting idea called “red-teaming”. These individuals are asked, as a group, a bit like devil’s advocates, to construct the strongest possible case against a proposal orAs Peter Drucker used to ask, what would someone who is not in this room and who disagrees with this decision, say?”

Group failures often have disastrous consequences – for businesses, social enterprises, government and even countries.  The findings of Sunstein and Hastie offer a means of reducing the probability of group failure and some practical advice on how to make groups, teams and boards a lot wiser.

   

Leadership Lesson in Making Mergers Work

Despite the popularity of growth strategies based on mergers and acquisitions, the challenges of execution are substantial.  Depending on who you believe, something like 70%-80% of mergers fail to meet their objectives in full.  One of the reasons is a failure of leadership.  And this research highlights the importance of middle managers as well as senior leadership.

To understand the high failure rate, prior researchers have examined financial characteristics, capability matches, and human factors such as culture.  What was missing was substantive quantitative research on collective leadership capability as a driver of success in forging collaborative strategies.

To fill that gap, Keith Dunbar of consulting house Potentious conducted a five-year study that aggregated individual leadership assessment data (obtained from Korn Ferry 360-degree evaluations) from both sides of the collaborative equation i.e. the acquiring and the targeted company.  In doing this he  created a picture of collective leadership capability.

His investigation encompassed 94 mergers that took place from 2004 to 2008 and sought to answer two questions: what leadership areas and competencies in acquiring and targeted companies affect the financial performance of a merger and what is the relative importance of senior executive versus middle manager collective leadership capability in mergers and acquisitions?

The study revealed three major findings:

  1. 1.Leadership capabilities in acquiring companies (specifically, skill in the broad areas of thought leadership, results leadership and people leadership) predict merger and acquisition success, but leadership capabilities in targeted companies are equally important
  2. 2.Seven leadership competencies for acquirers and four for target companies are reasonable predictors of a successful outcome
  3. 3.Senior leadership capabilities in acquiring companies and middle management leadership in targeted companies have the greatest effect on success.

Leadership Competencies That Predict Success 

 

This study of 94 mergers, using 360-degree evaluations of managers, identified the following skills as the most crucial in acquiring and targeted companies.  The seven crucial leadership skills for acquiring companies are:

  • Motivate others
  • Influence others
  • Build relationships
  • Develop others
  • Act with integrity
  • Show adaptability
  • Focus on customer needs

The four crucial skills for leadership in the target companies are:

  • Motivate others
  • Influence others
  • Build relationships
  • Provide direction

Big Lesson: Make Leadership Part of Due Diligence

The findings suggest that assessing the collective leadership capabilities of acquiring and target companies should be part of the due diligence that precedes an merger and acquisition offer and supports integration planning.   

The research results also suggest that middle managers at targeted companies are crucial to success and efforts to retain them should be given as much priority as seeking to retain senior managers.

   

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On Leadership

Max DePree "The first responsibility of a leader is to define reality. The last is to say thank you. In between, the leader is a servant." 

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