Introduction
Strategy-aligned leadership and culture
Perhaps exceeding strategy, innovation, disruption, process improvement, and so on, combined, countless billions (likely many trillions) of words have been written about leadership. What makes for a great leader? Are leaders born or made? and so on. Simply run a Google search for leadership quotations and you could be reading non-stop for the rest of your life (and still be nowhere near the end!). As for clichés, they are equally never-ending.
As with most other things, organizations look for the “magic solutions.” Identify the characteristics of a great leader, hire, and plug and play. Sorted.
Alas, as with everything else in the management/organizational fields, the holy grail of leadership is a myth. Nevertheless, that does not (and should not) lead to our stopping the search for clues to its whereabouts. Useful clues are found in understanding context.
The Importance of Context
The Stories of Steve Jobs and Winston Churchill
Consider Steve Jobs. Was he a great leader? Well, many would automatically answer yes. A phenomenally successful leader of Apple. But, he was once fired (actually forced out—never technically fired) by the same organization in 1985. In retrospect, this might seem like a terrible idea (and may well have been), but consider some of the reasons for the dismissal.
Alan Deutschman explains in his book, The Second Coming of Steve Jobs, that first, the new version of Macintosh he had launched was failing to make money. Not in itself a reason to change the CEO, but he also had a reputation for, “[driving] people too hard. …being gentle and polite was not part of his demeanour.”
He continues, “…he basically created his own team to create his own product, the Macintosh. His team had its own building. He even flew the pirate flag there. He said, ‘It is better to be a pirate, than to be in the navy.’ He had this company-within-a-company that became pitted against other parts of the company that actually made money.” [1]
Jobs was out for failing to deliver financial results, being a bully, creating turf wars, and encouraging an “us and them” mentality in the same company. Few would argue against these as good reasons for dismissal.
Although Jobs later said that he learned from his mistakes, even when back in the driving seat at Apple and leading the development of industry disrupting and world-changing products (iPad, iPhone, etc.) simply transposing him to a mining company, working in a very stable sector, would likely have proven disastrous. Jobs’ leadership style was appropriate for an organization reshaping the global communications landscape, but not appropriate for all industries. In 1985, it was deemed inappropriate for how the then board viewed the industrial context of Apple.
As a different example, consider Sir Winston Churchill. Certainly, another that is considered a great leader. His inspiring and rousing speeches (“we shall fight on the beaches,” etc.) supporting a two-part strategy (make Great Britain a “fortress,” before doing much actual fighting and then bringing the USA into the affray) were simply brilliant. Although notoriously difficult to work with, he had the right leadership style to deliver to his strategy.
But, in peacetime Britain, he was considered an ineffective leader (Prime Minister). He was simply too aggressive and did not reflect the, “calm and passive spirit that a peacetime leader should have. He was a constant reminder of war [and would constantly speak about the likelihood of another one]. He belonged in a war environment not peacetime Britain. It can be said that he was the reason for peace though he himself did not know how to maintain it” [2].
So, to the question, “what is strategy aligned-leadership?” what do we learn from these two examples? Leadership is, first and foremost, contextual. Different strategies require different leadership styles.
Leadership for the Execution of Strategy
Without understanding the context that a leader is operating in, it is impossible to effectively execute strategy. Each organizational context is different, even if only slightly, and driven by a variety of factors, both internal and external. This means that without a clear understanding of this, and the ability to adapt to this context, the efforts to execute strategy will fall short. Our research showed that this is often where great leaders fail.
The Leadership for the Execution of Strategy Model. (Source: Palladium)
Context
Palladium defines context as, The internal and external enablers or constraints that accelerate or decelerate execution efforts in the organization.
Culture: the history, narrative, values, style, business principles, and key cultural attributes of an organization can help or hinder leadership to drive successful execution. Strategy execution processes and capabilities must be built into the culture (we explore culture, specifically a strategy-aligned culture, within the next chapter).
Organizational complexity is a significant factor in leader’s ability to focus the organization. As a rule, leadership effectiveness is more critical as complexity increases.
The maturity of the industry and the firm within that industry requires different leadership focus and different types of people. As organizations graduate through each stage of maturity, execution takes on different forms (as perhaps the Churchill examples shows—albeit at a national, governmental level).
The environmental conditions (e.g. economic, political, etc.) play a key role in how leaders drive execution and may require different types of leadership and dynamic and adaptive strategy execution processes.
Having a clear understanding of the context and its implications sets the stage for leaders to struggle or thrive. Failing to do that can be catastrophic for an organization. Many companies collapse due to their lack of understanding of the context in which they are operating. Kodak is a good example of this. Their inability to respond to the emerging digital photographic market (which ironically, they invented) led to their loss of market share. Equally, Blockbuster’s failure to see the emergence of online movies led to their eventual fall and their business failed as a result (for more on the reasons for the demise of these one-time industry giants, see Chap. 2: From Industrial- to Digital-AGE-based strategies).
Characteristics
The characteristics comprise focus, emotional acumen, character, and engagement.The necessary distinguishing features that leaders in the organization must have for effective strategy execution.
Focus: The ability of leaders to clearly focus and make decisions with either limited, often ambiguous, data or, just as likely in the digital age, too much data. Focused leaders know the right questions to ask, which details are important, and where their energy will deliver the best results.
Emotional Acumen: Emotionally equipped leaders understand themselves and are adept at influencing and fostering challenge and stimulation in others. They connect with intellect and heart, bring people together, and manage consultative and directive behaviour.
Character: Great leaders have strong character, moral fibre, and rigidly adhere to their core values. Character forms the basis of their integrity, and this drives their communication style.
Engagement: The ability to motivate and engage employees and stakeholders to passionately grasp the vision for the organization is a key characteristic of all great leaders.
The characteristics of a leader are critical to their ability to execute an organization’s strategy. Without the respect and admiration of the workforce, it is nearly impossible to take them with you.
More importantly, leaders who lack the characteristics required to lead successfully can make decisions that drive failure of organizations. Consider characteristics of the leadership team at Enron that led to a spectacular crash and an ensuing corporate governance scandal. While they were clearly focused on making the business succeed, they lacked the emotional acumen and character to understand the impact of their decisions and the engagement of their people to act as a moral compass for the business. This drove decisions that deceived the market, and ultimately caused the business to collapse and their investors to lose their money.
Conditions
The leader’s role in establishing the right conditions for strategic success comprises process, fitness, agility, and momentum.The necessary organizational pre-conditions required for successful execution.
Process: Most leaders are unable to sustain execution success through sheer force of will alone. That is why having the correct processes is crucial. The right set of management processes and systems are required to enable alignment, drive accountability, and measure and manage performance.
Fitness requires selecting the right people with the right mix of capabilities at the right place and time in the organization. Subtle changes in context can render a previously “fit” team “unfit.”
Agile: Organizations and leaders that successfully execute strategy over the long term must be agile and must be able to adjust their style to fit the culture, values, and business in which the organization operates.
Momentum: Most organizations can sustain execution success in short bursts only, and are unable to sustain a continuous momentum over the long term. The best leaders create the conditions that position the business to succeed over the long term.
Leaders must create these conditions if the organization’s strategy is to be successfully executed. Systematic failures are common, and the effects can be catastrophic. The global financial crisis is stark evidence of that. The lack of systems, checks, and balances was a key contributor to the collapse of the international banking system in 2008. The leaders of these organizations failed to ensure the right conditions were in place to execute their strategies successfully.
Capabilities
The components of the right capabilities are resource optimization, learning, communication, and managing change.The critical capabilities that leaders at all levels must attain in order to sustain successful execution over the long run.
Resource Optimization: The essence of execution is choice (as we explain in Chap. 2). Where, when, and how to allocate all types of capital: human, financial, time, and social/political. How these resources are optimized is key.
Learning: Leaders are committed to learning; they are able to coach, mentor, and teach. More importantly, they choose people that have these same skills and create an environment of diversity, continuous improvement, learning, and innovation.
Communication: The ability of leaders to communicate the vision and strategy consistently is the essential capability for leaders to impact and bring all levels of the organization into alignment. This includes tailoring the information and receiving feedback.
Managing Change: Strategy execution is about managing change. Leaders that are able to convey the reasons for change, create a sense of urgency, and bring people along on the journey are the ones who are able to sustain execution success.
The Last Stage: Not the First
Note that managing change is the final of the 16 4C sub-components of the LFES model. This might at first be surprising, as this is precisely where many organizations start when executing strategy, especially when transformational. Evans explains, “Effective change management requires an intimate understanding of the pulse of the organization. Too many design and execute their change programs outside of this, limiting their effectiveness,” she says. “What works brilliantly in one organization is rarely as effective in another. This is because each organization is different.”
Advice Snippet
The Palladium Group’s 4Cs LFES model is based on a maturity model, where each of the building blocks must be understood before the next can be obtained. Sequence is important.
For example, issues around the internal and external context should be addressed so a leader can ensure that they are in fact leading with the strategic context understood. In turn, ensuring that the characteristics needed in an organization to effectively execute their strategies are in place is essential before analysing the conditions needed, such as having the right people—the right processes to execute is key.
Until these three elements are in place—context, conditions, and characteristics—it is premature to work on developing capabilities.
Palladium Model Summary
The research that informed the LFES model provided valuable insights into how leaders work within organizations. The subsequent model helps leaders to communicate more effectively with the people within the organization, meaning that they can better target the change program. Further to this, it helps organizations understand how to use each leader, at each hierarchical level, to drive the change process, making it more bespoke to that organizational setting and the individuals within it, and therefore more likely to be successful.
The Potential of the “Ordinary” Leader
Perhaps a valuable answer to the earlier question, “are leaders born or made?” Evans comments that, from the research and supported by observations from work with hundreds of companies, Palladium came to understand that “ordinary” leaders could be equipped with the capability to successfully execute strategy through a comprehensive and focused process. “The research led us to reject the “hero leader” principle, whereby the rock stars of leadership provide a reliable model for leaders to emulate, though study of successful leaders can certainly be instructive,” she says. “These ‘hero leaders,’ often savants in their own right (and therefore unrealistic to emulate), were often successful in a very specific context that cannot be replicated for other leaders who have unique challenges of their own.”
Indeed, continually citing Jack Welch as the manager all should aspire to emulate is akin to asking all soccer players to try and play like Cristiano Ronaldo (the Real Madrid star that many consider the best player in the world and one of the best of all time). Not realistic, however appealing.
Evans concludes that, “These findings clearly demonstrate the link between effective leadership and the ability to successfully execute strategy. More specifically, they show the need to develop a necessary understanding of context for the execution of strategy in organizational leaders, as traditional approaches to leadership development are not meeting the needs of organizations in the new economic realities.”
She adds that traditional leadership development efforts in the majority of organizations do not explicitly address strategy execution. “Instead, leadership competencies that enhance general leadership effectiveness are developed, but they do not give due consideration to the strategic context of the organization.”
Strategic Leadership: Research Evidence
Based on global research among almost 1300 organizations, the Palladium Group’s 2014 Global State of Strategy and Leadership Survey (in which the authors of this work were involved, alongside Jade Evans) uncovered significant challenges for strategy leadership in the digital age [3].
Although 96% of respondents stated that strategic leadership was key to their future success, fully 51% found the quality of their organization’s strategic leadership unsatisfactory. Alarmingly, 67% of board members, CEOs, and managing directors studied did not believe that their current leadership development approach was providing the skills that their leaders need to execute their strategies successfully, indicating a lack of executive stewardship of strategy execution, and even of the strategy itself.
Only 41% of respondents reported strong stewardship from the C-suite, without which strategy execution is typically de-prioritized. Participants identified managing change as the greatest weakness: 62% think that the inability to manage change or overcome internal resistance to change is a genuine problem within their organization. Fifty-six per cent say that strategy execution is challenging because it conflicts with existing power structures, a change issue incumbent upon senior leaders to resolve. This points to the performance sub-optimizing effects of the silo-based structure of organizations, as we stress throughout this book.
Poor Change Management
Leaders’ poor change management skills are worrying. To paraphrase Dr. Norton , if leaders cannot manage change, they cannot manage strategy. Given the myriad changes that organizations currently face and the innumerable changes on the horizon, poor change management will have severe consequences for many organizations. In fact, of the organizations that identified change management as a major problem, more than 75% also claim to be poor at strategy execution.
This scenario is already playing out: the very organizations that are under threat in the market are the same that are worst at change (eight times more likely to find change management a major problem, compared to those whose value proposition is not under threat). Overall, the research found a high correlation between change management success and execution success. No organizations that excelled at change management performed poorly at strategy execution.
According to the research, only 26% of organizations align their leadership development to their execution needs—what Palladium calls leadership for execution. Leadership for execution, which includes creating a sense of urgency, making a compelling case for change, and committing the entire organization to the strategy, brings much higher returns, the survey found.
In terms of overall strategy execution performance, organizations that practice leadership for execution are 22.7 times more likely to be high performing (68% of high performers; 3% of low performers) against eight times for internal coaching, 8.7 times for structured leadership development programs, and 6.7 times for 360 feedback.
Leadership Development
The Palladium research also uncovered very worrying statistics regarding present approaches to leadership development. Fully 72% of companies did not think that their organization’s learning and development programs are properly linked to the required skills for strategy execution.
Evans comments that, “If the budget repartition is ‘20% executive team/80% broader leadership team’ instead of ‘80% executive team/20% broader leadership teams’, an organization is three times more likely to develop the requested skills for strategy execution (12% instead of 4%).”
Most leaders have no formal training in strategy execution.
There is often a significant disconnect between leadership development frameworks and strategy execution.
Leadership development programs in isolation do not adequately equip leaders with the tools required to lead strategic change.
Leaders build up their ability to execute by making and correcting mistakes throughout their careers.
Leadership is often unprepared for significant changes that disrupt the status quo.
Some very interesting learnings here for those involved in leadership development, be it HR organizations or consultancies.
Advice Snippet
Of all the important roles leaders play in strategy execution, leadership development is perhaps the most crucial to the long-term success of any organization. Developing the right leaders and building a culture and structure for them to stay with the organization and thrive is critical to any organization. It is also the biggest challenge that organizations face today and into the future.
Leadership development solutions should be carefully tailored to the specific needs of each individual, team and organization instead of providing the usual “one-size-fits-all” approach to leadership development—the much sought-after perfect plug-and-play approach.
Leadership for Execution should be the core steer in leadership development for digital-age organizations.
Agile Leadership in an Age of Digital Disruption
A further useful research project that speaks directly to the challenges of the digital age is the 2017 research by the Global Center for Digital Business Transformation. This analysed the requirement for “Agile Leadership in an Age of Digital Disruption” and identified key competencies and behaviours required to lead organizations in environments characterized by digital disruption [4].
According to this research, agile leaders are humble, adaptable, visionary, and engaged. “These must-have competencies inform their business-focused actions,” the report’s authors note.
Humble
Knowing what you don’t know can be as valuable as knowing what you do in a time of rapid change, the research finds. “Agile leaders must be open, willing to learn, and seek input from both inside and outside their organizations. They also need to trust others who know more than they do.”
Crucially, the authors state that they do not regard humility as an abdication of the need to provide a strong vision and positive direction, but as an acknowledgement that the current speed of change outstrips any leader’s personal store of knowledge or experience. “Accepting that a single person cannot know everything needed to make a decision is a critical component of agile leadership,” they write.
Adaptable
Being adaptable is simply an acceptance that change is constant. When new information triggers a leader to change their mind, it should be seen as a strength and not a weakness. “Focused adaptability based on new information is a distinct competency, unlike random vacillation,” the report states. “Agile leaders adapt their behaviour in the short term based on their ability to make evidence-based decisions.”
They add that, “… agile leaders are adept at dealing with complexity and less reluctant to change their minds in the face of new information. They are not afraid to commit to a new course of action when the situation warrants it.”
Visionary
Visionary in the context of agile leadership means having a clear sense of the long-term direction, even in the face of short-term uncertainty. In times of rapid technology and business model disruption, with opportunities opening up everywhere, a clear vision is even more critical. “Agile leaders have a well-defined idea of where their organizations need to go, even if they do not know exactly how to get there.”
However, the authors note that being visionary is not restricted to digital disruptors; it is equally important for legacy organizations, where leaders need to define and clearly articulate long-term aims and objectives. An example provided was General Electric’s vision to become the dominant player within the “Industrial Internet,” a term it coined, which is a major departure from the company’s traditional manufacturing roots.
Engaged
Agile leaders display a willingness to listen, interact, and communicate with internal and external stakeholders and a strong interest and curiosity in emerging trends. In other words, they are engaged. “Whatever their hierarchical position, agile leaders are always engaged, be it with customers, partners, suppliers, team members, staff or the broader societal and industrial ecosystems. This desire to explore, discover, learn and discuss is as much a mind-set as a definable set of business-focused activities.”
Essential Behaviours of Agile Leadership
The research also identified three key behaviours that differentiated agile from non-agile leaders: hyperawareness, informed decision making, and fast execution.
Hyperawareness
Hyperaware agile leaders are focused on spotting emerging digital opportunities or competitive threats. They are engaged, seek new insights, and adapt in response, but they are also aware of the need to provide guidance through a strong vision, as the potential for change threatens to overwhelm a linear strategy. “Good leaders are constantly scanning their environments, both inside and outside their organizational boundaries. With technology-driven change accelerating across industries, the need for leaders to look outward, and not just at their competitors, is evident.”
Informed Decision Making
For agile leaders, informed decision making fundamentally entails using available data to make evidence-based decisions. To do this, leaders “… must recognize and utilize the best data sources, apply appropriate analytics, and then make a decision. Faced with insufficient or even contradictory data, leaders must draw on their experience and intuition to move forward.”
Informed decision making underpins a leader’s ability to adapt and support their long-term vision, the authors note. “Agile leaders who understand the value of using digital technologies to gather and analyse data are always on the lookout for new data sources to support informed decision making.”
Fast Execution
Fast execution entails willingness on the part of a leader to move quickly, often valuing speed over perfection. “In an environment characterized by significant disruption, the effectiveness of hyperawareness and informed decision making is significantly reduced if the organization is not able to act with speed. Ultimately, agile leaders will only be effective if they are able to quickly execute an informed decision.”
Assessing the Models
With differing spins, the research from Palladium and the Global Center for Digital Business Transformation show strong consistencies in their findings. As a few examples, both organizations point to the importance of the need for leaders to be adept at dealing with complexity and of being visionary in the context of having a clear sense of the long-term direction. Strong capabilities in execution are also highlighted by both.
Furthermore, both speak to the criticality of being open and willing to learn, to listen, interact, and communicate—perhaps, most importantly, of trusting others.
Our own research supports these findings. In the digital age, managing complexity, while ensuring a consistent message of intent and progress, will be leadership prerequisites. Moreover, conventional command and control structures, in which “managers think and workers do,” must be seriously challenged and dismantled. No single leader can know all the answers and must make more use of the insights of a highly educated workforce (and we sense there is something wrong with that term) that has grown up with social media and so expect to learn, challenge, and debate.
Furthermore, we also strongly support two specific observations from the Global Center’s research.
First, their assertion that good leaders constantly scan their environments, both inside and outside their organizational boundaries and not just their competitors. This supports a central message of this book that, in the digital age, we must move away from formulating a strategy and then attempting to execute, “as is,” and only paying attention to internal obstacles to success. External environmental scanning must be an everyday activity and fully integrated into the strategy execution process.
Second, we also agree that an agile leader must recognize the value of finding and utilizing the best data sources and applying appropriate analytics to inform decisions. As we explain throughout this book, and most particularly in Chap. 9, Unleashing the Power of Analytics for Strategic Learning and Adapting, advanced data analytics is transforming the strategy management process (along with just about everything else). Analytics coupled with the insights of an increasingly technologically savvy employee-base will uncover significant opportunities for those organizations that figure out how to meld this into an agile and adaptive capability.
Parting Words
As stated at the start of this chapter, the holy grail of great leadership does not exist. Strategy-aligned leadership is very much contextual and, as with everything else, evolving. What is great in one environment might be a disaster elsewhere. Winston Churchill’s leadership style was properly aligned to winning a complex war, but misaligned to the requirements of building a peaceful nation. Context matters.
But that said, there are a group of capabilities that, in some shape or form and applied with the proper understanding of context, is providing useful clues for good leadership in the digital age.
Interviewed for this book, Alistair Schneider, a Business Operations Leader and founder of startupsinnovation.com, succinctly summarizes many of the requirements of a leader in the early days of the 4th industrial revolution. “The type of leader required to drive transformative and continuous strategy execution in the Digital-Age will understand that the key elements are speed, agility, empowerment, presence, data analytics and acceptance of failure,” he says. “Additionally, it is about making the mission the core principle that drives everyone’s job everyday.” The latter point supports our message in Chap. 2 that organizations must understand their sense of purpose. With that sense of permanence and consistency, then speed, agility, and so on will provide great value and the appropriate balancing of the longer term with the mid and shorter terms.
Anchored to context, in the final analysis, strategy-aligned leadership is essentially about execution. To conclude with one of the millions of quotes on leadership, we agree with the words of Ram Charan and Larry Bossidy from their seminal work Execution: The Discipline of Getting Things Done: “Execution is a specific set of behaviours and techniques that companies need to master in order to have competitive advantage. It’s a discipline of its own” [5].
Self-Assessment Checklist
The following self-assessment assists the reader in identifying strengths and opportunities for improvement against the key performance dimension that we consider critical for succeeding with strategy management in the digital age.
Self-assessment checklist
Please tick the number that is the closest to the statement with which you agree | ||||||||
7 | 6 | 5 | 4 | 3 | 2 | 1 | ||
The prevailing leadership style in my organization is appropriate for our context | The prevailing leadership style in my organization is not appropriate for our context | |||||||
My understanding has a very good understanding of what is required for the “leadership of strategy execution” | My understanding has a very poor understanding of what is required for the “leadership of strategy execution” | |||||||
My organization has very good strategic leadership capabilities | My organization has very poor strategic leadership capabilities | |||||||
My organization is very good at managing change | My organization is very poor at managing change | |||||||
In my organization, learning and development programs are very well aligned to the required skills for strategy execution | In my organization, learning and development programs are very poorly aligned to the required skills for strategy execution | |||||||