Successful Strategic Leadership

Management guru Peter Drucker emphasized the importance of striking a balance between managing for present conditions (reducing expenses, minimizing risks, controlling cash flow) and strengthening resources for the long term. Successful companies search for opportunities to discover new paths or to do things in new or better ways, and to steer activities in promising directions dictated by shifting market conditions and consumer demands.

Strategic leadership is a process of envisioning the future and marshalling resources, then developing procedures and preparing operations to achieve that future. It is a dual process of developing a strategy and executing upon it. Effective strategic leadership involves renewing and reinventing an organization by recruiting and building a team, providing supportive leadership, and following a systematic process of planning, implementation and review.

Team Building

Fully involving your team in a strategic planning and execution process will strengthen your business in numerous ways. First, by working together, a team can often gain a better and broader understanding of corporate identity and competitive position than a single individual with a limited perspective. That makes for better discernment (discovery and choosing) of a shared vision. Second, the planning and execution process energizes and unites a team around common purposes and ignites the process of integrating those purposes into the organizational culture. As a team gets things done together, they learn through the process, and build trust and group self-confidence. Third, in defining how to compete as a healthy, growing company team members develop decision-making skills and add detail to business and functional strategies. In addition, the strategic planning process helps the organization begin to communicate across cross-functional areas and levels, to enable goal sharing and team alignment, and to eliminate political “silos” or “dynasties.” Involving team members in the input, discussion, decisions and strategic action commitments builds an organizational team with a shared understanding, approach, vision and action plan; it also turns them into champions for effective organizational change.

The strategy development team should be selected to accomplish all of these positive objectives. There is a tendency to select only people who are board members, executive decision-makers, or “strategic-type” thinkers (often independent types with strong power and autonomy needs). But to develop an integrated strategy, it is important to promote interdependence among the various operational unit leaders. Developing collective responsibility for strategy can initially slow the strategic leadership process, but will eventually lead to a more united and agile (and less political) business as leaders learn and function together.

Supportive Leadership

Organizational development studies show that the most significant barrier to strategy implementation and learning is certain management styles. Top-down (hierarchical), laissez-faire (uninvolved), non-communicative or non-collaborative managers are all equally deadly to organizational learning, planning and implementation. As identified by Kouzes and Posner in The Leadership Challenge, effective leaders challenge the process, inspire (vs. dictate) a shared vision, enable others to act, encourage the heart (passions and creativity), and model the way.

As discussed above, properly building a team helps effective strategic leaders empower others, instill energy and creativity, and inspire a shared vision.

Challenging the process means that effective leaders make sure that strategy team members are not stuck in the status quo. Leaders need to make time and space for people to think creatively and strategically. That means separating them long enough from the urgencies of business, finding ways to encourage thinking beyond their limited experiences and assumptions, and expanding mindsets to consider opportunities beyond just incremental improvements or working within resource constraints or rigid systems. An effective process will build on strengths and minimize weaknesses, but it will go beyond both. For new genius, we need to think in the manner of Albert Einstein, who said, “No problem can be solved from the same level of consciousness that created it. We must learn to see the world anew.”

Modeling the way in a strategy process means that the most effective leaders focus on discovering, understanding, speaking, and projecting their voices as individuals and as decision makers. At the same time, they encourage the same from others. This is a good reason to involve a skilled facilitator in the strategic planning process to encourage broad and open dialogue and involvement.

Systematic Process

A systematic process of strategic planning and implementation incorporates careful evaluation (Where are we?), planning (Where do we want to go?) and tactics (How will we get there?), as well as eventual follow up (feedback loop) to evaluate results and adjust accordingly. A successful business needs to have a process to understand and act upon changes in its environment and its approach.

Systematic innovation requires continually exploring to find changes within “the windows of opportunity,” such as changes in industry and market structures; changes in demographics; new knowledge, both scientific and non-scientific; needs of the company’s internal processes; the company’s own unexpected successes and failures; incongruities between what “is” and what “ought to be”; and changes in perception, mood and meaning. This means systematically scanning the world, both internally and externally, and questioning all assumptions (regarding your products, services, processes, markets, distribution channels, customers, and end users).

From new discoveries, new choices can be made to exploit successes and focus on opportunities. In choosing opportunities, however, it is especially important to identify the greatest value enhancers and stay in tune with the strategic focus of the business, and not to confuse novelty with innovation or activity with effectiveness.

Strategy development involves building an effective team, providing supportive leadership, and creating a systematic process for discovering new opportunities. An effective strategy provides a basis for a business to act with preparation and purpose to harness sustainable success.

Jim Gettel and Lou Banach are Managing Directors of Schenck M&A Solutions and each have over 20 years of experience in helping businesses with strategic growth. Schenck M&A Solutions is an advisor to privately-held middle market companies in strategic acquisitions, divestitures, recapitalizations, turnarounds and planning.

March 2009