The Most Strategic Leaders Excel in 4 Disciplines – by Rich Horwath
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During a safari in Kenya, I watched a pride of lions stalk a herd of zebra in silence for nearly 90 minutes. At that point, a lion cub rose up from his crouched position, and the zebra scattered. The female lions growled at the playful cub and moved on, well aware that their pride’s survival was wholly dependent on their fitness — their ability to adapt to their environment and gain advantage in the form of food.
The experience struck me as a useful metaphor for strategic fitness, or a leader’s ability to learn from and adapt to their environment in order to set direction and create competitive advantage. Just as the pride of lions needed to adjust to the lost opportunity for a meal, business leaders must adapt to a changing environment to grow and sustain their business.
Professional athletes typically spend much of their time practicing, as compared to competing. For business professionals, this dynamic is reversed, with most executives spending nearly all of their time working in the business and very little practicing to become better at the skills foundational to their success. Leaders who don’t practice their skill development will see strategic fitness levels that can be equated with the lower physical fitness levels of animals found in a zoo, as compared to their counterparts in the wild whose skills are strengthened each day by hunting for their survival.
So how does a leader develop — and maintain — their strategic fitness? To answer this question, I studied 77 C-Suite executives over a period of four years. These leaders were based in the United States from industries including technology, health care, financial services, consumer packaged goods and nonprofit associations. Each took an 80-statement strategic fitness survey, of which the average baseline score was 60 out of 100, indicating that there was a significant opportunity for improvement. I then conducted monthly one-on-one conversations and observed these leaders quarterly at their executive team meetings. Based on my observations of those who scored higher — and those who improved over time — I identified four disciplines practiced by strategically fit leaders.
Strategy fitness: They set clear strategic direction — and calibrate when necessary.
The ability to develop strategy is integral to an executive’s success. According to a 10-year study of 1,500 companies by McKinsey & Co., setting strategic direction is the number one factor that improves organizational health. And yet research by Gallup over the past 30 years with more than 10 million managers found only 22% of employees strongly agreed that the leaders of their organization have set clear direction for the business.
One behavior that sets strategically fit leaders apart is their ability to adapt their strategy in the face of a changing environment. They do this by regularly meeting with their team to gain their perspectives and include their input to sharpen the direction. They also continuously scan for and collect insights on their market, customers, competitors, and company.
Todd, an executive I work with, had grown his technology company to nearly $100 million in annual revenue when he realized he had a problem. The sales team was signing up dozens of new customers each day because they were incentivized on the total number, rather than the revenue and profitability contributions, of each. The disproportionate number of small customers was exponentially taxing the service operations area, and the team was beginning to neglect the needs of their larger, more profitable customers.
Todd re-evaluated his strategy and made the painful but necessary tradeoff to sunset all smaller customers below a certain dollar threshold by year end and fully invest in new products and enhanced services designed to provide greater value to larger enterprises.
To evaluate your own strategy fitness, ask yourself the following:
- Do I adapt my strategic plan when new insights arise to create differentiated value for customers?
- Have I demonstrated the ability to calibrate my plan when the business context changes?
- How often do I update my strategies and plan with new insights?
Leadership fitness: They refine their leadership style to meet the moment.
When I met Lori, a chief revenue officer at a large financial services firm, her team had failed to meet their financial targets for two consecutive quarters. She realized that for the first time in her career that her “just-get-it-done” style wasn’t producing the desired results, and she had to make a change.
Strategically fit leaders understand that their value to the business is enhanced by continually observing their own behaviors and interactions to assess how they can improve to meet the moment. They operate based on a series of leadership principles that trigger the behaviors necessary to support their strategic direction — for example, “We operate with an ownership mindset,” or “We assess the competitive landscape on a regular basis.” They also identify which of their own behaviors can help others achieve their goals — for example, “I listen without judgment,” or “I protect people’s time from fire drills.”
Lori and I identified five leadership principles that she felt would help her and her team move from a grind-it-out mentality and that they could adapt based on the needs of the moment.
- We lead at our level and don’t do our direct reports’ work.
- We agree or disagree but then commit to the chosen course of action.
- We build trust by doing what we say we’re going to do.
- We clarify decision rights to eliminate the escalation of issues.
- We give people our full attention when engaged in meetings.
To better understand your level of leadership fitness, ask yourself the following:
- What are my leadership principles? How do I want to be remembered as a leader?
- Do I proactively solicit insights on my leadership performance from direct reports and colleagues to gauge my impact?
- What triggers have I created to help the team adopt the leadership principles?
Organization fitness: They invest time thinking about the future state of the business.
Organization fitness is determined in large part by the ability to evolve your business model to proactively position your group to create, deliver, and capture value. A PwC Global Survey of CEOs found that they would ideally like to move from spending 47% of their time currently thinking about the future of the business to 57% of their time.
Investing time thinking about the future state of the business requires discipline, just as it takes grit to get up to exercise each morning before the day gets busy. One survey of leaders in the construction industry found 63% did not have a plan with a time horizon greater than one year and half of leaders didn’t have a plan for the year.
While plans will change throughout the year, it’s the process of continually scanning one’s environment to identify new patterns, trends, and activities that may have a material impact on the business that’s truly important. Training the organizational muscle to generate and share these insights breaks down silos and creates a learning flywheel that can lead to competitive advantage.
I worked with Cheryl as she was taking over as president and CEO of a health technology company from her highly successful predecessor. She recognized the adage, “What got you here, won’t get you there,” was staring her in the face. While her predecessor did indeed shepherd a strong financial performance, it was short-term oriented and marked by a lack of investment in critical future infrastructure areas, such as data management.
Cheryl worked on identifying the core elements of her company’s current business model — the “as is” state — and then went about designing options for the future by comparing today’s norms with future deviations from the norm. Cheryl excelled in harnessing her team’s thinking on new ways to capture value, partnering with key customers on the design of several new SaaS 2.0 (software as a service) offerings and licensing several IP products that were previously unavailable to customers.
To assess your organization fitness, ask yourself the following:
- Have I clearly depicted the business model for our group?
- Do I understand what the internal challenges are to successfully evolving the business model?
- Where can we deviate from the industry norm to create, deliver, and capture greater value?
Communication fitness: They effectively collaborate with internal and external stakeholders.
A survey I conducted in conjunction with Human Capital Media Research of 400 talent management leaders found that 58% of cross-functional groups within organizations do not effectively align their strategies with one another.
As one’s responsibilities increase and the pressure to achieve goals and reach financial targets heightens, it’s common to lose sight of the power of collaboration. It’s similar to the star player on a basketball team believing that she has to score on her own every time instead of distributing the ball to others who are open and can contribute in their own ways.
Strategically fit leaders build relationships with colleagues who can provide expertise and capabilities that they may not possess. When necessary, they look for external resources who can fill gaps and then collaborate with them effectively.
When I met Steve, he was recently promoted from vice president of product marketing to chief marketing officer at a mid-sized manufacturing firm. He was well aware of the challenges involved in attempting to span the silos between the sales and marketing functions. Over the years he had watched sales reps and their managers agree to customizing even the smallest orders from unprofitable customers, while the marketing team would promote a premium price, and the contracting group would appear to take an inordinate amount of time to execute agreements.
Steve moved quickly to develop regular interactions with the key players from each area. His efforts reduced the number of issues escalated to the executive team and freed up more time for coordinating strategic partnerships with key customers.
To evaluate your communication fitness, ask yourself the following:
- Am I meeting with key internal stakeholders intentionally and on a consistent cadence to develop relationships and align strategies?
- Do I have a clear understanding of what my colleagues are trying to achieve and their strategies for doing so?
- What channels are we using to share insights across different functional areas?
. . .
By taking a proactive approach to enhancing the four disciplines of strategic fitness — strategy, leadership, organization, and communication — you’ll continuously mine new insights from your interactions leading to greater competence and confidence in setting strategic direction for your business. According to research by Harvard Business School’s Michael Porter and Nitin Nohria, the average CEO invests 45 minutes a day developing their physical fitness. How much time are you investing each day in your strategic fitness? It may be the difference between thriving, or not surviving, in the business wilds.
[HBR]
ABOUT THE AUTHOR Rich Horwath is the founder and CEO of the Strategic Thinking Institute where he serves leadership teams as a strategy workshop facilitator, executive coach, and strategic advisor. He is a New York Times and Wall Street Journal bestselling author of eight strategic thinking books, including Strategic: The Skill to Set Direction, Create Advantage, and Achieve Executive Excellence.