The relationship between strategy, leadership and organisational performance continues to be an area of major interest for practitioners, academics and the business media. For example, the recent and untimely death of Steve Jobs has sparked a wave of interest in into his leadership characteristics and their links to Apple’s strategy and performance.
As a strategist, I am keenly interested in how leaders can better contribute to developing and executing strategy that creates value. In this and in subsequent blogs, I plan to talk about a topic that John and I call Leading Strategic Conversations. You’re probably thinking that the role of leadership in strategy has been explored in the past and you’re right but I believe the time is right to revisit it now for two key reasons.
First, thinking and practice at the intersection of strategy and leadership have changed significantly over the last 20 years. Strategic management has traditionally been a highly analytical, planning oriented discipline. It has drawn heavily on the field of economics, focusing on the structural aspects of industries, on the positioning of organisations in those industries, and emphasising the content of strategy as its core.
This traditional perspective positioned the CEO as an elite level planner who worked with a centralised planning department and external consultants to develop an organisation’s strategic direction. Formulation was seen as the difficult part, one that commanded the real thinking effort and lion’s share of time and attention. Execution was seen as the easy part and was handed down to lower levels in the organisation to worry about.
In more recent times we’ve seen the rise and fall (well, almost the fall) of ‘celebrity CEOs’. This fad has involved boards of directors importing highly paid, ‘charismatic’ and usually ego-centric individuals whose role was to develop a grand vision for their new organisation and then pass it down to their loyal ‘helpers’ for execution.
In this sense the celebrity CEO perspective is consistent with the traditional perspective of strategic management – formulation is still the critical part of a leader’s contribution to strategy and execution is still the easy part, something for others to worry about. However, the celebrity CEO has a more elevated status and a significantly higher compensation package than the planner CEO but usually does not deliver commensurate and sustainable organisational performance.
Contrast these two perspectives with Jim Collins’ concept of Level 5 Leadership, especially Collins’ emphasis on leaders who guide the ‘shared insights’ of their executive team (http://www.jimcollins.com/article_topics/articles/good-to-great.html). Level 5 Leadership and Collins’ notion of the ‘flywheel’ relentlessly building momentum for change were early signs that the boundaries between strategy development and strategy execution were becoming blurred and that leadership attention was taking a more balanced and simultaneous focus on both areas.
Over the last 10 years there has been a growing acceptance in the practitioner literature of the critical role of leaders in strategizing – developing and executing strategy on a continuous basis – as opposed to strategy as a plan or a ‘grand vision’.
This focus on strategizing is significant because it recognises strategy not only as a dynamic, adaptive and open-ended process but also as a social practice, one in which both development and execution require social interaction between individuals and groups at various levels both within and external to the organisation in question.
CEOs who see their role as strategizing will recognise that strategy development and execution are inextricably interlinked, an everyday practice that is the responsibility of the entire senior management team. As a result, these CEOs will behave very differently to planner or celebrity CEOs.
Second, recent advances in thinking about the business model concept enable leaders to gain a better grasp on the link between strategy and value creation. The business model concept is something that Tim has mentioned frequently in this blog. I plan to go into it more in subsequent blogs. However, my key point at this stage is that articulating a business model requires that you get beyond what are often vague notions of competitive advantage and clearly define the dimensions of value you are trying to create for customers, stakeholders and the organisation itself.
Business model thinking provides a logic for strategy integration and execution, one that is linked to these dimensions of value. It also provides a new framework for understanding corporate versus business level strategy and for business model innovation.
In our consulting work and in our strategy teaching John and I have synthesised the changes in thinking and practice around the intersection of strategy & leadership with the emerging perspectives on business models. We talk about leaders enacting their strategy role through leading strategic conversations – through enabling, encouraging and guiding vigorous, iterative dialogue on strategy, and reaching shared insights aimed at creating and re-creating value on a continuous basis. Leading strategic conversations involves a virtuous cycle through 8 key focal points:
In subsequent blogs I will explain the focal points in the Strategic Conversations cycle.