We need more Leaders!

Volume 15 Letter 8

Companies have all the managers they need………the question is, can you turn them into leaders?

A business strategy is the means by which a company sets out to achieve its desired goals. A strategic plan allocates scarce resources, achieves objectives, creates value and involves everyone. Strategy development skills are lacking in most companies and without them managers won’t become leaders.

An organization I consulted with had selected only PhD’s as business unit heads. Each was a brilliant scientist or engineer in his/her own field and on this occasion the CEO had brought them together to develop a strategic plan that would set the company on a successful trajectory and position the organization for the next generation. It was immediately apparent that there was a lack of agreement on how to tackle the task and the discussion soon devolved into the business heads defending his or her turf. At first I was surprised by the lack of strategic thinking skills displayed by such a highly educated management team. But maybe I shouldn’t have been.

Subjects like accounting, finance, engineering, chemistry and others with definitive right or wrong answers are well suited to university studies. If your company must solve complex definitive problems, go to the best universities and hire the brightest students. My group was clearly world class at this. However, business leaders must be able to develop a strategy. This requires a different type of thinking rarely taught at university. For managers who have spent their lives solving definitive problems, strategy can become a conundrum. Many mistakenly think they are tackling a concrete problem like declining market share or falling profit margins for which they believe there is a definitive answer. Actually, the solution to such a problem requires a strategy and strategic problems are dynamic meaning the best answer is always situation specific. What may be a brilliant strategy in one situation could well be a disaster in another. For strategic problems the answers clearly are not in the book!

Never mind their collective brilliance, my group of PhD business managers had never mastered solving dynamic problems. University classrooms aren’t effective in dynamic problem solving! While you can teach the principles of strategy in a classroom, to master those principles they must be practiced. Emergency room doctors, sports teams, soldiers and business strategists require this type of thinking and action. The only way to hone strategic skills is to practice them – before heading to the OR, the sports field, the front line or the company strategy session. Hands on training and practice was something my group of PhD’s was clearly lacking.

What can we learn from this:

  • Recognize the difference between a definitive problem and a dynamic problem. For one there is a correct answer; for the other the answer is relative.
  • A strategic problem is always situation specific and the best answer can change over time. That’s why strategy is constantly flexing and responding to the needs of an evolving market.
  • The ability to solve definitive problems does not guarantee you can solve strategic ones and vice versa. These are two different skill sets – value both equally.
  • A business strategy is an organization wide focus on creating value for the customer and the company through the deployment of resources in such a manner that brings one’s strengths to bear on attractive markets to achieve a central set of objectives through a continuously changing set of circumstances.
  • Leaders need a strategic planning process and a strategic plan so all levels of managers can become leaders. They need to analyze their specific markets and respond to local market conditions while feeding into the overall corporate objectives.

To improve this teams’ strategic planning skills we built a program that instilled both the strategic principles and used a business simulation to allow them to put those principles into practice and hone their skills. They’re all still great definitive problem solvers but many also excelled at dynamic problem solving and went on to build a robust strategy defining the future direction of the company. Many of them also applied the same process to develop a strategy for their individual business units. Isn’t it time to stop just managing and start leading? Build your business strategy – become a business leader!

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