The leadership role
IMPROVING THE PRACTICE OF MANAGEMENT
Demands and expectations of a business leader
have never been higher. But just how does a
leader develop winning strategies, execute them
brilliantly and develop organizational capabilities
and core competencies? This Ivey professor, who
has written and consulted on leadership widely,
discusses what every great leader needs to do,
and how she or he can do it.
is professor and Managing Director,
Program Design, in the Ivey Executive
Development Program. He is the author of four
books and more than 100 case studies. He has
been a faculty member at Ivey since 1977.
Leadership is about getting results for your
followers. If you get results, people will support you,
often without caring too much about how you got
them; without results, all the style or charisma in
the world won't retain the support of your followers
for long. This is true for the leader of a Scout troop,
a sports team, a political party, a government
department…and a business.
A business leader must increase shareholder value,
and the public-sector leader must increase public
value. (Shareholder value increases through either
increasing stock price and/or paying dividends on
stock that is owned, results that are usually measured
as total shareholder return over some period of time.
In the public sector there is a different but analogous
measure: public value, the return to taxpayers of public
goods in an effective and efficient way.) There is a
growing belief that the long-term generation of
either shareholder or public value requires the
balancing or integration of the interests of multiple
stakeholders in the enterprise; shareholders,
employees, customers or clients, suppliers, and the
various communities within which the enterprise
operates and with which it interacts.
Notwithstanding this view, failure to satisfy
shareholders is more likely than any of the others to
get business leaders into trouble.
To be an effective leader of either a private- or
public-sector organization requires you to do five
things:
1. Understand and interpret the environment
in which you operate;
2. Develop winning strategies;
3. Execute them brilliantly;
4. Measure the impact of your strategies
systematically, adjusting strategies as
indicated; and,
5. Develop organizational, departmental,
team and personal capabilities.
1. Understand and interpret the environment in
which the enterprise operates.
A leader has to be able to sense what's coming up
ahead, to see opportunities that should be the target
of action and to see threats before they materialize.
And the view has to be well into the future. As a
colleague of mine once noted, "It's no good
mistaking the edge of the rut for the horizon."
Leaders who only see what they have seen before,
whose scope and vision is limited by their past
experience, prove to be inadequate in a rapidly
changing world. Since we expect leaders to have
their eyes on the horizon and their feet on the ground,
this means that leadership is a tall order!
Looking over the horizon does not suggest that
experience is irrelevant. On the contrary, to the
extent that people have been through experiences
and learned from them, they will usually have
developed judgment and, perhaps, some wisdom.
Effective leaders do learn from the mistakes of
history so that they can avoid repeating them.
(). But the future seldom offers
up exactly the same set of conditions that existed
yesterday, and tomorrow's environment must be
interpreted in the light of yesterday's experience --
but seldom with exactly the same mental map or
template.
Business opportunities are often created or
destroyed by both direct influences of economic,
political, societal and technological forces as well
as complex interactions between these forces.
Whole industries were created by the development
of the transistor; socialized medicine limits the
growth of medical services
in many countries; periods
of economic growth and
slowdown, or realignment
of currencies, affect
businesses in many ways; and
political movements to the
right or the left may create
opportunities for the private
sector to grow or,
sometimes, may result in the
state taking over functions
from private enterprise.
Those who foresaw the fall
of the Berlin Wall, the
emergence of China as one
of the world's great
economies, the resistance of
many countries to
genetically modified
foodstuffs, the dramatic
realignment of the U.S. dollar
against the euro and other
currencies in the early part
of this century, made -- or
lost -- fortunes.
This outward-and forward-looking
requirement cannot be delegated to a small set of
specialized scenario-creators or confined to a few
days or weeks of the year. The chief financial officer
must scan the financial environment, the head of
human resources must be alert to changes in labour
markets and legislation that affects the workforce,
the chief information officer must recognize
developments in information technology that could
create or destroy competitive advantage.
is looking at the developing environment just
required of senior executives; the credit manger must
look at rising consumer debt levels, the purchasing
manager must think of commodity price movements
and the things that influence them, the facilities
manager must decide whether to go long or short on
energy prices...and so on. Leadership at all levels
must be focused on the future as well as the present.
2. Formulate winning strategies
If leadership is about getting results, then the role
of the leader is to develop the right strategies to get
those results -- winning strategies. Businesses make
money by creating value for a customer and then
capturing some of it for themselves from what the
customer pays for that created value.
Strategies are much more than intentions; they
describe what an organization is going to do to
achieve a defined end as well as the ways and means
that will be employed to do that. The what and the
how are usually accompanied by strategic plans
detailing who will do what, with which resources,
by when…and all the other details that allow for
effective and efficient capital and people allocation
and coordination. Since people generally follow
leaders better when they understand why they are
being asked to move in a certain direction, strategies
usually provide cogent reasons for action.
Strategies are needed at all levels of organizations,
from the office of the CEO to the individual
salesperson's strategy for their territory. And these
strategies must be integrated and coordinated if they
are to be well executed.
My emphasis is on developing winning strategies.
People who lead their followers in the wrong
directions may be effective leaders over the shortrun.
And the short-run may be quite a long-run!
But if the pathway chosen leads to eventual disaster,
there will be no place for such leaders in the
leadership hall of fame.
3. Execute those strategies -- brilliantly!
Strategies are only valuable if they can be executed
well. And execution of any plan is only valuable if
the strategy is right. Arguing which is more
important is, therefore, pointless. Both are critical
to success.
Unique strategies are rare. Some years ago I
received a copy of the marketing strategies and plans
of a large bank before I had signed a confidentiality
agreement. A day later, I received a phone call from
a very agitated executive asking me to return them
immediately. I did so, but without adding that they
were indistinguishable from the strategies of four
other banks that I had reviewed in the previous three
years. The competitive advantage is unlikely to
come from the uniqueness of the strategies; far more
likely, the company that executes the strategy with
brilliance will win.
There are many elements that go into the execution
of strategies. Key among them are:
• The alignment of the organization's various
department and sub-unit strategies so each
and every unit and person is striving to
achieve goals and objectives that contribute
to the overall mission, vision and objectives;
• Performance management, at the individual,
team, departmental and organizational unit
levels to ensure that the right people are
recruited, trained, developed, motivated and
directed in ways that support the
organization's mission, vision and objectives
consistent with organizational values.
• The leadership of strategic and operational
change, not just in response to "burning
platforms" but in anticipation of events and
states that many people in the organization
cannot comprehend or visualize at the
moment when change must be planned and
initiated.
Many excellent strategic thinkers and planners fall
short when it comes to execution. They may lack
the attention span needed to concentrate on the
details of large-scale organizational change; they
may not be persistent enough to see those changes
through to completion
when faced with
resistance to change; they
may feel that to do these
things is "micromanaging"
and that their
role is to focus on the "big
picture." That is not my
view. Truly effective
leaders derive strategy in
part from a detailed
understanding of their
business and how it works,
and they drive strategy
through each and every
business decision and the
people who make things
happen in the
organization. They are as tenacious in
implementation as they are brilliant in strategic
formulation.
4. Monitor the results and make strategic
adjustments.
The perfect strategy, flawlessly executed, is the
exception rather than the rule. Leaders recognize
the probable imperfections of any plan and take care
to monitor the outcomes systematically and
thoroughly, always being prepared to make
adjustments or completely change the strategy.
The best strategies and plans incorporate
measurements, but smart leaders are always alert to
the unanticipated: the competitor who responds
differently than the way you thought he would; the
sales force that cannot recruit enough people of
sufficient quality to execute the sales plan, at least
on the preconceived schedule; the key research
scientist who leaves to join a competitor; an
unanticipated change in legislation that makes it
impractical or illegal to take a certain approach to
the marketplace; a planned merger that ran into
trouble in the integration phase; a market that turned
sour; a product that did not live up to expectation.
Really effective leaders
understand the frailty of
strategic plans. They also
understand that if they act
promptly they can often
make mid-course
corrections to plans that
can put them back on
track, or they may even
find a superior solution.
Furthermore, they are
never blind to the idea that
they may have made a
mistake. In its early days,
Dell experimented with
retail outlets -- briefly!
Then Michael Dell
realized that he was
moving away from the direct sales channel that was
the core competence of his company. He rapidly
changed directions.
One of the best quotations I have ever come across
is: "If you're going to eat crow, eat it while it's young
and tender." It puts a premium on the early
acknowledgement of leadership errors and rapid
steps to correct situations; so what if it's a little
embarrassing.
Highly effective leaders also increase their sensitivity
to discordant information when they are deploying
new strategies., the founder of Miracle
Food Mart, had a great saying: "When three people
tell you that you're drunk…lie down! But that only
works if you are listening to the people. Every
great historical leader recognized that courtiers were
not necessarily the best advisers of kings and
queens… there was the need for the presence of
the "voice of the people." So, smart strategic leaders
have monitoring systems that feed back what
customers, first-line employees, suppliers, regulators,
and other stakeholders and their representatives are
thinking about strategic decisions and their
implementation. They don't retreat to their
management bunkers and
wait for the first official
measures of success to
come out. They get out
there, personally, meet with
early adopters, meet with
people who have tried the
product and did not
repurchase, attend testing
panels, see how trade
channels respond to
presentations, and so on.
A story is told of
arriving in a city one
day to be met by a local
senior general manager. As
they were climbing into the car, asked, "Where
are we going?" and was told, "To see some of our
best customers who would like to meet you." To
which Welch responded, "Cancel it; I want to go see
the people who aren't buying from us!" Leaders aren't
looking for flattery -- they are looking for information
that will inform and improve their strategic decisions.
Does this personal involvement create some
concerns among subordinates that they are not being
trusted to do what they are supposed to do? Yes,
sometimes. But real leaders don't get too upset about
this. They would much rather risk this than to have
anyone believe that they did not sweat the details,
and most of those who are responsible for the details
are delighted with the leadership attention they are
getting.
5. Build organizational capabilities
Highly effective leaders act for both the short- and
the long-terms, simultaneously. So, while they are
surveying their environments, developing winning
strategies and executing them brilliantly, and
monitoring them systematically, they are also
investing time, effort and money in building their
organization's core competencies, management and
leadership talents.
The business manager
often cuts costs to
meet profit crunches.
This is frequently done at
the expense of anything
that promises long-term
returns. Many commodity
- focused companies,
such as those in basic
steel production, respond
to downturns in the price
of steel or increases in
input costs by laying off
people in inverse order of
seniority, enacting hiring
freezes, stopping all
recruitment of new
people, postponing or cancelling training and
leadership development. Little wonder that after
50 years of doing this, they have aging workforces,
reputations as places where you go to stagnate in a
role forever rather than to be developed to the
maximum of your potential.
The business leader also has a keen eye on costs
and, certainly in commodity businesses, is sensitive
to the price fluctuations in the marketplace. But
unlike the manager, he or she balances the need to
cut costs with the mandate to build for the longer
term. Employment costs may be cut not by hiring
freezes but by buying out two "C" employees and
replacing them with an "A", by cutting some lowervalue
training programs but retaining core leadership,
and by developing high-potential focused programs.
I work with such a company, and the pressures on
the leader to cut everything when market prices are
low are intense -- and he resists.
The great British wartime leader and statesman
was famous for many things, but
one incident is relevant here. In the middle of an
air raid at the height of the blitz on London, he called
a meeting of his war planners to discuss the invasion
of Europe -- probably not to take place for another
two or three years. He was worried that the lack of
landing craft would not allow the allies (the U.S. was
not even in the war at that time) to put enough troops
on the beach. So he acted to ensure that the balance
between producing Spitfires now and landing craft
later was maintained.
Note that we are talking here about leading for
the short-term and the long-term. Managers choose
between the two, maximizing one or the other;
leaders optimize over both.
But there is more than leadership strength that
must be developed. Other core competencies, such
as knowledge management skills, intellectual
property, excellence in business-government
relations, community acceptability, environmental
reputation, all represent valuable assets that can be
turned into income or other outcome measures at
some time in the future. Leaders add to this store
of assets rather than deplete them. Leaders that
liquidate core competencies for short-term operating
results may not be doing the leadership job that they
appear to be doing on the surface. Liquidating an
asset may have a temporary positive impact on
income?but it may also have a negative effect on
the balance sheet!
Outstanding leaders over the long haul recognize
that they must continue to invest in core
competencies at the same time that they produce
results in the short-run. Whether it is renewing
physical plant, equipment, machinery or the talent
pool, it represents the future of the organization.
The challenges of leadership
I have described three primary challenges of
leadership -- strategic (involving both environmental
surveillance and the formulation of winning
strategies), executional (implementing those
strategies, monitoring their impact and making
adjustments as indicated), and developmental
(building core competencies and cadres of leaders
at all levels).
There is another, more personal challenge.
Leadership can be challenging, frustrating, exciting,
exhilarating, depressing, stimulating, dangerous,
exhausting -- and many other things. Throughout,
the leader must keep a sense of personal balance,
humility and integrity. Leaders must keep on
growing, learning and developing if they are to
continue to be effective leaders. The leader often
has responsibilities and obligations beyond the
narrow business sphere -- to family, community and
the broader society within which he or she operates.
These must be balanced with the obligations the
leader has toward the enterprise he or she leads and
the people who put their trust in their leadership.
Leadership is not for everyone, and it is not
something that even really good leaders necessarily
want to do for all time. Above all else, leaders need
to know when it is time to stop leading, to hand
over the reigns to someone else. The leader that
outstays his or her willingness or capacity to lead is
one that will eventually do poor service to their
followers, no matter how well they may have served
them in the past.
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