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By Ellen Pearlman
Strategic Thinkers: Steven Wheeler, Walter McFarland, Art Kleiner
Credentials: Wheeler is a senior vice president at Booz Allen Hamilton with expertise in strategic leadership; McFarland is a vice president with Booz Allen specializing in human capital, leadership and learning systems; Kleiner is editor-in-chief of strategy + business.
Big Idea: The effectiveness of leaders depends on the top team's quality and the capabilities of the full organization
Article: "A Blueprint for Strategic Leadership," published by strategy + business, Winter 2007
Leadership styles go in and out of favor just like fashion trends do. For a time, leaders became rock stars and had the egos and compensation packages to match their exalted status. But with many of the companies these business icons led suffering from lagging stock prices, business consultants and authors are now singing the praises of the leaders who realize that it's the quality of the top teams and the organization behind them that make the difference.
In fact, research is showing that companies that are consistently the best to work for also perform best. In "A Blueprint for Strategic Leadership," published by strategy + business, Winter 2007, the Booz Allen authors cite the results of research conducted by Gurnek Bains from his book Meaning, Inc. that shows that annual investments in the publicly held "Best Companies" (the 100 Best Companies to Work For, produced by the Great Place to Work Institute in San Francisco) from 1994 to 2006 would have yielded a return of more than 600 percent. That compares quite favorably with an investment in the S&P 500, which would have yielded 250 percent.
So what is a strategic leadership plan? According to the authors it is "an integrated group of practices that build a company's capacity for change." And to develop and maintain this capability, the authors cite four elements that must be integrated together:
- The commitment to the company's purpose
- The makeup of the top management team
- The capabilities and motivation of people throughout the organization
- A sequence of focused, well-chosen strategic initiatives that can take the company forward.
Companies often lose their way because they don't have a clear, focused statement of their purpose. The authors call this the "why factor," which explains to employees "why we do what we do." Having a clearly enunciated statement of purpose becomes the base for everything that follows. Some companies lose their sense of purpose when they change leadership. Dell, the authors contend, lost its way when it began to focus on cutting costs after COO Kevin Rollins took over the reins from CEO Michael Dell in 2004. Without its laser-like focus on customer service that had brought it success in the past, the company's reputation and business suffered. Today, with Michael Dell once more at the helm, the company is seeking to regain its focus.
Another way that leaders get tripped up is they are prone to creating their top teams from people they feel comfortable with, even though it's often an unconscious motivation. Balancing the talents and temperaments of team members with a diverse group of players is critically important, but often not accomplished.
Building the capabilities of an organization for change is challenging. Booz Allen learned all about this through their own work on building organizational capabilities for change and through their business practice known as organizational DNA (you can diagnose your organization's DNA by filling out a short survey. Organizations can enhance their ability to deal with change and motivate people to act in alignment with the company's purpose by working on the following:
- the reporting relationships and structures,
- the networks through which people exchange information,
- the motivators and incentives, and
- the decision rights in an organization.
And, finally, the strategic initiatives that a company launches when faced with a major change must be based on the particular situation the company faces and its corporate culture. Ask yourself: Is your company in crisis? Is your company in a state of inconsistency? Has your organization become complacent? Is your company exhausted from too many strategic initiatives designed to turn the company around? The answers to those questions will determine how your company or any other moves forward.
To learn more about how to get started, read the entire article.
Also of interest:
- Senior Leadership Teams: What it Takes to Make Them Great by Ruth Wageman, J. Richard Hackman, Debra A. Nunes, James A. Burruss, published by Harvard Business School Press, January 2008. The authors argue that in today's rapidly changing world, no one person can do it all. But setting up leadership teams is often mishandled, leading to disappointing results. The authors use research developed from their study of more than 100 top teams around the world to discuss what can work.
- Hot Spots: Why Some Teams, Workplaces, and Organizations Buzz with Energy—And Others Don't by Lynda Gratton, published by Berrett-Koehler Publishers, February 2007. The final volume of a trilogy of books on creating energy at work by London Business School Professor Lynda Gratton.
CIOZ Question: What team-building practices have worked well in a company you have worked for and what practices have failed miserably? Post your response here.
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