Leadership Strategy

We believe the turmoil we are currently observing has something to do with leadership, and that if we don’t change our current approach to leadership development, we will see even more of the same. As well-known companies disappear or are taken over (think of Lucent, Chrysler, Lehman Brothers, Northern Rock, Merrill Lynch) and new forces like the economies of China and India rise, surveys of Coos show that they believe the one factor that will determine their fate is the quality of their leadership talent.

Yet many top executives bemoan the lack of leadership bench strength in their companies and wonder what will happen once the baby-boomer generation of traders finally steps aside. Can we count on the next generation of leaders to step up once they are in position? Or are we seeing evidence of a talent gap that cannot be closed and will result in even greater numbers of high-profile failures? What can your organization do to avoid the risks associated with inadequate leadership and better prepare its current and future leaders for changes that are yet unforeseen? Every leader is aware of the value of a well-defined business strategy.

Few, however, give thought to the leadership that will be required to implement strategies that call for changes in the direction or capabilities of the organization. Without proper leadership, even the best and boldest strategies die on the vine, their potential never realized. This paper defines what a leadership strategy is and how to go about creating one for your organization that will forever change the way you develop leaders and create new leadership capabilities. What is a Leadership Strategy? In order to understand what a leadership strategy is, we first have to be clear about what we mean by leadership.

The Center for Creative Leadership has been studying leaders and leadership for nearly 40 years and has recently come to an important conclusion: leadership begins with individuals in leadership positions, but it doesn’t end there. L The ability of an organization to accomplish its goals does not depend solely on the force of will of a single great leader, or even upon the effectiveness of the organization’s chain of command. These things are important, but don’t in and of themselves help us understand why some organizations succeed where others fail.

Instead, research has shown, we must understand leadership culture, as defined by the collective actions @ 2009 Center for Creative Leadership. ALL RIGHTS RESERVED. The information 4 f formal and informal leaders acting together to influence organizational success. It is not simply the number or quality of individual leaders that determines organizational success, but the ability of formal and informal leaders to pull together in the support of organizational goals that ultimately makes the difference. Thus, when we speak about leadership here, it is both the leaders themselves and the relationships among them to which we refer.

At various times, the idea that leadership is greater than the individual leader has been referred to as interdependent, boundless, collective or connected leadership. In more robust definitions, leadership includes both formal and informal leaders. Observations of actual organizations in action are rarely as neat and tidy as their organization charts would suggest. Communication, influence and collaboration are occurring up, down and across the organization, almost as if the organization chart didn’t exist, as revealed by the work of various people on mapping informal networks within organizations. To ignore this reality in any discussion of leadership is to miss the point of what is really going on and what must be understood and managed if strategies are to be implemented successfully. Thus, when we describe the leadership of an organization, at a minimum we should consider: A. The quantity of leaders needed, as indicated by current and projected formal leadership positions depicted on an organization chart (number, level, location, function, business unit, reporting relationships, etc. ) B. The qualities desired in selection (demographics, diversity, background, experience level) C.

The skills and behavior that are needed to implement the business strategy and create the desired culture (skills, competencies, knowledge base) D. The collective leadership capabilities of leaders acting together in groups ND across boundaries to implement strategies, solve problems, respond to threats, adapt to change, support innovation, etc. E. The desired leadership culture, including the leadership practices in use, such as collaboration across boundaries, engagement of employees, accepting responsibility for outcomes, creating opportunities for others to lead, developing other leaders, learning how to learn, etc.

In much of the work on talent and leadership bench strength, the focus has been on only the first two of these ways of describing an organization’s leadership. By leaving out connected leadership and leadership culture, we have overlooked what makes leadership come alive in organizations and the factors that often determine whether strategies and plans will actually be achieved. A good leadership strategy takes all of these factors into account. Simply having all of the leadership positions on the organization chart filled will not produce the leadership that is required to implement 0 2009 Center for Creative Leadership.

ALL RIGHTS RESERVED. T he information contained in this document is proprietary and confidential intellectual property of the Center for Creative Leadership. Copying or redistribution for commercial purposes of any material or genteelness is strictly prohibited 5 What is a Leadership Strategy? (co NT i n u deed ) strategies, adapt to change, support innovation or other important organizational agendas. It is not just having the right number of bodies, it is what those bodies do and how they relate to one another that matters.

A leadership strategy makes explicit how many leaders we need, of what kind, where, with what skills, and behaving in what fashion individually and collectively to achieve the total success we seek. Very few organizations have an explicit leadership strategy. Is it any wonder that without one, Coos find that they don’t have the dervish talent they require? Like business strategies, leadership strategies are based on a thorough analysis of the current situation and an informed view of the future. The strategy then provides a series of recommendations to close the gap between the current situation and desired future.

Once the leadership strategy is known, a leadership development strategy can be formulated to produce the desired future state, and implications for talent management processes can be identified. When the strategy is implemented, business results will provide feedback on how well the leadership strategy is working and help happen what new business strategies can be considered with the leadership talent that has been developed 6 The leadership strategy should be driven by the business strategy and specify: A. Quantity: How many leaders will be needed over the next 5-10 years, taking into account growth needs and projected turnover 1. Hen 2. Where 3. At what level B. Qualities: The characteristics individual leaders and leaders overall should possess when selected or retained, such as: 1. Demographics a. Age b. Gender c. Race d. Culture of origin e. Education f. Experience 2. Internal promotions versus external hires 3. Diversity, targeted diversity a. Bevel b. Location C. Skills/Behaviors: The specific skills, behaviors, knowledge, competencies or abilities leaders need by function, level, location or unit to implement the business strategy 1. Energetic behavioral competencies that apply to all leaders in the organization 2. Specific behavioral competencies by level or function 3. Generic skills and knowledge required by all leaders in the organization 4. Skills or knowledge required by level or function 5. Skills, knowledge or capabilities by location 6. Language capabilities D. Collective Capabilities: The capabilities that are required of leaders when citing together, such as: 1. Providing direction, demonstrating alignment and generating commitment as a collective leadership team 2. Loving problems or making improvements efficiently and effectively that require collaboration across internal or external boundaries 3. Engaging employees in decision making and to gain their active support in implementing planned cross-functional actions 4. Jointly formulating strategies and executing them in a coordinated fashion 5. Implementing successful innovation requiring cross-functional collaboration 0 2009 center for creative Leadership. ALL RIGHTS RESERVED. T he information 7 What is a Leadership Strategy? Co NT i n u e d ) 6. Adapting to change in a cohesive and coherent manner 7. Working together to grow the business in new markets 8. Ensuring compliance/transparency requiring a consistent set of values, beliefs and actions across the enterprise 9. Being responsive to customers in ways that demand cross-unit coordination 10. Developing talent on behalf of the enterprise, rather than for individual units E. Leadership Culture: The key attributes of the culture created by leaders through the way in which they lead 1. Agree of dependence, independence r interdependence among leaders 2. Key values that are reinforced through the collective behavior and actions of leaders 3. The leadership style exhibited by the majority of leaders (control-oriented, laissez fairer, participative) 4. The leadership practices that are both important and shared across the enterprise (engaging employees, accepting responsibility, embracing opportunities to make improvements, being customer focused and so forth) Once the leadership strategy is formulated, a leadership development strategy can be drafted.

It clarifies how the leadership strategy will be accomplished, explores the implications for talent management systems and processes, and outlines an approach to leadership development. Creating the Leadership Strategy The first step in formulating the leadership strategy is to review the business strategy for implications for new leadership requirements. This analysis usually requires a team of experts composed of some people who know the business intimately and others who are familiar with processes for acquiring, retaining and developing leadership talent.

Beginning with the business strategy, the first step is to identify the drivers of the strategy. Drivers are the key choices that leaders aka about how to position the organization to take advantage of its strengths, weaknesses, opportunities and threats in the marketplace. They are the things that make a strategy unique to one organization as compared to another and dictate where tradeoffs will be made between alternative investments of resources, time and energy.

Drivers are few in number and help us understand what it is absolutely essential for leaders and the collective leadership of the organization to accomplish. 8 The reason why identifying key drivers is important in constructing the leadership strategy is because difficult choices will ultimately need to be made bout where to invest money in leaders and their development.

Particularly as budgets for leadership headcount and development tighten, it is more critical than ever to demonstrate a clear line of sight between investments in leadership and desired organizational outcomes, such as growth, profitability, talent retention and other metrics that are of key importance to top-level decision makers who control leadership development spending. Key Drivers of the Business are: the relatively few (e. G. , 3-5) determinants of sustainable competitive advantage for a particular organization in a particular industry. Also known as ‘key success factors,” “key value propositions,” critical success factors, etc. Present- and future-oriented. As customers and competitors change, are the key strategic drivers still relevant? Note that key drivers are not in themselves detailed strategies; instead, they are the key decisions leaders are making about what the organization must do. For example, in some markets, like the restaurant industry, making certain that customers are satisfied may be chosen as a key driver of success. In other industries, like utilities, customer satisfaction may not be a key driver.

A key driver in the utility industry might be finding long-term sources of competitively priced raw materials to turn 9 Creating the Leadership Strategy (co NT i n u e d) into electric power. Customer satisfaction and low-priced raw materials are not complete business strategies; instead, they drive the formulation of detailed business strategies. The restaurant owner must develop strategies for producing high levels of customer satisfaction, and the utility company must develop strategies for securing low-cost raw materials.

Key drivers can be identified by asking a few fundamental questions: Is this an organizational capability that is absolutely vital? Could something else be more essential in causing the vision/ mission to happen? Defined relatively, what is most important to competitive success and mission completion? Is this something that the organization is positioned to do better than its competitors? Will doing this well translate directly into continued or future success? Would not doing this well cause the organization to fail?

Key Driver Becoming More Global Leadership Strategy Implications Requirement for greater cultural sensitivity among leaders Enhanced representation of different geographies at top levels Enhanced language skills n key leadership roles to enable cross-cultural relationship building Enhanced importance of foreign assignments for future leaders Greater understanding of local laws and business arrangements in strategy making Becoming More Innovative Greater interdependence among leaders to create more effective collaboration across functions in bringing new products to market Need to increase leadership involvement across functions in gathering consumer insights and translating these into profitable ideas for new products Must anticipate capital, space, talent implications of rapidly expanding product portfolio Need cultural hanged to create a spirit of innovation versus a culture of risk aversion at top levels of the organization 10 Becoming More Customer-Focused Need to develop and implement new processes for understanding customer experiences and translating them into improved business practices Must create solid linkages across the organization at all customer touch points, so that the customer experiences a seamless relationship Need to understand the needs of different customer segments and move beyond “one size fits all” approach Must instill a culture of customer primacy and customer care Investing in High-Growth Opportunities Rapid growth requires attention to talent development; must accelerate the acquisition and development of talent for key roles to avoid talent becoming the constraint to continued growth Must grow number of leaders at every level by 10% per year over next three years Improving Operating Efficiency Must introduce Six-Sigma, lean manufacturing and other methods to bring costs into line with key competitors; these must be led from the top and supported by leaders at every level Must create a culture of continuous improvement that is led authentically by those in leadership positions 2009 Center for Creative Leadership. ALL RIGHTS RESERVED. T he information 11 In reality, the leadership strategy implications would be much more specific, reflecting the actual opportunities and issues surrounding the key drivers. The key drivers and their associated business strategies should have clear implications for what leaders must do well in order for the organization to succeed.

Ultimately, leadership development activities should be designed to ensure that individual leaders and the collective leadership of the organization are prepared to implement the most important strategies related to the key drivers. After the high-level implications for the leadership strategy have been identified, the next step in developing the leadership strategy is to assess the current leadership situation and compare it to the desired future. This is the step that requires the most “heavy lifting” in terms of assessment and data collection, covering a wide range of variables that will affect decisions regarding both the leadership strategy and the leadership development strategy to follow. 12 A sampling of the methods that may be used to collect the current-state information needed in each category is listed in the table below. Dimension

Quantity Methodologies for Data Collection Workforce planning HAIR data Scenario building Qualities Assessment centers Leadership style assessment/personality profiles Talent management forms/review sessions HAIR data Skill/Behaviors Career profiles Ability testing HAIR data Surveys/interviews Competency identification and assessment Collective Capabilities Focus groups Observation Leadership Culture Interviews Document analysis Culture assessment surveys Employee surveys Observation FOCUS groups Interviews Document analysis 13 The data from these analyses are used to identify gaps between the current and future states of leadership in the organization, which provides focus for the priorities to be addressed in the leadership strategy. A simplified example of the gap analysis that should be performed is shown below. Leadership Dimension Quantity of Leaders by Level Level 1 10 Analysis Implications of Gap for Leadership Strategy Significant increases at levels 2 & 3 will require accelerated internal development, as well as external recruitment or acquisitions.