If strategy were a physical summit in your company, business unit or functional area, would you be the only one standing at the top? For many leaders, the depressing answer is ‘yes.’ While you may have built a mountain of expertise shaped by strategic insights, the great leaders are the ones who help the rest of their team scale those heights from tactical to strategic thinkers.
The process of helping managers develop their strategic thinking skills enables an organization to become more competent in both strategy development and execution. Research out of Harvard Business School has confirmed the financial value of superior strategic thinking skills to an organization. A total of 160 companies were reviewed over a ten-year period to determine which of the management practices were essential to a company’s financial success.
Strategy development and strategy execution were two of only four management practices out of two hundred found in every single financially successful company. No exceptions. The firms with strong strategy development and strategy execution outperformed the losing companies by a 945 percent to 62 percent margin in total return to shareholders; a 415 percent to 83 percent advantage in sales; and a 326 percent to 22 percent advantage in operating income.
Leaders can embed a strategic thinking competency within their groups by following three steps:
1. Create common knowledge: What is strategy, how is it different from your business model and what is its’ relationship to competitive advantage? If your team doesn’t have an understanding of these basic concepts and how they influence one another, it’s unfair to fault them for failed strategy execution.
2. Create common language: Begin your next staff meeting by having people write down their definitions of business planning terms such as goals, objectives, strategy and tactics. Having conducted this exercise with many companies, I predict their answers will vary quite a bit. Develop a universal language of the key terms for discussing strategy and provide everyone with a reference piece to refer back to throughout the year.
3. Create common tools: Using only one tool to develop strategy (i.e., SWOT Analysis) is like giving an artist only one color to paint with. Introduce, practice and apply at least two tools in each of the four areas of your business: market, customers, competitors and company. By doing so, you’ll ensure your people are thinking strategically and holistically about the business.
Have you built a path for your team to reach the strategy summit? If not, you’ll know all too well how true the saying is: “It’s lonely at the top.”