Strategy is just a desktop exercise

“The approach decodes true behaviour change and transforms our strategy from a desktop exercise to something we live and breathe. It’s a simple, practical and intuitive way to create tangible and immediate effects – the puzzle brick we have been missing.

Why haven’t we always done it this way?”

HR director, FMCG company

Pinning your hope on the 10%

If you compare the 1955 Fortune 500 companies to the 2019 Fortune 500, only 52 companies remain on the list. In other words, 448 companies have for various reasons disappeared from the list during these 64 years. Yes, you read it correctly. Close to 90% have disappeared, and only 10% survived. Did those 448 companies not have thoroughly analysed, calculated and formulated corporate strategies in place as well as meticulously detailed plans for how to succeed in the future? Of course, they did. But. As in a big but.

For many, it ended up being the most extreme desktop exercise of the decade. Many of them stumbled along the road to transform their strategies into reality and to adapt to the unknown that suddenly came creeping up on them such as increasing complexity and speed, market disruption and other more successful players as well as innovation’s increasing dominance over efficiency and control.

Embarking on and succeeding with a new strategic journey, which in essence means you aim to create a different future and different results, require people to act differently. In turn, to act and behave differently, people need to think and wire their minds differently. Chances are that nobody has ever been exactly where you are heading. Not you. Not your employees. Probably nobody on this planet.

More than ever, we get approached by executives who have come to a crucial realisation: that the most definitive factor to succeed with their strategy is to equip their people to deliver on it. That we need to develop people to develop business. That the gap between the areas of strategy and leadership has to be closed once and for all.

The absence of humans, biased budgeting and chasing negative ROI

When it comes to equipping organisations and leaders to become fit for the future, there is a growing realisation that change transformation and leadership development – as we have known them for decades – are not delivering the expected impact.

The yearly global spend on leadership development initiatives amounts to a staggering USD 46 billion. With that sort of investment, CEOs should expect a rock-solid return on investment. So, is there? Not even close. Only 7% of executives believe that these initiatives effectively develop their leaders to steer the company into the future.

Here are three reasons why:

#1: The absence of humans

#2:Biased budgeting

#3:Chasing negative return on investments

The corporate strategy is formulated in a business way

Thoroughly analysed, calculated and transactional in its nature. If we do this, we get that. How come the strategy is so seldomly formulated from the human side of business?

The strategic choices made and thus also the deselections made will form new cornerstones to align the leadership with. Customers, market position, geographical expansion, product segments, value propositions etc. These moves will always require a shift in focus, attention, capabilities, leadership and behaviours.

Without an articulation of the leadership and employee behaviours required to succeed, each and every leader is forced to make his/her own interpretation. What organisations need is for the strategy to be translated from strategic goals into specific behaviours.

Cost of implementation does not consider the most fundamental success factor

When it comes to cost of implementation, too few strategies take into account the necessary people development or cultural movement efforts that have to be made to equip the leaders and employees to start delivering on the strategy. If people do not understand or believe in the strategy, they will make non-aligned decisions.

If people lack the competences or capabilities to deliver on the strategy, they will act in ways that do not necessarily bring us closer to the end goal. The strategic choices made have to be in sync with the actions we take to deliver on them. Not just in a roll-out plan but in everything we do. 

Efforts with arguable effect

Since leadership development is not included in the calculation of the cost of implementation, the HR director and the person responsible for L&D have to deal with whatever little money they have got. One of the reasons for the poor (often non-existing) return on investment of leadership development initiatives is an overconfidence that standard, plug-andplay programmes will move the needle.

Many initiatives are too theoretical and rest on the assumption that one size fits all and that the same group of skills or style of leadership is appropriate regardless of strategy, organisational culture or the specific situation the company is in. Leadership development becomes something you do on the sideline. Such off-the-shelf programmes may mean a smaller investment but are almost always a waste of time and resources.

Connecting the dots between strategy and leadership

Behold, there is a proven vaccine for the virus. On the other side of the spectrum, organisations that apply a strategic view on developing their people and tie it super close to accelerating the strategic agenda are continuing to deliver top performance compared with their peers on crucial metrics such as revenue growth, market position and future growth.

Organisations that consider L&D as critical to their strategic transformation success are 29 times(!) more likely to succeed with their transformation efforts compared to organisations that do not view L&D as critical.

Companies must become transformation leaders to avoid becoming a victim of transformation failures and to gain the best competitive advantage from changes in the business environment. They must become experts in execution and getting “the new” up and running quickly.

Organisations that manage to tightly string strategy and leadership together are continuing to deliver top performance compared with their peers on crucial metrics such as revenue growth, market position and future growth.

The 2018 State of Leadership Development, Harvard Business Publishing, 2018

This requires leaders to:

• Have skin in the game and step up early in the transformation process.
• Inspire to extraordinary levels of engagement in employees, managers and executives.
• Tap into the power of teamwork and collaboration.

Such demands are of course putting more pressure than ever on the L&D team, which must link the business strategies with the programme designs. They have to develop leaders who cannot only quickly drive the necessary change but also inspire and align employees behind the corporate strategy. The pressure to build all of these capabilities is mounting precisely as leaders in most organisations are struggling to meet ever-increasing demands.

Organisations that say leadership development is critical to their success are 29 times more likely to have a successful transformation than those where leadership is viewed as not important.

The 2018 State of Leadership Development, Harvard Business Publishing, 2018

Connecting the dots, there is clear evidence of a huge gap between giving birth to new strategic ambitions and equipping people to start moving fast enough in that very same direction. Struck by a strong urge to help companies close this gap, we have spent a considerable amount of time experimenting with different solutions together with several of our clients – bold organisations that have dared to prototype new ways to succeed with their strategic transformations.

Among other things, we have:

• Helped transform one of Scandinavia’s largest FMCG companies to deliver on a profitable growth strategy
• Supported one of Scandinavia’s largest property developers to deliver on their global expansion strategy.
• Enabled the growth ambitions of an international pharmaceutical company by building agile capabilities.
• Accelerated the transformation of an international energy supplier to deliver on their green energy strategy.

After years of prototyping, we dare to say that we have identified some magic bullets. Here they come. It may sound simple. And it is. In theory at least.

The magic bullet to getting things done

#1. WHAT THE [@#!?] DOES THE STRATEGY REALLY MEAN TO ME?

Surprisingly, strategies are often extremely unclear to leaders only a couple of levels below the executive management team. To resolve this issue, we sometimes use a method called Video Testing the Strategy. It helps leaders break down the overall strategy into goals that make sense for them. These goals then guide which behaviours need to be developed as well as the leadership required.

For example, we could ask the leaders:

• How does your function contribute to the overall strategic ambitions?
• In terms of your culture and behaviours, what works to your advantage, and what holds you back? Think about that for the next 3-4 weeks in your own context.
• After the 3-4 weeks, what are the 1-3 most important behaviours we need to work on? Give examples from reality.
• On a scale from 1 to 5, where do you think you are today? Where do you think you could be in X months?
• How are you going to drive the behaviours that you want to see?
• If we come to your workplace in three months to make a video recording, how will we see that you are driving the desired behaviours? What questions should we ask you?

The leaders’ reflections to these questions help them to transform the strategy into extremely specific behaviours so tangible you should be able to see them in a video. Sometimes, we actually show up to make that video.

#2. SPARK POWERFUL, FOCUSED MOVEMENTS IN KEY AREAS

Strategic choices have been made on how to play in industry segments, customer segments to target, channels to utilise, which capabilities and cost setup the business model is geared towards and how to respond to competitor reactions.

All strategies contain crucial movement areas. Outlining and prioritising areas allow us to carefully craft themes for leadership behaviour sprints for all leaders to execute during the coming months. The purpose of the sprints is to make an actual move on the strategy and the culture and at the same time develop the required leadership throughout the organisation.

Here are some sprint examples from organisations in which we have applied this:

• Extreme customer focus.
  No matter where you are placed in the organisation, you, your team and the organisation will benefit from a deeper empathy and understanding of the company’s customers. At Company X, even Finance got a better understanding of the company’s end customers, enabling Finance to rethink their customer touchpoints and make life easier for the company’s customers. If Finance managed to change their old, rigid processes in a few months, imagine what the rest of the company managed to do.
• Courage to innovate.
  To succeed with their transformation, Company Y recognised that change and innovation were required in all corners of the company. Innovation became everyone’s job – not just product, service or business development functions. Everyone at Company Y started to innovate their contribution to the overall strategy all the way from front end to internal support functions. Innovations varied from new service offerings to process and supply chain innovations.
• Bust non-value-adding bureaucracy.
  Bureaucracy was a heavy burden to Company Z, costing them way more than it earned them and holding them back from making progress at the speed they dreamt of. Control and efficiency were strangling all efforts to create something new. The focal point of one sprint was for leaders and employees to question every single “this is how we have always done things around here” that derailed the focus on delivering real value to the strategy. Barriers that were “hacked” involved disempowerment and mandate, decision bottlenecks, slow internal processes and political games.

At one company we worked with for a year, all 300 managers performed leadership behaviour sprints in 5 selected movement areas. This amounted to a total of 1,500 sprints executed throughout the organisation. The powerful movement that emerges when all leaders walk in the same direction gives us goosebumps. Every time.

#3. TRANSFORM LEADERS FROM CONSUMERS TO PRODUCERS

Traditionally, leaders attend leadership development initiatives as passive consumers of information and education. This has never created and will never create the necessary grit, motivation and perseverance to make big enough (if any) changes to yourself as a leader.

In a survey with over 700 leaders, 3 out of 4 leaders believe development experiences should be driven more by learners than by pushing top-down generic L&D priorities. By turning traditional leadership development upside down, leaders are forced to transform into active producers of their own development. This has shown to be a much more powerful basis for real, valuable development.

With the common strategic theme as an umbrella, leaders are guided to discover and define a challenge deeply rooted in the individual leadership identity they aspire to have. During the leadership behaviour sprint, leaders refine their leadership skills and work closely together with their teams and at the same time impact the culture and make progress on the strategic agenda. Leaders are encouraged not to hide behind insecurities or incapabilities but rather involve, be open and create transparency with teams and peers about the challenge. This is a success ingredient to enable the leaders to gather real, valuable data and feedback along the way. By frontloading challenges that may arise and visualising what success will look and feel like in the end, leaders become emotionally invested in the journey ahead, willing to fight harder when things get tough.

For more details about this, please see the article “Bringing leadership development back to life to catalyse strategic transformations”.

Sounds interesting. Does it work?

By now, we hope that we have managed to make it clear that this is neither a traditional leadership course nor a traditional strategy roll-out. By connecting the dots between strategy and leadership once and for all, leaders transform into the active producers of their own development with a tight connection to advancing the strategic agenda. If designed and implemented right, it does not even require leaders to spend much time away from “real” work. It actually frees up time and energy for leaders to do valuable work because they suddenly do the right things and do the things right. Succeeding with this requires collaboration across the executive management team and making L&D a strategic partner for real. Their agendas are not separate but rather one common pursuit.

Ethnographers who have studied this approach conclude that there are two major shifts achieved:

1. A major shift in the responsibility for one’s own leadership. The responsibility leaders take for developing their leadership and delivering on the strategy regardless of whether it is the CEO or a plant manager.
2. A major cultural shift. Moving the culture to truly support the strategic ambitions created through powerful movements where both leaders and teams are involved.

We bet you plan to be one of the 10%. The answer might be quite straightforward. Just make the decision to make strategy and leadership tightly interlinked. It is probably the best, and easiest, decision you will ever make.