Managing Leadership^®

The term “strategy” has a powerful cache to it. It calls to mind the highest level thinking, tremendous stakes, and even genius. Everyone wants to be associated with the word; certainly the modern leadership movement has jumped on the bandwagon.

But as we’ve seen here before, as important as it is, it is far less important than execution. That’s where you want to see genius – and not just at the top, but permeating every corner of your organization.

Strategy is, after all, just a basic level of planning. True, it is a fundamental level, and one upon which other plans are built and against which their results are measured. But it is still little more than careful, steady, thinking about how to actually accomplish the purpose and vision developed previously.

Once produced (and regularly updated), strategy helps transform what up to now has been dreamy-eyed aspiration into direction and measurable landmarks that people can point their activities toward. It is the skeleton that gives traction to the energy and spirit of the organization.

So, it is important. But is it distinct from management, or does it dwell only in the realm of leadership?

It certainly is a future-oriented function. It begins the streamlining of the organization’s activities toward future goals and around anticipated obstacles. Nevertheless, as a planning event it is decidedly not distinct from management, and is generally better performed by professional managers than by unearthly products of the modern leadership movement.

But ideally, where, actually, should it come from? In the modern world where the CEO is so often dual-hatted as the board chair, and is identified as the company itself, it is typically performed by that person, with the assistance of select directors and executives. But should it be?

In my view, to maintain the integrity of a meaningful corporate governance structure, strategy is something that is best developed by the board, and presented to managers for execution. In the real world, however, this is unlikely. The more probable occurrence will be that the senior management team develops a strategy to present to the board for its approval, and which it will then execute.

This superficially possesses some advantages. The strategic plan will be infused with the realistic eye for opportunity and execution possessed by the firm’s managers, and it will follow the popular current principle of giving those who are to execute a decision input, if not ownership, in it.

But I believe it would be best in such an instance if a board hired additional outside expertise, such as a carefully selected consultancy, to develop strategic plans for consideration as well. This is important to make sure the board has distinct and viable alternatives from which to choose, including those that are free of the various forms of management bias that might otherwise infect the available choices.

So, strategy is a leadership function only in the most generic senses of the term: it is forward-looking and is performed or approved by those with the fullest responsibility for direction of the firm. But it is also, at bottom, a management function – the fact that it is oriented to the future does nothing to dilute that fact.

We’re going to chalk this one up as a standard leadership function with its origin in management, with key managerial responsibility for input, but that is best performed or approved by traditional directors, as opposed to singularly transcendent leaders. Things, then, as we move from purpose to execution, do not seem to be boding well for an independent function called leadership.

Will that trend hold up? Let’s see how it plays out with respect to organizational design, which we’ll discuss next. In the meanwhile, have a great weekend – see you on Monday!

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Today’s tip: Speaking of purpose, vision, and strategy, we’ve noted that owners should be preeminent here, rather than CEOs. But what if the CEO is a sort of general, rather than silent, partner? And what if he or she simply brings additional owners on board who support his or her vision and strategy? Does that gum up the works? Please see this intriguing report from The Economist that touches on this with respect to a biotech firm in Europe.

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