At a glance
Some people may be natural born leaders, but strategic leadership skills can also be learned and improved through practice – which is just as well given that according to one study, the difference between the impact a top-performing leader and an average leader has on an organisation is at least 50 per cent.
John Trevillyan FCPA, who has over 21 years’ experience at Melbourne Business School and is a partner of Negotiation Education Australia, says leaders invariably hold the key to employee engagement, which is integral to business success.
He is also a facilitator of CPA Australia’s upcoming Strategic Manager Program, the latest in its Strategic Finance Leader Suite of executive education programs. The three-day course in part utilises the ground-breaking work of Robert Kaplan and David Norton, best known as the originators of the Balanced Scorecard, a strategic management tool that links a company’s current actions with its long-term goals.
Executing on your company strategy
According to Kaplan and Norton, there is a disconnect in most companies between strategy formulation and strategy execution, with their research revealing that, on average, 95 per cent of a company’s employees are unaware of, or do not understand, its strategy.
“Most people are happy to be involved in something they understand, but many companies do not spend enough time measuring performance against strategy, and when people don’t understand what they’re doing they become disengaged,” Trevillyan says.
Of course, this assumes they were ever engaged in the first place because, as he notes, there’s a good chance no one ever asked for their input.
“It’s been said that only 10 per cent of strategies succeed. I find that hard to believe, but it is probably less than 50 per cent. Leadership is about being able to articulate a vision and translate it into an action people can understand and follow. Some see the vision but can’t translate it, in which case a good leader would know how to delegate to people who can make it happen for them. For example, a good tradesperson can often need a partner who is a good businessperson.”
Be clear but ‘fuzzy’
In this respect, having a clear strategic plan from the outset is paramount, but according to Trevillyan, leaving a bit of “fuzziness” around the edges can help.
“If you are really listening to people you are going to have to tweak any strategy,” he maintains.
The trick is staying true to and delivering on the company’s overriding objectives while being nimble enough to exploit new opportunities which – perhaps because of changed economic conditions – suddenly arise.
However, the larger an organisation, the more important and difficult effective communication can become. Before it merged with AMP, Trevillyan worked extensively with insurance firm AXA, which every three to five years would adapt its corporate strategy to the changing market.
He says the company would book out a function area at the National Tennis Centre in Melbourne to not only inform managers of key shifts in strategy, but distribute brochures showing them exactly how the changes were to be communicated to staff. Although expensive, it achieved buy-in from management and ensured everyone from the top down was quickly and effectively brought onto the same page.
“In the case of AXA, they were changing from cost-cutting to becoming a growth-oriented organisation, which required a change in performance management systems,” Trevillyan says.
Develop a consensus
Although AXA’s new direction was determined by the board, it was up to managers to obtain broad consensus among the rank and file on how the goals it set could be best achieved.
“You may or may not be a part of overall strategy development, but as a manager you are going to have to make it happen, and that means developing a broad coalition behind it,” Trevillyan says.
“Once you establish the process, the performance management system has to match. If there is a new focus on customer service you could need more staff, which will be an added cost that has to be measured.”
For example, a key plank of hardware chain Bunnings’ strategy is to have sufficient staff on the shop floor to provide all customers with purchasing advice, even though 80 per cent don’t need it. The rationale, however, is that without the assistants it would lose 20 per cent of sales.
Overcome resistance to change
Change is often seen as a threat, and overcoming resistance to it is all about effectively communicating why it is needed – something that requires far more than just an email.
Generating consensus, Trevillyan emphasises, means properly addressing people’s concerns about change.
However, if a strategy is to be successfully executed, you also need to ask yourself whether you have the right people in the right place with the right skillsets, motivation and commitment for the job.
“Leadership is about explaining and listening and getting the best results from people,” Trevillyan says.
“It’s also about walking the talk in terms of what the company wants to achieve – helping to develop the strategies that will make the company’s core strategy work – and a key part of that is making certain the right people are in place.”
Implement distributed leadership
This is often called “distributed leadership”; the process of moving away from old structures that involve top-down leadership in favour of spreading decision-making ability throughout a team, particularly to those on the front lines of the operation. Encouraging initiative and collaboration, the technique allows those closest to the action to make the decisions that will most affect their success.
“Take Winston Churchill as an example, who never fired a bullet during the Second World War,” Trevillyan says.
“He led and managed from above, letting the people below him – most with completely different attributes – achieve the successes he wanted [and Britain, aka the company, needed].”
Focus on people’s skills
This also ties into “targeted leadership”, where once consensus on what will and won’t work has been reached, as a boss you need to keep those who are especially good at their job challenged and delegate to them accordingly, all the while with an eye on those further down the chain for whom the notion of change, and how to respond, may be new.
Trevillyan says this relates to what is known as the “four stages of competence”, but from a manager’s perspective the essence is to help someone “know what they don't know” or recognise a blind spot.
“As a leader it is important to spend more time developing these people’s skills so they can move to the next phase of being fully competent in their role. It is also where, as a good leader, you identify the people who can or can’t move to whatever is required.”
Interestingly, he believes it is probably possible to be a manager without being a leader – “but I don’t think you can be a good leader if you don’t have some management skills, or at least the ability to understand where you haven’t got those skills.”
In CPA Australia’s Strategic Negotiator Program, which will run again in 2018, Trevillyan emphasises the importance of managers seeing themselves as negotiators with stakeholders, listening to and questioning what they say to get their own message across.
“But how much time do organisations spend on executive committee meetings talking about strategy versus people’s belief in it?” he asks. “If you look at their agendas, I think it would be less than 10 per cent.
“Yes, companies need good strategy, but it has to be effectively communicated. You also need the right people and operational delivery processes that align with core goals. You need a performance culture to drive the execution, because culture eats strategy for breakfast.
“That’s where consensus comes in, which needs leadership from the top, and also distributed leadership, which through communication and consensus can ensure that people down the line are making the right decisions within the frameworks they are given.”