How Do I Build a Strong Pipeline of Future
Dear
Ken,
For
several years, the board has been after me to put in place a plan for my
successor. As chief executive, I agree in principle; we absolutely need a
pipeline of strong leaders, not just for me but for my entire top management
team, including the CFO and the COO. But when I look at the people in our
ranks, I’m not confident they’re well prepared. They’re excellent at their
positions, but they don’t have much strategic acumen. I’d really like to give
them more experience in strategy, for instance, by taking some big bets and
seeing whether they pay off. But we can’t afford to risk any part of our
business that way. What do you advise?
—Lonely at the Top
Dear
Lonely,
You are right to prioritize strategic acumen
in building a pipeline of strong leaders. But asking your people to be more
strategic can feel like telling them to get taller. What can you — or they —
really do to make that happen?
Fortunately, strategic acumen is not like
one’s height. The ability to think, act, and lead strategically is a skill, and
anyone can become better at it. But no one can develop a skill without
practicing it, and few executives have the opportunity to practice strategic
leadership before they are thrust into a position, such as CEO or business unit
head, that demands it. That makes succession more of a crapshoot than it needs
to be. Moreover, it deprives you of the ability to call on your team members
(and their teams) to help you steer the company’s strategy in a complex,
competitive world. No wonder it’s lonely at the top.
How do
you give executives the opportunity to develop their strategic acumen? There
are two approaches that work well. The first is to regularly engage top people
in “zero-basing” your strategy. Just five strategy
choices determine the performance ceiling for
your company: what business (or businesses) you are in, how you add value to
that business, who your target customers are, your value proposition, and the
three to six capabilities that make you better at what you do than anyone else.
The more specific, complete, and unique these choices are, the higher the
ceiling on your company’s ability to execute.
Roundtable discussion is the best way to
organize a forum for zero-basing your strategy. Keep it to no more than 10
future leaders and potential successors. Ask them to write down their thoughts
privately before the meeting takes place, which discourages people from
changing what they say in response to what they hear from those speaking before
them. Give each participant a maximum of three minutes to articulate his or her
understanding of the company’s five strategy choices. Methodically circle the
table and allow for clarifying questions along the way. Then let the discussion
flow by minimizing challenging questions until after everyone has had his or
her three minutes. Close by taking stock of what you’ve heard, identifying
where there’s common ground and where there’s misunderstanding or disagreement
that needs to be ironed out.
You should hold such a zero-based strategy
forum at least annually. Some CEOs do it with different groups during the year
to touch a broader, deeper cross section of their leadership pipeline. Your
people will find it liberating the first time, but the impact will have a short
half-life. Doing it twice will help them see that you are taking it (and them)
seriously. And making it a regular routine will start to change their wiring.
It may seem like a burden given how busy you
already are, but you will greatly streamline your organization’s decision
making and execution: Your people will be able to speak more consistently about
your company’s strategy and take actions more coherently on behalf of it. And
it’s amazing what you learn about people (and yourself) when you spend time
with them in this way. In fact, I guarantee this exercise will be an
eye-opener. You will see firsthand that your leaders do not speak with one
voice about the five seemingly simple choices outlined above. I also guarantee
that the very act of leading your people through this exercise will condition
them to think and act more strategically about your company. You may even find
that it sharpens your own strategic thinking as well.
The second approach to building the strategic
acumen of your leaders is to recruit them into strategic agenda management. You
create virtual strategy teams comprising a mix of line and staff executives,
each charged with tackling a live issue or opportunity on the company’s
strategic agenda. Some examples from companies I’ve worked with include:
·
“Online ride-hailing services are making us
obsolete while also creating a new growth avenue.”
·
“Our government business is highly relevant
to corporate clients but we lack the people and capabilities to win in the
enormous commercial sector.”
·
“Our products are increasingly stigmatized
because of the obesity epidemic.”
Each of these items demands a decision — one
that could meaningfully change one or more dimensions of the company’s
strategy. The stakes are high (and should be), but the risks are controllable
because each team reports directly to you, with two or three touch points to
discuss the issue/opportunity itself, alternative responses to it, how to
evaluate the alternatives, and ultimately, which one to choose. Any big bets are
ones you are willing to make because they are the best response to an issue or
opportunity that must be addressed. Along the way, your leaders learn from you
while getting to practice being in your shoes before anyone is asked to fill
them. Moreover, your strategy stays current because it evolves with the
never-ending stream of big issues and opportunities that will continue to
challenge it over time.
These
two approaches — the zero-based strategy forum and strategic agenda management
— have one other enormous advantage: They mirror exactly the way you
should engage your
board in the company’s strategy. In
fact, instead of having the ritual dog and pony show in which you roll out your
leaders to present their businesses or functions so they can impress the
directors, have them lead your board through their strategy projects. That’ll
give the directors much better insight into the leadership pipeline, and give your
leaders priceless experience. Their strategic acumen will be all the richer for
it.
Ken Favaro
https://www.strategy-business.com/blog/Strategy-Talk-How-Do-I-Build-a-Strong-Pipeline-of-Future-Leaders?gko=4afd3&utm_source=itw&utm_medium=20170413&utm_campaign=resp
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