As an investor, I look for leaders who can set ambitious growth goals and exceed them every quarter. I realize that it's almost impossible for anyone to meet that standard. But leaders who come closest do things differently than those who fall short.
This is how I view the findings of a study of 49 enterprise leadership teams published by two experts in the Harvard Business Review. The co-authors, Nathan Wiita and Orla Leonard, analyzed these leadership teams to answer a basic question: What distinguishes teams who excel at turning their strategy into high performance from those who don't?
The co-authors uncovered four things that characterize the most successful teams -- bolstered by data on how they allocate their time differently from their less successful peers.
1. Break down strategy into actionable goals.
Successful leadership teams create a shared understanding of their company's value proposition and distinctive capabilities. They spend time breaking it down into specific goals and actions required to achieve the goals, and they follow up with those they hold accountable for achieving those goals.
More specifically, the researchers found that the best-performing teams spend about 20 percent more time than low-performing ones translating a vision into actionable goals and 14 percent more time reviewing key metrics and shifting organizational resources to ensure that the strategy is executed.
2. Engage your people to overcome barriers to effective execution.
Another important difference between effective and less effective leadership teams is the amount of effort they put into interacting with those who are charged with achieving the goals.
These interactions address topics such as whether the actionable goals are achievable yet ambitious; whether those charged with reaching the goals have the resources they need; whether organizational barriers might impede progress and how to overcome them; and whether the company's current culture and staffing are making it more difficult to meet the goals.
The researchers found that the most successful leadership teams allocated more time to such activities. In particular, they spent 12 percent more time communicating actionable goals and getting buy-in from the organization; they devoted 28 percent more time to discussing "cultural enablers and barriers to execution"; and they spent about 33 percent more time "optimizing talent capabilities by reviewing development plans, ensuring that succession plans are in place, and evaluating compensation plans to be competitive," according to the researchers.
3. Create a better future for key stakeholders.
One of the truisms of organizational life is that if you want a bright future you need to create one in which you are positioned to excel. That is difficult, because many forces outside of a company are out of its control.
However, the most effective leaders listen to stakeholders -- such as board members, investors, customers, suppliers, and partners -- and understand how their expectations are likely to change in the future. They then craft a vision for the company that will position the company to grow.
More specifically, the researchers found that successful leadership teams allocated their time differently to create the future. The winning teams spent 25.3 percent more time influencing high-level stakeholders by identifying their needs and managing their expectations; 13.2 percent more time planning for the future by setting direction, creating a vision, and defining their strategy; and 20.7 percent more time responding to change in the present -- rather than waiting.
4. Spend less time fighting fires.
Finally, the most successful leadership teams invest in getting alignment from their people -- which means that they spend far less time reacting to short-term challenges. One of the most effective techniques they use to avoid firefighting is to set and communicate clear priorities so there is little confusion about who needs to do what and by when.
The researchers found big differences between successful and unsuccessful leadership teams. They found that lower-performing teams spend a whopping 83 percent more time firefighting and dealing with issues at a tactical rather than strategic level. By contrast, the most effective teams rated themselves as 36 percent more effective at prioritizing and sequencing initiatives than their more poorly performing peers.
The work of these researchers resonates with me since I believe that to get to the next stage of growth, companies ought to pull seven scaling levers. Scaling Your Startupamong these are: creating a strong culture that helps you to attract and develop talent; crafting strategies that allocate capital, people, and technology to deliver and service products that supply customers with more benefits for the price than their rivals do; and holding your people accountable for results.
You can improve your ability to bridge the gap between strategy and execution if you can truly dedicate more of your leadership team's time to working on these four initiatives.
Jun 21, 2019