Most companies have leaders equipped with the strong operational skills required to maintain the status quo. However, in today’s increasingly complex and disruptive business environment, many organizations face a critical deficit – a lack of strategic leaders. In fact, a study by PwC of 6,000 senior executives found only 8% of the respondents turned out to be strategic leaders, or those effective at leading transformations.
With strategic leadership in high demand, companies are often forced to look for leaders from outside the organization. Yet, in our experience, significant change and transformation in an organization is more likely to succeed if it is led from within. Fortunately, when either hiring an outside leader or grooming existing strategic leaders, companies can build the capacity for strategic leadership by developing the key competencies common among these transformational leaders.
Leveraging a dataset of hundreds of executives, our research has found that the profile of highly strategic leaders differs from the profile of leaders who are more operationally focused.
Strategic Leadership Competency Profile.
By examining the common profile of strategic leaders, companies can better understand the core competencies required for strategic leadership, and develop future leaders to build into their succession pipelines.
The top six competencies of strategic leaders include:
| Competency | Strategic Implication | Developmental Assignments |
|---|---|---|
| Data Driven Decision Making | Uses a variety of data sources and metrics to make decisions | Reviving a declining business or product |
| Leads Courageously | Makes tough decisions, taking a stand and following through on difficult decisions | Spearhead an improvement project to improve margins |
| Exude Executive Presence | Expresses complex issues with simplicity and conviction | Sponsor of a strategic change project |
| Focused on the Customer | Ensures policies and strategies support customer service by keeping the customer’s best interest in mind | Pursue a new market opportunity |
| Manage Risk | Identifies risks and develops plans to minimize them | Conduct a risk analysis on an existing business or an emerging environmental risk |
| Drives Innovation | Uncovers new markets or products and leads change to produce competitive advantage | Work on a product launch or collaborate on a competitive analysis |
Using leadership talent assessment solutions can help organizations select and develop leaders who exhibit strength in these competencies. Specific developmental assignments can help build the strategic aptitude of potential leaders or be used to select strategic leaders during the interview and hiring process.
Selecting and developing leaders who will think strategically about their business and work should be done through the lens of these supporting competencies. When interviewing leaders, ensure that they have developmental assignments under their belts that support developing their strategic aptitude. When grooming high potential leaders, provide assignments that give them sufficient exposure to building these skills.
Operational Leadership Competency Profile.
As a contrast, leaders who score low on strategic competencies can still be very strong leaders. We call them operational leaders. Those who score low on strategic competencies may likely score higher on competencies required for operational leadership. The top competencies include:
| Competency | Strategic Implication |
|---|---|
| Maintains Order and Accuracy | Builds and maintain effective work processes |
| Data Driven Decision Making | Uses a variety of data sources and metrics to make decisions< |
| Manages Work | Translates long term goals into plans and actions |
| Demonstrates Financial Acumen | Understands and protects the financial driver of success |
| Leverages Technology | Makes effective use of technology to support operations and new strategies |
It is important to note that Data Driven Decision Making scored in the top competencies for both strategic and operational leaders. Particularly in today’s metric and data driven business environment, making sound decisions based on fact and analysis is critical for all executives.
Developing Operational Leaders into Strategic Leaders.
Through assessment of existing and potential leaders, companies can better identify and coach candidates in need of stronger strategic competencies. For example, consider a COO of a financial services firm who the board considers not strategic enough to be the next CEO. He was promoted from being the controller and has led the development of a high-quality infrastructure that helped the company grow.
His leadership assessment results revealed that while he is strong in Data Driven Decision Making and Managing Risk, he is week in Leading Courageously and Focusing on the Customer. His profile indicates that he is best suited for an operational role. The board can either use developmental assignments to build his strategic competencies, or choose to identify a Vice President level leader who scores high in strategic competencies and continue to develop the candidate to be a strong candidate for CEO in the future.
Plan and Hire for Future Leadership Needs.
The ambiguity and speed in today’s marketplace makes it critical to have future strategic leaders in the pipeline. At the same time, strong operational leaders will continue to add value. The natural strengths of each are quite different. Many companies make the mistake of type casting a single leadership style rather than examining the leader’s fit to the demands of a role. Taking a step back and thinking about the composition of an entire leadership team will bring clarity and alignment to the organization’s capacity to develop strategy and drive it to action.
Click here to learn how XBInsight can help you identify your next generation of strategic leaders.