Senior leaders must frequently choose to devote their time to the company’s long-term strategy or focus on short-term execution. Often, the need for achieving quarterly earnings wins out, and leaders will lean towards the latter. With their time already monopolized by meetings, damage-control, and financial analysis, it’s too easy for senior leaders to slip into focusing exclusively on short-term activities. As one biotech executive said, “I think about strategy on my commute to work and my commute home. I don’t have time during the day.”
Most executives recognize the need to focus on both strategy and execution; however, what remains is how to do so. In an interview with an energy company’s board member, BTS consultants asked, “What makes an ideal CEO?” The interviewee expressed the need for a “bungee CEO” who could move quickly from big picture- to detail-oriented work. “Bungee CEOs” lie at the midpoint between strategy-focused CEOs, who are too far removed from day-to-day operations and struggle to connect with employees, and execution-focused CEOs, who run the risk of being perceived as micro-managers.
At a time when unforeseen shocks such as the Covid-19 pandemic have made it even harder to focus on long-term strategy, here are four principles senior leaders can implement to achieve balance between strategy and execution.
1. Strategic pivots and scenario-planning
In the past, many executive teams thought that rapidly changing a company’s strategic direction would reflect poorly on the team to the board, because that meant the strategy was ill-conceived. However, with the increasing volatility of global markets, it’s become more critical than ever to anticipate and make quick strategic pivots.
One way to anticipate pivots is by leveraging scenario planning. For one senior executive team surveyed by BTS, identifying the worst-case scenarios and possible solutions for the business helped them to be better prepared for the pandemic. During a strategy session prior to the pandemic, these executives imagined the impact of a global pandemic on their industry. The leaders created a “playbook” that would enable them to make strategic pivots in weeks rather than in months, ultimately increasing their odds of surviving a shock without taking drastic action. In this case, these leaders was able to leverage their solution when the pandemic hit, so that its strategy could remain intact while its tactics for execution evolved. Clearly, scenario planning can pay great benefits in the long term.
Another kind of scenario planning is called “war games,” where executive teams break out into two groups to discuss an idea. One team presents the idea in a positive light, while the other argues the opposite. This exercise creates conflict within the team, helping leaders practice healthy, animosity-free debate so they are prepared for when the stakes are higher. Experience with war games is particularly useful in situations where there is strong ownership for an initiative and coming to a consensus is challenging.
2. Trust, the linchpin between strategy and execution
CEOs set the tone when it comes to building a culture of trust amongst senior executives. Cultures built on trust allow leadership teams to focus on what is best for the entire organization, rather than any one person or function. Trust is also the foundation for setting a team-wide strategy. As mentioned by one CEO, “We can argue as a team, but once we leave the meeting room, we all have to agree on a common message.”
Frequent strategic pivots are a very real part of today’s business environment. While these shifts will inevitably leave some negative effects on employee engagement, one way to circumvent this is by adopting a policy of radical transparency. By taking the time to explain the reasons behind a change, you will increase the chances of buy-in from your employees, which is critical for making any shift.
Every risk comes with potential for failure, but in order to balance strategy with execution, senior executives must allow and even encourage their people to take risks. Without overly “scripting” out the future, leaders need to provide their teams with both the goals and the guardrails within which to accomplish them.
Senior leaders need to encourage teams to “fail fast and cheap,” using each attempt at executing an idea as an opportunity to gain insight for a future iteration. The risk-taking mindset is also an asset for senior leadership teams. As stated by one COO, “You need to have a short-term memory and not dwell on mistakes.”
4. Create a culture of psychological safety
Some employees fear that sharing bad news will adversely impact their career, so creating a culture of “psychological safety” where employees feel safe to share problems is critical for ensuring teams communicate problems quickly when they arise.
This is imperative because failing to address problems early on can have a compounding effect. When errors identified at lower levels go unreported to senior leaders, leaders will often continue to make decisions that drive the business down the wrong path, unaware of the impact they are creating.
Executives who lead in a punitive fashion are particularly prone to employees withholding critical bad news. For example, one professional services firm’s CEO was nicknamed “Mushroom” because his team felt it best to keep him in the dark, just as growing fungi are, while they fixed the issues at hand.
Creating a culture where reporting issues early and often is encouraged is particularly important in matrixed organizations, where a small issue within one group may cause a large issue in another. Bad news travels slowly in these hierarchical organizations where information must go “up the stove pipe,” slowing down decision-making and exacerbating once-small problems into large ones. Therefore, senior leaders must establish the psychological safety necessary to ensure open communication from the lowest level possible.
Focusing on strategy and execution simultaneously has never been easy for senior leadership. Challenges already associated with rapid changes in technology, customer preferences, and the global economic environment have only increased with disruptions such as Covid-19. To address the dilemma of strategy versus execution amid such continued seismic shifts, senior leadership teams must pivot strategy, plan for worst-case scenarios, create cultures of trust and psychological safety, and allow for risk-taking.