Execution matters

It was immediately evident that all the leaders we met have a strong focus on producing results and executing on strategy. “Keep your focus on proven results,” as a German CEO argues. “Concentrate on essentials and clear performance indicators. And get away from crazy figures and short-term optimization. Engage the team toward results.”

Engagement and communication emerge as foundational to successful execution. As one Polish executive puts it, “Without clear communication, nothing will happen, even if you have great ideas. Good communication substantially speeds things up.”

Successful leaders are clear about the need to demonstrate to stakeholders the benefits of the strategies they pursue. This particularly matters when innovation initiatives may not ripen into new businesses for some time. Stakeholders have an understandable interest in a return on their time and their money, and they need to know both are being looked after.

The way our leaders build credibility with stakeholders is with a well-measured trade-off between plain speaking about execution risks and solid expression of the benefits from their strategic choices.

“I dare to discuss the things beneath the surface,” says a Dutch interviewee, “and I dare to say I do that better than most.” Or as an Italian CEO explains, “It’s important to keep the bar straight when facing pressure from shareholders or authorities. Sheltering the team from the divergent pressures that come from the outside is a key part of my job.”

Illustrating the importance of a balanced portfolio of leadership skills, the executives profiled in our study value collaboration and execution about equally. Great execution is correlated with great teams. The collaborative approach to executing strategy is a profound change from the command-and-control style of leadership to which most of our interviewees were exposed early in their careers (see sidebar: Highlights of the leader’s way).

Highlights of the leader’s way

Think “differently” in volatile, rapidly evolving markets.
Manage dislocations caused by technological change. Look for disruption and teach yourself its sources.
Own a clear, comprehensive knowledge of the competitive arena and your company’s capabilities.
Adapt to stimuli, understand complexity, and take inspiration from change.
Apply a life-cycle approach to new business.
Take risks. Take the organization beyond its boundaries.
Execute in collaboration with talented teams. Give those teams real power.
Communicate with stakeholders. Stakeholders need to understand the benefits of a strategy—particularly in the matter of innovation portfolios that may not mature for some time. Move hearts and minds.
Have courage, show passion. These matter to men and women alike. For each gender, they assume different shades of emphasis—especially in the case of managing work and family.
Be authentic. Men and women apply the same sets of functional skills in managing an organization. They differ in how they apply them and in how they value the human dynamics of their organizations.

Clear strategic vision, complex strategic context

As we dug deeper in our conversations with leaders, we probed their private understanding of how they achieved personal success. It became clear that defining strategy was at the heart of what they believed was important. Everything proceeded from that.

Executives in the Leader’s Way study are uniformly forward-looking in the way they do their jobs. They insist on the primary importance of vision, ranking it as the most important pillar for their success as leaders. They share a belief that, as one says, “the ability to define a winning strategy for a company constitutes the essence of an executive leader. You have to know where you want to go.”

Easier said than done, of course. In our conversations, we strove to understand both the what and the how of successful strategy formulation.

Leaders at the helms of successful organizations chart a strategic path beyond their comfort zone. That might mean pursuing a positioning counter to conventional wisdom, such as the leader who tells us, “I decided not to go for scale but to be niche in several technology domains. That created a model which is difficult to replicate for our competitors.”

In their pursuit of new business, our leaders change assumptions about their business portfolio. One of our interviewees, for instance, boasts that “our business portfolio was 90 percent basic research. Now it’s only 35 percent.” Creating a winning strategy is seldom just tinkering with old formulas. Leaders look for disruption and teach themselves its sources. They treat innovation and thinking “differently” as management capabilities. Their objective is to achieve a fundamental shift in their business and operating models.

In an era of flat to shrinking growth for established businesses, our executives find the dislocations caused by technological change so pervasive and so unpredictable in their impacts that managing them is considered a crucial measure of leadership competence.

In good and bad ways, technology is shocking established businesses. But it is also creating new economic value and stimulating novel kinds of growth. Understanding how this is happening emerges as a key strategic capability for our senior leaders, and we asked our leaders how they develop that understanding.

The first thing they told us is that they hold deep personal knowledge and insight about their businesses. Of the senior leaders in our study, 55 have spent their entire careers in a single industry, including 32 who have held several roles in the same company where they work today. Another 21 report that they have a professional background in consulting, and 20 in other industries.

This is striking. It runs counter to what many imagine as a modern vogue among leadership talent for jumping from one hot start-up to the next. Since our study is anything but an old-school leadership sample, our results suggest that, in 2015, senior leaders superficially replicate the career paths of the old school while capitalizing on change at a scale that start-ups seldom attain.

“Being strong on content,” as one Dutch executive puts it, “is a key success driver.”

The complexity of modern operating environments makes it hard for even good leaders to develop successful and long-lasting strategies. But complexity also compels an ability to continually adapt to stimulus and change. As we explored the how of successful strategies, it became clear that simply having good insight would not be enough. Having “clear strategic vision” implies an understanding of complexity in an operating environment combined with a personal ability to move hearts and minds.

“A CEO,” says an Italian executive among our interviewees, “needs to lead from the front and add fresh value. That’s how you transmit strategic objectives to the rest of the organization.” The logic of this perspective is that, in any genuine effort at innovation, “think differently” will mean inspiring people to leave their comfort zones and set out for unexplored territory.

If, on one hand, our interviewees are explicit in telling us “it is not possible to delegate vision,” they are, on the other hand, candid in acknowledging that a key to their career success is the quality of the smart, diverse, confident teams they assemble. As one of them puts it, “You cannot do everything by yourself.” An inclusive approach to strategy formulation is viewed as a precondition to a desired outcome.

Our interviewees also underline their portfolio approach to strategy formulation. Competitive advantage has an increasingly brief life span, which means companies need to manage new initiatives on a life-cycle basis. In the words of a Polish executive, “One cannot be a prisoner of one’s goals and one’s projects. It is important to be able to change a decision if we see that it is not the right one.”

Certainly it is difficult to think about the future in eras of high-velocity change. The leaders in our study are the first to acknowledge that. But for them, strategy development is more important than ever in volatile eras when it is grounded in the principles of preparing for the future.²

Our strategy focuses on the simultaneous alignment of competitive goals with fast-changing operating environments (see figure 5).