Thursday, November 3, 2011

Placing the Right Leaders to Create and Implement Growth Strategies

One thing that seems to be missing from the articles from this week is the necessity to evaluate top talent in an organization when creating and implementing strategy. Knowing the correct models and implementation designs is all well and good. However, none of it will really matter if the organizational leadership structure does not house well qualified and properly placed personnel.

An article by Katharina Herrmann, Asmus Komm, and Sven Smit in the McKinsey Quarterly titled, "Do you have the right leaders for your growth strategies?" discusses the idea of effective leadership for growth strategies. They took 5,560 executives at 47 companies and measured their leadership competencies and examined it to revenue growth. In the end, they found that excellent leaders that can "do it all" are few and far between. Only around 1% of the executives surveyed gained an average competency level of 6.0/7.0 or 7.0/7.0.

To help beat the problem of few all around fantastic executives, the authors introduce the idea of companies "[cultivating] specific competencies correlated with growth in their existing teams or to [seeking] new talent with the needed skills." In short, the authors call on organizations and firms to pick and choose executives and place them in areas where they are most suited. Naturally, most executives would probably vary on skill level between areas like market insight, results orientation, strategic orientation, etc. Placement of executives helps foster effective growth strategies without the burden of ineffective all-around leadership.

This idea is useful when implementing the balanced scorecard discussed by Robert Kaplan and David Norton especially when it comes to goal setting and business planning. Leaders at the top with different perspectives and strengths will help to foster an all-around better strategy and implementation process. It is likely that the better placement of individuals would help in the aligning of strategic initiatives and setting of targets that would translate better to those in middle management and on the lower rungs of the organization. In the end, the vision and strategy will be better equipped to succeed in the months and years ahead.

Sources:

Herrmann, K., Komm, A. & Smit, S. (2011), Do you have the right leaders for your growth strategies?, The McKinsey Quarterly.

Kaplan, R. & Norton, D. (2007), Using the Balanced Scorecard as a Strategic Management System. Harvard Business Review.

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