The Company’s top administration body, usually the Board of Management, sets the long-term strategic goals, frequently taking into consideration the input of the top executive: the CEO or Managing Director.
At their turn, the CEO and the management team, elaborate, propose and, after the Board approval, execute the most convenient strategy to achieve the strategic goals. The key executives are, therefore, the Champions of the Strategy.
The implementation of a new strategy, due to the setting of new goals or to the adjustment of the previous strategy, should trigger the review of the suitability of the executive team in charge of carrying it out, either revalidating or altering its composition.
The ideal executive team must meet suitability requirements in two basic aspects:
- Capability: to have the necessary competence and empowerment
- Willingness: to be aligned and committed to both the strategic goals and the strategy to be implemented
There’s consensus between management experts on the importance of counting with competent and empowered executive teams committed to the business strategic success. Paradoxically, a systematic and regular analysis of the alignment of key executives with goals and strategic is far from frequent. Skipping this control might jeopardize the accomplishment of strategic goals and cause talent and opportunity losses.
Competence and Empowerment
When appointing an executive team to elaborate and execute a strategy to achieve the company goals, one must start by analysing and comparing needed and existing competences: does our management team the necessary competences (knowledge, skills and experience) to elaborate and implement the strategy? This is a dynamic checking, as company goals evolve with environment and business change: the ideal executives to reach yesterday’s goals are not necessarily (or not yet) the right ones to achieve tomorrow’s.
Moreover, managers with the necessary competences for the formulation and execution of the strategy must be sufficiently empowered to do it, through their formal (organizational position and decision-making power) and informal (based on authority, track-record and trust) leadership.
The double verification of Competence / Empowerment is an effective tool for the selection of management teams fit for the formulation and implementation of a specific strategy, according to their degree of specialization; for instance, different executive profiles are needed to implement a growth strategy than those idoneous to lead transformation, restructuring or profitability increase strategies.
We can illustrate this double verification with a simple graph:
An executive team located in zone A, highly competent and empowered, operating with sufficient autonomy, will maximize the chances of a successful implementation of a specific strategy.
In the absence of executives in zone A, managers in zone B (duly empowered) or in zone C (through a timely development of their skills) can be a good alternative. It is important to highlight that many senior executives or management teams with a successful track record fall in this area C when the company requires a significant turnaround in its strategy or substantially changes its long-term goals. In this case, the company should consider the temporary incorporation of one or more A zone executives, while the management team acquires the necessary missing skills.
Many strategies fail due to a non-systematic and rigorous application of this type of verification: zone B executives entrusted with the strategic mission often end up frustrated and burned-out, as they feel competent but powerless; in turn, executives in zone C who assume responsibility for the strategy will likely lose the confidence of the Board and end up in zone D.
Competent and empowered but… committed?
Executives who have the competence and empowerment necessary to carry out the strategy and achieve the long-term goals are potential candidates to form the team of Strategy Champions. To confirm their suitability, a final verification is needed: what is their degree of commitment to this mission?
This analysis is not about checking the loyalty and good faith of top executives, which is an initial assumption. It is about testing the degree of alignment of this team, in charge of leading the strategy, with the two key elements:
- Are they aligned and committed with the long-term goals set by the Board?
- Are they convinced that the selected strategy is the best one to achieve those goals?
One way to ensure this alignment and commitment from the start is to allow and encourage the contribution of senior executives to the setting of strategic goals by the Board, as well as the constructive dialogue between the Board and the Management Team in assessing and approve the strategy. The objectives and strategy created in this way will be more accurate and have greater odds of success.
It is, however, difficult to appraise the degree of commitment of an executive by means other than an open, candid and unbiased discussion.
However, it is difficult to assess the degree of commitment of an executive by means other than an open, honest and unbiased discussion.
It is also possible to graphically illustrate this last verification:
The ideal team will be led and integrated by Strategy Champions, aligned and identified with the long-term Goals and the chosen Strategy. However, the team may include Executors (capable of implementing a strategy without completely sharing the objectives pursued) and Critical Experts (who, without jeopardizing the advancement in the implementation of the strategy, may contribute with ideas for its improvement and optimization).
Managers who, being competent and empowered to participate, are not aligned with either the Goals or the Strategy cannot be involved in its implementation. They can be in charge and focus on other projects, although they often end up leaving the organization in search of projects to identify with.
Champions of Strategy
In summary, a critical process for the survival and success of the Company, such as the achievement of the Strategic Objectives and the determination and implementation of the Strategy, must be assigned to competent managers committed to those particular specific objectives and strategy.
Whilst it is a frequent practice in many companies, it is not advisable to leave a revisited strategy and goals in the hands of the existing management team without validating its suitability and commitment to accomplish it.
This recommended practice is not intended to install distrust between the CEO, the Management Team and the Board, rather the opposite: Boards can trust a CEO able to recognize and address the need to reinforce the top team with executives counting with the necessary competences to implement the strategy.