Effective leadership is at the forefront of executing strategy and change

(As originally published in Business in Vancouver, 17 April 2012)

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By Vincent Bryant, Leader, Performance Improvement Advisory Services, EY

In recent decades intangible assets — including our people — have become the primary drivers of corporate value. Without the support of their people, companies’ strategic decisions can fall flat and become increasingly difficult to execute. Successful strategy execution and effective leadership are inseparable. This puts leadership centre stage in any change-management program.

The financial crisis and destruction of value in the global finance sector highlighted the importance of effective governance and risk management to the generation of sustainable shareholder value. Good governance provides the leadership team with independent challenge and insight and is an essential part of the overall mix when making strategic decisions and executing strategy.

Creating a competitive strategy is about being different, choosing a different set of products/services or the same products/services, and delivering them differently to create a unique customer experience or value mix. While these ideas are good, a common source of failure arises from a lack of understanding about a company’s strategic choices — what we will and will not do. It’s up to the leadership team to take responsibility and ensure clarity exists throughout their organization. This requires a focused multi-channel communication process to constantly reinforce strategic direction and set new expectations.

A key element of effective and engaging leadership is the ability to create compelling reasons for people to change their habits, release their potential and maintain their focus on the drivers of company value. While the rationale for change decisions is based on robust and often complex analysis across a wide range of strategic, financial and operational performance areas, it’s up to leadership to create compelling reasons that resonate with employees at all levels of their company. Helping teams to visualize the rationale for change is an essential ingredient of successful execution.

History has taught us that separating the planners from the people on the front line is a risky approach to building a winning strategy. Involving people in the planning process enables them to contribute their knowledge, acquire an understanding of the decision-making path and direct their energy towards successful execution.

Congruence between strategy, structure, systems, people and culture is also essential. Successful execution requires thinking through the activities that must be performed to make a company’s strategy real and, in turn, needs a hard-headed assessment of their organizational capabilities and the degree of fit between current capabilities and those required to execute the strategy. Leaders can’t assume the proper processes are in place to manage change effectively. False assumptions can easily cause the failure of a well-thought-out program.

Culture is intangible and pervasive, but it defines the operating style of the organization. Changing it requires a common language that encourages understanding and discussion. Leaders must be role models for change to avoid cynicism and rejection of any new program. Changing culture is not a project or single initiative. Multiple leverage points and initiatives are required. Changing takes time and is always driven by leadership behaviour, not words.

Resistance to change is normal. Overcoming resistance requires a clear and compelling vision for the change, establishing dissatisfaction with the status quo and a clear set of steps to mobilize the change program. Many well-planned strategies fail the execution test, but companies can reduce the risk of failure by ensuring the essential leadership, governance and execution fundamentals are firmly in place.

Vincent Bryant leads EY’s Vancouver performance improvement advisory services team and teaches strategy execution and business transformation at the UBC Sauder School of Business in Vancouver; his column will focus on business growth strategies


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