While many leaders are great relationship builders, or able to navigate challenges right in front of them, being able to think strategically is the hallmark of a great leader.
Working both client-side and in consultancy has perhaps made this fact even more apparent for me. Some teams and leaders I’ve observed have shown aptitude in many technical areas, but the key traits we want our leaders to demonstrate – being astute, measured and also visionary – all come through thinking clearly.
The reverse is also true. Leaders who may be less strong in other areas of business can often work around this by being able to set out a vision and provide clear direction – and surrounding themselves with people who can support them.
Clarity of mind is a defining characteristic of any leader. As lockdown has presented a wealth of long-term challenges, now more than ever, this segment of the leadership persona is vital for private businesses as market conditions shift.
The only constant is change
Lockdown has precipitated one of the largest economic challenges of our lifetimes and shifted societal behaviour. All the while, many private businesses face multiple external challenges such as market-disrupting competition, tougher regulatory environments and wider uncertainty.
For businesses – large and small – many have faced disruption before. Take food retail for instance. Consumer behaviours have been changing for some time. Discount brands have stolen a march on many other of the big brand supermarkets by offering lower prices and using a more efficient operational model to do so. This example proves that it’s not the inability of businesses to react and change. Other big brand supermarkets have adapted years down the line.
Meanwhile, of course, lockdown itself brought its own challenges for the entire industry. Even for a sector that has performed well in the current circumstances – food retail has had to swiftly adapt to changing buying behaviours and high levels of demand.
Many of the learnings from this sector over the past five years can be applied to businesses across the private market.
The aim for many should be how to retain that speed, and not be complacent when it comes to your existing market position. Key to this is the ability to identify changes in the market or consumer behaviour and innovate before someone else does. And, maintaining agility as your organisation grows.
Building a culture of strategic leadership
For fast growing private businesses, the ability to maintain their agility and swiftly respond to change has to be tackled head on in strategic conversations. One key question is, has your business become so large that internal processes can hinder your ability to innovate?
Often people are rewarded for following processes, not taking risks and simply being good at their day-to-day job. Organisations can, directly or indirectly, also imply people who take risks and fail will be reprimanded.
A key facet of being able to think as a leader is being able to guide a team towards the behaviour of pushing boundaries, as well as challenging existing ways of working themselves. This ensures that all parts of the business can be a better forum for creating new ideas and presenting them to leadership.
Effective leaders in the private market need to give people clear permission to share new ideas. They also need to be willing to listen to ideas from every level within the business as they grow – particularly people who deal with customers day-to-day. Sometimes this may mean holding conversations with junior members of the team away from middle management to avoid any internal politics disrupting the flow of new ideas and genuine feedback.
Even if the ultimate ideas are not taken on and progressed, demonstrating these are the sorts of people you want in your organisation is key to building this culture of innovation. In my view, the measure of a great leader is how many people have gone on to do great things after working with them.
Key to this is of course being supportive of your entire team as a whole. One organisation which demonstrates incredible teamwork is the army. During my time in the military our key priority, which is taught to everyone, is to look out for one another. The welfare of each person is supported by every other trooper, and it makes teams incredibly strong and resilient.
This support-led culture is crucial in business too. People need role models and need to feel rewarded and this comes from the top. So, when businesses can hold up junior members of the team for contributing to great examples of innovation then they can embed this in their culture. If private businesses can get this right, they can help support a culture of innovation as the business evolves – encouraging people at all levels to perpetually identify risks and opportunities.
Leaning into innovation friction
Now, of course, this theory hasn’t yet considered some of the friction that can stop innovation from happening even when this culture has been developed. Generational friction is a key area often overlooked.
The accepted view is that younger people tend to be those who drive innovation and that older people are stuck in their ways. Of course, this isn’t always the case, but businesses are sometimes guilty of favouring drive for innovation over experience.
Private businesses that are focused on innovation or disrupting their markets, would do well to be acutely aware of this and their leaders should view innovation in a historical sense.
The most dangerous phrase in business is “it’s different this time”. There will be an entire generation of bankers and regulators who are risk averse because of their experience of the 2008 crash. Does this reduced risk appetite make them less successful? Many would argue not.
There needs to be an acknowledgement that some sectors may be more predisposed to innovation than others – the ability to decide where the line can be drawn in your own sector is a key part of having clarity of mind when making leadership decisions.
When considering what ideas to take on and progress, leaders need to be able to understand and use the experience of the people who have lived through past market cycles. However, leaders also need to be aware that they will never have a truly complete data set.
So, while they should balance the different risk appetites in their own teams to inform decisions, they shouldn’t wait for every single piece of information. Those who do will quickly find others make a move first. Being able to make strategic decisions without all of the information is an important skill in leadership.
Long-term lessons
COVID-19 has shown just how quickly businesses can react and change, and how quickly leaders can think when the pressure is high and information lacking. It may also fundamentally change how many successful leaders will think about innovation.
EY Private conducted an in-depth survey of 151 UK business leaders in June 2020 to gauge their response to, and the impact of, COVID-19. The results demonstrated many are using these moments to capture thoughts from across their organisation and using the time to drive change.
Great leaders emerging from the COVID-19 era will be those that are able to take the methodology behind how they have solved challenges in 2020 and apply it in future years.
Leading an organisation can sometimes be a lonely place. Set aside the time for you and your team for reflection and mind clarity. Lead by example and allow innovation to thrive in your business. Reflect on what has gone well and what hasn’t and create a framework for your team to evolve in the years to come. By doing so, leaders in the private market can improve their business’ resilience and lay the foundation for growth.
