Over the last few months I’ve been sharing my observations about leaders becoming overly operational at a time when we need them to be operating strategically. In times of uncertainty, change can be rapid and unpredictable. We need leaders to be constantly scanning for change so they can pre-empt and prepare for it. But as I’ve pointed out, heightened uncertainty makes strategic thinking harder. Leaders are feeling worn out and it has become increasingly difficult to make sense of things when it all keeps changing.
When talking to business leaders I rarely get pushback on the above claim, and there is general agreement that leaders need training and support in this space. But the truth is the challenges of getting leaders to operate more strategically aren’t just found in the external environment.
The uncomfortable truth is that in many organisations there are structural features and cultural norms that “bake in” short-term thinking. And unless these issues are understood, it’s doubtful that any amount of training or good intentions will fundamentally shift the status quo.
What do I mean by structural?
Just as there is an external environment that leaders need to respond to, there is also an internal structure in which they operate. The internal structure consists of a system of cultural norms, policies, processes and expectations that, in turn, shape the business practices of the organisation.
When we look at these structures closely, we find a number of them biassed towards short-term thinking. Weekly stand-ups, quarterly reporting, annual budgeting, performance reviews and short-term incentive payments are all mechanisms that encourage leaders to think in blocks of 12 months or less.
In addition to these procedural elements, there are often cultural norms that tend to reward short-term behaviours and discourage long-term ones. Short-term cultures tend to value efficiency, ticking boxes, managing risks and fighting fires because they create visible short-term benefits. At the same time, organisations with this type of culture may struggle to invest in R&D, innovation, experimentation, and training and development because the benefits are longer term and less tangible.
This isn’t “either or”
I’ve presented this as a duality for the sake of comparison, but successful organisations don’t just think short-term or long-term, operational or strategic, they do both. More than that, they understand that the need for short-term, efficiency-focused thinking and long-term, big-picture thinking changes with the external environment, and they shift their posture accordingly.
As discussed above, this operates in a somewhat counterintuitive way. Although big-picture thinking is harder in times of uncertainty, it is also a fundamental requirement for an organisation to be able to pre-empt and respond to change. Conversely, times of relative stability mean organisations should be more comfortable focusing on efficiency. It is never “either or”, only ever “more or less”.
The issue emerges when an organisation fails to realign its strategic posture when conditions change. In times of stability, excessive amounts of time spent imagining alternate scenarios and building optionality is wasteful (and any form of waste ultimately makes an organisation less competitive in the short term). Investing heavily in strategic thinking, optionality and responsiveness only pays off over the longer term if, or perhaps more accurately when, there is significant uncertainty and the operating environment changes.
I don’t know of an industry or organisation that feels they are currently operating in a time of high stability. Significant change is happening at all different scales on a regular basis. In the current environment the core risk isn’t waste or inefficiency, it’s an increase in organisational fragility because leaders don’t identify, prepare for and respond to change in a timely way.
Predictable thinking in an unpredictable world
The pursuit of efficiency over responsiveness is deeply ingrained in most organisations and has been the dominant paradigm for more than a century. This makes the structures and cultures that promote short-term thinking within organisations difficult to break out of.
Group norms and our individual need for acceptance and belonging are some of the most powerful forces we face*. The power of the status quo means that even if individual leaders agree with the need to be more strategic, and are then taught the requisite skills to do so, not much will change unless structural changes are made to support them.
*An incredible example of this can be found in the Seekers doomsday cult, whose leader predicted that cult members would be picked up by aliens and spared from Earth’s destruction on 21 December 1954. When this date came and went, their collective belief shifted to one in which their praying and preparation had been consequential enough to save everyone in the world. Check out this episode of the You Are Not So Smart podcast to hear about this in more detail.
The hierarchy of strategic interventions
Way back when I worked at Rio Tinto my core role was in scenario planning and strategy, but like everyone else at Rio, my other job was safety. As the saying goes in organisations like that, “safety is everyone’s business”. Given what’s at stake, it’s no surprise there is a high level of maturity around how safety is approached and how interventions are chosen and implemented. At the core of this is what’s known as the “hierarchy of controls”.
Source: National Institute for Occupational Safety and Health
What the hierarchy shows is that there are a range of different approaches we can take to occupational health and safety risks, but some are more effective than others. Giving someone gloves (PPE) is not as effective as building a guard rail around the hazard (engineering controls), but even this is not as effective as eliminating the hazard altogether.
Unfortunately, elimination and substitution are not always possible or practicable and often take much longer to implement. As a result, it’s necessary to settle for controls that sit further down the hierarchy. But even if we settle for lower-level controls, we should always be aware of their limitations and aim to move further up the hierarchy if and when it becomes possible to do so.
A similar premise can be applied to strategic thinking. Some interventions are quick and easy but less effective. Others, such as structural interventions, take longer and are generally more expensive, but are ultimately more effective. So what might a hierarchy of strategic interventions look like?
Training is the PPE of strategic interventions
A reasonable chunk of my business involves training and workshops, so proclaiming that training is the least effective form of strategic intervention probably isn’t very commercial, even if it’s true.
A more nuanced understanding is that although training is the least effective form of intervention, it doesn’t mean we shouldn’t do it. We should train our people for the same reason we give factory workers gloves, ear plugs, masks and safety glasses: because the alternative is considered negligent.
But just as occupational health and safety professionals know that providing PPE doesn’t absolve them from looking for more effective controls, providing training shouldn’t absolve us from looking for more effective strategic interventions. Beyond training, we can look at governance and policies that give leaders clarity on what behaviours are acceptable and unacceptable*.
*A shout-out to Cam Montgomery, who pointed me towards the NZ Government Health and Safety Lead’s work on psychological safety. As Cam pointed out, lower-level controls tend to make safety the responsibility of the worker rather than changing the work itself, and this is also true for strategy. Lower-level interventions put the onus on individuals rather than looking at the underlying processes and structures.
Beyond that, we can look at how we change and evolve processes to “bake in” strategic and big-picture thinking. Finally, and perhaps most controversially, we could consider how organisational structures and incentive programs undermine systemic and strategic thinking.
A structural response to a lack of strategic thinking
Ultimately, the structural issues noted above require a structural response. Change needs to be embedded into an organisation’s way of working. But the shifts can be subtle. Rather than ad hoc training to address a “skills gap”, integrate the training into a facilitated strategy workshop aligned with the existing business cycle.
An example of this, which I’m asked to facilitate regularly for clients, is a start-of-year team planning event. Held in February or March, these events are designed to align the team’s thinking and prioritise actions for the next 12 months. In doing this, we are taking an event that already exists in organisations and making it a strategic one. Rather than focusing on what should be prioritised now, it first asks participants to map the trends and changes they see happening over the next three to five years (after all, it’s only with a longer frame of reference that we can establish whether short-term decisions will still make sense*).
*The impact of a decision doesn’t happen in a single moment in time. The consequences play out over years or even decades. Depending on the industry sector, department focus and participants’ seniority, a suitable timeframe to consider could be anything between two years and 20 years.
Apart from the beginning of the calendar year, there are a number of other structural opportunities to “think big” during the year. These can include strategic planning days, end-of-financial-year strategy and budget refreshes, and end-of-year team reflections. Importantly, in each case there is a genuine business need for big-picture thinking and the opportunity isn’t wasted. Don’t treat these as tick-box exercises attended under duress. See them as core to the leadership function and repeat them until they are ingrained into the organisation’s structural and cultural fabric.
We need to move on from quick fixes
The quick-fix mentality is a great example of short-term thinking. It’s seductive in its simplicity, it has the appearance of “doing something”, and very soon after it’s been started the box gets ticked. But if problems are structurally and culturally embedded, it’s laughable to think a single workshop will change things in a meaningful way.
This isn’t just a realisation I’m hoping you can see, it’s a realisation I’ve also had to come to myself. Last year, 80% of my work involved providing quick fixes and short-term interventions through keynotes and workshops. And although I believe organisations have a responsibility to ensure leaders have the strategic thinking skills required to do their work and make the decisions their role demands, it can’t be the end game.
So this year I’m looking for three or four clients who know, deep down, that something bigger needs to be done. Who are open to being challenged on their structures and processes. Who are willing to invest over the longer term to meaningfully shift the strategic thinking within their organisation and deliver meaningful value.
If that sounds like you, please get in touch.
Simon
