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10.13007/137
Ideas for Leaders #137
Four Capabilities of Great Strategic
Leaders
Key Concept
Intellectual honesty, accountability, and self-awareness are three of the four
key capabilities of strategic leaders - leaders capable of inspiring change,
innovation, teamwork and competitive performance in their companies and
organizations. The final and fourth key capability of strategic leaders is the
ability to attract and develop great people - to be a ‘talent magnet’. Boards
searching for CEOs, and CEOs searching for a top executive team must
interview candidates and select CEOs with these four capabilities in mind.
And once successful CEOs and C-suite leaders who lose any of these
capabilities should be removed.
Idea Summary
Building on the latest research on leadership, as well as scores of interviews
with CEOs and other leaders, Professor of Strategy and Leadership Sydney
Finkelstein of Dartmouth’s Tuck School of Business has identified four key
capabilities that he argues are essential to strategic leadership.
The first is intellectual honesty, that is, the capability of the leader to adapt
to new realities. Strategic leaders are not welded to the strategies, products
or processes of the past. They are not afraid to break free of their comfort
zone and recognize that times have changed - and that the competitive
advantage of “the way we have always done it” or “our best product” is now
obsolete. Kodak’s inability to adapt to the digital age is one notorious example
of lack of intellectual honesty.
The second characteristic of strategic leaders is accountability, which
Finkelstein describes as “the capability of motivating teams to deliver world-
class results.” Motivation requires more than accountability, but leaders who
prove themselves accountable - who are willing to put on themselves the
responsibility for achieving the best results - are those who will motivate
others to do likewise. As a result, people in the organization are not working
because that is what they are paid to do, but because they care deeply about
their jobs and the results they can achieve.
Self-awareness - specifically the ability to understand why we make the
decisions we make - is the third key capability of strategic leaders. Everyone
is subject to biases that influence how they make decisions and respond to
problems; those who are self-aware of who they are will be less likely to fall
into the traps generated by these biases. Captain Chesley Sullenberger, who
famously landed a passenger jet on the Hudson River, continuously
responded to the changing set of circumstances before him without ever
thinking of what was theoretically not possible.
Authors
Finkelstein, Sydney
Institutions
Tuck School of Business
Source
Author Interview
Idea conceived
2013
Idea posted
May 2013
DOI number
Subject
Corporate Strategy
Senior Leaders
Leadership
Team Building and Teamwork
Career Development
Talent Management
Finally, there is the fourth of these key capabilities, which is captured in the
phrase talent magnet. Strategic leaders recognize talent, attract talented
people to their teams, and develop this talent - thus building not only a
leadership pool for their own organizations but, often, forming leaders that go
on to become leaders in their own right. Lorne Michaels of Saturday Night
Live and Jack Welch of GE are two leaders whose many subordinates have
become leaders in their fields.
Business Application
Citigroup adopted a supermarket model of financial services that no one has
been able to successfully implement… including Citigroup. The stubbornness
of Citigroup leaders to stick to this model - a clear indication of the lack of
intellectual honesty - has been disastrous to the company and even to the
financial services industry as a whole. Hiring leaders with the four capabilities
of strategic leaders is vital to the success of the organization. Finkelstein
offers several guidelines to boards and search committees for ensuring that
they hire and keep the best strategic leaders.
First, when hiring a high-level leader:
Emphasize behavioural questions in candidate interviews. Candidates for high-level
positions will have some kind of a track record and usually a long resume. Behavioural
questions, however, can dig below the surface. Such questions include: What major change
initiative did you lead and how did you get people to buy into the change? What major plans or
goals proved unworkable or failed for some reason and how did you respond?
Watch what candidates bring up themselves. Does the candidate initiate a story about an
unexpected market situation and how he or she responded? Does he or she bring up setbacks
and barriers?
Interview a large number of people who have worked with the candidate. They have
the perspective to offer a more honest assessment - both positive and negative - of the
candidate.
Another danger is the once successful leader who is no longer an effective
strategic leader. As people get older and have been in their positions longer,
they become complacent or arrogant, losing their intellectual honesty, self-
awareness and accountability. Finkelstein warns that boards of directors or
business owners must continuously monitor the leaders of their organization
to ensure that they still have within them the capabilities required of strategic
leaders.
Further Reading
Professor Sydney Finkelstein’s four capabilities concept builds on
current research as well as the leadership ideas found in his earlier
books, including:
Think Again: Why Good Leaders Make Bad Decisions, Sydney Finkelstein, Jo
Whitehead, Andrew Campbell, Harvard Business School Press, 2009.
Why Smart Executives Fail, Sydney Finkelstein, Portfolio, 2004
Further Relevant Resources
Sydney Finkelsteins’s profile at Tuck
Tuck School of Business Executive Education profile at IEDP
© Copyright IEDP Ideas for Leaders 2013
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