Strategic Leadership: The Essential Skills
The storied British banker and financier Nathan Rothschild noted that great fortunes are made when cannonballs fall in the harbor, not when violins play in the ballroom. Rothschild understood that the more unpredictable the environment, the greater the opportunity— if you have the leadership skills to capitalize on it.
Through research at the Wharton School and at our consulting firm involving more than 20,000 executives to date, we have identified six skills that, when mastered and used in concert, allow leaders to think strategically and navigate the unknown effectively: the abilities to anticipate, challenge, interpret, decide, align, and learn. Each has received attention in the leadership literature, but usually in isolation and seldom in the special context of high stakes and deep uncertainty that can make or break both companies and careers.
This article describes the six skills in detail. An adaptive strategic leader—someone who is both resolute and flexible, persistent in the face of setbacks but also able to react strategically to environmental shifts—has learned to apply all six at once.
Do you have the right networks to help you see opportunities before competitors do? Are you comfortable challenging your own and others’ assumptions? Can you get a diverse group to buy in to a common vision? Do you learn from mistakes? By answering questions like these, you’ll get a clear view of your abilities in each area.
The self-test at this article’s end (and the more detailed test available online) will help you gauge your strengths and weaknesses, address deficits, and optimize your full portfolio of leadership skills.
Most organizations and leaders are poor at detecting ambiguous threats and opportunities on the periphery of their business.
Coors executives, famously, were late seeing the trend toward low-carb beers. Lego management missed the electronic revolution in toys and gaming. Strategic leaders, in contrast, are constantly vigilant, honing their ability to anticipate by scanning the environment for signals of change.
We worked with a CEO named Mike who had built his reputation as a turnaround wizard in heavy manufacturing businesses. He was terrific at reacting to crises and fixing them. After he’d worked his magic in one particular crisis, Mike’s company enjoyed a bump in growth, fueled in part by an up cycle. But after the cycle had peaked, demand abruptly softened, catching Mike off guard.
More of the same in a down market wasn’t going to work. Mike needed to consider various scenarios and gather better information from diverse sources in order to anticipate where his industry was headed. We showed Mike and his team members how to pick up weak signals from both inside and outside the organization.
They worked to develop broader networks and to take the perspective of customers, competitors, and partners. More alert to opportunities outside the core business, Mike and the team diversified their product portfolio and acquired a company in an adjacent market where demand was higher and less susceptible to boom-andbust cycles.
To improve your ability to anticipate:
Talk to your customers, suppliers, and other partners to understand their challenges.
Conduct market research and business simulations to understand competitors’ perspectives, gauge their likely reactions to new initiatives or products, and predict potential disruptive offerings.
Use scenario planning to imagine various futures and prepare for the unexpected.
Look at a fast-growing rival and examine actions it has taken that puzzle you.
List customers you have lost recently and try to figure out why.
Attend conferences and events in other industries or functions.