Why do leaders fail to think strategically?

I often hear business leaders grumble that he/she cannot understand why suddenly his/her business is struggling, this although they work hard at it.

As they say the only constant is change but surprisingly many business leaders overlook just that.

There are multiple dangers that come from not changing and adjusting to new customer expectations, competitors, changing technologies, and other market conditions.

My experience has led me to conclude that the key root reason for this is a failure of strategic thinking and practices on the part of the leaders of those businesses.  

Many business leaders are very good at managing operations, resolving problems, or perhaps even coaching their employees. Some even go down the dangerous path of becoming “micro managers”.

However they then struggle to pick up their perspectives and look at their organisations more holistically and strategically.  In far too many cases, a key obstacle to leaders helping their businesses adjust to new business realities is their failure to think and act strategically.

But Why?

Not every leader has taken MBA classes or any sort of training on strategy, and even if they have some background in the strategy area, the field of strategy development continues to evolve and change in terms of approaches. In many cases the top business leaders do not themselves understand strategy and the need for strategic thinking or strategic practices. In these organisations, even at the very top, strategy is not fully understood or appreciated, and so therefore investing in this set of skills is not understood or appreciated.  In some other cases business leaders fail to see a need to invest time or resources in these sets of competencies, based on the belief that strategy work is only an academic exercise or something fancy for consultants. Many business leaders actually believe that executional skills are more relevant and useful for leaders in the organisation. That type of thinking tends to be self-reinforcing, as internal future leaders are therefore not prepared to engage in strategic work and persons who can think and work strategically need to be brought in from the outside, if ever.

In many organizations leaders are always busy. They are what I call the “runners on the spot”. Its true that just keeping a business running is complicated and takes significant effort.  Taking some time away from day to day crisis management and operational execution to apply strategic thinking or practices can be an enormous challenge, particularly during business downturns and turnaround situations. That does not mean its not worth the effort.

It is also true that many leaders have been raised in execution or operations-heavy environments and so may not have had extensive visibility to role models who think and act strategically.  Strategic thinking or practices may seem like an exercise done by consultants or academics, not something effective in the real business world!

In my opinion, however, the main culprit is in our rewards system. Most business leaders, have moved up through their careers based on their ability to deliver results. They tend to be strong operationally and “can be counted on to get things done”.  Executing harder and more efficiently have been the keys to their success. When business problems arise, these leaders tend to look at things from an execution standpoint to solve business problems. The answer to a potential strategic problem may be addressed by these leaders with an operational solution.

Finally and in all honesty, business leaders still find it very hard to change thinking and paradigms that have been established for many years. It’s difficult for leaders to step back and admit that what has been true in the past about the marketplace is not as true anymore.  It’s hard to consider approaches or strategies that are new or different. It’s hard to change methods, approaches, and strategies that have worked in the past. Most leaders look to their experiences of the past to provide clarity and insight for the future. That kind of thinking, particularly in today’s fast-paced, global, complex, and rapidly evolving market place, shuts down strategic thinking and practices.  

So what’s the good news?

The good news is that companies CAN change. But it will take leaders who are willing to change and look more objectively at their organisations and the environment in which they operate. It will take leaders who think and act strategically. It will require an investment in developing strategic thinking and strategy development skills with both top senior leaders as well as leaders at the mid-level and below. Strategy will need to be a priority, not an after-thought, and will need to be owned by leaders, not consultants.  

A better strategy will not solve every problem, nor save every company. But thinking of how many business failures and big blunders could have been avoided leads you to the conclusion that it is surely worth it!