Effective Enterprise Leadership: Counsel for enterprise leaders from enterprise leaders — CHAPTER 4
Set your agenda
The most experienced enterprise leaders were the most emphatic about crafting and leading from a well-defined agenda. As one veteran put it:
“The discipline of having an agenda — your agenda — is crucial; without it, you are at the mercy of others who would use your authority for their agendas.”
Contributors’ agendas ranged from detailed Gantt chart-style plans to bullet-point lists. Some included personal development goals alongside enterprise objectives. In every case, the leader had gathered input and ideas from many sources but saved the final determination for themselves. The impact of the agenda will be enterprise-wide, but its definition and evolution are personal to the leader.
The most effective enterprise leaders follow a rigorous approach to setting their agenda and preparing for implementation. Contributors offered ideas on how to:
- inform your agenda, based on stakeholder needs and enterprise context;
- define your agenda, based on the initiatives required to deliver your priorities;
- create the campaign that will stage, sequence, and provide contingencies for initiatives; and
- establish roadmaps to bridge initiative design to execution.
Insights from Enterprise Leaders
Effective enterprise leaders set an agenda that specifies their objectives, shapes their priorities, and guides their personal actions.
WORKING DEFINITION
“Agenda”
Many executives describe the portfolio of initiatives they use to drive change across the enterprise as their “agenda.” They expect the impact of these initiatives to define their era as leader.
The leader’s agenda has characteristics of a corporate portfolio and an investment portfolio. Like a portfolio of businesses, the set of initiatives should add value both independently and in combination. They should increase the returns to scale and/or scope of the enterprise as a whole. They should also reinforce the intended enterprise culture. Like a portfolio of investments, the sum of the initiatives should produce an attractive return for the resources they use, adjusted for the strategic and execution risks they require. Effective leaders do not shy from good risks — those with high expected return and controllable uncertainty; however, they avoid or minimize bad risks — those that have extreme downsides or uncontrollable uncertainty. Many leaders prefer that their portfolio of initiatives have varying levels of risk/reward and expected timing of benefits — a form of diversifying the portfolio.
An enterprise leader’s portfolio requires active management. As the ultimate owner of all initiatives, the leader must intervene if leadership proves insufficient, risk/reward expectations change, or resource and time consumption change.
The leader’s agenda evolves perpetually. The initial portfolio is only the starting point. New information, including changes in the objectives and constraints of stakeholders, will affect the expected value of individual initiatives and the portfolio as a whole. Priorities will — and should — change. Advancing the agenda will create new opportunities and options. As one leader put it, “…working your agenda is like sailing — what you can see on the horizon changes as you make progress.”
Set your agenda
Effective enterprise leaders set an agenda that specifies their objectives, shapes their priorities, and guides their personal actions.
In 2001, US President George W. Bush announced the “President’s Management Agenda”. Drawing on models used by private sector leaders, Bush aimed to make government more “citizen-centered, market-based, and results-oriented.” Bush introduced performance reviews with greater accountability in five areas: human capital, financial accountability, competitive sourcing, e-government, and budget and performance integration. He employed the Office of Management and Budget to drive implementation.
Nearly all enterprise leaders work from a well-defined agenda. Some travel with well-worn copies in their work bags, others mount them on highly-visible walls, and some carry them in their smartphones, ready for reference. Forming the right agenda, communicating it, and using it to drive the company forward is not just necessary to do the enterprise leader’s job — it is the essence of the job.
Peer counsel
“My job is to write the bible and then preach the bible; I have to make people believe in what we are doing for them to be empowered, motivated, and focused.”
“Leadership begins with an ambitious agenda.”
“You must have an agenda that defines your leadership internally and externally — you are not credible without one. Your agenda is either going to work or it isn’t, but you have to put it out there and stand for something.”
“Real leaders want to deliver results, not build their own CV.”
Set your agenda — inform your agenda
Leaders must first determine stakeholders needs, expectations, and ability to influence or constrain the enterprise. One contributor referred to this step as finding the solution space for their agenda.
“I constantly weighed the stakeholders’ interests to find the ‘solution space’ with which I could work. The challenge came when the stakeholders’ interests appeared to conflict.”
Some contributors identified gaps in stakeholders’ understandings of the industry and enterprise. Awareness of such a gap helps the leader work from the right baseline when communicating with each set of stakeholders.
The path of the leader to their role influences the approach to informing their agenda. Internally-promoted successors will need to guard against assumptions. External hires from inside the industry may have biases that should be tested with new information. Hires from outside the industry have the most to learn and the advantage of the cleanest slate from which to start.
Insights from Enterprise Leaders
Effective leaders employ a “listening tour” to identify issues, build relationships, and signal the organization and its stakeholders on leadership style and intended culture.
When evaluating stakeholder interests, leaders distinguish between stakeholders that set the enterprise’s objectives and those that define its constraints.
Leaders who have built their career in the enterprise, or industry, must guard against biases from their own experiences and the temptation to move too quickly.
New leaders from outside the enterprise, but inside the industry, must be mindful of their incoming perceptions, including those formed in the interview process.
Leaders from outside the industry must invest to build a grounded and independent perspective.
Leaders from outside the enterprise must dig to unearth the “deep culture” they have inherited with their new role.
Inform your agenda — conduct the listening tour
Effective leaders employ a “listening tour” to identify issues, build relationships, and signal the organization and its stakeholders on leadership style and intended culture.
As enterprise leaders frame the issues that will define their agendas, there is no substitute for listening to the needs and expectations of stakeholders. In-person interactions form the standard against which opinions asserted to the leader can be measured. Engaging stakeholders personally builds relationships that can prove vital over the leader’s tenure. In addition to the valuable content gained from interactions, spending time with stakeholders sends important signals to the organization about the leader’s style and the direction they want to take the enterprise’s culture.
Peer counsel
“As simple as it sounds — the key was to do as little talking and as much listening as possible.”
“I got new product ideas on my initial branch visits; the folks working directly with our clients cut through the clutter straight to client needs.”
“You need to see through the ‘popularity contest’ of today’s share price to the things that will drive sustainable value. The best place to learn this is by engaging clients and front-line managers directly.”
“I spent my first four months on the road with employees and customers — I avoided going to corporate as much as possible. Without any other action on my part, service levels to the branches improved. The folks in corporate roles got the message.”
Inform your agenda — distinguish objectives from constraints
When evaluating stakeholder interests, effective leaders distinguish between stakeholders that set the enterprise’s objectives and those that define its constraints.
Enterprise leaders cannot meet all the needs of all the shareholders — tradeoffs will be required. Past generations simplified this tradeoff by optimizing for shareholders within constraints acceptable to all others. While that thinking doesn’t match modernity, effective leaders should still distinguish between stakeholder needs that will define success and stakeholder concerns that should inform limits or boundaries. Engaging stakeholders with this distinction in mind will help leaders ask the right questions and, ultimately, find the best “solution space.”
Peer counsel
“Regulatory changes created constraints that halved our returns on shareholders’ capital.”
“I invested in building credibility and relationships with the regulators. Later, [when we had an unexpected problem], they were a source of support for working through them.”
“One form of dysfunction within a culture is when one set of stakeholders treats the others with an ‘I win/you lose’ mindset or passive-aggressive behavior toward other stakeholders.”
“Some stakeholders have power without much understanding — this can include regulators, community leaders, even some Board members.”
“The challenge is to take the inherent conflicts across stakeholders and resolve them in a creative way rather than a straight tradeoff.”
Inform your agenda — don’t let familiarity breed assumptions
Leaders who have built their career in the enterprise, or industry, must guard against biases from their own experiences and the temptation to move too quickly.
“Your assumptions are your windows on the world.
Scrub them off every once in a while, or the light won’t come in.”
Isaak Asimov
Internally-promoted leaders may be tempted to skip the step of engaging stakeholders personally or, worse, turn their listening tour into a “telling tour.” The first several weeks in the new leadership role are an opportunity for the leader to test beliefs and calibrate perspectives. Stakeholders often carry their own assumptions about internally-promoted leaders — the listening tour is an opportunity to strike a new tone. Effective leaders scrub their assumptions before setting course.
Peer counsel
“My stakeholder discussions were a good opportunity to ‘mark to market’ my views of the situation.”
“Self-surgery is exceptionally challenging; you have to seek input to see where your own experience misleads you.”
“Your team may be too close to the business to see it; you must open their minds to what can happen, instead of what has happened.”
“We had all been through the industry crisis and become fixated on it. We spent all our time talking about the external forces, rather than thinking about what we could control. I had to break that cycle.”
Inform your agenda — challenge your initial perceptions
New leaders from outside the enterprise, but inside the industry, must be mindful of their incoming perceptions, including those formed in the interview process.
The Right Honorable Susan Greenfield, neuroscientist, is a popular lecturer on the effects of digital media use on consciousness and the human brain. With the pervasiveness of media in the developed world, she asserts that there is no such thing as a clean slate for our beliefs and biases — even for our neural functions.
When taking on a leadership role from outside the enterprise, a new leader may already have formed perceptions of the business as a customer, investor, or competitor. Those perceptions may become reinforced or amplified through the interview process. The leader may feel informed, but their fact base is thin. While it may be impossible to be completely objective, leaders can challenge their preconceived views and reset their assessment as they encounter more substantive information from the enterprise’s stakeholders.
Peer counsel
“The military uses a term — ‘react to contact’; this concerns the adjustments and adaptations you make to your plan based on the real-world situation you find on the ground. My first 100 days were all ‘react to contact’.”
“Remember, part of the interview process is them selling you to take the role. On the first day of the job, forget everything you were told in the interview process and look at the situation for what it is.”
“Having built expertise during your career — even if it isn’t core to the job — teaches you what expertise looks like. You know who to trust.”
Inform your agenda — invest to build perspective
Leaders from outside the industry must invest to build a grounded and independent perspective.
“Fresh eyes” describes a technique used in Lean production systems. It refers to the introduction of people to an area or process in which they are unfamiliar with the belief that their absence of bias will reveal opportunities that incumbents overlook.
Leaders from outside have fresh eyes. To capitalize, they should build their own perspectives and avoid the short-cut of adopting the views of those around them — even those of the Board. To get to the root causes of issues without getting “lost in the weeds,” effective leaders create structure for their exploration and don’t stop listening, probing, and testing until their perspective is complete.
Peer counsel
“Coming from outside the industry made forming my plan less instinctive and more of a process. I literally took it step-by-step.”
“I kept a little notebook with vocabulary words — things I heard people say that I didn’t recognize or fully understand. At night, I read and talked to some friends to find definitions for everything. It took me six months to communicate in the language of the industry.”
“The first few weeks were incredibly difficult; I had to shut off everything else in my life and dedicate all of my energies to getting my hypotheses defined. In the background, I had to do the analytic work myself to interpret what I was being told.”
“When you are a new CEO in a business that is new to you, there is no such thing as overpreparing.”
WORKING DEFINITION
“Deep culture”
Social scientists use the term “deep culture” to distinguish between easily observed behaviors and the unseen motivators behind them. The iceberg model is used to illustrate this distinction.
“Surface culture” refers to norms that are easily observed. They may be distinct or derived from other cultures. Someone from outside a culture may replicate behaviors preferred by the audience without understanding the deeper drivers.
Deep culture refers to ideas, beliefs, and feelings that are not tangible or obvious. Surface culture norms are expressions of deep culture attitudes.
In the context of an enterprise, deep culture refers to core values that have formed over time, often passed through generations of employees or embedded in formative events in the enterprise’s history. It influences how messages are heard, how actions are interpreted, and how policy is implemented.
Inform your agenda — unearth “deep culture”
Leaders from outside the enterprise must dig to unearth the “deep culture” they have inherited with their new role.
The term “deep culture”, in this context, means the unconscious expectations, norms, and behaviors of an organization. These practices don’t find their way into mission statements or declared principles; in fact, they may not even surface during the interview process.
As an externally-hired leader builds their perspective of the enterprise, they should watch for embedded behavior patterns. By digging until they get to the why behind decisions and actions, they will begin to understand the deep beliefs– as either strengths to build on or challenges to overcome — that will affect their agenda and how best to communicate it.
Peer counsel
“Because the corporation was built through acquiring entrepreneurial, local businesses, we had a culture of teamwork in the branches that we needed to foster and preserve.”
“It didn’t take long for me to figure out that I was in charge of the Navy and everyone in the firm was an Admiral.”
“What was framed as ‘independence’ was really a culture of passive-aggressive behavior amongst senior leaders.”
“This business had a deep culture of financial performance long before I got here; it has been a source of strength on which to build.”
“Don’t conflate performance and culture. It is true that you can have performance as a result of culture. It is also true that you can have performance in spite of culture.”
Set your agenda — define your agenda
The leader’s agenda forms at the intersection of strategy, finance, and the enterprise’s operating model. Leaders may select or prioritize segments, but the market will evolve at its own pace and direction. Similarly, leaders may shape investor expectations, but the attractiveness of investing in the enterprise will be determined by its risk and reward relative to market alternatives. Strategic alternatives and their financial implications create the backdrop for what could be possible for the enterprise — the operating model determines what can be achieved.
Effective leaders first determine whether their business model, and the operating model that powers it, can meet the demands of the desired market segments. As one would expect, maturity of the business model may have both positive and negative effects with regard to its efficacy. It is not enough for the model to adequately meet market needs — it must be abundant. As one executive stated, “to be a robust business, you need to generate headroom for investment inside your own income statement.”
Potential initiatives to access markets, build capabilities, reshape or create new products and services, or invigorate the organization are the raw material for the leader’s agenda. Before selecting the initiatives that will form their agenda, effective leaders apply pressure to forge the best possible actions from the ideas for potential improvements. They weigh the value at stake and the potential reward of the initiative against the execution risk of the proposed approach. Experienced leaders consider both organic improvements and the possibility of outsourcing, partnering, or acquiring access, capabilities, or products and services.
Insights from Enterprise Leaders
Effective leaders make improving the through-line — from the market served through the enterprise operating model to employees — their top priority.
Leaders identify areas of strength — evidenced by harmony and efficiency — and weakness — revealed through discord and inefficiency.
Leaders combine analytics and judgement to project the future viability of the business model.
Where possible, leaders emphasize improvements that engage their organization at the point of action and create ownership amongst managers and staff.
Experienced leaders know the power — and difficulty — of transformative approaches and respect the risk and reward of operating model overhauls.
When transformational change is necessary, leaders consider the option of divestitures, closures, acquisitions, and partnerships to transform or close gaps in their operating model.
WORKING DEFINITION
“Through-Line” of the business model
“Business model” describes the combination of the operating model, commercial model, and talent development model of enterprises. The “through-line” of the business model describes how robustly the operating model connects the market to the employees of the enterprise.
The elements of the operating model include:
- the design of the product, services, and value delivery system;
- the definition of standards within the value chain and the scope of customization at each stage of the chain;
- the processes for execution and improvement in value delivery; and
- the resources employed in the value chain, whether owned, outsourced, or accessed through partners.
A robust through-line from employee to customer is efficient and provides leverage — the people within the enterprise can deliver its full potential value for customers without heroics or work-arounds. Customers perceive that the enterprise responds to their needs and executes quickly and smoothly. Employees and prospective employees find work more rewarding and less frustrating.
The operating model is the fulcrum for refining, adapting, or overhauling the business model for enterprise leaders. While the commercial model may have scope for innovation and the enterprise may shift market segment choices, market expectations are, ultimately, shaped by forces outside the enterprise’s control. While the talent model may also present opportunities for differentiation, the needs and wants of the most desirable employees will be determined by the market for talent, not the enterprise. By contrast, the enterprise leader can exert complete control over the design and capabilities of the operating model.
Define your agenda — start with the through-line
Effective leaders make improving the through-line — from the market served through the enterprise operating model to employees — their top priority.
Thomas Edison is credited with innovations that shape modern life: the phonograph, the microphone, photographic film, the movie camera, electric power generation and distribution, the nickel-iron battery, and the incandescent light bulb. Edison’s real genius was the operating model of his labs. He tasked teams of capable scientists and engineers with specific experiments to eliminate concepts and designs that did not produce the desired outcome. Although he is credited with 1,093 patents, Edison’s greatest invention was an operating model that organized collective efforts to invent products that addressed customers’ current and future needs.
An enterprise’s operating model should deliver value to the market efficiently and create enough surplus to fund reinvestment for health, growth, and innovation. For startups, an efficient operating model minimizes burn rate. A robust operating model produces desired outcomes for stakeholders through coordinated collective efforts. It enables employees to deliver extraordinary value to customers. Strengthening it must be at the heart of the leader’s agenda.
Peer counsel
“It is crucial that everything in the business is ‘tight’ so we can be consistent, efficient, and fast.”
“If you are growing share and growing value at the same time, the business model is working. If you are growing share without growing value, your business model is not optimized. If you are losing share or losing value, [the business model] is broken.”
“We were working harder than ever, but we weren’t winning anymore. I had to take action from the top.”
Define your agenda — follow the money
Effective leaders identify areas of strength — evidenced by harmony and efficiency — and weakness — revealed through discord and inefficiency.
The 1976 film, All the President’s Men, embedded the phrase “follow the money” into popular culture. It was the advice given by an informant to the journalists investigating the Watergate scandal, in which a trail of campaign donations led back to the crime.
Enterprise leaders can follow a similar trail to determine the strengths and weaknesses of their business model. Customer and employee satisfaction, operating surplus, and productive innovations will flourish around robust business models. Complaints, performance shortfalls, and an endless appetite for resources, talent, and investment will swarm from broken ones. Organizations often fail to assess strengths and weaknesses accurately. The results hold the real story. Enterprise leaders should follow the symptoms to get to the truth.
Peer counsel
“Our end of year results made it appear that we were on track. Underneath, we were relying on last-quarter heroics.”
“Our old operating model was at odds with the other players in the value chain — we had escalated to the point of war. The inherent conflicts capped our growth.”
“We had to pay people more than anyone else in the industry to compensate them for getting things done in our system.”
Define your agenda — divine then define the future
Effective leaders combine analytics and judgment to project the future viability of the business model.
Pop psychologists, life coaches, and meme-makers seem to disagree on Confucius’ wisdom regarding at least one maxim: “Study the past if you would divine/define the future.” They appear to choose between divine (predict) and define (shape) in equal number (although they appear to agree on rocky seacoasts as the preferred image for their inspirational posters).
For the enterprise leader, both adages are true. The strategy team should provide an assessment of external trends and risks. Line leaders should have views on the expected evolution of their competitive advantages. Enterprise leaders should bring their own perspective about the underlying momentum of the business and emerging external threats. Perceptions from the enterprise leader should not override facts; however, they can — and should — fuel questions that help divine their momentum course and define a different course for their enterprise.
Peer counsel
“Everyone overestimates short-term change and underestimates long-term disruption to their industry and their business.”
“I spend as much time as possible ‘out in the world,’ listening and looking for ideas that will change our beliefs.”
“You need to be informed beyond the data… without relationships with customers who will tell you what is really happening in their businesses and with yours, you will always be too late.”
Define your agenda — engage the point of action
Where possible, effective leaders emphasize improvements that engage their organization at the point of action and create ownership amongst managers and staff.
Deploying bottom-up improvement initiatives can feel like building a battleship. The program may involve tens, hundreds, or even thousands of people. Steering discussions and progress reviews consume countless hours. Despite the best of intentions and efforts, a few employees will passive-aggressively create pockets of cynicism.
In many cases, the prize is worth the fight. Engaging the organization in the productive work of improvement communicates the leader’s agenda far more effectively than words. Done right, front line-led initiatives are an opportunity to reinforce desired cultural elements, to identify “rising star” talent, and to strengthen the capabilities of the enterprise. Leaders who drive change at the front line reap more than bottom line returns.
Peer counsel
“We attacked our growth mandate by putting discipline around every step of the processes that drive growth, from top to bottom.”
“We are getting better at continuous improvement; we are increasing our improvement rate by increasing our iteration rate.”
“Our continuous improvement approach created natural change leaders within the organization. They became the teachers.”
“Productivity initiatives can get the whole organization engaged in making a difference. We reinvest the gains into innovation and growth, so there is shared benefit for success.”
“The saying that ‘you can go fast alone and far together’ may be cliché, but it is true.”
Define your agenda — respect transformational change
Experienced leaders know the power — and difficulty — of transformative approaches and respect the risk and reward of operating model overhauls.
When the through-line of the business model is significantly misaligned or suffers chronic breakdowns, the leader must choose between improving products, processes, or tooling — or changing the operating model so dramatically that it can only be called a transformation.
When evaluating operating model overhauls, leaders need clarity on their options. Each alternative approach will carry different risks — both of pursuing and not pursuing transformational change — and potential rewards — over the short, medium, and long term. For most enterprise leaders, the success of their tenure will be defined by this choice.
Peer counsel
“If some of your stakeholders are happy and others are miserable, the operating model of your business is broken.”
“When you want to tackle operating model change, be clear on what you have time to get done — things get worse before they get better.”
“When we announced the change to our operating model — around which we had optimized for years — the stock fell 10%.”
“Changing was risky but resulted in doubling the company’s size and more than doubling its value over the next four years.”
Define your agenda — employ creative destruction
When transformational change is necessary, leaders consider the option of divestitures, closures, acquisitions, and partnerships to transform their operating models.
“Schumpeter’s Gale” refers to the concept in economics that old wealth must be devalued or destroyed to clear the ground for new sources and forms of wealth. Dr. Richard Foster asserts that corporations must be willing to terminate businesses and replace them with ones that are suited to the future rather than reinvest in ones that extend the past.
Effective enterprise leaders always consider the potential value of eliminating businesses, products, processes, and activities. Wholesale replacement may seem disruptive; however, it is often necessary to facilitate a dramatic change in operating model or a significant change in performance trajectory. Creative destruction creates options.
Peer counsel
“We had tweaked products and gotten temporary ‘bumps’ in performance; to change the trajectory, we had to change the model.”
“Focus your energy on the businesses that deliver the best ROI, not a positive ROI. Marginally positive ROI activities eventually eat the capacity to lead and execute great businesses.”
“We changed our model and turned competitors into partners. We replaced fighting for share with growing the ecosystem.”
“We decided to pursue a restructuring-led transformation that was heavy on divesting businesses where we could not win.”
Set your agenda — create the campaign
Once the leader determines the initiatives they want for their agenda, they need to engage the organization and lay the groundwork for implementation. Many leaders capture the essence of their agenda in a theme or incorporate it into the mission of the enterprise.
“Define the enterprise as something more. Frame your agenda so that it has meaning for your stakeholders.”
When the leader shapes their agenda into the mission for the enterprise, they create a bridge to redefining culture. They also build a framework in the minds of their employees on which they can hang goals, performance management, and change management actions. Staging and sequencing their actions creates chapters for the narrative of their era as enterprise leader.
Insights from Enterprise Leaders
Many leaders embed their agenda in the mission of the enterprise with language that creates a compelling future for stakeholders.
Effective leaders create a portfolio of initiatives to their agenda based on leadership, resources, and the interrelationship of actions.
Effective leaders stage initiatives to reflect their priorities, navigate constraints, and reduce the risk of overloading the organization.
For low priority or projected gaps with high uncertainty, effective leaders often choose to wait, watch, and develop options for future action.
Create the campaign — connect your mission to your stakeholders
Many leaders embed their agenda in the mission of the enterprise with language that creates a compelling future for stakeholders.
“We are building a big, strong, fast, smart, tough, and disciplined football team that consistently competes for championships.”
New England Patriots’ mission statement
Bill Belichick’s 19 years as head coach of the Patriots has produced 16 playoff appearances, nine AFC championships, and six Super Bowl victories… so far.
Experienced leaders know that the stakeholders of an enterprise need more than a list to be inspired. Much has been written on the topic of mission and vision statements. The best ones convey focus on the stakeholders, a compelling future state for the enterprise, and enough color for the leader to connect the actions in their agenda to the mission. You can bet that when the Patriots recruit, hit the weight room, run drills, study tapes, and practice incessantly, Bill Belichick reminds them that they are becoming stronger, faster, smarter, and more disciplined — on their way to yet another championship.
Peer counsel
“It begins with a bold goal — something that unleashes everyone’s imagination.”
“We call the process with our franchisees ‘sense-making’; we translate our goals into something meaningful for them.”
“I could tell that one of my team members understood the change in the mission when their questions changed from ‘what is it?’ to what is in it for me?’”
Create the campaign — construct a portfolio of initiatives
Effective leaders create a portfolio of initiatives to advance their agenda based on leadership, resources, and the interrelationship of actions.
In the asset management industry, effective portfolio managers use hedges to reduce unintended risks, isolate intended ones, and increase the probability of success through diversification. Well-constructed portfolios produce more consistent returns that reflect the insight of the investor rather than the vagaries of the markets.
Effective leaders construct their portfolio of initiatives with similar intent. Actions that produce returns over a variety of time horizons enable performance and position to advance more steadily. Balancing short-term results with long-term health increases sustainability. Constructing the right portfolio allows the enterprise to meet its objectives even when some initiatives struggle or fail.
Peer counsel
“Our agenda has five items: two are shorter-term operational improvements; two are longer-term intended to reshape the business by changing the operating model; and the last, medium-term is people-related, concerning the attraction, retention, and satisfaction of our team.”
“An agenda that is too short-term and tactical can be seductive for the leader — wrestling immediate issues makes you feel like you really accomplished something every day.”
“You must constantly weed the garden. If you have ten initiatives, two will be clear winners, two will be clear losers, and everything else will be in-between. Keep only the clear winners. If you don’t, the in-between stuff builds geometrically and bogs down the company.”
Create the campaign — stage and sequence your actions
Effective leaders stage initiatives to reflect their priorities, navigate constraints, and reduce the risk of overloading the organization.
In military campaigns, actions are staged and sequenced to achieve maximum impact with finite resources. Each operation builds on the gains of its predecessors. Sequencing enables military leaders to adjust and adapt future actions based on real outcomes rather than forecasted ones.
While military analogies are over-used in business, the notion of a campaign remains relevant. Effective leaders resist the urge to pursue every good idea at once. They move high-priority actions forward for both business benefit and signaling value. They engage the organization while avoiding over-taxing leadership and talent. Effective leaders turn portfolios of initiatives into campaigns of action.
Peer counsel
“This is like military strategy — how many fronts can you fight on and win? What ground do you need to secure before launching the next initiative?”
“With limited time and resources, staging and sequencing initiatives is both important and hard to get right.”
“We worked hard on productivity and got nothing to the bottom line because we lacked pricing discipline… I got the sequence wrong.”
“Initiative overload is a real danger.”
“You decide what the organization will master this year and — just as important — what you will not master until later.”
Create the campaign — turn uncertainty into options
For lower priority or projected gaps with high uncertainty, effective leaders often choose to wait, watch, and develop options for future action.
One of the investment industry’s legendary traders always asks two questions when faced with a decision: 1) what are the other options? and 2) which choice creates the most optionality in the future? Once they make a choice — including the choice to defer choosing — they monitor the potential decision and watch for changing context and new information. In financial markets, the same decision made earlier or later can produce completely different results. As this legend says, “sometimes the best trade is the one you don’t make.”
Most enterprise leaders don’t think this way. Initiatives with outcomes too uncertain to pursue are usually discarded. Only a few enterprise leaders consider option value when making their choices, whether accounting for future options created by an action or the value created by deferring a decision until uncertainties resolve or more information becomes available. Take a lesson from a master trader and view the elements of your agenda as options, not binary choices.
Peer counsel
“When you can’t predict the outcome of your potential choices, the flow of options must be steady and growing for you to succeed.”
“It was a surprise to me, but the industry’s model for innovation has been ‘benign neglect’ followed by abrupt adaptation. It amazed me, but the success of the model is undeniable.”
“I always ask which options have the highest yield? Where do we have the most in the way of future options?”
Set your agenda — establish roadmaps
The bridge from the strategic side of agenda-setting to the planning side of agenda implementation is littered with disappointments. A surprising number of organizations and their leaders either shy away from planning disciplines or have a planning and budgeting process that is disconnected from the agenda of the leader.
Effective leaders use a “roadmap,” or equivalent planning model, to translate longer-term goals into interim strategic, operational, and financial milestones. These milestones provide markers for performance management and triggers for evaluating and exercising options. A roadmap approach to planning influences the initiatives that fuel the leader’s agenda, resulting in more specific, outcome-oriented designs that anticipate risk and provide contingency options.
Insights from Enterprise Leaders
Where possible, effective leaders express the objectives of their agenda in measurable goals.
Effective enterprise leaders translate goals into roadmaps with interim strategic, financial, and operational milestones and set expectations accordingly.
By translating longer-term goals into time-based milestones, effective leaders build a bridge from strategy to performance management.
Effective leaders recognize the pace and risk of initiatives when embedding their results into expectations for performance.
Experienced leaders resist pressure from their teams to back-end load expectations for results — robust roadmaps demand steady progress.
Effective leaders demand roadmaps that include options, contingencies, and alternatives. Their milestones are decision points to accelerate, continue, alter, or abandon the initiative.
Establish roadmaps — measure what you intend to manage
Where possible, effective leaders express the objectives of their agenda in measurable goals.
“If you cannot measure it, you cannot improve it.”
Lord Kelvin
The Net Promoter Score™ (NPS) has been adopted by more than two thirds of the Fortune 1000. It serves as a great example of translating a critical stakeholder proposition — customer satisfaction with products and services — into a metric suitable for goal-setting.
Not every stakeholder proposition in the leaders’ agenda will yield to simple, scalar measures. For some propositions, relative or descriptive measures are the best options. Experienced leaders know that the more specific and quantified your goals for satisfying stakeholders, the more likely you will deliver them.
Peer counsel
“We don’t translate all our objectives into measurable goals, and we almost always regret it.”
“If you are not creating measurable value for all of your stakeholders, your leadership isn’t sustainable.”
“We serve businesses, and we should be able to measure our value to them. I want us to strive for a ten-fold return in value for what our customers pay us.”
“Turning themes into actionable and measurable goals is part of the collective effort of building the agenda.”
WORKING DEFINITION
Financial and strategic “roadmaps”
Imagine that you want to go from Nashville to Tupelo. The navigation app would show you options with an overall estimate
of the time required to make the trip. Upon closer inspection, two of the options begin on the same path and allow the traveler to make their final routing decision partway through the trip when they will have more information (about weather, traffic, their need to stop and rest). The other option,
while predicted to be the shortest, presents an all-or-nothing choice — if there is a problem along the way, the traveler must accept the additional time or take a tedious side route.
Most planning exercises don’t offer alternatives for how to reach the objective or risk-based considerations for choosing one over the other. Many plans don’t include specific milestones to assess interim progress or pre-defined options and the point at which they should be exercised. Experienced leaders expect strategic, financial, and operational plans to include:
- alternative approaches to implementation;
- risk-adjusted perspectives on outcomes and time and resource requirements for each alternative;
- milestones for progress; and
- decision points for exercising contingency options.
Establish roadmaps — plot the course to your goals
Effective enterprise leaders translate goals into roadmaps with interim strategic, financial, and operational milestones and set expectations accordingly.
The route to Everest’s summit includes stages identified by camps. From Base Camp, at 17,700 feet in elevation, climbers proceed through Icefall, Valley of Silence, Camp 2, Lhotse Wall, and the Deathzone before reaching the top. Guides focus climbers’ attention on executing each day’s climb without fixating on the summit.
Effective leaders demand that initiative leaders roll the future back, one quarter at a time, with specific goals for the drivers of performance and the necessary operational and organization capabilities. The resulting roadmaps become the step-by-step commitments that set expectations of stakeholders and the axis around which execution and performance are managed.
Peer counsel
“It is easy to point at the mountain and say, ‘We’re going to the top!’ The truth is that the plan is not a five-year view to the top of the mountain. It is a series of paths, cut from tree to tree, that mark your climb. If you fixate on the top of the mountain, you will find that things change by the time you get there.”
“The financial plan I inherited was untenable — it harvested the business to feed the shareholders at the expense of all other stakeholders. We reset the plan and expectations immediately.”
“Our DNA included rigorous planning and performance management on financial results. Translating that discipline to operational and technology metrics and goals was new.”
“Your plan signals the pace at which you intend to move.”
Establish roadmaps — set the stage for performance management
By translating longer-term goals into time-based milestones, effective leaders build a bridge from strategy to performance management.
“What gets measured gets managed.”
Peter Drucker, 1954
“What gets measured gets done. Or does it?”
Ruth Henderson, 2015
Sixty years later, Henderson challenged the completeness of Drucker’s insight. She illustrated that having a bathroom scale (establishing metrics), using the scale (measuring interim progress), and losing weight (delivering results) are three different things.
Effective leaders define strategic and financial roadmaps, establish the measures to guide progress, then drive performance through their management system. The measures are nothing more — or less — than tools that enable the work of performance management.
Peer counsel
“We are not great at the transmission between our long-term strategic goals to performance management. It is a real weak spot.”
“We start with the mission, turn it into strategy, then derive the annual budget. I have seen firms let the budget drive the strategy.”
“Accountability for the overall mission was not translated [to interim goals] for the individual leaders of the firm. That had to change.”
“I keep the financial and strategic roadmaps — and our progress against them — on my wall.”
Establish roadmaps — address uncertainties explicitly
Effective leaders recognize the pace and risk of initiatives when embedding their results into expectations for performance.
The International Organization for Standardization (ISO) identifies 12 principles for risk management, among which are “explicitly address uncertainty and assumptions” and “take human factors into account.” On the journey from idea to business initiative, uncertainty, assumptions and the human factor are usually left behind on the way to spreadsheets and presentations.
Effective leaders understand that performance targets and projected pace of progress are full of execution risk. Some leaders incorporate a “safety factor” when solving for the expected quarterly outcomes of their agenda. Others expect to intervene to make projections come true. As ISO’s principles for risk management suggests, leaders who demand that assumptions and uncertainties be made explicit and quantified are less likely to be disappointed when the real world intervenes.
Peer counsel
“The Board view of the plan has a buffer in case of performance shortfalls. The internal view has stretch targets.”
“We have an illusion that our forecasting is good; as a result, we often put point forecasts into our plans or budgets. Those point forecasts are never right, and we panic when reality doesn’t match them.”
Establish roadmaps — insist on steady progress
Experienced leaders resist pressure from their teams to back-end load expectations for results — robust roadmaps demand steady progress.
An executive inherited a struggling business. He created a chart with the last ten years of plans plotted on a single timeline. The aggregate of the projections looked like a comb, because the “hockey stick” turnaround had been three years in the future — perpetually.
Effective leaders expect well-designed initiatives to produce results in a steady stream that begins not long after they are launched. Early results build enthusiasm, confidence, and conviction in the agenda. Some initiatives have unavoidable investment phases. If possible, experienced leaders structure those actions to deliver tangible partial results sooner. Make sure that your portfolio balances investment-requiring initiatives with actions that will deliver quickly to get inertia moving in your favor.
Peer counsel
“Our performance management, relative to our long-term goals, always turns into a sprint at the end.”
“If you are a new CEO, you have surprisingly little freedom to miss performance expectations in the near term.”
“Results give you the oxygen you need to reinvent your business; without results in the near term, you lose permission to get to the long term.”
“Organizations are inertial systems. You must overcome inertia to get going, but you can build inertia too.”
Establish roadmaps — decide on options at each milestone
Effective leaders demand roadmaps that include options, contingencies, and alternatives. Their milestones are decision points to accelerate, continue, alter, or abandon the initiative.
“To expect the unexpected shows a thoroughly modern intellect.”
Oscar Wilde
Modern intellect or not, effective leaders treat the milestones in every plan as catalysts for assessing, weighing options, and intervening. Allowing a business, initiative, or project to continue on its original plan is a choice that leaders should make with the same rigor as choosing to modify, re-design, accelerate, or discontinue. Effective leaders prepare their teams to expect candid discussions of progress, projections, and interventions that will optimize outcomes at every milestone.
Peer counsel
“Our lack of clarity leaves us chasing too many opportunities; we don’t have a good way of evaluating and shutting down losing initiatives.”
“Just as we began to execute our agenda, we were hit with a wave of input cost inflation that we couldn’t pass through in pricing; thankfully, we pivoted our tactics.”
“Things outside of your control, surprises — all part of the job; the question is whether you have a backup plan or whether the surprises completely throw you off your agenda.”
“No strategy is complete without contingency options.”
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Revisit Chapter 3.
Read Chapter 5 here.
