"Failure is nothing more than an opportunity to revise your strategy." Anonymous
We have arrived at the final act of this four-part discussion of strategic leadership, that of evaluation.
Before implementing a plan, a leader must carefully evaluate the costs pertinent to his or her strategy. As I wrote in the previous post, ideally a leader should evaluate not only first-order effects but also secondary effects in the medium- and long-term.
Assessing costs and risks is a fundamental pillar in the logic of strategic leadership and is an ongoing and interactive process. It allows leaders to weigh the expected benefits of a strategy against its projected costs and to assess the appropriateness of changing some aspect of it, or even stopping what is being done.
Cost assessment
Costs represent the investment required to achieve a business or team goal, and their assessment is a crucial element in making informed and sustainable decisions. Costs in strategic leadership are not just about financial resources; rather, they encompass a variety of factors that can include time, reputation, team member well-being, and missed opportunities. Here are some key aspects that leaders should consider:
Tangible Resources: easily measurable costs such as money, time and equipment.
Human Resources: physical and emotional well-being of the team.
Reputation and Influence: impact on personal and corporate reputation.
Missed Opportunities: a strategy could mean foregoing other potentially beneficial avenues.
Of course, not all costs can be calculated a priori and accurately. Some, as we discussed in Part 1 of this conversation on strategic leadership, are based on estimates and assumptions. It is therefore vital to be as realistic and objective as possible.
Also complicating this assessment is the dynamic factor of costs that can vary with circumstances. Here, then, is how flexibility and the ability to adapt are essential for navigating uncertain and volatile environments.
Finally, failure to adopt a strategy or delay in taking action can also have implicit costs that need to be considered. For example, inaction can lead to loss of competitive advantage or decreased team morale.
Identifying risks
Every strategy, no matter how well thought out, is subject to risks. Risks can be both internal and external to the strategy itself and can include factors such as changes in team behavior, the market, or the competitive environment. A good practice for leaders is to examine risks through objective and thorough analysis.
As with cost assessment, risk analysis is not a one-time task, but an ongoing activity.
Risks to consider can be:
operational risks: related to production, personnel management, business processes, and logistics.
financial risks: related to market fluctuations, investments, debt, and liquidity.
reputation risks: negative impacts on the brand or corporate image due to numerous factors such as negative reviews, scandals, or mismanagement.
strategic risks: long-term decisions that can have lasting effects on the business.
major risks: unforeseen factors such as natural disasters, political changes, or pandemics.
external risks: action by competitors or organizations that oppose the
human factor: errors, burnout, acts of sabotage, turnover.
In analyzing risks, the first step is to identify them. Each risk is then assessed in terms of its probability of occurrence and potential impact, and based on the assessment, they can be prioritized. At this point, plans to mitigate their effects should be developed and implemented, and finally, the evolution of risks and the effectiveness of containment strategies should be continuously monitored.
Assessment of feasibility
Creating a strategy is often compared to mapping a journey: we identify our destination, select the most optimal route, and prepare for any hiccups along the way. However, in the context of strategic leadership, this "map" is constantly evolving. To ensure that a strategy is not only effective at the time of its creation but remains relevant over time, an ongoing assessment of its viability is critical.
Appropriateness: the first question to ask is whether the strategy is adequate to protect or promote the interests of the company or team. In practice, this means that the strategy should align with the mission, vision, goals, and objectives of the leader, team, and organization. Every strategic decision should go through this "adequacy filter" to ensure that it supports the company's key objectives.
Feasibility: the second criterion is feasibility. It is critical to assess whether the outcome is feasible given the constraints of time, resources, and skills available for the requirement.
Desirability: a strategy might be both appropriate and feasible, but is it really desirable? In other words, do the expected benefits from its execution outweigh the expected costs? Desirability is often a function of the added value a strategy brings, in terms of its positive impact on business or team metrics such as customer satisfaction or environmental sustainability.
Acceptability: any strategy must be acceptable to the various stakeholders: employees, customers, investors, and the community at large. This means that it must be in line with the organization's values, culture, and long-term goals. Acceptability is often an overlooked criterion, but it is crucial to the adoption and long-term success of any strategy.
Sustainability: This criterion goes beyond the immediate execution of goals and raises the question of how a strategy can maintain or even enhance its value over time. Sustainability can be analyzed in a multidimensional way, considering economic, environmental, social, and cultural aspects.
The Role of Red-Teaming
"Red Teaming" is a practice that involves the creation of an independent team within or outside the organization, tasked with checking and stressing existing plans and strategies. This "red team" starts from an external point of view, which may be that of a customer or competitor, looking for vulnerabilities, weaknesses, or incorrect assumptions in the strategic plan. It is an exercise that requires humility and the ability to look critically inside and outside the organization, welcoming feedback and even criticism as opportunities to grow and improve. The goal is to strengthen the resilience and effectiveness of business decisions through a form of "devil's advocacy."
Red Teaming is also an excellent tool for avoiding the "echo chamber" effect and for testing the robustness and feasibility of leadership strategies, seeking to eliminate filters caused by bias.
Of course, the practice of red teaming can be considered if there is enough time to carry it out in detail.
Adaptation and course corrections
"No plan survives the first impact with the enemy." (Helmuth von Moltke)
Adaptation and course correction are not only inevitable but also vital to long-term success. A strategy or plan of action, no matter how well thought out, rarely survives intact upon contact with the dynamic and ever-changing reality of the world around it. This is where the importance of adaptation and course corrections comes in.
Adaptation involves a deep understanding of the variables at play, from the external environment to internal factors such as team skills and available resources. It is the process of modulating actions and decisions in response to feedback and situational changes. Sometimes it may mean making small adjustments to improve effectiveness; other times it may require a complete change in basic assumptions in strategy.
Course correction is closely related to adaptation and refers to the act of making targeted changes to the initial course of action to achieve the set goals. This may include reevaluating KPIs (Key Performance Indicators), allocating resources in new or diverse ways, or even rethinking the goals themselves if they prove unrealistic or not aligned with the long-term vision.
Both practices require ongoing analysis and critical evaluation, often facilitated by techniques such as Red Teaming. Above all, they require an open and agile mindset on the part of leadership, ready to listen, learn, and act proactively. In this way, both adaptation and course correction become powerful tools for navigating the stormy sea of business and successfully reaching the desired destination.
Conclusion
In this four-stage journey on strategic leadership, we have navigated through several key aspects: from planning to cost assessment, from risk analysis to feasibility. What emerges is a picture that may seem complex but is extremely rewarding, in which leadership is not an isolated and instinctive act, but rather a dynamic and interconnected process that requires constant commitment and open-mindedness. As you may have guessed, it is not necessary to always follow all the steps slavishly I have described. Depending on the magnitude of the results you want to achieve, and the actors involved, some steps may be avoided, or some strategies will take less time. In addition, practice will certainly help.
If all this sounds beyond complex to you, well...I don't seem to have ever argued that being a good leader is simple.
The art of strategic leadership is like that of a skillful captain navigating through rough and changing waters. A captain who knows when to spread the sails and when to drop anchor, who understands the importance of adapting and course-correcting, and who is always aware of the end goal. For in the end, like any skillful "master of the sea," we know that it is not the ship, but the lighthouse at the destination, that guides our course.
As we strive to be the leaders we want to be, let's remember what really matters is our ability to stay true to ourselves and the people we lead, finding the balance between the costs, the risks, and the endless possibilities that the future holds.
Thank you for joining me on this journey of strategic leadership.
If this topic has interested you and you would like to learn more, I invite you to contact me or listen to my podcast "When Leaders Talk," where I talk about these and many other leadership-related issues.