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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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