[IMGCAP(1)]Leadership excellence for executives and partners is all about combining strategy with operations, and this is where most leaders fail to understand the difference.

They usually are very proficient at the operational side of the business because they began their careers in some area of operations, which I call specialist work.

But even the best leaders are not always as proficient at management work, because it is more difficult.

Why? You were weaned on specialist work. If you are a CPA or financial analyst, your specialist work is all about the numbers and ROI of an entity. If you are a plant manager, your specialist work began on the manufacturing line, maybe even as a laborer utilizing a machine, and it was the specialist work you excelled in.

When in your career did you develop yourself in the elements of strategy? Or the elements of planning? Or the complex elements of organizing? When did you devote the time and energy to learn the axioms and principles of leadership, teamwork and control? All of these functions of leadership management are the toughest type of work, and every CEO or managing partner is accountable for ensuring that their direct reports are the most proficient in each of them.

Take strategy. Why is it so important to know the elements of strategy? Because at every level of leadership excellence within your company or firm it points to the “growth” areas of where you want to go, and identifies the ponds of opportunity which you see as CEO or managing partner that your executive team should be addressing to achieve growth.

As someone once said, “…it sets the wind at your back, not fighting a head wind” toward success.
Usually I see the missing elements in strategy are the detailed analyses that will provide the roadmap toward success, the blueprint of innovation processes that provide the contact with the market segment, or pond, in which your company competes.

Strategy becomes even more complex today because the CEO or managing partner must include a digital technology segment of the strategy, and he or she has no other alternative. If a competitor attacks your business model with a digital solution to your clients or customers, then you had better be prepared to lose some of your revenue. Think Uber.

There never seems to be enough time for implementing strategy, and I see this as the major impediment for SME businesses—no, for all sized businesses—to optimize the growth potential which is talked about but not fully implemented.

I work with a lot of CEOs of SME businesses on helping them develop a three-year strategic plan, and while it is hard work (i.e., management work is the hardest of work) and there is initial excitement and enthusiasm for placing the vision and strategy into a formal document, there never seems to be enough “time” for the CEO of a small business to continue to implement the plan because they are personally involved in the operational objectives of the business.

Only the smartest of CEOs understand they are not accountable for the implementation of the strategic plan. The executives reporting to the CEO or managing partner are the ones that must implement the strategy.

Thus, the executives with this dilemma of time always return to the specialist work and the operational plans of the current fiscal year and forget that the strategic plan is not time-denoted like operational plans. Strategic plans are ongoing and require a lot of leadership time to implement on an ongoing basis.

Are the executives wrong? Yes, but every company I know that provides a management incentive program at the end of the year bases that incentive on how well the executives and management perform toward their metrics in the operational plan of this fiscal year. None of that incentive is based upon how the executives perform toward implementing the strategic plan.

The board of directors should ask the question, “If the CEO is only focused on the operational plan of the fiscal year, and does not continually focus on the strategy, should we be looking for a new CEO?”
I believe the real problem is that the executive management team does not understand how the operational plan for this fiscal year is actually the first year’s strategic plan, and there are strategic action plans for years 2 and 3 for which the executives are accountable.

This begs the question about the type of management incentive program that is in place by the CEO. If it only rewards the performance for a successful operational fiscal year plan, then there is no need for a strategy or strategic plan because the emphasis on the longer term will have no executive motivation to ensure it is implemented.

In essence the strategic plan is the operational plan for this current year, and at the end of this year the executives will revisit the strategy for the next operational year.

Whenever a company or firm takes the time to prepare and implement a strategic plan, the executives must understand that the commitment is ongoing, not time denoted like a fiscal year.

The proper three-year strategic plan takes over six months to analyze all the critical information that addresses the vision of the CEO. It should have strategic action plans for each year that address the changes to this critical information. From vision, to game changers, to products and services, to internal and external environment—all should have strategic action plans for all three years of the strategic plan.

However, accountability for implementing those strategic action plans should be given to the executives of the company, instead of remaining on the CEO’s desk. Accountability leads to evaluation and appraisal, and both are required to determine an individual’s performance.

A major portion of any annual incentive program for the executives of the company should be based on how well they achieve the three-year strategic action plans for which they are accountable. But the added compensation dollars should be provided based on how well the executives or partners perform operationally and strategically, not just operationally.

When this occurs, the CEO will see that his or her vision, the basis for strategy, will come to fruition.

Greg Weismantel is CEO of the Epic Group, a strategic management consulting firm and advisor on strategy for small and large firms and companies. Its focus is on helping companies and firms analyze and dissect their strategy to support new and emerging businesses.

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