The Leadership Team Maturity Model
“If you do not know where you are going, every road will get you nowhere“
Strategy is the lifeblood of leadership teams, giving the team strength, confidence, and vitality when they have strong strategies and sucking the life out of leadership teams that have weak strategies. Strong strategies give the leadership clarity to a better future and the hope that they can get there. “So, what makes a leadership team good at strategy?”
Strategy is about the goals a leadership team chooses to execute to become a leader in their market. Leadership teams that are strong at strategy focus on the big picture needs of their business model, share an extensive common language around strategic concepts, constantly strive to improve their balanced portfolio of high-impact strategic initiatives across their business, ensure they are functionally excellent to drive the core competencies of the business, and effectively translate strategy into the objectives and key results that will drive the necessary changes to achieve market leadership.
1. The Big Picture: Leadership teams adept in strategy possess a comprehensive view beyond their immediate functions. They understand the need for holistic changes to their business model to secure market leadership, focusing on creating superior value propositions and efficiently targeting the right markets and customer segments.
2. The Language of Strategy: Effective leadership teams share a unified strategic language, ensuring alignment in understanding and approach to strategy and business models.
3. A Balanced Portfolio of Strategic Initiatives: High-performing leadership teams maintain a diversified portfolio of strategic initiatives across their business model, optimizing resource allocation to balance high-return investments and synergistic actions that drive significant business value.
4. Functional Excellence: Exceptional leadership teams ensure excellence in core business functions, recognizing that the strength of their strategic execution relies on the capability, efficiency, and effectiveness of each functional area within the organization.
5. Translating Strategy into Action - OKRs: Leading teams excel by breaking down strategic visions into actionable objectives and key results (OKRs), a crucial step in transforming theoretical strategies into concrete, tactical plans that drive forward momentum and market leadership.
1. THE BIG PICTURE
Leadership teams that are strong at strategy have executives who see the big picture beyond their function and expertise. They see how the puzzle pieces of their business model need to change to become a leader in their market. They play to win. They understand the heart of their business model is the value proposition, and they invest in creating and realizing a product and service roadmap that will drive superior value over the competition. They understand the importance of choosing, deeply understanding, and navigating through the right target markets, customer segments, and geographies to properly focus their business model and value proposition to fulfill customers' needs better than the competition. They get that having a lean organization focused on efficiently and effectively developing and delivering their value proposition and go-to-market is critical to their financial success. They create and reinforce a strong vision, mission, and values that align with the organization's strategies and actions. They recognize the tradeoffs and implications of big strategic decisions. Ultimately, they think and act at a strategic level for the betterment of the business as a whole in the pursuit of market leadership.
The performance of a leadership team is only relevant in the context of developing and executing strategies to become a market leader. For the laggards or average teams in any sports league, no one ever says, "They are a great team." Given this, the better a basketball team is at the fundamentals of passing, shooting, defense, spacing, chemistry, creating a system, and executing plays, the better chance they have of becoming a great team and winning the championship. This point is analogous to the leadership maturity model. The better a leadership team becomes at the fundamentals of strategy & planning, people & mindsets, communicating & collaborating, problem-solving & decision making, and leading & executing, the better their chance of becoming a high-performing team that matures their business model into a market leader.
When a leadership team thinks about becoming a market leader, it needs to answer and execute the core strategic questions below that will mature each element of its business model so the totality of the changes will create the market-leading business model.
The whole point of maturing across the leadership competencies is that the leadership team can more efficiently and effectively answer and execute the core strategic questions to become the leading business model in their market.
You are in luck! I cover all the major business model strategies referenced above in Stratechi.com. Don't do it now, but when you are ready, you can go in-depth on the various strategies at your own pace.
2. THE LANGUAGE OF STRATEGY
Leadership teams that are strong at strategy share a common language and view on strategy and business models. If you ask a group of ten executives their definition of strategy, you’ll typically get ten different answers. It is hard to be collectively good at strategy if you don’t have the same language and view on what strategy is. At the beginning of any engagement, I work through each element of a leadership team’s business model with them through a series of workshops. As we go through the workshops, the team coalesces around common strategy and business model concepts and definitions, foundational to maturing their strategic muscle.
Common language is not in the typical team improvement toolkit but must be. Without a common language, people talk past each other with their own conceptualizations and definitions around strategy and business, often without the patience to translate one’s worldview with others. Business model assessment workshops with leadership teams not only create a frictionless way to infuse common language within a team, but the team also learns where they are aligned and not aligned on their view of the business. Then, we work through the misalignments so everyone has a similar perspective on the business.
Over time, leadership teams embrace their collective language around strategy, elevating their strategic thinking and collaboration. Some of my favorite moments with clients are when people you aren’t expecting throw out big strategic thoughts and questions in meetings, such as
“How will this impact our value proposition?”
“How does this align with our mission and values?”
“How will our ICP (Ideal Customer Profile) view these changes?”
“Seems like a one-off idea that won’t create the synergies we need?”
Nothing is more fundamental to the fluidity of ideas needed for the art of the possible than a common language to create those ideas.
3. A BALANCED PORTFOLIO OF HIGH-IMPACT STRATEGIC INITIATIVES
In financial investing, the gold standard is to have a balanced portfolio of investments to maximize your risk return. This balanced portfolio approach is also the gold standard for your company's initiatives and investments. Instead of balancing your investments across international and domestic bonds, high-growth stocks, dividend stocks, treasuries, and cash, you should balance your company's high-impact investments across the organization (functions, processes, people, infrastructure, and partners), go-to-market (sales, marketing, distribution), the customer value proposition (products, services, pricing), and maybe new targets (markets, customers, geographies, only if you have a solid customer value proposition, go-to-market, and efficient and effective organization).
Low-performing leadership teams typically have an unbalanced portfolio, putting most of their eggs in one or a few business model elements. Sometimes, the overinvestment is in sales & marketing for companies with a weak value proposition. Sometimes it is overinvestment in sucking costs out of the organization to juice profitability without much focus on the investment needed in the value proposition and go-to-market to drive top-line growth. In these cases, it's essential to take a step back as a leadership team and problem-solve rebalancing the portfolio of initiatives. Organizational resources are finite, and one of the goals of strategy is to drive the most significant return on those limited resources.
Conversely, high-performing leadership teams have a balanced approach to investing their scarce resources and capital on a blend of high-return and synergistic strategic initiatives across their business model elements. They understand you can't just shrink your way to growth and that you can quickly bankrupt a company just by focusing on growth without the counterbalance of efficient operations.
High-performing leadership teams spend a lot of time problem solving and deciding on the optimal balanced portfolio of initiatives to drive the most value for the company. They consistently apply the concept of opportunity cost to the portfolio, understanding that certain paths often negate the opportunity to go down more lucrative paths. They take care to avoid overtaxing the organization with too many initiatives. They focus on building the organizational capabilities they need to execute novel initiatives. They constantly seek revenue and cost synergies between initiatives, ensuring 1+1 is much greater than 2. They are disciplined in stopping or remediating off-course initiatives. They treat their portfolio of initiatives with the respect it needs, given that, in the end, their portfolio of initiatives is the manifestation of their stream of decisions that will determine their success or failure.
The quality of the strategies of a leadership team will determine the quality of the future business model. Low-performing teams have a portfolio of strategic initiatives focused on low-impact endeavors or potentially high-impact endeavors without the organizational capabilities to execute them. On the other hand, high-performing leadership teams have a clear line of sight on the sequential strategies they need to execute to emerge as a leading business in their market. They have a clear and bold vision with a deep understanding of the markets, customer segments, and geographies they are targeting with their business model. They continuously improve the value proposition to create more customer value than competitors. They have high-ROI go-to-market strategies to amplify their differentiated value proposition to their target customers. They have a portfolio of strategic initiatives to significantly improve the efficiency and effectiveness of the functions, organization, processes, and people in developing and delivering the value proposition and go-to-market.
4. FUNCTIONAL EXCELLENCE
A business model is only as strong as its weakest link. Those weak links are often found within the organization's functions, whether it be sales, product development, operations, marketing, finance, HR, customer support, or some other function. A leadership team with weak functions cannot mature the business model to its potential. A product company without a strong product development team won't be able to dream up and execute the roadmap necessary for market leadership. A service company with a weak HR team will struggle to optimize the employee journey and culture to attract, develop, and retain the people required to create a superior client experience. Bold strategies without the functional excellence to execute them are bound to fail.
High-performing leadership teams ensure they have a high level of excellence in those functions that are core to their business model and strategies. A high level of excellence means they have the people, processes, infrastructure, and partners to execute their core functions efficiently and effectively. Furthermore, they can mature their core functions to deliver the strategies needed for market leadership. High-performing leadership teams ensure that a business's functions don't constrain its ability to execute its portfolio of strategic initiatives and that core functions become a core competency for the company.
5. TRANSLATING STRATEGY INTO ACTION - OKRs
Objectives & Key Results (OKRs) are what takes a leadership team from theory to action, translating the theory of strategy into the actions of execution. It is a challenge to chunk out strategies into what needs to change and happen at a tactical level within the functions quarter by quarter. Creating strong OKRs is one of the most difficult leadership team exercises. It takes answering the hard questions of..
- How do we chunk out the strategy into objectives and the supporting key results that we can accomplish over the next 4 quarters?
- What are the stretch key results that are doable with the resources we can mobilize?
- What are the elegant objectives and key results that will help us realize our strategies to become the market leader?
- What do we need to do now versus later?
- What needs to change in terms of people, processes, infrastructure, capabilities, and partnerships for us to accomplish the OKRs?
Over time, as a leadership team wrestles with their OKRs over 2-4 quarters and begins to understands the pace of change the organization can handle, they get better at defining and delivering strong objectives and supporting key results.
ADDRESSING STRATEGIC PLANNING
I often find leadership teams that wait to figure out their strategy during an annual strategic planning process aren’t strong at strategy. Leadership teams that depend on a yearly process to create their strategy are typically engaged in a financial projection and budgeting exercise, not an exercise on how the business model needs to evolve to become a market leader. Never confuse budgeting with strategy. There are so many ways leadership teams that are strong at strategy to develop their plan, but what they are all consistent about is their diligence around constantly assessing, problem-solving, ideating, and course correcting their strategies through weekly meetings, QBRs, workshops offsites, one-on-one conversations, and the like.
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I hope you are enjoying the leadership maturity model. Seeing the rapid improvements leadership teams have realized using the model has been rewarding. As an executive, consultant, and coach, I've worked with many leadership teams over my 25+ year career. If you want to take your leadership team to the next level, I encourage you to learn more about my background and reach out or set up some time if you think there is a fit. We'll work together to develop your team into a high-performing leadership team and your business into a market leader.