Leader behaviour explains 66% of a team’s effectiveness

According to a study by Norton & Kaplan, nine out of ten strategies fail to meet their objectives. Some fail completely, some partially.

Failure to implement strategic plans can be a huge source on inefficiencies. This may happen due to either - or both - of the following two root causes:

• The strategy may simply be bad/wrong, or,
• The strategy execution fails.

Usually the latter is the main reason for an implementation failure.

If there is a good strategy to start with, why the failures during implementation?

David C. McClelland has claimed that, based on their implementation approach, organisations can be categorised into three distinct clusters. I’ll call the first cluster Startups (even though not every startup follows this approach, and, equally, some companies in this cluster are not startups).

Companies in this cluster get an idea of a product and service, and they want to serve the world with it. They build their solution, believing that “If you build it, they will come”. So they set up their organisation to do just this, and someone goes out to sell it.

The second cluster - let’s call it Engineers - is different from Startups in that they actually come up with a strategy. After this, they’ll adjust their products, services and organisational structure to be in line with the strategy. As a first stage, they’ll aggressively wait for money.

McClelland found out that there was still one cluster of strategy implementers - I’m gonna call them the Storytellers. In terms of performance outcomes, what differentiated Startups and Engineers from Storytellers was that the Storytellers knew how to grow profitably, and sustain growth in the long term.

So, in brief - Storytellers’ strategy implementation worked better than that of the other two groups. This is supposedly what most organisation aspire - but fail - to do.

Leaders matter

What was it then that Storytellers did differently? Researchers discovered that this group did exactly the same what the Engineers did, but having put the new strategy and organisational adjustments in place, they didn’t stop there. Instead, they focused on adjusting their leadership processes and obsessed about ensuring the people leaders can, in fact, lead people.

Yes, the Storyteller KPI indices included revenue and profit related items, but equally important were measures that focused on leadership and organisational effectiveness.

The Storytellers realised that the net effect of any change effort would amount to zero, unless they really focused on leadership. Without this, no one in the organisation would ever realise that there has been a shift in strategy and, for example, in the organisation.

This is very understandable. Any leader’s role is to translate strategic intentions and organisational systems into a language that people understand. Without effective leaders, people within the organisation will not understand what it is that the firm is trying to do. This is quite human - how could they, unless someone explains it to them.

Equally, it is understandable that Startups and Engineers might want to skip this “long game”. Executives like to focus on strategy, products, and on services, and they make organisational changes, as it gives a feeling of doing something real. The leadership thing is harder to touch, harder to see. But one truly feels it - or the lack of it.

What are your thoughts?

At Cargotec we want to ensure that we have effective leaders in place across the organisation. Our leadership KPIs lead towards bottom-line performance. We know that with right kind of leaders, performance always follows. The data is fascinating. It shows that, on average, the measurable leadership behaviors of our leaders account for 66% of the effectiveness of any team. People matter, and leaders matter.

What do you think, is great leadership a needed ingredient in the creation of an efficient, well-functioning organisation? What are your leaders like? Join the discussion below, on LinkedIn and on Twitter.