The Predictable Failure of Strategic Leaders: The Role of Trust

Peter Senge once wrote that few large corporations live even half as long as the average person.  Recent high-profile CEO disasters at JCPenney and Lands End forcefully underscore the truth of this observation.  Adopting effective strategy within organizations is a two-step process.  The first step is commonplace and is taught in every business school.  The second step is illustrated by a nineteenth-century German soldier who is called “the philosopher of war” and this step is not well known at all.

The first step consists of coming up with a business strategy for your product or service.  Business strategies are so generic that they can either be developed internally or they can be purchased from consultants.  Some business strategies are mere tweaks (let’s serve breakfast all day!) and some are radical shifts (let’s add a communications business to our entertainment business) but, regardless of their nature, all business strategies are a function of well-known principles of strategy.

Coming up with a great strategy is a common enough competency but it is only the first step.  Ron Johnson thought he had a strategy that would enable JCPenney stores to generate the same enthusiasm from customers as the retail stores he developed for Apple.  Federica Marchionni thought she had a strategy that would enable people to use “high fashion” and “Lands End” in the same sentence without laughing.  Both of these strategic initiatives failed.  One important reason for these failures is that organizations and the people within them naturally tend to resist strategic change.  More than two hundred years ago, the strategic thinker Carl von Clausewitz identified why this is so and he pointed out that the art of influencing at the strategic level is completely different than the art of decision-making at the strategic level.

Strategic leadership is difficult and one of the reasons for this difficulty is that many managers have a shockingly narrow perspective of strategic leadership.  The vast majority of people in the United States who study strategy do so in business schools and the field of strategic management that they study has only been in existence for several decades.  In contrast, the field of military strategy is thousands of years old but only a tiny percentage of people ever study military strategy.  Few people realize that corporate strategy and military strategy are two sides of the same strategic coin.  This is a shame because Sun Tzu was writing about strategic leadership before Rome became an empire and he is as relevant to corporate leaders as he is to military leaders.

Two hundred years ago, Clausewitz examined the nature of warfare as it was being transformed during the Napoleonic wars and one of the concepts that fascinated him was the idea of “friction.”  Clausewitz noticed that commonplace tasks are easy to perform in peacetime but these same tasks become astonishingly difficult on the battlefield.  In effect, Clausewitz had discovered that human behavior varies when put in situations of risk, uncertainty and complexity.  Clausewitz came to the conclusion that one of the most powerful remedies for organizational friction was great leadership.  It is not enough for leaders to come up with new and innovative strategies.  They also need to exemplify the simple truth that people are more likely to trust the plan if they trust the leader.

Having the narrow perspective of strategy taught in business schools means that corporate leaders frequently possess a flawed mental model of leadership.  There are people who think that they are great leaders because a board of directors gave them authority as a CEO.  They confuse their managerial authority (given to them by their organization) with their leadership influence (which is only granted by trusting followers).  It is true that knowing how to skillfully use managerial authority is an important skill that enables CEOs to get their organizations moving down the road.  But organizations will never achieve top speed unless CEOs knows how to generate leadership influence and use it to supplement their authority.

When soldiers discuss the difference between management and leadership, they often say that no one was ever managed into battle.  Like most cute sayings, this is only half right.  This saying is half wrong because soldiers are managed into battle all the time.   Without sound management practices they would not have a steady stream of competent commanders, high-tech weapons or sufficient supplies. This saying is half right because getting people to operate effectively in situations of uncertainty and risk is also an art that depends on great leadership.  One of the telltale signs of great leaders is that they are trusted leaders and where some CEOs fail is when they think that their competence at strategic decision-making is enough to engender trust.  It isn’t.  Soldiers don’t trust their commander based solely on the commander’s tactical competence. They are more likely to trust their commander when the commander demonstrates the ability to minimize risk (which is a function of their competence) and a willingness to share risk (which is a function of their character).

As someone who spent two decades in uniform, I am definitely not saying that the corporate world is as dangerous as the battlefield.  What I am saying is that strategic change in the corporate world involves risk and uncertainty and people act predictably when they are put in circumstances of risk and uncertainty.  The insights of Clausewitz demonstrate that effective leaders can be usefully thought of as catalysts.  When leaders put the right ingredients of competence and character into the process, one of the outcomes will be an increased level of trust between leaders and followers.  Clausewitz’s insight is directly relevant to the corporate world and it is exciting to realize that he is only one example of two thousand years of military strategic thought.

Michael Hennelly served in the U.S. Army for 21 years where he qualified as an Army Ranger and certified as an Army strategist.  Later, as a civilian with a Ph.D in strategic management, he taught strategy to MBA students at two different universities and spent seven years teaching strategy and leadership to cadets at West Point.