The Five Functions of Strategy

In this episode of Culture by Design, Tim and Junior explain the 5 Functions of Leadership, originally created to provide a job description for a CEO. When you're an executive leader, nothing is your job and everything is your job. Delegated authority is hard to find success in, but this episode will help you better understand how to be effective in any leadership role.

Function 1: Vision & Strategy (07:26)

Vision and strategy represent the direction of an organization. Inherent in the leader’s role is the commission to give the organization sight by painting a portrait of the future and inspiring others toward it. The essence of strategy is the deliberate reduction of alternatives to determine how value will be created. To achieve the vision, leaders need to apply strategy principles to achieve competitive advantage.

Reflection Question: How are YOU doing painting the vision?

Function 2: Alignment & Execution (19:56)

To align an organization is to load-balance and pace the organization, and then cognitively and emotionally prepare people to achieve the vision and execute the strategy based on specific goals. Through alignment and execution, leaders convert vision into plans and plans into concrete activity. They merge priorities, plans, incentives, expectations, and measures to get desired results.

The 5 Alignment Questions

1. What are your concerns? Don’t ask people if they have concerns—of course they do. So let’s get them on the table and discuss them.
2. In your view, why are we doing this? You need to check understanding, which you can only do if your people explain where you’re going and why, back to you. They need to teach it back.
3. How do you see your role in this? This allows people to see themselves in context and personalize the direction they’ve been given.
4. What support do you need? Again, it requires the individual to think more carefully through the personal implications of what they’re being asked to do.
5. And finally, how committed are you to support this direction? This last question assesses the level of commitment; it ties a bow on the whole thing.

Reflection Question: Are you prioritizing until it hurts?

Function 3: Change & Innovation (31:22)

By definition, leaders have a contradictory role. On the one hand, they need to preserve the status quo to create value today. They also have to disturb the status quo to create value tomorrow. Organizations change for three reasons: 1) to achieve higher value, 2) to achieve lower costs, or 3) to ensure compliance with legal, regulatory, and safety requirements. Businesses need change and innovation because competitive advantage isn't promised, it's perishable.  It’s the leader’s role to initiate change and innovation in order to gain, maintain, or reclaim competitive advantage.

Reflection Question: Is my communication as a leader more discovery- or advocacy-based?

Function 4: Talent Acquisition & Development (38:17)

The fourth function is to acquire and develop human capital. Given the transitory nature of competitive advantage, the true source of sustainable competitive advantage is ultimately people. They are the source of ideas and action—the two assets most responsible for organizational performance. Senior leaders must be deeply committed to and engaged in acquiring and developing talent. They are in large measure defined not only by what they do but also by who they leave behind in the leadership pipeline. Leaders who develop a climate of psychological safety and cultivate a high tolerance for candor engage and retain their people at much higher levels than the competition.

Reflection Question: Do you have top talent leaving? Why?

Function 5: Values & Culture (45:46)

Values are the primary ingredient in any culture. Research confirms what we now call the culture formation hypothesis–the modeling behavior of leaders is the central factor in culture formation. Leaders either show the way or get in the way. This central question now becomes: Culture by design or by default? Because intellectual diversity alone produces nothing, a leader’s most important job– second only to setting strategy–is to act in the role of a social architect and nourish a culture in which professed values become de facto values.

Reflection Question: Am I modeling the culture I want to have? What am I doing to create it?