Most leadership teams spend significant time developing their strategic plan.
Where are we going in the next three to five years? How fast do we want to grow? Which markets will we enter? What acquisitions might we make? Where will technology change the business? What needs to be different operationally? Those are important questions.
But there is another question that often doesn’t get the same attention: Do we have the executive leadership capabilities required to actually execute that strategy?
Every strategic plan has a people plan hidden inside it. The challenge is uncovering it.
Start With the Future, Not the Current Org Chart
When companies think about executive talent, they naturally start with the people they have today. Who is performing well? Who has potential? Who may retire? Where might we need to make a change? Those are necessary conversations, but they can lead organizations to evaluate their leadership team based primarily on the business as it exists today.
A better starting point is the business you’re trying to become. Imagine a $500 million organization with a goal of becoming a $1 billion company over the next five years. The question isn’t simply “Do we have a good leadership team?” It’s “Does our leadership team have the capabilities required to lead a $1 billion organization?” Those are very different questions.
Translate Strategy Into Capabilities
Take each major element of the strategic plan and ask what leadership capabilities will be required to execute it.
- If the strategy calls for significant acquisition growth, the organization may need executives with experience integrating companies, cultures, systems, and leadership teams.
- If international expansion is part of the plan, global operating experience may become important.
- If margins need to improve, operational excellence, pricing strategy, or supply chain expertise might rise in importance.
- If technology will fundamentally change the customer experience or operating model, digital transformation and technology leadership could become critical.
- If the company plans to pursue an IPO or another major capital event, the finance organization may need experience it has never needed before.
- If the business expects to double in size, executives who have successfully led through that kind of scale may become increasingly valuable.
None of those conclusions starts with a job title. They start with the strategy.
Evaluate the Leadership Team Against the Future
Once you’ve identified the capabilities the future business requires, you can evaluate the current executive team against them. For each critical capability, ask: Do we have this capability today? Who on our executive team possesses it? Have they demonstrated it at the scale we’re heading toward? Can we develop the capability internally? Or is this a gap we will eventually need to address externally?
This exercise often produces a much more productive leadership discussion. It can reveal that an executive who is highly successful today needs additional development for the company’s next chapter. It may uncover a capability that exists within the organization but isn’t currently positioned in the right place. It can identify succession risk. And sometimes it reveals that the future organization needs a leadership role that doesn’t exist today.
That last point is becoming increasingly common. We’ve seen organizations add entirely new executive positions because the next phase of the business requires capabilities that weren’t necessary in the previous one.
This Isn’t About Replacing Good People
The purpose of this exercise isn’t to create a reason to replace executives, it’s the opposite. Identifying future capability requirements early gives organizations more options. You may have three years to develop an internal leader. Responsibilities can be redesigned. A succession plan can be created. An executive can gain exposure to an area they’ll eventually need to lead. Or the organization can thoughtfully determine that a new role or external hire will eventually be necessary, well before the need becomes urgent.
The earlier you identify the gap, the more choices you have.
A Simple Exercise for Your Next Leadership or Board Meeting
Take your three to five year strategic plan and put the major priorities down the left side of a page. Next to each priority, identify the executive capabilities required to accomplish it. Then map your existing leadership team against those capabilities.
You will likely find three categories:
- Capabilities you already have
- Capabilities you can develop
- Capabilities you need to add
That third category is particularly important. Those are your future leadership gaps. Identifying them today allows you to be intentional about how you close them tomorrow.
Strategy, Structure, and People Need to Move Together
Organizations often treat strategic planning, organizational design, and executive talent as separate conversations, but they shouldn’t be. Strategy determines what the organization needs to accomplish. Structure determines how the organization will organize around those priorities. And people determine whether the organization can actually execute them.
When those three are aligned, organizations can build leadership teams for where the business is going, not simply where it has been.
So as you look at your strategic plan for the next three to five years, add one more question to the conversation: What must our leadership team be capable of three years from now that it doesn’t need to be capable of today? The answer may tell you as much about your future organization as the strategic plan itself.
If you’re thinking through how your leadership structure needs to evolve alongside your strategy, our team at Versique Executive is glad to share what we’re seeing and help you think through your options.
