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February 11, 2019

The Three Core Parts of an Effective Leader

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If you’re a mindful, effective leader, you will have three parts to your core: Strategy, Leadership, and Impact. Everything you are and do is anchored to one of these terms.

I’ve been guiding CEOs, business owners, and senior leaders for over three decades against this core. Every meeting, every task, every email, every budget forecast, every P&L, and every decision touches at least one of these fundamentals. And more often than not, we touch more than one at the same time.

Take a single P&L convo, for example. You’re analyzing whether your strategy is going to “win” financially. You likely will be developing others around you to better understand and navigate the financials. And if millennials are a part of your employee pool or customer base, you’re likely thinking about your multiple bottom line of impact. So this one conversation touches all three core elements.

With that, though, let’s look at each of the three categories in a bit more depth.

Strategy
Michael Porter wrote, “The best CEOs I know are teachers, and at the core of what they teach is strategy.” Do you think of yourself as a strategy teacher?

The idea of strategy brings up images of warfare, and it is the generals who craft strategy—great masses of ground troops coordinating with a naval blockade and preceded by air strikes all aimed at a specific objective. Different elements have their different roles and sub-plots abound, but it’s all aimed at completing an objective.

Or think about athletics. Coaches spend countless hours designing strategies to maximize their team’s strengths and exploit the weaknesses of their opponents. Why? So they can win.

The great question in any strategy is “How do we know if we won?” I almost hate to reduce it to winning and losing, but that’s the name of the game in strategy. (More on that later.) What is your formula to win? What are your metrics?

If you don’t have an internal scoreboard, then you don’t have a strategy. Profits up, growth slower than expected, stores opening, stores closing, managers hired from within—the items on the scoreboard are not universal, but there has to be a scoreboard.

Where there is sound strategy, there is momentum, clarity, and confidence. Are your direct reports operating with great momentum? Do they have clarity on their objectives? Do they have confidence in the plan? If so, then you probably have a good strategy in place. If not, then it’s time to recreate a scoreboard.

Leadership
If you want to see how you’re doing as a leader, look at your direct reports. Here are some specific questions to ask yourself about your direct reports:

  • Where are they coming from?  If every one of your direct reports comes from outside the company, you’re probably not investing much in a leadership development engine.
  • How are they different from one, five, and ten years ago? Are they more effective and successful in their roles than they were formerly? Leaders should improve in their character, competence, and chemistry by working with you. You should be leading them to improved performance.
  • Do they give you what your company needs from its leaders—particularly in this season? Look at your company and think of the top five crucial leadership qualities your company needs. What are the non-negotiables? Then rank your current direct reports in those categories. 
  • What do they think of you? Just about every CEO thinks he’s great but few stop to ask the question, “How am I doing?” or “How can I improve?”

Here’s one example of how to lead direct reports: 

Gene Kranz, played by actor Ed Harris, trusts the information that people bring him and casts a clear vision going forward. This combination creates a passion to work hard and achieve success. His direct reports rise to the challenge.

This Forbes article says that the number one reason leadership development fails is because it is confused with training. The author puts it this way: “Training focuses on best practices, while development focuses on next practices.”

I love that. Are you thinking about what comes next for your leaders and your direct reports? And are they doing the same—thinking about what comes next?

Impact
In an earlier article, I argued that the decision-making matrix for companies must include both profit and impact. When your company has an option that makes sense in both categories, it’s something of a no-brainer.

But I want to dig a bit deeper here on the idea of impact. At its core, this is a challenge to begin with the end in mind. Or as Simon Sinek titled his book, Start with Why.

Why does your business exist? What is the impact that you hope to have? Here are a few examples of impact that others hope to have:

  • Chevron—“Be the global energy company most admired for its people, partnership and performance”
  • Dole—“The dawn of the nutrition age”
  • Nike—“To bring inspiration and innovation to every athlete in the world”
  • TED—“Ideas worth spreading”
  • PBS—“To create content that educates, informs, and inspires”
  • Teach for America—“Growing the movement of leaders who work to ensure that kids growing up in poverty get an excellent education.”

You see that impact can fall into a couple of categories, and I’d argue that’s a good thing. What impact do you want your company to have in the industry? What impact do you want to have in the community? What about around the globe?

What will be different because your company existed? How will your company be different because you existed? 

If you haven’t done this exercise already, it’s well worth the hours to wrestle with these questions. Oftentimes, as this article points out, we focus on strategy instead of impact, when in reality the two are inextricably tied together.

Those are impact questions, and without them you’re wandering. Everything you do becomes inward focused rather than legacy focused. Instead, evaluate what kind of personal leadership legacy you want to leave and how you can strengthen that legacy now.

Conclusion
I said earlier that I almost felt bad to reduce strategy to winning and losing. That’s because there’s more to business than winning and losing. In other words, there’s more to business than strategy. To be specific, there are two more things: leadership and impact.

These three categories—strategy, leadership, and impact—work most effectively when they work in unison. You lead those around you to design strategy that has impact in a company, a community, an industry, and the world.

That’s a grand vision, so start small:

  • Strategy—In the next year, how will you know if you’re winning?
  • Leadership—In the next year, how will you develop current and future leaders?
  • Impact—In the next year, what kinds of impact do you want to have?
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