Seven Intangible Conditions that Kill Strategy and Innovation

by Soren Eilertsen, Ph.D. November 25, 2015.

Why does the quote, “Culture eats strategy for breakfast” attributed to Peter Drucker, strike a chord with today’s business leaders? It’s because they understand the importance of culture in strategic execution but too often overlook it in the process of creating strategy. Intangibles such as cultural factors destroy strategy and innovation. Neglecting these essential components when developing strategy leads to perilous consequences during strategy implementation. As a result, companies don’t achieve the desired change and results and instead waste precious time and manpower.

Leaders are conditioned to avoid the harder to measure and less tangible issues surrounding people—their thinking, behavior and emotions. Overlooking these “softer” issues can have a significant negative impact on future growth since the reality of business involves internal human reactions, whether individual or collective.
Seven conditions that kill strategy initiatives

Here are seven intangible conditions that can kill any strategy before birth or upon arrival. That’s why leaders need to be aware of these influences and work to overcome them. They are:

1. Lack of cognitive elasticity. How individuals think greatly influences their personal leadership approach and behavior. Thinking styles vary widely, but generally range from operational to entrepreneurial. In business, operational leaders are often referred to as “professional” management since they are experts at executing on the vision of the company. The operational leader tends to take the business forward in a predictable manner without the inherent ability to pivot to leverage new opportunities. On the other end of the continuum, entrepreneurial leaders are often the visionary founders of the business or are brought in to transform an organization in decline. Entrepreneurial leaders thrive on change and disruption. The key to success is for leaders to have awareness of their own thinking style and being able to bridge to that of others at the other end of the continuum.
2. Limited leadership awareness. Equally important to the outcome of any strategy is the leader’s awareness level. Conventional leaders tend to be more dogmatic and “rules based.” They prefer a traditional approach to strategy development, which utilizes traditional planning approaches. Post-conventional leaders listen more to surroundings and can take a more flexible approach, adjusting the strategic framework in response to feedback and learning. Today’s typical business leaders fall in-between the conventional and post-conventional levels of development. This stage is characterized by competitive and somewhat self-centric perspective. Off all the conditions, the leaders’ inability to fully see the world through others is the single most devastating and worrisome issue for today’s businesses.
3. Organizational silos. People naturally tend to align in smaller tribes. When organizations grow in size, these tribes frequently form inside the functional areas of the organization. People in tribes look to forward the success of the tribe and work to create results that make the tribe shine. Cross-functional collaboration is neglected as power and success are tied up in the identity with the insulated tribe.
4. Stuck with committees. Most executive teams function as committees (very different from a team) that reinforce organizational silos and thereby encourage dysfunctional behavior. Becoming a high-performing executive team that genuinely collaborates on strategy development and execution takes real intent and serious work. A strong and high-performing team significantly raises the likelihood of business success and may be the most important competitive advantage.
5. Culture of fear. The great number of disengaged employees in today’s organizations represents a significant challenge facing businesses today. This reality stems from the prevalence of cultures of cynicism and fear. Cynicism and fear typically arise from distrust. This occurs when leaders lack transparency or don’t “walk the talk” and make repeated empty statements without follow-through.
6. Steeped in entitlement. A culture of entitlement is likely to exist when the organization’s leaders fail to inspire and challenge people while providing a safe environment with excellent compensation and benefits. With little or no accountability and consequences for poor performance, workers become apathetic to cries for change and innovation from above—especially when leaders are seen as detached and unable to articulate a vision.
7. Customer ignorance. In today’s technologically advanced society, where competition is fierce and social media is the new word of mouth, customer and brand loyalty is more important than ever. Because companies recognize this fact, sales and service personnel are frequently encouraged to obtain perfect satisfaction survey data from customers in a situation that can best be described as an unethical bribe. Staying ahead of competition today requires leaders who are in touch with customers’ sentiments about the company’s products, services, and the brand.

Connections are key

Awareness and understanding of often-overlooked subjective and intangible conditions can represent the difference between business failure and success, contribute to a more positive corporate culture, and promote effective implementation of organizational goals. By listening for and recognizing the importance of both individual and collective factors, leaders can fully comprehend the holistic reality of the business. For the conscious and purpose-driven leader, each of these conditions provides an opportunity where the antidote becomes transforming for the organization. In today’s rapidly moving world, this may seem like a tall order, but it’s essential to create an enduring and successful business.

* Reproduced version with kind permission from Strategize Magazine —fall 2015.
Photograph by Peter Daniel.