Building People Skills Is No Longer Enough

Executive Summary:

• Strategic acumen is a mission-critical skill for leaders to achieve desired business outcomes.
• Strategically savvy leaders understand customers, analyze strengths and weaknesses, and shape a vision.
• Strategic leaders make informed decisions, respond to changes, and maintain a competitive advantage.
• Neglecting strategic skills in leadership development can lead to poor decision-making and obsolescence.

The dangers of neglecting strategic skills in leadership development

Leadership development programs have long been mainly about so-called soft skills. Participants learned how to communicate more smoothly, delegate better, or manage conflict in their teams. Programs taught coaching skills for leaders and explored emotional intelligence. The main promise of human resources (HR) functions and leadership development companies was that combining people skills with subject matter expertise would do the trick and create great leaders. 

But that’s only half the truth. These people skills, as undoubtedly desirable as they are, need to be paired with one specific hard skill: strategic acumen – the ability to think and act strategically. Strategic acumen is what helps leaders channel their subject matter expertise and people skills in the right direction to achieve desired business outcomes. 

With increasing business complexity, relying on the strategic skills of a few top managers in an organization can be dangerous. Some executives might be too far away from the front lines to react quickly to shifts in consumer demands, or to the rise of new technology and how it could be applied to create a competitive advantage. 

Strategic Acumen Is a Mission-Critical Skill 

Strategic acumen is one of six critical leadership skills I describe in my forthcoming book The Strategy Legacy – Shape Your Business, Leave a Mark (Fall of 2023). It is not a magic capability that some have, and others do not. Strategic acumen can and should be trained to enable businesses to quickly create and capitalize on opportunities. 

To keep up with market developments and customer needs, it is more important than ever for leaders at all levels of an organization to hone their strategic skills. Strategically savvy leaders understand, for instance, who their customers are and don’t get hung up in internal debates and politics. They are customer-centric and know how to properly apply tools to analyze the strengths and weaknesses of their areas of responsibility in this respect. 

Strategic leaders identify potential opportunities and threats from their analyses. Among other factors, they use these results to shape a tangible vision for their business area, craft a jargon-free strategy to achieve the vision, ruthlessly allocate resources accordingly, and regularly monitor their priorities and progress toward making this vision a reality.

The Advantages of Strategically Savvy Leaders

Leaders who have a deep understanding of their organization’s overall strategy are better equipped to make informed and effective decisions. They see the bigger picture, understand the interconnections between different parts of the business, and weigh the short and long-term implications of their decisions. This leads to better alignment between the organization’s strategy and its operational decisions.

Strategically savvy leaders are better prepared to respond to changes in the business environment, whether it’s a shift in market conditions, a new competitor entering the scene, or a change in consumer behavior. They can quickly assess the situation and identify the best course of action, allowing the organization to remain agile and respond to changes in real time.

Organizations with strategic leaders on all levels are better positioned to compete in their market. They identify opportunities for growth and innovation, as well as potential threats, and proactively respond to maintain a competitive advantage. This helps the organization stay ahead of the curve and remain relevant, especially in the eyes of its customers.

Leaders with strong strategic acumen create direction, growth, and opportunities within the organization. This, in turn, motivates employees, retains talent, and helps to attract the best people in their industry.

Examples of Successful Companies Building Strategic Acumen

Organizations with strategically strong leaders are more likely to be profitable. By making informed and effective decisions, responding to changes quickly, and maintaining a competitive advantage, these organizations are better positioned to generate revenue and achieve their financial goals.

There are numerous examples of organizations that have invested in making their leaders more strategically savvy. IBM is well known for investing in strategic skills. The company has long recognized the importance of having leaders who are not only knowledgeable in their subject matter but also have a deep understanding of the business. 

Goldman Sachs is known for its focus on developing strategic thinkers who can navigate a complex business landscape. The company has a reputation for attracting and developing top talent, and its leaders are widely recognized for their expertise and innovative thinking.

Walmart – the largest retailer in the world- has made a significant investment in developing its leaders, particularly in the areas of strategic thinking and business acumen. This has enabled the company to remain competitive in an ever-changing retail landscape. 

The Threats of Stopping at People Skills

When leadership development stops at people skills, organizations create the potential for significant risks, such as poor decision-making. Leaders who lack a strategic mindset may make decisions that are not in line with the organization’s overall strategy or that have unintended consequences. This can lead to a lack of alignment between different parts of the business and can ultimately hurt the organization’s performance and competitiveness.

The risk of employee disengagement and high turnover is also a concern for organizations that do not invest in their leaders’ strategic skills. When employees do not see a clear direction or opportunities for growth within the organization, they are more likely to become disengaged and seek opportunities elsewhere. This can lead to a loss of valuable talent, as well as increased recruitment and training costs for the organization.

Perhaps the most significant threat is the risk of obsolescence. Organizations that do not invest in developing their leaders’ strategic skills run the risk of becoming irrelevant as the business environment evolves and new competitors enter the market. They may also struggle to keep pace with the rapid changes driven by technological advancements and the opportunities they bring.

Sears, the American department store chain, was once the largest retailer in the United States and a dominant player in the retail industry. The company failed to respond to the rise of e-commerce and the increasing dominance of online retailers. The company’s leaders were criticized for not being strategic enough, failing to respond to changes in the market, and not investing in innovation. As a result, Sears struggled to remain competitive and eventually filed for Chapter 11 bankruptcy in 2018. 

Strategic Acumen Is a Must-Have Skill for the Future

It is critical to have leaders with strong people skills, who are both knowledgeable in their subject matter and have a deep understanding of the organization’s strategy and the wider business environment. Organizations should consider investing in the strategic skills of their leaders at all levels. By doing so, they will create a sense of direction, growth, and opportunities within the organization, which in turn attracts top talent and drives business success. These businesses reap the benefits of better decision-making, increased agility, enhanced competitiveness, improved employee engagement and motivation, and increased profitability.

This article was first released via HR.com

Main image by Jens Schwan.