I know a company that is face to face with a strategic problem of critical importance—in fact, its survival is at stake. The underlying strategic issues were correctly identified and thoroughly analyzed over three years ago. A detailed action program was outlined. It is still valid, still ready for implementation, yet the company is headed for bankruptcy. The reason is simple: the CEO simply cannot bring himself to make some tough decisions. He is waiting and hoping that his key lieutenants will reach a consensus. Given the nature of the decisions, this is impossible. In a situation of this kind, only the CEO can exert the needed leadership, and this CEO is not the one to do it.
The value system works against it. Too often a company’s executive motivation system flies in the face of strategic decision making. This occurs for two reasons. First, good managers tend to be promoted so fast that they never have to live with the medium- to long-run outcome of their plans. Second, incentive compensation is often tied either to short-term earnings performance or to stock-price movements, neither of which has anything to do with strategic success.
As we have seen, the leap from plans to decisions is an entrepreneurial step that cannot be reduced to a routine. Making it happen is an educational, attitudinal task, but some concrete steps can be taken to facilitate the process.
I know a company that is face to face with a strategic problem of critical importance—in fact, its survival is at stake. The underlying strategic issues were correctly identified and thoroughly analyzed over three years ago. A detailed action program was outlined. It is still valid, still ready for implementation, yet the company is headed for bankruptcy. The reason is simple: the CEO simply cannot bring himself to make some tough decisions. He is waiting and hoping that his key lieutenants will reach a consensus. Given the nature of the decisions, this is impossible. In a situation of this kind, only the CEO can exert the needed leadership, and this CEO is not the one to do it.
The value system works against it. Too often a company’s executive motivation system flies in the face of strategic decision making. This occurs for two reasons. First, good managers tend to be promoted so fast that they never have to live with the medium- to long-run outcome of their plans. Second, incentive compensation is often tied either to short-term earnings performance or to stock-price movements, neither of which has anything to do with strategic success.
As we have seen, the leap from plans to decisions is an entrepreneurial step that cannot be reduced to a routine. Making it happen is an educational, attitudinal task, but some concrete steps can be taken to facilitate the process.
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