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The way I look at built to become that it means, not,
that there is some founder, or founders who have a vision at the outset,
that is going to be invariably pursued, by whoever comes after them,
but that they do actually have some principles that
explain why they were successful to begin with, and
built an institution that already lasted, at least for their time,
not just founders, but also leaders of that company, and
that built to become means that the leaders, who've followed the founders,
understand what those key strategic principles are,
and try to continue to pursue the activities of
the company in the future, living by those principles.
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These principles, they have to be pursued by, and
reflected in what I call the strategic leadership of the company.
So that means,
that it's not just leadership that matters, it does, of course.
But it is strategic leadership that matters.
And by strategic leadership, I simply mean, that all the leaders
in the organization, who commit the resources of the company, the people,
the technology, the financial resources, the reputation of the firm,
that they all have a strategic mentality, which means, when they take action,
they let those actions be informed by a thinking process that asks,
are these actions going to continue to secure the success of the company,
in it's competitive and collaborative endeavors?
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I have developed a framework for identifying,
four different situations of what you would call strategic leadership regime.
And while no company, of course, is exactly going to fit in each of those four
types, an interesting question at any moment in time is to ask,
in which direction are we moving?
Are we moving in a direction in which there is both, strong, top, down and
bottom up leadership?
Which by the way is only possible if top management wants it, of course.
Or are we for instance, are we
moving in a direction where top down leadership is becoming weak,
and bottom up leadership is still quite strong?
Which might lead to a danger,
if the company begins to drift, as opposed to having a clear direction.
It could also be the moving in the direction of what I call, very strong top
down, and weak bottom up leadership, and this kind of like a lock step approach,
everybody goes in the same direction, better be the right direction.
Or you can sometimes even find a situation, where both the top down and
bottom up leadership are actually weak.
And in that case, the company's leadership regime,
might characterize it by what physicists would call in motion.
You just follow some particles, that just follow some random path.
So that's one key component, the strategic leadership regime.
The second part of the framework has to do
with the interplays between culture and strategy.
So at the time of founding of successful companies,
usually there is a good fit, between the strategy and the culture.
The strategy is compelling to the members of the organization,
and the culture that we have is supportive of that strategy.
As a company that wants to continue to be built to become, it will have
to manage the interplays, between the changing corporate strategy, right?
And the culture that it has,
when both are aligned, you have a situation of what I call commitment.
All the members of the organization are committed to trying to pursue,
the strategy that the firm has,
in order to continue to be successful, and continue to live.
If the culture is, let us say,
still very supportive.
But the strategy has become not so compelling or unclear,
then we find ourselves in a situation of what I call contention,
which means now multiple
senior leaders will try to drive the company in different directions.
And they still think that what they want to do is consistent with the culture.
But it leads to a situation where there's no clear direction in the company, so,
that's contention.
It's really competition among the senior leaders in driving the company forward.
So that's the second part, the interplay between strategy and
culture in a dynamically moving environment.
The third aspect of the strategic leadership capability
is the tension between what we would call FIT,
which is how well are you able to exploit the existing opportunities that you
already have in the environment with which you are already familiar, that's FIT.
And the other aspect is evolvability, which has to do with how
much are we able to get into new environmental segments,
if the environment which we have been successful, which we are familiar,
is beginning to get saturated or in fact, may even decline?
So over time, a built to become company,
will have a top management that can balance
the resource allocation to fit initiatives and
evolvability initiatives, that's the third element.
And the fourth element, is the link,
this is the link, if you want, or the interactions, rather,
between the top management, in particular the CEO, and the board of directors.
The CEO can have a compelling strategy.
And if the board of directors is functional,
then you will have a constructive relationship
between what the CEO wants to do and the top management.
And then where the board of director who represents in a public company,
has fiduciary responsibilities to the shareholders, where those two are aligned.
And there will be a constructive relationship between the top management,
and the board of directors.
But that's not always the case.
Sometimes the boards can become actually dysfunctional and
then, the CEO will, even if he or she has a compelling strategy,
will find itself in a disruptive type of situation with
the board of directors, they're always stymied,
trying to deal with the dysfunctional board.
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If you think about the situation, that a multibusiness firm faces,
you can think about at least in two dimensions again,
one is the evolution of the complementarity of the businesses.
Maybe at some point there is great complementarity between the businesses and
over time the complementarity may diminish.
The other aspect of it is the complexity within each business,
which can evolve from, let's say, mild complexity to very high complexity.
And if you have the situation where the complementarity is decreasing,
on the one hand, between the businesses.
And the complexity of each business is increasing, then you can begin to make
a reasonable case, that in fact that company should perhaps split off some
of its businesses, to put it in a position where each business has a better chance
to again continue to exist for the long term.
Because now, it's strategic leadership for each of those different businesses
will be able to do a better job, than when the strategic leadership of the combined
businesses is stretched beyond its capacity to be actually effective.
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