Strategic Context: The Key to Transformative Leadership

The Challenge with Strategy Today

In today’s fast-paced and competitive business landscape, companies need not only smart strategies to gain a competitive edge but also agility to adapt these strategies as market conditions shift. This requires acting as a cohesive unit with the impact of thousands. Achieving this level of strategic agility hinges on establishing a strong strategic context.

In this article, we’ll explore what strategic context means, how it differs from strategy design and execution, and why it’s essential for sustaining a competitive advantage.

Strategy Design

Most managers excel at optimising day-to-day operations but often struggle with strategic thinking, which requires juggling abstract concepts and envisioning new possibilities. A 2015 PwC study of approximately 6,000 senior executives found that just eight % of respondents demonstrated strategic leadership.

This gap in strategic thinking explains the success of large, well-known consultancies who specialise in hiring minds adept at theoretical thinking. When companies need to develop a new strategy to present to their boards or shareholders, they often turn to these external firms. However, relying solely on consultancies means the strategic design expertise often remains external, rather than becoming a core competency of the organisation itself.

To cultivate strategic thinking internally, organisations should:

• Include strategic thinking modules in leadership development programmes.
• Encourage managers to engage in long-term, high-level project planning and problem-solving.
• Create a mentorship structure where strategic thinkers mentor other leaders.

Strategy Execution

Once a strategy is designed, the focus shifts to execution. Many leaders feel confident handling this phase independently, especially if they’ve been involved in the planning. However, effective execution requires more than understanding the strategy; it demands buy-in at every organisational level, alignment of roles and responsibilities, and transparent communication about why the strategy matters.

The Challenges in Strategy Execution

• Lack of Buy-In: Often, the rationale (or why) behind the new strategy isn’t clearly communicated, leading to low commitment.
• Resource Conflicts: Implementing new strategies may demand resources or investments that put pressure on existing products or services, leading to internal conflicts over priorities.
• Organisational Structure Misalignment: A new strategy may call for faster decision-making or decentralised control, which could conflict with an existing hierarchical structure.
• Communication Breakdowns: When strategy communication is too top-down, abstract, or infrequent, true understanding fades as it trickles down through management levels.

To improve execution, leaders can:

• Communicate the strategic WHY clearly and repeatedly.
• Align resources and prioritise budgeting to avoid internal conflicts.
• Adjust organisational structures to support the new strategy, ensuring decisions are made at the appropriate levels.

Strategic Context

So, what exactly is strategic context? Strategic context is the environment in which strategy thrives. It’s the collective mindset and cultural alignment that enable everyone to not just understand the strategy but to align their work and behaviour with it.

In a strong strategic context:

• Leaders and teams regularly discuss how their roles contribute to the strategy.
• Purpose-driven conversations help secure buy-in and commitment.
• Teams co-create sub-strategies that link back to the overarching corporate strategy.
• Organisational structures, roles, and responsibilities adjust as needed to support the strategy.
• When strategic context is weak, a strategy becomes like a plant trying to grow in infertile soil: it may survive for a time but lacks the environment to thrive.

So how do we build a strong strategic context?

• Create regular forums for managers to discuss strategic priorities with their teams.
• Foster an organisational culture that values strategic alignment as much as operational performance.
• Develop frameworks or use tools, such as the Leadership Cube model, to regularly evaluate the strategic context.

The Elements That Build Strategic Context

Drawing on research from the independent research institute Management Analytics and over 15 years of experience, the Strategic Leadership team has identified six elements that reinforce strategic context in organisations:

1. Develop Strategic Acumen
Strategic acumen involves understanding the external environment and aligning team goals with the larger strategy. Leaders don’t need to design strategies from scratch but should be adept at interpreting and adapting them within their areas of responsibility.

2. Communicate a Purposeful Vision
Strategy becomes meaningful when anchored in a compelling vision. Before diving into strategy details, leaders should paint a picture of where the organisation is headed and why. Then they should explain how the strategy addresses evolving market dynamics and benefits stakeholders, from employees to customers.

3. Co-Create Sub-Strategies
Managers should involve their teams in creating localised strategies. This collaborative approach promotes ownership and clarity about how each team contributes to the larger vision. This ensures alignment and helps teams see their role in the broader plan.

4. Develop Highly Functional Teams
Functional teams are critical for translating strategy into action. Today, creating a safe space for vulnerability and open dialogue, termed “psychological safety” is foundational for team performance.

5. Adjust Structure, Processes and Roles
Structure and roles must evolve to support new strategies. Often, resistance to change stems from insecurity over role adjustments or changes to familiar processes.

6. Set Clear Targets and Define Relevant KPIs
Performance is driven by clear, aligned targets. Design KPIs with meaning and purpose at every level. Include non-financial metrics (e.g., sustainability efforts, skill development) to motivate and engage the workforce fully.

In conclusion, this article presents a holistic approach to integrating Leadership, Strategy and Culture through a strong strategic context. By using the Leadership Cube model, organisations can synchronise leadership development, strategy design, and culture to create a competitive edge in a complex world.

To dive deeper into building strategic context in your business, do get in touch

Further Reading:

How to Become a Better Strategic Thinker
Strategic Thinkers Are Found to Be the Most Highly Effective Leaders

Authors: Thor Olafsson & Kate Tuck