This series of articles is for the leaders in the trenches … the senior workers, line and middle managers who are responsible, sometimes unknowingly, for half the market cap of a corporation.  One error, incident, or security compromise can negatively impact a company overnight.  Unfortunately, senior leaders often don’t get it.

Why Senior Leaders May Miss the Importance of Local Strategic Decision-Making

I developed a Theory of Half-Lives while in the Air Force.  Simply stated, reality happened on the flight line; you lost a half-life of reality when you crossed the street from Squadron to Group Headquarters … and another getting to Wing Headquarters … by the time you got to Command, reality often didn’t exist.  I’ve seen the same in industry.

Senior leaders are often insulated from the realities faced by the line worker and manager as they try to execute on the company’s strategic initiatives.  That is to say, senior leader’s direction is at such a high level, it sometimes doesn’t translate into actionable work associated with the core business.

Guidance from executives like “Do more with less,“ but “don’t sacrifice safety” during market downturns don’t translate well to middle managers and workers.  They are forced to make impossible trade-offs in their operational decisions that often result in the  wrong behaviors.  The effect is what executives view as tactical work and small operational decisions, sometimes turns out to be very strategic decision making.

In recent years, we have seen that decisions in a very small part of a company’s operations – usually a routine operation that happens every day and involves few people – can have tremendous negative impact on a company’s overall well-being.  For example, Target’s profits plunged 46% due to a data breach.  Exxon lost nearly half its market cap due to an incident on a single tanker Valdez.  BP lost a significant portion of its overall business and market cap on a single incident at the Macondo well.

Are these examples of poor senior leaders?  Was the company’s overall strategic direction incorrect?  No.  What these examples do reflect is making poor strategic decisions at the local level and the inability of local leaders to consider the larger, more strategic implications of their actions.  The truth is that strategic decisions are made locally every day.

We hold senior leaders accountable, as we should…but, when an incident occurs the senior leaders usually are not there.   They are insulated from the realities of the trenches.  Most executives’ work is focused on achieving aggregate numbers.  But, sometimes numbers don’t provide the real picture of how the company is doing.  Leaders must be willing to get out of the office and interact with line managers and workers to gain a proper perspective on what is happening.  Executives must be in tune with the strategic decisions happening locally and be prepared to offer strategic guidance at the operational level as well as the general guidance at the company level.

In the next article in this series, we will address the drivers for local strategic decision-making.

If you’re in the trenches and could use help contact us.