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Harbir Singh and Michael Useem  |  March 30, 2017

6 Capabilities You Need to Become a More Strategic Leader

Indian banker Chanda Kochhar joined the Industrial Credit and Investment Corporation of India—later ICICI Bank—fresh out of college as a management trainee. After working in virtually every major division and function in the bank over the next 25 years, she became its chief executive in 2009. When Mike interviewed her last year, he asked her to explain how she had learned to run India’s largest non-state-owned bank, with $5 billion in revenue and a market capitalization of $23 billion in 2015. Kochhar shared how she used directed learning, one-on-one coaching, and experience to learn to lead strategically.

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For directed learning, she earned a Master’s degree in business management and later participated in a range of management development programs. For personal coaching, Kochhar cited former ICICI chiefs who had taken her under their wing as they transformed ICICI from a small state agency into the country’s largest private bank. “I had two very great mentors,” she told us. The first was Narayanan Vaghul, who had run the bank from 1985 to 1996, and the second was his successor, K. V. Kamath, who had led it from 1996 to 2009. Kamath as CEO, for instance, had invited Kochhar to accompany him to Davos, Switzerland, for the annual meeting of the World Economic Forum. Mixing with a gathering of 2,500 business and political leaders proved formative for Kochhar to move her bank ahead of others, “You could see what was happening around the world,” she recalled, “and come back with thoughts and ideas of how you want to implement them.”

For the power of instructive experience, Kochhar cited her own pathway across the diverse functions and divisions of the bank. “A banker is either an investment banker or a retail banker or a commercial banker,” she reported, “but I have, in my journey, moved from project finance to retail to control functions.” In project financing, she learned how entrepreneurs invested, behaved, and repaid. In retail banking, she learned how consumers decided and how new technologies could be harnessed to reach them. In control functions, including compliance, risk, and finance, she learned where the company created value and how it could be lost if controls were inadequate. “I think this whole, all-rounded experience [became the most] valuable learning for me as I moved up the organization,” Kochhar concluded. And by the time she became CEO she knew almost every side of the business of the organization. In other words, she had learned to lead strategically, and her broad experience across the bank’s diverse functions and divisions provided for a strong fit between her own skill set and the management required at the top.

“By the time [Chanda Kochhar] became CEO she knew almost every side of the business of the organization.”

As a result, upon becoming CEO, Kochhar felt that her direction and priorities were clear. What was new was the act of leading from the top as general manager. “[Once] you become a CEO, you realize that almost every buck stops with you, and it’s not just about your particular business or your particular line, but all stakeholders,” she said. As a result, “whether it’s the regulator, whether it’s the employees, whether it’s the customer,” you suddenly find that every stakeholder’s interest is in your hands. “You realize that the whole thing about running the organization is not only strategy, not only direction, not only execution, but how you balance everybody’s interests.” The integrated application of both strategy and leadership had become paramount for her.

For developing those who report to her, Kochhar shared these learning avenues with them. In personal coaching, for instance, she asked each of her senior managers to think differently about “what’s going to happen next and not just about what is happening currently.” She pressed each to have a good mix of both strategic thinking and execution. Although, from her own experience, she found that, “[Some managers are] very good thinkers and they can really come up with great ideas and innovative thoughts, but are not very good at actually completing the tasks. There are others who get so involved in the nitty-gritty of managing [that] they do not think broadly.” Appreciating those gaps, she worked to develop managers who could do both, and in doing so, she layered leadership, making it clear that she expected her managers to take deliberate but independent actions to achieve the strategy she had conveyed for the long-term growth of the bank.

“Though we sometimes say that an individual is a gifted strategist or a natural-born leader, we know from research and experience that both are learned.”

We have researched and observed many companies and managers and have identified 6 critical capabilities of strategic leaders, each of which Kochhar epitomizes.

1. Integrate Strategy and Leadership. Master the elements of strategy and leadership both separately and as an integrated whole.
2. Learn to Lead Strategically. Pursue directed learning, one-on-one coaching, and instructive experience to develop an integrated understanding of strategy and leadership.
3. Ensure Strategic Fit. Arrange a strong match between the strategic challenges of a managerial position and the individual with the leadership skills to fill it.
4. Convey Strategic Intent. Communicate strategic intent throughout the organization and empower others to implement the strategy.
5. Layer Leadership. Ensure that leaders at every level are capable of appreciating strategic intent and implementing it, and hold them responsible for its execution.
6. Decide Deliberatively. Focus on both short- and long-term objectives; press for disciplined analysis and avoid status-quo bias; and bring the future into the present.

Each element of this list is vital, in our view. Mastery of one or two elements will not accomplish much, but taken together these six items form a firm platform for developing and applying strategic leadership. Becoming a more strategic leader is a tall order, and we believe that concentrating on one’s personal development in each of these areas will offer a practical way forward.

“We can all become strategic leaders if we stay on the right path.”

This is especially true in an era marked by uncertainty, complexity, and change when company strategy and leadership are especially consequential for a firm’s performance. And though we sometimes say that an individual is a gifted strategist or a natural-born leader, we know from research and experience that both are learned—and that we can all become strategic leaders if we stay on the right path.

Adapted from The Strategic Leader’s Roadmap: 6 Steps for Integrating Leadership and Strategy, by Michael Useem and Harbir Singh, copyright 2016. Reprinted by permission of Wharton Digital Press.