Critical Leadership Skill

We believe that in this environment of data sufficiency and perhaps excess, coupled with the impatience of the investor community, a key managerial skill is the ability to sift through piles of data and hone in on those pieces of information that are most critical to organizational success. This requires decision makers to be quick and articulate in summarizing the situations they face, to convert them into sets of formal or informal hypotheses, to identify the data requirements to test the hypotheses, and then to make strategic calls at high speed.

For example, let us say that you are the country manager for a quick-serve restaurant in an emerging market. At the current juncture in the organizational evolution, you are faced with the task of increasing your market penetration. One morning, you hear unexpected and potentially game-changing news that a key competitor has big plans of entering the marketplace! Being from the trade, you recognize the competitor’s likely entry strategy, but at best, it is an intelligent guess. What would you do? Would you make changes to your prices to attract more customers? How would you assess if you could afford it? Alternatively, would you seek greater retail outlet penetration? How would you know if you can find good sites at a fast pace? Would you spend more on advertising? Would you make changes to your menu items? Or would you do some combination of these possible reactions, or do nothing? Can all the learning from brand equity, segmentation, category and brand awareness, and pricing studies aid you? Think fast—time is running out!

How can this be done? While we will go into the details of the answer to this question, we will briefly illustrate the importance of this critical skill using a simple example. In this case, a large and financially distressed firm appointed a new president. He was an outsider to the industry, but had a proven record of successfully turning around companies. Most of the employees in the firm looked forward to his arrival and the excitement was palpable. Recent market research had indicated that the firm was losing customers at a much faster pace than usual and that its brand was losing its equity. In order to quickly hone in on the problem, the new appointee immediately offered to spend a few days with the consumer insights group to identify key areas of focus that could help the firm deliver superior customer experiences and rebuild the brand. After all, the insights group had spent considerable time and money on various studies and was most likely to have an answer. The group presented multiple studies to him and he listened to each one of them patiently. At the conclusion of each presentation, there were recommendations on potential areas of investment toward building a stronger marketplace presence for the brand.

When the presentations ended, he congratulated the group for sharing the work and posed one simple question: While each presenter had provided good ideas, if all of them were intended to create more satisfied customers and a stronger brand, why was it that the recommendations had no synergy? Each study asked for investing in a completely different area of performance, and he was now even more confused than when he started. He had a pool of funds budgeted for strengthening the brand and the customer experience but was not sure of the best way to deploy them.

In this case, the leader demonstrated two of the critical leadership skills we are referring to. The first was a faith in information and data to solve strategic problems. The second was recognition of the limitations of a set of unrelated, albeit data-driven, solutions without a unifying synergistic framework. To help resolve the problem, the firm worked toward integrating the numerous pieces of existing feedback from the marketplace and building a unifying framework around them. The estimated impact of each proposed initiative was then linked to monetary value. It created a common metric to compare different investment alternatives. With the help of the overall framework to synthesize the information from the various studies, and the estimated bottom-line impact of each, the new president was able to compare alternate initiatives using common evaluative criteria. He could prioritize them and draw linkages among them. For example, he could see how clearer communication during the presale and the sales processes could minimize customer confusion and reduce the volume of expensive inbound calls. He could draw similar linkages between the quality of the billing process and the rate of customer defection. And most important, he could append estimates of returns on investment for each potential area of improvement. As a result, he was ultimately in a position to make informed, coherent, and data-driven decisions after accounting for their firm-wide strategic and financial impact.