Strategic Leadership and Decision Making

6

STRATEGIC LEADER PERFORMANCE REQUIREMENTS

Officers who succeed at three and four star levels have the individual capacity to cope with complexity, amorphousness, and uncertainty. They do not have to have everything laid out for them. They have the resiliency and ingenuity to adapt to new and different circumstances.

A Four-star Flag Officer

Among performance requirements at the strategic level, there is a critical requirement for strategic vision. Most of what we know about strategic leadership performance requirements comes from three sources: Stratified Systems Theory (SST), outlining how complexity-handling skills requirements must grow with organizational level; a 10-year research program on senior officer leadership conducted by the U.S. Army Research Institute; and general literature on executive leadership.

STRATEGIC LEADERSHIP

Leadership is an interactive process, the collective energy of a group, organization, or nation is focused on the attainment of a common objective or goal. Through leadership, clarity of purpose, direction, and means is achieved. There is also a perception of shared commitment by members. However, leadership tasks at the top of a large-scale organization are different from those at lower levels because the nature of work changes as an individual moves up through the hierarchy of an organization.

Most large-scale organizations have three broadly defined parts: the top levels ("strategic"), the middle levels ("organizational") and the bottom levels ("production" or action-oriented).

Leaders at the lower levels are responsible for getting things done; they are action-oriented. Compared with leaders at topmost levels, they have little discretion about the

decisions they make, the procedures they use, and the degree of innovation they may implement. They may improvise but they rarely invent, because, at their level, consistency of action is important.

The mid-levels are responsible for setting near- and mid-term goals and directions, and for developing the plans, procedures and processes used by the lower levels. (Plans, procedures, and processes are major tools for coordinating effort, particularly in large-scale organizations with many interdependent parts that must act in a coordinated way.) The mid-levels are also responsible for prioritizing missions and allocating major resources to tailor capability at the lower levels. This includes formulating intermediate-range resources allocation plans that implement concepts developed at higher levels, as in the Planning, Programming, Budgeting and Execution System (PPBES).

Top-level leaders are responsible for the strategic direction of their organization within the context of the strategic environment-now increasingly global. The term "strategic" implies broad scale and scope. It requires forward vision extending over long time spans-in some cases 50 years or more. So strategic leadership is a process wherein those responsible for large-scale organizations set long-term directions and obtain, through consensus building, the energetic support of key constituencies necessary for the commitment of resources.

The major functions performed by increasingly higher levels of the organization are increasingly indirect, complex, and ill-defined. The lower levels deal with well- understood procedures. The resource requirements are modest, and expectations of performance are clear. Leadership is "direct"; leaders are expected to influence the course of events by their own actions.

At higher levels, requirements are less clear, problems are less defined, and there are situations where developed procedures or precedents do not exist. Leaders at higher levels must be creative in problem solving, more innovative in their thinking. They must also be more proactive, in the sense of looking further forward more perceptively to set directions that play out over long periods.

INTEGRATING THE LEVELS OF LEADERSHIP

FUNCTION

STRATEGIC LEADERSHIP

ORGANIZA-TIONAL LEADERSHIP

DIRECT

LEADERSHIP

VISION

CREATE THE VISION

CREATE THE PLANS

EXECUTE THE PLANS

TEAMWORK

INTEGRATE STRUCTURE/ PURPOSE

DESIGN

INTER-DEPENDENCIES

FORGE TEAMWORK

VALUES

ARTICULATE

CULTURAL

IMPERATIVES AND VALUES

SET

COMMAND

CLIMATE

MODEL AND REINFORCE

VALUES

INFORMATION

ESTABLISH CONCEPT BASE FOR INFORMATION SYSTEMS

ENGINEER INFORMATION SYSTEMS

GENERATE/

APPLY

INFORMATION

The critical functions of higher levels are increasingly conceptual (abstract) in nature. The lower levels are more concerned with hands-on operations. Tanks are maneuvered. Ships are driven. Aircraft are flown. There are rules and procedures that make tasks clear and unambiguous.

The midlevel of the organization is where procedures and practices used by the lower levels are generated. Leaders no longer deal "hands-on" with weapons systems; they deal indirectly with organizational systems, and thus must deal conceptually, using analytic procedures, because they are allocating finite resources to competing demands. Their thinking skills must be rational, critical, and discerning.

At the topmost levels, there are more conceptual requirements. Analytic skills alone are not enough because of long-time horizons and the massive scope and scale of resources being committed. To build long-term vision of where an organization must move over the next 15 to 30 years, leaders must be creative (e.g., exercise creative thinking skills). Creative thinking is very different from critical thinking. The creative process demands synthesis skills, a willingness to take moderate risks, and a degree of personal comfort and confidence in decision making when exploring the uncertain and unknown.

The functions of higher levels require increasingly long time frames for their execution. There are three reasons why this is so. The first is that the resources committed by consequential decisions are much greater. All organizations have "sunk" costs. They exist in research and development, equipment, training, and operational procedures. The cost of an aircraft carrier, for example, must be amortized throughout a life-cycle covering decades; the concepts giving rise to this type of system must have arisen out of strategic vision extending over 35 to 40 years or more. A second reason is that the uncertainties of implementing strategic vision are very great. Research and development on a new system may extend more than a decade. For example, the F-22 will have been in development for perhaps a dozen years when the first aircraft flies. Will it be needed? If so, in what quantity? Finally, every organization has both a culture and a well-established set of operating practices and functional roles. They are based on extended training of organization members and long periods of operational experience, incurring both human and dollar costs. Any change in practices and procedures, if necessary, not only creates resistance from members who, by nature, do not like change, but also increases the financial cost of both re-training and subsequent operations.

The effectiveness of long-term vision is crucial to the long-term health of any organization. At all levels, leaders must make trade-off decisions, generally with the use of resources. Critical trade-offs reflect a choice between current effectiveness and projected future effectiveness , whether to do more research and development on a future, qualitatively superior weapons system, or to buy more of the available system; whether to make the investment in current technology or wait for the next quantum step. Each decision is surrounded by risk, imposed by cost and the uncertainty of future developments. Strategic leadership is a balancing act, a thin line between maximizing present effectiveness, and maximizing future effectiveness, decisions that, to some extent, are mutually exclusive. Resources expended today in the wrong direction become a loss. This is why strategic vision is crucially important to organizations and to the national interest.

Strategic leadership is a risky business. Strategic decisions are rarely clear-cut. There will always be uncertainties and often ambiguities. Contributing to the uncertainty is the fact that decisions must be made with some set of presumably valid assumptions in mind. However, strategic decisions may play out over long time spans: 10, 15, 20 years-or more. It is almost certain that very long time frames will see change in some or many of the assumptions on which such decisions were based. The decisions themselves may thus become flawed over time- overtaken by events through no fault of the original decision maker. Another uncertainty is that the support of constituencies for the decision may change with changing circumstances. And the risk is compounded by the fact that strategic decisions almost always call for major commitment of scarce resources. "Opportunity cost" is created when commitment of resources to one option precludes the exercise of other options. Consequential strategic decisions- those committing very large resources to very long term courses of action-may also prevent reconsideration of other options. A risky business indeed.

An additional source of strategic risk is that top-level decisions will almost always have both direct and indirect effects. Where decisions impact globally, even the direct effects may be uncertain. The probable actions of competitors/adversaries may not be understood when prediction must take into account other cultures, themselves understood only dimly. And there may be missing information. In the Cuban missile crisis during the Kennedy administration, the Executive Committee members were quite uncertain what the response of the Russians would be to the various options discussed. It is now known the Soviets had over 150 nuclear warheads in Cuba, including tactical nuclear weapons that might have been triggered by any direct assault on the island. However, direct uncertainties may be minimal compared to indirect outcomes of decisions that involve long-term, irretrievable commitment of mammoth resources. An indirect effect occurs when a decision creates a direct effect that produces additional ripple effects. In complex systems, second-, third-, fourth-order effects are common. And the further removed they are, the harder they are to anticipate.

Two examples illustrating this are the North American Free Trade Agreement (NAFTA) and the impending decisions about medical care in the United States. The results of these system changes will play out over a 20- to 50-year time frame, intermixed with changes resulting from other decisions. Not only are indirect effects hard to anticipate, but also in some cases it may not be clear what actually did/will cause them.

For all these reasons, strategic decisions need to be systematic, rational (to the extent possible), based on well understood and articulated assumptions, and broadly supported by those involved in their implementation. Consensus team decision making is a process that can produce decisions of this nature; however, not all decisions at the top require this process. First, not all decisions are resource intensive. Those, by their very nature, are less risky because they do not create "opportunity costs." Second, not all decisions deal with long time horizons. Some of what is in a flag rank officer's in-box is due out within hours or days, so effects can be examined and "mistakes" quickly rectified. (However, if the leader is adding value to the organization, even short-term decisions will be considered within the context of strategic objectives.) And, finally, not all top-level decisions are complex. The time and resource costs of consensus-team decision making may not be warranted.

STRATEGIC TRADE-OFFS: BALANCING PRESENT AND FUTURE EXPECTATIONS

Strategic leadership involves making choices between competing alternatives that are, to some extent, mutually exclusive. Sometimes, one choice commits resources that cannot later be allocated to another. This is "opportunity cost." At other times, opportunity has a sharply defined window, demanding quick initiation. Then there is no later opportunity for another choice. Trade-offs between a course of action that will pay off maximally in the short term, and one that will pay off maximally-if it pays off at all-in the long term contribute to the complexity of strategic decisions. Among them are:

Differences in needs and expectations must be assessed and balanced among the various constituencies that have a critical interest in decisions. Members of one's own organization and key external constituencies such as the Congress, the media, and the citizens who are served by the military must be considered. This has substantial implications for making strategic decisions and constructing strategic plans. For example, each service has its own concept of its strategic mission, and how it should contribute to joint operations. These expectations may be at odds. Effective strategic leadership required understanding these different expectations,and an ability to balance them in creative and non-destructive ways. Desert Storm provides an illustrative example. Political considerations governed selection of the ground forces to "liberate" Kuwait City, and determined the selection of forces that were to cross the Iraqi borders.

Decisions are required on the number and types of subordinate and lateral organizations that must be brought together around a single set of understandings and purposes in order to achieve unified action. This issue derives from different cultural understandings, even among the services. Language used and understood by one might not have the same meaning to another. Frames of reference will differ enough to require tradeoffs between what is optimum as a 108

course of action, and what is feasible, based on current skill levels, training, concepts of employment,etc. Desert Storm provides an example here also. Coordinating the action of multi-national forces was daunting. There were enormous differences in equipment and languages. The anticipation was that communication problems would be massive. However, a staff member suggested that Special Forces soldiers (trained in the language and customs of the multi-national combatant forces, but equipped with U.S. equipment and concepts) would be an effective interface. This proved valid.

There is an influence of forces external to the organization which the executive may or may not be able to anticipate or control. For example, in the current media-dominated world, actions that might appear straightforward in the absence of public scrutiny may become untenable. Regardless of the merits of any public event today, there can be no doubt that its outcome will be influenced by public opinion. Its importance may be media generated, and its eventual defusing will require delicate decision-making by top officials. Other force influences, both internal and external to the organization, for one reason or another, cannot be fully known. If greater clarity cannot be obtained on these forces, the executive may have to "live with them." First, understanding that these influences exist in a complex situation suggests that time should be spent looking for contingencies whenever strategic decisions or plans are being constructed. Second, understanding that change probably is inevitable as the course of action unfolds suggests that tolerance of uncertainty and/or ambiguity is an important part of the psychological make-up of any strategic leader.

THE JOINT, UNIFIED, AND COMBINED PERSPECTIVE

The importance of a joint/combined perspective is reflected in the extent to which strategic leaders must operate outside a narrowly defined single service (or single nation) environment. The complexity created by the requirement to interface outside single service boundaries is twofold. First, communication is complicated by the need to understand the different cultures and languages of the other participants, including the members of other U.S. service branches. Accurate, effective communication requires understanding the frames of reference of other organizations' listeners, not just one's own. Second, subordinates, e.g., in a joint command, may not be totally subordinated in the same sense as in single service organizations. Other leaders, and the forces they command, might be nominally under your command. Nonetheless, they retain at least some of their allegiances and lines of authority to their own-service commanders, reducing the likelihood that your command influence alone will produce committed, unified action.

JOINTNESS

ONE REASON THE MILITARY SERVICES HAVE TROUBLE OPERATING JOINTLY IS THAT THEY DON'T SPEAK THE SAME LANGUAGE. FOR EXAMPLE, IF YOU TOLD NAVY PERSONNEL TO "SECURE THE BUILDING," THEY WOULD TURN OFF THE LIGHTS AND LOCK THE DOORS. THE ARMY WOULD OCCUPY THE BUILDING SO NO ONE COULD ENTER. THE MARINES WOULD ASSAULT THE BUILDING, CAPTURE IT, AND DEFEND IT WITH SUPPRESSIVE FIRE AND CLOSE COMBAT. THE AIR FORCE, ON THE OTHER HAND, WOULD TAKE OUT A THREE-YEAR LEASE WITH AN OPTION TO BUY.

Strategic leaders must also be skillful at working in a collegial, but, at the same time, competitive environment where each member bids for a share of limited resources. Although they compete with one another, they also rely on each other to reduce uncertainty, and to build consensus and shared vision in these complex environments.

MULTINATIONAL AND NATIONAL ENVIRONMENTS

The requirement to operate effectively in a multinational environment demands an international perspective -- understanding the political, economic, and social factors in other countries. Leaders responsible for developing and sustaining the coalitions and alliances central to our national defense strategy must have an in-depth understanding of the other cultures involved. This is an essential part of the strategic frame of reference to make clear the meaning of actions taken, words spoken, and, perhaps more important, words and expectations unspoken. Lacking this, negotiation well encounter obstacles that impede progress.

A past Supreme Allied Commander, Europe, explained some of his decision processes. His position demanded that he have a profound understanding of the national cultures, proclivities, and interests of all the NATO nations. First, a decision taken by NATO had to be unanimous, so patience was a valuable attribute for decision makers. Second, he had had to make decisions contrary to the interests of the United States when U.S. interests were not representative of the best interests of the NATO nations. Balancing the sense of "what's best for all combined" against "what's best for the U.S." was a delicate task, given that he had to answer ultimately to critics in the U.S. who felt their national interests had not well been represented.

An equally profound national perspective is required for testimony to Congress, and interactions with executives of federal agencies, state and local authorities, the media, and other leaders of political and social opinion who influence national attitudes toward the military. This awareness of the outlook, values, and priorities of others requires a deep understanding of American society, including its culture and values, and differences in the interests of its key groups. This leadership perspective is necessary not only for public representation, but also for shaping the culture and values of our military institution as an integral part of the total society.

Because strategic leaders must proactively influence their constituencies as well as respond to their concerns, both national and international perspectives are used in two ways:

Defense needs, goals, or objectives may be in conflict with those of other departments, because all elements of government compete for resources within an increasingly constrained and ever-less munificent fiscal environment. In addition, public sentiment may be activated by either the media, other organizations, or members of government to swing the perception of the national interest in one direction or another, thus changing the relative importance of needs, goals, and objectives of any given agency or department. One key role of strategic leadership is to understand this competition, and to participate at senior levels in ways that represent his/her institution effectively in the public eye. Strategic leaders are responsible for achieving such shared understanding-both by representing defense views to external audiences and by explaining external views to internal audiences. Understanding then serves as a basis for the formulation of the military services' strategic direction that accurately reflects national policy objectives.

STRATEGIC RESPONSIBILITIES

Within the DoD, strategic leadership responsibilities are broad and varied. Four areas of concern to strategic military leaders and their civilian counterparts stand out.

The first strategic responsibility is managing the relationship between the nation's total defense force and the overarching national policy apparatus:

The second strategic responsibility is representing the organization in its relationships with the larger society:

The third strategic responsibility is creating the future operating capability of the military to meet worldwide contingencies:

The fourth strategic responsibility is managing joint and combined lateral relationships among the Services and with representatives of other countries in both peace and war.

STRATEGIC PERFORMANCE REQUIREMENTS

The systems led by strategic leaders are ponderous and complex; they change slowly and only with great expenditure of energy. Within this protracted time horizon, strategic performance requirements include:

STRATEGIC SKILLS AND ABILITIES

Specific leadership tasks to be performed differ from level to level in organizations. More importantly, the balance between technical, interpersonal/communication, and conceptual changes across levels, as shown in the figure above.

TECHNICAL SKILLS

Technical skills are required at all levels. However, at the lower levels, technical skills consist of using or operating a system; at upper levels, technical skills are more about employing systems within systems in order to create synergy. For example, at the lower levels, automation-technical skills might consist of what is required to install and maintain a network of computer systems. At the strategic level, they might be what is required to achieve the integration of an extensive automation system, e.g., WWMCS, into a multiservice command and control architecture.

At the direct level, technical focus is on solving well-defined problems, and performing specific tasks and missions. At the strategic level, the focus is on solving ill-defined problems-dealing with intangibles and indirect effects that can impact on the organization. Many of the technical decisions facing these senior leaders require the assessment of organizational capabilities and an understanding of the intricacies of resourcing the total organization.

Structuring and re-structuring includes responsibility to develop new kinds of systems and organizations to provide future operational capability. These strategic decisions require major resource commitments that cannot easily be reversed (e.g., the decision to build an aircraft carrier). They also require calculation of the tradeoffs between opportunity and risk, with the knowledge that if decisions are wrong, the defense posture may be weakened.

New organizations may be developed in response to changing threat capabilities, technological enhancements, or resource changes. Within the Air Force, the development of composite wings is an excellent example. Within the Army, the creation of light divisions is another. Light divisions were formed to deal with a part of the spectrum of war that was not sufficiently covered, as well as to increase flexibility and mobility. However, such decisions carry substantial opportunity costs. In this case, the light divisions cost some heavy divisions.

INTERPERSONAL SKILLS

Because the relationships at the strategic level are much more lateral and without clear subordination than at lower levels, the interpersonal skills involved in persuasion, negotiation, and collaboration are more crucial. These processes operate on a base of effective reasoning and logic. Strategic leaders -- especially when consequential decisions are being made -- must be able to build the perception that their ideas are rational and deserve support. This demands that a consensus be built among contemporaries of equal rank and tenure, who might have competing interests and ideas of their own. To a very great extent, the capacity to build consensus depends as much on interpersonal skills as on political and conceptual skills.

The ceo must be able to lead subordinates who disagree with each other, and with him, while he retains his own convictions about the desirable direction for the corporation. This conviction may be tested over several years by the skepticism and dissent of other senior officers. But if the ceo and those who agree with his ideas for new direction are persistent, and if they are correct in their decisions so that improved results become apparent to others, then gradually they can rebuild a consensus about the "rightness" of the new ideas, and these will be incorporated into management's beliefs.

Donaldson & Lorsch

CONCEPTUAL AND DECISION SKILLS

Environmental Scanning. Scanning is purposeful search in the environment for relevant information. The skill lies in knowing what may be important, where to look, who to ask, and what to ask, to obtain needed information. Not all environmental scanning is done by strategic leaders. In today's environment, the task has such enormous scope that whole departments, branches, or organizations maintain environmental scans. For example, environmental scanning is one of the most central missions of the CIA.

In any organization the leader's unique capacity to commit the resources of his/her organization, opens many doors. One way a leader may add value is by using this "source mobility" to scan, interpret, and understand what is going on elsewhere that may have future relevance to his/her organization. Because many strategic courses of action require huge investments, they may unfold over substantial time frames. Therefore, to the extent early sensing of important events might allow timely action to gain a competitive advantage, the value of strategic scanning may be enormous.

Decision Making. In most strategic decision making where options are consequential, situations may not have clear cause-and-effect outcomes. Also, plausible courses of action may not yet have been developed or identified. In such cases, decision makers must isolate and identify key issues, visualize and predict potential problems, and formulate least-risk solutions. Additionally, at the strategic level, some problems may be so poorly structured that even one clearly workable course of action is not apparent. The complexity may be too great, and the consequences of possible courses of action too uncertain. For these complex and ill-structured problems, most organizations make use of an executive team, composed of the leader and his/her advisors. The assembled wisdom of the team members enables a broader scope to be considered, and permits a more careful analysis of the information relevant to the issue.

Reducing Complexity. The complexity and uncertainty of the strategic environment exceeds that which can be tolerated at the lower levels. Decision makers at these levels- nominally the mid-levels-develop concrete plans for allocating resources to operations. For example, the PPBES process is located at the mid-level of the various services; this process allocates major fiscal resources to long range concrete plans. However, this kind of resource allocation cannot be done intelligently without concept guidance from higher levels. The strategic role is to comprehend the complexity and uncertainty in the strategic environment, and then to set understandable azimuths for the mid-levels of the organization that can be used as a rational basis for resource allocation to operational units.

Systems Understanding. This is a capacity to visualize the interactive dynamics of large systems, including interdependencies, so that decisions taken in one area will not have adverse impact in another. Strategic decisions must balance conflicting expectations, requirements and values, over time. Systems-by virtue of strategic leadership-must deal with current requirements, conceive future requirements, and balance these requirements with current and future resources.

Understanding Indirect Effects. A strategic leader's frame of reference and vision must be broad enough to predict the indirect-second-, third-, and fourth-order effects of decisions. Without this capacity, changes in policy, regulation, or action may produce effects neither anticipated nor desired.

Future Focus and Vision. Strategic leaders must not only be future oriented, but must have a "sense of time" to envision long-term system-wide programs and schedules for their implementation. Time horizons from 12 years (for the Extended Planning Annex) to 20 years (for programs requiring major capital resources, such as the force modernization programs of the various services) are common in peacetime. The importance of vision at this level is that it provides the umbrella for defining specific and detailed programs at the organizational. As one four star general put it:

It seems to me that you need a long range planning effort that is visionary (20-25 years). You would not want to commit yourself that that is the way it is going to look out there. But if you force a group to philosophize and postulate about what it will be out there, then it causes dialogue. ... Pretty soon, as you work down, you find yourself arriving at a consensus of what that vision might be, and it influences what your middle term goals might become.

Proactive Reasoning. Although strategic leaders must react to immediate, near-term events, they reduce the surprise factor by maintaining a "proactive stance." Being proactive is more than just seeing the future relevance of present-day events. In this proactive process, strategic leaders use their frames of reference as a tool to:

The Army's force modernization program is an example of executive action that illustrates this five-step process. To accomplish this task, senior leaders had to understand how to initiate and institutionalize a desired set of objectives so their successors would continue toward attainment as a natural course of events. Its prime initiator said it would not be fully complete "within the service lives" of the graduates, predictably an additional 10 to 15 years. His time horizon was a minimum of 20 to 25 years at the time the program was institutionalized.

This program was not formulated in response to a requirement. Rather, it was envisioned as a necessary step to create a force that could deal with future contingencies. It was a proactive effort requiring consensus for initiation, and a program for creating the critical mass of resources to get it started.

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