Just like in politics, CEOs must have highly likeable manifestos

Over the past week or so, Kenyans have been glued to their TV sets following developments on the presidential election petition at the Supreme Court. I couldn’t help drawing parallels between happenings in the corporate world and the political arena. In the corporate world, leaders need to determine the strategic direction for their organisations. This involves specifying the vision and the strategy to achieve the vision over specified times, in the context of the opportunities and threats in the external environment that the leadership expects the organisation to face.

The strategic direction can be viewed as the image and character that the firm wants to develop over time. This is considered the single-most important strategic leadership role. Though usually looked at from a corporate entity perspective, the same is true for political leadership.

We have just gone through an electioneering period, in which the Kenyan voter was required to scrutinise the various coalition, party and candidate manifestos to make an informed decision on the respective candidates at all levels right from the president, governor, senator, woman rep as well as members of the national and county assemblies. Many voters opted for the candidate whose indicated strategic direction was most compelling and aligned to their (voters’) aspirations.

Convey a vision

Similarly, in the corporate world, it is important for the leader to convey a vision of the organisation’s future. Strategic direction would entail vision, mission and strategic intent of the organisation. Whereas the mission statement would specify the business that the organisation is in, the vision expresses the aspirations of the leadership by presenting the strategic intent that focuses the energies and resources to achieve a desirable future.

The vision does not fluctuate from year to year and serves as an enduring promise painting a vivid picture of the organisation. The vision is future-based, being a picture of what the company could be that accommodates the needs of all stakeholders, but it is specified in the present tense, as if it were being realised now. During the electioneering period, the voter had to choose the leader with an aligned vision by reading through the manifestos, attending the rallies and scanning through the campaign posters and materials.

Successful organisations choose a pure business strategy of either cost leadership or product differentiation. An attempt at a hybrid of the two is akin to straddling and often leads to being stuck in the middle, which is a manifestation of the firm’s unwillingness or possibly inability to make choices on how to compete.

This is akin to trying for competitive advantage through every means and achieving none because achieving different types of competitive advantage requires inconsistent acting, which inevitably leads to the firm being unable to achieve competitive advantage. In the political arena, the voter should be able to pick out inconsistencies in the strategy of the candidate and therefore the likelihood that the promises would not be delivered, if elected.

Strategic direction

Another factor that comes into play in setting the strategic direction is the CEO’s personality. The CEO’s personality determines both initiation of strategic change and the performance effects of change implementation. Personality shapes how the CEO communicates with, rewards and motivates their direct reports, who can decide success or failure of strategy implementation. The personality shapes how the CEO defines strategic vision and goals, which in turn determine the personality of people attached to and retained by the organisation. In the political arena, this could be observed in the kinds of coalitions that were formed to secure a winning ticket. The personality of the leadership at the various coalitions came into play. The choice of the candidates on which coalition to align with was driven, to a large extent, by the personality of the leaders in the various coalitions.

It is also important, in the corporate world, to facilitate employees to convert them from resisting change to becoming champions of change. Individuals become adaptive to change when they construct meaning of those events. This is by both understanding that the change is part of a bigger plan and that the change has more benefits than downsides. This can be reinforced through effective communication from the managers to the employees.

 On the campaign trail, most candidates expended considerable energy trying to paint a view of the bigger picture and the benefits that would accrue to the voters if the candidate were elected. Most dangled the carrot of strategic appointments, all for the benefit of the voter.

Committed to status quo

Common in organisations that have performed well in the past and for long-serving CEOs, the top team is ordinarily committed to the status quo due to an aversion to what they consider risky actions, thus at times hindering the organisation from reaching its full potential. More often, this requires changes at the top for the firm to reach its full potential. To motivate the leadership to select the best strategies, incentive compensation has been found to be most effective.

Incentive compensation can be very effective on talented management teams selecting the best strategies that lead to high performance, with the down side being that the same incentives on less talented management teams could lead to diminished performance. Incentive compensation stimulates aggressive risk taking, which magnifies the effects of skilled management teams, while it similarly magnifies the mediocre performance of the less skilled management teams. A number of parallels can be drawn in this regard with the political arena.

Most of the debutant candidates shouted themselves hoarse on the new direction they would bring to the table, of course in an attempt to convince the voter that they would score where the incumbent had failed. Our politicians are paid well, and my submission is that would only motivate the talented ones to deliver to the electorate on the promises, while for those less endowed with talent, the voter will be better informed after the five-year term.

Dr Olaka is the CEO of the Kenya Bankers Association.