After watching the video from Harvard Business Review: “The Biggest Mistake a Leader Can Make” , in at least 250 words, please answer each of the following:
(a) Choose one of the ‘mistakes’ that are described in this video, and describe how you think the mistake would influence the strategic management process of an organization.
(b) Explain how you would try to address the mistake and try to improve the situation.
The Harvard Business Review Video: ‘The Biggest Mistake a Leader Can Make’ features a remarkable set of professors from highly respected and reputable establishments that share their ideas on how and why leadership does go wrong.
The mistake I’ve chosen to review is ‘failing to embrace uncertainty’ as shared by Dr. Ellen Langer, a management leader at Harvard University. The irony is that uncertainty does form a significant portion of any business and many leaders understand and preach the no risk, no reward mantra. The traditional approach subjects companies to having precise predictions and can lead to executives underestimating the power of uncertainty which is downright dangerous (McKinsey, 2020).
Uncertainty-based management explores four uncertainty types (unknown and knowns):
- Foreseen variation
- Unforeseen Uncertainty
All of the above indicate a certain level of uncertainty and certainty. McKinsey (2000) advises confronting uncertainty head-on by embracing the notion of probability and likelihood. The odds can be calibrated, explicit trigger points built and even decisions re-examined to understand the chances the strategy has of actually being successful. This scenario can be easily demonstrated with the aftermath of the pandemic and how/whether companies had a ‘plan’ to tackle the pandemic head-on, which might be rare and unlikely scenario to many, however, fast forward 2 years later and it has completely affected individuals and companies on a global scale.
Addressing uncertainty and trying to improve the situation can be attempted as follows (Forbes, 2020):
- Applying the appropriate tools to identify and evaluate strategic options and repercussions of decisions in advance
- Selecting a strategic posture that clarifies the strategic intent
- Building a portfolio of strategic moves and being adaptable and flexibility
- Accepting things that are outside control and building risk mitigation strategies and focusing on strategies within the control of the organization
- Being transparent
- Optimizing strategy implementation
- Embracing ambiguity
- Developing pessimistic and worst-case scenarios proactively
- Focusing on high payoff paths
- Ensuring a robust risk management plan is established
- Incorporating value-based decisions and resilience practices
- Leveraging Leadership Core Values and Ethical Responsibility
- Thinking Globally, but Acting Locally
Gurkov (2010) also shares strategy techniques during the economical crisis where there was high volatility and a lack of clarity in terms of demand and supply under the described conditions and enlightens us with a discussion on the classic decision theory of making decisions under certainty, under risk or under uncertainty (when the decision-maker has an incomplete knowledge on the types of consequences the decision will have). The necessity of having different forms of scenario planning is emphasized.
According to professor Bill George from the Harvard Business Review video, the biggest mistake and the greatest failing of a leader is that they have put their self-interests ahead of the best interests of the organizations they run. Leadership is about responsibility instead of power, fame, money, and glory (Video, 2010).
Strategic management deals with an organization’s strategic objectives. The strategic management process is a process that managers formulate, implement, and evaluate strategies in order to help the organization achieve competitive and sustainable advantages in the market (David & David, 2017). If leaders put their self-interests ahead, they will intervene in organizational strategy formulation process and lead to strategy implementation. They will not only delay a strategy or reduce the quality of its implementation, redirect a strategy, but also can totally sabotage the strategy, when they feel their self-interests are at stake. Leaders that are motivated more by their perceived self-interests than by the organizational interests have low or negative commitment to the strategies and create significant obstacles to the strategic management process (Guth & MacMillan, 1986).
Conflicts of interests are nothing new. In order to improve the strategic management process, problems need to be detected and addressed appropriately. First, rules and policies need to be established; second, moral obligations and responsibility need to be emphasized; third, incentive and motivation can be one of the approaches to improve leaders’ commitment; last, coercion or replacement of leaders have to be taken place if necessary.