Leading with Strategy summary

Let’s try an experiment. Walk into an organization, and ask the first ten people you see what their company stands for. One of two things is guaranteed to happen. Either you get ten different answers, or you get ten identical versions of the same rehearsed answer which everyone has learned and no one actually believes in. 

Both scenarios point to a serious gap in the corporate culture between stated values and lived values. And, not to be dramatic about it, but that gap is where strategy goes to die. This is because culture is more than a mission statement. It’s the invisible operating system that underpins every decision: what gets rewarded, what gets tolerated, and what gets buried. And if that operating system is running on outdated values or unspoken rules that contradict your stated strategy, no amount of bold vision from the boardroom will save you.

In 2012, JCPenney’s new CEO Ron Johnson embarked on an audacious rebrand. No more discounting. Now, the stores were framed as a collection of boutiques. It was, on paper, a great strategy. But it failed to take a pretty crucial data point into account: how JCPenney’s customers actually shopped at the retailer. The JCPenney customer was a bargain hunter – they wanted goods at a good price, nothing fancy. Post-rebrand sales collapsed by nearly $5 billion. This disaster didn’t happen because JCPenney’s executive team lacked vision, it happened because of a disconnect between the organization’s strategy and its lived reality.

That disconnect has a name: the strategy gap. It can be fatal, but with early diagnosis, you can stop that gap from turning into a JCPenney-style strategy chasm. Here’s how to do it:

In the early 2000s, General Motors was losing market share to Toyota. Leadership responded tactically. They cut costs, launched new models, increased their marketing spend. But while they were zooming in on isolated problems, they failed to zoom out and see the bigger issues. Supplier relationships, manufacturing culture, dealer incentives, and product decisions were all quietly reinforcing each other's dysfunctions. Suppliers were kept at arm's length and played off against each other on price, producing cheaper parts that undermined quality. Dealers were incentivized to shift inventory rather than build customer relationships, eroding brand loyalty. And a culture of internal competition between divisions meant that lessons learned in one part of the business rarely travelled to another. By 2009, GM had filed for the largest industrial bankruptcy in American history.

Now, it's tempting to say that GM's leadership wasn't thinking strategically. But it isn’t true. Most strategic thinking is linear: identify the problem, find the cause, apply the solution. The problem is that organizations aren't linear. They're ecosystems. What GM's example teaches us is that strategic thinking needs to be supplemented with systems thinking – the ability to see an organization not as a set of separate problems to be solved, but as a web of interconnected elements that shape and reinforce each other.

When it comes time to make decisions, leaders often need to sit with competing realities. Realities like ‘We need to move faster’. And ‘We can’t afford to get this wrong.’ And here’s how they usually handle it: they pick one truth and ignore the other, prioritizing speed or caution. Or they come up with a compromise that dilutes both: moving a little faster, and paying slightly more attention to detail. Neither move is satisfactory. 

Those two truths, ‘We need to move faster’ and ‘We need to get this right’ pose a paradox. But most organizations treat paradoxes like dilemmas. A dilemma has a right answer. Should we enter this market or not? Should we acquire this company or build the capability ourselves? The tension is real but resolvable. A paradox is different. It presents competing truths or priorities – think efficiency and innovation, or stability and change – which are both valid. The tension between these truths can’t be resolved. It has to be managed.

When Paul O'Neill arrived as CEO of manufacturing giant Alcoa in 1987, analysts expected him to talk about margins and market share. Instead he announced that his singular strategic priority was zero workplace injuries. Shareholders were baffled. But O'Neill had seen something important about Alcoa's injury rate. It was a symptom of a deeper operational problem: the failures in communication, process discipline, and accountability that were causing accidents were the same failures causing defects, inefficiencies, and strategic drift. His core idea was if you fix the safety culture, you fix the operational infrastructure that strategy runs on. Within a year, Alcoa’s systems had been rebuilt around that single priority. Within a decade, its net income had quintupled.

O’Neill avoided a pitfall that plagues most strategic thinkers: strategizing at altitude. He understood that strategy isn’t the domain of the executive team only. Strategy that isn’t embedded in daily organizational behavior is strategy that is likely to fail.