Harald (not his real name) is a high-potential leader with 15 years of experience at a leading European chemical company.
He started as an assistant product manager in the plastics unit and was quickly transferred to Hong Kong to help set up the unit’s new Asian business center. As sales there soared, he soon won a promotion to sales manager.
Three years later, he returned to Europe as the marketing and sales director for Europe, the Middle East and Africa, overseeing a group of 80 professionals. Continuing his string of successes, he was promoted to vice president of marketing and sales for the polyethylene division, responsible for several lines of products, related services, and a staff of nearly 200.
All of Harald’s hard work culminated in his appointment as the head of the company’s plastic resins unit, a business with more than 3,000 employees worldwide. Quite intentionally, the company had assigned him to run a small but thriving business with a strong team. The idea was to give him the opportunity to move beyond managing sales and marketing, get his arms around an entire business, learn what it meant to head up a unit with the help of his more-experienced team, and take his leadership skills to the next level in a situation free from complicating problems or crises. The set-up seemed perfect, but a few months into the new position, Harald was struggling mightily.
Many rising stars trip when they shift from leading a function to leading an enterprise and for the first time taking responsibility for a P&L and oversight of executives across corporate functions. It truly is different at the top. To find out how, I took an in-depth look at this critical turning point, conducting an extensive series of interviews with more than 40 executives, including managers who had developed high-potential talent, senior HR professionals and individuals who had recently made the move to enterprise leadership for the first time.
What I found is that to make the transition successfully, executives must navigate a tricky set of changes in their leadership focus and skills, which I call the seven seismic shifts:
1. Specialist to generalist
Harald’s immediate challenge was shifting from leading a single function to overseeing the full set of business functions. It would be wonderful if newly appointed enterprise leaders were world-class experts in all business functions, but of course they never are. In some instances they have gained experience by rotating through various functions or working on cross-functional projects, which certainly helps. But the reality is that the move to enterprise leadership always requires executives who’ve been specialists to quickly turn into generalists who know enough about all the functions to run their businesses.What is “enough?” Enterprise leaders must be able to (1) make decisions that are good for the business as a whole and (2) evaluate the talent on their teams. Leaders must be able to speak the language of all the functions and translate for them when necessary. And critically, leaders must know the right questions to ask and the right metrics for evaluating and recruiting people to manage areas in which they themselves are not experts.
2. Analyst to integrator
The primary responsibility of functional leaders is to recruit, develop and manage people who focus in analytical depth on specific business activities. An enterprise leader’s job is to manage and integrate the collective knowledge of those functional teams to solve important organisational problems.
Once again, executives need general knowledge of the various functions to resolve such competing issues, but that isn’t enough. The skills required have less to do with analysis and more to do with understanding how to make trade-offs and explain the rationale for those decisions.
3. Tactician to strategist
How do tactically strong leaders learn to develop such a mindset? By cultivating three skills: Level shifting, pattern recognition and mental simulation. Level shifting is the ability to move fluidly among levels of analysis – to know when to focus on the details, when to focus on the big picture and how the two relate. Pattern recognition is the ability to discern important causal relationships and other significant patterns in a complex business and its environment – that is, to separate the signal from the noise. Mental simulation is the ability to anticipate how outside parties (competitors, regulators, the media, key members of the public) will respond to what you do, to predict their actions and reactions in order to define the best course to take.