When it comes time to execute a strategy, many companies find themselves stymied. They carefully identify the opportunities within their reach, then wonder why results fall short of expectations. The problem? New strategies and initiatives demand leadership, but many companies fail to recognize that fact. So the innovations are doomed from the start. McKinsey consultants Tsun-yan Hsieh and Sara Yik take it one step further. They believe that leadership is the starting point of strategy. So what is “leadership”? While good managers deliver predictable results, leaders generate performance breakthroughs. Leaders create something that didn’t exist before: they launch new products, enter new markets, boost performance while lowering costs. A company’s leadership reaches well beyond a few good men and women at the top. It typically includes 3-5% of an organizations employees. Strategy and leadership go hand in hand; it’s tough to implement one without the other. Strategy cannot succeed in a void, and leadership often makes the difference between reaching for great opportunities and actually achieving them. Top managers must assess their company’s leadership gaps and find ways to close them—over the short, medium, and long term. Better still, they should integrate leadership with strategy development and thoughtfully match their portfolio of leaders with opportunities. Thinking about leadership now can affect the direction, path, and actual outcome of future strategies.

McKinsey Quarterly 2005 No. 1