The leadership tier that makes or breaks strategy keeps getting ignored

A group of plant managers sat down with a McKinsey team that their company had brought in to lead a transformation. They'd heard the pitch before. Higher EBITDA. Better cash flow. Nothing in it for them.

The consultants turned the conversation around. Instead of presenting a plan, they asked the managers what they'd been waiting years for someone to address. The managers didn't hesitate. Years of neglected maintenance came pouring out — small things, mostly, but enough of them to add up to roughly $50 million.

Leadership made a commitment on the spot: whatever the transformation saved first would go back into the factories. For repairs under $200,000, managers wouldn't need to ask anyone. The managers who had been skeptical had suddenly become some of the loudest advocates for change.

Leadership strategist David Lancefield argues in Harvard Business Review that the tier sitting directly below the C-suite — including business-unit presidents, regional CEOs, and functional heads — is the most consequential leadership layer in most organizations. It's also the one that receives the least investment. These leaders have more influence over whether a strategy lands than anyone in the boardroom. They hold more operational leverage over execution than any other group in the organization. They just don't have a seat at the table when plans are written.

The story behind the neglected leadership tier

Academic literature on strategy execution has largely ignored this tier. In one meta-analysis of 188 studies, the group doesn't even appear as a subject of research. Across another study of 124 organizations, fewer than three in 10 leaders could name what their company was actually trying to do.

Most of these leaders have built their careers on execution. They've turned around business units, run complex operations, and delivered results under pressure. What they're rarely asked to do is help build the strategy they're being asked to run. When they are asked, they reap the benefits. Involvement in execution creates compliance, Lancefield says, and involvement in development creates ownership.

Developing strategic judgment at this level is a distinct undertaking. The people in these roles typically have deep domain expertise and strong operational instincts. What they lack, and what the C-suite rarely invests in building, is what Lancefield calls systems awareness: the ability to spot signals in adjacent markets, test whether plans hold up under different scenarios, and connect decisions in one part of the business to consequences in another.

CEOs resist bringing this tier into strategy-making for understandable reasons. The objections Lancefield hears most often are really fears about control. More voices means more friction, more complications, and more chance that the strategy won't survive scrutiny. Lancefield's reframe is that those problems are better discovered in a room than in the market.

The systems that undermine new strategies

The McKinsey State of Organizations 2026 report, drawn from a survey of more than 10,000 senior executives across 15 countries, identifies a related failure mode. Organizations ask leaders to behave differently without changing the systems that shape behavior. Performance reviews, incentives, and governance structures often lag behind a new strategy, continuing to measure people against the priorities the organization just said it was moving away from. A media company that Lancefield advised fell into this exact trap. It tracked performance using traditional ratings even after it had begun demanding growth in digital audiences, a completely different target group that it had not previously prioritized. The C-suite had changed the direction, but nobody had changed the instruments.

The fix starts with clarity. The people running the business units need to know which aspects of the strategy are firm and which are theirs to shape. Then the metrics have to move. Without alignment between what leaders are measured on and where the strategy is headed, even committed leaders end up optimizing for the wrong outcomes.

McKinsey's research identifies four levers that determine whether new behaviors take hold: giving people a convincing reason to change, having leaders visibly model new behavior, redesigning the systems that make old habits easier than new ones, and building the skills people need to act differently. Most organizations pick one or two and hope for the best. McKinsey's data suggests that's a costly shortcut. The difference in outcomes between a partial approach and a full one is more than eightfold.

The structural question is how to get leaders who run separate domains to start making decisions together. Lancefield's answer is rotation. In the media company he advised, each divisional head took temporary ownership of an enterprise-wide challenge. Some built audiences in new segments. Others developed content across broadcast and digital formats simultaneously. Within months, the divisional heads were exchanging data on audience behavior, moving talent between teams, and partnering on editorial initiatives that none of them could have executed alone.

Leaders who share accountability for something beyond their own domain start developing the instincts the organization needs. Most CEOs know this, but few build the conditions for it.