We are living in a changing environment that demands that organisations develop their people to be innovative and flexible to succeed. There is already substantial research available and world leading companies that are creating such cultures. We need to learn from these examples and act on them immediately.
We are living in a volatile and interdependent world. Globalisation and technology are two powerful forces which are causing much of this disruption. This is the same disruption that has lead to the fall of three dictatorships in the last 18 months. Traditional businesses structures are coming under the same increasing pressure.
Demographics are creating change, our work places now contains a diverse range of people groups; baby boomers, generation X and Y, with open border immigration adding further diversity to this melting pot. Each generation and culture has different expectations, values, goals and characteristics which is driving fast changes in consumer behaviour and work place expectation.
Our organisations value is more likely to be based on intangible assets (good will, brand, IP) than its tangible assets (plant, machinery, stock). It is the people who are creating innovation, technology, IP and brand value that is driving the creation of value in businesses around the world.
Never before has business faced such a complex external global environment and internally diverse work force. Never before has the quality of the people in an organisation been more important to create value, provide innovation, and develop adaptability within organisations to cope with this changing and volatile markets.
This Hack is neither radical, innovative, or new. The solution to this challenging environment is to develop the leadership within an organisation. It is the people within an organisation that will provide the answers and deliver financial performance.
Leadership development is already being delivered today in market leading organisations such as Cisco, General Electric, Proctor & Gamble, Dow Corning, IBM, 3M, Dell Computers and even our own Air New Zealand. These companies are market leaders, outperforming their competition and receiving returns on their investments well beyond the cost of their development programs.
My Hack is to encourage leaders and future leaders to learn from these examples. We do not need to pioneer a new pathway, we need to consider the huge amount of research and empirical evidence that already supports leadership development and establish the elements that make these companies strategies successful.
These market leading companies whose strategies focus on developing leadership share three common elements:
- The most important element is that the strategy has been delivered from the top down. It has been driven, sustained, resourced and promoted continuously by the CEO. Senior management ‘walk the talk’ and create a culture that celebrates the importance of shared responsibility, delegated authority and creating the autonomy to make improvements. This requires leaders who understand that people are an organisation's greatest asset and that they need to be developed and given the opportunity to lead.
- The second element is the implementation of strategic human resources to develop programs across the organisation that delivers leadership through coaching, mentoring, performance management, feedback and training. HR is an enabler of these initiatives working closely with the CEO to ensure that leadership development is fully aligned with the business strategies. HR is no longer a support service it is a structural alignment partner who can develop the programs and culture required to develop the leaders required to improve company performance.
- To deliver a successful leadership strategy the organisation must have a supportive structure which allows communication, team work and knowledge sharing. The structures need to be flat with horizontal and vertical integration where everyone is exposed and encouraged to develop their leadership. Technology needs to be the backbone of the structure to generate effective and efficient communication, training and program distribution throughout an organisation.
This is a solution where everyone benefits. Employees feel valued, supported, motivated and engaged. It is this engagement and sense of ownership that provides motivation, enthusiasm and retains quality staff. These benefits ultimately drive better performance and create a unique competitive advantage that cannot be easily replicated.
The practical impacts of developing leadership within organisations are evident in a number of examples.
Cisco after the dot-com bust developed a leadership strategy recognising the importance of developing different leadership skills to meet the new market conditions. The CEO at the time, John Chambers, hired a team of strategic human resource specialists to implement programs across the organisation. They created a culture of leadership that resulted in Cisco outperforming their competition and generating net revenues even higher than they were able during the height of dot-com bubble.
GE started its program of leadership development in 1992 to empower its many subsidiaries which restructured the way the business operated, taking the company to new levels of financial performance. In 2005 they spent $1 billion on leadership training which has helped to create a talent pool across multiple businesses and countries making them one of the world’s most respected, admired and profitable companies.
Air New Zealand under the direction of CEO Rob Fyfe has developed and empowered leadership across the organisation which has developed innovation in every aspect of the business. They have pioneered new fare structures, marketing programs, introducing new seating arrangements and created award winning customer service call centres. Most importantly they have maintained profitability while their peers continue to run at huge losses.
The impacts on company performance and employee motivation, innovation and business continuity are evidence of the success of these strategies.
The first step as a company CEO and board of directors is to take action. The evidence and benefits are clear, supported by research and real world examples. As future leaders we must encourage our current leaders and managers to take up these initiatives. When our opportunity comes to lead our organisations, we must be prepared to take up the challenge to build our own leaders, and the profits will come.
Interesting post, thanks for it, Daniel. So, the thinking here is that traditional leadership development is effective -- evidenced by companies like GE and Cisco -- but it's not followed rigorously and broadly enough? In other words, we don't need to reinvent the wheel, we just need to remember how to use it properly. I think there's a lot of truth in that.
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David, Yes it was interesting in conducting the research for this Hack how much supporting research and great examples that could be found. It became quite clear to me that we can learn from other companies to help implement leadership programs for our own companies. The examples do however show that it is not easy, requiring leaders who understand the importance of developing their own leaders, not just followers. But those leaders who are truly committed and passionate about leadership development found a way to implement programs that supported their business objectives. The success of ‘unlocking’ the leadership potential in their people was measured in superior company performance and profit. Certainly plenty for us all to consider. Thanks for your comments. Dan
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Inspirational Dan. I'll certainly do my bit where I have the chance.
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