You want your leaders to be the kind of people who embody the promises your company makes to its customers. To build this capability, follow these five principles.
How do some firms produce a pipeline of consistently excellent managers? Instead of concentrating merely on strengthening the skills of individuals, these companies focus on building a broad organizational leadership capability. It’s what Ulrich and Smallwood—cofounders of the RBL Group, a leadership development consultancy—call a leadership brand.
Organizations with leadership brands take an “outside-in” approach to executive development. They begin with a clear statement of what they want to be known for by customers and then link it with a required set of management skills. The Lexus division of Toyota, for instance, translates its tagline—“The pursuit of perfection”—into an expectation that its leaders excel at managing quality processes. The slogan of Bon Secours Health System is “Good help to those in need.” It demands that its managers balance business skills with compassion and caring. The outside-in approach helps firms build a reputation for high-quality leaders whom customers trust to deliver on the company’s promises.
In examining 150 companies with strong leadership capabilities, the authors found that the organizations follow five strategies. First, make sure managers master the basics of leadership—for example, setting strategy and grooming talent. Second, ensure that leaders internalize customers’ high expectations. Third, incorporate customer feedback into evaluations of executives. Fourth, invest in programs that help managers hone the right skills, by tapping customers to participate in such programs. Finally, track the success of efforts to build leadership bench strength over the long term.
The result is outstanding management that persists even when individual executives leave. In fact, companies with the strongest leadership brands often become “leader feeders”—firms that regularly graduate leaders who go on to head other companies.
Buy CopiesThousands of companies spend millions on leadership development—only to get lukewarm results. Why? They rely on leadership competency models that identify generic traits (vision, direction, energy). Then they try to find and build next-generation leaders who fit the model. Result? Vanilla managers and executives who aren’t equipped to manage their firm’s unique challenges.
There’s a better way, say Ulrich and Smallwood. Build a leadership brand: a shared identity among your organization’s leaders that differentiates what they can do from what your rivals’ leaders can do.
To build your leadership brand, first articulate what you want your firm to be known for by your best customers. Then link those qualities to specific managerial traits and activities. For example, Wal-Mart wants to be known for its everyday low prices. So it strives to hire and develop managers who are frugal and unassuming and who can drive a hard bargain.
Brand your firm’s leadership and you deliver unique value for investors, customers, and employees—elevating market value and sharpening your competitive edge.
The Idea in Practice
Ulrich and Smallwood recommend these practices for building your leadership brand:
Though generic leadership competencies won’t differentiate your firm from others, they’re still important baseline skills for all leaders. Train your firm’s leaders to master these five fundamentals:
Decide what you want your firm to be known for, then link those brand attributes with specific leadership skills and behavior. For example, pharmaceutical company Teva’s brand qualities included integrity, which managers embodied by ensuring employees delivered products on time.
To ensure leaders are living up to your leadership brand, regularly assess their actions and accomplishments from an external point of view. Invite key customers, investors, and community leaders to periodically evaluate your leaders through surveys, interviews, and focus groups.
Incorporate external expectations into your leadership-development efforts by:
Procter & Gamble helps its leaders gain a consumer and P&L perspective early. Instead of assigning new hires to positions in individual departments such as finance, marketing, or HR, it places them with cross-unit “brand teams” who are responsible for meeting customer expectations.
A strong leadership brand translates into superior financial performance. Evaluate the success of your leadership brand by considering how much confidence investors have in your future earnings (as expressed by your company’s price/earnings ratio) and how much customers value your brand (as expressed by market share).
Quick: What do the following firms have in common?