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Most CEOs agree that leadership is important, yet few assess their leadership gap precisely. Fewer stilf build an engine to develop the right quantity of leaders with the right mix of capabilities, at the right time
time lacked the cultural sensitivity to path toward a predetermined toimplementa operateinnewergeographies. strategicgoalbytakingintoacstrategy,many Thefailuretoassessleadership countthequantity,timingand mix ofleaders that the various capacity systematically before companies find Iaunching strategic initiatives can alternatives require. Companies themselves stymied at the point leave top executives scrambling to using this framework may rule out of execution. Having identified the fill gaps at the last minute-with some possibilities if developing the requisite depth ofleadership is unopportunities withintheirreach, significant consequences. " , they watch as the results fall short In the short term, companies that realistic in the time frame dictated of their aspirations. Too few com- undertake new strategies without by the marketplace. panies recognise the reasOn. the right leaders in place are forced These three approaches illustrate toburdentheirexistingoneswith howthinkingaboutleadershipup Mismatchedcapabilities, poor front can affect a strategy's direcadditional responsibilities. asset configurations, and inadequate executioncanallplaytheir Inthelongerterm, apersistent tion, pathandoutcome. Butcana part in undermining a company's leadership gap will be responsible company bring leadership considfor an inexorable decline in the erations into its strategic discusstrategic objectives. Although well-regarded corporations tend number and quality of leaders. sions even earlier, before it chooses ageneral direction? To do so, the to keep these pitfalls squarely in
hen it comes
,
must possess to be prepared for futureroles. Many executives spend years building their technical skills and industry knowledge but rarely develop expertise in areas such as managing stakeholders and
buildingnetworks.
o Short Term: Match Job experiences and stretch assignments are the primary development vehicles for leaders. Opportunities to achieve performance breakthroughs are critical not just for reaching a company's performance goals but also for developing its best people.
theirsights,farfewercompanies I
recognisethereadershipcapacity
that new strategies wiII
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Unfortunately, corporations that are risk-averse often match their people to opportunities by looking at track records and job experiences,
s o B::'.T?frxvJljotsucWhereasgoodmanagersdeliver
offutureperformance.Butsuch
an approach is
'?
taloneregardingstrategyand havetakenanumberof
proaches to this puzzle.
leadership often makes the difference between feaghing fOf gfeat Opities andre
unlikely to succeed,
skills
neededfor earlier successes are not necessarily precursors for thoSe required in subsequent
improvements,Ieadersgenerate
breakthroughs in
ir potential
the types of leaders and their mix of capabilities-and lay out the strategy accordingly. Taken to this level, leadership becomes the true starting point for strategy.
require One successful US conglomerate of with global operations routinely fronts, a firm needs stronger and holds discussions that integrate both strategy and leadership. more dominant leadership at aII
Since bold strategies often breakthroughs along a number levels ifstrategies are to
performance.
succeed.
leader: sufficient number of the right leadassess ers, the plan does not proceed. Another approach is to weigh a their leadership gap precisely. Fewer still build an engine to decorporation's strategic options velop the right quantity of leaders against its ability to launch new withtherightmixofcapabilities, businesses,newapproaches,and at the right time. other forms ofbreakthrough
Most CEOs will agree that ship is important, yet few
Inattention Hurts
firm
professional abilities, such as leadership qualities, track record and potential, as weII as key personal traits, such as style and preferences, character and motivation and current attitudes and mindset.
To help leaders develop throughout any of these three time horizons, a company must first accurately identify who its leaders are and then convince them of an
performance
leadership. Consider, for example, the global expansion strategy for a successful resource company. The effort included identifying the leadership requiredto drive breakthrough performance over five years inareas such as running and expanding existing
businesses, developing new ones, renovating corporate processes such as risk management, and providing overall change leadership. The company then gauged its leadership gap by comparing these requirements with the qualities ofits current leadership bench. It made a number of strategic decisions to determine, among other things, which path was best for realising the strategy, whether tb revise its aspirations, and whether to develop leaders internally or
zonsinmind.
o
LongTerm: Position
Ifthe number of leaders needed to achievea strategic goal-for example, expanding current operations
or developing new businesseswere.set againstthe number
Companies need to position themselves today to meet their strategic objectives duringthe nextthree to five years. In an l8-month period, for example, a South Korean consumer goods company successfulIy expanded its core business into Japan, where it diversified into non-core sectors such as low-cost lodging. It achieved such deep pen-
opportunity's potential.
Strategy will not succeed in a void, and leadership often makes the difference between merely reaching for great opportunities and actually realising their potential. Top managers must assess the leadership gap and find ways to
close
of
existing leaders, a company could uncover the numeric leadership gap itmustdddress. Even ifan organisation has enough leaders, it may discover a shortfall in their capabilities. A company expanding internationally, for example, could find that its current leaders
-l J
-
etration of this closed and mature market so quickly by building its leadership bench in advance.
with opportunities. Medium Term: Cultivate Companies must also begin cultio
hirethemfromoutside.
A
third approach
is to plan
the
vating leaders for speciflrc roles one to two years down the road. This effort requires recognising the skills, behaviour and mindset that leaders
This ad.apted article was published in Mc Kins q Quar t er ly, w w w. rnckins q! qu ar ter ly. c om. C opy rig ht 2 0 0 5
McKinsqt & @mPaW. All riehts r e s eru ed. Repr intcd by p er mi s sion
MakeLea
BUILDAN ENGINE
TO CREATE LEADERS
Most CEOs agree that leadership is important, yet few assess their leadership gap precisely. Fewer still build an engine to develop the right quantity of leaders with the right mix of capabilities, at the right time
lacked the cultural sensitivity to operate in newer geo graphies. The failure to assess leadership
miedatthepoint
of execution. Having identified the
opportunities within their reach, they watch as the results fall short of their aspirations. Too few companies recognise the reason.
scramblingto
Mismatched capabilities, poor configurations, and inadequate execution can all play their part in undermining a company's strategic objectives. Although well-regarded corporations tend to keep these pitfalls squarely in their sights, farfewer companies recognise the leadership capacity that new strategies willrequire, let alone treatleadership as the starting point of strategy. This oversight condemns many such endeavours to disappointment.
asset
In the short term, companies that undertake new strategies without the right leaders inplace are forced to burden their existing ones with additional responsibilities. In the longer term, a persistent leadership gap willbe responsible foran inexorable decline inthe number and quality ofleaders.
path toward a predetermined strategic goalbytaking into account the quantity, timing and mix ofleaders that the various alternatives require. Companies using this framework may rule out some possibilities if developing the requisite depth ofleadership is unrealistic in the time frame dictated by the marketplace. These three approaches illustrate how thinking about leadership up front can affect a strategy's direction, pathandoutcome. Butcan a company bring leadership considerations into its strategic discussions even earlier, before it chooses a general direction? To do so, the company must think rigorously about its current leadership pool-
must possess to be preparedforfuture roles. Many executives spend years building their technical skills and industry knowledge but rarelydevelop expertise in areas such as managing stakeholders and
buildingnetworks.
o ShortTerm: Match Job experiences and stretch assignments are the primary
performance breakthroughs are critical not just for reaching a company's performance goals but
also for developing its best people.
Leadership First
Given the severe consequences
Unfortunately, corporations that are risk-averse often match their people to opportunities by looking at track records andjob experi-
whichthey see as indicators future performance. But such an approach is unlikely to succeed,
ences,
of
skills
_.
LTADERSHIP
Even the best- devised strategy can fail miserably if a corporation doesn't have a cadre ofleaders with the right capabilities at the right levels of the organisation I, j---n t
/1
";
,l
t,,
I
MostCEOsagrethat leadership is important, yetfewassesstheir leadershipEap precisely. Fewerstilf build an engine to develo0 the right quantity of leaders with the right mix of capabilities, at the right time
henitcornestime toimplementa strategy,many compani6sfind'
'themselvesstyexecution. Having identifl ed the opportunities within their reach, they watch as the results fall short of their aspirations. Too few comof
lacked the cultural sensitivity to n operate innewergeographies. The failure.to assess leadership
miedatthepoint
scramblingto
'
Mismatched capabilities, poor asset configuratio.ns, and inadequate execution can all play their part in underminlng a company's strategic obj ectives. Although well-regarded corporatibns tend to keep these pitfalls squarely in their sights, far fewer companies recognise the leadership capacity that new strategies will require, let alone treat leadership as the starting point of strategy. This oversight condemns many such endeavours to disappoi4tment. What do we mean by'leadership' ?
,
In the short term, companies that undertake new strategies without the right leaders in place are forced to burden their existing ones with additional responsibilities. In the longer term, a perslstent leadership gap will be responsible for an inexorable decline in the number and quality pf leaders.
path to-ward a pf edetermined strategic goal by taking into account the quantity, timing and mix of leade4s that the various alternatives require. Companios using this framework may rule out some possibilities if developing the requisite depth ofleadership is unrealistic in the time frame dictated
mustlnssess to be preparedforfu-' ttre roles. Many executivix spend years building their technical skills and industry knowleGe but rarely develop expertise in areas such as managing stakeholders and
buildingnetworks.'
bythemarketplace.
how
rSlrortTerm:Match
.
ers.
Thesethree approaches illustrate thinking about leadership up front can affect a strategy's direction; path and outcome. But can a company bring leadership considerations into its strategic discussions even earlier, before it chooses a general direction? To do so, the
company must think rigorously about its current leadership pool-
Opportunitiestoachieve
Leadership First
Giventhe severe consequences of somanv
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performance breakthroughs are critical not just for reaching a company's performance goals but als Un
arerisk-averseoftenmatchtheir
people to opportunities by looking at track records and job expeiiences;.which they see as indicators
an approach is
"
sue
offutureperformance.Butsuch .
unlikely to succeed,
since the experience and
skills for
talone
prediOtableresultsas
strategyand
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