Let’s face it. CEOs come and go. But leadership, if developed in a comprehensive way, endures.
In the last few years we’ve seen new CEO’s at Yahoo, HP, Apple, and other prominent companies, and in each case we watch to see if the CEO can “pull it off.”
Well, while the CEO is a very important person, our research shows that enduring business performance is really driven at much deeper levels: a focus on leadership strategy. Long term business performance comes from leadership culture and careful and continuous development of leadership at all levels. It’s not all about the CEO.
In this research we looked at hundreds of companies over the last few years and correlated their business performance to a variety of different people and talent practices.
After looking at many talent management practices (including the purchase of expensive software), we found that a company’s level of maturity in their leadership development has a greater impact on their long term business performance than almost all else. And this impact transcends changes in the CEO.
Let me share some of these findings and best practices.
1. High-Performing organizations directly link leadership strategy to business strategy.
Regardless of who the CEO may be, operational execution takes place at the mid-level and supervisory level. When these individuals are well aligned, coached, and trained, the business thrives.
High-performing companies understand this, and they build a leadership development program which uniquely trains, supports, and selects people who drive their business’s strategy. By doing this, they build execution into the culture.
A great example of this is UPS. UPS is a company which has outperformed other express companies for many years and it continues to transform itself from its origin as a horse and buggy delivery company. The company promotes from within and continues to promote a leadership culture of customer service, safety, and entrepreneurship. If the CEO were replaced, he or she would come into a company with a deep rooted leadership culture.
At times this culture needs to change. During my years at IBM the company went through a wrenching transformation as Lou Gerstner came in and changed the company from a “seller of solid technology” to a “deliverer of high value services.” This meant bringing in many new leaders, building a consulting mindset, and driving a different type of innovation and creativity into the management team. (Xerox is going through this process today.)
While I’m sure Sam Palmisano had much to do with driving this forward, now the company has deep roots of leadership from which to grow this base. And Ginny Rometti can build and evolve this leadership into the future.
2. High-Performers develop leaders at all levels.
High performing companies understand that execution takes place at the grass roots level. It is the line managers, supervisors, and middle managers who make things happen. If the CEO doesn’t push his or her leadership strategy down effectively, it wont take hold. In fact our research shows that the best companies develop leaders from the bottom up. Senior executives “serve” the needs of line leaders, like an inverse pyramid.
The “inverse pyramid” of leadership is one now widely used by many agile organizations. In our company we have a philosophy that “everyone is a leader” and each individual is given the responsibility to understand the business and make decisions which support the mission of the entire organization. Accenture calls this “stewardship” and they reinforce to managers that they must “leave work each day making Accenture a better organization.”