In recent years, the need to develop next-generation leaders — people who can translate strategy into results and core values into day-today behaviors — has become the paramount challenge for many chief executives and their top teams. But even though this issue has risen to the top of the agenda, most executives would be the first to admit that they are failing at the effort. And that’s a significant admission, because they would also concur that their leadership “inventory” is woefully insufficient.
In retrospect, the reasons for this shortfall are easy to understand. From the mid-1970s to the mid-1990s, the growing phenomenon of globalization compelled top teams to focus on such priorities as strategic differentiation and the need for sustainable core competencies.1 There was no sense of urgency in this era about developing new leaders, and senior executives all but abdicated ownership of the task to the human resources function, where it was relegated to a second-tier staff responsibility. This path of benign neglect by top management can best be thought of as “the cream will rise to the top” theory of leadership development.
But by the mid-1990s, this approach was clearly inadequate. Unprecedented advances in information technology and jolting demographic changes revealed the scarcity of technical and leadership talent. Seemingly overnight, top teams came to realize that the inability to find leaders with the right skills in the right place at the right time would be the ultimate barrier to their companies’ chances of sustaining competitive advantage.
Unfortunately, top management had little control over the matter. Leadership specialists, lacking clout inside their own organizations, had outsourced their company’s leadership-development programs to brand-name consultants and business schools. In other words, disengaged top teams had delegated an otherwise critical activity to staff specialists who, in turn, had farmed out key aspects of their jobs. High-potential employees paid the greatest price in this process. Although “high potentials” sometimes learned specialized skills in external courses or were exposed to points of view that stimulated behavioral change, they all too often found themselves participating in a series of ill-conceived, out-of-context leadership programs that would come to be viewed as little more than fads-of-the-month and false starts.
In the past few years, there has been a momentous shift away from the use of external faculty and consultants; companies are using their own executives as dialogue leaders, coaches and teachers.<