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In the past couple of years, leadership has become the hottest topic in business. Companies see this hard-to-pin-down ability as essential to organizational success, and they want their executives to learn how to exercise it. As a result, leadership development has become a big business: Investment in leadership education and development approached $50 billion in 2000.1 Publishing houses are shaking the trees in hopes of finding the author of the next blockbuster leadership book; consulting firms that once focused exclusively on strategy have aggressively launched global leadership practices; and business schools have positioned themselves as prospective partners with companies in the lucrative leadership-education market.2
In this atmosphere, it is difficult to find a CEO of a large company who doesn’t have a carefully honed speech about the importance of developing next-generation leaders at every organizational level. And yet for most companies, the combination of eloquent statements and massive investments has not produced a sufficient pipeline of leaders. Many report that they have been forced to look outside the company for a new CEO or top executive team member, even though people brought in from the outside derail at significantly higher rates than internal hires. The very high rates of CEO turnover due to poor performance in recent years points to the problem: If companies were adept at developing leadership talent internally, it should be most apparent in the performance of senior leaders.3
Our research and advisory work involving dozens of companies over two decades leads us to believe that three pathologies are the root cause of the failure of so many leadership-development efforts. (See “About the Research.”) By pathology, we mean the causes and effects of systemic problems in the way organizations attempt to develop leadership capability. As with an actual disease, companies exhibit clear patterns that cause repeated failures or breakdowns in their capacity to create internal leadership talent. Until these pathologies are examined and understood, leadership-development initiatives will continue to produce flawed results despite the best of intentions and continual investments of time and money. Fortunately, there are ways of fighting these diseases so that companies can create healthy processes for preparing the leaders they’ll need in the future.
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1. R.M. Fulmer and M. Goldsmith, “The Leadership Investment: How the World’s Best Organizations Gain Strategic Advantage Through Leadership Development” (New York: AMACOM, 2000).
2. A.A. Vicere, ed., “Executive Education: Process, Practice, and Evaluation” (Princeton, New Jersey: Peterson’s Guides, 1990); D.A. Ready, “How Storytelling Builds Next-Generation Leaders,” MIT Sloan Management Review 64 (summer 2002):63–69; M. Kizilos and D. Ready, “World-Class HRD: Innovations in Practice” (Lexington, Massachusetts: ICEDR, 1999); A. de Meyer and D. Ready, “Developing Global Capability” (Lexington, Massachusetts: ICEDR, 1998); D.A. Ready, “Champions of Change” (Boston: Gemini Consulting/ICEDR, 1994); D.A. Ready, “Executive Education: Is It Making the Grade?” Fortune, Dec. 14, 1992, 39–48; J.A. Conger and B. Benjamin, “Building Leaders: How Successful Companies Develop the Next Generation” (San Francisco: Jossey-Bass, 1999).
3. A recent study by Booz Allen Hamilton shows that CEO turnover at major corporations in Europe and North America increased by 53% between 1995 and 2001, and the number of CEOs departing due to poor company performance increased by 130%. See C. Lucier, E. Spiegel and R. Schuyt, “Why CEOs Fall: The Causes and Consequences of Turnover at the Top,” Strategy + Business 28, third quarter 2002, 34–47.
4. Ready, “How Storytelling Builds Next-Generation Leaders.”
5. D. Ulrich, J. Zenger and N. Smallwood, “Results-Based Leadership” (Boston: Harvard Business School Press, 1999).
6. M.W. McCall, Jr., “High Flyers: Developing the Next Generation of Leaders” (Boston: Harvard Business School Press, 1997).
7. N.M. Tichy and S. Sherman, “Control Your Destiny or Someone Else Will,” revised ed. (New York: HarperBusiness 2001).
8. Conger, “Building Leaders”; J.A. Conger, “Learning To Lead: The Art of Transforming Managers into Leaders” (San Francisco: Jossey-Bass, 1992); de Meyer, “Developing Global Capability.”
9. R.A. Heifetz, “Leadership Without Easy Answers” (Cambridge, Massachusetts: Belknap Press of Harvard University Press, 1994); Ready, “How Storytelling Builds Next-Generation Leaders.”
10. For a discussion of the differences between product-centric and solutions-centric organizations, see J.R. Galbraith, “Designing the Global Corporation” (San Francisco: Jossey-Bass, 2000) and J.R. Galbraith, “Designing Organizations: An Executive Guide to Strategy, Structure, and Process,” revised ed. (San Francisco: Jossey-Bass, 2001).
11. S.R. Covey, “The Seven Habits of Highly Effective People: Powerful Lessons in Personal Change” (New York: Simon & Schuster, 1989); P.M. Senge, “The Fifth Discipline: The Art and Practice of the Learning Organization” (New York: Currency/Doubleday, 1990); J.C. Collins and J.I. Porras, “Built to Last: Successful Habits of Visionary Companies” (New York: HarperBusiness, 1994); D. Goleman, “Emotional Intelligence” (New York: Bantam, 1995).
12. Richard Pascale, a former Stanford Business School professor, charted the ebbs and flows of line management attention to what was considered best practice in leadership over recent decades. He cited the near-fever-pitch interest in T-Groups, quality circles, confrontational feedback, assessment centers, reengineering, and a variety of other leadership initiatives. See R.T. Pascale, “Managing on the Edge: How the Smartest Companies Use Conflict To Stay Ahead” (New York: Simon & Schuster, 1990).