BUIIDA$TEHETNE

TO CREATE
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

'eddrship First require, Given the severe consequences of

t

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Unfortunately, corporations that are risk-averse often match their people to opportunities by looking at track records and job experiences,

whichthey seeas indicators

?

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,

since the experience and

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.

opporlunities. Abetter approach isto use

corporate-performance obj ectives and personal-development goals to match current and potential leaders with opportunitieq. This multifaceted approachuncovers a better fit between the individual and the opportunity. For this process to
be successful, top managers need

succeed.

Any condiderationofa slraleSig

initiative invariablv includes the

question,'Who exactly will get this
done?' Ifthe

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

does not have a

Filling the Gap

A clear picture ofthe leadership gap canhelp guide strategic thinking, but to retain as many options as possible, companies must also consider ways to fill that gap. To reduce the risk of strategic failure, they'need to direct their approach
to leadership

to acquire aholistic understanding of each individual, including

performance-in other words, its

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

Whereas good managers del iver predictable results and occasional

incremental improvements, leaders generate breakthroughs in

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

with three time hori-

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

itoverthe short. medium and

long term. Better still, they should

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.

integrate leadership with strategy

development and thoughtfulty match their portfolio of leaders

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

henitcomestime toimplementa strategy,many companiesfind

themselves sty-

lacked the cultural sensitivity to operate in newer geo graphies. The failure to assess leadership

miedatthepoint
of execution. Having identified the

capacity systematically before launching strategic initiatives can

opportunities within their reach, they watch as the results fall short of their aspirations. Too few companies recognise the reason.

fill gaps at the last minute-with

significant consequences.

leave top executives

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

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.

Leadership First
Given the severe consequences

of stratQeV wiil not succeed in a void, and leadershipoften makes

Unfortunately, corporations that are risk-averse often match their people to opportunities by looking at track records andjob experi-

;?.Tili. fl ;;;;;i"s It theirstrategies?Thisquestion -

whichthey see as indicators future performance. But such an approach is unlikely to succeed,
ences,
of

since the experience and

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

capacity systematically before launching strategic initiatives can

miedatthepoint

fill gaps at the l4st minute-with

significantconsequences.

leave top executives

scramblingto

'

panies recognise the reasOn.

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-

'Job experiences and stretch assignments are the primary

development vehicles for le4d-

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

their strate gies? This question

raises another, more fundamen-

"

sue

:::T?,iXa VJ,'Jot in void; and

leadership often makes the difference between

offutureperformance.Butsuch .
unlikely to succeed,
since the experience and

skills for

Whereas good managers deliver

talone

prediOtableresultsas

strategyand

needed for earlier successes are

not necessarily precursort

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