Posted by Noah Rabinowitz on September 09, 2016.
Leadership development is big business, to the tune of $31 billion in 2014.1 But where’s the payoff for that investment? Many companies don’t really know (and their consultants allow it to happen). They assume it’s a good thing to do, but leadership development is notorious for not being tracked or assessed in conjunction with the rest of the business or with the same rigor as other decisions and investments. This situation is not likely to be tolerated in any other area of the business and is clearly not sustainable. Yet here it persists, a veritable black hole where plenty of dollars go in, but few measurable results come out. I’d like to propose a better way.
Consider how a typical leadership development investment differs from, say, a typical technology investment.
Notice how one of these investments is concrete, business-focused, and built to deliver measurable outcomes, while the other is more unknown, nebulous, and intangible. Again, there’s an assumption that having better leaders is good, but better leaders for what? This perspective must change if leadership development efforts are going to have a measurable impact on business performance and contribute to building stronger, healthier organizations.
At Deloitte, we have cultivated that different perspective, one built around the actual world of how business gets done. One that focuses not on what leaders do or say, but on how they think. And, rather than focusing on the dogma of development or which geometric shape best articulates how leaders should behave, we have developed a technology to understand how excellent leaders frame business challenges and think through their solutions. This is what we build into our leadership development strategies, programs, and actions.
We believe businesses should refocus their leadership development efforts in three ways:
1. Take a business-first approach.
Many leadership programs focus on leadership for leadership’s sake, teaching, training, and developing individuals to become stronger leaders in general. The cookbook approach, “do XYZ and you will be a better leader,” isn’t readily translated into business-relevant, measurable results and can be devoid of meaningful context—marketplace challenges, known and unknown competitive threats, industry dynamics, global trends. Instead, the focus should shift to individuals within the organizational context and, even more specifically, how effective leaders think and respond to actual business issues in their own organizations.
A key takeaway here: Your business is your best leadership development lab. Why should your leaders tackle a theoretical case study or another company’s antiquated business problem? Your business is facing complex problems and challenges in need of leadership attention and guidance right now. Let’s let people hack away at them and develop as leaders at the same time.
2. Design with the modern leader/learner in mind
Not much is business-relevant about leadership development built around a one-and-done program or event—leadership challenges happen around us every day in a myriad of ways, and we need to be logged on. Learning how to lead the business and its people through these challenges and toward business goals should be equally constant, varied, and as close to real life as possible. This involves a blended learning approach, integrated into the business, that starts early in an individual’s career. It reaches broadly across the workforce (rather than according to an outdated, corporate-ladder hierarchy), and engages and stretches learners through a variety of learning modalities and opportunities for networking, challenge-based learning, and intense peer-to-peer collaboration.
A key takeaway here: What we know about how leaders learn has advanced tremendously. Some of the newest and most engaging strategies include logged-on learning, gamification, immersive learning, and schema-based development. We also know of global human capital trends signaling big shifts in the future of work and the workforce. Leadership development should consider these realities, particularly targeting Millennials, who have grown up with technology and have different views and expectations of work than previous generations.
3. Insist on business-relevant measurement.
Measurement (and perhaps, lack of measurement) is not a new topic to the leadership development world. It has been widely studied, and the well-known, four-level Kirkpatrick scale is typically referenced: Reaction, Learning, Behavior, Results. Did you feel it was worth your time? Did you show that you understood it? Did you apply the learning? And, at the highest level of learning, did something change as a result of applying the learning?
I would argue that the most relevant method of displaying Level 4 learning is when the “something that changes” is a measurable element of the business itself. I would go even farther to say that if you don’t get to Level 4, the other three levels are almost irrelevant, because if you didn’t make a significant and meaningful change that positively impacts the business, what was all of that time, money, and effort for? Better leaders…?
A key takeaway here: As in our technology vs. leadership development example above, leadership development typically falls short of demonstrating the meaningful outcomes expected of other business investments. This must change for the Learning & Development function to be seen as worthy of substantial investment (time, money, and resources) by the business. One of the ways to make this change is to build measurement into the program from the very beginning. Measurement should be integrated into the architecture of the program, even before the content and modules are designed.
These three guideposts—business relevance, leader-centered design, and meaningful measurement—mark a better way forward for leadership development, pulling it out of the proverbial black hole and into a position of prominence as a strategic component of the business. I’ll explore each of these three in upcoming HR Times posts, but I’ll leave you with this case in point.
It was a multibillion-dollar life sciences company whose business was based solely on a blockbuster drug. The patent for this drug was about to expire, and the company didn’t have a replacement immediately ready in the pipeline. It decided to make a huge strategic shift to move into the realm of health and wellness, focusing on preventive care and lifestyle changes rather than pharmaceutical-based care.
This decision had a downstream effect on everything: Its customers would change, and so would the focus of its salesforce. Instead of selling “the drug” as they’d done for decades, the product and pitch had completely changed. One of the new customer segments was corporations and government institutions, with the company asking “How can we help you manage health care costs, promote better health among your workforce, and prevent disease so treatment becomes less necessary?”
To make the shift, when this company thought of developing leaders, it used its own context as a logged-on case study. It broke out into subgroups to solve the most challenging and transformational issues, and worked on knowledge sharing, learning from peer companies and companies facing similar challenges, grappling with issues of truly transformational change.
I changed the specifics to mask the company’s identity, but the story is real and offers a telling case in point. A better way forward in leadership development is possible, plausible and, in most cases, essential to the health of the business.
1 Karen O’Leonard and Jennifer Krider, Leadership development factbook 2014: Benchmarks and trends in U.S. leadership development, Bersin by Deloitte, 2014.