No Company Can Outperform Its Leadership

Leadership has been mythologized across human history, and the history of business and modern organizations is no exception. The stories we’re told are typically stories about leaders: who they were and what they did. Rarely do these stories describe leadership as a collective endeavor.

But even in a classic hierarchy, where those at the top wield great power and influence over those below, the top leader does not succeed alone; they must marshal those around them. Conversely, their downfalls are often the result of power imbalances – echo chambers, hubris, and sycophancy being the poison that destroys them.

Organizations are, after all, complex human systems in which information, insight, ideas and (potential) value creation are highly distributed.  Whether information flows quickly in an unadulterated fashion, and whether it moves in multiple directions – breaking through hierarchy and silos – matters. Leadership determines whether an organization achieves its potential.  Now more than ever, leadership is a source of competitive advantage. Leadership is a multiplier, it is the engine of adaptation, and leaders should stand proud that they have an outsized opportunity to shape the fortunes of their organizations and those they serve.

Companies cannot outperform their leadership. As such, how we identify and develop the right leaders, and how we facilitate their success as a team, has never been more important. For leaders to create the conditions for their organizations to thrive both today and in the future, we need to intentionally evolve our leadership approach to match the fast changing world around us.

Redefining Successful Leadership for a Fast-Changing World

Regardless of their experience, skill, vision and perseverance, it is impossible for any single leader to address these five shifts by themselves. Instead, it requires an approach that understands leadership as a collective endeavor, underpinned by a commitment to a long-term destination. This enterprise approach is the key to crafting resilient and adaptable leadership and involves:

Demonstrating an enterprise mindset: Leaders must have an understanding of and commitment to the effectiveness, goals, and strategies of the entire enterprise—not just their own unit. They should prioritize actions and decisions that are most in service of the entire enterprise’s success (even if that means trading off on their own individual outcomes).

Applying expertise: Leaders must possess and apply strong expertise and excellence in their area of responsibility – be that a function, geography, or business unit. The generalist approach is out.

Taking full ownership: Additionally, they must take full ownership for their teams, effectively organizing and deploying them to achieve relevant goals and outputs, owning their successes and failures.

Engaging in productive collaboration: They should assume responsibility for how all parts of the business come together, working to address internal friction points openly and constructively, and knowing how and when they need to work with, through, and for other leaders to solve problems and capture opportunities.

And orienting themselves around two core principles:

Stewardship: Leaders must balance the ability to deliver the year, with a long-term view. A clear understanding and commitment to the long-term destination, combined with an ability to prioritize investments and actions accordingly. This focus on the long-term health and capability of the enterprise is perhaps best epitomized by a deep responsibility for developing the next generation of leaders.

Service: They need to recognize that frontline employees – those that serve customers and build and design the organization’s products and services – are central to value creation.  Leaders need to ensure that the enterprise’s focus goes beyond demonstrating appreciation for these employees, and also enables them to be successful by recognizing the knowledge and innovations they can contribute.

To build this enterprise leadership approach, organizations must focus on both the individual and how they operate within the collective endeavor that is modern leadership.

• The Individual: How do we develop, select, and engage leaders with the right experience, leadership span, and potential to lead effectively amidst complexity and uncertainty?
• The Team: How do we enable effective alignment, trust, and collaboration amongst a group of individuals with diverse skills, experience and motivations?

How to Enable Leadership Change and Evolution

The Individual: Evolving our understanding of what makes a good leader

As these five shifts further complicate leadership, we need a new approach for identifying, developing, and selecting our seniormost leaders. While existing assessment models identify rising talent, they have been less effective at differentiating leaders who are already succeeding at the executive level. To help organizations understand the best predictors of success among leadership teams within our changing business context, Russell Reynolds Associates created Leadership Portrait.

Built upon years of proprietary research, the Leadership Portrait model encompasses an executive’s readiness to meet immediate challenges—their relevant experience and leadership competencies—as well as their future potential—their growth factors and their ability to realize their full potential.

RRA Leadership Portrait

Growth factors—or, a leader’s ability to continue driving growth in the face of change—include systemic thinking, learning and adaptability, drive and resilience, and social intelligence. But growth factors alone are insufficient. Leaders who successfully realize their full potential also demonstrate a high degree of self-knowledge around their strengths and limitations, a defined set of decision-driving values and aspirations, and clear goals regarding their impact on others and the long-term implications of their leadership legacy.

While a leader may index more on growth factors or potential realization, the two are intrinsically intertwined. If growth factors indicate the height of an individual’s “ceiling,” potential realization is the sturdiness of their supporting walls.

The key paradigm shift: Making it to the top job is not the realization of potential. As the world grows more complicated, roles will continually change, and the bar will continually reset. As such, potential realization is an ongoing journey that even the most senior executives must contend with as the context and challenges around them change.

And it is important to recognize that they should not go on that journey alone. Even the most well-rounded leaders – be that the CEO or another C-suite leader – are not super-heroes. Organizations must invest in supporting leaders as they adapt to their new roles and develop within a shifting context.  Structured transition support and mentoring that blends internal colleagues and external advisors can be hugely powerful.

The Team: Building and monitoring leadership team health

Developing, selecting, and supporting strong leaders is critical, but getting them to deliver on the enterprise leadership approach needed for today’s world also requires an intentional focus on overall leadership team health. We expect our top leaders to create the conditions for success across the organization, but they cannot do this if their team isn’t functioning properly. As such, we must carefully consider and manage the conditions for success for the entire leadership team.

There are five dimensions of leadership team health that are important to understand and actively manage: capability and skills, composition and structure, commitment and alignment, culture and behavior, and continuity and succession. And unfortunately, our research shows notable gaps across all of these today:

Evolving leadership for today and tomorrow

The speed of change will continue to accelerate, making leadership contexts more complex. Thriving in that unknown future will require a resilient and adaptable enterprise leadership approach.

How we identify, develop, and select the right individuals for leadership, and how we create the conditions for them to succeed as a team, has never been more important. Because no company can outperform its leadership.  And for leaders to perform successfully today and tomorrow – creating an environment in which the organization can thrive over the long-term – we need to intentionally evolve our approach to leadership to match the fast changing world around us.

Individual leaders (and perhaps especially those at the very top) will need to continually evolve and grow as the shifting context around them forces an ongoing evaluation of their roles and how they create impact. Moreover, we must think about the leadership team as a living organism and actively monitor and manage its health, rather than periodically intervening when its vitals are flashing red.

Authors

Tom Handcock leads Russell Reynolds Associates’ Center for Leadership Insight. He is based in London.

Bob Marcus is a senior member of Russell Reynolds Associates’ Leadership Advisory practice. He is based in New York.

Acknowledgements

The authors would like to thank a group of key colleagues whose valuable perspective and expertise was crucial to the development of this research:

• Gretchen Anderson leads Russell Reynolds Associates’ Culture capability. She is based in Baltimore.
• Jamie Hechinger co-leads Russell Reynolds Associates’ Social Impact and Education practice. She is based in Washington D.C.
• David Lange leads Russell Reynolds Associates’ Global Development capability. He is based in Chicago.
• Margot McShane co-leads Russell Reynolds Associates’ Board & CEO Advisory Practice in the Americas. She is based in San Francisco.
• Justus O’Brien leads Russell Reynolds Associates’ Global Family Enterprise practice and is a senior member of the Board & CEO Practice. He is based in Stamford.
• Dean Stamoulis is a senior member of Russell Reynolds Associates’ Leadership Advisory practice. He is based in Atlanta.
• Aimee Williamson is a senior member of Russell Reynolds Associates’ Leadership Advisory practice. She is based in Sydney.
• Anita Wingrove is a senior member of Russell Reynolds Associates’ Leadership Advisory practice. She is based in Melbourne.