Set your company apart by focusing on the organization, not individuals, and on external matters such as customer and investor expectations
Dave Ulrich and Norm Smallwood are friends and two of the world's acknowledged authorities on leadership development. They have done some fascinating work on taking the concept of "brand" and applying it to leadership. Here are some edited excerpts from a recent conversation we had.
What exactly is leadership brand?
DU: Leadership brand extends thinking about leadership in two ways. First, the focus is less on the individual leader and more on the leadership capability within the organization. Second, effective leadership is defined less by what happens inside an organization and more by how leaders turn external customer and investor expectations into employee abilities and organization capabilities.
The leadership brand sets a company apart from the competition by developing a cadre of exceptional managers with distinct talents geared toward fulfilling customer and investor expectations. When leaders' knowledge, skills, and values bring focus to employee behavior on areas targeting the issues customers care about, ultimately it inspires faith in the consumer that employees and managers will consistently make good on company promises.
NS: Leadership brand is consistent with a firm's brand, or identity in the marketplace. For example, Marriott (MAR) is known as a firm with exceptional service, so its leaders should be competent in identifying and delivering great service. Leaders at all levels reflect the brand when they think and act in ways consistent with the desired product or firm brand and demonstrate an ongoing reputation for both quality and results. Leadership brand is a true extension of an organization brand or identity because it shows up in behaviors and results.
What are some companies that stand apart as leadership brands from others? And why do they stand out?
NS: Wal-Mart (WMT), because the brand is built around its low prices and leaders at the company are known for managing costs efficiently, and getting things done on schedule is a good example.
Apple (AAPL) is another because it is known for its innovation and design and this comes from leaders creating new products and services like iPods, Macs, and the iPhone, for example, that break industry norms. Lexus lives by the credo, "the relentless pursuit of perfection," and leaders apply it by managing quality processes that bring continuous improvement. Nordstrom (JWN) wins in the service game because its leaders are branded with a service mentality. They don't have to ask for permission to serve customers; they do it as a part of who they are. And customers respond with high customer share.
DU: What differentiates branded leaders is the ability to reflect in their leadership style both the attributes and results that customers want to see in the company. Leadership brand should reflect the expectations of customers.
Firms with branded leadership are in a win-win situation. They win with customers because customers have confidence that the leaders will respond to their needs in a consistent and appropriate way. Firms with branded leadership win with employees because when a consistent leadership brand exists, employees know what to expect and the engagement-draining dissonance is eliminated. Employees see in their leaders what customers expect. One leader told us that he treated his best customers as if they were his best employees and his best employees as if they were his best customers. If a company makes a customer brand promise of timely and responsive behavior, the same brand should be reflected in employee relations.
Companies that go beyond standard leadership training, by doing more than strengthening the abilities of individual leaders, specifically focusing on more general leadership capabilities are the ones building the stronger leadership brands. Often they become "leader feeder" firms whose managers are well-equipped to run other organizations.
What do "leader feeder" firms have in common?
DU: In observing successful leader feeder firms of various sizes over the past decade, we have found that most of them have developed an outside-in approach, which helps them produce an excellent pipeline of leaders generation after generation. They also tend to enjoy remarkably steady profits year after year, because they have secured the ongoing confidence of external constituents whose expectations are comfortably filled by leaders throughout the organization. They also have developed enormous confidence in the investment community as reflected in their price/earnings ratio compared to their industry average.
NS: Companies with strong leadership brands are generally not as strongly affected by changes in management as companies with weaker leadership brands. In some cases firms are so confident about their bench strength that they turn what most organizations view as a negative, the loss of a leader, into a positive. The consulting firm McKinsey, for example, continues to build its leadership brand reputation by tracking and publishing the feats of its successful alumni.
What are the keys to building a strong leadership brand?
DU: Building a leadership brand comes from the following principles:
Creating a case for the importance of leadership. Senior executives need to see that quality of leadership will help them reach strategic, financial, and customer goals.
Defining a clear theory or definition of leadership. This statement of leadership should reflect external customer and investor expectations in terms that translate to employee actions.
Assessing current leaders according to those external perspectives and defining the gap in what exists and what customers say should exist.
Investing in broad-based leadership development that helps managers hone the skills needed to meet customer and investor expectations. This development may come from training, work, or life experiences.
Measuring the effectiveness of leaders in terms of how well they are able to deliver on strategy and how well the investments in leadership have worked.
Determining the reputation or efficacy of leadership as seen by multiple stakeholders inside and outside the company.
NS: As a prerequisite to building a leadership brand, firms must master what we call the Leadership Code. In broad terms, the code consists of these requirements:
Leaders must master strategy; they need to have a point of view about the future and be able to position the firm for continued success with customers.
They must be able to execute, which means they must be able to build organizational systems that work, to deliver results, and to make change happen.
They must manage today's talent, knowing how to motivate, engage, and communicate with employees.
They must also find ways to develop tomorrow's talent and groom employees for future leadership.
They must show personal proficiency, demonstrating an ability to learn, act with integrity, exercise social and emotional intelligence, make bold decisions, and engender trust.
Why do some companies have a hard time integrating leadership practices into everyday practices of the organization?
DU: Often companies put too much emphasis on one kind of fundamental at the expense of the others. For example, one company we worked with identified 12 requirements for a successful leader including characteristics like personal integrity, willingness to learn, and consistency, but nine of them fell into the personal proficiency domain of the code. Another company listed 10 requirements including the ability to make decisions quickly, manage change, deliver results, and work well in teams, but eight of them fell into the execution domain. A successful leadership development model should incorporate all elements of the Leadership Code. Individual leaders may have a predisposition in some areas, and should be strong in at least one, but should demonstrate a high level of competence in all of them.
How can companies evaluate their leadership brand efforts?
DU: One way companies can evaluate the success of leadership brand efforts is by looking at how much confidence investors have in their future earnings. A publicly traded corporation's price/earnings ratio is a simple, though not a perfect, indicator of that confidence. Companies with strong leadership brands, we have found, tend to have above-average p/e ratios.
Another company evaluated leaders by the extent to which they provided talent to the rest of the company. Leaders at this company has been accountable to produce financial results and give money to the company. But the company also began to track the extent to which leaders were either consumers or producers of talent for the company. Some leaders took in company talent with few individuals leaving their division for other divisions in the company. These were consumer leaders. Other leaders were producers who exported more talent than they imported. These were producing leaders.
NS: At the end of the day, a leadership brand shows up not only in stable stock prices but in higher market value. Increasingly, the market value of a company is determined by its intangibles, its ability to keep promises, design and deliver on a compelling strategy, ensure technical excellence, hire and retain smart people, build strong organizational capabilities, and, especially, develop strong leadership. Intangible value grows as customers and investors gain greater confidence about the future fortunes of one firm over others in the same industry.
Thank you for your thoughts on leadership brand. How can our readers contact you?
DU: They can e-mail us or call (801) 373-4238.
NS: If they are interested in additional information and resources they can also visit the RBL Group Web site.