Best practices leadership development by Korn Ferry

Talent Management Best Practice Series: Leadership Development

Talent management best practice series

Leadership development

Copyright ÂŠ 2013 Korn/Ferry International. All rights This publication was issued to Korn/Ferry employees. Unlawful distribution of thisreserved. publication is prohibited. This publication was issued to Korn/Ferry employees. Unlawful distribution of this publication is prohibited.

Talent management best practice series Leadership development

This publication was issued to Korn/Ferry employees. Unlawful distribution of this publication is prohibited.

Talent management best practice series Leadership development

Series Editor J. Evelyn Orr Contributors Noah Rabinowitz Catherine McCarthy Kathy Woods Janet Feldman Jacqueline Gillespie Jonathan Feil

This publication was issued to Korn/Ferry employees. Unlawful distribution of this publication is prohibited.

Table of contents

Foreword

Introduction

Rethinking Leadership Development

Building Your Business While You Build Your Bench

Using the Strategy Activation Formula

Designing a Strategy Activation Program

Conclusion

Appendix A: Strategy Activation Checklist

Appendix B: Case Studies

Notes

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Foreword The Korn/Ferry Institute Best Practice Series provides a window into the thought leadership and expertise that Korn/Ferry International offers as the premier global provider of talent management solutions. Each installation of the series covers a key area of talent management and captures Korn/Ferry’s science, philosophy, and approach. These best practice books provide an introduction to who Korn/Ferry thought leaders are, what Korn/Ferry does best, and how Korn/Ferry can fuel organizations’ success in meeting their strategic talent management needs. Korn/Ferry’s approach is based on science and informed by what works in practice. The Korn/Ferry Institute Best Practice Series is intended to summarize key, unique points of view held by Korn/Ferry thought leaders that inform our methods and approach to strategic talent management. Consider it a way to spark new thinking and get to know what Korn/Ferry offers.

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Talent Management Best Practice Series: Leadership Development

Introduction Over the years, leadership development has taken on a broad meaning. In fact, Wikipedia defines it as “any activity that enhances the quality of leadership within an organization.” Because of this almost unbounded characterization, we have decided to narrow in on a specific style of leadership development for the purposes of this discussion. We will focus on the programmatic, structured, cohort-based learning experience. This is not in any way meant to de-emphasize the importance of other approaches such as job rotations, stretch assignments, exposure plans, coaching, degree programs, or international assignments. In fact, a combination of approaches can often make for the most powerful developmental strategy and we use an intentional blend of many of them to customize an appropriate developmental experience. But for purposes of focus, and because cohort-based programs are where we uncover the greatest contrast in approach, it makes sense to limit our scope.

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Talent Management Best Practice Series: Leadership Development

Rethinking Leadership Development The term leadership development typically conjures up a series of images and ideas. It could be an executive education program at a well-known university. It could be a group retreat designed to address future-focused competencies. It could be a keynote speaker brought in to talk about a particular matter. It could be an outdoor adventure program intended to promote teamwork and camaraderie. There are many possibilities. Now imagine a yearlong developmental journey, done in a cohort, in which participants grapple with real business issues and learn about leadership while they solve relevant and high-value problems in the context of their own organization. No generic case studies. No talking heads. The yearlong experience integrates leadership fundamentals with real-time problem solving and actual business building. The development experience includes workshops, assessment, individual feedback, executive coaching, action-learning, selfpaced activities, personalized reflection, and technology-enabled learning. Participants learn about strategy, innovation, finance, team leadership, personal mastery, customer focus, and other crucial topics. But these subjects are all anchored within their business and constant connections are made to behaviors that leaders can adopt to activate and accelerate organizational strategy. In fact, the entire journey directly drives strategy execution, with a tangible impact on results, mission success, community impact, marketplace valuation, and the bottom line — in addition to changed leadership behavior and transformed lives. For several decades, classic leadership development has focused on bench building and the preparation of future leaders. These are worthy and important tasks — no doubt about it. But preparation for what? Even some of the world’s best executive development programs may not be tailored to the complexities and intricacies of your business. Participants in these programs come out on the other side more knowledgeable, skilled, polished, and “ready.” But ready for what exactly? Are they truly prepared for the needs of their business, markets, industry, customers, and culture? It may be world-class learning taught by world-class thinkers, but is it giving them what they really need? Non-contextual development or development done in a vacuum can result in Copyright © 2013 Korn/Ferry International. All rights reserved.

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lost opportunity and reduced efficacy of the development program itself. It can produce leaders who are more knowledgeable and competent than they were before, but not necessarily ones who are better prepared to meet your organization’s critical strategic goals. What if you could grow your business while you grow your leaders — merging those two activities into one? What if you could create leaders who are primed to meet the specific challenges your organization faces, taking strategy out of the boardroom and making it a reality for their colleagues, teams, and customers? What if you could use your own business as the “case study” for leadership development? We believe that organizations that are able to create developmental initiatives that use this approach will significantly increase their chances of winning in the marketplace and position themselves ahead of their competitors that offer more traditional approaches to leadership development.

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Talent Management Best Practice Series: Leadership Development

The Strategy Activation approach uses your business context as the platform for leader development. Using the real-time issues your business faces now and will in the future, this approach blends high-impact adult learning strategies that include instructor-led workshops, executive coaching, action learning, virtual collaboration, self-paced reflection, just-in-time learning, mobile learning, peer interaction and coaching, assessment, and business simulation. This is all intended to bring real business issues to the forefront through a blend of classic and innovative learning methodologies. The objective of the Strategy Activation approach is to dynamically engage leaders in your strategy, vision, and culture in order to develop ambassadors, influencers, and educators who communicate the strategy message to colleagues at all levels of the organization. This approach will simultaneously create deeper pools of strong leaders who have the competencies and core leadership foundations to advance the business, creating exponential value for themselves, their teams, and the organization. The outcome? Leaders who directly help an organization turn on — or activate — its strategy and ROI that can be measured by first-order business metrics: growth, mission success, product and service innovation, profitability, efficiency, productivity, customer retention and satisfaction, sustainability, and market valuation.

Heed the Business Case In today’s fast-paced world, staying agile and adapting to marketplace shifts are crucial to sustained growth. In mature markets, it is particularly important to consistently uncover new opportunities and ways of doing business. Most ambitious growth-focused organizations are pursuing or considering a strategic shift — a change to their core business model that provides fuel for their continued growth, marketplace relevance, and financial health. Here are some examples of strategic shifts from a number of Korn/Ferry clients:

• A large financial services company aims to capture increased market share in a crowded marketplace by creating the most differentiated and value-added customer experience.

• An aerospace and defense contractor sets out to mitigate the risk of decreasing defense spending in the US by moving into commercial aerospace and select high-growth international markets.

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• A global pharmaceutical company seeks to significantly expand its North American footprint by establishing a series of distribution partnerships and developing a differentiated sales force that captures physician mind-share and time-share.

• An Indian IT services company attempts to fight the forces of commoditization and eroding margins by climbing the value chain, competing against the global IT consulting players, and pursuing sources of more strategic, longer-term, and higher-quality revenue.

• A professional services firm seeks to mitigate the threat of technology to its core business by broadening out from its traditional service offering into a wider set of related offerings.

What do all of these situations — and the many more we could cite — have in common? First, they are major strategic shifts — large-scale changes to the core business model that have a multitude of implications for people, process, technology, culture, and finance. Second, they require new thinking, capabilities, and behaviors on the part of individuals and the organization to successfully execute on the strategy. Third, they are essential pathways to growth and sustained marketplace relevance and therefore critical to investor, employee, and customer confidence. Perhaps most importantly, though, they all require extremely strong and potentially very new approaches to leadership. The not-so-good news on these types of strategic shifts is that most of them do not come to fruition.

• A Bain Consulting study notes that seven out of eight companies in a global sample of 1,854 large corporations failed to achieve profitable growth, though more than 90 percent had detailed strategic plans with much higher targets.1

• Forbes magazine cited that 82 percent of Fortune 500 CEOs believe their organization did an effective job of strategic planning but only 14 percent of the same CEOs indicated that their organization did an effective job of implementing the strategy.2

• A 2004 study by The Economist found that nearly two-thirds of Senior Operating Executives had been unsuccessful in executing on their most important strategic initiatives.3 Copyright © 2013 Korn/Ferry International. All rights reserved.

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Talent Management Best Practice Series: Leadership Development

• Charan and Colvin state in “Why CEOs Fail” that approximately 70 percent of CEOs’ failures were the result of poor execution rather than poor strategies.4

There is a compelling body of evidence that points to a gap between strategy formulation and strategy execution. Clearly, it is not enough to want it to happen or declare that it will be so in order for the full value of strategic thinking to be realized. Something more needs to occur.

Develop Leaders Who Will Activate Your Strategy Why do some organizations execute flawlessly on their strategy while others flail? Why do some successfully shift while others remain bogged down in the status quo? Although there are obviously many factors that affect an organization’s ability and ultimate success at executing on its shift, it is our assertion that, in large part, success has to do with how effectively and aggressively your people “activate” the strategy — turning it from ideas into action and from action into impact. A simple concept for sure, but one that we can see from the statistics above, remains elusive for most. Most entrepreneurial and successful people among us will find opportunity where others find roadblocks, create momentum where others create drag. Strategy activating leaders put life into your vision, turning it from idea into action. They are proactive, practical, and inspired. They make connections, seek out opportunities, engage with people, break down barriers, and generally strive to create value and be of positive service. They understand organizational direction and strategy and successfully reconcile it Ralph Waldo Emerson with their own personal aspirations and ambitions. They are positive and energized by the promise of achievement and success. They know which levers can be pulled to drive change and create opportunity for themselves, their teams, and their customers. They are strong learners, curious, able to change, and willing to take risks. At the end of the day, they are the vessel and the lifeblood of strategic change and progress.

“No great man ever complains of want of opportunity.”

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To produce positive return and affect shareholder value, Strategy Activation should harness the power of these types of leaders and produce more of them. It should be the driving force behind leader development, decision making, communication strategies, resource planning, and talent management. When done properly, Strategy Activation can increase marketplace valuation by linking leadership development to Earnings Per Share, driving a future-focused agenda, building confidence among the investment community, reducing inherent people-related risks, and cutting down on the gap between vision and appropriate action. Companies that want to close the strategy execution gap must first and foremost develop their people in tight alignment with the organizational shift in strategy. This should be done with laser-beam focus, disciplined execution, and appropriate intensity. For example, if a company is moving to a more customer-centric strategy and believes that there is competitive advantage in being more in touch with its customer, then leaders in that organization should be developed directly in terms of customer centricity. They should learn what it means, see what it looks like, hear from internal and external experts, try it out themselves, ponder the implications, grapple with the personal barriers that may hold them back, and ultimately identify specific ways they can become customer-centric leaders in their organization. This includes holding themselves and others accountable for customer-centric behavior. It also includes taking decisive corrective action when they see behaviors that are not in line with this new vision. Simply learning or being taught about customer centricity will not achieve the targeted change in behavior and therefore is unlikely to produce any kind of meaningful return. Leadership development done in a vacuum will never serve as the catalytic force that is needed to convert strategy into action. Leaders learn from experience. They learn best in real situations in which success or failure matters.5 Learning from real experiences is more powerful in terms of achieving movement, action, and momentum. This is why we say that learning has to occur within the execution of strategy in order to drive impact. Leaders who activate strategy spur valuation. There is clearly a direct connection between strong leadership, successful strategy, and higher business valuation. In his recent research, Dave Ulrich found that confidence in a companyâ&#x20AC;&#x2122;s future (i.e., quality of strategy and leadership) is increasingly more important in determining the companyâ&#x20AC;&#x2122;s market value. Secondly, he stated Copyright ÂŠ 2013 Korn/Ferry International. All rights reserved.

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Talent Management Best Practice Series: Leadership Development

that investment bank UBS found that Fortune’s Top Companies for Leaders significantly outperformed the general market over a ten-year period. Lastly, Ulrich compared the price-earnings ratios of Fortune’s Top Companies for Leaders to their respective industry averages, discovering that they were all outperforming by a significant percentage.6 Clearly, quality leadership stimulates market value. When organizations systematically cultivate leaders, developing them within the vision, strategy, culture, and purpose, value is created and compounded. From another perspective, Alexander Sacerdote, Founder and Managing Partner at Whale Rock Capital, said that 20-50 percent of his investment decisions are based on the quality of the leadership team. One of his first considerations when researching a company, he noted, is “what will this group of leaders do to valuation?” There is no doubt that the top leadership team plays an enormous role in how the investment community evaluates a particular stock. But it’s not just the C-suite that it is examining. It considers how the leadership of the company is turning on its strategy and closing the strategy-execution gap. The investment community also notes the extent to which top leadership is engaging the whole organization in the strategy, creating an emotional imperative and thus increasing the chances of successful execution. Since most strategies are focused on growth, and growth is the key driver of upside valuation, it’s logical that confidence in the ability of an organization to retain, develop, and engage leaders with a laser focus on executing strategy is a major driver of valuation. According to Sacerdote, the direct and indirect investments that companies make in leadership development are directly linked to a number of positive outcomes that are important to the financial community. Earnings Per Share. Using a causal chain, it is possible to link every employee’s daily leadership routines to Earnings Per Share (EPS). Take for example a defense contractor that is lagging behind its competitors on the days cash outstanding of its receivables. By developing the contract manager, account team, and finance executives in terms of the courage, financial acumen, and influence skills needed to change the conversation with their customer, they can drive a reduction in days cash outstanding that subsequently has a positive impact on cash flow and therefore EPS. Now imagine the exponential effect if every person in the organization developed a breakthrough leadership routine so tightly Copyright © 2013 Korn/Ferry International. All rights reserved.

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connected to EPS. Grounding leadership development in these types of realworld applications and making the causal link between behavior and bottomline metrics fuel value creation through the development process. Reduction of People-Related Risk. Risk is a drag on valuation. Investors don’t like risk in the strategy or the core business model. When there is any sign of the leadership team not doing everything it needs to do to fully activate its strategy or not having the capability to lead the strategy, red flags go up and investor confidence may be rattled. Strategy activating leadership development pulls key leaders into the mission, purpose, and strategy of the organization, enrolling them at the emotional level in what the organization is trying to achieve. This inherently reduces risk of attrition and apathy, especially among those essential people who will have the most direct impact on successful execution of strategy. Direct Financial Metrics. At an organizational level, high-impact leadership development activities are an integral part of Strategy Activation. As such, they use real context as the platform for development, with leaders solving real problems and innovating for the business as they learn. When done effectively, this allows leadership programs not only to self-fund, but to be propellants of improved financial metrics. Some of the world’s most successful companies have created tremendous value for their shareholders by developing their leaders with real-life challenges. Cisco Systems, for example, estimates that it has created upward of $20 billion in new business value through the use of action learning or real-life leadership development.7 Leadership as a Differentiator. Former Merck CEO Dick Clark paraphrased Peter Drucker, a respected authority on business strategy, when he said, “Culture eats strategy for lunch.” Through the lens of Strategy Activation and marketplace valuation, this saying still holds true. Sacerdote affirmed this when he commented that “culture is crucially important” in his investment decisions, especially for organizations that do not have large amounts of hard capital assets. A well-designed Strategy Activation program develops future leaders within the culture, preparing them to be cultural ambassadors and to continue to create valuable differentiation through leadership. Clearly, quality leadership drives market value and informed investors care about it and take this into consideration when deciding where to deploy their capital. When organizations systematically unleash and cultivate leaders, developing them within the vision, strategy, culture, and purpose, value is Copyright © 2013 Korn/Ferry International. All rights reserved.

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Talent Management Best Practice Series: Leadership Development

created, sustained, and compounded. Value-seeking investors are conscious of this and on the lookout for organizations that can tell a compelling story of leadership development and its prominent role in closing the ubiquitous strategy-execution gap. Strategy Activation does not only impact the business and the bottom line. It also has a personal effect and changes lives. It is deeply intertwined with individual leadership growth, progress, engagement, and development. These two forces — organizational and individual — interact systematically and each pushes and urges advancement of the other. A good leadership development program creates as much value and impact for the individual as it does for the organization. People need to be touched personally, authentically, and as a whole person through processes that change their lives as much as they change the life of the organization. An exceptional leadership development program creates value and impact for the individual by targeting two fundamental outputs of whole-person

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development. These contribute seamlessly to the leader’s overall growth and advancement by moving beyond the technical and behavioral level to addressing the core of an individual. Consider the following valuable outputs: Real work is accomplished. World War II veteran and author Zig Ziglar wrote that “motivation is the fuel necessary to keep the human engine running.” Successful executives are, by their nature, motivated by achievement and results. Leadership development should capitalize on this predisposition by giving executives real things to do and by creating a platform for them to have new experiences and try new behaviors. This will cause them to be energized by the accomplishment of real work with their teams. Winning is a powerful motivator. Because it fuels confidence and a sense of self-worth, it is a potent dimension of leadership development and lifelong learning. Giving executives the opportunity to succeed as they learn is a crucial aspect of successful leadership programs. In doing this, these programs need to be focused on both closing skill gaps and aggressively leveraging strengths. For many years, our needs analysis process has concentrated on where we are weak and used those insights as a way to select focus areas and content. A current popular trend rooted in positive psychology is to center on strengths alone. The right approach is a balance of both. Strengths propel leaders to success as long as they don’t have any glaring weaknesses that could derail them. It is worth investing the time and energy to shore up weak or blind spots in order to reduce the chances that they would detract from a leader’s strengths.8,9 Each leader’s legacy begins to take shape. Every leader strives to make a difference and to contribute in a unique and important way. Through selfdevelopment and personal reflection, great leadership development helps the individual find and define the imprint he or she wants to create and leave behind with others. Radio talk-show host Laura Schlesinger said in an interview that “it is humbling and enthralling to know your legacy while you’re alive.” Creating an imprint and leaving something durable behind is a central part of each leader’s growth and development. And legacy creation is not an exclusive claim of CEOs or those at the very top. Focusing on enduring impact advances a sense of purpose, contribution, and personal worth, making a leader more effective and influential with others. Businessman and author W. Clement Stone wrote, “When you discover your mission, you will feel its demand. It will fill you with enthusiasm and a burning desire to get to work on it.” Each person has this latent enthusiasm within. Leadership development should help the Copyright © 2013 Korn/Ferry International. All rights reserved.

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Talent Management Best Practice Series: Leadership Development

person discover it, capture it, articulate it, and use it in positive service of self, team, and strategy. Strategy Activation is turned on through concentrated and disciplined development of the people who are responsible to deploy it. When leaders personally engage with Strategy Activation, they are provided even greater opportunity to achieve real success and their intrinsic motivation can be encouraged and heightened. Using the lens of the strategy and culture, they will also be able to home in on a leadership imprint that will make a profound difference and leave behind an enduring legacy.

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Building Your Business While You Build Your Bench For far too long, we have been thinking about leadership development as an event or an expense that we look to Human Resources to create and manage. Through the new lens of Strategy Activation, we reframe the way we think about leadership development and the way we bring these experiences to life. Our research and experience shows that there are three key tenets to be followed when creating these Strategy Activation experiences. The three tenets are:

• Make it real — context is king.

• Focus on what leaders need to be and do.

• Treat leadership development as a journey.

Make It Real — Context Is King In a development experience that is part of a Strategy Activation campaign, this is perhaps the most important of the guiding principles. It suggests that every aspect of the current and future business context — external and internal — must be intrinsically woven into the entire leadership development process for real leadership development to translate to the real business environment.

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Talent Management Best Practice Series: Leadership Development

Although it is often said that “leadership development must be informed by and aligned with strategy,” subscribing to the principle “context is king” takes this premise considerably further. This tenet requires that leadership development be an integral part of achieving the business strategy. It is not a parallel activity or something that people “undergo” in addition to doing their jobs. Leadership development is part of the business and is as crucial to implementing strategy as any other business activity. In essence, leadership development becomes the catalytic force that propels strategy out of the boardroom and into the field. Development is a real business issue. Leaders committed to Strategy Activation treat their own development and the development of their teams with the same intensity as they treat finance, sales, and operations. They make it a real priority. They visibly invest in it — both of their time and their resources. They create accountability for it. They drive it, measure it, and make it happen. These leaders see their developmental commitments through to completion and expect the same from those around them. For them, Strategy Activation is not a nice-to-have activity delegated down to support staff or bureaucrats. It’s not a discretionary activity, ripe for elimination during challenging financial times. It’s not an after-hours activity, bolted on to people’s “day jobs.” It’s not the last item on the agenda that regularly gets pushed to the next meeting. And although Human Resources may be the shepherd and designer of the framework, it certainly does not bear sole responsibility for Strategy Activation. To act as a force of Strategy Activation, leadership development should be a central part of the leadership agenda and receive the attention it deserves. Don’t just talk about the strategy — engage in it. The tenet that “context is king” means that in defining the leadership development experience, we need to ensure that we uncover and understand context and then integrate into all aspects of the program. We incorporate actual customers and the customer experience by bringing them in for panel discussions or by taking field trips to their workplaces. We probe the financial model and what is driving company valuation, analyst opinions, and the key lines on financial statements. We do this not by working through semirelevant case studies, but by looking at and dissecting the actual financial statements. We consider the competitive environment, the global landscape, and how innovation is driving the business. And we do all of this, of course, in the context of not only industry trends and dynamics, but most important the specific strategic goals and plans of the organization. Copyright © 2013 Korn/Ferry International. All rights reserved.

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“ More and more CEOs and C-suite executives are viewing leadership development as a business imperative rather than an HR ‘activity.’ These leaders are actively involved in the overall design of the initiative and definitely have a very visible presence in the delivery. One CEO has personally launched the Strategy Activation journey for each of eight cohorts that participated over the past eighteen months. Another global business unit president takes three days of his time, multiple times per year, to spend with his up and coming leaders in the organization. This involvement completely changes the dynamic for the participants in a very positive way. We’ve also seen significant business benefits in each of these organizations.” Kathy Woods Global Service Offering Leader for Leadership Development at Korn/Ferry

Traditional strategy rollout involves a process of downward cascade of communication with an occasional reach-out to involve users of the strategy in its formulation. This may achieve awareness and sporadic buy-in, but will not achieve deep change or real learning. Activating the strategy is entirely different from just understanding the strategy. To activate and accelerate, employees must be deeply engaged in the strategy. They must have the opportunity to grapple with the strategy, uncover its complexities, and ultimately develop a personal point of view on how to catalyze execution. Even the best top-down communication is a one-way, biased, and passive activity. Strategy Activation requires dynamic learning that places employees directly into the heart of the matter. Using Strategy Activation as a driving force for leadership development, and leadership development as a driving force for Strategy Activation, means we Copyright © 2013 Korn/Ferry International. All rights reserved.

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Talent Management Best Practice Series: Leadership Development

bring the business into the development journey and we develop people in tight alignment with the organizational shift. For example, if a company is moving its sales force from a products-focused strategy to a solutions one, then leaders should be developed directly within this new business model. They should have the opportunity to transparently compare their own values and capabilities with this new vision. To illustrate this, consider the following narrative that elucidates the types of questions that leaders may have. Selling product requires deep expertise. I’ve always been good at that. Selling solutions requires a broader, adaptive, and more consultative approach. I’m not so sure I know how to do that. How do I shift from expert — especially when that has been the success formula over my entire career — to more of a generalist? What if I don’t have all the answers? How will I develop a different kind of relationship with my customers? Will they continue to respect me? Can I represent products that aren’t in my area of specialization? How am I going to learn all this new stuff? Isn’t this really just cross-selling we’re talking about? Is the company going to give me the training I need? Can I be successful in this new model? Conversations like this one take place every day as individual leaders wrestle with the implications of organizational shift. And they are perfect opportunities for strategy activating development. Just sending out a communication — no matter how well written — misses the point. Shifting the organization means shifting the individuals who make up it. To do this, each leader must commit to overcoming often self-imposed barriers like the ones illuminated in the narrative above. Even the best communications won’t get you all the way there. An emotional imperative must be created by letting people own and shape the change themselves.

Focus on What Leaders Need to BE and DO Leadership development programs have historically put a very strong focus on developing the behaviors, competencies, and capabilities that leaders need to possess in order to be successful. This approach emphasizes what they need to do. Although this is important, focusing instead on what leaders need to BE provides more sustainable leadership strength that can endure even as the market changes and specific competency-based success profiles shift. Copyright © 2013 Korn/Ferry International. All rights reserved.

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Competencies are valuable tools to define the behavior-sets people need to develop to accelerate organizational strategy. They are of critical importance to leadership development as they help target the high-value behaviors that are foundational to the organization’s purpose, strategy, and mission. However, competencies do not tell the whole story. There is a layer at the core of the individual leader that if not developed, will leave competencies stationary and inactive. Strategy activating development must place equal, if not greater, emphasis on what leaders need to BE. These are fundamental mindsets and personal qualities (virtues) that drive every other leadership behavior and activity.

What Leaders Need to BE There are four universally important characteristics that leaders need to BE in order to engage in advanced development and therefore become agents and promoters of Strategy Activation. These four universally important characteristics help leaders become enablers of the organization’s progress, transformation, and growth. Be Vital. Vitality is defined as the capacity to live and develop. It manifests itself both covertly and overtly in virtually every aspect of an executive’s daily leadership routine. It affects drive, persistence, focus, resilience, compassion, and presence. Vitality is a crucial tool to stave off the powerful effects of stress, high demand, uncertainty, and tension. It is an essential dimension of leadership effectiveness and it can be intentionally enhanced. Vitality can be developed in individuals by focusing on the basic aspects of life and personal energy management. There are well-documented studies linking vitality to increased well-being and overall health. In fact, a study by the University of California San Francisco found an “association of vitality and other measures of physical and psychological health,” essentially highlighting that people who focus on their energy typically enjoy the benefits of better overall health and productivity.10,11 In concentrating on vitality, we also encourage leaders to maintain and practice a sense of equilibrium. The human’s most comfortable condition is in a state of balance and stability. However, it is not always an easy state to maintain, especially under the levels of high demand and pressure that executives experience today. Leaders who work on personal mastery can achieve higher Copyright © 2013 Korn/Ferry International. All rights reserved.

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Talent Management Best Practice Series: Leadership Development

levels of discipline in their life choices and reach greater levels of restraint, presence, focus, adherence to values, and moral fulfillment. Practicing balance can help leaders become more inspiring and it can in turn activate their inherent desire to achieve greater levels of leadership impact. There is a common saying among executives that “I am one person at work and another at home.” This is false. We may act differently (sometimes drastically) in each place, but we are always only one person. Finding comfortable balance and living the life we desire is a crucial stepping-stone to leadership fulfillment and should be actively incorporated into leadership development. Helping leaders make good choices around nutrition, exercise, sleep, recovery, stress management, and equilibrium can position them to be more inspiring and proactive. Vital leaders are less likely to react and are generally more inclined to take the right action and seek out value-creating opportunities. Be Authentic. A 2012 study by Palanski and Simons supports the proposition that leadership authenticity and behavioral integrity are related to follower commitment and performance.12 This makes intuitive sense as authentic leaders are optimistic, transparent, future-focused, resilient, and ethical. They reveal more than leaders without this trait. They are comfortable with themselves and they relate in deeper ways to those around them. Developing authenticity is not a simple task. In fact, as Kevin Cashman wrote in his book Leadership from the Inside Out, “of all the principles supporting sustainable leadership, authenticity may be the most important. It may also be the most challenging.”13 This is because in order to develop deeper levels of authenticity, emerging leaders require a set of experiences that challenges them to go beyond their comfort zone to disclose and reveal their true selves. Authenticity is central to whole-person development and it should be amplified before focusing on any specific strategy-related competency. In developing authenticity, we also maintain that leadership is not a selfish act, but rather an act of service. Leadership is inherently and fundamentally about others. The great Yogi and spiritual leader J. Donald Walters may have summed it up best when he wrote, “Leadership is an opportunity to serve. It is not a trumpet call to self-importance.” Making service a central part of the leadership journey helps leaders discover a deeper sense of personal value and contribute to the betterment of those around them. For this reason, service should be a foundational dimension of leadership development programs and curricula. Participants should have the opportunity to serve their teams, organizations, Copyright © 2013 Korn/Ferry International. All rights reserved.

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customers, and communities in ways that form new perspectives and deepen their leadership skills. Most leadership programs focus on the development of leaders to achieve results. However, providing a developmental platform in which leaders have the obligation to serve others (not just themselves) instills deeper inspiration, meaning, and authenticity in the experience. Be Learning Agile. Learning Agility is defined as the willingness and ability to learn from experience, and subsequently apply that learning to perform successfully under new or first-time conditions.14 Simply stated, Learning Agility is the ability to know what to do when you don’t know what to do. Leaders higher in Learning Agility are better able to succeed in ambiguous, challenging, and first-time situations.15 Strategy Activation development is designed to place leaders in first-time situations in order to stretch them beyond their current ways of doing things. Without a threshold level of Learning Agility, some developmental experiences could be met with resistance instead of curiosity and resourcefulness. Therefore Learning Agility, like authenticity and vitality, should be a central focus of the leader’s overall developmental program. Be Self-Aware. Leadership Development, at its core, is a process of change. Nobody goes through any kind of developmental experience with the goal of nurturing or preserving the status quo. In order to change, an individual leader must be willing to look critically at him or herself. Self-Awareness means being in tune with one’s own strengths and weaknesses, being free of blind spots, and using this personal insight to perform effectively. It’s also important to note that self-awareness is one of the five dimensions of Learning Agility, meaning it has great influence as well on how readily the leader can adapt to new situations and extract meaning from first-time experiences. A lack of Self-Awareness, at worst, can manifest as defense mechanisms such as denial, rationalization, or arguing, presenting a virtually impenetrable barrier to advanced leader development. At best, the absence of Self-Awareness can represent a great deal of lost opportunity, when leaders do not fully leverage their strengths and capabilities in a conscious and purposeful manner.

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“ I’ve had the pleasure and privilege of working with cohorts of leaders focusing on authenticity, purpose, and self-awareness — really pausing to think about who they want to be as people and as leaders, and how they can live that every day. It has been personally rewarding and also quite incredible to see the depth of emotion this work evokes for people and the really tangible impact it makes on their lives both personally and professionally. It really is transformational. In terms of the professional impact, I worked with one cohort of ten people. Within six months of the end of the journey, we saw more than one-third of them get promoted into new positions, and others shift into very different roles as they pursued new directions.”

Kathy Woods

Global Service Offering Leader for Leadership Development at Korn/Ferry

Research on Self-Awareness reveals some alarming facts. In 2012, Korn/Ferry found that nearly 80 percent of all leaders had at least one blind spot — an area in which they thought they excelled but others disagreed. The same study discovered that 40 percent of leaders have a hidden strength that they cannot fully take advantage of because they are not aware of it.16 Vitality, Authenticity, Learning Agility, and Self-Awareness create the leadership core that everything else stands on. The good news is that Self-Awareness, like Learning Agility, Vitality, and Authenticity, is something that can be enhanced. Strategy Activation development depends entirely on leaders who have threshold amounts of these universally important characteristics or who are motivated to intensify them. Copyright © 2013 Korn/Ferry International. All rights reserved.

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Typically, leaders find that achieving greater Vitality, Authenticity, Learning Agility, and Self-Awareness brings many individual benefits. In fact, the personal rewards of leadership development are not just an ancillary outcome. We believe that personal impact and personal change are critical to leaders having an impact on the business.

What Leaders Need to DO Although we believe that developing the whole person and helping leaders become Vital, Authentic, Learning Agile, and Self-Aware create the most sustainable platform for success, we are still asked to help leaders strengthen more specific competencies to support their growth. The mission critical competencies required to activate a strategy are going to be dependent on the specifics of that given strategy. These competencies are crucially important for leadership success as they provide a formula for effective behavior in the context of strategic direction. Part of a true Strategy Activation process is to work with an organization to discover those competencies that are going to have the most leverage in bringing the strategy to life. This is generally a very natural and obvious process if the development journey is truly grounded in the strategy, as the process of bringing context to the journey inherently allows us to be very clear on the competencies required to deliver on this context. From that point, it is straightforward to ensure that we help leaders build these competencies as part of the contextual development journey. Although we want to be certain that the competencies we develop connect directly with the strategy, we have also done extensive research that allows us to predict with some accuracy a group of competencies that will likely be important for leaders’ performance in any situation. These are the competencies that we call “The Big 8.” Based on our research, they are defined as those competencies that correlate with top performance and potential for both managers and executives and that are also in the shortest supply in the global talent marketplace. Hence, we can be relatively confident that in the process of discovering the competencies that are important for activating an organization’s strategy, some or all of the following will be at the top of the list.17

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1. Creativity

2. Strategic Agility

3. Motivating Others

4. Dealing with Ambiguity

5. Innovation Management

6. Building Effective Teams

7. Managing Vision and Purpose

8. Planning

Korn/Ferry research shows that these eight competencies are universally important, in low supply, and tougher to cultivate. Therefore, leadership development programs that include these competencies as part of their skill building elements will see greater returns on their efforts.

Treat Leadership Development as a Journey All too often we are asked to “host the two-day leadership off-site to align people to our strategy” or “pull a workshop off the shelf that will help our leaders be better prepared for the future.” Leadership development truly becomes Strategy Activation when it is positioned and designed as a journey, not an event. It is an investment in the business that parallels the intensity, focus, and time allocated to all other aspects of strategy development and implementation. Deep development cannot be achieved in a single shot. It must be worked on over a continuum of time with multiple touch points, reinforcements, applications, and reflections. Every leader has gotten to where he or she is today by traveling on a personal journey. This individual voyage is full of highs and lows, successes and failures, wins and losses. Each person’s journey is unique and, when properly captured and articulated, tells a story of who we are as people and therefore as leaders. American management consultant Noel Tichy said, “Leadership is autobiographical: if I don’t know you as a person, how do I know you as a leader?” Harvard Professor Howard Gardner took it even further when he wrote that “leaders lead in two principled ways, through the stories they tell and the

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kinds of lives they lead.” The creation and public articulation of a leadership narrative is an essential dimension to developing the core of each person’s leadership potential and capability. Our experience is that true Strategy Activation involves a leadership development journey, typically consisting of a yearlong experience in which participants engage in a variety of high-impact learning activities grounded in the context of their business and organizational culture. Similarly, within this process, leaders create their own unique voyage. This is personalized based on their own leadership narrative, understanding of self, and vision for the future. This multilayered journey keeps the participants on their feet, highly engaged, and continuously reflecting on who they are and who they want to be as leaders. This process of growth, sparked by personal reflection, becomes one of the most rewarding aspects of the creation and delivery of these programs.

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Using the Strategy Activation Formula We have captured the essence of the leadership development journey using our Strategy Activation Formula, which serves as the governing framework for building a program that activates the strategic shift by engaging your people.

Context Weâ&#x20AC;&#x2122;ve focused heavily throughout this paper on the need to use context as the platform for leader development. What do we mean exactly when we refer to context? Context is the use of real business problems, issues, and policies as the cornerstone for leader development. These real-life scenarios capture the pressing issues of today and the future and use them as challenges for leaders to work through. Context also embeds your culture, reality, markets, customers, and industry perspective into the learning. Essentially, through greater levels of context, we increase relevance, opportunity for impact, and access to real value creation. To put a finer point on this, traditional strategy rollout involves a process of downward cascade of communication with an occasional reach-out to involve users of the strategy in its formulation. This may achieve awareness and sporadic buy-in, but will not engender deep change or real learning. Activating the strategy is entirely different from just understanding it. To activate and accelerate, employees must be deeply engaged in the strategy. They must have the opportunity to grapple with the strategy, uncover its complexities, and ultimately develop a personal point of view on how to catalyze its execution. Copyright ÂŠ 2013 Korn/Ferry International. All rights reserved.

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Even the best top-down communication is a one-way, biased, and passive activity. Strategy Activation requires dynamic learning that places employees directly in the heart of the matter. Additionally, in this formula, context is squared because of its exponential impact on overall Strategy Activation. Without high degrees of context, it is essentially impossible to build a strategy activating leadership development program. One of the most important things to think about when we consider context is how we are going to capture and integrate it into the learning journey in a way that tells a story and is meaningful and real to the leaders involved. The trouble with many leadership programs is that they present a series of disjointed topics that the learner is then forced to integrate. A better approach is to build in the integration so the learner can focus on application and relevance rather than connecting the dots between seemingly unrelated learning objects. Integration can be achieved by using red threads or core connectors that string through the life of the entire development journey and ground it in its purpose and intended outcomes. Red threads can be defined by looking at the major strategic shift of the company and identifying the most crucial changes that will support it. For example, for a company looking to significantly expand its presence in Asia, the red thread could be “The West to East” shift. For an organization moving from a products focus to a services one, the red thread could be “Services that Deliver.” For a media company seeking to shift its presence from paper to online, the red thread could be “Our Digital Future.” For an organization in the process of absorbing several new acquisitions, the red thread could be “Communication and Trust.” In reality, these red threads are integral to the challenge the business faces and are inseparable from its ultimate resolution. As the leaders travel through the program, all activities, experiences, and content must be directly linked back to the select few threads that provide the continuity and stability for the overall program.

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Learning This factor includes the quality and relevance of the curriculum or program content. It revolves around what participants are learning, the acquisition of new behaviors, skills, and mindsets and the use of engaging learning modalities that are appropriate for the audience. Some of the key things to consider to ensure that the learning appropriately addresses all these factors are described below. Engaging and energizing. Adults need to own their own learning. They will tolerate certain amounts of lecture or presentation, but eventually they will want to take control and drive it themselves. Strategy Activation design pushes a lot of the control to the learners. They are presented with problems to solve, given very few answers and just the necessary amount of instruction. Participants make presentations, teach one another, interact with leaders, and in many ways create their own curriculum and learning experience. This pulls them into the process rather than treating them as passive learners who simply need to absorb a predefined curriculum that has been designed on their behalf. Programs high on the learning factor engage participants with appropriate and varied learning strategies, introduce highly relevant and substantive content, and push participants into new modes of thinking, being, and acting. One of the key aspects of the learning factor is that multiple modes of learning are used so that different learning styles are catered to and so that participants learn without necessarily realizing it is happening. In essence, they learn by doing, which we know is the most effective and sustainable adult-learning strategy. Multimodal. Adult learners do best when they are engaged and given opportunities to experiment. A multimodal approach draws in the learner through a wide variety of learning strategies. The exact blend of pedagogies we apply depends of course on the design, but can include workshop, virtual classroom, group coaching, individual coaching, simulation, structured dialogue, technology-enabled learning, self-paced learning, and e-learning. The most important success factors are that these learning strategies are selected carefully, integrated methodically, and that they create a seamless and engaging experience for the participants.

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Purposefully ambiguous. Allowing leaders to grapple with complexity is one of the most effective adult-learning strategies. Strategy Activation, by default, provides ample amounts of ambiguity as leaders wrestle with real-life problems that don’t have simple answers and contain ample implications. Although many learners will ask for absolute clarity and may even push back if their task is not entirely spelled out, engineered ambiguity encourages leaders to stretch their capabilities and more accurately resembles conditions of real life. Korn/Ferry research reveals that Dealing with Ambiguity is one of the rarest competencies found in the talent marketplace. And in today’s chaotic business environment, it is also one of the most coveted.

“ The ladder of success is best climbed by stepping on the rungs of opportunity.”

Purposefully pushing leaders to test their abilities of managing ambiguity sets the program up for higher order outcomes and deeper levels of learning. In his latest book Need, Speed, and Greed, veteran Economist correspondent Vijay Vaitheeswaran Ayn Rand wrote that “the current education system that our and other countries developed was suited to the industrial revolution, a one-size-fits-all model for education that treats people as commodities. But we’re in an innovation age where creativity, individual initiative, willingness to think out of the box and disrupt established business or even lifestyle patterns is much more important.”18 Vaitheeswaran declares there, in not so subtle terms, that the traditional top-down and absolutes-based approach to education fails to take into account the complexities of today’s world and marketplace. If, as Vaitheeswaran suggests, easy or singular answers no longer exist, why should our approach to education be satisfied with the ultimate identification of a “right answer”? The goal here is not to absorb knowledge, but rather to wade around in the pool of ambiguity, producing thinking skills that will act in service of strategy, self, and others. Opens the door of opportunity. An invitation to participate in a leadership development experience can be a tremendous opportunity, filled with possibilities. It opens doors and creates a platform for people to learn, succeed, and grow. However, different people approach this opportunity in different ways. Nomination into a leadership development program should not create an elite class nor should it produce entitlements or unrealistic expectations. Copyright © 2013 Korn/Ferry International. All rights reserved.

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It should give people who have already demonstrated strong performance and potential the opportunity to accelerate their development. How they approach this opportunity is a personal choice and, in itself, a part of the program. Will they embrace the opportunity, give of themselves, engage with the learning, and ultimately take action in service of self, team, and strategy? Or will they put up defense mechanisms, punch holes in key ideas, grandstand for attention, disengage, take mental field trips, or worst of all, diminish the opportunity for others to learn and grow? The leadership program should create opportunities for participants to choose how they want to show up. And evaluation and observation mechanisms should be built in as well. The program should not be conducted in a vacuum, nor should it be free of consequences. Participants should be given every opportunity to succeed, collaborate, and win. Then they should be assessed on how they perform in the program experience. Led by leaders. No external partner knows your business as well as your own executives. Internal leaders should be central participants in the shaping and delivery of content, adding their expertise and creating the relevant connections to action opportunities. Internal leaders should act as facilitators, storytellers, context-creators, subject matter experts, mentors, sponsors, and coaches. The leader-led model embeds context into all learning and also places senior leaders in a position where they can model the changes they are seeking. They can be coaches in applied learning challenges, not only suppliers or messengers of readily available information. This, in turn, takes their leadership to another level and positions them as true people developers and capability builders. An important component of making this successful, though, is to ensure that the executives are supported in their preparation for and participation in the development journey. Being a successful executive and Mother Teresa business leader does not necessarily translate directly to being an effective learning leader. Hence it is incumbent on us to help executives tailor their messages and approaches to engaging with their people in the learning journey.

“Life is an opportunity; benefit from it. …”

Integrated into cultural context. Leadership development can be a powerful tool to drive culture change and advancement. To do this, program participants should be exposed to the history and legacy of the organization in order to understand how the culture got to its current state and how the culture may Copyright © 2013 Korn/Ferry International. All rights reserved.

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need to shift in the future. They should then be engaged in a discussion on culture creation — having multiple opportunities to promote the desired culture through the daily activities of their leadership.

Application According to TrainingIndustry.com, businesses globally spent $287 billion on employee learning and development in 2011, yet according to International Data Corporation (IDC), half of every dollar invested in training is wasted.19 One of the root causes of this waste is the evaporation of learning before it is embedded into neural hard drives and therefore into actual behavior. In other words, without immediate application, learning will disintegrate and erode over a relatively short period of time. Application is the key to overcoming this tendency and converting learning into action and action into outcomes. There are numerous ways to ensure that meaningful application of learning takes place. Three that we believe are most relevant are described below. Living case studies. As we have mentioned, real-time problem solving creates a powerful platform for leadership development. Generic or standard case studies can often help individual leaders develop their strategic thinking and decision-making skills, but the connections to your business can often be tenuous or unconvincing. Using real and relevant case studies allow leaders to hone all the desired behaviors and skills, and they learn to do so in the context of your business, industry, and culture. Living case studies can be created to illustrate and practice skills around strategy, innovation, customer focus, team leadership, and other important leadership responsibilities. Living case studies can be surfaced and designed by talking to on-the-ground resources who struggle with the translation of strategy into daily action. They can also be selected by using a top-down approach that relies on critical initiatives and their spin-off problem sets as the real-time content for case studies. Action learning. Scottish philosopher Thomas Carlyle bluntly wrote that “talk that does not end in any kind of action is better suppressed altogether.” Creating opportunities for leaders to apply their learning — to take action — is essential to the implementation of strategy activating development. Action learning (also known as applied learning or workplace challenge) uses actual organizational problems as opportunities for leaders to exercise and apply new leadership behaviors and routines. The projects can be chosen using multiple Copyright © 2013 Korn/Ferry International. All rights reserved.

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approaches, but regardless of how they are selected, they should be of strategic significance to the organization. The organization should also be prepared and committed to accepting the recommendations that are produced as outputs. These projects are not hypotheticals. They are real initiatives and should receive real support and organizational commitment. Constant connections. Again, leadership development done in a vacuum may produce certain value for the individual, but doesn’t necessarily yield large rewards for the organization. To create organizational relevance, participants need to be constantly challenged to make connections from their learning to real-life opportunities. This means that debriefs, activities, exercises, and discussions need to link back to organizational challenges and context. Additionally, participants in leadership programs should be tasked with on-thejob reflection and engaged in developmental “micro-moments” in which they think about the application of new behaviors and translation of concepts into action. This is real-time development on an organizational scale.

Intensity When a global quick-service food chain decided to dramatically alter the course of its terrible food-handling and sanitation record, it would have been unrealistic to think this problem could be solved through skills-based training alone. A complete Strategy Activation program, with learning at the core, was necessary. It required multiple touch points with all involved to discuss values, leadership, communication, change, measurement, outcomes, process, and problem solving. Employees even needed to overcome fear of retaliation to feel comfortable reporting violations. Bottom line, the intensity and scope of the development had to match the ambition of the strategic shift. This was not a training problem; it was a culture problem. And it required an intensive leadership development journey to change the course of the organization. Developmental intensity is the importance given to strategic leadership development as reflected through accountability, sustainability, sponsorship, commitment, and follow-through. As an example, when a professional services company decided to diversify its suite of offerings and expand its reach with clients, it would have been unrealistic to think any single training session could magically get consultants to make this shift. An entire activation program was needed during which leaders contended with the implications of this change, became comfortable with their transforming roles, worked through new processes and relationships, and practiced a new model of interaction Copyright © 2013 Korn/Ferry International. All rights reserved.

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with their clients. This shift required strategic development, whole-person development, aligned communications, and sustained focus and intensity. Intensity shows up in several ways, including manager involvement, senior leader sponsorship, aligned communications, investment of time and resources, reinforcements, consequences, and cultural alignment. The biggest drag on developmental intensity comes when organizations are unwilling to invest the necessary time and resources to catalyze their strategic shift. It’s akin to buying an expensive piece of hardware to drive business growth and then never installing it properly. You may get some use out of it, but it will never fulfill its promise for the organization. One of the key ways to ensure we achieve the intensity we need in a leadership development journey is to incorporate relevant measurement. It is crucial to gauge the program based on metrics that matter to the business. For too long, we’ve been judging our leadership development efforts on the satisfaction of the learners. If they declare it to have been a worthwhile experience, then we must be doing something right. This is insufficient and essentially what we fondly call “milk and cookies” measurement — feel-good responses that tell us how the learners perceive the development experience. Although we can’t discredit the learner experience as a vital success factor, it doesn’t give us what we really need — value driven metrics. These can be produced only through contextual development that is grounded in solving real business problems. It’s a simple formula. We must track the learning and application of new leadership behaviors and routines and then key in on the changes that are produced as a result. There is an entire science behind the measurement of leadership development activity that goes beyond the scope of this paper. However, the paramount message is that a robust measurement strategy that evaluates activity and outcomes is essential to the build-out of a leadership program that truly activates strategy.

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Designing a Strategy Activation Program Building a leadership development journey that activates organizational strategy and the individual’s emerging leadership capability should follow a disciplined design process. The graphic below illustrates the eight-step sequence to move from concept to program design:

Step 1: Define the Shift: As we have repeatedly mentioned, the essential first step in the design process is to clearly articulate the organizational shift. This should be expressed in the form of a problem statement such as “how do we accelerate the pace of innovation and bring new products to the market in order to stay ahead of the competition?” Or “how do we create a differentiated customer experience that captures share in a crowded marketplace?” The shift then becomes a red thread or backdrop for the entire design of the program and all learning objectives anchor back to it. Step 2: Define the Demand: Once the shift is well defined, we can establish the things people will need to do in order to activate and accelerate the change. This involves a profiling exercise in which we detail the critical behaviors and capabilities needed by leadership to bring the change to life. The most

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commonly occurring capabilities revolve around cross-functional collaboration, strategic thinking, risk-taking, systems thinking, developing people, and taking action despite ambiguity. Step 3: Establish the Core: We’ve discussed how the four universally important characteristics of Vitality, Authenticity, Learning Agility, and Self-Awareness lay the foundation for all subsequent behavior change and leadership growth. Any leadership program must deeply address these four dimensions if any further change is to be expected. In the design process, the question is not whether we should address these four aspects of leadership, but rather what is the most appropriate way to do so in the context of the organization’s culture and current way of doing things. Although these are the individual’s responsibilities, the context and program need to shine a light on them and bring them forward as a central part of the design. This will contribute to the “demystification” of historically sensitive topics that have been acknowledged as central to success in our complex and uncertain world. Step 4: Understand Current State: Now that we have defined the shift and the demand as well as established the core, we can ask, “how far away from this vision are we?” This gap analysis will inform all subsequent design activity as it will dictate the pace, intensity, style, and approach to Strategy Activation that must be embraced in order to close the gap. Current state can be defined by using a structured approach that includes diagnostics, assessment processes, interviews, data analysis, and observations. Step 5: Design Architecture: With the gap well defined, we can now lay out the blueprint or road map for our leadership program. Based on size and scale of the shift and subsequent gap, we determine pacing, sequencing, and duration of the major programmatic touch points. The output of this step is a blueprint for the program that details all participant activities, touch points, and the pedagogical strategies that will be deployed. To the right is an illustrative program road map that outlines a typical design and program flow.

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Step 6: Build Program: With the road map established, we can now proceed to the detailed design of the actual program. This entails the creation of all participant materials, the build-out of agendas, electronic media, activities, workbooks, job aids, and resource materials. Because the exercises are so contextualized, this requires input and collaboration from both the client organization and the instructional design team. It is also an iterative process of co-creation, not merely an assembly of prefabricated content or existing material. Step 7: Implement Development: Finally, the program can be deployed. Faculty members work with internal leaders-as-teachers to facilitate, engage, and conduct the program while transforming the business. Participants travel through the leadership journey, working, reflecting, collaborating, and changing. Their experience should be intense, difficult, powerful, and rewarding. It should inspire and motivate them to activate organizational strategy and engage in individual growth. Step 8: Feedback Loop: A good Strategy Activation program is always a work in progress. Context is constantly changing so the program must keep up. Feedback should be continuously collected from program sponsors and participants, and adjustments should be made to consistently strive for increased levels of impact. Additionally, as measurement is so crucial and data begins to flow in, designers can take action based on qualitative and quantitative feedback to seize opportunities to increase impact. Copyright ÂŠ 2013 Korn/Ferry International. All rights reserved.

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Conclusion Today’s leaders, and the leaders of the future, face a set of unprecedented challenges. Globalization, pressures of competition, and the drive to grow market share are as fierce as they have ever been. We believe that closing the strategy execution gap becomes paramount for organizations to both thrive and survive. Companies that are able to narrow the strategy execution gap will outpace their competitors and experience greater mission and financial success. They will also likely be seen as category leaders and be able to attract and retain the best talent worldwide. Updating your approach to leadership development and linking it more closely to the actual activation of the strategy will result in leaders who are able to shift and flex with your organization as it navigates an ever changing landscape and strives to differentiate itself from its competition — often with lean or limited resources. This occurs because they will fully understand what needs to happen to be successful and the hard work that is necessary to keep an edge over others. They will be able to execute in a fast paced, uncertain world and to anticipate future challenges while engaging others in getting the day to day work done efficiently. They will have had practice grappling with real issues the organization is facing. They will be able to make a positive contribution to your organizational culture and collaborate with an increasingly diverse workforce because they will have been given the opportunity to do so through the learning process. They will have advanced as individuals and human beings, discovering greater levels of purpose, meaning, and contribution. Learning how to lead in the context of your business will bring about a quantifiable ROI when we measure what matters to your organization, get people actively engaged in the strategy, and treat leadership development the way winning businesses do — as a business imperative.

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Appendix A: Strategy Activation Checklist Does Your Leadership Program Align with the Strategy Activation Approach? Using the checklists that follow, you can evaluate a current or planned leadership development program on the four dimensions of the Strategy Activation formula: context, learning, application, and intensity. The checklist below provides a simple tool to assess an existing or work-inprogress leadership development program on the context dimension. Context Checklist (Scoring Sheet) Program uses real strategic problems as living case studies (3 points) Participants learn about the organizationâ&#x20AC;&#x2122;s strategic vision and how they fit in (2 points) Participants interact with real customers (1 point) Participants explore the financial workings of the organization and how they create value within that model (1 point) Participants interact with organizational leaders and create meaningful dialogue on relevant topics (1 point) Program promotes the cultural vision of the firm (1 point) Participants get a perspective on their industry, markets, and regions (1 point)

Total Points (out of 10)

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Learning Checklist (Scoring Sheet) Program engages participants with varied and engaging learning strategies (2 points) Content is relevant and at appropriate level of complexity/ difficulty for participants (2 points) Content is substantive and research-based (1 point) Participantsâ&#x20AC;&#x2122; experiences are honored and valued, and they have ample opportunities to learn from one another (3 points) There is an appropriate blend of business topics with whole-person development subjects (2 points)

Total Points (out of 10)

Application Checklist (Scoring Sheet): Program provides opportunities to apply learning on the job (3 points) Program provides opportunities to reflect on on-the-job application (3 points) Participants have the opportunity to present their results and learnings in front of senior leaders (1 point) The organization will consider implementation of ideas generated as a result of the program (2 points) Participants create business value as they learn (1 point)

Total Points (out of 10)

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Intensity Checklist (Scoring Sheet):

The managers of the program are involved and contribute to the leadership development experience (2 points)

Senior leaders actively sponsor and participate in the program (2 points)

The amount of developmental time matches the scale of the strategic shift (3 points) A strong measurement strategy is in place to monitor execution and results (1 point) The program is seen as central to execution of strategic direction (1 point) Reinforcement strategies are in place to drive learning transfer and avoid “learning evaporation” (1 point) Total Points (out of 10)

Interpreting the Scores Plug your scores on each of the four dimensions into the formula and calculate your overall score. {Context² + Learning + Application} x Intensity = Strategy Activation The maximum possible score is 1,200 and the minimum score is 0. 0-200: Minimal Strategy Activating Value. May be at risk of negative ROI. Could be perceived as generic, irrelevant, or immaterial. Likely not engaging for participants. Likely difficult for participants to connect outcomes to real workplace problems or needs. Overall developmental experience is seen as disconnected from business strategy. 201-500: Moderate Strategy Activating Value. Potentially produces valuable outcomes. Participants make connections, but they may be tenuous and unconvincing. Participants experience some personal transformation, but it may not be enduring or sustainable. Value may be created, but it may be difficult to measure or appraise. Copyright © 2013 Korn/Ferry International. All rights reserved.

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501-800: Strong Strategy Activating Value. Participants learn and engage in a way that creates value as they develop their leadership skills. Strong connections are made to important business issues and relevant problems. Participants go through significant personal transformation and identify opportunities to deploy new behaviors in service of themselves, their teams, their customers, and the organization. Measurable outcomes can be captured and analyzed. 801-1,200: Maximum Strategy Activating Value. Participants are empowered through the program to dramatically alter the course of the business. Participants grapple with the most pressing issues of today and the future. Measurable value is created as an outcome of the program. Participants experience deep personal transformation that they apply in service of accelerated strategy execution and themselves, their teams, their customers, and the organization.

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Appendix B: Case Studies Case Study #1: The Power of Contextual Development A financial services organization struggled with a problem in two of its operating divisions â&#x20AC;&#x201C; retirement solutions and personal investing. These units were managing the same clients and competing in many cases for the same dollars. Moreover, their clients were receiving different statements from the same financial organization and even worse, differing points of view on the same investment opportunities. The situation was leading to client confusion, frustration, and attrition. This was a real business problem to say the least, especially for an organization placing heavy strategic emphasis on the creation of a differentiated and winning client experience. What was behind this? Because the two units were competing for the same customer wallet-share, they were acting in silos to protect and preserve their own personal outcomes, but ostensibly to the detriment of the customer and the larger organization. More money to retirement means less money to personal investing. Territorial behavior had led to deeply rooted personal mistrust and conflict. These two operating divisions were unwilling or unable to have the difficult conversation around how to fix this entrenched rivalry. This led to unproductive behaviors such as information hoarding, lack of collaboration, and misaligned client communications. We used this exact situation as the case study for learning how to address and manage conflict. We used much of the same content, theories, frameworks, and ideas found in a traditional course on the topic of conflict management, but embedded inside the context of this relevant and complex business problem. The leaders in the program dialogued about the real conflict as the way to practice new leadership behaviors. Then they looked for other real-life opportunities to use those same behaviors. They solved the problem as they learned. As a result of this approach, the leaders in the financial services organization were able to achieve a productive breakthrough in the conflict that led to new levels of collaboration and real business outcomes such as higher client retention and satisfaction. This created value for the leaders, their clients, and the business, which constituted a powerful learning opportunity and made good business and financial sense. In solving this problem, there was no single Copyright ÂŠ 2013 Korn/Ferry International. All rights reserved.

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right answer. Success did not come in the form of demonstration of a skill or playback of rote knowledge. Rather, success was defined as an outcome that got past the conflict and produced a viable solution — any solution — that served the strategy, the customer, the organization, and the individuals. Positive change and movement were the goals.

Case Study #2: Estée Lauder Companies The Context: Asia 2.0 As the world came out of the financial crisis, a group of consultants in Korn/ Ferry’s Asia practice noticed an emerging trend in the region’s talent markets. Organizations wanting to capitalize on the opportunities in Asia were constantly being challenged by three shifts: the Innovation shift, the Consumer shift, and the Talent shift. The Consumer shift, one of the most significant in Asia, was driven by the increased growth of the Asian middle class and the heightened spending power of this group of consumers. More and more, organizations had to innovate in Asia to ensure the unique needs of these consumers were being met. These two shifts were dictating a very different workforce requirement, and the war for talent in Asia seemed to have taken on a new level of intensity as the region was increasingly being viewed by companies as the center of gravity for global growth, while the qualified people available to lead that growth were in short supply. The Challenge for Estée Lauder Companies Like many other firms, Estée Lauder Companies (ELC) has been undergoing a major transformation in this region. As dynamic Asian markets began to take the lead in determining the health of international economies, ELC needed to step up from being simply a “multinational company” to becoming one of the world’s first truly global enterprises. Estée Lauder Companies outlined a new strategy of transformation that meant that leaders had to learn how to operate in novel ways with one another, focus on the new emerging consumer, and understand nontraditional channels to market and grow at a rapid rate through innovation. This fresh approach created new challenges for the business in Asia; one was to implement the transformation strategy over the next four years and another was to ensure that the top two hundred leaders in the region were able to Copyright © 2013 Korn/Ferry International. All rights reserved.

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Talent Management Best Practice Series: Leadership Development

develop at a speed that kept pace with the business transformation. Fast growth on both an organizational and individual level is not an easy mandate. Talent in the Asia-Pacific (APAC) region is scarce and demand for it is high given that opportunities tend to expand exponentially in today’s Asian markets. The need for growth is fast surging ahead of the availability and capability of the talent pool. Coupled with the requirement that leaders be able to handle the unique cultural diversity of the region, the war for talent becomes even more intense. It was within this context that ELC developed a new approach to managing talent. The “Home for Talent” vision guided the firm to create a strategy to effectively “Buy, Borrow, Build, Bind, and Boost” talent for the organization. As part of that blueprint, the Asia Pacific Leadership Institute (APLI) was established. The APLI’s “Build” approach is anchored on four pillars: Talent Management, Leadership Development, Learning and Development, and Employee Engagement. These precepts are seen as discrete yet linked to work toward a common goal. Essentially, the institute’s entire system endorses a holistic attitude that views every individual’s development as a unique journey of continuous molding and self-discovery that requires focused attention. A crucial component of this journey is the identification of what leaders need to be and do at ELC to be successful. ELC Global developed a clearly articulated view of future leadership success that included the ELC High-Touch Leadership Competencies Model. These steps provided a common leadership language and expectations, and presented guidance on how the organization’s leaders could achieve outcomes in line with the business transformation strategy. The Transformative Leadership Program The APLI’s “Build” strategy was a long-term investment of time and resources to prepare ELC’s regional managers to become the leaders of tomorrow. And with the fast pace of Asia’s growth, the bridging of skill gaps in leaders at ELC APAC had to be accelerated. The comprehensive nine-month integrated Transformative Leadership Program (TLP) is geared toward building total leadership capability. It goes beyond traditional leadership programs that focus only on classroom learning. Instead, this extensive curriculum has been custom designed based on ELC’s business Copyright © 2013 Korn/Ferry International. All rights reserved.

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strategies and leadership requirements. It drives capability improvement in select leadership competencies through a number of carefully chosen learning components, including:

• Nine days of cohort learning sessions

• Action learning projects

• Team coaching

• Comprehensive multisource- and self-assessments

• E-Learning

•B usiness simulations

Throughout the nine months, participants journey together as an intact cohort. ELC APAC leaders engage in a sustained and enduring learning immersion process that challenges them to do more than merely acquire additional knowledge. They work on projects and build close bonds and support networks across the entire ELC APAC. The application and testing of learning transfer are grounded in how both individuals and their cohorts apply and act on the program’s content on the job. One thing is made clear to participants from the beginning of the program: they are accountable for their own transformation. “Nine months is just to help them learn, relearn, and even unlearn things; the journey doesn’t end there,” said Figin Seng, Regional Director, Learning and Development, APAC, and Dean, Asia Pacific Leadership Institute. “Leaders need to desire to create their own leadership brand. They need to desire to gain support from line managers and those around them.” For this reason, participants find themselves doing much more than attending a workshop or program. All ELC APAC leaders are tasked with internalizing and taking responsible at-work actions to enhance their own leadership performance through integrated coaching and cohort/peer feedback. At the end of the nine months, the leaders do an individual presentation of their Action Learning Projects before a panel of judges.

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The panel usually comprises senior leaders who take time out of their busy schedules to judge. The amount of time both the participants and senior leaders commit to the program stands as a tangible testament to the level of expectations that ELC APAC has set for the future of leadership within the region. “Commitment from senior management has never waned even though we’re in our tenth cohort,” Seng explained. “Each cohort has a lot of senior leaders supporting it in many different ways. It includes our regional president and senior vice presidents, vice presidents and managing directors … even those flying from global headquarters in New York!” In the last twenty-four months, ten cohorts (more than two hundred people) have been put through the program; there have been 160 graduates thus far and the program has had a positive impact on the way leaders head their teams. Fifteen percent of the people who have participated in the program now have greater roles in the company. In addition, ELC APAC has gained deep insight into how the talent pool achieves readiness for the transformation of the business, including that:

• The firm is in a stronger position to establish its leadership bench — allowing for investment and development of key people to take on future leadership roles.

• The strategy to build from within has been realized and gained credibility for the organization.

• The TLP continues to raise the bar on many aspects of leadership in ways that empower future key ELC leaders to be ready to excel in their roles.

• Leadership development has played a significant role in improving employee engagement across the company.

• The TLP has become a strong brand within the organization and is connected through emotional engagement across the APAC region.

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Notes 1. Zook, Z. and Ledingham, D., “Winners Narrow Their Sights to Expand” (white paper, 2008), retrieved from http://www.bain.com/bainweb/PDFs/cms/Public/BB_Software_growth.pdf. 2. Mankins, M.C. and Steele, R., “Turning Great Strategy Into Great Performance,” Harvard Business Review 83, no. 7/8 (July-August 2005): 64-71. 3. The Economist, “Strategy Execution: Achieving Operational Excellence — the Benefits of Management Transparency” (white paper, 2004), retrieved from http://graphics.eiu.com/files/ ad_pdfs/Celeran_EIU_WP.pdf. 4. Charan, R. and Colvin, G., “Why CEOs Fail. It’s Rarely for Lack of Smarts or Vision. Most Unsuccessful CEOs Stumble Because of One Simple, Fatal Shortcoming,” Fortune (June 1999), retrieved from http://money.cnn.com/magazines/fortune/fortune_archive/1999/06/21/261696/ index.htm. 5. McCall, M.W., Lombardo, M.M., and Morrison, A.M., The Lessons of Experience (Lexington, MA: Lexington Books, 1988). 6. Ulrich, D. and Ulrich, W., The Why of Work: How Great Leaders Build Abundant Organizations That Win (New York: McGraw-Hill, 2010). 7. Bersin & Associates, “Action Learning Facilitates Business Growth: A Look Inside Cisco’s Progressive Executive Development Approach” (white paper, October 2009), retrieved from http://www.cisco.com/web/about/ac49/ac55/Bersin_C3_Case.pdf. 8. Eichinger, R.W., Lombardo, M.M., Stiber, A.J., and Orr, J.E., Paths to Improvement: Navigating Your Way to Success (Minneapolis: Lominger, a KF company, 2011). 9. Eichinger, R.W., Dai, G., and Tang, K.Y., “It Depends Upon What You Mean by a Strength,” in The Perils of Accentuating the Positive, ed. Kaiser, R.B. (Tulsa, OK: Hogan Press, 2009). 10. Gump, B., “Vitality and Vigor,” MacArthur Foundation (November 1997), retrieved from http://www.macses.ucsf.edu/research/psychosocial/vitality.php#relationses. 11. Schwartz, T., Gomes, J., and McCarthy, C., Be Excellent at Anything: The Four Keys to Transforming the Way We Work and Live (New York: Free Press, a division of Simon & Schuster, 2010). 12. Leroy, H., Palanski, M., and Simons, T., “Authentic Leadership and Behavioral Integrity as Drivers of Follower Commitment and Performance,” Journal of Business Ethics 107, no. 3 (2012): 255-64. 13. Cashman, K., Leadership from the Inside Out: Becoming a Leader for Life (San Francisco: BerrettKoehler Publishers, 2008). 14. Swisher, V. V., Becoming an Agile Leader: Know What to Do When You Don’t Know What to Do (Minneapolis: Lominger, a KF company, 2012).

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Talent Management Best Practice Series: Leadership Development

15. Lombardo, M. M. and Eichinger, R. W., The Leadership Machine: Architecture to Develop Leaders for Any Future, 10th anniversary ed. (Minneapolis: Lominger International, a Korn/Ferry company, 2011). 16. Orr, J.E., “Survival of the Most Self-Aware: Nearly 80 Percent of Leaders Have Blind Spots About Their Skills” (white paper, Minneapolis: Korn/Ferry International, Korn/Ferry Institute, 2012). 17. Hallenbeck, G.H., “ ‘The Big 8’ Skills Give Lift to Rare-Air Executives” (white paper, Minneapolis: Korn/Ferry International, Korn/Ferry Institute, 2012). 18. Vaitheeswaran, V.V., Need, Speed, and Greed: How the New Rules of Innovation Can Transform Businesses, Propel Nations to Greatness, and Tame the World’s Most Wicked Problems (New York: HarperCollins Publishers, 2012). 19. Harward, D., “How Big Is the Training Market?” TrainingIndustry.com (January 10, 2012), retrieved from http://www.trainingindustry.com/blog/blog-entries/how-big-is-the-trainingmarket.aspx.

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About the Korn/Ferry Institute The Korn/Ferry Institute generates forwardthinking research and viewpoints that illuminate how talent advances business strategy. Since its founding in 2008, the institute has published scores of articles, studies, and books that explore global best practices in organizational leadership and human capital development.

About Korn/Ferry International Korn/Ferry International is a premier global provider of talent management solutions, with a presence throughout the Americas, Asia Pacific, Europe, the Middle East, and Africa. The firm delivers services and solutions that help clients cultivate greatness through the attraction, engagement, development, and retention of their talent.

Visit www.kornferry.com for more information on Korn/Ferry International, and www.kornferryinstitute.com for thought leadership, intellectual property, and research.

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