Leadership At Scale: Better leadership, better results

‘Anyone can hold the helm when the seas are calm’, said Publilius Syrus over 2,000 years ago. In organizational life today, there are few calm seas, few periods without turmoil. A good captain has the capacity to apply his or her refined judgement in uncertain situations and to encourage others to follow; then to learn from the experience and be ready for the next storm. Leadership matters, and organizations must find and develop that quality in their people to outlast and overcome those stormy seas.

This chapter introduces the foundations of our thinking on leadership and leadership development. First, we illustrate the link between leadership effectiveness and organizational health and performance. Second, we give a brief history of leadership development theories and philosophies. Third, we present our definition of leadership and its implications for organizations and leadership development.

We know from our research and our practice that the best-performing organizations transcend others in terms of their leadership. At its best, great leadership can achieve extraordinary results. And at its worst, poor leadership can derail teams, organizations and even nations. The evidence for this has long been intuitive, and visible to the discerning observer: it is possible to feel within minutes of visiting an organization whether it is ill or well (and even ill- or well-led). But this feeling is of little use unless there is data to support the insight and turn it into value-adding and actionable advice.

Anecdotally, there are a multitude of reasons why leadership matters: more clarity about direction, better plans, faster execution, better talent development and so on. These elements fall broadly into both organizational performance and organizational health. When reviewing the importance of leadership, it is therefore important to address both concepts. We will review each in turn.

Leadership effectiveness has a strong correlation with performance directly. Companies with top-quartile leadership outcomes on the McKinsey Organizational Health Index (there will be more on the OHI in the next chapter) have 3.5 times greater average total return to shareholders (TRS) than companies with bottom-quartile leadership outcomes, over a three-year period. When we looked at 14 individual leadership behaviours (more on the specific behaviours in the next chapter), we found that companies with top-quartile results for the leadership behaviour scores have between 1.4 and 7.2 times greater average TRS than companies with bottom-quartile scores, depending on the behaviour being looked at. For example, when looking at the ability of organizations to problem-solve effectively (one of the leadership behaviours we tested), companies in the top quartile on problem solving have a 6.6 times greater average TRS than companies in the bottom quartile on that behaviour.¹

Other studies back up these results: organizations performing in the top quartile on overall leadership effectiveness (leadership outcome) outperform bottom-quartile companies by nearly 2 times on EBITDA (earnings before interest, tax, depreciation and amortization).² Organizations that invest in developing leaders during significant transformations are 2.4 times more likely to hit their performance targets.³ And leaders who have developed a core of self-mastery feel 4 times as prepared to lead amidst change and are 20 times more likely to be satisfied with their leadership performance.⁴

Leadership matters to organizational health. Organizational health is the ability of an organization to align, execute and renew itself to sustain exceptional performance over time. Organizations with poor health typically face stark challenges, for example: lack of direction, customer losses, low employee morale, loss of talent and lack of innovation. On the other side, organizations with great health are typically performing extremely well, leading in their industry, gaining share in the market, attracting great talent and working with engaged, motivated employees.

At McKinsey & Company we measure organizational health with the Organizational Health Index (OHI), a metric based on nine outcomes (which measure perceptions of effectiveness), and 37 management practices (which measure frequency of each practice) (See Figure 1.1).

For more than fifteen years, we have compiled over 1 billion data points from more than 5 million respondents across more than 1,700 organizations. These organizations are spread out globally in over 90 countries, with all regions almost equally represented. Our research in the past decade shows that the OHI score of an organization is a strong predictor of shareholder returns. Organizations with high OHI scores tend to produce high levels of shareholder returns in the three years subsequent to the measurement of the OHI score.

The effectiveness of leaders in an organization strongly correlates with the OHI score of that organization. The R² is 0.78, meaning that the leadership outcome explains almost 80 per cent of the variance in the overall health scores – see Figure 1.2.

There is a significant difference between the likelihood that companies with a specific leadership level have top-quartile overall health: it is virtually impossible to have top-quartile health if leadership effectiveness is in the fourth quartile or third quartile, while only 27 per cent of companies with second-quartile leadership effectiveness have top-quartile health. This number jumps to 65 per cent for top-quartile companies in terms of leadership for exceeding the 25 per cent proportion of top-quartile health companies, conferring a 240 per cent advantage (see Figure 1.3). Leadership is thus clearly a key component of organizational health.

Hence we have seen that leadership effectiveness is a clear driver of overall organizational performance and health. So, what leadership behaviours are the best, under what circumstances, and how can organizations develop these behaviours at scale? This is the subject of the following chapters. Before we address these questions, it is important to understand the different leadership theories that exist, as well as how we define leadership and the implications this definition has on leadership development.

What makes a good leader? Ask any five experts what makes a good leader, and chances are you will get six answers: Aspiration. Inspiration. Imagination. Creativity. Authenticity. Integrity. Perhaps anything goes. It's now time for a reality check. There's good news, and there's bad. The bad news: we don't have a one-word answer. The good news: we have found the stepping-stones that empower organizations to develop leadership that is more effective, right across the organization.

Leadership has been a subject of investigation since the dawn of democracy in ancient Greece. Some 2,500 years ago, Plato's Republic sparked a furious debate among the citizens of Athens. His rigorous rules for the selection and education of the guardians of the ideal state were as controversial then as they are today. Overnight, leadership had become the talk of the town.

Today, colleges and universities in the US alone offer hundreds of degree programmes in leadership. Amazon lists more than 60,000 book results on the topic.⁵ In 2016 the word ‘leadership’ was mentioned in US news headlines more than 25,000 times,⁶ up from just a few hundred in the 1990s. Once again, leadership is the talk of the town.

In an effort to bring some measure of order to this rich discussion, we have identified five principal schools of leadership. While this breakdown is obviously a simplification, we believe it is an instructive one.

• Traits-based leadership. According to this theory, leaders are born, not made. Proponents of innate leadership believe that immutable personality traits, such as intelligence or character, determine an individual's leadership effectiveness and performance. One of the more popular versions of this school of thought is the ‘Great Man Theory’, developed by the Scottish scholar Thomas Carlyle in the Victorian era. Carlyle was convinced that the history of the world was ‘the biography of great men’ (he does not include women). It may well be that some individuals are more inclined to lead (and lead well) than others; but the limitation of this theory lies in its determinism: unless you are born a great leader, you never will become one.

• Behavioural leadership. This theory is based on the assumption that leadership is action rather than character. Leaders become leaders not by birth, but by the power of the behaviour they display. Rooted in nineteenth century behavioural psychology, this theory postulates that effective leadership is defined by a set of ideal behaviours. For instance, a strong leader may be someone who develops a compelling vision, acts courageously and takes decisions quickly. The drawback of this theory is its assumption that the same set of behaviours is optimal in all circumstances. But in a concrete business situation, some abstractly defined ‘ideal behaviour’, whatever it may be, could prove irrelevant or even detrimental to the leader's intent. It is hard to refute the idea that all leadership involves interaction and exchange between people, and therefore that all leadership is about behaviours; however, there is no one-size-fits all model, and behaviours have to be apt and appropriate in order to be effective.

• Situational leadership. According to this theory, great leadership arises only in response to specific situations. Its followers are convinced that different real-life situations call for different traits or behaviours in a leader; they deny that leadership is based on any single optimal psychographic profile or set of ideal behaviours. This theory draws on empirical research suggesting that someone who is a leader in one situation might not necessarily fill this role in others. Situational theories of leadership enjoy great popularity in practice. Their main drawback is their assumption that leaders can adjust their style according to the situation – that when circumstances or teams change, leaders can easily change their behaviours accordingly. In reality, even the finest leaders may have a hard time adapting to a changing environment or new types of challenges.⁷

• Functional leadership. This theory construes leadership as a combination of specific skills that help groups of individuals become effective as a team. These skills enable the leader to perform essential functions, such as monitoring, organizing, coaching, motivating and intervening. Proponents of functional leadership consider both behavioural and situational factors, suggesting that leaders should devise their courses of action in light of the specific requirements of a given organizational unit. The limitation of this theory is twofold. First, many of its opponents regard it as overly simplistic, since it reduces leadership to a technique or set of techniques. Secondly, real-life leaders often find it difficult to match the right approach to the right needs, to inflect their style to suit the needs of different groups, or both. In this respect, functional leadership theories resemble situational leadership theories.⁸

• Psychological leadership. This type of theory recognizes the fact that the path to great leadership is riddled with obstacles, and that many leaders feel they are less effective than they believe they could and should be. In response, the proponents of psychological leadership argue that leaders must accomplish self-mastery by exploring the driving forces of ineffective leadership behaviour and tackling their inner resistance to change. Critics of psychological leadership theory note that it relies on inference and interpretation rather than observation and measurement, and that it may be dangerous in the wrong hands. Because it uses introspection and self-examination, psychological leadership development requires practitioners with deep psychological expertise and experience.

In addition to these schools where ideas on leadership have coalesced, there has been a substantial body of work from numerous different angles. There is a great deal of literature from individual (often successful) leaders, who share their experiences. There are sector-based analyses – for example from the military – as well as regional studies that dive into cultural differences. More recently, gender based studies have emerged, which explore the differences and similarities between women and men.

All these theories have limitations as they try to explain leadership through a single lens, be it character, behaviour or situation. Therefore modern leadership models take several angles to address the practical definition of leadership. For example, the ‘Be + Know + Do’ model of leadership⁹ of the US Army is essentially interdisciplinary in that it focuses on character and traits (Be), skills (Know), and behaviours and action (Do), and draws on a clear sense of behaviours in context. The ‘Be + Know + Do’ model derives from several of the schools (innate, behavioural, situational). The point here is that no one model or theory can carry the whole field.

While we believe in the value of Occam's Razor – the principle that the simplest scientific explanation is usually the best – we also find that each of these schools (while adding an important angle) falls short of the manifold reality of organizational leadership we encounter in our work. We also take account of the individual variance we find. We serve many of the world's most distinguished leaders, and we find that no two are alike. Some are introverts, others extroverts. Some lead by doing; some are great at bringing out the best in others. Some thrive on detail, others on the big picture. Yet these wildly different individuals are all great leaders in their respective fields. In real life, all kinds of people excel and succeed as leaders.

Any theory should explain the past and help predict the future: such a thing is unlikely with a one-dimensional and static view of leadership. Instead, we take a view that is expressed through research, informed by real work engagements and the results we have achieved internally as well as with clients. No one answer fits all occasions, and equally no model is either robust or flexible enough to compass the many variables at work. The appeal of a ‘Both/And’ approach is more attractive as leadership challenges become more complex.

Bear in mind that we have at all times an organizational perspective: we think in terms of leadership within and across an organization, not solely of individual leadership. To increase the leadership effectiveness of an organization as a whole, it is imperative that executives think at an organizational, system-wide level, and the approach one takes to do this differs markedly from that of increasing the effectiveness of individual leaders.

Our definition of organizational leadership builds on several schools of thought and is pragmatic. We take inspiration from multiple schools and advocate an approach that is comprehensive and practical. In fact, we do not propose a new model of leadership. Rather, we build on existing thinking. Our definition of organizational leadership is thus as follows:

Our definition draws on all the schools of leadership thinking: behavioural (behaviours and skills), situational (in a given context), functional (aligning, fostering execution and renewing), and traits based and psychological (mindsets). It builds on existing work in the leadership literature. Gary Yukl, for example, categorizes individual leaders as task-oriented, relationship-oriented, change-oriented, and external, and stresses the situational variables alongside the importance of behavioural flexibility, i.e. the importance of adapting one’s leadership behaviours to certain situations. This is in a long tradition of situational leadership thinking, exemplified in the work of Ken Blanchard or John Adair that emerges from military practice¹⁰ yet is explored further through our research and practice on what really works ‘in the field’. Figure 1.4 summarizes our model of leadership, incorporating the four key elements of context, behaviours, skills and mindsets.

We believe leadership comes alive in the behaviours that are used, felt and observed across an organization. These seen and felt behaviours are where we have placed our main research effort (beginning with 24 leadership behaviours in the next chapter). Our research shows that the context defines which behaviours are most desired and most effective. We take these observed behaviours as our units of analysis, and the organization’s health (and the industry and economy in which it operates) as the primary context in which that behaviour is expressed. Our emphasis is on improving leadership effectiveness at an organizational level to help achieve organizational performance goals. Broadly, there are four premises in our view of organizational leadership.

Leadership is expressed in action. For us, this takes the form of alignment, execution and renewal. Leaders make decisions about people and direction (we call this alignment); they see that their intent is carried out (we call this execution), and they think about the next evolution of activity (we call this renewal). This cycle of alignment, execution and renewal may take place over the short term (in the event of a crisis) or the long term (in the event of a shift of circumstance or priority).

All leadership therefore seek to achieve these three things in concert. There are many ways to express this triad – alignment might well include visioning and inspiring people; execution might well involve organizing and measuring performance; and renewal might well entail a leadership approach that values creativity, innovation, adaptation, learning and development.

We want to highlight the importance of the third element renewal, which is represented in our definition by the last three words, the constantly changing environment. Organizational contexts have and will always be ever changing, and a key element of leadership is thus to display resilience and agility in order to continue to thrive.¹¹ We have previously shown that organizations and teams must demonstrate all three dimensions by emphasizing different elements of organizational health (see Figure 1.5), and it is only natural that leaders help bring these outcomes about.

2 Organizational strategies typically emanate from the top down to the rest of the organization, often through explicit Key Performance Indicators (KPIs) and clearly defined boundaries. Hence the common goal around which to align will vary greatly from one department to the next, meaning that the specific contexts within an organization have a bearing on the most relevant behaviours to display.

Would you trust a physician who prescribes the same treatment to all patients, regardless of their symptoms? Probably not. We strongly believe that there is no such thing as standard leadership behaviour that works irrespective of contextual factors, such as corporate strategy or the level of hierarchy of a given position.

Our research with Egon Zehnder International, an executive search firm, illustrates this point. By matching Egon Zehnder's management appraisals of more than 5,500 senior leaders with McKinsey's ‘Granularity of Growth’ database, we were able to isolate the impact of leadership on growth in terms of total return to shareholders. We have found that leadership quality matters. Executives at top-performing companies display stronger leadership profiles than those at other companies. But, more importantly, we found that different contexts require different combinations of leadership competencies.¹²

Let’s take growth strategies as an example. Thought and business leadership help commercial companies make the bold moves that let them excel at mergers and acquisitions; for example, the strongest predictor of growth through M&A turned out to be market insight. In contrast, people leadership and organizational savvy are more conducive to organic growth, which involves succeeding through superior execution of a given strategy. Achieving organic growth takes leaders who excel at developing organizational capability and display team leadership. These insights are in line with the work of Ralph Stogdill, a pioneer of situational leadership theory. In his influential review Personal Factors Associated with Leadership he found that few, if any, leadership skills are universally applicable.¹³ Hence the contextual awareness and the ability of a leader to adapt his or her behaviours appropriately is critical for successful leadership.

Take the chief executive of an American energy utility. When the market was deregulated, the company was plunged into the most serious financial crisis of its history. The CEO helped transform the organization from a denizen of the regulated age into a competitive player in a liberalized global market. He is convinced that leadership should be a function of economic reality: ‘You have to put things in the context of a business model. Who are your real customers? Can you grow the business? What kind of partner do you need to make it work? What do you really do? And where should that work be done?’¹⁴ The executive in question has since been named ‘one of the best-performing CEOs in the world’ by Harvard Business Review.

Our experience shows that highly successful executives typically think about a range of dimensions to determine the relevant context for effective leadership in a given case, for example:

Would you get on a plane piloted by an aviation expert who has logged zero flying hours? Would you buy tickets to the concert of a band that has never actually played together? We would not. Of course, you can learn to fly a plane in a simulator. You can learn to play the guitar by watching virtual tutorials. All this is true – up to a point. Sooner or later, you have to take your plane off the ground, get up on stage with the band.

The ability to display effective leadership behaviours in a given situation depends on having the right skills (and experience, which we count as an accumulation of skill). Leadership skills are the leadership lessons and wisdom that individuals have accumulated through formal training and on the job learning. Skills cannot be developed solely by reading about them; and learning can only be accelerated to a certain extent. As Henry Mintzberg said, ‘Leadership, like swimming, cannot be learned by reading about it’.¹⁵ It is undoubtedly important to receive the right training and best practises as a foundation for any skill-building effort. However, successful leaders are sure to hone their new skills in the context of actual business assignments – and are seen doing it.

In any given situation, a leader either has the right skills or does not, in which case the organization will have to take a risk and support the individual in developing these skills. In a low-risk situation, such as restructuring a small department, this may not be an issue at all, but in a high-risk situation, such as the acquisition and integration of a major competitor, it could be favourable to have individuals who have prior experience and skills learned from a similar initiative. Alternatives to developing leaders in their place could be to transfer leaders from within the organization, or to hire them from the outside, and then either on a permanent or temporary basis.

Leaders define goals, attract talent, assign responsibility, monitor target achievement and make decisions. In this respect, we follow the behavioural school: leadership is something you do.¹⁶ The important thing is that you do it, rather than just pretend to. Even after very basic training sessions, adults typically retain just 10 per cent of what they hear in classroom lectures, versus nearly two-thirds of what they learn by doing (more on this in Chapter 5). Furthermore, burgeoning leaders, no matter how talented, often struggle to transfer even their most powerful workshop experiences into changed behaviour on the front line.

Over the course of almost a decade, we have accompanied dozens of senior leaders who made transformational change happen in a wide range of national cultures, industries and organizations. They have restructured international conglomerates, turned around companies on the brink of bankruptcy, steered former monopolies through deregulation, and helped reinvent entire national economies. Despite the diversity of their assignments and the lessons they learned along the way, they all agree on one thing: these lessons could only be learned in real life. There is no exercise, no handbook, and no training programme that will prepare you for the real thing. As Marvin Bower, McKinsey's Managing Director from 1950 to 1967, put it: ‘The only training for being a CEO, is being a CEO.’

In short, great leaders’ skills are forged on-the-job, and the experience and skills that leaders have accumulated help them display more effective leadership behaviours.

Leaders are often required to adapt their behaviour to a new assignment, expand their knowledge to make sense of a change in context, or enhance their skill set as they take a new role. But in some cases, a more fundamental kind of development is called for. Think of an executive who moves into a board-level position, takes on an assignment in an entirely new corporate culture, or assumes a position of leadership in a situation of extreme uncertainty. According to our research, those who are most satisfied with their performance as leaders are those who excel at knowing and mastering themselves. They have the ability to regulate their own energy, tap into their personal sources of meaning and strength, overcome fears and connect with others.¹⁷

These and similar capabilities are unlike the kinds of skills learnt from a textbook. Collectively, they constitute what we think of as the hidden layer of leadership. This line of thought is inspired by psychological theories of leadership.¹⁸ While behaviour can be observed and knowledge can be communicated, psychology remains hidden beneath the surface. We use the metaphor of an iceberg; behaviours are ‘above the water’ and constitute only 20 per cent of what there really is. Below the water lie mindsets and beliefs, values, and needs and fears. See Figure 1.6. The reason we focus on mindsets is because mindsets ultimately drive behaviours. Hence, in the same way that ensuring leaders have the right experiences and skills for a given context, it is critical to understand and address what lies beneath the waterline in order to bring out the desired leadership behaviours.

There is ample literature that illustrate the power of mindsets and underlying needs and fears, including Kegan and Lahey’s Immunity to Change, Mitroff and Linstone’s The Unbounded Mind, Senge’s The Fifth Discipline, Dweck’s Mindset: The New Psychology of Success, Russo and Schoemaker’s Decision Traps and Winning Decisions, and Gallwey’s pioneering work in The Inner Game.¹⁹ In addition, recent breakthroughs in neuroscience are explaining, by taking into account neuroplasticity (the brain's ability to reorganize itself by forming new neural connections throughout life – we will review this in more depth in Chapter 5), how adults learn, the role our emotions play, and how we form new habits.

Variations of ‘iceberg coaching’ are common among executive coaches and some psychologists. The main idea is to identify the set of strongly held core beliefs that drive the behaviours above the waterline. Often, these core beliefs are unconscious for the individual, and it is only through careful questioning and reflection that they emerge. These core beliefs are, in turn, driven by a set of underlying needs and fears. For example, many young employees may not automatically ask their leaders for help if stuck on a problem. Indeed, some may go out of their way to hide the fact that they are stuck, instead spending many hours late in the evening trying to crack it themselves. They may have a limiting belief that asking for help is seen as a sign of weakness. If we dig a little deeper, we may often find an underlying belief that asking for help will lead to a poor performance rating, triggered by fear of a poor evaluation. This, in turn, could be triggered by a fear of failure, perhaps due to pressure at home, from peers, or from the employee himself or herself. (The iceberg model is a simplified version of a psychological model of elements that trigger behaviour. In reality, there are other elements to consider as well [personality traits, motivation, etc.])

Although some of these elements below the waterline are formed early in life and may be hard to change, we find that awareness alone often goes a long way toward increasing leadership effectiveness. Awareness helps us understand the unconscious roots of our behaviour, making them accessible to conscious reflection and careful evolution. Our research on organizational health shows that making one's mindset the subject of conscious scrutiny is an indispensable prerequisite of leadership effectiveness. Only about a third of over 2,500 executives in our sample said that their organization’s transformations explicitly assessed the mindsets that would need to change to reach their goals. Those that did so were 4 times more likely to be successful.²⁰

Take as an example a professional-services business that wanted senior leaders to initiate more provocative and meaningful discussions with the firm’s senior clients. Once the trainers looked below the surface, they discovered that these leaders, though highly successful in their fields, were instinctively uncomfortable and lacking in confidence when conversations moved beyond their narrow functional expertise. As soon as the leaders realized this, and went deeper to understand why, they were able to commit themselves to concrete steps that helped push them to change.

A major European industrial company, meanwhile, initially met strong resistance after launching an initiative to delegate and decentralize responsibility for capital expenditures and resource allocation to the plant level. Once the issues were put on the table, it became clear that the business-unit leaders were genuinely concerned that the new policy would add to the already severe pressures they faced, that they did not trust their subordinates, and that they resented the idea of relinquishing control. Only when they were convinced that the new approach would actually save time and serve as a learning opportunity for more junior managers – and when more open-minded colleagues and mentors helped challenge the ‘heroic’ leadership model – did the original barriers start to come down and decentralization start to be implemented.

One would think that, given the pertinence of this, leaders would have ample tools and training to help them understand their own and others’ mindsets in order to identify and shift limiting beliefs. Sadly, we find that this is not the case. There is still much work to be done in organizations to help leaders shift behaviours in themselves and in others by using tools such as iceberg coaching and self-reflection. Identifying some of the deepest, ‘below the surface’ thoughts, feelings, assumptions and beliefs is too often shirked in development programmes.

This is an important point for context-specific leadership. Organizations that wish to foster certain leadership behaviours must proactively foster the underlying mindsets most conducive to carrying out those behaviours. This starts by identifying the aspired mindsets. Thereafter organizations must assess current mindsets in the organization, draw a link to the desired mindsets (what we call the ‘from–to’ shifts) and design the interventions to create the shift. We will discuss our approach in more detail in Part 2 of the book.

From the perspective of leadership development, self-knowledge is essential in several ways. First, it is a source of insight: exploring our character or psychological makeup helps us understand what we thrive on and what we value. Secondly, it is a source of strength: a clear sense of how we are wired helps us apply our unique traits and talents to the tasks we face. Thirdly, it is a source of social competence: self-awareness lets us realize how we differ from other people, helps us see others for who they really are, and lays the foundation for collaboration.

While there may not be any particular type of personality pre-destined for leadership, we find that great leaders are often acutely aware of their unique traits and talents, and of how they can use these to everyone's advantage. The ability of a leader to understand his or her underlying mindsets, focus on strengths and shift limiting beliefs is thus a core enabler of effective leadership behaviours. Great individual leaders are willing to confront the inner barriers that sometimes keep them from realizing their full leadership potential. This is why it is better to create awareness rather than prescribe behaviour, and help leaders build on their strengths – rather than compensate their weaknesses, in the context of their work. We firmly believe that a leader's most powerful tool is neither a formula nor a checklist, but an open mind.

The focus on behaviours, skills and mindsets is another way of casting the relationship between the three elements in ‘Be + Know + Do’ schools of leadership thinking.²¹ The skills and mindsets are vital here, because they bridge the gap between knowing and doing. They are not necessarily natural to the workplace. They need to be learned, practised and mastered.

In addition, it is important to note another implication of our definition: that leadership is relevant at all levels of the organization. We do not discriminate in terms of hierarchy of leaders, managers, supervisors and front-line employees. At every level of the organization there are leadership opportunities and prerequisites to succeed. For the organization as a whole, leadership at all levels is thus not only relevant but critical in driving performance. In a typical organization, the leadership/executive team makes only a fraction of the leadership decisions on a daily basis, and it is the cumulative sum of better leadership at all levels that really moves performance.

No organization can survive with inadequate leadership. Leadership is a key enabler of financial and non-financial organizational performance. It is a complex topic, however, and is often romanticized. It appears to have many truths, depending on where you look, and you would be hard pressed to find someone who does not have an opinion about the topic.

This chapter has laid the foundations for us to explore what constitutes effective leadership, and what organizations can do to improve leadership development. We have reviewed the history of leadership and looked at five different schools of thought. We find that leadership development does not fall into one or two categories but is very much an ‘and’. By combining the different theories with proprietary research, our own leadership experiences developing consultants, and hundreds of client engagements, we have defined a unique perspective on leadership (and a definition) that is pragmatic – allowing us to understand what really drives leadership effectiveness at an individual and an organizational level.

In sum, our perspective on leadership posits three things. First, effective leadership at an organizational level is about behaviours that ensure alignment, execution and renewal. Second, the specific behaviours required are defined by the organizational context. Third, these behaviours are enabled by the right skills and the right mindsets. Organizations must understand their context and the resulting behaviours that are required, and put in place the skills and mindsets at scale in order to drive effective leadership.