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Core Principle 4: Integrate and measure

Arne Gast, Faridun Dotiwala, Gemma D’Auria

Why is system integration important? | Integrating the change through the Influence Model | Measuring impact | The link to organizational culture | Implications for leadership development

In the last chapter, we saw that the human brain remains plastic during adulthood, and we reviewed modern adult learning techniques. We discussed the importance of applying these learning methods during a leadership development programme in order to shift behaviours sustainably. However, formal training/capability building is only one component of a system-wide change effort. In order to shift behaviours across an organization, more is needed.

This chapter reviews the importance of embedding the desired behavioural changes in the broader organizational system, which we do through the Influence Model (discussed below). This encompasses not only capability building, but also role-modelling, fostering understanding and conviction, and aligning HR and people systems. In addition, it includes measuring the progress and adapting as needed. Finally, we illustrate the implications for leadership development and how this could look in practice.

Core Principle 4: Integrate and measure the programme in the broader organization

Organizations must ensure that the broader ecosystem directly supports and enables the shift in behaviours, skills and mindsets that the leadership development programme promotes

Why is system integration important?

During our research for this book we considered the question Do organizations lead? We answered this with a resounding ‘yes’ – see Chapter 3. In the same way, one could ask whether organizations have distinct cultures (contexts) that are self-sustaining and self-perpetuating. Numerous researchers find that this is indeed the case. More importantly for leadership development, studies have shown that people adapt to their environments, and that their behaviours are at least in part due to the context they are in.¹ Changing the context, or system, therefore changes people’s behaviours.

As such, if leadership programmes are treated as isolated initiatives, they will never succeed in shifting and maintaining the behaviours of the leaders and broader organization. To create lasting impact at scale, organizations must adapt formal and informal mechanisms to enable the leadership programme. This could include ‘harder’ elements such as a revised performance management system, performance evaluation, compensation, and internal mobility and succession-planning, as well as the ‘softer’ elements of feedback, non-financial rewards such as recognition, and praise, and the overall way employees interact and work.

Like many other of our core principles, the importance of integrating and measuring is most apparent in its absence. One of the most frustrating situations leaders face, having learned new things and grown during a programme, is to return to a rigid organization that not only disregards their efforts for change, but also actively works against them. This recalcitrance could take many forms: unsupportive superiors who do not espouse new and different behaviours, HR systems that do not reward (or may even penalize) new leadership behaviours such as empowerment and experimentation, and innovation, and processes and authority thresholds that do not enable certain behaviours (for example, customer centricity and speed of decision making). Instead, what is needed is to embed the leadership development intervention in the organizational system.

Our latest leadership development research confirms the need for action in this area as three of our top ten key actions were related to embedding leadership development interventions into the broader organization. We found that organizations with successful leadership development interventions were 5.9 times more like to review current formal/informal mechanisms for building leadership skills, prior to building a leadership development intervention than those organizations whose interventions were not successful.

It is critical that organizations adapt formal HR systems to reinforce the leadership model/the desired behaviours (for example, recruiting, performance evaluation, compensation, succession planning), which had a multiple of 5.6 times. From our experience, adaptation of HR results is truly critical. For organizations that had successful leadership development interventions, almost 75 per cent adapted HR systems accordingly, while only 13 per cent did so for unsuccessful organizations.

Organizations should ensure that the top team role-models desired behaviours in the context of leadership programmes (for example, by acting as programme faculty, project sponsors, mentors, or coaches, which had a multiple of 4.9 times). Other important actions outside of the top 10 list were to measure ROI with the same rigour as other initiatives across three dimensions: participant assessment, behavioural change and business performance (3.6×), and to ensure programme objectives, metrics, tracking mechanisms and governance are clearly formulated and in place (3.3×).

Additionally, the focus on the broader organizational context means that the desired leadership behaviours become espoused by not only the leaders who receive the formal training, but also the rest of the organization.

All leadership development must bring about a change in behaviour across an organization. The other core principles explain why this is so, and how to achieve it. This principle explains how those changes become part of the life of the organization, and the new way of doing things.

Integrating the change through the Influence Model

Integrating or embedding the desired leadership behavioural change in the broader organizational system is critical to the success of a leadership development programme. In our view, the best way to change people’s behaviour is by using what we call the Influence Model, which is a proven model based on sound psychology and years of practice (see Figure 6.1).

FIGURE 6.1 The Influence Model

In both research and practice, we find that transformations stand the best chance of success when they focus on four key actions to change mindsets and behaviour:

•    fostering understanding and conviction

•    reinforcing changes through formal mechanisms

•    developing talent and skills

•    role-modelling

In any transformation or change (and leadership development is a prime instance), these four elements must all be present.²

The Influence Model is based on an extensive review of more than 130 sources and has stood the test of time. It has been a key enabler of organizational change for more than 10 years and it has informed thousands of client engagements in practice. We know it works. Our research in 2010 sheds light on the degree of difference in transformation success rates for organizations that do or do not deploy the different elements of the Influence Model (see Figure 6.2). It is clear that the results are not trivial.³

FIGURE 6.2 Transformation rates using the Influence Model

The Influence Model is a cross-cultural phenomenon. Research suggests that much of what is at the core of influence is not geographically or nationally dependent. Basic principles of influence – including reciprocity, scarcity, authority, consistency, liking and consensus – seem to exist in all cultures. As such, the principles in the Influence Model can largely be generalized across cultures. However, cultural differences do impact how to most effectively apply elements of the model. Research indicates that cultural differences can have a bearing on the relative effectiveness and application of specific influence strategies. For example, research suggests that group behaviour has even greater influence on how someone behaves in a collectivistic/communal culture (for example, Poland) vs. in a more individualistic culture (for example, United States) – a finding with implications for role-modelling. Conversely, one’s own behavioural consistency was shown to matter more in individualistic cultures – a finding with implications for fostering understanding and conviction.⁴

One of the benefits of adopting the Influence Model (and all that it implies about the systematized nature of the leadership development, or any change, effort) is that it prevents the behavioural change from becoming orphaned or disregarded. Instead, it implies a comprehensive change effort that transforms the overarching culture of the organization. This ensures that the desired change effort engages the full organization and not just a select 10 per cent or so of leaders. Below, we provide more details on each of the quadrants, why they are important, and the implications for leadership development.

Fostering understanding and conviction

The first quadrant is around fostering understanding and conviction in the organization. This is critical because human beings strive for congruence in our beliefs and actions. In 1957 the Stanford social psychologist Leon Festinger published his theory of cognitive dissonance, the distressing mental state that arises when people find that their beliefs are inconsistent with their actions. Festinger observed in the subjects of his experimentation a deep-seated need to eliminate cognitive dissonance by changing either their actions or their beliefs.⁵

The implication of this finding for an organization is that if its people believe in its overall purpose, they will be happy to change their individual behaviour to serve that purpose; indeed, they will suffer from cognitive dissonance if they don’t. But to feel comfortable about change and to carry it out with enthusiasm, people must understand the role of their actions in the unfolding drama of the organization’s fortunes and believe that it is worthwhile for them to play a part.

It isn’t enough to tell employees that they will have to do things differently, however. Anyone leading a major change programme must take the time to think through its ‘story’ – what makes it worth undertaking – and to explain that story to all involved in making change happen, so that their contributions make sense to them as individuals. This is because humans are wired to respond to stories, as stories activate and excite our brains.⁶

When telling this story, it is important to think about how it is framed and presented. Research indicates that how a message is framed affects its persuasive power; we often react differently to the same underlying message based on how it is worded. ⁷ It is also important to touch on different sources of meaning among employees. We find that people are motivated by different things, with a roughly equal split among the elements of society, company, customer, team and me. Change stories should therefore touch on each of these five sources of meaning. In addition, research has shown that communicating clear goals, especially shared goals, can be a powerful motivator and enhance performance.⁸

There are numerous ways to do this. For example, executives should craft an overarching company change story, fit it to their contexts, and ‘cascade’ the story to senior leaders in large group sessions where they define what it means for them. This cascade should be repeated until it reaches the front-line. The story should be kept alive through traditional and viral communications (for example, Townhalls, intranet, emails, meetings, celebrations of where it’s working). We’ve also seen examples of organizations establishing ‘language markers’ (for example, Walmart’s ‘10 foot rule’ – when employees are within 10 feet of a customer, they must look him or her in the eye, greet and ask if they can help).

In addition to the content of the story, it is crucial to think through how the story is presented. We often find that executives spend the majority of their time on what to say, and not how to ensure the right level of emotional connection to the people in the organization so that they can truly buy into the case for change. Research shows, however, that the way a message is communicated visually and vocally influences an audience more than the content itself (verbal), with over 50 per cent of the impact coming from the body language of the presenter and visuals, almost 40 per cent coming from the vocals, and less than 10 per cent coming from the content itself.⁹

For leadership development programmes specifically, here are some interventions we have seen work to foster understanding and conviction:

•    Developing and disseminating the message that we are only as strong as our people – we will reap many times what we invest in their development

•    Publicly committing to developing internal talent

•    Promoting voluntary training and development programmes

•    Creating and publishing a standard career development profile for each role (for example, training, job rotation, required skills, time to promotion)

Role-modelling and leadership

The second quadrant of the Influence Model has to do with the leaders and pivotal influencers in the organization role-modelling or embodying the desired behaviours, i.e. ‘walking the talk’. Humans unconsciously mimic the behaviour and emotions of the people around them. Researchers have shown that we have a tendency to assume the behaviours, expressions, speech patterns, and other mannerisms of our interaction partners without conscious intention,¹⁰ and that even emotions can be contagious.¹¹

Leaders have a disproportionate impact on people within the organization, and role-modelling is especially important for those at the top.¹² However, people model their behaviour on ‘significant others’: those they see in positions of influence. Within a single organization, people in different functions or levels choose different role-models – a founding partner, perhaps, or a trade union representative, or the highest-earning sales rep. In addition, we are also prone to consciously conforming to align our own behaviour and thinking with others in order to fit in.¹³ Behaviour in organizations is deeply affected not only by role-models but also by the groups with which people identify. So to change behaviour consistently throughout an organization, it isn’t enough to ensure that people at the top are in line with the new ways of working; role-models and key influencers at every level must ‘walk the talk’.

The way role-models deal with their tasks can vary, but the underlying values informing their behaviour must be consistent. In a company that encourages entrepreneurial decision making at low levels, one middle manager might try to coach junior employees to know how to spot a promising new venture; another might leave this up to them. Both, however, would be acting in line with the entrepreneurial principle, whereas a boss who demanded a lengthy business case to justify each $50 expenditure would not be. But organizations trying to change their value systems can’t tolerate as much variance in their role-models’ behaviour. If, in this case, entrepreneurial decision making were a new value, both of these middle managers might have to act in roughly the same way in order to encourage their subordinates to make bold decisions.

A typical intervention is to align the top team (for example, top 200) on the direction of the change and on their role in making it happen. Often their role will include taking symbolic actions that send a strong, positive message to the rest of the organization. Symbolic actions are actions that the organization will notice, and which are representative of the new leadership model and culture. For example, this might mean regularly ‘walking the halls’ to ask how employees are doing, working alongside front-line staff once a month, or hosting regular lunches with employees. Other interventions include finding and empowering the key influencers so that they become change leaders; and leaders showing openness by asking for – and acting on – feedback, and at the same time encouraging direct reports to do the same.

For leadership development programmes, we have seen countless examples of executives endorsing a programme for everyone but themselves, believing that their subordinates have much to learn but they themselves do not. Over a quarter of all organizations felt that leadership development programmes do not apply to all levels of their organization. Below are some interventions we have seen work in practice.

•    Have the top team be the first cohort of the leadership development intervention – and share the experiences with the rest of the organization

•    Leaders in the organization acting as programme faculty, project sponsors and mentors

•    Leaders creating a learning plan for each of their direct reports and encouraging them to share that plan with their direct reports as an example

As mentioned in Core Principle 2, we use people analytics to assess more accurately who the organization’s top talent really are, at different levels of the organization. People analytics can also be used to identify ‘influencers’, who may not necessarily be characterized as top talent but who are important to win the support of, and who should act as change agents and role-models.

Developing talent and skills

The third critical element of the Influence Model is capability building and leadership development, which is the focus of this book. As we saw in earlier chapters, it is critical to link the programme to context, engage a critical mass of leaders, and to use the latest adult learning principles in designing and running the leadership development intervention.

In addition to engaging leaders on the programme, however, it is important to ensure that everyone who is expected to behave differently is given the appropriate tools and skills. Many change programmes make the error of exhorting employees to behave differently without teaching them how to adapt general instructions to their individual situation. It is one thing for the leader to tell his sales team to ‘be more customer-centric’, and it’s another thing for the leader to coach each sales rep do so and provide them with the right software and customer insights. The organization may urge its people to be ‘customer-centric’, and even walk the talk, but if it paid little attention to customers in the past, its sales staff will have no idea how to interpret this principle or won’t know what a successful outcome would look like. In order to truly cascade the new leadership behaviours to all employees, below are some interventions we have seen work in practice:

•    Developing individual development plans for each employee, driven by their direct managers

•    Ensuring leaders provide feedback to and coach employees on the desired behaviours. This should be cascaded from leaders all the way down to the front line

•    Providing learning opportunities that are supportive of the desired behavioural shifts, to all employees. A cost efficient way to do this is to provide eLearning modules to all employees

•    Have leaders teach the new behaviours, skills and mindsets to their direct reports, having their direct reports do the same, and in this way cascading the learning interventions to the front line. This has the added benefit that the people teaching will further assimilate the learnings. As the organizational psychologist Chris Argyris showed, people assimilate information more thoroughly if they go on to describe to others how they will apply what they have learned to their own circumstances. The reason, in part, is that human beings use different areas of the brain for learning and for teaching.

Reinforcing with formal mechanisms

The last piece of the Influence Model is perhaps, together with role-modelling, the most critical. It is also the one with the highest numerical success ratio at 4.2 times. The importance of reinforcing behavioural change with formal mechanisms builds on the work of B.F. Skinner, who is best known for his experiments with rats during the late 1920s and the 1930s. He found that he could motivate a rat to complete the boring task of negotiating a maze by providing the right incentive – corn at the maze’s centre – and by punishing the rat with an electric shock each time it took a wrong turn.

Skinner’s theories of conditioning and positive reinforcement were taken up by psychologists interested in what motivates people in organizations. Organizational designers broadly agree that reporting structures, management and operational processes, and measurement procedures – setting targets, measuring performance, and granting financial and nonfinancial rewards – must be consistent with the behaviour that people are asked to embrace. When an organization’s goals for new behaviour are not reinforced, employees are less likely to adopt it consistently; if managers are urged to spend more time coaching junior staff, for instance, but coaching does not figure in the performance scorecards of managers, they are unlikely to bother. While it may not be overly rigid to include quantitative KPIs on coaching (for example, number of sessions conducted), the behaviour can be measured through a 360-degree review, with rewards and consequences based on the behaviours the organization is trying to promote.

Some disciples of Skinner suggest that positive-reinforcement ‘loops’ have a constant effect: once established, you can leave them be. Over time, however, Skinner’s rats became bored with corn and began to ignore the electric shocks. In our experience, a similar phenomenon often prevents organizations from sustaining higher performance: structures and processes that initially reinforce or condition the new behaviour do not guarantee that it will endure. They need to be supported by changes that complement the other three conditions for changing mindsets. ¹⁴ Other research has shown that learning and behavioural change often occurs through direct associations (Pavlov’s dogs)¹⁵ and vicarious reinforcement (watching others suffer the consequences of their actions).¹⁶

However, research (and our experience) also shows that organizations often reinforce the wrong things and overlook the right things.¹⁷ Organizations often over-weight financial rewards, when employees in practice often value a broader range of both financial and non-financial rewards. According to the Theory of Needs, employees also value achievement (implying that clear targets and feedback on progress are motivators), power (implying that promotions are motivators), and affiliation (implying that shared recognition and team rewards are motivators).¹⁸ In fact, financial rewards have even been shown to hurt motivation in intrinsically motivated people.¹⁹

In addition, many other structural elements of an organization influence behaviour. For example, the characteristics of a job and the way the work itself is designed (responsibilities, decision-making rights, team support etc.) impacts employees’ motivation.²⁰ In the same way, the organization structure shapes employees’ behaviour. For example, a mechanistic organization model (highly centralized, formalized, hierarchical) leads to very different behaviours and mindsets than an organic/agile organization model (highly dispersed, transparency and free flow of information, autonomous units).²¹

To make the behavioural change stick, key interventions are to ensure roles and responsibilities (including accountability) are clear, to refresh/reinforce standards and procedures, to integrate the desired behavioural change into the individual performance management system (ensuring the right mix of financial and non-financial incentives), and to cascade key performance indicators down through the line and build them into key business processes.

Leadership development programmes stall when the surrounding HR systems remain static in the face of expected behavioural change of leaders. While participants gain increased awareness of themselves and others and learn new skills, they often clash with a misaligned incentive system, leaving them frustrated. As one leader put it, ‘they [executives] expect me to collaborate across the group, but my bonus is based on the bottom line of my business unit’ – an all too common insight. As a result, participants gravitate to old forms of behaviour, and organizations are thus not able to sustain the impact of a leadership development programme. Here are some the key elements we have seen work in practice:

•    Embedding the leadership model into individual performance management, at all levels. This requires breaking the desired behaviours down into clear expectations for the employees (for example, in a performance grid). In addition, business KPIs should also be updated to reflect the desired changes (for example, targeting more innovative leaders requires more risk taking and perhaps a push to more revenue from new sources). Organizations should also ensure that the new performance management metrics are linked to rewards and recognition/promotion, as well as consequence management.

•    Embedding the leadership model into the employee value proposition and consequently into the recruiting process.

•    Ensure a robust performance dialog process is used to help employees understand what is expected of them and to give them the right feedback to help them develop.

•    Aligning processes and delegations of authority to the desired behaviours (for example, if an organization wants employees to be more empowered, providing more decision-making rights is desirable).

•    Succession planning for top levels of organization.

Measuring impact

Organizations vary in terms of how they measure the impact of their leadership development interventions. At one extreme, some organizations do not measure it at all. The Chief Learning Officer of a multi- national company, for example, told us that his organization does not measure the ROI of training, as it is such an integral part of the organization - much in the same way that you typically do not measure the ROI of your finance professionals. Nonetheless, we find that it is generally helpful to measure the impact of leadership development programmes, at a minimum in order to compare different approaches and improve interventions along the way. This involves formal measurement of outcomes and outputs – above and beyond the four areas of intervention based on the Influence Model – to properly anchor the impact of the leadership development intervention and properly embed it in the broader system. This is distinct from the individual performance management discussed above, but instead focuses on the intervention as a whole. We frequently find that organizations pay lip service to the importance of quantifying the value of their leadership development investment. When organizations fail to track and measure changes in leadership performance (and the performance of individual leaders) over time, they increase the odds that improvement initiatives won’t be taken seriously. Additionally, a failure to measure not only decreases effectiveness of training but also makes it harder to illustrate a business case for additional leadership development initiatives.

Too often, evaluation of leadership development begins and ends with participant feedback; the danger here is that trainers learn to game the system and deliver a syllabus that pleases rather than challenges participants. Our most recent research indicates that only a quarter (27 per cent) of organizations measure participant learning, only a third (37 per cent) measure change in participant behaviour, and fewer than half (44 per cent) actually track one of the key metrics of leadership development, the impact on the overall organization (for example, through financial KPIs or organizational health). A quarter of organizations (26 per cent) state that they don’t measure the return on leadership development at all.²² Yet targets can be set and their achievement monitored. Just as in any performance programme, once that assessment is complete, leaders can learn from successes and failures over time and make the necessary adjustments.

We typically measure four main elements, similar to the model laid out by Donald Kirkpatrick, yet tailored to the needs of our clients, and use tools such as the Organizational Health Index.²³ These four elements are:

•    reaction of the participants

•    degree of learning

•    behavioural changes

•    organizational impact

We do not typically measure the return on investment of a learning intervention, as it is challenging to accurately isolate the impact of the training (see Chapter 13 FAQ 6 for a discussion on this point). However, we know that leadership is highly correlated with performance – organizations performing in the top-quartile on leadership outperform others by nearly 2 times on EBITDA,²⁴ and organizations that invest in developing leaders during significant transformations are 2.4 times more likely to hit their performance targets.²⁵

•    Participant reaction. This should cover a wide range of elements – course content, faculty, venue, value of time spent, overall net promoter score, as well as open comments.

•    Assess the degree of learning. This can be done through tests before and after the training, as well as through feedback from the managers of the participants.

•    Assess the extent of behavioural change. We recommend developing a customized 360-degree feedback tool that incorporates the leadership model, and embedding the 360-degree feedback tool into the performance management framework of the organization to track the impact of leadership development. Leaders can also use such tools to demonstrate their own commitment to real change for themselves and the organization. One CEO we know commissioned his own 360-degree feedback exercise and published the results (good and bad) for all to see on the company intranet, along with a personal commitment to improve.

•    Measure overall organizational results. This has potentially many elements to it. At the individual level, one could monitor the performance of participants vs. non-participants, for example, in terms of revenue growth year-on-year. Another approach is to monitor participants’ career development after the training, for example, in terms of the proportion that were appointed to more senior roles one to two years after the programme, as well as the attrition rates of participants vs. non-participants. By analysing recent promotions at a global bank, for example, senior managers showed that candidates who had been through a leadership-development programme were more successful than those who had not.

We also measure the impact of the projects that are carried out by programme participants. Metrics might include cost savings and the number of new-store openings for a retail business, for example, or sales of new products if the programme focused on the skills to build a new-product strategy. The committee evaluating the project (typically made up of senior leaders) often have a good sense of what project quality typically looks like, and whether the participants on the programme have delivered projects that are higher than what would be expected without the learning intervention.

Finally, it is critical to measure overall organizational health. This will show, at an organizational level, the changes in overall health, the leadership outcome, the leadership practices, as well as the specific behaviours in the leadership behavioural report. Some companies include health-related metrics into their management accounting systems, while others monitor health ‘in real time’ by asking employees one health-related question a day, every day.

For example, American Express quantifies the success of some of its leadership programmes by comparing the average productivity of participants’ teams prior to and after a training programme, yielding a simple measure of increased productivity. Similarly, a non-profit we know recently sought to identify the revenue increase attributable to its leadership programme by comparing one group that had received training with another that had not.²⁶

The link to organizational culture

We often get asked the question: Are a leadership model and culture the same thing? They are not. Marvin Bower, McKinsey’s Managing Director from 1950–67, defined culture as ‘The way we do things around here’, and we find this to be a practical and simple definition.²⁷ As such, culture fully encompasses leadership behaviours but is even broader. For example, part of a corporate culture is the dress code, meeting etiquette and social events. Many of these elements may not be formalized in a leadership model (and may not be formalized at all), but form an important part of how the organization operates. We often measure culture using the organizational health index, as it is quantitative, actionable, and directly linked to performance; the OHI’s underlying management practices, in particular, are a good representation of how people do things in the organization.

However, an outcome of a leadership development intervention that encompasses all elements of the Influence Model is a shift in the culture. Leadership development at scale changes the expectation of employees in terms of what behaviours to display in different situations. Through the Influence Model, new leadership behaviours become the practices that the organization does normally – transforming ‘the way people do things’. Leadership development done well thus shifts the underlying culture towards a culture of leadership and specific leadership behaviours, in line with the leadership model.

There are two implications for organizations. First is that leadership development interventions should be fully aligned with other cultures or people interventions that the organization may be undertaking. Second is that organizations should think about the aspirational end state of leadership development as creating a more leadership-oriented culture. It is not merely about tweaking the underlying formal and informal mechanisms – these are input drivers – but rather about shifting the underlying way of working of all employees, at all levels.

The end game is thus a transformed organization with a transformed culture. This does not mean that the organization needs to let up on the system embedment – it is critical that each of the four quadrants of the Influence Model continue to work in tandem. But it does mean that the relative effort to sustain (and perpetuate) the change diminishes. New recruits are immediately swept up in the culture and begin adapting their behaviours quickly (or leave if there is not a cultural fit). The leadership culture becomes self-perpetuating – no longer dependent on specific individuals or on top down interventions – but embodied by all employees as the normal way of working.

Implications for leadership development

People’s behaviours are heavily influenced by their broader context, and in order to sustainably shift their behaviours, you need to shift the context. When designing a leadership development intervention, the actual capability building journey is only 25 per cent of what is required. In addition, it is critical to ensure leadership role-modelling, conviction and understanding throughout the organization, and adapted and aligned organizational processes and structures.

Technology plays a key role in enabling the system embedment. Recently we have embedded a ‘digital variation’ of the Influence Model, which allows for even more scale, speed and impact. Among other levers, technology enables quicker feedback loops (allowing individuals to see the impact of their actions in real time), personalization (for example, of messages and content, leading to greater relevance for each individual), shorter links (for example, between employees and managers, fostering more transparency) and community building (for example, through sharing of experiences between colleagues). These levers can be applied across all four quadrants of the Influence Model.

In addition, measurement is critical. Setting targets means that organizations have to put hard numbers on the soft stuff. They must tie learning objectives not only to participant feedback, but also to specific behavioural changes and overall performance improvements. This is done by base lining the as-is state and conducting regular ‘pulse checks’ to gauge improvements over time.

Finally, organizations should think about leadership interventions as cultural interventions. Leadership must be carried out not as isolated initiatives, but as fully embedded in the broader organizational culture and context.

Case study: The power of holistic system change

Context and challenge

In 2011/12, this consumer electronics organization was in crisis. Since 2000, revenues had declined by one third, profit margin had dropped to 7 per cent, and the stock price had fallen by 60 per cent; the company had under-performed the stock market indices for a decade. It was adrift in a perfect storm: the lighting division had pioneered LED technology and in doing so had moved from a comfortable oligopoly to a highly competitive semiconductor space. The healthcare division experienced a business model disruption as hospitals moved away from capital-intensive investments, forcing a transition to service provision. And the Consumer Lifestyle division (tv/audio) faced fierce competition at scale from Asian competitors. Its leadership realized that the organization had to reinvent itself. This was not only about strategy, processes and organization structures, but also about cultural change.

Approach

McKinsey began by measuring the top team’s attitude across the three fundamentals aspects of leadership: alignment (Does the team share a view on where to lead the organization and how to lead it there?), execution (Is the team effectively designed, and does it have high-quality interactions that drive superior performance?) and renewal (Is the team able to sustain its energy and does it have the capacity and ability to adapt to change?). In May 2011 these scores were some of the lowest McKinsey had seen; by the end of the leadership development programme, they were amongst the highest.

The organization decided to invest in building the leadership capabilities required for the transformation, and established a new practice around leadership by focusing on two critical characteristics: Feedback, and Courageous Conversations. In doing so, a new language of ‘learning and protection, elephants in the room, hot buttons’ began to emerge. The language itself became a catalyst to help teams move where they had previously been stuck. And a new language helped address the fear inherent in all transformations. The programme was anchored in three behaviours that shaped culture and articulated values. These were specific to the organization at that time: Team up to excel; Eager to win; Take ownership, and were cast as a series of ‘from–to’ shifts:

•    ‘Team up to excel’ meant a shift from valuing relations over results, avoiding conflict and protecting functional interests to using tension as a source of learning and renewal, to deepen trust and drive collective performance

•    ‘Eager to win’ meant a shift from avoiding risk, valuing insight over action and being complacent to taking pride in winning and delivering on commitments, driving operational excellence with passion and constantly raising the bar

•    ‘Take ownership’ meant a shift from abdicating responsibilities, explaining non-performance with excuses or blaming others to being accountable for performance one could not entirely control by himself/herself

In the wider company context, the new CEO hosted a top 300 leadership summit to present the case for change based on the insight he gained in dialogues with hundreds of customers, investors and employees across the world: ‘We had our first collective courageous conversation addressing major elephants in the room. Tough – yet energizing – we built a fact-based case for change and a compelling story, where it became clear what was asked of us. This was the start of our Transformational journey, ‘Accelerate!’ which we clearly positioned as a marathon, not a sprint.’ At its next leadership summit in 2012, the organization chose a different framing by connecting the transformation to its core values. The company’s founder spoke in a 1930s video of the values of entrepreneurship and innovation; and all sectors presented how they were still living these values, showing the latest innovations and customer impact – this organization at its best. It was a turning point where many senior leaders’ involvement turned into commitment. From that moment many leaders stepped forward to become part of the ‘Accelerate!’ journey.

The new challenge was how to get the rest of the organization to this level. To this end, the organization embedded culture as one of the five pillars of the transformation, to ensure it was front and center. It then chose a holistic approach the focused not only on capability building, but also on creating the right external environment to enable the desired behavioural shifts:

•    The top 1,200 leaders went through a structured leadership development journey, focusing on the mindsets and skills needed to live the new behaviours. The program, called the Accelerate Leadership Programme (ALP), created a space where natural, cross-functional teams raised their individual and collective awareness on limiting mindsets in facilitated workshops, resulting in clearly defined learning practices that were then embedded in real life with coaching on the job

•    The desired behaviours were not only discussed in the workshops, but actively embedded in the organization. Leaders were coached on the importance of role-modelling and the specific symbolic actions they could take to signal the change, which helped ensure that the new behaviours trickled down the organization

•    The organization’s leaders developed a compelling change story linked to the transformation, which was communicated broadly and cascaded down the organization. Each leader took the ‘DNA’ of the story, and tailored it to make it their own for their department

•    There was a complete change in the incentive system, and incentives became linked to the extent to which employees lived the three desired behaviours

Impact

The ALP leadership journeys were truly liberating as they offered a space where deep and paralyzing fears blocking the change could be addressed. People found a common language to coach and – most liberating – experienced how conflict could be a place of learning and new ideas, not a place of personal judgment. As such they were ‘experiences’ that, over time and repetition, created a shift in the beliefs and values of the organization. This is the essence of culture change – the real change is not on the level of behaviors – behaviors are the mere product of underlying beliefs and values. And these only change by consciously creating experiences that shift these beliefs over time. The impact could be measured in two ways: first, the share price which recovered the dip from the preceding years (from a base of 1.0 in 2009, it stood at 1.2 in 2012 and rose to 1.8 in 2014). Second, by the degree to which the organization was living the new culture, and the effectiveness of teams in doing so. While the top team scores were amongst the lowest globally at the beginning of the programme (scores of 49–58), within 3 years they were amongst the highest in our database (scores of 87–93).

Reflection

While the holistic nature of the programme was a key success factor in itself, there were three other elements worth highlighting. First, the change efforts were anchored in performance transformations. While workshops are often disconnected from business realities, the ALP programme focused heavily on the specific business challenges that leaders were facing, to ground the personal transformation work. In addition, a whole network of internal ALP facilitators and coaches were trained, so they could provide continuous (sometimes tough) feedback to participants during the course of their day to day work, when old habits emerged.

Second, leaders who were part of the programme recognized how a business transformation also meant a personal transformation. The leadership develop culture journeys truly opened people up to change, helped leaders work through their vulnerabilities, and helped take away fear. This upfront investment in the cultural shifts at the beginning laid the foundation for the transformation. In addition, leaders recognized the importance of stepping into the unknown, and avoid ‘death by planning’. Leaders were coached to truly transform themselves and their teams, experiment, and learn along the way.

Third, the leadership development programme and broader culture change was managed with the same rigour as the business-related initiatives. The initiatives were measured at multiple levels, including at the organization level, across teams, and for individuals. For example, certain divisions created a fixed quarterly 360-degree feedback loop for all teams, to assess whether they had progressed in terms of embracing the new culture and behavioural shifts. Other behavioural assessments will never be 100% objective, the fact that they triggered a proper feedback discussion ensured that leaders took the initiative seriously.

Summary

We showed in Chapter 2 that there is no silver bullet to leadership development. Organizations need to do many things right, centred around four key principles:

•    Focusing on the critical shifts that drive disproportionate value

•    Engaging a critical mass of pivotal influencers across the organization to reach a tipping point

•    Architecting programmes that maximize behavioural change based on neuroscience

•    Integrating and measuring the programme in the broader organization

These four core principles will embed the new behaviours across the organization, in a sustainable manner (see Figure 2.3 for a reminder of the Leadership at Scale Diamond). They form part of an integrated system for leadership development. Our research and experience shows that all four principles must be present in order to increase the leadership effectiveness across an organization. Even if three out of four principles are adhered to, the leadership development impact is often severely compromised. In addition, we re-emphasize that the four principles are dynamic and never static. Once an organization has put in place all four principles, it is time to re-visit Core Principle 1. As context shifts, so do the behaviours, skills and mindsets you need to foster, and the cycle continues.

There are many different ways to put a leadership development intervention into practice (for example, the number of forums days, the exact learning modules used, the facilitators deployed, whether it’s on-site or at a remote location). Budgets often put a constraint on the solution space available. However, what is key is to incorporate the four principles in the programme. Doing this should greatly enhance the chances that the interventions are successful and that the changes are sustained. In the next part of the book, we display a typical way that we bring the four principles to life.