The Value of a Leadership Brand
In our research, we’ve found that companies who are known for their leadership all have one obvious connection: they build leadership brand.
The Value of a Leadership Brand
Think about a company you admire for their leadership. A few may come to mind: Amazon, Disney, Microsoft, American Express, Apple. What do all these firms have in common? How did they get to be known for their leadership? In our research, we’ve found that companies who are known for their leadership all have one obvious connection: they build leadership brand.
Leadership brand is a reputation for developing exceptional managers with a distinct set of talents that are uniquely geared to fulfill customer and investor expectations. A company with favorable leadership brand inspires faith that employees and managers will consistently make good on their brand promises to customers. It also embeds those promises into the company’s culture and integrates them into its policies and expectations of employees.
To possess a leadership brand, leaders must think and act consistently with customer promises made by the firm brand. When a firm has an identity in the mind of customers, the expectations that flow from that identity need to be made real to employees through the firm’s policies and culture. Leaders at all levels of an organization can transfer customer hopes and expectations into leadership actions.
Here are a few examples of companies whose firm identity is linked to leadership actions.
The firm is know for…
Leaders at this firm are known for…
|Wal-Mart||Everyday low prices||Managing costs efficiently; getting things done on time|
|Lexus||Pursuit of perfection||Managing quality processes (lean manufacturing and design, Six Sigma) to improve constantly|
|Apple||Innovation and design||Creating new products and services that break industry norms|
|Procter and Gamble||Brands you know and trust||Developing consumer insights, targeted marketing, product innovation|
|Disney||The happiest place on Earth||Delighting guests with an exceptional and personalized experience|
The benefits to building leadership brand are significant. Companies with a strong leadership brand produce generation after generation of excellent leaders. They’re not as affected by changes in management as firms with weaker leadership brands. In fact, change of leadership often turns out to be positive. Because they’ve secured the ongoing confidence of their stakeholders whose expectations are consistently met, they also tend to enjoy fairly steady profits year after year. What’s more, leadership brand also wins with investors—we’ve found that companies with strong leadership brands tend to have above average P/E ratios with corresponding higher market value. It’s clear that leadership brand matters. So why do so few companies succeed in establishing one that generates confidence and results?
One reason is a misguided focus on leaders versus leadership. Many companies tend to focus on building individuals as leaders instead of building leadership as an organizational capability for the firm. Being a leader focuses on the person; building leadership focuses on the organization that creates leaders. Investing too much time developing an individual leader often creates the kind of celebrity leadership that can end up hurting a firm once that leader moves on or fails to live up to expectations. Another issue that hinders leadership brand are development programs that are too generic or too internally focused. Leadership can and should focus on the things that go on outside the company as much or more than what happens inside the company.
It’s smart to develop strong individual leaders. But given the short tenure of most CEOs and the shifting fortunes of the corporation in a rapidly changing marketplace, we think it’s smarter to create bench strength with an outside-in leadership brand that’s tailored to a firm’s unique requirements. A focus on leadership brand emphasizes the methods that secure the ongoing good of the firm and also builds future leaders.
If strong leadership is a source of value, how can such a brand be built? We propose six steps in the RBL Leadership Brand® Architecture.
1. Build business case for leadership
We believe that developing leadership should be a top business priority. A case for leadership brand shows how leadership investments contribute to organization goals or critical challenges.
2. Agree on what leaders must do
Identify expectations for leaders at your company- a leadership profile. Consider what you want to be known for by your best customers and what attributes and results are needed to contribute to that reputation. Create a statement of leadership that articulates the leadership reputation in terms of attributes the leader must have and results the leader must deliver.
3. Assess leaders & leadership
Once the leadership profile is defined, leaders can be assessed by how well they behave the brand as they deliver results and by how they’re developing the requisite skills and attributes. Use a 360 (or 720) assessment to collect objective data from multiple stakeholders and use the assessment to detect patterns.
4. Invest in leadership & leadership
Leading companies invest in specific practices that instill the leadership brand such as formal training, on-the-job experience, and off-the-job experiences. Let the perspective of customers and investors influence the teaching.
5. Measure leaders & leadership
Two key measures are important in evaluating leadership. One is tracking the leadership development investments and the outcome of those investments (such as behavior change). The other is referring back to the business case for leadership: is the focus on leadership yielding the promised business results?
6. Ensure reputation
The ultimate goal is for leadership brand to build stakeholder confidence. CEOs should lead the charge to build awareness of the brand by ensuring that interested stakeholders understand the brand, what’s being done to build the brand, and the results that have been achieved.
By following these six steps, companies can create a leadership brand capability that differentiates the organization to employees inside and customers and investors outside. When an organization has a leadership brand, customers have positive images of the firm, investors perceive the firm as possessing intangible value, employees feel more committed, and leaders create enormous value.
We’ve helped dozens of firms define their leadership brand and make it real in their organizations. Learn more about how we can help you get started.