Building a Leadership Brand
Quick: What do the following firms have in common?
General Electric, whose motto is "imagination at work," is a diversified company with $163 billion in annual revenue. It is famous for developing leaders who are dedicated to turning imaginative ideas into leading products and services. A GE manager can be trusted to be a strong conceptualist as well as a decisive thinker; an inclusive, competent team leader; and a confident expert in his field.
Johnson & Johnson, whose credo begins, "We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services," earned $53 billion in revenue last year. It is celebrated for developing leaders who provide scientifically sound, high-quality products and services that help heal and cure disease and improve the quality of life. A Johnson & Johnson manager is known for being socially responsible and a stickler for product development and differentiation. The manager takes a product to market in a disciplined way, is committed to building consumer trust, to product quality and to safety.
"Good help to those in need" is the mission of Bon Secours Health System, a non-profit health care firm based in Marriottsville, Maryland, that operates a variety of hospitals and nursing care facilities. Consistent with its purpose as a Catholic health care ministry, the 19,000-person organization develops leaders who put a premium on "reflective integration." That means Bon Secours expects its managers to do more than just run health care units. They must also balance the business of health care with compassion and caring.
Give up? One obvious connection among these firms—and others such as PepsiCo, Goldman Sachs, Disney, Boeing and Herman Miller—is that they turn out strong leaders, in some cases becoming "leader feeder" firms, whose managers are well equipped to run other organizations. But there’s a less obvious answer as well: These companies go beyond standard-issue leader training, doing something they themselves aren’t even necessarily aware of. Instead of merely strengthening the abilities of individual leaders, these companies focus on building a more general leadership capability. Specifically, they build what we call leadership brand.
Leadership brand is a reputation for developing exceptional managers with a distinct set of talents that are uniquely geared to fulfill customers’ and investors’ expectations. A company with a leadership brand inspires faith that employees and managers will consistently make good on the firm’s promises. A Nordstrom customer knows that the retailer’s employees and managers will give her white glove service. Parents who take their kids to a Disney theme park assume that ride operators and restaurant personnel will be upbeat, friendly and gracious. McKinsey clients understand that smart, well-educated consultants will bring the latest management knowledge to bear on their problems. A leadership brand is also embedded in the organization’s culture, through its policies and its requirements for employees. For example, the tagline of Lexus is "the pursuit of perfection." Internally, the Lexus division translates that promise into the expectation that managers will excel at managing quality processes, including lean manufacturing and Six Sigma.
In observing 150 successful leader feeder firms of various sizes over the past decade, we have found that most of them have developed a similar outside-in approach, which helps them produce an excellent pipeline of leaders generation after generation. They also tend to enjoy remarkably steady profits year after year, because they have secured the ongoing confidence of external constituents whose expectations are comfortably filled by leaders throughout the organization.
Building a strong leadership brand requires that companies follow five principles. First, they have to do the basics of leadership—like setting strategy and grooming talent—well. Second, they must ensure that managers internalize external constituents’ high expectations of the firm. Third, they need to evaluate their leaders according to those external perspectives. Fourth, they must invest in broad-based leadership development that helps managers hone the skills needed to meet customer and investor expectations. And finally, they should track their success at building a leadership brand over the long term. Before considering these principles in more detail, however, let us consider why relatively few companies are able to establish leadership brands in the first place.
For more information see www.rbl.net.
Originally Published in the Harvard Business Review, July 2007.