Sometimes we are prisoners of other people’s paradigms. The problem with most companies, even those with strong management, is that there are few mechanisms for bottom-up renewal. As a result, change happens in convulsions usually involving a crisis. The credit crunch did more to Citigroup and Merrill Lynch than trigger the departure of their respective CEOs. It showed that they had had very weak mechanisms to regenerate leaders.
But leadership is more important than picking another CEO; it’s identifying and grooming leaders at all levels. In this issue, CE looks at the importance of leadership development in two different ways. In “Stars and Keepers,” Andrew Green, Chris Barbin and Melanie Schmidt examine a merger notable for the acquirer’s attention to retaining the talent required to make the deal worth pursuing in the first place.
Elsewhere, CE looks at what leading companies do to develop a talent pipeline. In our third annual study (p. 58) conducted in partnership with The Hay Group, we look at the 20 best companies that develop leaders at all levels of the organization. In his new book The Future of Management, Gary Hamel credits Mary Parker Follett, a contemporary of Frederick Winslow Taylor, for being the most prescient management thinker of the 20th century. He advances the following from her 1924 work, Creative Experience, in which she wrote:
Leadership is not defined by the exercise of power, but by the
capacity to increase the sense of power among those who are led.
The most essential work of the leader is to create more leaders.
Hamel argues that all management is stuck in a time warp. It still has its hierarchies; its bureaucracies, and its attention to stamping out variances. Eliminating variances is good insofar as it promotes efficiency, but as the pace of change accelerates, more companies are finding themselves on the wrong side of the change curve. This is why GE’s Jeff Immelt and Procter & Gamble’s A.G. Lafley spend up to half their time in one way or another developing talent from within. For the third year running, the two companies have led the study’s premier list. “We are an innovation company,” says Lafley. “In our company you’ve got to be very open and agile, someone who’s continually learning and getting the best ideas from anywhere.” Hamel argues that the technology of management must be reinvented. But who is going to do the reinventing? Bet on those who develop the gene pool for the tomorrow no one can fully anticipate.