The future of leadership development - Nick van Dam

The future of leadership development – Nick van Dam

Corporations are facing unprecedented challenges in the 21st century, and this requires a different style of leadership. The demand arises from several new and disruptive realities:

- We live in a VUCA world of exponential change. This acronym developed by the US military to describe the changed nature of battle in the 21st century – Volatile, Uncertain, Complex, and Ambiguous – applies to all organizations. 

- With disruptive technologies emerging rapidly, businesses and their underlying business models change at a fast pace and deeply.

- The already ongoing automation of the workplace creates a shift in the nature of work due to technology and automation

- The lifespan of a Fortune 500 company was 90 years in 1935, by 1975 this was shortened to 30 years, and in 2011 it was 18 years. And the lifespan continues to dwindle (so does the tenure of the CEO and other top leaders).

Companies who want to survive in this VUCA world must continuously innovate and reinvent themselves.  Executives are needed to play a critical role in this by leading positive change and building purposeful and sustainable organizations.  But it isn’t clear that they are prepared for success in this new and unpredictable environment.

CEOs identify the development of leadership talent equipped to meet these challenges is one of their most pressing concerns. As stated in an HBR article (June 2015), “People Before Strategy”, “CEOs know that they depend on their companies’ human resources to achieve success.  Businesses don’t create value – people do.”

McKinsey research verifies this perspective and finds that over 90 percent of CEOs are already planning to increase investment in leadership development because they see it as the single most important human-capital issue their organizations face.[1] Earlier McKinsey research indicates that this investment is spot-on because good leadership is fundamental to organizational health, which is an important driver of shareholder returns.[2]

But serious questions arise –

1. Are the current approaches to leadership development building the most needed leadership capabilities?

2. What approaches best produce the new capabilities and foster successful transfer to the workplace?

3. How can we leveraging all potential leadership earning opportunities and methods?

4. Can we measure the return-on-investment of leadership development?

The most needed leadership capabilities for our VUCA world

“What got you here, won’t get you there”. Marshall Goldsmith.

You cannot rely on what may have worked for leaders in the past. Today’s world is different. The stakes are high and the challenges and issues are changing at a rapid speed.  Among researchers and thought leaders, there is some consensus that the most needed characteristics and traits for leaders today include: Authenticity, Inspiration, Passion, Flexibility, Comfort with Ambiguity, Collaboration, Optimism, Learning, Humility, and a Focus on Mental and Physical Health.

In an extensive survey of 189,000 people in 81 diverse organizations[3] around the world, McKinsey research has narrowed what is required down to four essential leadership behaviors that matter most.  These include:

- Solving problems effectively – which precedes decision-making.  If not done well the outcomes of decisions will be compromised.

- Operating with a strong results orientation – following through on the promise of the vision to achieve results.

- Seeking diverse perspectives – watching internal and external trends, seeking input from others and differentiating the important from the unimportant issues.

- Supporting the performance of others – building trust and helping colleagues overcome challenges.

There is another key to attaining and maintaining the new leader mindset. To keep up the demands of a rapid pace with clarity of mind and positive action, the leader cannot ignore the importance of exercise, reflection and mindfulness, good nutrition and enough sleep. Research has shown that sleep-deprived brains lose the ability to make accurate judgments. Neuroscientists know that although other brain areas can cope relatively well with too little sleep, the prefrontal cortex (seat of all the higher-order cognitive processes, such as problem solving, reasoning, organizing, planning, and executing plans) cannot.[4] Which means that in order to be effective as a leader today and tomorrow, attention must be paid to building and preserving health.

Best approaches to produce the new capabilities and foster successful transfer to the workplace

“We can’t solve problems by using the same kind of thinking we used when we created them.” Albert Einstein

Given the vast and ever evolving changes in the requirements of leaders, it is not possible to pursue traditional approaches and methods for development. Organizations recognize this. Only 7% of organizations think that their companies develop their global leaders effectively and only 34% of learning from development interventions is transferred into real behaviors back in the workplace.  One off face-to-face learning programs are not sufficient to overcome these issues. Therefore, it is critical that the next generation of leadership development programs are anchored upon key learning design principles:

Anchored in the business context and reflects reality

First, learnings must be focused on the practical day-to-day business context by linking to real world business leadership challenges. Secondly, the learning must be situated in the organizational and personal context of the people in the program, where they can work on real business problems and projects that are relevant to their job and apply acquired insights and skills back in the work environment. Third, leadership development must go beyond skill building – first, critical required behavior changes must be identified and defined and what is getting in the way revealed (e.g., underlying mindsets and root perspectives) to help people shift how they act at work.

Evidence-based learning practices

Professional learning design has its roots in various disciplines including: neuroscience, psychology and pedagogy.  Evidence-based approaches reveal that adults learn the best when: they are motivated and in charge; are pushed to the edge of their comfort zone; are challenged by action and experience; are involved in a combination of formal and on-the-job training; learn from role models, experts and their peers; and, are supported by effective just-in-time encouragement from coaches and mentors. [5]

Blended learning

Most effective leadership learning combines a number of different learning interventions and solutions. For example:  learning needs are assessed via stakeholder interviews and supplementary (online) diagnostics; participants are assigned meaningful pre-work; they learn tools and build skills in a classroom; use new skills to deliver on real world projects as part of field work; and employ (digital) tools to continuously reflect and track their progress. During this extended experience, participants engage regularly via a digital platform in at-your-own-pace courses, experience coaching with faculty, and group work with their global cohorts.

Individualized development journeys

Every person has very unique development needs and learning preferences. Most effective development programs can be customized by the leader to support his/her development. Elements of individualized learning journeys could include: shadowing a leader, special job assignments, coaching, access to on-demand learning programs, on-the-job performance support, digital learning modules, leader as teacher, groupwork, in-person workshops, in addition to formal classroom programs.

Digital learning

Digital learning solutions – such as videos, corporate MOOCs (Massive Open Online Course) (within an organization also-called SPOCs – Small Private Online Course), online assessments, online simulations and games, online performance support aids, e-coaching and mentoring, online communities, virtual classrooms, webinars etc. – are key components of any leadership development program. They can be taken on-demand at any-time and any place and on different devices. Additionally, digital learning will support the knowledge transfer and application on-the-job.

Driven by the organization

It is invaluable that company executives own and champion leadership development programs in any organization, engage meaningfully with the participants and recognize and reward new leadership behaviors.

Finally – a lot of leaders tell us that not all learning can happen on the job.  They are simply incredibly busy during the day, much too busy to have time to focus on learning.  Therefore, they value time away from the job which provides them with opportunities to connect with themselves, reflect on their actions, gain new insights, learn from others and practice new skills in a safe environment.  As demonstrated above, ‘one size no longer fits all’, a leadership learning experience must be a rich tapestry of multiple approaches to leadership mastery.

Measuring leadership development ROI

To our final question, leadership development can have measurable returns:

Organizations earn a substantial premium for great leadership – those performing in the top quartile on leadership outperform others by nearly 2x on EBITDA.[i]

Organizations that invest in developing leaders during significant transformations are 2.4x more likely to hit their performance targets.[ii]

Dr. Nick H.M. van Dam

Partner, Global Chief Learning Officer, McKinsey & Co.

Professor Corporate Learning & Development, Nyenrode Business Universiteit

Founder & Chairman, The e-Learning for Kids Foundation

[1] The State of Human Capital 2012—False Summit: Why the Human Capital Function Still Has Far to Go, a joint report from The Conference Board and McKinsey, October 2012, on mckinsey.com.

[2] See Aaron De Smet, Bill Schaninger, and Matthew Smith, “The hidden value of organizational health—and how to capture it,” McKinsey Quarterly, April 2014, on mckinsey.com.

[3] Claudio Feser, Fernanda Mayol, and Ramesh Srinivasan, “Decoding Leadership: What Really Matters”, McKinsey Quarterly, January 2015. The 81 organizations are diverse in geography (for instance, Asia, Europe, Latin America, and North America), industry (agriculture, consulting, energy, government, insurance, mining, and real estate), and size (from about 7,500 employees to 300,000), on mckinsey.com

[4] Nick van Dam and Els van der Helm, “The Organizational Cost of Insufficient Sleep”, McKinsey Quarterly, January 2016 + Eileen Rogers and Nick van Dam, “YOU! The Positive Force in Change”, LULU publishing, 2015.

[5] Claus Benkert , Nick van Dam, “Experiential learning: What’s missing in most change programs”, McKinsey Operations 2015, on mckinsey.com

[i] 1 Organizational Health Index database (n = 60,000); ”Return on Leadership”  report by Egon Zehnder Intl and McKinsey

[ii] 2 McKinsey Quarterly Transformational Change survey, January 2010; June 2009 McKinsey Global survey results