Developing Strategic Leadership


October 30, 2007

by Marshall Goldsmith

Developing leaders with strategic vision and successfully implementing strategy are two critical challenges for every chief executive. These goals can best be achieved by aligning corporate strategy, leadership development strategy, and succession/career planning.

Robert Fulmer and I have known and worked with each other for almost 30 years. Bob is a world expert on leadership development and co-author of four important books on how companies can develop better leaders. The most recent, The Leadership Advantage (with Jared Bleak) has just come out. Bob is academic director at Duke Corporate Education.

Not long ago, we had a chance to talk about his latest ideas on making leadership development a source of competitive advantage. Here are edited excerpts of our conversation:

You and I have both been involved in management education for most of our careers. What are the important changes that you see in our field? 

At one time, corporate educational programs were a disconnected series of independent events. In today’s best firms, they are part of an integrated career-development plan that is tied to strategic objectives with specific, actionable goals.

Leadership development has moved from training “just in case” someone needed to know the key concepts or tools in management to focused learning and development “just in time” to apply them to achieve specific strategic objectives. Today’s leadership development is much more likely to include an application opportunity and to support specific strategic initiatives.

Which firms do you think are exemplars in this arena? 

We worked with the American Productivity & Quality Center, the Center for Creative Leadership, and Duke Corporate Education to identify the best in this arena. After several screening steps, we wound up focusing on Caterpillar (CAT), Cisco Systems (CSCO), PepsiCo (PEP), PricewaterhouseCoopers and Washington Group International (WNG) as well as on our previous research with General Electric (GE) and Johnson & Johnson (JNJ).

In a nutshell, what makes these firms stand out? 

The best organizations are consciously strategic in their leadership planning. They tie human resources development activities directly to the business strategy and ask what business issue each developmental activity is designed to address. They don’t always have new, unique practices, but they approach their challenges in a systemic, strategic manner. Like a winning sports team, they play by the same rules but execute all of the basics better than their competition.

What causes a firm to move from good to great in this arena? 

Just as individuals have “teachable moments” in their careers, our research indicates that organizations have teachable moments too. These opportunities generally occur when there is a new CEO who wishes to align the organization around a new strategy, when two organizations have merged, or when there is a significant organizational crisis.

Can you give some examples? 

When Jim Owens became CEO of Caterpillar in 2004, one of his early decisions was to empower the Leadership College of Caterpillar University to create a suite of courses for key leaders at each stage of their career. The “leadership quest” for high-potential leaders specifically focused on the creation and implementation of a vision for 2020. PepsiCo has a long tradition of CEOs seeing the development of the firm’s highest-potential leaders as a personal responsibility.

The merger of Price Waterhouse and Coopers Lybrand created a need and opportunity for a strategic shift in culture along with the development of new leadership expectations. The collapse of the dot-com bubble helped Cisco recognize the importance of shifting from a “buy”to a “build” philosophy for leaders.

In 2002, Washington Group International emerged from Chapter 11 with a four-person office of the chairman headed by Stephen Hanks as CEO and a new three-fold mission statement that identified people and their development as a first priority. According to Hanks, “The company that develops talent the fastest will take the hill.”

What do all of these have in common? 

Each benchmark company used a key organizational transition to develop, articulate, and align a new leadership strategy with the strategic direction of the firm. These transitions became teachable moments for the organization and formed crucial starting points for achieving excellence in leader development.

How important is top management support? 

One of our key findings was that leaders who teach are more effective than those who tell. Senior management at all of our best practices firms was involved in the design and delivery of key learning programs.

How do firms determine if their leadership development activities are strategic and successful? 

The best seem to believe that financial results are a “lagging indicator” of organizational success, while people development is a “leading indicator.” Consequently, people development is becoming an important part of the assessment of executive performance.

Pepsi has historically allocated one-third of incentive compensation for developing people, with the remainder for results. In 2007, the company is moving to an equal allocation of incentive compensation for people development and results.

Cisco Systems uses a “success case method” to assess their programs. Caterpillar measures a “return on learning” for key programs, and other firms do post-program assessments to determine how behaviors have changed as a result of developmental activities.

Are you implying that leadership development can be a source of competitive advantage? 

Absolutely! No business or strategy is good enough to succeed without strong leadership. And this strong leadership has been shown to be the essence of exceptional organizational performance. Leadership and learning should play a critical role in enabling organizational growth and transformation. Today’s leaders must be flexible, collaborative, able to leverage subject-matter expertise, and willing to continue their learning journey.

The benchmark companies understand these principles well and created best-in-class leadership-development strategies, practices, and measures that in turn contribute to overall financial and strategic success. They know that great leaders deliver great results.

How do our readers get in touch with you? 

Your readers can feel free to contact me at

Thank you!