Development Dimensions International (DDI) a respected,  global talent management company recently published their Global Leadership Forecast 2011. This report is one of the largest leadership studies of it’s kind, with more than 2,600 participating organizations. The research provides some interesting perspectives on the current state of leadership and future leadership needs. Specifically, the report looked to uncover the answers to the following questions:

• What is the overall quality of leadership in organizations today? How does it compare to previous years?
• Do organizations have a sufficient supply of capable leaders to meet tomorrow’s business challenges?
• What can HR professionals do to revolutionize the development of their leaders?
• Is it time to radically innovate not only products and business models, but also the very way we manage?
• What impact can we have by moving the needle on leadership quality?

The research defined a leaders as “someone who manages the performance or responsibilities of individuals in an organization.”

Research Findings

This research study produced interesting findings I have extracted some of the research findings I found interesting, those that stood out and caught my attention.

Effective Leadership Matters

• The research demonstrated that organizations with the highest quality leaders were 13 times more likely to outperform their competition in key bottom-line metrics such as financial performance, quality of products and services, employee engagement, and customer satisfaction.

• Leaders who reported that their organization’s current leadership quality as poor, only 6% of them were in organizations that outperformed their competition.
• Organizations with higher quality leadership were up to three times more likely to retain more employees than their competition.

Future Leaders Are Few

• Only 38% of the 12,423 leaders in the study reported that the quality of leadership in their organization is very good or excellent.
• According to both leaders and HR professionals, leadership quality was rated highest in North America (52% of leaders and 30% of HR rated it highly) and lowest in Europe and Asia (33% of leaders rated it high, as did only 21% of Asian HR professionals).

Leadership Development Needs

• Only 33% of leaders and HR professionals rated their leadership development efforts as highly effective.
• Driving and managing change will remain the number one priority for leaders  over the next three years, see illustration below.

• About 50% of leaders are currently ineffective in the skills critical for the next three years.
• The most common personality derailers of leaders in their organization were risk aversion, distrust, and approval dependence (58% selected risk aversion and 44% selected distrust and approval dependence).

Leadership Development Effectiveness

• Only 18% of HR professionals surveyed reported strong bench strength to meet future business needs.
• Research into the use and effectiveness of leadership development methods is illustrated below.

• Only 31% of leaders and HR professionals rated the effectiveness of leadership selection as high.
• Only 26% of organizations have effective programs to ensure smooth leadership transitions.

The Importance of Culture

“Right now, your company has 21st-century, Internet-enabled business processes, mid-20th-century
management processes, all built atop 19th-century management principles.” – Gary Hamel

DDI partnered with Gary Hamel and his Management Lab to identify the key factors that either facilitate or hinder the way in which the work of management is carried out, these are illustrated below.

• Organizations with effective management cultures were more than 2½ times more likely to have
  highly passionate leaders.

Wrapping Up

I found this report provided interesting insight into the current state of leadership. Within this research report are some insights that will help improve the effectiveness of leadership in your team and organisation, consider the following:

• Do you have a strategy and plan for improving your organisations leadership effectiveness?
• What are you doing to improve your ability to drive and manage change?
• What are you doing to develop future leaders?
• What is the state of your organisations culture? How are you planning to change it?

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The Booz & Company is the one of the oldest management consulting firms which completed a survey of more than 1,800 executives. According to the survey:

• A great majority of executives (64% of the survey respondents) say that their biggest frustration factor is “having too many conflicting priorities.”
• Executives report that their biggest challenges are (a) ensuring that day-to-day decisions are in line with the strategy (56%) and (b) allocating resources in a way that really supports the strategy (56%).
• Half of the executives (50%) consider setting a clear and differentiating strategy a significant challenge.
• In fact, most executives (52%) do not feel their company’s strategy will lead to success. Only 21% say their company has a right to win in all the markets in which it competes.
• Most executives (81%) say growth initiatives lead to waste, at least some of the time.
• The vast majority of executives (82%) say functional departments in their companies get competing demands from different business units.

The Bottom Line

The research seems to highlight short coming in how companies go about creating and setting strategy.

“The root of the problem is that too many companies grab too hastily for what seems like the next answer to growth. They don’t have a solid framework to decide which set of opportunities will lead to sustainable success.”

Effective strategy is developed using a well proven approach that results in a clear focus on a limited set of opportunities. Trying to be all thing to all people, avoiding making important  trade offs usually results in a weak strategy and very poor execution.

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A recent post on Harvard Business Review, “Why American Management Rules the World” discusses research from a group of European researchers which found that on average American firms are the best managed in the world.

“Over the past decade, a team from Harvard Business School, London School of Economics, McKinsey & Company, and Stanford has systematically surveyed global management. We have developed a tool to measure management practices across operational management, monitoring, targets, and people management. We scored each dimension on a range of practices to generate an overall management score, surveying over 10,000 firms in 20 countries. This has allowed us to create the first global database of management practices.”

The mean management score for the countries that participated in this research is illustrated in the chart below.

Some of the findings from this research include:

• Well managed firms thrash their poorly managed competitors.
• Good management appears to be so strongly linked with good performance that it might be reasonable to expect all firms to make better practices a priority.
• More intense competition is clearly associated with better management practices
• Management practices vary much more within than across countries
• American firms outperform all others
• U.S. dominance occurs in the manufacturing, retail, and healthcare sectors
• Japanese, German, and Swedish firms follow closely behind.
• The middle stand countries like the UK, France, Italy, and Australia, which have reasonable but not brilliant management practices.
• Every country has some world-class firms, individual companies are not trapped by the national environments in which they operate — there are top performers in all countries surveyed.
• Being in a world-class environment like the U.S. does not guarantee success. Even in America, more than 15% of firms are so badly managed that they are worse than the average Chinese or Indian firm.
• Multinational companies perform well wherever they are in the world, even in areas where overall management practice scores were particularly low.
• Managers are poor at assessing their own performance.
• Countries with more flexible labour markets have better people management.
• Better management is linked with higher skills

What is the secret of management success?

When examining what makes for management success on of the biggest drivers is due to differences in people management practices.

“American firms are ruthless at rapidly rewarding and promoting good employees and retraining or firing bad employees. The reasons are threefold.

1. The U.S. has tougher levels of competition. Large and open U.S. markets generate the type of rapid management evolution that allows only the best-managed firms to survive.
2. Human capital is important. America traditionally gets far more of its population into college than other nations.
3. The U..S has more flexible labor markets. It is much easier to hire and fire employees.”

For more on this interesting research and related work, go to the World Management Survey.

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The “2010 Global IBM CEO Study” was recently published, it’s one of the largest one-on-one CEO interview studies, surveying 1,541 CEOs, general managers and senior public sector leaders from 60 countries and across 33 industries. The four primary findings of this year’s survey are as follows:

• Today’s complexity is only expected to rise and more than half of CEOs doubt their ability to manage it. Seventy-nine percent of CEOs anticipate even greater complexity ahead. However, one set of organisations we call them ‘Standouts’ has turned increased complexity into financial advantage over the past five years.
• Creativity is the most important leadership quality, according to CEOs. Standouts practice and encourage experimentation and innovation throughout their organisations. Creative leaders expect to make deeper business model changes to realise their strategies. To succeed, they take more calculated risks, find new ideas and keep innovating in how they lead and communicate.
• The most successful organisations co-create products and services with customers, and integrate customers into core processes. They are adopting new channels to engage and stay in tune with customers. By drawing more insight from the available data, successful CEOs make customer intimacy their number one priority.
• Better performers manage complexity on behalf of their organisations, customers and partners. They do so by simplifying operations and products, and increasing dexterity to change the way they work, access resources and enter markets around the world. Compared to other CEOs, dexterous leaders expect 20 percent more future revenue to come from new sources.

After reviewing the findings it becomes clear the extent to which the economic downturn has affected customers, business and society. We will not simply go back to “business as usual” once we recover from this economic downturn. The world has undergone a significant paradigm shift and we will never be the same.

As we move towards a recovery in the world economy, global leaders are experiencing high levels of complexity and uncertainty, “eight in ten CEOs expect their environment to grow significantly more complex and fewer than half believe they know how to deal with it successfully.” This environment creates an urgent need for leadership. Given this, the survey explored what CEOs consider  the most important leadership qualities required over the next five years, the results are illustrated below.

CEOs cited creativity as the most important leadership quality over the next five years…

Creativity is essential when uncertainty is high and where the future is expected to be a significant departure from what we’ve known in the past. When uncertainty is high you cannot just repeat the successful practices of the past and expect similar results. You will need to find new ways of thinking, new ways of operating and new ways of behaving. The IBM survey puts it this way…

“Creativity is often defined as the ability to bring into existence something new or different, but CEOs elaborated. Creativity is the basis for ‘disruptive innovation and continuous re-invention,’ a Professional Services CEO in the United States told us. In addition this requires bold, breakthrough thinking. Leaders, they said, must be ready to upset the status quo even if it is successful. They must be comfortable with and committed to ongoing experimentation… It’s not that CEOs are just now becoming aware of the importance of creativity they have long been aware of the need to innovate their products, their processes and their customers’ experiences. Even in 2004, CEOs were telling us that ‘CEOs the world over were refocused on growth and they viewed innovation as the way to get there.’ But today, creativity itself has been elevated to a leadership style. Traditional approaches to managing organisations need fresh ideas, ideas that are intended to disrupt the status quo.”

It seems that we are entering a period in our history that places a premium on effective leadership. It’s not often that we have the opportunity to re-invent how we choose to approach our life and work. These are exciting times indeed…!

• What are you doing in response to this increased demand for leadership?
• Are you re-examining your existing leadership practices?
• Are you experimenting with new approaches, new paradigms, new ways of working? If not, why?

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Research from the Center for Creative Leadership (CCL) which surveyed 2,200 leaders from 15 organizations, in three countries between 2006 and 2008 produced some interesting findings. The research project was designed to answer the following questions:

• What leadership skills and perspectives are critical for success now and in the future?
• How strong are current leaders in these critical skills and perspectives?
• How aligned is today’s leadership strength with what will be the most important skills and perspectives in the future?

A comparison of the leadership strength from the research, that contrasts existing leadership skill levels with the skills that would be required in the future, the results for the analysis is illustrated below.

The research identified the following seven competencies as most critical for success, now and in the future:

1. Leading people: directing and motivating people.
2. Strategic planning: translating vision into realistic business strategies, including long-term objectives.
3. Managing change: using effective strategies to facilitate organizational change.
4. Inspiring commitment: recognizing and rewarding employees’ achievements.
5. Resourcefulness: working effectively with top management.
6. Doing whatever it takes: persevering under adverse conditions.
7. Being a quick learner: quickly learning new technical or business knowledge.

The interesting thing to note from this research is that only resourcefulness is a current top ten skill! All the others rated as important for success in the study are not skills that leaders have mastered today. This means that today’s leaders are not meeting the demands of their organisations. The CLL call this the “Leadership Gap”, referring to the huge gap that exists between the leadership skills organisations have today and the skills they will require in five years time.

Given these findings we need to take personal responsibility and ask ourselves:

• What are we doing personally to improve our leadership skills?
• What are we doing to help others improve their leadership skills?
• If we are taking action, are we doing enough?

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