What are the makings of great leaders? Do they arrive in the world, nearly packaged, waiting for their moment to shine? Or do they grow steadily, building in confidence and capability, as they make their way through life?
My long experience as an organisational psychologist tells me it’s the latter. Our top leaders are made, not born that way. They may show early promise, but need the right mix of opportunity, hard work and coaching to go the full distance. Their talent needs nurturing or we risk losing it.
As Jim Collins, co-author of ‘Built to Last’, discovered, organisations that thrive usually maintain a strong vision and ethos over the long term. They foster their talent from the ground up and have a credible succession plan. They choose internal candidates for senior leadership, people who maintain direction despite the turbulence, and who stay around for the long haul. By doing it this way, they get an alignment of individual ambition and organisational purpose.
Harvard Business Review has just published its annual list of the world’s 100 best-performing business leaders. Let’s look at the numbers. On average, the 100 leaders have been in office for 16 years. It gets better – 86% were promoted to CEO from within their own companies.
For me, this is very satisfying reading. Some people say that Collins’ research, first published in 1994, is out-of-date and no longer applies. The pace of change is such that few leaders can keep up. Frequent renewal is often necessary. This latest piece of analysis from HBR says something different. Collins is still relevant, perhaps more so. Why? Because a leader embedded in the company’s ethos, people and strategy is best positioned to read the currents and execute the winning strategy. You only get that if you grow your own.
Lars Sorenson is CEO of Novo Nordisk, a Danish pharma controlling half the world market for insulin products. His goal is to cure diabetes within 15 years and close down a big part of the business. He is also HBR’s best-performing CEO for 2015.
An odd choice for No. 1, you might think. Not at all. This year, for the first time, HBR included corporate social responsibility metrics in its calculations, along with the usual shareholder value and other performance criteria. Sorenson is a passionate supporter of social and environmental causes. For example, he differentiates the market and provides high-quality generic products to less affluent countries at 20% of the regular price. Staff are engaged with the mission. Patients are introduced to them so they see how they are saving people’s lives. As a motivator, this is hard to beat.
Sorenson fits Jim Collins’ profile of a great leader, whom he defines as a person with a paradoxical blend of humility and drive to achieve. His colleagues describe Sorenson as very modest and mild-mannered. He is consensus-oriented with a desire for internal cohesion. As an innovator, his strategy is to identify company strengths, build capability and ask ‘what risks do we dare take?’
How did Sorenson get to the top? Given he started with Novo Nordisk in 1982 with an MSc in Forestry, it was a long climb. He had several overseas stints in operational roles before being appointed to corporate management in 1994 and then CEO in 2000. He admits to being part of some stupid mistakes over the years and having to change his perspective as he rose through the ranks. It was a big transition for him, learning how to set the tone and values of the company and communicating them personally with employees and stakeholders.
HBR has done us a great service by broadening the criteria used to rank CEOs. Before, when only financial outcomes mattered, we lost sight of societal and environmental factors. This forced company ethos and values into the background and blinded us to factors that engage employees at all levels, not just the top.
HBR’s new criteria also draw our attention to results over the longer term. The Australian Industry Group has shown that Australia is slipping behind in the international business stakes and needs a lift in productivity, innovation and sustainability. It has identified short-term thinking, outdated leadership culture and inadequate leadership development practices as the main culprits.
We have the talent. It’s time for a radical rethink of how we develop leaders. People like Lars Sorenson do not come along by chance. At the start they look a lot like everyone else, but develop through exposure to the right opportunities and the investment of time and resources by those more senior.
I believe that everyone with ambition and the desire to learn deserves their chance to shine. We need great leaders, from first-time supervisors to CEOs. Why continue to look outside when there is a role to fill when we can grow our own?
That is what I encourage all senior leaders to do. Please get in touch if you wish to discuss strategy.