It is a simple fact that leadership and company growth are fundamentally linked. Without the right leader at the head of the organisation, business success is not guaranteed. However, it is not always easy to define what exactly makes a leader great and many organisations have to consider the skills and abilities of more than one senior team member.
This also needs to be considered alongside having to think about what the company itself needs to be focused on to help achieve business success apart from its people. Without the right leadership which sets out a powerful strategy for the future, helps to mobilise employees and is equipped to make the tough decisions, companies basically stumble and fail.
In an article in the McKinsey quarterly “Do You Have the Right Leaders for Your Growth Strategies” there has be shown to exist a definite relationship between individual leadership skills and returns and business growth. Making comparisons between a database on the growth performance of over 700 companies, and analysis of performance appraisals of more than 100,000 senior executives the research found that when the teams members at the top all had strong leadership scores, then income was at its highest for businesses which might be as expected. However, they found that there was no correlation in leadership teams with solid but unexceptional employees. So, it is evident that business success comes from outstanding leaders, but the question remains how do you find these leaders.
Most interesting, the research found that individual leadership skills favour different business strategies. It seems not all leaders are the same. Only 1% of the executives that they looked into achieved a competency score which would mean they had all of the required competencies to lead for growth. This really supports the idea that few executives leading an organisation can do everything by themselves. It takes a combination of leader’s skills and talents to comprehensively engage in high quality business growth strategies. Companies need to be using this insight when it comes to creating a leadership team that is effective. Since only a few executives had the high scores in all competencies, attempting to start-up growth by considering using only this type of leader only their own is a danger, and also, they are fairly elusive to find. An alternate tactic may be for companies to nurture particular competencies that are correlated with generating growth in their current leadership teams or appoint new team members to help to bridge the gaps in existing leadership teams.
To improve performance in general, the analysis shows that one of the most impactful competencies that leaders need, that delivers the biggest gains, is the capacity to identify with customers evolving needs. The 2017 PWC Global Operations Survey, found that 63% of business leaders find it challenging to recognize their customers’ priorities, and have said that 61% find it difficult to change direction quickly enough to respond to customers’ wants. McKinsey correspondingly found that if around 40% of senior teams are highly competent at customer impact, then this drives superior business growth. So, this suggests that not all of a leadership team need this skill but when a significant number do have it, then this can impact your growth strategy in a powerful way.
To accomplish strong growth, companies should not just gather a number of excellent leaders, but they must additionally align these leaders’ positions with a combination of different growth strategies. The most successful companies must conduct comprehensive assessments of the abilities required to encourage growth across the business. Then clear-cut leadership-development targets need to be set for different types of leaders which can then be incorporated into performance-management in a holistic way.
Companies with well-versed portfolio growth strategies have been found to be 46% more likely to endure in business in the next five years in comparison to those who do not operate a portfolio of diverse growth strategies according to long term study of hundreds of worldwide companies from by Capron and Mitchell. However, they found 40% of those businesses relied mainly on a single growth strategy which does not reflect the need for a diverse leadership style. Diversity in strategy enables companies to systematically create outstanding leadership with the spectrum of skills necessary to drive growth.
Internal development of staff leadership teams in combination with the right growth strategies will ultimately be the best thing for business growth. The main consideration is understanding that different leaders will have different competencies. So, ensuring that existing knowledge about employees is up to date and continually tested, and setting up an organisational structure that works for everyone should lead to further growth. Importantly, even when a business has the pertinent technical expertise or high-quality products and services business growth ultimately is reliant on the right leadership.Back to News