In a recent studyof senior leaders around the globe, 91% of those surveyed saw strong leadership capability as critical to their firm’s continued growth, yet only 8% considered their own leadership teams to be “excellent.”
This difference between the need for strong leadership and the current lack of it has been referred to as the ‘leadership gap.’ By some estimates, this gap can influence bottom-line profit margins in a
n organization by as much as 47%! How does leadership, or a lack of leadership, cost your organization?
While research suggests leadership directly affects efficiency (the ability of an organization to properly use resources and processes) and human capital (how engaged or emotionally committed employees are, how much ‘discretionary’ effort they choose to give, whether employees stay or not), there is no better place to observe the power of leadership than in adaptation.
In a rapidly changing world, leadership matters more than ever if your organization is going to be able to navigate the disruptive events and technologies it faces. For instance, why do you think PayPal disrupted credit cards (and Google is now disrupting PayPal)? Or iTunes disrupted the music industry? Or YouTube disrupted network television? Or Netflix disrupted Blockbuster (who is now bankrupt)? You can argue that this is simply the result of new technology found in the digital age. But there is more to it than that. This technology was not unavailable to these disrupted organizations. Good leadership was.
If a leader is mired in the day to day and can’t see the big picture, or is afraid to take a risk, (especially when they are on top), or can’t challenge their organization to think differently and act differently, then they will not be able to help their organizations effectively adapt. And without adaptation, the best laid plans are worse than useless; they are an impediment to performance. It reminds me of a saying in the military (with whom we have worked for over a decade in the US): “No plan survives its first contact with the enemy.”
Without effective and decisive leadership, adapting to an environment (or maximizing human capital and efficiency) is impossible. Just ask Blockbuster, network television or the music industry.