Building leadership capacity is a topic that sends shivers down the spine of top business management!

Global Human Capital Trends conducted a survey of CEOs in which 80% say that looking at leadership is a priority in their organization, but only 41% believe that leadership is ready to meet the requirements of the strategy designed. The problem is exacerbated in increasingly complex contexts.

Complex because of the frequency of changes in the business (from external and internal sources) and also because this same leadership is constantly under pressure for efficiency and lives in an eternal cycle of evil:

Leadership is a priority.

That's why we invest in actions to take care of our leadership.

However, we still believe that our leadership is not ready to deliver the strategy.

So business strategy changes due to internal and external factors.

We have to make leadership a priority again...

The problem with this loop goes beyond the financial and efficiency perspective. When we look at the cases of the most respected businesses for successful strategic moves, such as Starbucks, Apple, Microsoft, we have one thing in common: They have all created organizational capabilities that have become intangible assets in the execution of their strategies - e.g. reputation and brand, capacity for innovation, ability to make decisions centred on consumer changes and other points.

We can't even see or touch any of these "things" (which is why they are intangible), but these aspects are decisive in the execution of a long-term vision - not least because we don't create them overnight, and at the same time it's difficult for a competitor to copy. It's worth noting that these elements have a huge impact on the market value of the business (Nubank's value compared to the big banks is a good example).

Building these intangible assets involves the organizational capacity for leadership. But what is this organizational capacity?

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Have you ever heard the phrase "This company is a good school for [choose a topic - leadership, technology, culture, innovation, branding...]"?

It is a representation of an organizational capability, which is basically a collective ability, where a group of people can combine knowledge, skills and attitudes towards a practical change that the business needs to make.

And here begins our conversation about organizational leadership capacity: the hole is deeper and the equation for progress in this construction is broken.

Most organizations fail to do this because of certain beliefs:

- Not being clear about the direction of their leadership strategy and its role in the business strategy.

- They expect and/or prioritize short-term results. This goes hand in hand with an investment discussion: "Let's try something for 6 to 12 months and if it's not transformative we'll stop investing".

- Believing in a silver bullet: That single action or project that will solve all problems. This usually results in inefficient investment.

- Looking at leadership only from the perspective of individuals: We need to look at strategy, processes > enablers > skills and only then get into the individual level.

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We don't need to invest a truckload of money to discover that this ability is linked to business performance. No wonder Google did the oxygen project and invested a lot of resources to study whether they needed leadership and, if so, what effective leaders did. No wonder many businesses are looking at their employee lifetime value (ELTV) to measure the return on investment in human capital. After all, in many businesses the biggest line of investment is in staff and looking at the efficiency of this line is looking at the efficiency of the business!

But how do we fix this broken equation? What do businesses that have seen progress in their work with leadership do?

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0. Clarity about the reality and causes of the problem

Leadership performance challenges

- Challenges in clarifying role, competencies and current scenario

- Communication challenges and coherence of strategy with tactics

- Culture challenges

- Structural challenges

- People process challenges

- Development challenges

Delving into the history of the business, its culture and the people who brought the business to its current level is fundamental as a starting point.

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1. Building the vision

Leadership is built over the long term and, despite the amount of change the business is going through, knowing the direction and what won't change is just as important as the ability to adapt along the way. What are the leadership attitudes and skills that will strengthen your business culture and strategy in the medium term?

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2. Understanding the Journey

Once the vision is clear, we need to understand that reaching it will be a journey. Changing behavior and creating competence requires method: from ensuring the leadership's commitment to the process, to working on the foundations and allowing the leadership to play its role in practice (social skills are learned by doing), providing support along the way.

To support all these steps, an architecture is needed.

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3. Creating the architecture and components that support the journey

It's the same logic as in construction: we need certain elements to ensure that the capacity "stands up".

Simply put:

- Processes: This covers all the management practices that support the leader in their role, such as: culture, management rituals, data and all the people processes. Ex: I might be a leader who makes more decisions based on facts and data if I had the support of pulse research processes and focus groups with a business partner.

- Training: This covers all practices with the aim of providing knowledge, tools, experience and support for the effective execution of processes and practices. Ex: Training, workshops, debate sessions, benchmarks.People - This covers all the personalization of the journey, whether people have unique journeys, whether their demands will have particularities that are not met by institutional actions. This pillar is fundamental when looking at key positions or people, especially at higher levels in the organization. E.g. mentoring, coaching or the innovative"shadow executives".

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4. Prioritization and timing for business strategy

Part of the strategy doesn't come to fruition due to the desire to do a lot to move forward and not having the resources (talent and financial) to do everything at once. The match between the vision and the current business context are two fundamental inputs for defining the priority of a period. As Jocko Willink would say in his book Extreme Ownership, this is the time to "Cover and Move", in other words, to protect the fronts with the greatest impact and guarantee progress in building the vision.

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5. Repetition, repetition, repetition

I like to look at 2 elements to know if leadership is an organizational capability of a business. The first is "critical mass", where behaviours and skills are the majority within the group of leaders in the organization (this is where "capability" comes in). The second is related to having a method that sustains this condition over time, being able to maintain this "super power" even with the natural departure of people (this is where "organizational" comes in).

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For this to happen, we need to build up this vision consistently over time, which requires a lot of repetition. As in a soccer team or an orchestra, ensuring the harmony of all the components of a living system is a daily task. And it becomes even more fundamental to follow this journey as the business evolves.