To grow a business you must also develop its leaders

Leadership and business development must be designed in tandem within organisations – and Business Schools can provide the education to support this, writes Aalto University’s Pekka Mattila

Leadership development is crucial in creating competitive business advantage. It improves financial performance, helps attract and retain talent, drives strategy execution, and increases success in navigating change. Leadership development should be seen as part of overall business development. In short, leadership and business development are two sides of the same coin. 

But not all organisations have caught up with this view. This could be due to the fact that resources in both public and private organisations tend to fluctuate, and HR projects are the first to fall victim to cost-cutting. This causes the business to lose sight of the bigger picture. HR development and business development happen in parallel, but in silos – they are often very disconnected, even though they depend on each other. 

When running a business, ultimately the main goal is to make a profit, and HR can contribute to this, but during periods of economic instability, the main aim is to keep the business afloat. Anything that is not needed to keep the business running takes a backseat. Developing employees is important, but ensuring they keep their jobs is even more so. 

When an upturn eventually comes around, the business begins to address the maintenance backlog accrued during the cost-cutting period, and must start from scratch as HR projects were put on hold, or phased out. To avoid this chain of events, smart organisations will formulate an overarching trajectory for their leadership development objectives and activities. 

For this to succeed, they need leadership development and business development. 

Leadership development programmes offer external inputs as stimuli. However, growth does not take place in a classroom, it happens when leaders apply the skills they’ve learned in their work. By combining business development and leadership development, employees can apply these skills immediately. Only by combining leadership and business development will individuals be able to conduct experiments, implement experience and insights, and close the knowing-doing gap. It also allows them to validate what they’ve learned and see how it works in their own contexts. 

Develop the right leadership programmes

Leadership development programmes often offer a ‘buffet-style’ experience. These programmes dish out a spectrum of coaches and facilitators with many tools and concepts. However, the selection is so varied that it could lead to ‘overeating’, where participants end up with huge piles of literature and other materials, but lack the opportunity to apply their learning to their work. 

This approach can often overwhelm participants, but the goal is not for every individual to adopt every tool and concept on offer. Instead, a high-quality leadership development programme caters to many different skills and needs. 

Here at Aalto University Executive Education, we strive to integrate a live business case into each programme so that participants can test their new skills and knowledge and see what works for them.

Leadership training with a vision

Leadership development programmes are linked to organisations’ long-term visions. In the best-case scenario, the strategy is also still in the making and the strategy dialogue takes place, in part, on the leadership programme platform. This way, the programme provides an opportunity to validate hypotheses on the go. Programmes make it possible to facilitate these discussions in a structured manner. 

In strategy work, it is important to decide what we choose to believe as ‘truth’. All industries have become more challenging; they find competition in unexpected places, or notice their competitors innovating with revenue and business models. 

Smart organisations will view leadership development programmes as voyages of discovery to uncharted territories, or as an opportunity to validate assumptions. 

Support for strategy implementation

Many organisations will have already formed a strategy but not yet implemented it. In this scenario, a leadership development programme can provide outside support and guidance, or serve as a platform for launching projects. Having a programme means that projects don’t get buried under competing priorities. They have a structure, a timetable, a support system, and control points. 

The challenge most organisations face is that people get excited about ambitious new strategies and visions, but ask what’s going to happen next. This places pressure on management to show that the vision will lead to action, and that they are serious about implementing it, not just trying to be trendy. In this situation, a leadership development programme may serve to prove that things are changing. 

When implementing strategy, the timeline is important. It’s vital that the organisation gets moving in weeks, and achieves a concrete milestones within months. This may be as simple as announcing that a task force has been launched – another thing with which leadership programmes can help. 

Goals provide focus 

Leadership programmes are not only a great way to make people feel included, but also a way to channel the organisation’s energies in the right direction. But this only works if the programme is directly linked to the organisation’s ambitions – so the more concrete objectives organisation can present, the better. Effective goals are always measurable because it helps identify what must happen to achieve results. 

Leadership skills impact the bottom line

As I’ve already stated, leadership development is proven to help organisations achieve their business development goals, but it also gives backing to the entire management team responsible for implementing the organisations strategy. 

Research carried out by McKinsey and Egon Zehnder in 2011 revealed that while talent is always important, only exceptional talent makes a real difference. According to the report, there was a high correlation between executives with ‘excellent’ capabilities and the organisations financial performance, while merely ‘good’ performance showed no correlation. 

In appraising leadership development, we should move from measuring intellection and cognitive skills to evaluating the concrete actions taken and the results achieved. 

The real impact of a leadership development programme should manifest itself in improved business development performance. 

What does this mean for Business Schools?

If more organisations adopt the idea that leadership development and business development go hand in hand, then they will start to rely on Business Schools more and more to provide them with the education to support this. 

Combining leadership and business development benefits both the organisation and the Business School. It benefits the organisation because, as I said earlier, leadership development and business development are two sides of the same coin. By using leadership programmes to develop the leaders within a business, you will help the business to succeed, because a good leader will implement vision and values, ensure effective communication, and motivate employees. 

It will benefit the Business School because more people will attend the School, but it also brings in a variety of different voices who have had experience in different industries. 

Working together with an organisation allows them to bring in real-world problems, discuss and come up with a solution – which will then benefit the individual when they face a similar problem in their job. By combining leadership and business development, you are truly enhancing their education. 

Pekka Mattila is the Group Managing Director of Aalto University Executive Education and serves as a Professor of Practice at the Aalto University School of Business.

This article originally appeared in Ambition – the magazine of the Association of MBAs.