One idea that is starting to become very clear in the minds of many of the senior business leaders with whom I work is simply this – the most sustainable source of differentiation comes from building a strong leadership culture.
As one CEO put it, “if I can get all my leaders truly aligned as a team, it will clearly set us apart from our competitors – to me, our leadership culture can be our secret sauce.”
When you have a strong leadership culture, everyone can feel it.
Why is leadership culture the ultimate differentiator? First, leaders today feel the relentless pressure to continually drive value for their customers. They know that the traditional sources of differentiation such as price, quality, operational excellence, technology and innovation are becoming harder to sustain. It is easier for competitors to catch up and advance in these areas. Second, business leaders see leadership culture closely tied to strategy execution. One senior leader I spoke with put it best when she said, “execution lies at the intersection of strategy and leadership. Our ability to align our leaders and ensure we can execute our strategy in a seamless way is what will set us apart in our industry.”
So what is leadership culture and how do you build it?
What Is Leadership Culture?
Leadership culture represents a company’s set of values, expectations and behaviours about leadership. It is intangible, but when you have a strong leadership culture, everyone (your customers, employees and competitors) can feel it.
The challenge is that building a strong leadership culture takes work. Many leaders may not know how to create one. The risk is that if you are not building a strong leadership culture, then you will get a weak one by default.
What does a weak leadership culture look like? The “feel” of the company is dull, mundane and lacking any vitality. The leaders of these companies do not have a unifying force that aligns them. Employee engagement tends to be low because there is nothing that motivates employees day to day. You can imagine how successful a company with this kind of weak leadership culture will be in executing its strategy or differentiating itself in the market.
Other companies may have the glimmer of a leadership culture, but it tends to be functionally based. In others words, the functions of the organization such as sales, finance, marketing or manufacturing dominate the culture. In many cases, the leaders within the functions compete with one another for resources or for status. Typically, this makes the company more internally focused. Leaders are not paying attention to the competition outside the company because they are absorbed by fighting battles within their own company.
A strong leadership culture is more holistic. You know you have one when your leaders are:
Leaders need to come together to network and build relationships – this is a key to culture.
- Relentlessly focused on driving value for customers
- Aligned and engaged around the company’s strategy and working effectively and collaboratively to execute it
- Working as one team rather than competing internally
- Acting as a community of leaders with genuine care and support for each other’s success
- Aware that high standards and expectations have been set for leaders by the company
- Expected to lead in the best interest of the whole organization.
How Do You Build a Strong Leadership Culture?
So how do you go about building a strong leadership culture? Here are five key steps:
- Define the leadership culture you will need. Begin with your business strategy and ask yourself: if we are going to be successful in executing this strategy, what will we need all of our leaders to do exceptionally well?
- Set high expectations for strong leadership. Once you are clear on the leadership culture you will need, set very high expectations of your leaders. Leaders need to know what standards of behaviour are expected of them and the consequences for not delivering on these expectations.
- Support your leaders to grow. Companies with strong leadership cultures continually support leaders to grow and develop through coaching, feedback and ongoing development opportunities.
- Bring leaders together. One company I worked with brought together the top three layers of managers on a quarterly basis to review the strategy, business performance and assess the leadership culture. Leaders need to come together to network and build relationships – this is a key to culture.
- Sustain momentum over the long term. Building a strong leadership culture is hard work. It requires constant attention and work to make sure your leadership culture remains strong and vibrant.
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