The Value of a Leadership Brand

Think about a company you admire for their leadership. A few may come to mind: Amazon, Disney, Microsoft, American Express, Apple. What do all these firms have in common? How did they get to be known for their leadership? In our research, we’ve found that companies who are known for their leadership all have one obvious connection: they build leadership brand.

Leadership brand is a reputation for developing exceptional managers with a distinct set of talents that are uniquely geared to fulfill customer and investor expectations. A company with favorable leadership brand inspires faith that employees and managers will consistently make good on their brand promises to customers. It also embeds those promises into the company’s culture and integrates them into its policies and expectations of employees.

To possess a leadership brand, leaders must think and act consistently with customer promises made by the firm brand. When a firm has an identity in the mind of customers, the expectations that flow from that identity need to be made real to employees through the firm’s policies and culture. Leaders at all levels of an organization can transfer customer hopes and expectations into leadership actions.

Here are a few examples of companies whose firm identity is linked to leadership actions.

The benefits to building leadership brand are significant. Companies with a strong leadership brand produce generation after generation of excellent leaders. They’re not as affected by changes in management as firms with weaker leadership brands. In fact, change of leadership often turns out to be positive. Because they’ve secured the ongoing confidence of their stakeholders whose expectations are consistently met, they also tend to enjoy fairly steady profits year after year. What’s more, leadership brand also wins with investors—we’ve found that companies with strong leadership brands tend to have above average P/E ratios with corresponding higher market value. It’s clear that leadership brand matters. So why do so few companies succeed in establishing one that generates confidence and results?

One reason is a misguided focus on leaders versus leadership. Many companies tend to focus on building individuals as leaders instead of building leadership as an organizational capability for the firm. Being a leader focuses on the person; building leadership focuses on the organization that creates leaders. Investing too much time developing an individual leader often creates the kind of celebrity leadership that can end up hurting a firm once that leader moves on or fails to live up to expectations. Another issue that hinders leadership brand are development programs that are too generic or too internally focused. Leadership can and should focus on the things that go on outside the company as much or more than what happens inside the company.

It’s smart to develop strong individual leaders. But given the short tenure of most CEOs and the shifting fortunes of the corporation in a rapidly changing marketplace, we think it’s smarter to create bench strength with an outside-in leadership brand that’s tailored to a firm’s unique requirements. A focus on leadership brand emphasizes the methods that secure the ongoing good of the firm and also builds future leaders.

If strong leadership is a source of value, how can such a brand be built? We propose six steps in the RBL Leadership Brand® Architecture.

1. Build business case for leadership

We believe that developing leadership should be a top business priority. A case for leadership brand shows how leadership investments contribute to organization goals or critical challenges.

2. Agree on what leaders must do

Identify expectations for leaders at your company- a leadership profile. Consider what you want to be known for by your best customers and what attributes and results are needed to contribute to that reputation. Create a statement of leadership that articulates the leadership reputation in terms of attributes the leader must have and results the leader must deliver.

3. Assess leaders & leadership

Once the leadership profile is defined, leaders can be assessed by how well they behave the brand as they deliver results and by how they’re developing the requisite skills and attributes. Use a 360 (or 720) assessment to collect objective data from multiple stakeholders and use the assessment to detect patterns.

4. Invest in leadership & leadership

Leading companies invest in specific practices that instill the leadership brand such as formal training, on-the-job experience, and off-the-job experiences. Let the perspective of customers and investors influence the teaching.