I was talking with a business owner recently about developing future leaders, and he was asking the questions every owner eventually asks. Should I invest in developing future leaders, and will these people be able to run the business when I’m ready to retire?
He told me how he recently pulled his executive team into a meeting to discuss succession. He wanted his SLT to build the bench and develop future leaders who reported to them. He told them that they needed to ensure that the people coming up behind them are ready to carry the business forward. It was a good speech, and he meant every word.
But as I listened, something worried me. He and his team were aiming at the right goal but focusing on the wrong milestones. They talked about readiness in ethereal terms, things like ownership mindset, executive presence, and strategic thinking. And when they described how they would build it, they listed activities and experiences that others needed to engage in. Give her more exposure to the board. Put him on a cross-functional project. Send them to the leadership program.
But the focus on activities, experiences, and traits was insufficient. If you want to develop future leaders, you need to focus more on achievements.
Why developing future leaders goes wrong
If you lead people, you spend your entire day watching behavior and converting it into meaning. That is how the human brain works, and you can’t turn it off.
Someone rolls their eyes in a meeting, and by lunch, you are no longer thinking she rolled her eyes. You are thinking she has an attitude problem. Someone asks a lot of clarifying questions, and you do not think he asked seven questions. You think he is in the weeds. You take a behavior, run it through your interpretation engine, and lock onto a trait. Then you manage around that trait.
The problem is that traits are interpretations, and interpretations are pretty hard to act on. Tell someone they lack an owner’s mindset and watch what happens. They might get quiet, express some confusion, and walk out of your office feeling less confident and frustrated. Even worse, they might start overcompensating and behaving in other counterproductive ways.
That is what people do when you give them a verdict instead of a target to aim at. People don’t like being judged, and when they feel judged, they spend way too much time overanalyzing it and spinning their wheels.
I’m sure you have watched this play out on more than one occasion. A high performer does excellent technical work, so you promote her into management. She turns out to be a great day-to-day operator, but something is missing. What’s missing is that her job requires far more than just doing good work. Now, she has to retain her people, win new business, and ensure her business is profitable.
Unfortunately, nobody told her that, so she optimized for the only thing she could see: the work directly in front of her.
Two years later, the conversation in your leadership meeting sounds like this:
- She doesn’t quite get it.
- She micromanages everything, and
- she is stuck in the weeds.
- I am not sure she has the right stuff.
Every one of those is an interpretation, and none of them is a target. We failed her by focusing on the wrong things. We misdiagnosed her and passed down a verdict. But all of this could have been avoided if we had changed one simple thing.
The Owner’s Scorecard
So in the middle of that conversation, I picked up a notecard and asked the CEO a question. “Forget mindset,” I said. “What quantitative measures would tell you this person is ready to lead this business?”
Here is what we came up with.
Five things, and not one of them is a personality trait.
- Employee Retention. Do good people stay, and do they say this is a good place to work? If you give a rising leader a goal to retain 100 percent of the team’s best people, you give that manager a target to work toward.
- Customer Satisfaction. How do customers feel when they are served by this person and their team? A simple customer satisfaction survey can give you exactly what you need to know if the person can deliver on this metric.
- Sales. Can they bring in new business, or only service existing businesses? Give someone the goal to bring in $10 million in new revenue and see what they actually do with it.
- Capital. Do they have the required funds to invest in the business, or can they secure that capital? Ask someone to demonstrate their ability to raise money by requiring them to bring a specific amount to the table.
- Financial numbers, hit and understood. Does this person generate revenue and spend it wisely to ensure the business remains profitable? Give people specific financial targets to meet consistently before considering whether they should lead the business.
None of this is new. Peter Drucker called it management by objectives sixty years ago, and I think he said that we should lead people by focusing on outcomes, not adjectives.
What to do this week
Here are three actions you can take this week to develop future leaders.
One. Pick the three people you believe could run a piece of this business someday. For each one, take the card and write down a number next to retention, customer satisfaction, sales, capital, and financials. Just write down one number and then discuss it with them.
Two. Tell them. Out loud, in writing, in plain language. Say the words. This is what you have to achieve to prove you are ready. Most rising leaders have never once been told this explicitly, and the moment you say it, their attention moves.
Three. Change the language you use when you discuss ways to develop future leaders. Every time someone suggests an activity, experience, or trait, shift their attention toward these numbers. When a member of your senior leadership team says he is too passive, ask what his division has failed to achieve because of that passiveness. If there is no number, there is no case. Make that the rule in the room and watch how fast the conversation gets honest.
So here is the Subtle Shift
Developing future leaders is not about spotting the right personality. It is about naming the right numbers and measuring progress against them. Stop asking whether they think like an owner. Start asking what they own. The moment you start judging people with targets rather than traits, you change the game.
