Leadership capability

Building Organisational Capability

Leaders need to develop the employees in their teams and it is no longer enough to focus on technical job level skills, to be successful in the current environment you need grow leadership traits and build broader competence in organisational capability.

“Instead of showing the way, effective leaders invite their followers on a shared journey”

Stanislav Shekshnia (INSEAD Knowledge, February 2021)

Firms and leaders know that driving sustainable long-term performance requires equal emphasis on how the firm makes money (performance) and how leaders run the place (health). McKinsey have codified this into four quadrants and have been exploring how to apply this organisational capability model at both the  organization and individual level.

Critical Domains
Source: McKinsey Organisation Practice

The quadrant model builds capabilities by teaching the business, teaching management, ensuring the technical and functional skills are built and then focusing on building organisational capabilities.

  1. How we make money
    Helping employees have a solid understanding of what is driving business performance. The organisational strategic priorities and the status of critical initiatives and performance metrics. The learning objective is to ensure that everyone understands the day to day running of the business as well as any transformation or strategic initiatives.
  2. How we run the place
    Building leadership competency at all levels to ensure a common understanding of how leaders need to operate to achieve strategic goals. This includes a focus on company culture, individual accountability, continuous improvement and how leaders ‘walk the talk’.
  3. How I create value
    Every role needs the specific skills to be effective in that job in addition to the critical skills associated with driving growth and efficiency. Some companies have benchmarked competencies relative to the industry and set themselves targets to build or close skill gaps.
  4. How I behave
    By translating individual performance goals into day-to-day relational and adaptive behaviours, and by being clear about what ‘good looks like’ it becomes clearer for individuals understand and achieve success in the goal while also building new positive habits.

These points are reinforced in a recent article found in the INSEAD Knowledge publication where Stanislav Shekshnia writes about the leadership challenges for the next decade. In particular he points out that old way of attracting and inspiring employees through a shiny exciting vision of the future and an associated business strategy are no longer enough. Rather in the current environment successful leaders are offering “employees a way forward that reflects their values, creates opportunities for meaningful work and contributes to solving key global problems”.

Leadership is contextual. Successful leaders set agendas and choose strategies in accordance with opportunities and risks posed by the external environment. The ability of leaders to understand and interpret the vagaries of the moment for their organisations is crucial in today’s rapidly changing world.

Stanislav Shekshnia (INSEAD Knowledge, February 2021)

DIGEST of an Article from McKinsey
Are you building employee capabilities across these four critical areas?
By Alexander DiLeonardo, Taylor Lauricella, Laura Pineault, Bill Schaninger
Published: 25th January 2021

and from INSEAD Knowledge
The Next Decade Will Be a Leadership Game Changer
by Stanislav Shekshnia
Published: 23rd February 2021

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