Ask the leaders in most companies how they are growing the business and you’ll hear about marketing & sales, lean manufacturing, innovation, attraction and retention of top talent, and acquisitions etc.

While leaders will readily agree that effective leaders drive business performance, improving leadership effectiveness is rarely a leadership priority. And if it is a priority, the focus is often on individual emerging or high performing leaders (through training, coaching and mentoring). This ignores the huge potential of collective leadership effectiveness.

Peter Senge notes that the collective intelligence and performance of most groups is well below the average intelligence and performance of the members. The dynamics played out in most groups—overly aggressive advocacy of positions, poor listening, reactive responsiveness, political caution, ambitious self-interest, mistrust, withholding opinions—subvert collective effectiveness. Leaders act at the lowest common denominator.

Don’t stop investing in individual leadership development. It is often the right place to start. It’s just not enough to deliver the big gains that are possible when an entire leadership team grows.

Do take individual and collective leadership effectiveness seriously to drive business growth. Improve leadership effectiveness and you’ll have a 38 percent probability of seeing the improvement translate into higher business performance[1]. This 38 percent lever is well beyond most companies’ profit margins. This means that developing effective leaders—both the individuals and the collective– clearly deserves investment.

Leaders who are rated at or above the 80th percentile on a good 360 competency assessment (that compares them to a robust norm base) will produce twice the results of those in the middle 60th percentile range. An entire team of highly effective leaders, without weak links dragging them down, can be unstoppable.

When you think of overall leadership effectiveness at your company, where would the ratings fall? Is your leadership team bringing a strong competitive advantage, having a neutral effect, or bringing a distinct disadvantage to your business growth.

Your (collective) leadership has great potential. What will you do to realize it?

[1] This stat comes from Mastering Leadership: An Integrated Framework for Breakthrough Performance and Extraordinary Business Results by Robert J. Anderson and William A. Adams (2015).

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