Developing leaders requires more than promoting top-flight managers

Most business owners believe they are investing in their next leader. They identify a strong candidate, begin giving them more responsibility and gradually include them in higher-level conversations. 

Many believe — too many I would contend — that this approach will result in continued growth that will ensure they are prepared for leadership. Sometimes it does. Often it does not. 

There’s a big difference between being effective in a defined role and being prepared for the weight of leading the enterprise. When the focus shifts to profit, cash flow, risk, competition and long-term sustainability, decisions carry broader consequences — sometimes bleeding into the entire organization. 

The difference between management and leadership

To be sure, there are a wide variety of skills necessary to be a high-performing manager. You must be a good communicator and quick thinking, to start. But managers are essentially trained to execute. They focus on results within their department or area, develop and protect their teams and above all, ensure the work gets done right. Managers have a specific focus area, and the good ones execute and elevate that area. This is, by definition, the job. 

Executive leadership, though, is different.

While managers are rewarded for optimizing their area of responsibility, executive leaders are responsible for optimizing the whole. This reality requires a different mindset than does management. When managers, even high-potential ones, move into executive roles without preparation, they often continue thinking like management — more functional than organizational. This is natural. That’s why the biggest change that needs to happen for managers moving into executive roles is a change in mindset. A great manager doesn’t automatically make that shift simply because their title changes.

Leadership at the top requires managing across the organization and, sometimes, managing up as well. It requires understanding how decisions in one area affect other areas, like cash flow, culture, risk mitigation and competitive positioning. This requires a broader perspective that must be developed intentionally — before the succession. 

True mentorship

Mentorship is more than encouragement. Shifting from a focus mindset to an enterprise mindset won’t happen via observation alone. It needs structure. Mentorship should include leadership development, including giving the future executive cross-functional exposure or even position rotations, so they can gain a broader understanding of how the business operates at every level. A good development plan should also include “stretch” assignments that force enterprise-level thinking and decision making, not just departmental execution. And it should always include assessment and feedback. A good way to do this is honest feedback through self-assessment and 360 input, so emerging leaders understand how they are perceived beyond their immediate team —s elf-image can often differ from what others think. 

Mentorship, of course, includes ongoing dialogue about strategy, risk, financial performance and other facets of becoming a leader, both personal and professional. But when layered on top of structured leadership development, a future executive’s perspective widens and their decision making matures.

When it’s family, it’s harder

Everything written above applies to any type of business. 

But as a family business consultant, I understand all too well that in family businesses, things can be even more sensitive. History, loyalty, legacy, and literal bloodline all play an influence in a family business transition. If someone has been around long enough, understands the history of the company and has proven themselves capable, the next step can feel obvious — especially to a parent choosing a child as the next leader. 

But ownership and leadership are not the same thing.

While ownership can be transferred through documents, leadership capability can’t. For this reason, family business leaders planning a succession must start the leadership development program now — assuming it’s not already too late. None of this happens quickly. Developing a leader takes years, not months. It requires patience and humility from all. It requires acknowledging that being good at your job is not the same as being ready to carry the enterprise. It takes time. But it’s time well spent. The way you develop a leader will ultimately determine whether the leadership transition strengthens the company — or destabilizes it.