Four-Ring Leadership

by Jac Fitz-enz | Talent Management

Three-ring circuses have three acts going on simultaneously under
the big top. Separate and outside the rings, clowns run around
acting silly. Leadership is like that, only more so.
Leadership is a four-ring circus, complete with occasional clowns
inside the rings. This is why it is the most studied process. There is
no end to the models, hypotheses and theories. Still, we struggle to
find a simple means to understand and explain how to lead, and
even more difficult, how to develop tomorrow's leaders. The
following is one way I find that works to reduce this enigma to
something basic, understandable and teachable.
I see the essence of leadership as four interlocking rings of activity:
knowledge, development, management and measurement. They are
not linear. They are all in action concurrently, which is why the topic
is so exquisitely mysterious. Consider these rings and how they are
connected, or disconnected, in your organization.
1. Knowledge:
An effective leader needs three types of knowledge: the market, the
organization and the self.
To lead, a person must have a thorough knowledge of the current
and near-term future marketplace and how it is likely to affect the
organization's human, structural and relational capital. Second, a
leader has to look across the three and ask, "What are we doing
that is helping or hindering us?" Last, and most important, a leader
has to know himself or herself in two ways. Internally: What is my
value system? What is my preferred style? What are my goals in life
and with this organization? Externally: How do I value people? Are
they interchangeable expense elements or true value generators?
2. Development:
This is a prime responsibility for every leader, along with generating
shareholder value. Leaders need to develop the competencies
necessary to accomplish current goals. Additionally, they must build
capabilities to deal with future challenges.
To meet tomorrow's capability challenges, the best leaders support
a succession planning system that reaches far down into
management ranks. The leader also has to be accountable for

management growth and succession. HR might administer the

system, but the leader is accountable.
3. Management:
Management is divided into effectiveness and efficiency.
Effectiveness is doing the things that are essential for the growth
and success of the enterprise. It is a matter of allocating resources
in ways that ensure long-term, sustained success. Effectiveness is
evaluated in terms of new product and employee development,
market share and revenue growth, among others. Efficiency is
managing processes in ways that incur the lowest costs while
leaving sufficient muscle for future growth, and it is measured in
terms of process costs and gross margins.
4. Measurement:
At the end of the day, leadership quality is a function of value
adding performance. Performance is expressed in both objective
and subjective terms. The metrics come in three forms: strategic,
operational and leading indicators.
Strategic metrics are organization-wide macro-measures of
profitability, customer retention and growth in revenue and human
capability. Operational metrics deal with process costs and time
cycles, quality and quantities. Leading indicators look at issues that
predict future outcomes, such as leadership quality, management
readiness and employee engagement. These metrics are combined
into a single report system, and algorithms are created to show the
interdependencies across the system.
In the end, leadership is the most popular management topic
because it is a multifaceted, mysterious set of behaviors. Yet
leaders are found at all levels, from homemakers to heads of state.
Claiming that specific leadership behaviors are consistent across all
situations is a stretch. Separating leadership from operational
management is impossible because it raises the question:
Leadership for what purpose?
Because leadership is situational, for practical purposes it can be
better understood and applied as four interconnected concepts. So
what can you do to develop leadership within your organization? Tell
me what you think.
[About the Author: Jac Fitz-enz is founder and CEO of the Human
Capital Source and Workforce Intelligence Institute.]