Measuring Leadership

Circle of Impact
There are no real measures of leadership.

Well, they are, but what we use are not real measures.

What we typically measure is management, not leadership.

The management of people, products and processes. 

That is different than leadership.

Management numbers may ... may ... have a relationship to leadership. But it needs to be defined.

So, if you are going to measure leadership then you need to define what it is, and define it in such a way that you can measure it.


Defining Leadership

Here's how I define leadership.

Leaders take initiative to create impact.

Each word is intentional.


    Leaders start, engage, facilitate, act, do and take the first step.


    Leaders generate processes, products, systems, relationships, openness, cultures, opportunities, or the next ones, and they adapt, form, and bring into existence what is new, needed and necessary.


    Leaders make a difference that matters by creating change.


By this definition any person can function as a leader. What does this mean for those people who are in executive and supervisory roles in traditional vertically integrated hierarchical organizational structures?

It is simple.

Executive leaders initiate the creative processes which produce leaders who initiate to create impact.

This means that executive leaders are measured by the leadership of those for whom they are responsible. This is quite similar to what we have thought of as management, but there is a difference.

The difference is that the management of efficiency, predictability and consistency requires control those who work for them. The reality is that this is a fading reality. Businesses are rapidly changing, by necessity, and our understanding of leadership needs to catch up.

The Three Dimensions of Leadership

Now if everyone simply initiated change in a random manner, then greater chaos would ensue.

Therefore, an integral part of executive leadership is coordinating the leadership of others. Executives do so through three principal areas: Ideas, Relationships and the context which each person has through the social and organizational structures of their work.

In other words, leaders facilitate clarity around the Connecting Ideas of Purpose, Values, Vision and Impact. They facilitate the communication and coordination of the actions that follow the organization's purpose. 

Executive leaders build a culture of shared leadership through the shared responsibility for the organization's defined purpose, values and its vision for impact.

As a result, leadership spreads out through the company. We can see a better connection between the company's purpose and the means to achieve its bottom line. Better communication, and a greater sense of community between the people in the company, fosters a culture that adapts more quickly to the opportunities and obstacles that present themselves every day.

Measuring Leadership

So, how do we measure leadership.

First, we define the change we want by defining the purpose of the impact that we seek.

We track change. We track the changes that we see in how the Connecting Ideas are being use. We track change in how people communicate and work together. And we track changes in processes as they adapt to new circumstances.

Second, we identify and track employee initiative.

We track the connection between communication and issue resolution. If people are taking initiative to resolve issues at their own point of responsibility, then you are seeing the spread of leadership in the company.

Third, we track the speed of change.

How fast does it take for an idea to be enacted? The key to this returns to the Connecting Ideas. These ideas provide a context of understanding that can guide the initiative leadership of people.

Ultimately, the measure of leadership is the number of leaders who have been formed and nurtured by the company, and the collective impact of their shared leadership.

By growing a leadership culture of initiative, a company can become a community of leaders whose impact is far beyond what it was when everyone was being managed to just do their job.

Return On Initiative: ROI for the 21st Century


Over the past month, a group with whom I'm involved have been asking local leaders about the programs that we present to the community.  These leadership development events are especially focused on personal leadership within the context of work and professional life. We've always seen our audience as the local business person who either has never attended a leadership conference, or the business owner who brings her staff to our event for a shared leadership experience.

One of the questions that has been asked of us concerns the Return on Investment (ROI) for attending one of our events.  Here are some of my colleague's thoughts.

... this is the times we have moved into.. ROI...people on all levels are stretched - for time, money and quality.. they think before they spend now.. and what they are thinking about it is now I have to make a choice.. if I do this I can't do that... and that speaks to the decision going to the highest point of value... I have to sell ROI to get the gig ... they want to know "what is going to be different" after this event.. Tall order.. but still have to address it ...

I think we need to consider that the whole ROI question could be a red herring. Not that ROI is not important or should not be measured, but it reminds me of the companies who are scaling back on corporate wellness programs because they haven't figured out how to measure ROI. 

Honestly, you CAN'T accurately measure the ROI of the programs we present.  In fact, you can't measure it ANY time exactly.  The reason is that there are SO MANY additional factors within the organization and out that could radically affect such measurements.  Yet, the corporate CEO, business owner/leader wants to SEE the value and benefits.

Bottom line...people are spooked at all levels of life. Uncertainty in the future is at an all time high. We don't have the answers, but we can stimulate great questions and help people deal with their uncertainty in a positive fashion. If we don't inspire people to develop their creativity, think of themselves as solutions providers instead of employees...we are not creating value ... However, I believe we are doing this. We just have to be creative in positioning this message. The ultimate ROI is to help people feel as if they can leverage their uncertainty into unparalleled opportunity.

I agree with my colleagues about these issues.We live in a much more complex, demanding world. Every decision brings a level of scrutiny that is unprecedented.  As a result, I've come to the conclusion that we need to think differently about ROI.

There are two aspects of ROI that are worth considering. One is the standard question of the meaning of investment and its return. The other is deeper question related to employees and their value.

What do we mean by ROI?

ROI is a concept for measuring value. It is primarily a cost-benefit measurement. If I spend this money on this event, will it return a value equivalent or greater to its cost.

This is a trap that many businesses find themselves in. It is a trap because the cost / benefit ratio is not a adequate measure of value.

Watch this video by Dr. Eliyahu Goldratt that provides perspective on the trap that many business are caught in.

Goldratt Lectures: Thinking Globally by Theody0fConstraints

When cost is a primary measure of value it is impossible to understand the potential that resides in the business.  Potential requires investment for it to be discovered, developed and fulfilled.

This especially applies to the highest cost within a business, employees.

Here is one of those points of transition that is important for us to recognize. The shift is from one conception of what a business is to a new conception.

A shift in values and approach.

The 20th century marked the height of the application of the industrial model in business. Employees were viewed as parts of a production system. The ROI / cost-benefit method of thinking meant that those jobs were allocated to where costs were low and production levels could be maintained. As a result, corporate businesses became huge successes by this way of thinking.  That was then, this is now.

Today, as globalization flattens the business landscape, these decisions are not so simple as they once were. Factor in an accelerating and disruptive rate of social, economic and political change, and the environment for business from the largest company to the local mom and pop convenience store is filled with uncertainty.

The old way of understanding a business was to see it as a mechanical system of business and production processes, with people as the most expensive parts of the machine. A new way to understand the nature of a business is as a community of people committed to a shared mission for impact. 

The old way of doing things, the person was defined by the job. In the new way, the person is defined by their potential contribution. With the former, the perspective was reductionist and limited. With a different approach, the system is open to change through the contributions of each person. The system opens up avenues for discovering the value that is latent in products and processes.The old system assumed that we know all that we need to know. The new approach assumes that we must discover what we don't know, and then build from that perspective.

A better understanding of ROI asks what kind of investment do we need to make to fully realize the value of the staff that we have?

The change in perspective here is not just about employees. It is about the business itself. Is the business about what it produces or is it about the impact that its products and services have upon its market?

With a cost orientation, the production system is the focal point of the business. With a view to optimizing (a Goldratt term) the system, the shift can be made to the benefit or impact of the products or services of the company. It is ironic that the question about the Return on Investment in people leads to the same question applied to the company as a whole.

What is the Return that a client or customer should expect from the company's products and services?

My point here is that our conception of ROI is based upon an understanding of what a business is that is more all encompassing than what we initially recognize. If our conception puts us in the trap of not being able to see the potential that resides dormant, waiting to be released, then we need to think more deeply than simply about what ROI means. We need to look at what is the purpose or mission of our business and what role do our employees have in its fulfillment.

Taking ROI one step further

One of my colleagues commented in our discussion,

...What we CAN demonstrate clearly is that the organizations that invest more heavily in their people through training and events are the CEOs who are most successful -- from Southwest Airlines to Starbucks to Lockheed Martin, Google, …

Yes. This is clear, in that we all understand that there is value in investing in people. What isn't clear is the answer to the question,

"What should be the outcome in investing in people?" 

Our conception of ROI is rooted in 20th century thinking. It is a transaction based model that defines the value of people as costs within a production system. (I am somewhat overstating the point, because not every business owner sees employees in this way. They recognize that their staff are people with families, mortgages to pay, and who are the ones who make the business function.)

This transactional perspective fails to understand that the transformation of any organization comes through the people who work and volunteer within it. The agility and adaptability that businesses need today does not come by executive fiat.  It comes by having employees who are passionately engaged as leaders in the company's mission. As a result, executive leadership must shift from a control stance to the practice of developing  and facilitating employee leadership.

To embrace this change of mind requires us to also make the shift from a mechanistic understanding of business to something a kin to the business conceived as a a community of leaders joined together to create impact. In this sense, the company is a society of change agents whose purpose is to have as great a positive impact upon clients and customers as possible. It is an approach centered upon realizing the full potential of people as the business' strongest, most valuable assets, not as costly machine components.

What does it mean for employees to lead?

First, they are seen as people with potential that is unrealized and undeveloped. 

This is the talent question that businesses are beginning to invest significant resources in.

Second, employee leadership rises from their own, individual, personal initiative to make the difference that the company's mission promises. 

These employees are engaged in taking action to make their company better.

Third, their leadership is both collaborative and individual.

This understanding of leadership isn't an encouragement for every employee to do their own thing based on their own interests.  This is leadership that recognizes that how people work together is a key dimension of organizational success, and of increasing importance.

One way of distinguishing the difference between employee leadership and executive leadership is the difference between tactical and strategic leadership. If the business owner spends her or his time putting out fires, addressing customer issues, resolving employee issues, then the system is designed for the executive leader to control all aspects of the business. Today, this is not realistic.

Instead, by developing the leadership capacity of people, employees learn that they have the prerogative to resolve issues before they become problems. They learn that they can take care of customers, vendors and other employees in a way that builds long term sustainable relationships of mutual benefit.

A company that supports the personal initiative of their employees is one that has opened up the possibilities and opportunities that were hidden before. People are the agents of transformation through their individual initiative and shared responsibility for the company.  Employees are assets waiting to be utilized for the benefit of the company.

Redefined ROI as Return on Initiative.

The measure of initiative is the change that makes a difference that comes from the leadership of people. This kind of leadership transcends the restrictions of cost/benefit decision-making by elevating a culture of shared responsibility. It means that employees are not measured simply as costs on a balance sheet, but rather as agents of positive, sustainable change.

What does it take to create a culture where employees are equipped and motivated to take leadership initiative?

Here are four steps.

The first, the owner or chief executive has to release control, and allow for employee initiative to take place. 

The future success of a company will be determined by how well the organization can become a community of leaders.   It starts with the person at the top being willing to share leadership.

This is not an easy step because every inclination bred into the bones of a senior executive is the fear of losing control and failing.  Often, only after realizing that over-control is the surest route to failure that openness to a more open, collaborative leadership structure can develop.

The second step is to begin to invest in specific ways to help employees realize their leadership potential.

This is not training in executive leadership. This is training in personal leadership that is reflected in their performance, attitudes, behaviors and relationships within the company. With this training, the company transitions from a mechanism of business process into a community of leaders who take initiative to develop those processes for impact.

Let them lead, and It may turn out that eight leaders can do more than a dozen people who are just time-servers as employees.  Let them lead, and your company becomes a magnet for people who want to work in an environment where leadership initiative is welcomed. But to let them lead, they must be equipped to do so.

The third step is to allow for the structure of the organization to adapt to a new leadership approach.

Too often I've seen great ideas fail to return on their promised benefit because the environment is not suited to them. For employees to lead requires change in how the business functions. If there is genuine openness to change, then the right changes will be made.

The fourth step is to recognize that values are the heart of this kind of leadership.

These are values that provide the foundation for the company's purpose or mission, its vision for success and how it defines the impact that it is to have on its community of constituents. Values are the unchanging foundation that unites a community of leaders together.

The pejorative attitude that values are a secondary importance as "soft-skills" simply reveals the mechanical perspective that has been the dominant philosophy of business for the past century.  An emphasis on the importance and application of values creates a shift in culture that opens the company up to fresh ideas and new opportunities. It allows for relationships to form that are based in respect, trust and mutuality. 

Each of these steps needs to be implemented for each supports the other as change brings strength and growth.

Shifting from a Return on Investment mindset to a Return on Initiative one.

This change of mind is like the difference between a journey measured by a credit card statement and one measured by the pictures, videos and stories of the trip.  One is like a list of activities and the other a biography of a person's life.  Invest in the person, and their life and work become more integrated, providing a stronger basis for leadership.

The most important question that must answered before any of the above can be fully understood is what is the potential that each staff person has?

Do you know what that might be?

Do you have any way of understanding what potential looks like?

Then you can ask the question what does it take to develop their potential? It is part training, part creating the right social atmosphere, and part a redesign of how the organization functions.

The beauty of this new approach to being a business is that it is no longer all up to the senior leadership. As this approach produces its promised impact, more and more of the staff will be making contributions that move the company into a new way of operating.Then your Return on Investment in them will be measured in the company's Return on their Initiative in leading.

Photo courtesy of Push Revolution Photography

The Two Levers of Culture

Organizational culture is an important driver of any business. 3891544806_a7b01c8a63_b But culture is often seen as some vague organizational presence, typically personalized in the senior leader or owner. Culture is much more. 

For example, take a person. Hair, skin color, gender, height, shape, family lineage, geographic location and many other facets of a person are the things that distinguish us. But our hair, or lack of it, does not define us a whole person. It is all these things and more. The whole of a person is very similar to what we think of as the culture of an organization or a town. 

The culture of an organization therefore is something whole and complete, always shifting and changing as the context and the people within the organization change. Changes that are happening on a global scale are requiring us to pay more attention to precisely what is the culture of our businesses.

The shift that is taking place in organizational cultures is not incremental, but transformational. The mechanistic culture of the Industrial Age, think Henry Ford, defined the culture of most businesses over the past century. Today a more organic culture based on human interaction is emerging.

Australian Futurist Ross Dawson sees this Transformation of Business being driven by the following developments.

Flexible organizational structures

Distributed innovation

Tapping talent

Dynamic strategy

Scalable relationships

Governance for transformation

What drives these drivers? People, and the changes that they bring to their work in organizations.

A New Kind of Culture is known for being a unique place to work. Its organizational culture stands out as distinctive. It is one of many businesses that have figured out how to engage its employees so that they want to give their best to their work.

Read the latest edition of their culture book (free for the asking at, and page after page are brief stories by employees of their love and commitment to Zappos. Is Zappos the answer to the question about what the culture of work will look like in the future? No more so than any other business is the answer for every other business.  Zappos does provide an indicator of the kind of cultural change that is possible.

In the 2010 Zappos Culture book, CEO Tony Hsieh explains the Zappos culture.

“For us, our #1 priority is company culture. Our belief is that if we get the culture right, most of the other stuff – like delivering great customer service, or building a long-term enduring brand and business – will happen naturally on its own. … So what is Zappos culture? To me, the Zappos culture embodies many different elements.  It’s about always looking for new ways to WOW everyone we come in contact with. It’s about building relationships where we treat each other like family. It’s about teamwork and having fun and not taking ourselves too seriously. It’s about growth, both personal and professional. It’s about achieving the impossible with fewer people. It’s about openness, taking risks, and not being afraid to make mistakes. But most of all, it’s about having faith that if we do the right thing, then in the long run we will succeed and build something great.”

Tony Hsieh understands what Daniel Pink, in his book Drive: The Surprising Truth About What Motivates Us, describes. Pink sees that people today are not motivated to excellence in their life or work by fear of punishment or just by financial rewards. Instead three personal factors - autonomy, mastery and purpose – are the key motivators.

Two Levers of Culture

At a deeper level, organizational culture is a values structure, especially those focused on purpose and mission, and respect, trust, openness and mutual reciprocity.

We can describe this human centered system by identifying two levers. These levers provide energy and strength to the system. One is self-leadership. The other is the functioning of the organization as a Community of Leaders.


The old industrial model of leadership was built around the idea that leaders control and the rest follow. That worked when followers lacked education and training, and business systems were relatively simple and predictable. Today, nothing is simple, and the complexity of organizational systems is such that talent has become an important differentiator between businesses.  Talented people need development and the right culture to be able to reach their potential.

These changes also mean that each employee has greater responsibility for their work than ever before. That responsibility is carried out through their own personal initiative.

Personal initiative is the origin of all leadership. Without it, nothing begins or is sustained. In the past, this initiative came from a small, select group of people in positions of leadership. Now, leadership is less a role and more the way a person conducts themselves within the culture of the company.

Personal initiative is product of self-leadership. It comes from the individual him or herself. It is that expression of inner motivation that turns a person who is only there to do the job assigned into a person who is a creator and contributor to the developing success of the company.

Where does this drive for personal initiative that is leadership come from?

It begins with values. Not generic ones that appear on rest room walls with not so subtle reminders to do your best. Rather these values are personal ones that transcend the individual and form a basis for collaboration. These are the kind of values that are expressed by Zappos employee Darrin S. in the 2010 Zappos Culture book.

One of the best bits of advice I've ever received was, "Surround yourself with people that make you want to be your best self."

My Interpretation of "best self" is this:

- Purpose greater than one's own personal interests.

- Fear of stagnation

- Relentless quest for the truth in decision making.

- A thrill for the unknown when the right answer is difficult to determine.

- Trust in the effort of others.

- Genuine desire to watch others succeed.

Zappos has a high concentration of people with these values and the Zappos Culture is a product of these people.

People like Darren are self-motivated to lead from their individual place within the company's structure. They look for ways to contribute, to innovate, and to create an impact that matters.  Grow up a company filled with people like Darren and the company is transformed into a culture of committed contributors.

Community of Leaders

Two experiences inform my understanding of the phrase "community of leaders."

One was a project where issues that began at the lower level of the company's structure would get passed up the line until it reached the head of the business unit. Instead of the issue being a dispute between two people or the performance of one person, as the issue was passed on, it changed into being a dispute between the union and the company.  It was a culture problem. Managers and supervisors avoided taking responsibility because of a culture of mistrust.

The second experience was the tour of a local hospitals where we had the opportunity to meet and dialog with department heads and floor leaders. My opinion of the organization changed as I found middle-tier leaders who not only had a tactical and technical grasp of their specific area of responsibility, but also had a strategic grasp of the region's healthcare issues with an understanding of how the hospital was positioned to meet them.

A Community of Leaders is a way to describe an organizational culture where self-leadership is wide spread. It is more than just a collection of self-led people. It is an emergent culture where the whole is greater than the sum of its parts. The key change is relational and social.

As I describe above, a culture that avoids responsibility is not a culture where the relationships function well. Lack of respect and trust in any social system is sclerotic, creating an environment that is rigid, unresponsive and unable to adapt.

How many times have I been in a planning meeting with an organization and the group is pushing for greater accountability, not greater trust.  In effect, they are looking for scapegoats to blame poor performance on.  It is a symptom of a failing culture.  If people are not willing to take initiative, to build open, respectful relationships, then something is wrong. I know this is the norm in many, many organizations. Conduct anonymous surveys of employees, and you'll hear it. The social/ relational dimension of an organization is not a second level area of leadership, it is the connectional, the ligament, the glue of the system.

A Community of Leaders is an organization whose self-led members contribute through the leadership of their own personal initiative to build relationships of respect and trust. In order to see this, we have to think a bit differently about how an organization can be a community.

There is the formal structure of departments, business units and process. And then there is the informal structure of relationship. It is this latter structure that needs development in most organizations. It is developed by creating a culture of respect and trust. 

What can an executive leader of a company do to create a community of leadership culture?

First, YOU cannot create it. WE have to create it.

It cannot be controlled or mandated. It must be permitted to happen. There must be openness and freedom for people to take initiative to create the social environment that allows them to show up like Darren S. of Zappos to be their best every day. All you can do is support and facilitate, and most important join them as a co-participant.

Second, you have to understand what people want. Three Goals of Life-Work - Simple

 1. People want their lives and work to be Personally Meaningful In other words, there are ideas, values, a sense of purpose or personal calling that they want to express in the way they spend every day.  Work is personal, and becomes professional as it defines and guides their relationship to the company. The more a person’s core values are in synch with his or her work and aligned with the company’s mission, the more significant the workplace becomes as place to invest oneself in high endeavors and excellence in performance.

2. People want their lives and work to be Socially FulfillingThey want their relationships to be whole and healthy, for respect, trust and openness to be valued and practiced in the workplace. This is more than just about the functioning of a project team or a business unit. There is unfulfilled desire that informs the cynicism and fear that is prevalent in so many organizations.  It is a belief that better work results from relationships of trust and respect.

3. People also want their lives and work to Make a Difference that Matters This desire is more than just to being successful or having a fun.  People want to see the product of their effort at work creating a lasting benefit for their customers and clients.  The sense of accomplishment that comes when one’s mission or their company’s mission is fulfilled through their contributions is what I identify in people. To Make a Difference that Matters is to create change. 

Third, you have to be an example. If you are, then people will follow you. Deeds are much more important than words. If you are starting from square one, then let me suggest you take on developing the Five Actions of Gratitude as a discipline of relationship building within your company.

The Five Actions of Gratitude are five strategic actions that elevates the collaborative work as an organizational asset.

The Five Actions of Gratitude are:

Say Thanks in gratitude to those who make a difference that matters in your life and work.

Give Back in service to those who make a difference that matters.

Make Welcome in open hospitality, inviting people to take personal initiative to make a difference that matters

Honor Others in respect and recognition, as the foundation of healthy relationships.

Create Goodness through one’s own personal initiative to make a difference that matters in life and work.

What I have found is that the greatest change happens within us. The world's needs are not as insurmountable as our own fear and reticence to change.  It may be part ego, but what I find more often is that it is our lack of confidence in being able to succeed.

To take these three steps:

1. Letting go to let a community of leadership culture to develop,

2. Facilitating the development of a corporate culture which allows for people to find their life and work to be Personally Meaningful, Socially Fulfilling and To Make a Difference That Matters, and,

3. Making the Five Actions of Gratitude the basis of your personal and professional relationships,

will initiate a process of personal change that creates the opportunity for others to join you.  As a result a cultural change will take place that will release the unrealized potential that resides in every company. 

People are the levers of strength and change in organizations. Encourage their self-leadership and the result is a community of leaders. This is the future, possibly the only future that we have.

Self-Leadership in Life and Work is available for download.