Whose responsibility is it to ensure your organization will have the great leadership it needs to succeed far into the future? Too often, this responsibility is essentially ceded to Human Resources, to each individual manager-or it's simply ignored. Ultimately, of course, as today's business leader, the responsibility is yours. And meeting it is more urgent than ever before, because your organization may be at greater risk of facing a critical leadership void than ever before.

Chances are you know some of the reasons. As is often the case, they begin with demographics. With baby boomers heading for the exits, half of all companies surveyed recently by RHR International say they expect to lose 50 percent or more of their senior managers by 2010; nearly one-sixth expect to lose at least 70 percent of those seasoned leaders. Of course, with so many companies competing for the same leaders, hiring from outside is becoming increasingly difficult and expensive.

Demographics isn't the whole story. Today's "right-sized" and "flat" organizations have fewer ready replacements. These dynamics are already having enormous impact. As Johnson & Johnson CEO William Weldon put it, "Leadership is the single biggest constraint to growth at our company, and it is the most critical business issue we face."

Simply put, many enterprises face a deepening leadership void. Shortages of effective leaders are preventing them from leveraging new market opportunities, responding to competitive threats, or executing successfully on mergers, acquisitions and key initiatives. Without enough quality leadership, they cannot effectively drive needed change or handle the growing complexity of their businesses. (There is a crucial, under-recognized link between superior leadership and the ability to handle complexity. High performers outperform average performers by only 20 percent in assignments of low complexity, but they outperform by 50 percent in assignments of higher complexity.)

That's the challenge. How do you overcome it?

If it's your responsibility to keep all this from happening to your business, the question becomes: How?

This article introduces an approach that has succeeded at leading-edge organizations ranging from COSTCO Wholesale to Milgard Manufacturing. It's called Leader-Led Leadership Development (LLLD). While LLLD is a specific process developed by Quest Consulting & Training after decades of research, companies can apply its core components or integrate them into existing leader development plans.

Using LLLD, you can develop your leaders of the future as you focus them relentlessly on performance and results. You can give your people the knowledge, skills and tools they need to excel in your unique organization, marketplace and environment-something typical "leadership development" doesn't do. And, at the same time, you can align emerging leaders behind your key strategic initiatives: plans they might otherwise ignore or try to "wait out."

LLLD: How it works; why it's different

In an LLLD program, an organization's most successful leaders teach what makes their enterprises successful, and why. They demonstrate what's expected of leaders in their unique organizations. They show how to leverage their specific, patiently-learned best practices.

LLLD reflects an inescapable reality that too many organizations have tried to escape: today's best leaders are the only ones who know the essence of what tomorrow's leaders need to learn, and they are singularly positioned to ensure the credibility of leadership development.

In LLLD, your organization's most effective leaders "take the wheel" and personally own and drive the learning process. This can't be sugarcoated: the process requires a portion of your time, personal commitment and more than a little passion.

Given the proper HR support, senior leaders can become increasingly committed to LLLD over time. Rather than viewing "development" as a distraction, they find it surprisingly gratifying and critical to the organization's success.

A closer look at LLLD

With LLLD, current leaders present the best way to handle specific situations in their own organization, using specially prepared learning materials generated from their own organization's goals, methods and measures. These customized materials include "real" examples and cases, use familiar terminology and systems, and reflect their organization's own philosophy, processes and forms.

In preparing the program, leaders must identify and illuminate the critical business knowledge and best practices, resulting in a "performance model." This process of exploration-first with current leaders, then with emerging leaders-is indispensable. As senior and junior leaders analyze key business challenges and desired outcomes together, younger leaders learn decision making from the best teachers and role models: the people who've built the organization.

A case study: COSTCO Wholesale

LLLD has been implemented at companies in diverse markets and industries, from manufacturing to retail-and consistently achieved exceptional results. LLLD can be used to develop leaders at any level, and each implementation is unique.

Nevertheless, a case study helps understand the types of problems LLLD can solve and how it is implemented. For that, we turn to one of North America's most respected and innovative retailers, COSTCO Wholesale.

COSTCO's 490 warehouses provide carefully chosen brand-name and company-branded products at low prices to its 47 million members. Notwithstanding its relentless focus on exceptional value, COSTCO has earned a worldwide reputation for being a great place to work, with a culture that values employees and offers them real career paths.

When COSTCO set an aggressive five-year goal of opening 175 new warehouse stores, it necessitated 6,000 additional managers. They knew from experience that hiring from outside simply didn't work. COSTCO's leadership development program at that time, which consisted of sending managers to community colleges to learn leadership skills and principles, wasn't leading to improved workplace performance. Even worse, it was taking much too long to "grow" a COSTCO warehouse manager, a store's senior operating leader, to meet this growth.

The company recognized it needed an entirely new approach-one that would develop far more talent, reflect COSTCO's unique culture and realities, and start delivering results immediately.

In implementing the program, Quest began by seeking as much input as possible from managers who'd mastered the job and were delivering outstanding results. With extensive personal involvement from COSTCO senior leadership-including CEO Jim Sinegal-we worked with 20 exceptional warehouse managers from across the company. Together, we identified what a warehouse manager needs to know and do to operate a successful COSTCO warehouse, and the best ways to transfer that knowledge and skills to new leaders. COSTCO's curriculum ultimately ranged from philosophy and values to best practices and critical thinking skills.

At the same time, we recognized that warehouse managers would be the program's best teachers: more than anyone else, they understood the real-world challenges their peers would face. Moreover, as COSTCO came to recognize, if responsibilities were shared equitably, enough senior managers were available to facilitate the program successfully without compromising their other responsibilities.

We then developed case studies addressing each aspect of COSTCO's store operations, with a focus on "people" issues involving members, employees, vendors and other stakeholders. These cases created a comfort zone for facilitation by the COSTCO Warehouse Managers, enabling them to lead in-depth, candid discussions of a wide range of business issues. Like any leader asked to facilitate learning, the Warehouse Managers received their own training, coaching and support from HR.

After a pilot program was enthusiastically received, COSTCO formed COSTCO University and within 12 months rolled out LLLD programs company-wide. Ron Rothman, VP of personnel, said "it exceeded our wildest expectations." LLLD has enabled COSTCO to staff its growth entirely from within and reduced in half the time needed to prepare managers.

Faster implementation, easier measurement, exceptional results

It's possible to have a fully-customized pilot running within 120 days, and to start gaining quantifiable business value from it within months after that.

Once LLLD is running, its effectiveness is easier to measure than conventional leadership development programs. Because it's built around strategies and goals you've already established, you may well be able to use existing performance metrics-for example, scorecards, dashboards, or KPIs. Last but not least, LLLD is flexible enough to be extended in virtually any direction: up or down, laterally to other businesses or functions, or in response to new strategies and change initiatives. Whether you're concerned about long-term succession or you're already running short of high-quality leadership, LLLD may well represent your highest-value solution. iBi

Dr. Eric Herzog is founder and president of Quest Consulting & Training Corporation, a leading organizational consulting and development firm. His innovative programs on change management, strategic planning, team building and leadership development have resulted in dramatically improved performance for hundreds of companies in various industries. Herzog received his doctorate from the MIT Sloan School of Management. He is also author of the recently released book, Future Leaders.