Building a Business Case for Leadership: Defining the WHY

When we offer public programs on human capability (talent, leadership, organization, or HR), we often ask how many participants have engaged in rigorous discussions on how the topics presented would help them and their organization create more value for all stakeholders. Typically, fewer than 20 percent indicate having had such conversations.

For in-house programs on similar topics, we frequently invite business executives to welcome attendees. The executives usually begin by congratulating participants for being invited to the program and encouraging them to actively learn. However, they seldom discuss explicitly why the content in this program will increase value for stakeholders.

We suggest that knowing the why—or starting with knowing what value investments hope to achieve—is as important as focusing on the how (leadership development programs). We encourage those that invest in developing better leaders to follow a six-step process that we call “leadership brand” (Figure 1).

Figure 1: Six Steps of Leadership Brand

Within this leadership brand work, our studies have shown that the first step, building a business case for leadership, provides the most value to employee, business strategy, customer, investor, and community outcomes (Figure 2). Investments in leadership development often do not yield visible, satisfactory returns, and we believe that the absence of a clear business case, the first step of the leadership brand work, is a key reason why.

Building a business case for leadership development centers on the “why.” Generally, when people understand and accept the “why,” they more actively engage in the “what” and the “how” (the subsequent steps in our leadership brand research).

Figure 2: Research on the Impact of Leadership Brand on Stakeholder Outcomes

Let us suggest six specific steps to creating a business case for both being a better individual leader and building leadership capability in the company. 

We have used these steps to help senior executives increase their leadership investments, often through a one- to two-day experience (we have called a sprint) designed to underscore the value of such investments. We also apply these six steps to help individual leaders recognize their personal development needs, thus building a business case for leadership (the “why”).

As we cover each step, we will reference a recent case involving an organization where all participants developed their business case as an integral piece of a leadership academy.

Step 1: Context

To understand context, we encourage executives or leaders to examine three key sources of data: the business context and opportunities to improve results, team capabilities, and personal leadership strengths and opportunities. This information, along with organizational and market context, is used to answer the business case questions: Which of your results can/need to improve, and which leadership skills must change to achieve these improvements? For the participants in our recent academy session, seeing the significant impacts that “support” function leaders have on business and organizational outcomes was enlightening for everyone. This transformed conversations during the session of the “me versus you” type into collaborative ones with the objective of supporting one another’s goals going forward. 

Step 2: Exploration and Prioritization

After looking at context, we invite executives or leaders to identify and prioritize the most important actions to enhance their business case. We encourage them to focus on the potential impact and feasibility of implementation helping them concentrate on the most effective actions. From these priorities, executives or leaders apply these ideas to the next step. In our sprint with this organization, some key ideas were immediately apparent, while others demanded time and conversations prior to becoming clear. The ideas that were more difficult to identify were typically high value and were shared by multiple participants. Many expressed that these conversations may have never taken place without the rigorous analysis the business case exercise demanded.

Step 3: Connection

We commonly believe that better leadership competencies yield better results; however, this is only true if the competencies are aligned with the required outcomes. Therefore, the third step of building the business case involves linking leadership competencies to the desired results, determining which competencies are required for each desired result. Participants in this connection stage discovered the value of involving their teams to build their cases as it helped them focus their implementation efforts and understand their team’s needs.

Step 4: Metrics and Results

The adage, “You can’t improve what you don’t measure,” holds true here. A successful business case measures how improved leadership influences targeted outcomes, considering both time as well as the number of leaders impacted. When actions are tracked properly, leaders can make true progress. Despite initial doubts, participants identified metrics that confirmed the business case of investments in development About 60 percent of human capability metrics impacted financial results, while the others impacted customer, employee, and reputation outcomes.

Step 5: Validation and Commitment

Once executives and leaders have a clear vision of their business case, they must then build the required support for their initiatives. This step involves validating the leadership investment with stakeholders and refining the business case based on feedback to ensure broad acceptance. Successful validation and commitment to the business case for leadership ensures the realization of the promised investments. The participants in our sprint indicated that involving their leaders and colleagues bled to new learnings from each other as well as a collaboration commitment that fostered energy to both learn and deliver.