The leadership pipeline model was first introduced by business analyst Walter R. Mahler during his time at General Electric in the 1970s. In his report entitled Critical Career Crossroads, Mahler suggested a shift in work values according to the various stages of an organization ensured leadership success. The leadership pipeline model is a framework for identifying, developing, or recruiting leaders.
In the year 2000, Mahler’s ideas were developed further by Ram Charan, Stephen Drotter, and James Noel in their book The Leadership Pipeline: How To Build The Leadership Powered Company.
The expansion of the leadership pipeline model was underpinned by decades of consultancy experience, with the writers having worked with numerous Fortune 500 companies.
Ultimately, their objective was to develop a strategy organizations could use to nurture leadership.
The result was a six-step model describing the major events every leader experiences, from junior positions to senior executives.
The model also favors a strong internal leadership culture.
Instead of the organization looking externally to recruit leaders, it is encouraged to develop strong leaders itself by moving candidates through the six-step process.
The six steps of the leadership pipeline model
As hinted at in the previous section, the six steps are designed to enable the individual to develop the competencies required for each successive stage.
Let’s take a look at how this progression might play out below:
Step 1 – Managing self to managing others
Employees in this first step are equipped with technical skills but not those required to manage others.
Charan, Drotter, and Noel acknowledge the first step is the hardest because it requires a significant behavioral and value-based transformation.
As a result, the emphasis here should be on teaching the basic functions of management.
This encompasses time and resource management, planning and assigning work, and motivating and assessing subordinates.
Crucially, the employee must shift their mindset from simply tolerating management to realizing its importance.
Step 2 – Managing others to leading managers
According to Charan, Drotter, and Noel, the second step is “the level where a company’s management foundation is constructed; level-two managers select and develop the people who will eventually become the company’s leaders.”
Although it goes without saying, it is vital the business performs this step properly.
Second-level managers must be able to separate themselves from tasks and focus on managing others. In other words, they must be able to assess and select suitable candidates for first-level roles.
They must also be able to provide mentorship and coaching, with less reliance on processes.
Step 3 – Leading managers to functional manager
One of the key differences between a leading manager and a functional manager is the latter’s superior communication skills.
Functional managers must also employ holistic thinking since they will be dealing with other managers from multiple departments.
Competency is measured by team-oriented working and the ability to successfully compete for finite resources while meeting operational needs.
The functional manager must also devise strategies that help the organization gain a long-term competitive advantage
Step 4 – Functional manager to business manager
Business managers are required to make decisions under pressure and have increased autonomy in decision-making.
The transition from functional manager to business manager is significant as the focus shifts from managing to leading.
Indeed, the business manager must control and inspire multiple teams and connect with subordinates on an emotional level.
Furthermore, the business manager must be able to analyze past, current, and future performance to maintain efficient operations under financial and other constraints.
For some individuals, there can be friction at this point.
Business managers must be able to trust and receive advice or feedback from functional managers – especially when they have little knowledge of the function in question.
Step 5 – Business manager to group manager
Primarily, the role of a group manager is to support and encourage other managers to succeed.
This requires four key skills:
Strategy formation
With an emphasis on appropriate capital allocation and deployment.
Talent identification
Or a track record of identifying and supporting the right managerial talent.
Business needs identification
The ability to identify the broader business needs likely to result in expansion and growth. By extension, group managers must be able to recognize parts of the business no longer contributing to success.
Self-actualization
In the context of the leadership pipeline model, this means developing an integrative management approach by using the broadest scope possible.
Step 6 – Group manager to enterprise manager
From this point onward, leaders must understand the values underpinning management strategy and success.
While enterprise managers consider short-term functioning to some extent, the overarching goal should involve long-term visionary thinking.
This means enterprise managers can sense the way forward for a company – even if it is less apparent or invisible to others.
They must also be able to communicate this vision and encourage buy-in across the organization.
Leadership pipeline example
Manchester United
When Sir Alex Ferguson joined Manchester United as football manager in 1986, the team was very much unsuccessful with many players grossly unfit and only one under the age of 24.
Ferguson immediately set about developing a leadership pipeline to rebuild the club from the bottom up.
He realized that assembling a cohesive, winning team did not happen by accident and required selecting players who could perform specific roles, get along well with others, and embrace team values.
To maximize his chances of long-term success, Ferguson needed to look far into the future and create a conveyor belt of talent.
This meant older players would be progressively moved on and replaced with younger talent that could be nurtured to deliver a consistently high level of performance.
In addition to helping the team win more games, younger players bought into the culture Ferguson wanted to create with energy, enthusiasm, and loyalty.
Succession planning is only one aspect of the leadership pipeline – albeit a very important aspect – but the results of Ferguson’s efforts speak for themselves.
During his 26-year tenure, Manchester United amassed 38 domestic and international trophies including 13 Premier League titles.
General Electric is one of several organizations that has instituted a development program to engage managerial staff in the leadership development process.
At the John F. Welch Leadership Development Center in Crotonville, New York, managers and executives from various levels are responsible for teaching the program curriculum and running different leadership development activities.
Since the company takes its leadership pipeline seriously, students are able to step away from their day-to-day work commitments to solely focus on personal development.
With a strong internal focus on the leadership pipeline, General Electric is better equipped to fill positions with current employees.
Existing managers are also immersed in the process of developing the subordinates from their own teams, which empowers them to take an active role and become better coaches.
When senior leaders can develop the company leaders of the future, they also become motivated to provide feedback consistently and constructively.
This ensures that the leadership pipeline is in constant flux, so to speak, because constant feedback results in constant development.
This also ensures that development is not treated as a commodity that is only actioned after a performance review.
As those born between 1980 and 1995 start to fill managerial positions left vacant by retirements, a new generation with different values and skills will lead corporate America into the future.
GE customer success manager Dimitri Leimonitis noted that a key focus of the Crotonville program was centered on “what 21st-century leadership looks like, at a time of such disruption and when multiple generations are entering the workforce.”
Leimonitis also noted that the company had been forced to have a “huge rethink on how we recognize and reward performance in organizations.”
General Electric’s executive-led approach to leadership development in a modern context has been replicated by notable companies such as Yum! Brands, 3M, Home Depot, and Nokia.
Key takeaways
The leadership pipeline model is a framework for identifying, developing, or recruiting leaders developed by Walter R. Mahler in the 1970s.
Some decades later, the leadership pipeline model was developed further based on the vast consultancy experience of Ram Charan, Stephen Drotter, and James Noel. Together, they developed a framework to help organizations develop a strong internal leadership culture.
The leadership pipeline model has six stages that explain the progression from a junior employee to an enterprise manager. Each helps the individual develop competencies vital to succeeding at high levels of management.
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
