How to grow the next generation of CEOs | FT Working It

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How do we grow our next generation of business leaders? One answer is leadership development courses.

But the corporate learning industry, which is worth hundreds of billions of dollars, is changing fast. I want to look at how leadership development is being reinvented and how it can keep pace with today's complex, competitive, and fast-paced business environment. I'm Isabel Berwick. I host the FT's weekly Working It podcast and write a newsletter about the workplace. In this series I'll explore some of the most pressing issues around the future of work and talk to senior leaders about how they are making work better for everyone.

This is at the crux of the challenge that we've got.

For many years business leaders refined their skills at off-site, purpose-built corporate university campuses.

As big companies developed, particularly in the middle of the 20th century, they themselves recognised that they needed to educate and develop their own leaders to do the things that specific company wanted to do.

One of the best known corporate campuses was GE's Crotonville, launched in 1956. Back then, leadership was about command and control with a 12-week advanced managers course teaching old school bosses how to lead. Throughout the '80s and '90s, these campuses were a must-have for companies like Boeing, Kodak, and Procter & Gamble.

That was a big cultural event for people to go to training, and meet other people, and learn, and then go back to their jobs. And companies were willing to spend a lot of money on that.

So Crotonville was and is a beautiful spot in the Hudson Valley in Upstate New York. People I spoke to were very proud to have been invited on those courses. And they did put a lot of thought into how it should be arranged. There was a bar, and a restaurant, and a sort of hotel-style approach.

It was a big deal. But even when I went GE was already starting to run Crotonville in inverted commas courses outside New York state. Because as a multinational it needed to be able to teach people the GE way in India, or Japan, or wherever they did business.

In 2002, an estimated 80 per cent of Fortune 500 companies had a corporate university campus. But since then they've fallen somewhat out of favour. GE sold off the Crotonville campus this year. Under powerhouse CEO Jack Welch future leaders were immersed in company culture. Now, the site is being turned into a conference centre. And many other companies have made similar moves.

Right around 2000, 2001, 2002, when internet became really big, there was this massive rush towards e-learning. In the very beginning it was a cost savings, and then they realised there was a whole bunch of other benefits. People could learn at their own time, at their own pace, when they had time to learn. They didn't have to do it during the day in the office as they would have in a normal course. They could chunk the content into smaller pieces, so you could skip a chapter and get to the information that you really wanted to learn.

During the pandemic, investment in online learning exploded.

You had hundreds of millions of venture capital dollars flowing into this space at a time when capital was also a lot cheaper and interest rates were low. We've since just gone through a pretty painful correction in that space.

Emeritus works with 100 of the world's top universities, offering online leadership courses. But the company realised an element of personal contact was also really important. What are the benefits of virtual learning?

The biggest benefit of virtual learning is that it is cheaper and more flexible. You don't need to pay for travel. You don't need to book a fancy space. You can do the training on your own time. What we've tried to do at Emeritus is to take the benefits of virtual learning, but then add in the support and structure of a physical classroom where we can.

So Emeritus has been using technology that makes virtual learning a little bit more personal. I went to Madrid to see it in action. Laura.

Hi, Isabel.

How are you?

Wow. This is amazing.

So what have we got here? We've got a lot of screens, cameras. How does it work?

So we have around 34 screens for a video wall. And of course, the green, we cannot ignore the green in the room. This allows us to make this room anything we want.

A lot better than the chat on your Zoom. For the teacher, at least, this is a much more immersive experience. It feels quite unreal.

But actually, to present like this is so different from being behind your desk in your bedroom. And it's so much more professional and so much more fun. What's the ratio between in-person and online?

We do actually find ourselves increasingly adding in-person components to the learning. And this is following a pretty big trend that large companies are seeing, where employees really do value the benefit of in-person learning experiences, the chance to travel somewhere, the chance to meet colleagues. But they still want the benefit of the cost savings and flexibility that comes with online learning.

In 2023 the corporate training sector was valued at $164bn. And it's forecast to grow to $487bn by 2031. But according to the 2024 LEADx Report, only 54 per cent of companies have mandatory leadership training. I can see how the Emeritus model can be effective at upskilling big parts of the workforce. But what else can be done to prepare people for the C-suite or even to help develop established CEOs?

Lots of CEOs have coaches. And there are lots of coaches out there offering their services to provide another sounding board for some of the challenges that they may face, because it's a pretty isolating role being a chief executive. And also, I set a lot of store by some of the forums in which CEOs from different companies themselves meet. And that might include the much maligned Davos, for example, as places where they can talk off the record with senior people at other companies, not just about business, but about the kind of things that they're facing.

Japanese tech company Ricoh offers a kind of mini MBA, where leaders have that chance to get together.

Leadership development is different, because it's developing how you think. It's developing your views of the world. It's developing how you make leadership decisions. And that has to be ongoing.

It isn't, you know, you've got to the C-suite. You've arrived. Welcome. And now, we're not going to continue to help you evolve.

Ricoh works with the University of Oxford's Said Business School. But the course is not focused internally. Instead, Ricoh offers leadership development to its clients.

We kind of had a real brainstorm and thought, what can we do to spend time with our customers in a way that they can accept the invitation but also give something back to their organisation? So we kind of pivoted towards the education route, sort of a mini MBA. It's over a two-year period. From a business angle, we have never lost a customer account that's been through this programme, because of the depth of relationship that we're able to build.

It's a mixture of in-person events and online sessions, we call them. There are four in-person events. They happen every six months - looking at the future of work and the world.

How is this changing context needing you to behave differently as a leader? We've got academic content, experiential elements in every in-person summit. We do lots of great things to bring the ideas to life rather than just sit in a room and have someone talk to you, at you.

What is different about the Ricoh programme?

Ricoh are in the room. So they're learning alongside their own clients. And they're also getting intelligence from those clients in the room. So in some ways it's a market research activity as well.

It's almost like a therapy group, actually, where you really kind of go, wow, everyone's having these challenges and how can we tackle them as a group? I do think it's right that people go externally and go into cohorts where they are with other companies and have a broader network, broader pool of experience that they can learn from.

So where do your star CEOs fit in? I can't imagine Elon Musk on one of these leadership programmes.

They are exceptional in every respect, good and bad, leaders. And they can make change just by the force of their unique personality, with emphasis on unique. And so if you start to say I'm going to be a future Elon Musk, you might end up mimicking all the bad sides of Musk.

I think Bill Gates once said of Steve Jobs that he knew lots of people who were modelling themselves on the genius asshole that he was and managed to get the asshole bit right every time. So there is a kind of danger that you go with an exceptional leader and say these are the things I have to do in running my rather humdrum small company. And you end up replicating the bad side of what some unique, exceptional leaders might do.

Some companies still see the value in their own bricks and mortar. In 2024, Deloitte opened its seventh university campus, just outside Paris. The 22,000-square-metre estate can house 500 Deloitte employees every day. But can such a facility be justified when so much learning can be done online?

So there's three things we really want to achieve here. First of all, obviously, the quality of the training and the development that our people get, but it's also about the connections, the connections they make with one another, the relationships that they build here.

And then finally, it's also about an exceptional experience. We want people to come to this place, to be wowed by it, to enjoy being here. Attracting and retaining is so important to us. Having somewhere like this is a real asset, we feel.

Do you think the increasing use of tech in the workplace is sort of prioritising the value of real-life connection? Is that something that's gone through Deloitte's mind?

Yes, definitely. So I think bringing people together, we've learned through the pandemic, actually can be really important at the right time for the right purposes. I think that the prevalence of technology and the need for people to develop their technology skills actually leaves us as humans craving more interaction.

So thinking about the old-style learning campuses of the '60s, '70s, '80s, it was all about bringing up internal candidates to be CEO and C-suite leaders. Is that still the philosophy?

I think the philosophy here is much more around general leadership. All of our professionals are facing into challenges perhaps we've not seen before. Having said that, we also really do want to foster the next generation of leaders. And I'm really passionate about the day that our future leaders will be talking about the experiences they had coming through the doors here in Paris.

Online, virtual classrooms, real classrooms, there are many paths to leadership development. But all the people I've spoken to have emphasised the need for real-life human connection. That's especially important in a fast-changing world, which in recent years has seen the pandemic, wars, supply chain issues, and the development of AI.

Some of the attributes of modern leadership are to do with being able to adapt, to take advantage of opportunities and challenges caused by sort of fast-changing events. So I think there is a challenge there for those who are devising leadership development programmes, to find a way to teach what is essentially unteachable - that agility.

When I was talking to people about how they worked through Covid, leaders would say to me, not I learned this on a leadership development course, and so I was able to adapt quickly. They would say, well, I remember when the financial crisis hit, and I was in a more junior position and had to do things quickly. Or, for some of the older leaders, 9/11 and what happened after that, was useful experience that they were able to bring into their leadership through the crisis.

Sometimes, what counts is not learning in the classroom, but learning on the job.