Leading Off: A playbook for developing future leaders today

ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

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Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms

Welcome to the latest edition of Leading Off. We hope you find our insights useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com.

—Alex and Axel

As leaders wrestle with today’s uncertainties, they also must ask themselves: Who will tackle tomorrow’s challenges? Being a successful 21st-century leader means charting a path for long-term growth while also navigating a range of complex issues, from geopolitical instability to evolving employee expectations. One key to supporting an organization’s future is creating a leadership factory to develop a new generation of managers and executives who will steer the company through subsequent obstacles and opportunities. This week, we look at how executives at top-performing companies are establishing their leadership factories—and how others can follow suit.

An IDEA

An image linking to the web page “Scaling the 21st-century leadership factory” on McKinsey.com.

Be a hands-on builder

With so many day-to-day responsibilities and disruptions to manage, few CEOs devote enough time to identifying, nurturing, and empowering the future leaders of their organizations. But at companies that have created successful leadership factories, CEOs are deeply and personally involved in the training and transfer of leadership skills, say McKinsey’s Global Managing Partner Bob Sternfels, Senior Partner Daniel Pacthod, and Senior Adviser David H. Berger. “Lessons are more likely to stick, and growth opportunities are more likely to emerge, when CEOs, working closely with their leadership teams, take an active, hands-on role in building the factory,” they observe. The authors reveal five critical actions that CEOs and their teams have taken to create effective leadership factories: for example, outlining the desired traits and attributes of future leaders, engaging early and often with high-potential employees and unconventional thinkers, and cultivating new approaches to risk-taking and learning. According to the authors, companies can then bolster their leadership development efforts with detailed metrics and with enabling technologies, such as gen AI and agentic AI .

A BIG NUMBER

That’s how many fundamental shifts in mindsets and ways of working leaders must embrace to thrive in an era of disruption, according to McKinsey’s Aaron De Smet, Arne Gast, and Johanne Lavoie. They note that, among other changes, leaders should evolve beyond a focus on shareholder profits and focus instead on creating holistic impact for all stakeholders. Another shift is moving from commanding a hierarchical organization to collaborating with others, in order to guide and empower networks of teams .

A QUOTE

“From now on, the differentiating factor will be human leadership that gives people a sense of purpose, inspires them, and cares about what they want to achieve.”

That’s McKinsey’s Dana Maor, Hans-Werner Kaas, Kurt Strovink, and Ramesh Srinivasan—authors of The Journey of Leadership: How CEOs Learn to Lead from the Inside Out—on why it’s important for executives to develop soft skills. In the AI era, technology alone will not create higher performance; employees will also need their leaders to demonstrate empathy, engagement, and wisdom. “When human capital is managed the right way, the results translate straight to the bottom line,” the authors say.

A SPOTLIGHT INTERVIEW

An image linking to the web page “Author Talks: Leadership lessons from a baseball icon” on McKinsey.com.

Business leaders can find inspiration in unexpected sources—for one, the iconic baseball manager Earl Weaver. Journalist John W. Miller, author of The Last Manager: How Earl Weaver Tricked, Tormented, and Reinvented Baseball, says executives can learn from how the former Baltimore Orioles leader developed his organization’s culture. “Leadership is pointing at not just results but also the process of what matters,” Miller says in an episode of Author Talks. “If you’re in business, it’s profit; it’s sustainability. In baseball, it’s winning games, but it’s also a culture that leads to winning and is not obsessed with the immediate result.” Weaver’s teams, he noted, started slowly but were able to rebound because they were fundamentally sound. “They always accumulated good habits and didn’t always care who got the credit,” Miller says.

READING LIST FOR LEADERS

An image linking to the web page “What to read next McKinsey’s 2025 annual book recommendations” on McKinsey.com.

Executives seeking further insights into the art of leadership can turn to the bookshelves of other leaders. McKinsey’s annual book recommendations include suggestions from prominent figures in business, media, and beyond—several of which focus on leadership itself. For example, Sanofi CEO Paul Hudson recommends economist Dan Davies’ The Unaccountability Machine: Why Big Systems Make Terrible Decisions—and How the World Lost Its Mind, while Black Girls Code CEO Cristina Mancini suggests investor James Rhee’s Red Helicopter—a Parable for Our Times: Lead Change with Kindness (Plus a Little Math). Also on the list is A CEO for All Seasons: Mastering the Cycles of Leadership by McKinsey Senior Partners Carolyn Dewar, Kurt Strovink, Scott Keller, and Vikram Malhotra. In addition, Global Managing Partner Bob Sternfels recommends Thinking, Fast and Slow, by Nobel laureate economist Daniel Kahneman, saying, “This book got me focused on when to use your gut versus when to be more deliberate.”

Lead by fostering the next generation of executives.

— Edited by Eric Quiñones, senior editor, New Jersey

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