Why leadership teams should be developed on real business problems — and why the payoff shows up in the middle of your organisation
Ask a CEO what their leadership team’s last development programme cost and you’ll get a number. Ask what it solved and you’ll usually get silence — or, in my experience just as often, a candid admission that not much has really changed.
And solved is the right word. Not what did they learn? Not how did they rate the experience? What did it solve? Which friction disappeared? Which stalled decision got made? Which opportunity moved from the flipchart into the business? How has the team’s performance actually improved — have they brought what they learned to life and applied it in the way they lead? What problems can they solve today that they couldn’t six months ago? And can they now move at a pace they couldn’t before?
That silence, and that admission, are among the most expensive in any organisation.
Companies globally spend well over $350 billion a year on training and development, and the return on that investment is, by Harvard Business School’s own assessment, poor.
Michael Beer and his colleagues called it “the great training robbery”: organisations pour money into education that fails to convert into changed behaviour or improved performance. If that’s true of development in general, I’d suggest it should be absolutely intolerable at the executive level, where the people being developed are the ones your strategy, your culture and your growth depend on most directly.
This isn’t a knowledge problem. It’s a design problem. And after more than two decades advising and coaching CEOs and executive teams around the world on leadership, culture and innovation-led growth, I’ve become convinced the fix is deceptively simple: stop taking your most senior people away from the work in order to develop them. Make the work itself the development environment.
“The most powerful learning doesn’t happen outside the work. It happens within it.”
The transfer problem nobody wants to own
The traditional model of leadership development rests on a seductive belief: if smart, senior people understand something clearly enough, they’ll naturally apply it. Give them a framework. Teach them a process. Help them see something they hadn’t seen before. Surely the learning will find its way back into the boardroom?
Experience, and the research, says otherwise.
McKinsey’s analysis of why leadership development programmes fail identified precisely this flaw: the tendency to “decouple reflection from real work.” Adults retain roughly 10% of what they hear in classroom lectures, versus nearly two-thirds of what they learn by doing.
In an earlier McKinsey survey, only a quarter of managers said their training programmes measurably improved business results. And seniority doesn’t grant immunity. If anything, the gap between the executive offsite and the executive’s Monday morning is wider than anywhere else in the organisation.
I’ve watched the pattern play out with leadership teams more times than I can count. They leave the offsite energised. They have new language, new insights, and good intentions. For a few weeks the framework appears in executive meetings. Something has shifted.
Then, as the real world returns, the framework dissipates. Investor pressure. Operational escalations. Board demands. The urgency of the quarter. And gradually, what felt clear and important fades into the background.
Not because your leaders weren’t committed. Not because the content lacked value. But because the learning happened in one place and the leadership was happening somewhere else.
A word in defence of the offsite
Let me be clear about what I’m not saying, because this is where the argument is often misheard. I am not saying “down with the offsite” or that time away from the day-to-day has no value for senior teams. Quite the opposite.
Time away is one of the most valuable investments an executive team can make — when it’s used for what it’s uniquely good for. Reflection. Design. Imagination. Exploration. The space to lift heads above the operational noise, question the direction of travel, and think about the organisation you’re becoming rather than the one you’re running. That kind of thinking time is where futures get created, and most executive teams don’t value, prioritise, or protect nearly enough of it.
What the offsite is not good for is learning how to lead differently — building the capability to lead at pace, make faster decisions and solve harder problems. That capability is forged in the work, under real conditions, with real consequences. The mistake isn’t taking the team away. The mistake is asking the retreat to do a job it was never designed for, then wondering why nothing changed when everyone came home.
So keep the offsite. Just be honest about its purpose: it’s where your team imagines the future. It’s not where they learn to build it faster.
“Thinking time is where futures get created. But it’s not where the pace of leadership gets built.”
The case study problem
There’s a second flaw, and it’s one the leadership development industry is strangely reluctant to confront: the hypothetical scenario.
The case study borrowed from Silicon Valley and transplanted into a legacy engineering firm. The neat simulation designed for teaching purposes, run with the leadership team of a professional services network, a public institution or a highly regulated business where the realities are entirely different. The abstract exercise that everyone around the table knows, on some level, doesn’t matter.
Here’s what hypotheticals can never replicate for a leadership team: consequence. When nothing is at stake, senior leaders engage differently. They perform learning rather than experience it. There’s no emotion, no ambiguity, no political complexity, no exposure, none of the texture that makes leading at that level hard.
And it’s precisely that texture executives must navigate every day. Strip it out and you’re teaching your most senior people to swim on dry land.
Where problems actually get solved
Now for the part most leadership development gets completely wrong, and it changes what the development itself should be for.
In most organisations, problems don’t get solved in the boardroom. Opportunities don’t get capitalised there either. That happens in the middle of the organisation — by middle managers and dynamic teams close to the customer, close to the friction, who want to do things differently and better. My own work over two decades keeps confirming what the engagement research keeps finding: the middle is the most powerful multiplier an organisation has. It’s where strategy either becomes movement or dies in translation.
Which means the purpose of leadership development is not to turn your top team into better problem-solvers. It’s to coach and develop them to lead for an environment in which problems get solved — repeatedly, at pace, by the people best placed to solve them. That’s the distinction I’ve built much of my work around: leading for innovation. Not innovation as a department, a programme or a boardroom agenda item, but as a culture the leadership team deliberately creates the conditions for, so that solving complex problems becomes something the organisation can do again and again rather than something it achieves occasionally by heroics.
And here’s the uncomfortable truth: the middle of the organisation can only ever be as enabled as its senior leaders allow. Every unmade decision, every hoarded authority, every mixed signal from the top lands in the middle as hesitation. If your managers aren’t moving at pace, the first place to look isn’t at them. It’s at the environment your executive team has built around them.
“If your managers aren’t moving at pace, the first place to look isn’t at them. It’s at the environment your leadership team has built around them.”
What the evidence actually supports
None of this should surprise us, because the research pointing the other way has existed for decades.
The Center for Creative Leadership’s studies of how executives actually learn to lead — the work of Morgan McCall, Michael Lombardo and Robert Eichinger that produced the well-known 70:20:10 model — found that around 70% of meaningful development comes from challenging, on-the-job experiences, not classroom instruction. The Corporate Leadership Council similarly concluded that on-the-job learning has roughly three times more impact on performance than formal training.
The evidence on action learning, developing leaders through work on live organisational problems, points the same way. Peer-reviewed research by Michael Marquardt and colleagues shows it builds exactly the capabilities CEOs say they’re desperate for in their teams: collaborative leadership, coaching, questioning, and the ability to find integrative solutions to genuinely messy problems. And McKinsey found that successful programmes were five to six times more likely to involve senior leaders as sponsors, mentors and coaches on real work, rather than delegating development to an off-site event.
So the data confirms what I’ve seen repeatedly in practice: when a leadership team applies new thinking immediately to something that matters, they listen differently. They question differently. They remember differently. Development stops being separate from strategy and performance and becomes part of how the team makes sense of a challenge and decides what to do next.
The double return
Here’s where this stops being an argument about pedagogy and becomes an argument about economics.
Take a real business problem — not a sanitised version of one, but a painful, costly, current issue the organisation would pay to make go away — and make it the development environment. Done properly, this can’t be a leadership-only exercise, and that’s precisely the point. Because the problem is real, solving it requires involving the managers and teams who live with it every day. The leadership team’s development happens through learning to lead that effort: framing the challenge, creating clarity, pushing authority towards the people closest to the work, removing the blockers only they can remove, and holding the space for others to think, test and act.
The programme then produces two returns simultaneously.
The first is the one you paid for: capability. A leadership team that has learned — by doing it, not hearing about it — how to lead for a culture that can repeatedly solve complex problems. And a middle layer that has experienced what it feels like to be properly enabled, because they were in the room, working the problem, watching leadership behave differently.
The second is the one almost nobody budgets for: the problem gets solved. Assumptions get challenged. Ideas get tested against reality. Priorities become clearer. Ownership shifts to where it should have been all along. The friction that had been quietly taxing performance for years finally gets addressed — not by the leaders heroically fixing it, but by leaders learning to build an environment in which it could be fixed. In some of the engagements I’ve facilitated, the commercial value of what got unstuck exceeded the cost of the entire programme before it even finished.
That is a category of ROI traditional leadership development simply cannot generate. A hypothetical case study, however elegant, solves nothing and enables no one. A real one might solve the thing that’s been holding your strategy hostage — and leave behind an organisation that knows how to solve the next one.
“The problem gets solved — not by executives heroically fixing it, but by leaders learning to build an environment in which it could be fixed.”
Performance you can see, culture you can feel
There’s a third return, and it’s the one CEOs should care about most.
What you actually need from your leadership team isn’t knowledge. It’s the ability to lead at pace, drive innovation and deliver growth — which, stripped to its essentials, means the ability to create an organisation that solves problems and capitalises on opportunities quickly and repeatedly. That is the capability your strategy quietly depends on, and it’s exactly what conventional development struggles to build, because nobody learns pace in an environment with no clock, no stakes and no consequence.
Develop your leadership team this way and something different becomes visible:
- performance improves, measurably, in ways a feedback form never captures.
- Decisions that used to circle the boardroom for months get made in weeks.
- Challenges that would have been deferred or diplomatically parked get confronted and worked on — in the middle of the organisation, where the capability now lives.
- Opportunities get seized while they’re still opportunities.
The metric is no longer what your leaders learned or how they rated the experience — the lowest and least meaningful bar in the evaluation of any programme — but how much faster the whole organisation now moves. That’s a difference a CEO can see from the head of the table and, crucially, one the P&L can register.
And alongside the performance shift comes a culture shift, equally observable, and it starts where culture always starts: at the top. When leaders learn to lead for innovation on something real, and managers and teams experience being trusted with something that matters, the way the organisation works changes. Assumptions get challenged more openly. Ownership spreads instead of pooling at the top. Functional silos give way to collective problem-solving, because people at every level have experienced what it feels like to move at pace on something consequential — and they don’t willingly go back.
This tracks with the broader evidence: McKinsey’s research consistently links top-quartile leadership quality to markedly stronger financial performance, roughly double the EBITDA of peers. Leadership team performance isn’t a soft metric. It’s a leading indicator of growth.
In the engagements I’ve facilitated with executive teams around the world, this is the pattern that repeats: the programme ends, but the pace doesn’t. Because what was built wasn’t knowledge about leading. It was an environment that keeps solving problems after the development formally stops — and that’s what makes the ROI of leadership development not just arguable, but visible and measurable.
“The metric is no longer what your leaders learned or how they rated the experience, but how much faster the whole organisation now moves.”
Why this matters more now
DDI’s Global Leadership Forecast 2025 found that 77% of organisations lack sufficient leadership depth, while trust in leaders has fallen sharply. Meanwhile, my own research over the years has consistently shown a stubborn gap between how critical executives say innovation is and how satisfied they are with their organisation’s ability to deliver it.
You don’t close gaps like that by sending your top team on another programme of workshops. You close them by developing your leaders inside the work: on the painful, costly, current problems that are actually taxing your organisation’s performance, alongside the managers and teams who will ultimately solve them. Development designed this way doesn’t compete with performance for your team’s time and attention. It compounds it.
The CEOs getting this right aren’t asking their leaders to learn a framework and then, later, figure out how to use it. They’re bringing the thinking directly into the work, treating every significant strategic challenge as a chance to build two things at once: a leadership team that knows how to lead for innovation, and a middle of the organisation that’s enabled to deliver it.
The question for your next programme
So before you sign off your leadership team’s next development investment, ask one question of its design: what real problem will this solve while it develops my leaders — and who else will it develop along the way?
If the answer is “none, and no one,” you already know how the story ends. Your team will leave energised, the ideas will surface in meetings for a while, and then the quarter will reassert itself.
But if the programme is built around challenges that are timely, relevant and consequential — with your leaders learning to lead the environment and your managers and teams learning to run in it — you get something rarer: a leadership team that grew because the business moved forward, and a business that moved forward because its leaders learned to make room for it.
That’s not training. That’s how pace, a culture of innovation, and embedded learning get built at the same time. And it might just be the only leadership development that pays for itself.