Even with a clear direction and strong capability, people must be committed in order to unleash their full potential.

Leadership is not what it used to be, which is both the good and the bad news. The meaning of leadership is changing, and leadership challenges are intensifying. Businesses and other organizations are being asked to find, groom, and retain leaders in an entirely new and increasingly complex environment. Old models, frameworks, and competencies don't have the impact they once did.

Peter Drucker, the late management guru, was famous for dispensing wisdom and clarity in a no-baloney style. On the topic of leadership, he was predictably plain spoken: Management is doing things right, said Drucker, but leadership is doing the right things. In an era when the distinction between management and leadership was in its infancy, Drucker highlighted one of leadership's most significant challenges. For many years, the idea of doing the right things formed the basis of the dominant model of leader as strategist. If leaders charted the strategic vision, then managers would handle the execution.

The leadership landscape has undergone a dramatic series of evolutions, especially in recent years. Leaders face a much more demanding world and are called on to meet a greater range of challenges than simply creating the company's strategy. Today's list of "right things" that need to be done is so impossibly long that executives need a leadership definition that provides new strategic clarity and a more practical focus. Nearly every company and organization today is well advised to update its definition of leadership to keep pace with the nature of leadership challenges. To borrow from Drucker a bit: It is time to clarify which things are the right things for leaders to do.

We live in challenging times for leaders in business and elsewhere, including elective politics, public administration, professional and collegiate sports, the military, organized religion, and the nonprofit world. Leadership — or the lack of it — is a common thread central to many issues, from the corporate abuse scandals of companies such as Enron and others, to the mishandling of crises such as Hurricane Katrina, to the sexual abuse scandals that rocked the Catholic church over the past several years. It often seems as if any day's headlines are dominated by developments with leadership failures and challenges at their core.

But nowhere is the leadership gulf as widespread or daunting as it is in business — for companies along the full spectrum, from large corporations to mid- and small-sized firms in nearly every industry or field. Even companies and industries that aren't experiencing an obvious leadership crisis are often woefully unprepared to develop the next generation of leaders internally or through recruiting efforts.

Without a doubt, leaders still have to be smart strategists. But the standards of leadership development today also require leaders to understand how to align their people collaboratively toward a strategy. In industry after industry, great strategies are likely to fail if people aren't aligned with them. Those situations and others call for leaders who know how to develop leadership in others — more specifically, leaders who can inspire, motivate, coach for performance, and facilitate critical agreements across a diverse group of stakeholders. In nearly every industry, the leaders in great demand today are those who are innovators and shepherds of innovators, and, most important, leaders who have the personal attributes that we all look for — but often don't know how to develop — including courage, integrity, and presence.

This article explores the underlying issues fueling the challenges to leadership and the critical components necessary for developing leaders in today's business environment.

Leadership challenges widespread

In my extensive experience with Fortune 100 companies in industries as varied as high-tech, financial services, and manufacturing, I find that executives face very similar challenges in developing leaders. Specifically, when most executives are asked whether their company has a deep bench of seasoned and high-quality leaders for the next 20 years, most answer no. Similarly, when asked whether they have the leadership ranks for the most critical roles for the next three to five years, most say they don't, that they're behind. If asked to cite the issues or barriers to developing new leaders, many executives cite the short supply of critical thinking and strategic analysis skills.