Numerous surveys confirm that a potential business leadership shortage looms on the horizon. Executive Development Associates recently surveyed 100 representatives of Global Fortune 500 companies on the topic, and an overwhelming majority of respondents indicated that their lack of depth in leadership talent was a major barrier to future growth.

There are many reasons for this shortage: years of downsizing, early retirements, fewer middle managers, demographic shifts, fast-changing business strategies and globalization. The need to reverse the trend is why corporate investments in leadership development are at an all-time high. But in today's performance oriented environment, many companies are abandoning traditional executive development programs such as the "mini-MBA"-style development classes sponsored by business schools, in favor of company-specific initiatives to increase their bench strength. They could be throwing out the baby with the bath water. Abandoning traditional programs might be a knee-jerk reaction. Both types of programs have their strengths and both have their place in the arsenal of tools for leadership development.

The key is for organizations to recognize what type of experience -- external or internal -- works best in what situation.

External programs are the more traditional approach, providing a rich developmental sabbatical for participants, exposing them to leading-edge thinking, multiple approaches to doing business and a potential network of diverse colleagues. Typified by the open-enrollment executive education programs sponsored by major business schools, these programs formerly were the mainstay leadership development experience for senior executives. Almost as a rite of passage into their top positions, these leaders were sent to business school classrooms with colleagues from a multitude of companies to learn new ideas from recognized professors.

The traditional business school program is a broadening experience, and still has a place. It enhances participants' confidence, challenges their assumptions, encourages them to rethink their own and their organization's traditional values and viewpoints, and makes them more aware of the leadership challenge. By giving participants a chance to exchange ideas and experiences with their peers from other companies as well as exposing them to the latest management thinking, an external program can be a catalyst for change in an individual's approach to leadership. That makes the experiences a high-potential method for helping an individual to make the transition into a higher-level leadership position when a company builds the experience into an individual's development plan.

But today's organizations are staying away from these types of programs in droves, favoring custom-designed initiatives, attended by leaders from only that company and focused on the company's key business issues and challenges.

These internal programs can be engines for transformation, vehicles for changing the way an organization operates. By helping participants develop a deeper understanding of the organization as a whole, and by helping to form and maintain internal networks, these programs can play a critical role in the organizational development process.

Company-specific programs generate different outcomes, perhaps the most significant of which are the encouragement of teamwork across an organization, the development of new lines of communication, and the clarification of organizational style, strategy and culture. Participants learn more about their respective companies, more about their competitive strategies and more about each other. And there are numerous examples of how company-specific programs have helped initiate dialogue and action that helped transform the sponsoring organization.

At the right times in an individual's career or in an organization's developmental cycle, each type of program can have a dramatic impact on individual or organizational effectiveness. The business school-type experience can help an individual make the transition to higher levels of leadership. The company-specific program can help an organization make the transition to new strategies, business models and levels of performance.

By understanding the nature of both types of experience, companies are in a better position to maximize the contributions of each approach to building breadth and depth in their leadership talent pools. Both can add value, and both can contribute to building a talent pool of high-potential, high-performing leaders.