The Wharton School. Harvard Business School. The Yale School of Management. CIK Enterprises.

CIK Enterprises? The Indianapolis-based holding company, which operates three marketing firms and a business networking group, may seem out of place among these storied institutions of business education. But it makes sense to founders Scott Hill and Andy Medley. The two men not only want to run a successful company, they also want to develop business leaders.

No ivy clings to CIK's bright, high-ceilinged headquarters, but there's a campuslike feel to the activities within. A manager's book group meets weekly to discuss the theories of Jim Collins, Jack Stack, and other business thinkers. A monthly business literacy course taught by Hill and other executives demystifies every line of the company's profit and loss statements. Colorful graphics explaining terms like EBITDA adorn the office walls. Salespeople receive outside training and meet with supervisors for an hour each week to practice their pitches.

Executive development, of course, is a core competency at many large companies, which spend years--sometimes decades--nurturing nascent leaders before popping them into top slots. Corporations such as General Electric (NYSE:GE) and Johnson & Johnson (NYSE:JNJ) identify so-called "high potentials" while they are still damp behind the ears and circulate them through assignments carefully chosen to nurture that potential. The process forges leaders who are intimately familiar with the company's workings and deeply rooted in its culture.

Small companies generally lack the time and resources for such considered gestation of talent. As a result, they often are forced to look outside as they build out their executive teams. But for CIK, that prospect was unappealing. "We think our leaders will have the most impact if they know our culture," says Hill, CEO of the company, which has 80 employees and about $40 million in revenue.

One reason companies like CIK have trouble cultivating leaders is a paucity of farm teams, such as regional offices or an overseas division, which can serve as fertile grooming grounds. A good alternative is to adopt a university model. Combining old-fashioned book learning with hands-on experience, university-style programs may include presentations by executives, reading assignments, and group and individual projects. Hill and Medley incorporated all those elements into a program, the Incubator, which they launched last April.

Participants stay in the program for 12 months. Employees cannot volunteer to participate. Rather, as occurs in large corporations, managers nominate candidates based on enthusiasm, drive, and smarts. No more than 10 percent of CIK's employees can participate at any one time. Managers made eight nominations for the inaugural class. Four were selected, including an employee who redesigned the purchasing process on his own initiative and a prepress director who launched an entirely new business.

The program's curriculum is built around CIK's home-baked principles, such as community service and the wide sharing of financial and operating data, as well as ideas borrowed from some of the founders' favorite gurus. The group reads and hashes over books such as The E-Myth by Michael E. Gerber and The Five Dysfunctions of a Team by Patrick Lencioni. At monthly meetings, company leaders make presentations on everything from interviewing techniques to succession planning to time management. Developing those presentations has forced CIK's existing leadership to reexamine its practices. Hill explains: "We're asking ourselves, how do we actually do things? What do we do if a vendor makes a mistake? What do we do if a customer is upset? We're creating the curriculum and refining our philosophy at the same time."

In addition to their studies, Incubator members must complete a series of projects, some individually and some as a group. Rather than tilt at hypotheticals, each challenge addresses a real but back-burner problem. "A lot of projects need to get done but always fall to the status of being not as important as something else," Hill says. "The Incubator team learns by doing. They make a strategy and make decisions and get support." Participants, for example, devise guidelines for an office process; they're currently working on a building-security project. The team meets about five hours a month for discussions and presentations and another two hours a week when it's involved in projects. Hill concedes that's a lot of work on top of employees' existing duties. "For one year, you feel like you're going to grad school and holding down a job," he says. "People are willing to put in the extra time because they're building toward a payoff."

For a sense of what the Incubator is meant to accomplish, consider Aaron Williams, a participant in the program. He joined Trace Communications, a CIK-owned marketing firm, as prepress director last year. Soon he became frustrated with vendors of the banners that the firm hangs in the show rooms of clients, many of them auto dealers. The banners often arrived late or with errors. "I started thinking, 'What would happen if we made the banners in-house?" Williams says. A hawk about spending that reduces the bonus pool, Williams began looking for places to prune. "I realized we could save $80,000 by doing it all ourselves," he says. He brought the idea to Hill and Medley, and BigBang Promotions was born. Williams, who holds an equity stake in the spinoff, has done much of the development work and serves as operations director. Being part of the Incubator program was another reward. "I need this program to prepare me for taking a larger role," says Williams. "I had an idea and now I'm learning to run with it."

Entrepreneurship is a natural and desirable channel for the company's nascent leaders, Hill and Medley believe, and they want to corral those impulses within their walls. Before investing $25,000 in BigBang, the pair asked Williams to write a business plan; they now require each Incubator member to compose his or her own plan for a spinoff like BigBang in order to graduate. The opportunity to make one's ideas flesh has generated real excitement and made the Incubator more attractive. "Aaron's starting the business raised a lot of eyebrows," says Danielle Bitar, a customer service representative and Incubator participant. "I've been thinking a lot about what my own business plan is going to be."

Of course, not all Incubator graduates will launch companies; some won't even scale the leadership ranks. Hill also expects some participants to discover the life of a leader is not for them and to return to the ranks with new ideas for a career path. "Even if they don't want to do management, they'll come through saying, 'Hey, I learned a lot," Hill says. "And they'll be better able to help in any way they can."


For more on developing the next generation of leaders, check out The Leadership Pipeline by Ram Charan, Stephen Drotter, and James Noel. The website of the Center for Creative Leadership,, has articles, case studies, and other resources.