CNAS (the impressive team of Barno, Bensahel, Kidder, and Sayler) just put out a terrific study on how to improve the quality of generals in the U.S. military.
You should read the whole thing, but here are some of the key recommendations:
-More education for senior leaders.
-Longer time in assignments.
-Performance reviews for three and four star officers.
-Two tracks for generals -- either warfighting or management.