The Fundamental Differences Between Leadership And Management

The Fundamental Differences Between Leadership And Management

Visionary leadership combined with great management achieves the best results. Seems obvious right? Then why do so many companies get it wrong, especially during times of needed change?

There are fundamental differences between leadership and management that apply to any team or organization, but the focus of this article is to explore the strengths of each as they apply to leading organizational change.

Generally speaking, management is a set of systems and processes designed for organizing, budgeting, staffing and problem solving to achieve the desired results of an organization. Leadership defines the vision, mission and what the “win” looks like in the future. It inspires the team to embody the beliefs and behaviors necessary to take the actions needed to achieve those results.

The most successful transformations occur when strong, visionary leadership converges with great management. Both are required to define a clear path, plan accordingly and see the mission plan through to fulfillment.

All organizations — large and small — face the need for change now more than ever. And not in a reactive manner but rather a proactive approach that is ingrained in the fabric of the organization’s culture. I previously wrote an article about developing and properly communicating a powerful change vision. The communication of the vision never ends during the change process and is woven into every aspect of what the leaders and managers do.

But it is important to note the differences in leadership and management, as they relate to the fundamental roles the transformation task force must take on. A transformation task force in this sense is the guiding body developed to lead a company through its transformation. This team must include senior leaders, front-line managers and other key team members that are well respected in their given fields of expertise.

Most organizations still focus on what is really management development, not true leadership development — although you see it called that all the time. Individuals can, of course, embody qualities of both disciplines, but in my experience, it seems to be rare that you have a great visionary leader who is also an effective manager, and vise versa.

Regardless, all aspects of a powerful change vision must be both led and managed for a successful outcome. Here, let’s take a look at the fundamental differences between leadership and management as they apply to organizational change.

The Principles Of Leading Change

Organizational transformation, regardless of how complex or significant, has to start at the top.

Defining And Articulating The Vision

I have identified six principles for communicating a powerful change vision, which include: keeping the messaging simple and authentic, utilizing multiple channels, being repetitive, ensuring behaviors are consistent with the vision, and gathering feedback along the way.

The vision is what the team can connect with. Visualization of that winning result helps everyone develop a shared sense of purpose and get behind the actions — and even sacrifices — that will be needed to succeed.

Aligning The Team With The Vision

Getting the team aligned with the vision starts with spending the appropriate time and energy developing the right vision. Not just change for the sake of change but true transformative actions that will improve the company and add value to the customers, employees and shareholders.

Alignment starts at the top. Senior leaders must first make sure they are truly aligned so that their communications and behaviors are authentic and truly embody the vision for change — the old lead-by-example model. Seems simple, but companies get this wrong all the time. The leaders must first believe in the mission before the front-line troops can connect with the cause.

Keeping The Team Motivated And Inspired

Organizational transformations can take a long time. One of the core roles of leaders is to establish and plan for quick wins, which will accomplish several things.

First, quick wins give the team something tangible that proves their sacrifices are driving the change initiatives forward.

Second, quick wins take the wind out of the sails of the naysayers — who can exist at any level of the company, from the board of directors to the front-line troops.

Third, quick wins keep the team motivated and inspired, which is great medicine for the battlefield fatigue they will experience during the transformation process.

The Principles Of Managing Change

Everything mentioned above is imperative to any successful transformation, but it can’t be accomplished without diligent management. It’s management’s role to put the plans into action and measure the progress from start to finish.

Putting The Mission Plan Into Action

As mentioned above, the transformation task force should include a combination of influential leaders and managers from various levels of the organization. And once they have the mission plan established, it’s largely the responsibility of management to establish the timelines and milestones needed to stay on track.

This is also where management steps in to make sure those quick wins collectively defined by the transformation task force actually happen.

Organizing, Budgeting, And Staffing

 A vision is only as good as the development of the new systems, processes and structures needed to support it. This is the painful — and often less exhilarating — part of the transformation process. Comfort zones are demolished and everyone is asked to learn the behaviors needed for the “new way of doing things.”

New budget plans must be developed and staffing requirements are usually affected by organizational change. The role of management is to work closely with the finance team to ensure that budgeting and staffing also fit within the parameters of the vision.

Maintaining Control And Navigating Obstacles

One of my favorite quotes that applies to both combat and business — especially during times of change — is: “No plan survives first contact with the enemy.” The original transformation plan will come into conflict and adjustments will need to be made.

Management must foresee these needs and act accordingly, while the leadership team continues to communicate the ultimate vision and what winning is going to look like.

The Power Of Great Leadership And Management Combined

When a company has great visionary leadership but poor management capability, the transformation will only get so far. When the opposite is true, the vision will not be powerful, or even worse, will be totally flawed. Or it will never develop in the first place. With great leadership but marginal management, the change effort can make some significant gains but will eventually slow. Where the magic happens is when great leadership intersects with solid management. Change is messy and it’s never perfect. It usually takes longer and has a greater cost–hard and soft–than is originally anticipated. But with visionary leaders who have the best interests of the company and its culture in mind, supported by great management throughout the company, winning results are likely to happen.

Brent Gleeson is a Navy SEAL, speaker and leadership consultant. Follow Brent on Twitter at @BrentGleeson or view his website.

The Fundamental Differences Between Leadership And Management

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How the CFO and General Counsel Can Partner More Effectively

How the CFO and General Counsel Can Partner More Effectively

Commentators and researchers have focused on the crucial role of the CEO in leading effective corporate action to promote high performance, high integrity, and sound risk management. What receives far less attention is that, more and more in our increasingly complex, volatile, and fully-globalized business world, the effectiveness of such action depends on a powerful partnership between the Chief Financial Officer (CFO) and the General Counsel (GC). This critical alliance needs and deserves much greater analysis and application.

The CFO-GC alliance has always been important because the finance function and the legal function are truly the nervous system of the corporation—sending critical signals to all parts of the company about the accuracy of the financials and compliance with law. But, the integration of finance and legal is even more consequential today because what the corporation can and cannot do across the globe is affected directly not just by financial and commercial issues which the CFO analyzes but, increasingly, by evolving “business and society” issues which the General Counsel and the corporate law department must address. These issues include legislation, regulation, litigation, enforcement, investigations, geopolitical risk, demands for ethical actions, and public criticism, affecting all the functions of the corporation in their interaction with all levels of global governments (central, regional, local). Especially in light of ever-increasing variety and intensity of stakeholder demands on the corporation, these business and society issues, under the purview of the GC, must be closely fused with the CFO’s financial and commercial analysis to serve the CEO and top business leaders when they make and implement core strategic and operational decisions.

Indeed, due to increased commercial complexity in global companies as well as the growing impact of business and society issues, the expertise, quality, breadth, power, and compensation of the General Counsel have increased dramatically in recent decades. At many firms, the GC has replaced the law firm senior partner as primary CEO counselor, becoming a core member of top management and participating in decisions and actions not just about law but also about business. Also, the GC now often leads units beyond the legal department, such as public affairs, taxes, and environment. In more and more global companies, the CEO, directors and other key stakeholders see the GC as having importance and stature comparable to the Chief Financial Officer. It is primarily the GC who must navigate complex and fast-changing law, regulation, litigation, public policy, politics, media and interest group pressures across the globe, often in a public, outward-facing role as negotiator, spokesman or representative. As a result, the optimal CFO-GC alliance is now much more like a peer relationship, jointly coordinating and overseeing fundamental corporate issues of performance, compliance, ethics, risk and governance, and organization. Here is a brief discussion of how the alliance works in key areas:

Performance. Financial, legal, ethical and risk perspectives obviously need to be integrated when the corporation is making decisions about new deals, about new types of customers, new geographic markets, new technologies and new products. For example, the financial and legal staffs are bound at the hip on the various phases of mergers and acquisitions, from the memorandum of understanding, to representations and warranties, to due diligence, to definitive agreement, to closing and then to deal integration. On major deals, the GC and CFO are strong partners on a personal level because the robust integration of their complementary views on key issues can spell the difference between success and failure, both in closing and in subsequent performance. For example, failure to identify a serious accounting or environmental failure of the target company in due diligence can lead to a major criminal or civil liability for the acquiring company after the deal is sealed.

Compliance. Although the CEO and division heads should, in my view, be the ultimate leaders of the corporate compliance program, the CFO and GC jointly share responsibility for actually designing and implementing the systems and processes that ensure adherence to formal legal and financial rules. Compliance always has been and always will be a basic corporate responsibility, and any such program must be comprised of three essential elements: protection, detection, and response. What’s radically changed in recent years is complexity. Responding effectively to this means the CFO and GC, working with Compliance and Risk, together develop a robust method of process mapping, risk assessment, and risk mitigation relating to those formal rules that apply to all corporate functions—e.g. sales, marketing, manufacturing, intellectual property—in all business units in all geographies. Ideally, the legal and financial staffs together conduct compliance reviews which report up to the CEO, CFO, and GC, and also act as core investigators in the event of a major compliance failure like bribery or accounting fraud in a major overseas division.

Ethics. In exemplary corporations, the CFO and GC jointly staff the systematic processes the CEO and top business leaders use in voluntarily adopting vital global standards for the corporation, which go beyond what the formal rules require. Once the company establishes these ethical positions on key issues—whether on global sourcing or greenhouse gas reduction, or extra consumer protections—they are implemented systematically just like formal, mandated rules. In my experience at GE, what worked best is to have the CFO and GC jointly identify a range of possible ethical issues for consideration; help select a salient sub-set for analysis; and then develop options to guide the ultimate decision-making process by the CEO and the board of directors. Deciding among those options involves a combination of considerations both prudential (enlightened self-interest of the company) and moral (rights of—duties to—others) which vary with context. Decisions about not doing business in a corrupt nation are very different than those considering whether to voluntarily reduce the corporation’s emission of greenhouse gases. And then, of course, there are costs. The CFO and GC determine together whether the cost of a particular voluntary global standard is amenable to hard financial analysis (e.g. cost of reducing pollution) or if it turns on a broad-gauged judgment about corporate reputation without financial precision (benefits of imposing labor standards on third party suppliers).

Risk. The CFO and GC are key in developing together, with business leaders and other staff officers, safety processes, management practices, and a safety culture to handle both economic and non-economic risks beyond legal and ethical threats. One key to this partnership is identifying risk priorities—whether economic (e.g. leverage and liquidity risk, operational and technology missteps, or macroeconomic threats) or non-economic (e.g. injuries to third parties from company processes/products, security and safety, and country/geopolitical risk). A second key dimension is justifying the costs of instituting prevention and response steps for risk events that may not happen—especially for the vexing issue of low probability/high impact catastrophic threats. The CFO and GC can work up pro forma cost scenarios and also look to analogous disasters (e.g. the Challenger explosion, Hurricane Katrina, the Siemens bribery scandal, BP gulf explosion) to explain the types of adverse effects/costs which could happen and which investments in prevention and response make sense in attempting to avoid or mitigate the disaster.

Finally, and most importantly, the CFO and GC must support each other as “statespersons” in a corporation. This means asking first whether a corporate action complies with legal and financial rules, but asking last whether an action is “right” in terms of the corporation’s mission of high performance with high integrity and sound risk management. To be effective statespersons, the CFO and GC must manage a dynamic tension: acting as “partners” to the board of directors, the CEO and top business leaders, but also, ultimately, as “guardians” of the corporation. And they must work together to help create a pervasive culture of integrity under CEO direction. Business pressures, practices, attitudes, and internal politics (a courtier’s desire to please the CEO) can create obstacles to the statesperson’s role, the partner-guardian fusion, and the integrity culture.

A strong, respectful, mutually-supportive partnership between the Chief Financial Officer and the General Counsel is one critical way to overcome these obstacles. More broadly, that alliance has become an imperative, helping global corporations to be more responsive, resilient, and effective in a fast-changing and ever more complicated world where commercial and societal issues are intertwined.

How the CFO and General Counsel Can Partner More Effectively

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