Management is about coping
with complexity. Its practices and procedures are largely a response to one of
the most significant developments of the twentieth century: the emergence of
large organizations. Without good management, complex enterprises tend to
become chaotic in ways that threaten their very existence. Good management
brings a degree of order and consistency to key dimensions like the quality and
profitability of products. Leadership, by contrast, is about coping with
change. Part of the reason it has become so important in recent years is that the
business world has become more competitive and more volatile. Faster
technological change, greater international competition, the deregulation of
markets, overcapacity in capital intensive industries, an unstable oil cartel,
raiders with junk bonds, and the changing demographics of the work force are among
the many factors that have contributed to this shift. The net result is that
doing what was done yesterday, or doing it 5% better, is no longer a formula
for success. Major changes are more and more necessary to survive and compete
effectively in this new environment. More change always demands more leadership.
Consider a simple military
analogy: a peacetime army can usually survive with good administration and
management up and down the hierarchy, coupled with good leadership concentrated
at the very top. A wartime army, however, needs competent leadership at all
levels. No one yet has figured out how to manage people effectively into
battle; they must be led. These different functions coping with complexity and
coping with change shape the characteristic activities of management and
leadership. Each system of action involves deciding what needs to be done, creating
networks of people and relationships that can accomplish an agenda, and then
trying to ensure that those people actually do the job. But each accomplishes these
three tasks in different ways. Companies manage complexity first by planning
and budgeting setting targets or goals for the future (typically for the next
month or year), establishing detailed steps for achieving those targets, and
then allocating resources to accomplish those plans. By contrast, leading an
organization to constructive change begins by setting a direction
developing a vision of the future (often the distant future) along with
strategies for producing the changes needed to achieve that vision. Management
develops the capacity to achieve its plan by organizing and staffing creating
an organizational structure and set of jobs for accomplishing plan requirements,
staffing the jobs with qualified individuals, communicating the plan to those
people, delegating responsibility for carrying out the plan, and devising systems
to monitor implementation. The equivalent leadership activity, however, is aligning
people. This means communicating the new direction to those who can create
coalitions that understand the vision and are committed to its achievement. Finally,
management ensures plan accomplishment by controlling and problem
solving—monitoring results versus the plan in some detail, both formally
and informally, by means of reports, meetings, and other tools; identifying
deviations; and then planning and organizing to solve the problems. But for leadership,
achieving a vision requires motivating and inspiring keeping people
moving in the right direction, despite major obstacles to change, by appealing
to basic but often untapped human needs, values, and emotions. A closer
examination of each of these activities will help clarify the skills leaders
need.
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