It is time to end a decades-long debate.
For years, leadership consultants have discussed the differences between leadership and management and which approach is more effective.
Some argue that management and leadership are mutually exclusive roles that require different values and characteristics. This conventional way of thinking says that managers value stability, control, and efficiency, while leaders value flexibility, innovation, and adaptation. Managers are practical, analytical, and rational, while leaders are visionary, creative, and emotional.
Another perspective is that leading and managing are different roles, but both roles can be played by the same person. Management seeks to produce predictability and order, while leadership seeks to produce organizational change.
Both roles are necessary, but problems can arise when one role is overemphasized. Strong management alone can discourage risk taking and create a bureaucracy without a clear purpose. Strong leadership alone can upset the order and create change that is impractical.
The importance of leading and managing depends in part on the situation. As an organization becomes larger and more complex, the importance of management increases. As the external environment becomes more dynamic and uncertain, the importance of leadership increases. Both roles are important for executives in large organizations with a dynamic environment. Unfortunately, it seems that few executives are effective in both leading and managing.
The idea that leading and managing are important is not new, but there is no clear explanation of how the two roles are interrelated and how they jointly affect organizational performance. The flexible leadership model provides a useful way to understand the controversy between leading and managing, and points the way to a resolution.
The flexible leadership model
The flexible leadership model identifies three distinct determinants of organizational performance:
1. Efficiency and process safety
2. Innovation and adaptation
3. Human resources and relations
A business organization is more likely to thrive and survive if it has efficient and reliable operations, provides products and services that customers want at prices they are willing to pay, and has a high level of skill, commitment, trust, and cooperation among members. The three determinants of performance are interrelated in complex ways and together determine organizational effectiveness.
The relative importance of each determinant of performance at any given time depends on the situation. Innovation is most important when the competitive strategy is to provide differentiated products or services and there are rapid and unpredictable changes in technology, customer preferences, and competitors’ products. As the pace of global competition and technological change increases, rapid innovation becomes more important to the successful adaptation of most types of organizations.
Efficiency leads to low operating costs and is especially important for companies that have undifferentiated products or services and must keep prices low to retain customers. It is also important when a company has some large customers who may demand cost reductions.
Human resources and relationships are especially important when a company needs highly motivated and skilled employees who are not easily replaced. There is increasing evidence that the development and retention of “human capital” has a stronger impact on business results than previously thought. A study of 3,000 companies by researchers at the University of Pennsylvania found that spending 10 percent of revenue on capital improvements boosted productivity by 3.9 percent, while a similar investment in human capital increased productivity by 8.5 percent.
Reframing the controversy
Scholars discussing the importance of leading and managing have generally defined the two roles in a very narrow way. These definitions place the roles at opposite ends of a continuum, with order and stability at one end and innovation and change at the other end.
In terms of the determinants of performance, the usual definition of management emphasizes the efficiency and reliability of the process. The usual definition of leadership emphasizes innovation and adaptation. These overly narrow definitions make it difficult to understand how the two roles can be integrated.
Overemphasizing one role will have undesirable results, but finding the right balance is only part of the answer. How the roles are played is just as important as how much they are emphasized.
Guidelines for integrating the roles of leader and manager
Despite the hundreds of books published in recent years on leadership and management, there is no magic formula that guarantees success. However, the following guidelines can help achieve a better integration of manager and leader roles in companies with a dynamic environment.
1. Increase situational awareness
Situational awareness means understanding the external factors that can affect an organization’s effectiveness and which strategies are likely to succeed given the company’s internal processes and resources.
For example, it would be difficult for a senior executive to diagnose the causes of a problem, initiate change, and inspire commitment without a clear understanding of:
• The shared values and beliefs that make up the organization’s culture.
• Past events and decisions that determine how the organization got to where it is now.
• The impact that the proposed changes could have on work processes and customers.
• Political processes that affect important decisions
To maintain a high level of situational awareness, leaders must obtain accurate and timely information about the organization, its members, and the external environment. It is essential to measure the key variables and how they change over time. Leaders can gain additional insight by visiting facilities, observing operations firsthand, and meeting with employees, customers, and vendors.
2. Embrace systems thinking
Understanding the various factors that affect performance and the implications of changing situations requires the use of “systems thinking.”
When making decisions or diagnosing the cause of problems, it is essential to understand how the different parts of the organization interrelate and how a specific change in one area could have unintended consequences in other areas.
While strategic thinking on these topics may be most important for top-level managers, it is relevant at all levels.
3. Coordinate leadership across levels and sub-units
The performance of the organization depends not only on the decisions and actions of the CEO, but on the commitment, cooperation and coordination among all managers in the organization. The decisions made by managers at different levels must be compatible with each other and with the overall strategy of the company.
It is difficult to achieve perfect coordination between the different parts of an organization, especially when the subunits have different functions, markets or subcultures. Formal plans and objectives are helpful, but effective coordination is unlikely unless managers also have shared ideals and values to anchor judgments and guide decisions. Companies with strong shared values and beliefs about the organization’s mission and primary purpose, the desirable qualities of its products and services, and how members should be treated are more likely to survive and succeed over a long period of time. A primary responsibility of top management is to ensure that the organization has a relevant core ideology, but leaders at all levels must build support for the core ideology and ensure that it is understood and used to guide daily actions.
4. Lead by example
When top executives act in highly visible ways that emphasize the importance of efficiency, innovation, or human relations, the effects can ripple throughout the organization.
Setting a bad example can be just as powerful as setting a good example, and it is essential to keep decisions and actions in line with the organization’s espoused values and core ideology. Unethical behavior and self-interested decisions can undermine employee trust and commitment.
tie it all together
Although there is no simple formula for success, the flexible leadership model reminds us to consider all relevant factors when making decisions or implementing organizational changes.
The controversy between management and leadership has continued for so long because roles are defined in a narrow way that makes it difficult to understand how they jointly affect organizational performance and how they can be integrated.
Instead of asking whether they need leadership or management to be successful, organizations should consider how they can incorporate elements of both when the situation calls for it. Applying the principles of flexible leadership can help leaders at all levels make better decisions, respond to a crisis, and prepare for the challenges that present themselves with new roles and opportunities.
