Leadership versus Management: and the winner is!

by Steven Cerri on March 15, 2013

Leadership versus Management: and the winner is!

Everyone wants to be a leader. Current articles praise the leader in all of us while at the same time designating leadership a mystical quality possessed by a few select individuals.

Leaders are often said to be inspirational. But while many people define the distinguishing characteristic of a leader as “the ability to inspire” most of us also want to work for mangers who can be inspiring.

This dilemma regarding the definitions of manager versus leader was, once again, brought into clear focus for me recently. I was attending a dinner meeting of an international organization. The dinner topic focused on leadership and whether leadership qualities can be taught to others. This question and ultimately the question of “What is leadership?” (if you want to teach something it is a good idea to have a clear, crisp definition of it) were addressed by three panelists. One panelist was a professor of leadership at a major Bay Area university. Another was a high-level executive at a network hardware company in Silicon Valley, and the third panelist was a speaker/entrepreneur/consultant.

The discussion meandered here and there with each panelist describing the leaders they had known during their respective careers. Questions were asked by the moderator regarding the definition of leadership as well as whether it could be taught to others or was it some form of “innate” characteristic. By the end of the evening it was apparent from audience comments and from statements by the panelists that the consensus role of a leader was to inspire. Being able to inspire others, everyone agreed, was the hallmark of a true leader. Everyone that is…. except me.

During my career I have come to a different conclusion. I have seen people, who by all accounts would be called leaders, fail for lack of management skills. I have seen CEOs of companies fail because they could not “manage” their executive staffs. I have seen leaders who could not succeed on leadership skills alone. Therefore, leadership, and by connection, inspiration, did not seem to be sufficient to guarantee leadership success. Conversely, I have seen managers who seemed to become stars because they could inspire their direct reports to achieve extraordinary things.

From my perspective management and leadership do not seem to be distinct abilities but two sides of the same coin and if management can be taught then so can leadership. My experience has taught me, that in some very subtle yet significant way, management and leadership are intrinsically connected. They are attached in a way that the success of one is dependent upon the ability of the other and often in unequal proportions.

The following old quips are not true:

“Leaders know what to do and managers know how to do it.”

”Leaders inspire and managers perspire.”

The distinction for me is not that leaders inspire, but that leadership has to do with what I will call the “unknown” and management has to do with the “known”. From my perspective, “Managers manage resources into the known and leaders manage resources into the unknown.”

Let me explain.
During the dinner/panel discussion, I repeatedly asked questions regarding “managing into the unknown”. A clear example of my idea emerged when the speaker/entrepreneur/consultant began explaining the process she used when she founded a book distribution company for kids.

Several years ago she founded a company that receives donations of children’s books and then distributes them to children in need of books. She explained that she began her company by “inspiring” people to support her idea of providing books to children in need. When she came up with the idea no one had ever done this before. She was told it could not be done and therefore, she should not do it. There were scores of voices telling her that it was a bad idea. But she persisted. She convinced others that it was possible and slowly she rallied people to support her in her endeavor. All of these processes are “Leadership Processes”; getting something done that has never been done before and where the outcomes are relatively unknown. This I call, “Managing into the unknown”.

However, once she received the support she needed she then required a website; a way to receive and catalog the books; a way to distribute the books; and all the other logistical processes necessary for the idea to come to fruition. These are management functions… getting things done that have been done before, where the cause-and-effect relationships between tasks and outcomes are relatively well known. This I call, “Managing into the known”.

As she began to describe her leadership role she also began to describe the more common management tasks necessary for success. I asked her if she had found it necessary to “manage” the tasks of implementation after she had received sufficient support for her idea, and she said “yes”.

For her to be successful after she had performed the leadership function (i.e., establishing a sufficiently stable foundation in the unknown to successfully sell her idea) she then had to manage the processes of implementing the idea. Where the selling of the idea (and whatever implementation is required to sell the idea) requires achieving something never done before; that is leadership. Inspiring people is often part of the leadership process, but it is not the distinguishing characteristic nor is it sufficient for success. The distinguishing characteristic of leadership is the management of progress into the unknown. The management of resources necessary to accomplish something that has been done before (i.e., the website, the distribution channels, etc.) is management into the known, or as most people refer to it…. management.

Leadership/Management Fusion
I call this interdependence of leadership and management, the need to move from the known to the unknown and back and forth, the Leadership / Management Fusion. Leadership and Management are two sides of the same coin. One cannot exist without the other. Leadership cannot be successful without management and management only excels when leadership is also an accessible capability. Leadership and management can exist in the same person or they can be separated but they must both be present for an organization to function effectively over the long term.

Example #1: True Personal Story
Several years ago I joined a small start-up; I’ll call it Company A (I’m changing the names and being a little vague to protect the innocent). I was the 40th employee or so. The CEO (lets call him CEO-A) had started Company A about six months before my joining.

CEO-A had worked in a very large printer manufacturing company for much of his career. During this period he had progressed in responsibility until he was placed in charge of the complete process of designing, manufacturing, distributing, selling, and supporting a line of printers. He had done this three different times for three different printer lines while at this large printer company. Because of this experience he had become fully knowledgeable of the complete life cycle of printer development and sales. He understood the printer business from top to bottom and could easily have been the CEO of his own printer manufacturing company.

The large printer company he worked for decided to divest some of its printer holdings and began to sell parts of the company including the part that he had been recently managing. When CEO-A found himself without a job and his former company selling portions of it’s business, he decided to submit a ridiculously low bid for one of the spinoff companies that was being sold. He did not plan to have the winning bid, but submitted it anyway. To his surprise, his was the winning bid.

Upon winning the bid for the spinoff, he now found himself with a printer manufacturing capability and no printers and no market. What should he do?

As a manager, he knew exactly how to build and sell printers. But he had no printers to sell and he had no market in which to sell printers even if he had them. He concluded there was no need for another printer manufacturer capable of manufacturing current, state-of-the-art printers.

Without understanding the shift CEO-A was making, he decided to start a company. But the company he founded was not the typical printer company. He decided to manufacture a printer that had never been built before and to sell it into a market that did not currently exist. He became a leader… he stepped into the unknown.

He decided to build a printer that was completely counter to the conventional wisdom. In fact, when CEO-A went to printer trade shows to display his new idea with a prototype, he was laughed at. People thought his printer was a joke. Imagine, a respected manager from a respected large printer company, presenting his own design for a new printer, representing his own company and being laughed at. This meets my definition of leadership.

In the face of this ridicule, CEO-A persisted. Utilizing his leadership skills, CEO-A inspired a small staff of loyal, previous employees to stick with him. Utilizing his leadership skills, he persuaded banks to fund his garage-based prototype manufacturing facility from which new test printers were produced. And with his leadership skills he inspired his first customer, a large shipping company, to take a chance on him, his ideas, his company, and his revolutionary printer. He was displaying “leadership”, the management of resources to move into the unknown. His leadership was directed toward accomplishing something that had never been done before.

In fact, when I joined the company as the 40th employee, the company had secured a multi-million dollar contract with a very large firm based on a prototype printer that had not yet moved into full production. But no one was laughing now.

Once the contract was signed and the start-up company was established (i.e., a building and a few employees), the management side of CEO-A kicked in. Now it was time to perform all those tasks that were necessary to manufacture, distribute, and sell the printers… for the fourth time in his career. It became all management.

The fact that the CEO had previously “managed” the development of three printer lines made managing the manufacturing of his new printer a relative breeze. The “leadership” process had been getting his idea off the ground… managing the movement into the unknown… creating the new printer. The “management” process was managing the movement into the known… building and selling the new printer.

Once again, my definition of leadership is “managing movement into the unknown” while my definition of management is “managing movement into the known”.

It is very important that the dividing line between management and leadership be very clear. Management is about being able to “predict” what the outcome of an action will be. Leadership is taking the risk when we do not know what the outcome of an action will be but still, we are willing to persist and take the risk.

Both leadership and management were necessary for the successful development of the printer and subsequently of the company.

Example #2: Elon Musk and the Tesla Automobile
Elon Musk displays another example of the Leadership/Management fusion. The fusion of leadership and management is exemplified by how Elon has developed the Tesla electric automobile and the sales channel for the Tesla high-end electric cars.

Lets look at the distribution/sales channel developed for the Tesla high-end electric cars. The Tesla electric cars are sold through display showrooms in malls, not in car dealerships. This is a complete departure from the traditional method of selling automobiles. Will this approach work? Should it be attempted? How should it be implemented? The answers are currently unknown. Therefore, this is a step into the unknown. This is leadership because the outcome is uncertain.

The execution of this decision, the execution of the sales of high-end electric cars through mall display rooms however, is an “implementation issue”. This is primarily management. Implementing the acquisition of showrooms, contracts with malls, and the hiring of staff, these have all been done before and the relationships between actions and results are relatively well known. This is management, and Elon is overseeing this process with relatively tight management controls, if the news reports are to be believed. Therefore, Elon is displaying both leadership and management. In fact, this is often one of the characteristics of repeat entrepreneurs… the ability to move seamlessly from management to leadership and back as needed by the environment and circumstances.

Example #3: Boeing
Boeing took several leadership positions in the development of its 787 Dreamliner. However, the Dreamliner is also an example of not making the line between management and leadership distinct and not spending sufficient time on management.

Boeing took a leadership position by making an airplane with a large percentage of composite materials. This is clearly a leadership decision. No one has done this before. No one knows, even at this point in time, what the outcome of this decision will be with certainty. There is a high level of risk involved in this decision… it represents leadership as managing movement into the unknown.

Boeing also took a leadership position with respect to its suppliers. A larger proportion of the Boeing 787 aircraft is built by suppliers than any other commercial aircraft. This leadership position was untested and the risk was substantial. Once again it represents leadership as management movement into the unknown.

Boeing took another leadership position with respect to the use of Lithium batteries. Application of lithium batteries to the extent utilized on the 787 has never been attempted before on a commercial aircraft.

The Dreamliner represents a leadership position for Boeing on many different fronts. Lets look at the application of the lithium batteries as a specific example. While the application of lithium batteries was a leadership move into the unknown, the actual implementation of the lithium batteries required the application of strict management practices. All the engineering and testing hours that have gone into the implementation of the lithium batteries were applied in an effort to “manage” the application of this new, leadership technology. And currently, the management portion of the process has fallen short.

The same holds true for the outsourcing of much of the manufacturing process of the 787. The decision to outsource so much of the 787 was a leadership decision. However, the implementation of that decision was a management process and that management process seemingly, has also fallen short.

One lesson to be drawn from the Boeing 787 Dreamliner is that when leadership movement into the unknown is taken, management practices must be strictly implemented to mitigate risk. In fact, the higher the risk of the unknown, the stricter the management process must be.

Example #4: Leadership on Apollo 11
When Neil Armstrong landed on the moon he also displayed this fusion of leadership and management. During much of the decent and landing phase of the lunar landing of Apollo 11, the Lunar Lander was on automatic pilot. As the Lander descended, the terrain of the target landing area was seen to be rough and boulder-strewn. Near the lunar surface, it became clear that, with fuel reserves running low, and the target lunar terrain still covered with boulders, something had to be done to ensure that the Lunar Lander would set down on smooth terrain. If the current landing approach continued, the Lander risked running out of fuel before finding a smooth place to set down or, worse yet, landing on a boulder.

Neil Armstrong made a “leadership decision”. He removed the Lander from auto-pilot and took manual control of the Lander and the landing process. The outcome was uncertain. He was stepping into the unknown. Would he find smooth terrain before running out of propellant? Should he have taken the Lander off auto-pilot? While NASA had trained the astronauts in pilot-controlled simulations of lunar landings, it was considered the exception. An auto-pilot landing was the expected procedure. Neil Armstrong was now the pilot, something that was not the normal and planned process for landing on the moon.

However, once Neil Armstrong made the leadership decision he then stepped into a management role. How to land the Lunar Lander was not an unknown. He had practiced simulations of landing on the moon manually hundreds of times. He knew how to “fly” the Lander. He knew the rate of consumption of fuel. He knew what to expect when looking for a “smooth lunar surface”. Once he made the decision to take the Lander off auto-pilot, his goal was to manage the Lander resources to find a smooth landing place. And, of course, he found it. He made a leadership decision and successfully implemented that decision through good “Lander management”.

Example #5: The Soldier as Leader
Often the label of leader is given to certain acts of bravery demonstrated by soldiers in war. The typical military situation of leadership often arises when a planned maneuver or tactic goes wrong. The soldier then steps up and exercises control and through his or her actions saves the day or saves lives or saves the mission.

If we analyze the situation, the act(s) of leadership often described represent another example of what I have been describing as leadership. In the adverse situation, the soldier begins to manage the resources necessary for success within a context where the outcome is unknown. Perhaps a planned action has failed. The soldier takes action that is out of the ordinary or not expected. He or she has stepped into the unknown. The relationship between action and outcome is not clear but the soldier takes the action anyway. The process may also entail convincing (inspiring) others to follow. Once others are “following”, the soldier must manage the resources at his or her disposal in an attempt to bring the situation to a positive resolution.

In the final analysis
In the final analysis, leadership is moving forward into the unknown. Moving forward without certain knowledge of the success of the endeavor. Management is moving forward into the known, taking actions where the outcome of those actions has a high degree of certainty.

Think of it this way:

Leadership is getting something done (managing resources) when the relationships between tasks and outcomes are unknown.

Management is getting something done (managing resources) when the relationships between tasks and outcomes are relatively well known.

Most people who accomplish note-worthy feats in life use a combination of leadership and management. This is what I call the “Leadership/Management Fusion”.

Look around you. Think about the people you have worked for and worked with. Think about those you know now. Notice when they are stepping into an “unknown decision”. Notice the uncertainty around that choice.

Likewise, notice when they are moving toward a “known decision”. Notice the certainty of that choice.

These two poles reflect, for me, the definitions of leadership and management. They clearly explain why sometimes people can be leaders and at other times be managers. The definitions explain why great leaders must, at times, be great managers, and why some of the best managers, are at times, leaders.

It also explains why many entrepreneurs cannot stay in their companies as their companies grow. They are true leaders. Stepping into the unknown is what they enjoy. Stepping into “management” is boring. The structure of doing what has a known cause and effect is not stimulating. Therefore, as their companies grow and the need for structure and predictability increases, the start-up entrepreneur cannot make the adjustment.

This phenomenon also explains why some people are great managers but can’t make adjustments to their companies or products as the external environments shift.

While some may say that my distinctions are subtle and not substantive, I disagree. To say that leadership is about inspiration doesn’t tell anyone how to “be” a leader. But if I say that being a leader is using all the same management skills as a typical manager, but leadership is the application of those skills to an unknown outcome, now leadership can be taught. Leadership is no longer a mystery. In fact, people can be taught the underlying component of leadership… the ability to be comfortable with risk… intelligent risk. With this ability in place, leadership becomes a much easier trait to transfer.

The reason many people think they want to be leaders is because they think that leadership is about inspiring people and yet, you know a lot of people who attempt inspiration and fail as leaders. True leadership is about risking the unknown. It is this willingness to risk the unknown that makes leadership such a gem in the world and why so few people actually become leaders. Not everyone is comfortable with risk.

My suggestion is…
Therefore, my suggestion for people who want to become leaders is… become managers first. That is, be capable of managing into the known. Become knowledgeable and competent at something. Only then, extend that ability and capability into the unknown as a leader.

Be like Neil Armstrong, practice landing on the moon. Then when circumstances present themselves, you will be able to venture into the unknown.

One more point. Being a leader is not for the squeamish or weak hearted. Leadership, by my definition, takes courage. Venturing into the unknown takes courage, commitment, and an ability to stand facing a future that may not be clearly defined or certain. Before we all jump on the bandwagon of leadership, it is important to understand what it entails.

Be clear about what you can do and what needs to be done before stepping into the unknown. Or if you are anxious to jump into the unknown, understand that once you have stepped into the world of unknown outcomes, you must buckle down to manage the processes that ensure your success. My guess is that great accomplishments are approximately 30% Leadership and 70% Management.

I’d be very interested in knowing what you think about my ideas in this blog. Please feel free to send me your thoughts and comments.

Be well,

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