Leadership versus management — myths and reality

The leadership versus management debate has mushroomed, infesting every corner of the business media. Sadly, the debate has devolved into a polarised view of leaders as empowering saints and managers as scheming narcissists. This is not only wrong, it is harmful.

Leadership and management are simply roles. Anyone in business who fills just one role and not the other will fail spectacularly. Not knowing when each role is appropriate will also stifle an executive's career.

Role definitions are quite subjective. In this case it makes no sense to define the roles in a vacuum. A better route is to define the potential issues, then the role definitions will resolve themselves.

Most businesses are usually in one of two states. Most of the time they are business as usual. There might be change, but it is change at the margin and within the context of business as usual. Call this the normal state.

On occasion a business will face an inflection point, an opportunity or a challenge that needs to be met in a manner that is not normal for the business. This requires a change not only in mindset but in other facets including authority levels, risk tolerance and resource expenditure. Call this the change state.

The management role comes to the fore in the normal state. To be effective in this state, the manager aims to maximise efficiency and minimise risk. Efficiency is achieved by following well studied and approved policies and procedures. All stakeholders are well aware of their roles and responsibilities. Decision-making is collaborative.

In the change state there are usually two elements that dictate the appropriate response — a new situation in terms of the opportunity/threat, and a sense of urgency.

The new situation element of the opportunity or threat is an important differentiator: a new competitor in a crowded market can and should be dealt with within the context of business as usual. A disruptive competing technology is clearly a change state.

The time element is also worthy of explanation. There is a difference between urgent and a sense of urgency. A sole shopping mall in a city needs to have a sense of urgency at the time a competing mall is announced, not wait until the mall opens.

With this description of the change state, the definition of leadership is similar to that of entrepreneurship, discussed in detail in an earlier article. In summary, the main skill expected from a business leader in this situation is to manage unknown risks.

This does not mean that leaders manage risk and managers do not. On the contrary, in a normal business a manager will manage far more risk than a leader does in the change state. The difference is that the types of risk faced by the manager will be known and studied, with clear policies or at least guidelines outlining how to manage such risk.

On the other hand a leader enters the change state without clarity on what he is facing. When Nokia introduced a new phone, Samsung knew how to respond. When Apple deployed the iPhone, nobody understood the tsunami that was heading their way.

Another major misunderstanding is how leaders and managers deal with their employees. This idea that there are different styles and that there is a control or autocratic style that leaders or managers must use is plain wrong. There might be executives who treat their employees as lowly subordinates, but they will never retain quality employees.

Successful executives, regardless of the role that they are playing, know that they need to treat their employees well. Employees who believe that they are being treated well are the ones who will be team players when urgency trumps communication.

It is now clear that leadership and management are two different but important roles for an executive. What remains is understanding when to switch from one to the other. The mistake is nearly always with switching into leadership mode.

Too many executives think that leadership mode is what happens when things are not going their way and they need to become more forceful, even autocratic.

Leadership is about achieving goals that benefit the company and the stakeholders, not aiming for self-serving goals. Leadership is about taking measured risks, not abrogating one’s responsibilities. Leadership builds support over time, not enemies. Most of all, leaders know when to stop being leaders and start being managers again.

Sabah Al Binali is an active investor and entrepreneurial leader, with a track record of financing, building and growing companies in the Mena region. You can read more of his thoughts at al-binali.com.

Follow The National's Business section on Twitter