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 with no clear purpose. Strong leadership alone can disrupt the order and create change that is not practical.
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, few executives seem to be effective at both leadership and management.
The idea that leading and managing are important is not new, but there is no clear explanation of how the two roles interrelate 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. Process efficiency and safety
2. Innovation and adaptation
3. Human resources and relationships
A business organization is more likely to prosper and survive if it has efficient and reliable operations, provides products and services 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 a 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 clients 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 growing 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 3.9 percent. 8.5 percent.
Reframing the controversy
Scholars who debate the importance of leading and managing have generally defined the two roles very narrowly. These definitions place 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 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 the roles of manager and leader 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 what 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 culture of the organization
• 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 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. Adopt 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 critical to understand how the different parts of the organization interrelate and how a specific change in one area could have other unforeseen consequences in other areas.
While strategic thinking on these topics may be more important to senior managers, it is relevant at all levels.
3. Coordinate leadership across levels and subunits
The organization’s performance depends not only on the decisions and actions of the CEO, but also 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 company’s global strategy.
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 goals 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 mission and primary purpose of the organization, 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 reverberate 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 espoused values and core ideology of the organization. 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 the 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 come with new positions and opportunities.