Management is a set of processes that can keep a complicated system of people and technology running smoothly. The most important aspects of management include planning, budgeting, organizing, staffing, controlling and problem solving. Leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances. Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles. This distinction is absolutely crucial for our purposes here. Successful transformation is 70 to 90 percent leadership and only 10 to 30 percent management. Yet for historical reasons, many organisations today don't have much leadership. And almost everyone thinks about the problem here as one of managing change.
For most of this century, as we created thousands and thousands of large organisations for the first time in human history, we didn't have enough good managers to keep all those bureaucracies functioning. So many companies and universities developed management programmes and hundreds and thousands of people were encouraged to learn management on the job. And they did. But, people were taught little about leadership. To some degree, management was the main item on the twentieth-century agenda because that's what was needed. For every entrepreneur or business builder who was, a leader, we needed hundreds of managers to run their ever growing enterprises.
Unfortunately for us today, this emphasis on management has often been institutionalized in corporate cultures that discourage employees from learning how to lead. Ironically, past success is usually the key ingredient in producing this outcome. The syndrome, as I have observed it on many occasions, goes like this: success creates some degree of marked dominance, which in turn produces much growth. After a while keeping the ever larger organisation under control becomes the primary challenge. So attention turns inward, and managerial competencies are nurtured. With a strong emphasis on management but not leadership, bureaucracy and an inward focus take over. But with continued success, the result mostly of market dominance, the problem often goes unaddressed and an unhealthy arrogance begins to evolve. All of these characteristics then make any transformation effort much more difficult.
Arrogant managers can over evaluate their current performance and competitive position, listen poorly, and learn slowly. Inwardly focussed employees can smother those who want to respond to shifting conditions. And the lack of leadership leaves no force inside these organisations to break out of the morass.
