Folklore and facts about leadership

Most bosses of significant organisations like to think of themselves as leaders. Still, leadership is different from management. Contrary to popular belief, leadership is not about having “charisma” or some other mystical and exotic personality trait.

Leadership is not necessarily more important than management. Most business and political organisations require both effective leaders and managers, as these two distinct yet complementary systems are necessary to achieve success in an increasingly complex and volatile business and political environment.

Strong leadership with weak management is not better than the reverse. The challenge most organisations face is to combine strong leadership and strong management, and use each to balance the other.

Put simply, management is about coping with complexity. An organisation’s policy and procedures frequently have to be revised in response to significant developments in its sphere of operations. Good managers ensure that the effectiveness of their organisation is never compromised. They focus on scheduling their time, processing information, making decisions and interacting with their staff.

The leadership role is different. It’s about coping with change. The business and political world has become more competitive and volatile in the last few decades.

Fast technological change, increasing international competition, consumers’ evolving behaviour, changing demographics and geopolitical realities make it necessary for organisations to have good leaders who can manage change to remain relevant. The net result is that, doing what was done yesterday, or doing it 5% better, is no longer a formula for success.

The CEOs of businesses manage complexity first by planning and budgeting, setting targets or goals for the future (usually on an annual basis), establishing detailed steps for achieving those targets and allocating resources to accomplish those plans.

Organisational leaders have a different role. They must first set a direction by developing a long-term vision of the future, along with strategies for implementing the changes needed to achieve this vision.

Despite leadership’s growing importance, the on-the-job experiences of most people undermine their ability to lead. Some managers will transition successfully to leadership roles in their careers, provided they understand that their new role is distinct from their previous management experience.

Most organisations suffer from leadership inertia. They prefer to manage the status quo rather than reform themselves

Unfortunately, some others never relinquish their roles as managers and tend to micro-manage rather than lead their organisation when they are promoted to the boardroom.

Successful business and political organisations develop leadership talent by creating challenging opportunities for their employees who show early signs of leadership potential.

The decline of traditional political parties of the centre right and centre left in most European countries is arguably the result of not having leadership-grooming programmes in place. They rely on antiquated processes that are rarely updated to fill leadership posts when a vacancy occurs.

There is nothing magical about a process for grooming future leaders. Organisations must go out of their way to make young people at lower levels in the organisation visible to the organisation’s top brass. Directors must have a clear sense of who has considerable leadership potential and what skills they need to develop. They then ensure that they put in place plans for their development.

A review of recent business and political history reveals various examples of organisations that succeeded or failed as a result of how they addressed their leadership requirements.

Once internationally re-nowned companies like Kodak, IBM and Thomas Cook failed to have leaders who anticipated the massive changes that were affecting their future prospects. Today, they are either a shadow of their former selves or have gone out of business. Other companies, such as Ryanair, had leaders in place who capitalised on changing market opportunities to create new ventures.

Few traditional European parties appear to have the right leadership programmes in place to address the realities of a rapidly changing political landscape. One must remember the decline of the centre-left and centre-right parties in France, Italy, Germany and Greece to understand why traditional political parties are on a steady decline.

Leadership is about using power to influence the thoughts and actions of other people. Of course, power in the hands of an individual entails human risks. First, there is a risk of equating power with immediate results.

Another risk is the loss of self-control in their desperate need for unchallenged control. Organisations must hedge these risks by ensuring that their governance structures are well defined and robust, with clear checks and balances.

Most organisations suffer from leadership inertia. They prefer to manage the status quo rather than reform themselves. Sadly, managing the status quo by doing too little too late frequently results in organisations becoming irrelevant.