It’s time to put an end to a decades-long debate.
For years, leadership consultants have discussed the differences between leadership and management and which approach is more effective.
Some contend managing and leading are mutually exclusive roles that require different values and traits. This conventional way of thinking says managers value stability, control, and efficiency, whereas leaders value flexibility, innovation, and adaptation. Managers are practical, analytical, and rational, whereas leaders are visionary, creative, and emotional.
Another perspective is that leading and managing are distinct roles, but both roles can be enacted by the same person. Managing seeks to produce predictability and order, whereas leading seeks to produce organizational change.
Both roles are necessary, but problems can occur when one role is overemphasized. Strong management alone can discourage risk taking and create a bureaucracy without a clear purpose. Strong leadership alone can disrupt order and create change that is impractical.
The importance of leading and managing depends in part on the situation. As an organization becomes larger and more complex, the importance of managing 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, it appears that few executives are effective at both leading and managing.
The idea that leading and managing are both important is not new, but there is not a clear explanation of how the two roles are interrelated and how they jointly affect organizational performance. The flexible leadership model provides a helpful way to understand the leading versus managing controversy, and it points the way to a resolution.
The Flexible Leadership Model
The flexible leadership model identifies three distinct determinants of organizational performance:
1. Efficiency and process reliability
2. Innovation and adaptation
3. Human resources and relations
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 performance determinants are interrelated in complex ways, and they jointly determine organizational effectiveness.
The relative importance of each performance determinant at any given time depends on the situation. Innovation is more important when the competitive strategy is to provide differentiated products or services and there are rapid, unpredictable changes in technology, customer preferences, and the products of competitors. As the pace of global competition and technological change increases, rapid innovation is becoming more important for successful adaptation by most types of organizations.
Efficiency leads to low operating costs, and it is especially important for companies that have undifferentiated products or services and must maintain low prices to retain customers. It’s also important when a company has a few large customers that can demand cost reductions.
Human resources and relations 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 conducted 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 8.5 percent.
Reframing the Controversy
The scholars who debate the importance of leading and managing have usually defined the two roles in a very narrow way. These definitions place the roles at opposite ends of a continuum, with order and stability at one end and innovation and change at the other end.