Management skill vs. Leadership skill
A growing business needs both Leadership and Management to thrive
The best companies have managers with strong leadership skill and superb management skill. But when chaos strikes, you can’t always concentrate on both. (It might even be a luxury to concentrate on either for more than an hour at a time!) But what are you losing when you neglect one or the other? Both are essential for keeping a solid foundation during rapid change. But how?

Processes Must Adapt as Business Grows
Management helps the business grow. The larger an organization, the more ways information and materials flow. As processes become more complex (some would say “sophisticated”), small delays at each step add up to long delays shipping product and serving customers. Well-run projects get neglected, drift off course, and start to drain time and money instead of replenishing them. It’s the manager’s job to measure, root out the inefficient, prune the irrelevant, and bring errant projects back to the fold.

Managers also guide people by setting up and running the systems that affect people. They set and implement performance evaluations, rewards, and penalties. Managers create rules for employees to live by. Though most of a manager’s time is often spent building people systems, the work is about process.

Creating these systems makes growth and change possible. When every business process must be reinvented every time it’s needed, forward progress never gets made. The energy that would be moving the business forward is being spent reinventing the present. In the worst case, several people reinvent the same processes in different parts of the business. In one company I worked with, three separate PR agencies managed different product launches, at great expense and great duplication of effort.

Keeping all the systems in place while those very systems will become obsolete in six months is hard. Very hard. Yet it’s necessary; work must continue to get done until the company’s next growth plateau. But it isn’t always clear which tool is best for a given problem. Each tool comes with its own costs and timeframes. Choosing the right tool is at a reasonable cost requires careful understanding of the levers that can be used to affect the problem. Fortunately, managers have a huge toolbox to draw from: process mapping, compensation systems, personality assessments for hiring and firing, project management methodologies, finance theory, organization design, etc. Many of those tools can be learned at business schools and taught to help organizations keep their systems running.

People Need Emotional Stability as Business Grows
We hate to admit that emotion influences business. In fact, Harvard Business School has only a couple of classes that even acknowledge that emotion exists. Yet most of what happens in business is emotional. Think about the last time you held back giving your “all” on a project. Was it for rational reasons, or because you felt unappreciated / overwhelmed / conflicted? Chances are it was rooted in emotion. The COO of one of the largest retail chains in the US confided to me that his biggest agenda items revolved around the emotions of his subsidiaries’ CEOs. As he put it, “at the end of the day the financial and strategic issues are there but they are reducible largely by analytics...the people and process issues are not.”

Leadership helps the people systems grow. Leadership is not about setting up compensation systems and creating rules. Leading is about touching peoples’ identities and emotions; leaders comfort. Leaders direct. And most of all, leaders inspire!

In times of change, this is more than just “touchy-feelie” nice-to-have. Change unsettles people. They need a stable touchstone to keep on track while the world reels around them. That’s what a leader provides. When people are looking for guidance, a good leader gives it, confidently. Even if the future is uncertain, the leader offers whatever stability they can to those looking to her for direction.

And they can offer many kinds of stability. They can offer a stable vision of the future that stays constant even when setbacks and surprises sway the course. They can offer ways of doing business—values—to anchor people in their process. And when things look hopeless, they can encourage, reassure, and offer hope. These are what bring people to accomplish great things, and this is how a leader becomes the glue that holds a community together during times of threat.

But leadership happens through only a couple of tools. Talking or modeling through their own behavior. That’s about it. What not many people realize is that once in a leadership position, they are always leading. Every time they talk, and every time they take action, they send signals setting direction and demonstrating what’s important–even if that’s not what they intend.

Successful leadership is challenging because it is mostly “right brain.” It’s not so much in what a leader says, but how they say it. This kind of subtle communication isn’t well-understood. One consulting company hired a Fun consultant to help revamp the company culture. The kick-off meeting was on an unpaid Saturday, with attendance mandatory for all professional staff. The very way they organized their culture-building guaranteed it would send the opposite message.

The Management/Leadership Balance Changes Over Time
Companies need management and leadership at different times. When a company is just starting out, leadership is paramount. The founder’s job, more than anything else, is to inspire other people to believe enough to commit time and resources to an unproven company and product. They are the quintessential team-builder, and with only five or six people working together in a room, management needs are minimal. “Hey, Sam, do we have any outstanding receivables?” “Yeah. The invoices are under my bag of M&Ms.” Communication is informal, and the shared sense of purpose keeps people on track.

As companies grow, more and more structure begins to creep in. More sales prospects, customers, suppliers, and employees means a lot more organization is needed. Filing cabinets, if nothing else. But especially as the customer base grows beyond the initial friends and early adopters, rapid, repeatable service and quality becomes important. Management comes to the fore as the organization struggles just to keep doing what it always wanted to do.

And there comes a point where the company gets large enough that not everyone is committed anymore. More and more employees consider their job to be “just a job.” Branch offices scatter the workforce, and the day-to-day work is routine and proceduralized. Management has done its work well, but the organization has grow so big that most people’s jobs have become small. They see no direct connection between their job and the company’s health, and certainly no connection between their job and the company’s direction.

This is when leadership reenters the picture. While it’s nice to think that the right incentive systems, proper rules, and a great Procedures Manual can keep hundreds of people moving in the same direction, it’s just not true. It takes a leader to decide where the company is going, and help every member of the company support and feel supported by that vision. The policies manual may say, “Pursue only opportunities with a 15% return on investment,” but the leader ties it to emotion: “Pursue opportunity that will make us #1 or #2 in every market we enter.” A 15% ROI only inspires an analyst. Being #1 in a market inspires a workforce.

Develop Both Skill Sets ... Not Necessarily Both in You
Strong leadership and management will help your business thrive. But you don’t need one person with both skill sets. Often, the skill sets clash and don’t coexist comfortably. Are you good with systems, but not with people? Concentrate on becoming the best manager you can be, and cultivate a partner or upper manager who is a strong leader. Choose that person for their ability to help you articulate your direction, and build a culture that will get you there.

If you’re a visionary leader, you already have your vision and your culture. Find a partner who can turn your vision into a rock-solid operation.

Either way, be prepared to manage the balance. A manager’s job is to create stability and deal with reality. A leader’s job is to stir emotion and set audacious, grandiose goals that shake the status quo. Too much management and you stagnate. Too much leadership and you get nowhere. Embrace the challenge of striking the balance. Do it well, and the results will surpass your wildest dreams.