Our Blog

Leadership vs. Management

Posted May 11, 2010 11:16 AM by Dylan Miyake

There's been a lot of writing on the importance of leadership in an organization. There have also been volumes written about the importance of management. But one of the critical issues -- how management and leadership intersect -- hasn't been dealt with to any great depth. A few years ago, Bob Kaplan wrote an article for the Balanced Scorecard Report called "Lead and Manage Your Organization with the Balanced Scorecard."

I think Dr, Kaplan is on to something here. Leadership is critical to effective management. And without effective management, leadership has no meaning. In today's world, where the strategy development, communication, and execution cycle is getting shorter and shorter every day, effectively bridging the gap between leadership and management is more critical than ever.

In the article, Dr. Kaplan outlines the differences between the roles of managers and leaders as follows:

Leaders Managers
Foster new approaches and ideas; alter organizational structures; cope with change Conserve and maintain stability and order; cope with complexity
Shape moods and ideas; establish direction React to goals
Welcome new options, develop choices, and stimulate fresh approaches to longstanding problems; choose which decisions get made and how vision and strategy get communicated. Keep choices and options down to manageable levels; focus on how decisions get made and communicated
Influence others to voluntarily make day-to-day decisions that enhance the long-term viability of the organization; maintain control through socialization, shared beliefs, norms, values; generate intrinsic motivation Conduct day-to-day activities: negotiate, bargain, rely on extrinsic motivation; organize responsibility by functional areas of responsibility; conserve assets
Conduct turbulent, intense, and disorganized interactions that are future-oriented and involve risk-taking and creativity Interact with people through prescribed roles and hierarchy

Traditionally, the differences between leadership and management in the table above could be summarized as the differences between "strategy" and "operations." Leaders set the strategy, managers operationalize it. But as mentioned above, in organizations today, often strategy gets defined at the operational level. Insights about customers and market trends are often best sensed by the front line employees and their managers, not the leaders of the organization.

The Balanced Scorecard, Dr. Kaplan argues, provides a powerful way to link management and leadership because it forces a conversation on both what needs to be done (leadership stuff) and how it will get done (management stuff). For example, during the creation of the strategy map, leaders can outline the high-level strategy of the enterprise. And during the cascade of the strategy map to divisions and departments, managers can be explicit on how to operationalize the strategy.

Interestingly, however, the cascading of the strategy allows leaders to emerge at all levels of the organization. Because the strategy is now explicit at a business unit level, managers at the business unit level can take a leadership role in communicating, motivating, and aligning their employees to the strategic vision of the company. Without the cascaded BSC to help them in this process, they would have to resort to vague allusions to corporate strategy and would not be effective leaders.

Management meetings can also become more strategic using the Balanced Scorecard. For example, while reviewing a particular project, executives can ask both status (management and control) and strategic (how is the project affecting our objectives) questions. This allows executives -- at all levels of the organization -- to effectively combine both leadership and management.

Increasingly, as organizations become more strategy-focused, the gap between leadership and management naturally shrinks. Effective strategy-focused organizations have executives at the helm that can both lead and manage the organization.