When addressing management, one is actually addressing a subset of leadership. If all one focuses on is management, their chances for success in growing a business, or even surviving, are significantly reduced.
Leadership and management have many definitions. But what are the differences? One way of making the distinction between the two would be to say “you manage things, you lead people.”
Using this approach would result in these distinctions between leadership and management.
- Manage things.
- Create structure and processes for work.
- Plan and allocate resources.
- Monitor efficiencies, implement controls and solve problems.
- Lead people.
- Define and communicate the mission, vision, and goals.
- Align people.
- Motivate and inspire others.
- Monitor effectiveness.
However, a more effective approach to grasp the concepts of leadership is to understand the four fundamental responsibilities of any leader; management resides within these. The responsibilities that every leader must fulfill are:
- Purpose: Establishing or answering the “why”. Why does the business exist, what does it do? This is often captured in a business’s mission and vision.
- Motivation: Mission and vision also help provide the needed motivation; however, motivation must go beyond these two statements. Leaders must find ways of linking what is important to the individual to what is important to the business.
- Direction: The concepts and techniques of management reside primarily, but not totally, in this leadership responsibility. Direction can take one of two forms. First, direction can create performance boundaries, allowing for individuals to make their own decisions on how to operate within those boundaries. Second, direction can state “this is how we do business” by establishing more restrictive policies, processes and procedures. In most business and organizations, direction is a combination of both techniques.
- Resources: Providing what is needed to accomplish the purpose and implement the direction. Resources are more than just money. Time, materials, individuals, skills, equipment are other types of resources.
When establishing direction the terms policies, processes and procedures are often used but understanding the differences can be confusing. A simple way to understand the differences was developed by the Kauffman Foundation: Policies explain when and why. Processes explain what. Procedures explain how.
Leaders must measure performance. The first three leadership responsibilities help influence and drive both individual and organizational behavior. Measures are a way to provide direction, they also drive behavior. Having and using effective measurement and reporting processes are part of being a good leader and manager.
The leadership roles of the entrepreneur and business owner must evolve as the business grows. Making the needed transitions is both difficult and critical. There are local resources to provide assistance leading and managing a business, as well as making the necessary transitions to grow.
Assistance available through the SBTDCs in the region includes:
- Counseling and coaching sessions
- Strategic planning
- Tactical planning
- Baldrige-based assessments and implementation
- Balanced scorecards and other measurement and reporting systems
- Training for new leaders