Understanding people will help you make the shift from managing to leading a business

Part 3

Great managers will tell you that the difference between a manager and leader is much more profound than most people think and that the company which overlooks this difference will suffer for it.
Leaders look forward and imagine the possibilities that the future may bring in order to set direction. Managers monitor and adjust today’s work, regularly looking backward to ensure that current goals leading to that direction are being met. The best leaders lead and let their management teams manage the work at hand.
Let us explore these points a bit more in this instalment.
The Coca-Cola Company Chairman and CEO Douglas Ivester (1997-2000) was crystal clear on the difference. 
Sometimes he’d say to his senior managers, “This is your decision to make. I’d like to give you my thoughts as input.” Since he was the CEO, the managers always considered his thoughts. Most of the time, they did things the way he suggested. Sometimes they disagreed. They quickly learned that going back to the CEO and telling him that they decided as he didn’t know what he was talking about did not make for pleasant meetings.
But it did work when they went back to him and said, “Wanted to follow up on the decision we made on this subject. After we talked to you, we did some more digging and uncovered five things that you could not have known about. Given those new findings, we decided to go a different direction than what you had suggested.”
He was fine with that.
Other times he’d say, “See these stripes. I am the CEO of this company. I’m going to give you some direction which you need to follow.” It was extraordinarily helpful to know when he was giving the managers input for them to consider in their decision and when he was giving them no choice but to follow his direction.

Mix of skills
You have to understand that leaders are the heart of a business. The essence of leadership means inspiring a group to come together for a common goal. Leaders motivate, console and work with people to keep them bonded and eager to move forward. That means setting a direction, communicating it to everyone who will listen (and probably many who won’t) and keeping people psyched when times get tough.
At the same time, managers are the brains of a business. They establish systems, create rules and operating procedures and put into place incentive programmes and the like. Management, however, is about the business, not the people; the people are important as a way of getting the job done.
Most business executives have a mix of management and leadership skills. Both skill sets are necessary to run a successful business (unless it’s a very small business with people who naturally mesh very well). Leadership skills provide the direction, while management skills provide the systems that let a company grow with success.
Generally, only the top executives of the company are the leaders. They set direction in the company. Setting direction is different from setting goals. A goal is concrete and measurable: “We must sell a dozen 55-inch TV sets by next Tuesday.” Direction is broader. 
Leaders set direction with a vision, a mission and operating principles that embody the company’s direction and values.
For instance, Alpha Agencies may be an organisation specializing in the recruitment of personal assistants to companies. Their mission statement might sound like this: “We free people from life’s drudgery, freeing them to live a life of doing only the things they do best.” This mission doesn’t give measurable goals but rather points to an overall direction--it gets people excited and moving in one direction. 
A personal assistant wouldn’t suddenly decide to diversify into heavy machinery; it doesn’t fit the mission. Yet, the mission is broad enough that the company can create a rich set of offerings over many decades. Specific projects and products may come and go, but the mission gives the company an enduring direction.

Three tests
There are three tests that will help you decide if you’ve made the shift from managing people to leading them.
Counting value vs. creating value. A manager will ‘count value’. This means he will measure the value created by the employees, asking for reports and other analytics to demonstrate how the business and its employees are tracking. This action can actually disable value-adding employees. If a diamond cutter is asked to report every 15 minutes how many stones he has cut, by distracting him, his boss is subtracting value.
Leaders, however, will be a part of creating value. They will forge a powerful team and help delegate tasks while handling other matters. A strong leader leads by example and enables those in their team to forge their own path, working on their tasks without the need for someone hovering over them. This is also referred to as ‘action-based leadership’.
Circles of influence vs. circles of power. Managers have subordinates. Managers create circles of power while leaders create circles of influence. A manager’s subordinates are obligated to work under him and the flow of delegation is one way from the manager to their employee. In contrast, leaders have followers. The flow of duties and information is two-way. A leader will find many colleagues coming to them for advice, including those outside their teams. While it may appear that a leader has less power than a manager, in actuality, they wield more control over the organisation as more employees value their input.
Leading people vs. managing work. When it boils down to it, a manager controls a set group in order to accomplish a goal. Leadership, however, is about influencing and motivating, allowing others to contribute to organisational success. Power and control is not what separates the two, but rather an understanding of influence and inspiration.
In his 1989 book ‘On Becoming a Leader’, Warren Bennis, an American scholar, widely regarded as a pioneer of the contemporary field of leadership studies, composed his list of the differences:

• The manager administers; the leader innovates.
• The manager maintains; the leader develops.
• The manager focuses on systems and structure; the leader focuses on people.
• The manager relies on control; the leader inspires trust.
• The manager has a short-range view; the leader has a long-range perspective.
• The manager asks how and when; the leader asks what and why.
• The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.
• The manager imitates; the leader originates.
• The manager accepts the status quo; the leader challenges it.
• The manager is the classic good soldier; the leader is his or her own person.
• The manager does things right; the leader does the right thing.

Lead people
Perhaps there was a time when the calling of the manager and that of the leader could be separated. But in the new economy, where value comes increasingly from the knowledge of people and where workers are no longer undifferentiated cogs in an industrial machine, management and leadership are not easily separated. People look to their managers, not just to assign them a task but to define for them a purpose. And managers must organise workers, not just to maximize efficiency, but to nurture skills, develop talent and inspire results.
The management guru Peter Drucker was one of the first to recognize this truth. He identified the emergence of the ‘knowledge worker’ and the profound differences that would cause in the way business was organised. With the rise of the knowledge worker, “one does not manage people,” Drucker wrote. “The task is to lead people. And the goal is to make productive the specific strengths and knowledge of every individual.”
(Lionel Wijesiri is a retired corporate director counting three decades of senior management experience. He is now an independent consultant and a freelance journalist. He may be contacted on [email protected])