Force For Change: How Leadership Differs from Management

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9780029184653: Force For Change: How Leadership Differs from Management

John P. Kotter shows with compelling evidence what leadership really means today, why it is rarely associated with larger-than-life charismatics, precisely how it is different from management, and yet why both good leadership and management are essential for business success, especially for complex organizations operating in changing environments.

The critics who despair of the coming of imaginative, charismatic leaders to replace the so-called manipulative caretakers of American corporations don't tell us much about what leadership actually is, or, for that matter, what management is either.

Leadership, Kotter clearly demonstrates, is for the most part not a god-like figure transforming subordinates into superhumans, but is in fact a process that creates change -- a process which often involves hundreds or even thousands of "little acts of leadership" orchestrated by people who have the profound insight to realize this. Building on his landmark study of 15 successful general managers, Kotter presents detailed accounts of how senior and middle managers in major corporations, in close concert with colleagues and subordinates, were able to create a leadership process that put into action hundreds of commonsense ideas and procedures that, in combination with competent management, produced extraordinary results.

This leadership turned NCR from a loser to a big winner in automated teller machines, despite intense competition from IBM. The same process at American Express and SAS helped businesses grow dramatically despite the fact that they were "mature" and "commodity-like." Kotter also shows how leadership turned around operations at P&G and Kodak; produced huge business successes at PepsiCo, ARCO, and ConAgra; and made the impossible occasionally happen at Digital.

Thousands of companies today are overmanaged and underled, John Kotter concludes, not because managers lack charisma, but because far too few executives have a clear understanding of what leadership is and what it can accomplish. Without such a vision, even the most capable people have great difficulty trying to lead effectively and to create the cultures which will help others to lead.

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About the Author:

John P. Kotter is Professor of Organizational Behavior at the Harvard Business School. He has won McKinsey awards for two Harvard Business Review articles and has received the 1985 Johnson, Smith and Knisely Award for new perspectives on executive leadership. Professor Kotter has achieved international recognition as an expert on leadership in business with his works The General Managers, Power and Influence, and The Leadership Factor, which have been translated into six languages.

Excerpt. Reprinted by permission. All rights reserved.:

Chapter 1: Management and Leadership

The word leadership is used in two very different ways in every day conversation. Sometimes it refers to a process that helps direct and mobilize people and/or their ideas; we say, for example, that Fred is providing leadership on the such and such project. At other times it refers to a group of people in formal positions where leadership, in the first sense of the word, is expected; we say that the leadership of the firm is made up of ten people, including George, Alice, etc.

In this book, I will use the word almost exclusively in the first sense. The second usage contributes greatly to the confusion surrounding this subject because it subtly suggests that everyone in a leadership position actually provides leadership. This is obviously not true; some such people lead well, some lead poorly, and some do not lead at all. Since most of the people who are in positions of leadership today are called managers, the second usage also suggests that leadership and management are the same thing, or at least closely related. They are not.

Leadership is an ageless topic. That which we call management is largely the product of the last 100 years, a response to one of the most significant developments of the twentieth century: the emergence of large numbers of complex organizations. Modern management was invented, in a sense, to help the new railroads, steel mills, and auto companies achieve what legendary entrepreneurs created them for. Without such management, these complex enterprises tended to become chaotic in ways that threatened their very existence. Good management brought a degree of order and consistency to key dimensions like the quality and profitability of products.

In the past century, literally thousands of managers, consultants, and management educators have developed and refined the processes which make up the core of modern management. These processes, summarized briefly, involve:

1. Planning and budgeting -- setting targets or goals for the future, typically for the next month or year; establishing detailed steps for achieving those targets, steps that might include timetables and guidelines; and then allocating resources to accomplish those plans

2. Organizing and staffing -- establishing an organizational structure and set of jobs for accomplishing plan requirements, staffing the jobs with qualified individuals, communicating the plan to those people, delegating responsibility for carrying out the plan, and establishing systems to monitor implementation

3. Controlling and problem solving -- monitoring results versus plan in some detail, both formally and informally, by means of reports, meetings, etc.; identifying deviations, which are usually called "problems"; and then planning and organizing to solve the problems

These processes produce a degree of consistency and order. Unfortunately, as we have witnessed all too frequently in the last half century, they can produce order on dimensions as meaningless as the size of the typeface on executive memoranda. But that was never the intent of the pioneers who invented modern management. They were trying to produce consistent results on key dimensions expected by customers, stockholders, employees, and other organizational constituencies, despite the complexity caused by large size, modern technologies, and geographic dispersion. They created management to help keep a complex organization on time and on budget. That has been, and still is, its primary function.

Leadership is very different. It does not produce consistency and order, as the word itself implies; it produces movement. Throughout the ages, individuals who have been seen as leaders have created change, sometimes for the better and sometimes not. They have done so in a variety of ways, though their actions often seem to boil down to establishing where a group of people should go, getting them lined up in that direction and committed to movement, and then energizing them to overcome the inevitable obstacles they will encounter along the way.

What constitutes good leadership has been a subject of debate for centuries. In general, we usually label leadership "good" or "effective" when it moves people to a place in which both they and those who depend upon them are genuinely better off, and when it does so without trampling on the rights of others. The function implicit in this belief is constructive or adaptive change.

Leadership within a complex organization achieves this function through three subprocesses which, as we will see in further detail later on in this book, can briefly be described as such:

1. Establishing direction -- developing a vision of the future, often the distant future, along with strategies for producing the changes needed to achieve that vision

2. Aligning people -- communicating the direction to those whose cooperation may be needed so as to create coalitions that understand the vision and that are committed to its achievement

3. Motivating and inspiring -- keeping people moving in the right direction despite major political, bureaucratic, and resource barriers to change by appealing to very basic, but often untapped, human needs, values, and emotions

Management and leadership, so defined, are clearly in some ways similar. They both involve deciding what needs to be done, creating networks of people and relationships that can accomplish an agenda, and then trying to ensure that those people actually get the job done. They are both, in this sense, complete action systems; neither is simply one aspect of the other. People who think of management as being only the implementation part of leadership ignore the fact that leadership has its own implementation processes: aligning people to new directions and then inspiring them to make it happen. Similarly, people who think of leadership as only part of the implementation aspect of management (the motivational part) ignore the direction-setting aspect of leadership.

But despite some similarities, differences exist which make management and leadership very distinct. The planning and budgeting processes of management tend to focus on time frames ranging from a few months to a few years, on details, on eliminating risks, and on instrumental rationality. By contrast, as shown in the chapters that follow, that part of the leadership process which establishes a direction often focuses on longer time frames, the big picture, strategies that take calculated risks, and people's values. In a similar way, organizing and staffing tend to focus on specialization, getting the right person into or trained for the right job, and compliance; while aligning people tends to focus on integration, getting the whole group lined up in the right direction, and commitment. Controlling and problem solving usually focus on containment, control, and predictability; while motivating and inspiring focus on empowerment, expansion, and creating that occasional surprise that energizes people.

But even more fundamentally, leadership and management differ in terms of their primary function. The first can produce useful change, the second can create orderly results which keep something working efficiently. This does not mean that management is never associated with change; in tandem with effective leadership, it can help produce a more orderly change process. Nor does this mean that leadership is never associated with order; to the contrary, in tandem with effective management, an effective leadership process can help produce the changes necessary to bring a chaotic situation under control. But leadership by itself never keeps an operation on time and on budget year after year. And management by itself never creates significant useful change.

Taken together, all of these differences in function and form create the potential for conflict. Strong leadership, for example, can disrupt an orderly planning system and undermine the management hierarchy, while strong management can discourage the risk taking and enthusiasm needed for leadership. Examples of such conflict have been reported many times over the years, usually between individuals who personify only one of the two sets of processes: "pure managers" fighting it out with "pure leaders."

But despite this potential for conflict, the only logical conclusion one can draw is that they are both needed if organizations are to prosper. To be successful, organizations not only must consistently meet their current commitments to customers, stockholders, employees, and others, they must also identify and adapt to the changing needs of these key constituencies over time. To do so, they must not only plan, budget, organize, staff, control, and problem solve in a competent, systematic, and rational manner so as to achieve the results expected on a daily basis, they also must establish, and reestablish, when necessary, an appropriate direction for the future, align people to it, and motivate employees to create change even when painful sacrifices are required.

Indeed, any combination other than strong management and strong leadership has the potential for producing highly unsatisfactory results. When both are weak or nonexistent, it is like a rudderless ship with a hole in the hull. But adding just one of the two does not necessarily make the situation much better. Strong management without much leadership can turn bureaucratic and stifling, producing order for order's sake. Strong leadership without much management can become messianic and cult-like, producing change for change's sake -- even if movement is in a totally insane direction. The latter is more often found in political movements than in corporations, although it does occur sometimes in relatively small, entrepreneurial businesses. The former, however, is all too often seen in corporations today, especially in large and mature ones.

With more than enough management but insufficient leadership, one would logically expect to see the following: 1) a strong emphasis on shorter time frames, details, and eliminating risks, with relatively little focus on the long term, the big picture, and strategies that take calculated risks; 2) a strong focus on specialization, fitting people to jobs, and compliance to rules, without much focus on integration, alignment, and commitment; 3) a strong focus on containment, control, and predictability, with insufficient emphasis on expansion, empowerment, and inspiration. Taken together, it is logical to expect this to produce a firm that is somewhat rigid, not very innovative, and thus incapable of dealing with important changes in its market, competitive, or technological environment. Under these circumstances, one would predict that performance would deteriorate over time, although slowly if the firm is large and has a strong market position. Customers would be served less well because innovative products and lower prices from innovative manufacturing would be rare. As performance sinks, the cash squeeze would logically be felt more by investors who get meager or no returns and by employees who eventually are forced to make more sacrifices, including the ultimate sacrifice of their jobs.

This scenario should sound familiar to nearly everyone. Since 1970, literally hundreds of firms have had experiences that are consistent with it. No one can measure the overall impact of all this. But in the United States this problem has surely contributed to the fact that real wages were basically flat from 1973 to 1989, that stock prices when adjusted for inflation were less in late 1988 than in 1969, and that consumers have turned increasingly to less expensive or innovative foreign goods, leaving the country with a crippling trade deficit. And recent evidence suggests that the problem is still a long way from solved.

During 1988, senior executives in a dozen successful U.S. corporations were asked to rate all the people in their managerial hierarchies on the dimensions of both leadership and management. The scale they were given ranged from "weak" to "strong", and their responses were grouped into four categories: people who are weak at providing leadership but strong at management, those who are strong at leadership but not at management, those who are relatively strong at both, and those who do not do either well. The executives were then asked if the specific mix of talent their companies had in each of these four categories was what they needed to prosper over the next five to ten years. They could respond: we have about what we need; we have too few people in this category; or we have too many people like this.

Half of those polled reported having too many people who provide little if any management or leadership. Executives in professional service businesses such as investment banking and consulting were particularly likely to say this. The other half reported having very few people in this category, which, as one would expect, they said was just fine.

Nearly half reported having too few people who provide strong leadership but weak management. However, those who answered this way typically noted that such people were very valuable as long as they could work closely with others who were strong at management. Most of the remaining respondents reported having about the right number of people in this category for future needs, sometimes commenting that this "right number" was "very few." These respondents tended to be pessimistic about strong leaders/weak managers; they felt such people usually created more problems than they solved.

Nearly two-thirds of those surveyed said they had too many people who are strong at management but not at leadership. Some even reported having "far too many." The other third split their responses between "too few" and "about right." Those saying too few usually worked for professional service firms.

Over 95 percent reported having too few people who are strong at both leadership and management. Everyone thought they had some people like that: not super humans who provide outstanding management and excellent leadership but mortals who are moderately strong on one of the two dimensions, and strong or very strong on the other. But the respondents felt they needed more, often many more, to do well over the next decade.

This survey is interesting, not because it proves anything by itself, but because the results are so consistent with a variety of other evidence, some of which will be presented in later chapters. As a whole, the data strongly suggests that most firms today have insufficient leadership, and that many corporations are "over-managed" and "under-led."

An even larger survey conducted a few years earlier provides some insight as to why this leadership problem exists. Nearly 80 percent of the 1,000 executives responding to that survey questionnaire said they felt their firms did less than a very good job of recruiting, developing, retaining, and motivating people with leadership potential. These same executives also reported that their companies were not successful in this regard because of a large number of inappropriate practices. For example, 82 percent of the respondents said that "the quality of career planning discussions in their firms" was less than adequate to support the objective of attracting, retaining, and motivating a sufficient number of people who could help with the leadership challenges. Seventy-seven per...

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