Harsha Kopuru EMEN 5830Leading Others ManagementSuccess vs Leadership Success On my honor, as aUniversity of Colorado Boulder student, I have neither given nor receivedunauthorized assistance.
IntroductionInmodern business environments, the distinction between management and leadershipis small, if any distinction exists at all. The terms ‘leadership’ and’management’ are perceived and practiced synonymously, to the point thatleaders are confused about what they should do differently from managers1. Manyleadership development programs suffer the same shortcoming in equalizing thetwo, or treating leadership as a subset of management rather than a separate concept. Leadership is more analogous to one of the complementary sides of anorganizational pyramid than a segment of an organizational pie chart. Thedifference between management success and leadership success derives fromdifferences in management and leadership.
Management is defined here as the oversight of factors directlyconnected to or correlated to the output of functional parameters, such as headcount, hours worked, and efficiency. Managementis measurable or quantifiable in the impact it has on results. Leadership is defined here as the setting ofa vision and influencing (rather than controlling) the outcomes of teams ofindividuals and business processes. Leadershiprelies on relatively immeasurable characteristics such as perception,motivation, diversity, and empowerment2. Typicalmeasures of contemporary business performance are effective at conveying changeover short interval durations but do not have direct analogues in the domain ofleadership success.
Leadership success isassessed by its effects over an arbitrary period – usually several years ordecades – and by a ‘jury’ of passionate founders, the employees, andcustomers. Organizational success requires management to return profitsthat keep the organization viable3 but also leadershipto fulfill larger goals over time. Said differently, totalorganizational success is measured by a combination of quantifiable (albeitimpersonal) results representing management success, and foundationalprinciples that advance an entire organization forward representing leadershipsuccess. Management success is sometimes solely used to characterizeorganizational success, or to rationalize an imbalance toward managementsuccess4. Leadership success is complementary tobut separate from management success and both constitute parts of the whole of organizationalsuccess. Organizational focus onmanagement success or leadership success manifests in key differences such as thetype and role of stakeholders, communicating success, and the perceived role ofa leader.ResearchOrganizationshave a variety of stakeholders or stakeholder groups, each with a differentimpact on current business performance and future strategy or direction5.
Stakeholders in management success advocatefor maximizing what adds value to the stakeholders themselves and are commonly comprisedof shareholders such as owners, investors or creditors, and theirrepresentatives such as boards of directors and chief executives6. These types of stakeholders are often externalto the organization but tend to focus on top-line business performance as ittranslates to shareholder returns. Thepreponderance of publicly traded companies since the 1980s witnessed the riseof shareholder value to almost a corporate commandment7. The maximization of shareholder value hasbeen advanced as a corporate governance principle even by the government(s) ofthe countries in the Organization of Economic Development as evidenced by itsstatement that good corporate governance regimes have in common “a high degreeof priority placed on the interests of shareholders, who place their trust in corporations…”(OECD, 1999). Historically, there hasbeen little regard or priority for other stakeholders that also place theirtrust in corporations or organizations. It is understood that an organization driven to satisfy shareholdersmust focus on producing shareholder value at the expense of all otherstakeholders. De-facto prioritization ofshareholder value is representative of organizations disproportionately focusedon management success.Bycontrast, stakeholders in leadership success are involved in creating the product(s)or delivering the service(s) of value.
In this definition, stakeholders in leadership success are primarily theorganization’s employees and the organization’s customers8. Employees’ success is entangled withleadership success because their constituency is existential to leaders,9 and theirdaily efforts contribute directly to achieving the organization’s vision. Customers’ patronage is a core requirementfor business performance excellence, but the customer’s stake in leadershipsuccess is to selectively patronize those organizations with value propositionsthat include leadership principles. Giventhat organizations must maintain profitability, leadership success requires comprehensiverecognition of all stakeholders and equally considering their needs, whereas management success may considerthe needs of individual or groups of stakeholders at the expense of otherstakeholders. President Obama and his administration exemplifiedequal consideration of all stakeholders in weighing Chrysler’s continued existenceagainst its bondholders’ legally prioritized claims to Chrysler’s assets inbankruptcy10. Chrysler could not have achievedprofitability without its bondholders that initially financed it, but it alsocould not have stayed successful without the employees that manufactured its vehicles,or the customers that bought and drove them. Thus, employees and customers are stakeholders in Chrysler alongsidebondholders, and bearing in mind the impacts on the employee and customerstakeholders if all of Chrysler’s assets were awarded to only bondholders(meaning the company would go out of business) exemplifies leadership success.
Totalorganizational success is achieved by giving equal priority to the interest of managementsuccess stakeholders and leadership success stakeholders as part of the decision-makingprocess, even if the ultimate decision favors management success stakeholders. Anotherkey contrast between management success and leadership success is in the roleof an individual within the story of success. Quantities such as thosefound in quarterly or annual financial statements reflect business performanceresults over the short-term (defined here as <1-5 years) and are often usedas a corollary for organizational success.
These quantities often dilute or outright ignore the role of individualsin those same results, and thus represent management success rather thanorganizational success. Leadership success is communicated against a moreabstract frame of reference, such as progress towards achieving a vision, andconsiders long-term objectives. Thevision statement can itself indicate whether the organization is tuned towardsmanagement success or leadership success. Characteristics of leadership success within vision statements are focuson long-term objectives (defined here as 15 years or more), exploration of theultimate objective of the vision, and acknowledgement of the role ofindividuals and team play in achieving that vision. Framing results into a perspective that includesthe participating individuals integrates the individual as a stakeholder in thevision and gives them a higher purpose,11 without de-humanizingtheir contribution. Asan example of the communication differences in management success andleadership success, consider the examples of two CEOs – Jack Welch of GeneralElectric and Elon Musk of SpaceX. Whenhe became CEO of GE in1981, Jack Welch set a vision to grow GE’s business unitsand for all business units to become first or second in global markets or beshut down.
12 Elon Muskfounded SpaceX in 2002 with a vision statement that reads “SpaceX designs,manufactures and launches advanced rockets and spacecraft. The company was founded in 2002 torevolutionize space technology, with the ultimate goal of enabling people tolive on other planets.”13 GE was ultimately successful in improving businessperformance14, but Welch’svision is more akin to strategy because of its short-term outlook, lack of recognitionof persons such as employees and customers ultimately underpinning the results,and not addressing the purpose of pursuing said vision. Conversely, Musk paints a picture of a futurewhere people can travel to other planets by using the revolutionary technologythat SpaceX employees created, and the same vision sustains SpaceX fifteenyears later. Welch’s vision is aboutimproving GE’s ranking, which is appealing to shareholders, but is not easily relatablewhen compared to Musk’s vision for SpaceX. Musk’s vision is clearly about people (i.
e., its customers) living onother worlds, and SpaceX’s purpose is to make possible a future for humanitybeyond the planet Earth. Furr and Dyer illustratethe distinction best: Welch dictated a vision, whereas as Musk set grandchallenge15. A vision to achieve top ranking, which benefitsGE as an organization, demonstrates management success. Realizing a future benefitting people orsociety at large reflects leadership success principles. Organizationsmay implement formalized leadership development programs and education indeveloping future leaders, but the effectiveness of these programs is notcommonly assessed or reported16. Collins references leadership practices andtheories as modern sources of leadership acumen, such as observation andemulation of current leaders, experience in past roles, and 360-degree feedback.
As experiential learning is common to any leadershipposition, it is assumed that experience is the most common source of learnedleadership acumen among a plurality of leaders. Experience is intuitively cumulative in nature, dynamically increasingor expanding what it includes and so leadership development can be considered tocontinuously develop over time as a leader gains experience. Thus, a holistic leadership developmentexperience integrates leadership success principles through established leadersfor future leaders to emulate, fostering mentoring; encouraging diversity ofexperience; and opportunities to provide and receive critical feedback. The organizational culture in turn skewscurrent leaders’ behavior, selected experiences, and the type of feedback providedinto alignment with the organization’s valuation of management success orleadership success.Managementsuccess was previously stated to be a pre-requisite or pre-cursor to leadershipsuccess out of a need to keep an organization solvent and sustainable. Organizational environments that equatesuccess with positive or improved metrics often evolve into a paradigm referredto as ‘managing the numbers.’ In this paradigm, the purpose of leadership is solelyor largely transformed to a defined process with set and controllable variablesthat result in predictable outcomes when evaluated against a pre-determinedperformance metric or set of metrics.
Froma management success perspective, a leader’s purpose is to modulate technicaland non-technical variables in the correct way such that the final metrics showpre-determined performance thresholds are met or exceeded. This paradigm is also endorsed by somewell-reputed educational programs such as Master’s in Business Administration degrees,whose curricula equate management and leadership as closed-loop process models,17 quitecontrary to the open-loop nature of individuals. Withoutdata from controlled changes in leadership changes to organizational success,it’s difficult to say that a scientific or technical analysis based approach iswrong in a capitalistic sense, but it is de-humanizing. If a leader develops in an environment thatreacts primarily to the story told by the numbers, then the goals, priorities,and decision making by that leader will be centered on telling a goodstory. Senior leaders that subscribe tothe management to the numbers philosophy pass it on to mid-level leaders, andit is ultimately imposed on the pool of low-level leaders and individualcontributors that will eventually become senior leaders, thereby perpetuatingthe cycle.
Ultimately, the numbers maytell a good story, but the story of those being led is absent. From the perspective of leadership success, numbersshould be used to gauge the effectiveness of implementation of leadershipprinciples and adjust based on individual feedback rather than to improve thenumbers themselves. As with products andcustomer service, leaders must deliver a high quality of leadership to theorganization in parallel with business performance excellence.
ConclusionOrganizationalsuccess consists of distinct types of success, referred to as managementsuccess and leadership success. Theproportions of each type needed for organizational success vary by industry,organizational culture, and the nature of individuals that from theorganizational status-quo. Managementsuccess conceptually differs from leadership success in that management successis an outward focus on quantifiable results and leadership success is a focuson enabling individuals or teams inside the organization to achieve resultsmore than on the results themselves. Historically, the purpose of organizations has revolved aroundfulfilling the goals of external stakeholders and shareholders. Traditional measures of organizationalsuccess such as financial ratios, margins, or market share were designed toabstractly communicate performance in ways that cannot be broken down or tracedto any individuals. More so, thesemeasures can tell a story of growth and business excellence while maskingsimultaneous negative effects on individuals such as stressful workenvironments, high employee turnover, or customer dissatisfaction. Thepersistence of this dichotomy is due to weighing or prioritizing the role ofexternal stakeholders above internal stakeholders (employees), or enforcing aseparation between the two groups of stakeholders. Leadership success assigns equal weight tothe success of internal and external stakeholders alike, but is qualitativelyassessed against abstract concepts such as vision and workforceengagement.
Measures of managementsuccess such as financial ratios can clarify otherwise ambiguous success, butleadership success must ultimately recognize that individuals, not ratios, areaccountable for success. Leadershipsuccess is largely situational and occurs at on microscopic levels such as thenumerous daily transactions or interactions during business, and at macroscopiclevels such as a board of executives deciding on long-term strategicpriorities. Developing leaders inherittheir leadership styles from the behaviors exhibited by successful leaders inan organization and influence the perceived weighting towards management orleadership success measures. Leaders inan organizational culture where success is defined or just perceived by theirsuperiors as positive trending of performance metric will primarily focus onachieving upward trends, perhaps exclusive of the resultant impact on otherpersons. In these organizations, the role of leaders is perceived to be thesupervision of technical variables known to impact overall trends.
Subsequent ‘generations’ of leadersinternalize the same dynamics and perpetuate the cycle of focus on managementsuccess further. To break the cycle, an organizationmust re-cast the perceived responsibilities of both current and future leaders fromemphasis on oversight of top-level results to responsibility for developmentand growth of individuals at all levels. The definition of leadership itself must be altered to include someproportion of managerial results and transformation of individuals into leadersthemselves.
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