The Difference between CEOs That Manage vs. Lead

Today's blog is by guest blogger Kevin Dincher.

A long-time client surprised me last week. He called to update me on his pursuit of a new position within his company and in the course of our conversation said that his CEO “is an extremely talented manager but not much of a leader.” The assessment itself didn’t surprise me; I have known this CEO for over 30 years and agree completely. What did surprise me was hearing my friend make the distinction. We have often talked about the differences between managing and leading. Like most people, however, he generally use the terms interchangeably and doesn’t really make a distinction day-to-day—just the kind of thing that drives leadership experts like John Kotter crazy.

For over 40 years, Kotter has been on a mission to get people to think about the distinction between management and leadership. Our ongoing transition from a manufacturing-based economy to a service-based economy, however, has made Kotter’s work much more difficult. We still need to understand the difference between management and leadership, but it is increasingly difficult to be an effective CEO without also being a good leader.

In the Industrial Age, ownership of capital—i.e., factories—was the basis of wealth, and to a great degree managers and manual workers in those factories were cogs in an industrial machine to be managed. The goal was to keep a large, complex, unwieldy organization operating reliably and efficiently Your managers didn’t have to give much thought to what they were producing or to the people who were producing it. Managers followed your orders, organized the work, allocated resources, assigned the right people to the necessary tasks, and ensured completion of the job as ordered.

Things are different in the Information Age; the basis of wealth is access to people’s knowledge. As management guru Peter Drucker foresaw, the rise of the knowledge worker has profoundly changed the way business operates (Management Challenges of the 21^st Century). If you are a CEO in the Information Age, to be successful you can no longer simply organize work and assign tasks. You need to be a manager who leads.

CEOs need to define purpose and inspire results. In the Industrial Age, managers organized work and assigned tasks, and manual workers could focus narrowly on the specific task assigned them. But knowledge workers can only produce if they know how their work fits into and contributes to the big picture. They need to know the purpose of their work—and they look to you to provide that purpose.

CEOs need to nurture skills and develop talent. Continuing innovation is part of knowledge work; therefore, knowledge work requires continuous learning on the part of the worker. In the Information Age, it is your job to create a climate for learning and to design work not just for efficiency but to build competence. You now need to be a coach and a mentor while facilitating formal and informal learning opportunities.

CEOs need to treat workers as an "asset" rather than a "cost." These days we hear a great deal about the employee engagement, satisfaction and retention—and the high cost of turnover. The crux of the matter, however, is that the basis of wealth in the Information Age is access to people’s knowledge. Disengaged manual workers may be slow or sloppy—but the assembly line keeps them moving, and they still manage to get the nut on the bolt. However, when knowledge workers are dissatisfied and disengage, then you lose access to your primary asset—their specific strengths and knowledge. Knowledge workers need to want to work for you and your company. Therefore, you need to create the working and cultural conditions in which employees are recognized and valued and feel challenged by their work.

Engage employees. Nurture skills and develop talent. Define purpose and inspire results. Now we’re talking about leadership rather than management. In the world of knowledge workers, Drucker said, “one does not manage people. The task is to lead people. And the goal is make productive the specific strengths and knowledge of every individual.” There are still good reasons for understanding the difference between management and leadership for every CEO—and one of them is that it is increasingly necessary that good managers learn to be good leaders.

Kevin Dincher is an organization development consultant, professional development coach and educator with 30 years of experience that includes not only OD consulting but also work in adult education, counseling psychology and crisis management, program and operations management, and human resources.