Tuesday, January 13, 2009

Managers and leaders: Are they different?

All these articles about what are the characteristics of a good leader or CEO always make me feel a bit sceptical. Sometimes even nauseous. It always strikes me, when I look into the history of a company and analyse its strategic development that they seem to need top people with widely different characteristics at different points in time.

Take my favourite little English company; the model train maker Hornby. When they were in trouble about ten years ago, its board appointed a tough guy: Peter Newey. He slashed costs, rigorously cut in their portfolio and fired a bunch of people. He wasn’t the most popular guy on the block (he was wise enough not to live in the company’s home town Margate; he might have ended up with a knife in his back) but – be it in hindsight – people also respected him: it was what the company needed at the time, and it is doubtful they would have survived without him.

But then Hornby hired a people guy: Frank Martin. The first thing employees told me about him was: “he is extremely good at managing relationships” (something Newey wasn’t exactly renowned for; and that’s a euphemism). And he was; he built superb relationships with suppliers, customers, retailers and investors. And the company flourished.

Yet, could he have done the tough turnaround job? Doubtful. He simply has other qualities. He too was the right man for the job at the time – just like Newey was.

You see the same thing at companies over and over again. Take Apple; in its early days, the energetic and charismatic Steve Jobs was exactly what the spawning company needed. However, when down-to-earth CEO John Sculley took over (much to the chagrin of Jobs), the company had one of its most profitable runs ever; Sculley didn’t innovate, inspire bold new moves, or initiated great change; he focused on making money, and did that very well.

And that is what the company needed at that point in time. Later, when they needed to be pushed and driven into a new direction, Sculley could not give them one; it was Jobs’ time again, to inspire, initiate and make the company grow. And again he did that very well. The same happened at the famous Swiss watch-maker Swatch: Ernst Thomke created the organisation that led to the emergence of the innovative Swatch; subsequent CEO Nicolas Hayek took the invention and relentlessly managed the organisation into a long streak of dominance and profitability. There is not one type of leader that fits all; different companies, at different times, need different people.

In the classic Harvard Business Review article “Managers and leaders: Are they different?” author Abraham Zaleznik’s answer to this intriguing (and slightly provocative) question was an unambiguous “yes”: Leaders inspire, are emotional, if not neurotic, and they are born that way. Managers are very different; they are rational, balanced, unemotional and easy to get along with (be it perhaps slightly yawning). And it is not that one is superior over the other; different firms, at different stages of their development, need someone who inspires and does extraordinary things. But at other times, you need someone rational and objective, and perhaps slightly boring. Such a person may never be “a leader”, but is a damn good manager.

Sometimes we need to be inspired, take risks and dream up wacky things. Sometimes not. Banks come to mind. Sometimes, there is nothing wrong with a boring banker. Or a boring politician.