Leadership Profit Conundrum

Can leadership prevail in a profit first organisation? Understanding the fundamental differences between leadership and management goes some way to explaining the nature of what I call the Leadership Profit Conundrum.

Though relatively simple the following succinct definitions and broad principles assist in illustrating the conundrum. Firstly, leadership is fundamentally about inspiration, motivation and direction and manifest more in terms of influence and guidance. Secondly, management is fundamentally about control, co-ordination and organisation and manifest more in terms of functional regulation. I believe it is unwise to interchange the meaning and use of the words leadership and management.

In business, leadership is inextricable from organisational performance; by which I mean increasing the bottom line and looking after the shareholders interests first. This is well enough for those at the most senior levels in a business who benefit from performance related bonuses. However, company profit generally does not motivate and influence staff engagement and performance throughout an organisation. In fact, growth linked to actualisation of profit and proportion of profit distributed to workers wages is disproportionate see http://www.bbc.co.uk/news/business-17033039 In essence, profit growth has become detached from wages with shareholder dividends and the highest echelons’ bonuses increasing whilst wages have stagnated and regressed in real terms. Those who are producing growth and ergo profit are receiving a decreasing share. This cannot be very motivating for the majority of individuals who are tasked with improving performance.

By definition, management restricts performance by setting limits, controls and regulation; furthermore, you cannot manage the way to achieving exceptional performance above and beyond expectation. On the other hand, good leaders influence and motivate others to perform successfully and achieve exceptional performance. Three questions come to mind here; is business leadership as we have come to know it really just business management? What is the place of customer service in businesses placing priority on profit return to shareholders? Which approach, leadership or management, is most likely to deal best with the challenges of an ever changing and demanding business environment?

The Leadership Profit Conundrum manifesting itself as management will continue prevail whilst profit is ‘king’ even though the enduring economic climate requires good leadership to prevail in order to succeed. Try this exercise to illustrate my point. Draw three columns on a sheet of paper and in the middle column write a list of words and phrases describing the current economic environment. In the left hand column write a list of words and phrases from definitions of management and in the right hand column do the same for leadership. In order to succeed and thrive in the environment of your middle column you can choose only to go left or right – which path would you choose and why?

KICKING THE FEAR OF FAILURE IN THE TEETH

Anyone who watched the television last night will understand how each of us is programmed to ignore the evidence of failure and proceed in a positive way. That's why we often harm ourselves through smoking, alcohol and unprotected sex even though we are fully aware of the consequences. So in our lives we always assume it will never happen to us and yet when it does in business we rarely see failure as a positive.  In life we are programmed to see a positive outcome otherwise we would not take risks and we would not develop and learn as a race. What we have to do is take the positives out of failure and use them in business as well.

When we plan to succeed there are automatic built in components of overcome failure because nothing worthwhile in life comes easy we are all more robust if we have and maintain a vision of eventual success.  Failure is not our enemy; but it is our friend. As a race we don't always like adversity because it hurts. However, think of what adversity has delivered to our society in terms of a hunger and drive for success. It is not adversity that kills businesses. What kills businesses is a lack of understanding and education as to how things such as adversity and failure are actually assets, and not liabilities.  Every organisation if it is to exploit its opportunities should look for the positive in each situation. I like the old Chinese saying “I complained because I had no shoes until I saw a man who had no legs" makes real sense. Often it is only our lack of perspective that allows the fear of failure to control our thinking.  If we maintain perspective in terms of our real situation we can learn as much from failure as we can success.

Failure is not something to be avoided but something to be encouraged, all creative ventures yield to the maximum when failure is embraced rather than shunned.  Failure is often seen perceived as a weakness and yet we all have weaknesses as we are all flawed as humans that is in our nature! It is the strong man that knows his weaknesses. It is only when the limits of anything are known through it breaking or failing that we are we able to understand its flaws and  develop something new, it is only then that we have a  real need to change. That is as Donald Rumsfeld would say when an "unknown unknown" is possible because an "unknown known" has become a "known known". Failure brings us knowledge and development and should always be viewed positively as long as it is not repeated too often because that only exposes an inability to learn the lessons of failure. If you keep on doing the same things you will always get the same results. As Albert Einstein said “the definition of insanity is doing the same things over and expecting a different result".