The Wise Entrepreneur

Top 7 Reasons Why An Entrepreneur Must Know The Difference Between Leadership And Management

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Today we are going to quickly take a look at the difference between leadership and management. Oftentimes these two words are interchanged while talking about business or enterprise, simply due to two factors. First of all many people do not actually know the differences between the two. Secondly, some of the qualities and characteristics required or manifested in leaders also apply to managers, so this makes people think that the two are the same. What about you my dear? Do you see any differences between the two? In my opinion I candidly agree with many authors, consultants and educationists that the two are different. Multiple books also tend to confirm this. However, in many small organizations you usually find the manager also putting on the hat of a leader. Larger organizations tend to have these two roles better defined in both words and actions.

It is often said that leadership is the first creation, while management is the second creation. Leaders use more of intuition, creativity and innovation, hence utilizing more of the right side of the brain while managers use more of logic and analytical thinking, hence using more of the left side of the brain.  Now, don’t ask me too many questions about this left and right side of the brain things! Ok? I’m simply basing on scientific knowledge and research which you can search for and read for yourself. Additionally, there are literally hundreds of definitions of leadership and management, but our duty today is not on the definitions. We will instead dwell on the top reasons why an entrepreneur must know the differences between leadership and management. This knowledge determines many things in an enterprise.

Stephen R. Covey, one of the renowned management guru once said this, I quote; “A leader is the one who climbs the tallest tree, surveys the entire situation and yells, ‘wrong jungle’”.

So, can we then proceed and consider why an entrepreneur must distinguish between the two?

  1. The focus of the two differs. Leadership and management have different focusses or areas of attention. If you have a large enterprise but you don’t separate these two roles then you are rendering a disservice to your organization. Leaders focus on the broader picture while managers consider the details. Leaders inspire, innovate, differentiate, take greater risks, build relationships, create followers and fans, focus on the long-term etc. Managers on the other hand focus on controlling the status quo, efficiency and effectiveness, analysis, achieving goals and objectives, processes including systems and structures, skills and competencies, mimicking, direction, organization and the like. Managers plan, communicate, control, organize, and also do some leading but to a limited scale. Leaders are change agents while managers tend to maintain the status quo. Now, I hope you can candidly see that the two are indeed different and if in your enterprise you have them mixed anyhow, you may not be able to significantly grow and develop that enterprise. Don’t you think so?
  1. Leadership and management impact business differently. In light of the above, leaders and managers impact the business differently. There are businesses that are over-managed and under led or vice versa and such businesses do not grow much. The issue is this; too much logical and analytical approach simply improves certain aspects of the business but misses out on others. There is need for someone (usually a leader) to stand aside and think in a different way. I mean consider issues from a broader, intuitive and creative perspective. In busy organizations the day to day managerial issues leave managers so occupied and exhausted that they hardly have the time to properly utilize the right sides of their brains. This is not to say that they don’t. There are some managers that are also very good leaders and could be very charismatically strategic, having qualities that leaders manifest.
  1. Hiring requirements can never be the same. Another top reason why an entrepreneur must know the difference between leadership and management is the fact that hiring requirements differ for the two roles. My dear entrepreneur, don’t be so naïve and recruit a leader in the position of a manager, or vice-versa. You will only have yourself to blame while your competitors are recruiting right and continue to drive and upscale their enterprises to new levels while you yawn. Do you understand me? In a manager you are seeking for a person who is work-focused, can exercise control and authority, and is transactional while in a leader you are seeking for a people person, someone transformational and charismatic with the ability to rally people to a course. In a manager you are seeking for someone who can do things right while in a leader you are seeking for someone who knows the right things to do. In a leader you are considering someone who asks the right questions, develops ideas and people, inspires and motivates, makes heroes of everyone around, and is comfortable with change; while in a manager you are considering someone who gives directions and tells people what to do, is slow to change, etc. Come on Mr. Entrepreneur, please hire right and based on your needs!
  1. Performance measures and assessment differ. This is another important element. You cannot measure or assess the performance of a leader in the same way that you do for managers. If you make the mistake of thinking that the two have the same KPI’ s (Key Performance Indicators) and CSF’s (Critical Success Factors) then you are certainly going to miss it big. Managers want to be heroes and some could even become too smart in achieving results by manipulating some things. They need the reward and they need it now, and this could lead them to make and implement decisions that could hurt the business in the long run. Leaders are patient and see their achievement in terms of business growth and development in the long term, building other great leaders, building great and renowned enterprises. Leaders could defer getting reward even for several years.
  1. Leaders communicate and transfer vision and mission while managers transfer goals, effectiveness and efficiency. My dear entrepreneur, if you are in business for the long term and really desire to build a great business, based on your mission and vision, you need a good leader. Of course leaders achieve through managers. Leaders develop other leaders and transfer vision, mission, values etc. to other people while managers build other managers and transfer managerial skills and competences to ensure that the enterprise runs effectively and efficiently towards achieving the determined goals and objectives. In this regard, don’t rely too much on your managers to develop leaders. There are occasional cases where the managers could themselves transform to good leaders but this requires quite some mentoring by other great leaders.
  1. Building great enterprises that last require great leaders and not great managers. This reason comes obviously from the ones above. I know that today’s business world has many entrepreneurs who are so focused on money making, that once they hit the jack-pot they could quickly divest and run to other things. While I don’t want to sound like I hate serial including hit-and-run entrepreneurs, I don’t think I can hide my dislike especially for the hit and run approach to entrepreneurship. M. Entrepreneur, if you have and continue to develop great products and services that serve humanity, you are not going to cut and run after making some bucks. Don’t you agree with me? If you are passionate about it, you will look beyond the money. This implies that you build great enterprises that last. This requires real leadership. You need to understand the blend of the two to derive something that is good for your business. You need balance in your enterprise. Don’t you?
  1. Facing globalization and the new business age. Last but not least, another top reason why an entrepreneur must understand that leadership is different from management is the need to face globalization and the new business age. If you are a serious entrepreneur today, you should be aware of the impact of globalization on business. The world has become a single village. Information moves at supersonic speed. The market (people) is becoming more aware. There are endless choices and options, and with it opportunities and threats for enterprises. The business world is VUCA (Volatile, uncertain, complex and ambiguous). If you must remain in business, you have to adapt. Now, you are not going to have managers who are buried in the day to day nitty-gritties of making things work, to focus on big matters like this. You need leaders to take time and focus on matters such as this, and if you don’t you are simply on the way to becoming dinosaurs. Do you get the gist of the matter? Think! My dear entrepreneur. Think. Ok?

That’s it for today, and for a terrific ending – have a fantabulous week!


The Wise Entrepreneur

Picture of Clayton W. L. Mwaka

Clayton W. L. Mwaka

Clayton W. L. Mwaka, a Ugandan chartered accountant and motivational speaker with 24 years of diverse experience, specializes in business administration, international consultancy, and lecturing. He advocates for personal empowerment through balanced living, qualitative leadership, and paradigm shifts, aiming to unlock individual potential globally.

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