The Difference Between Management and Leadership

Carly Fiorina, Former CEO of HP, discusses the difference between leadership and management. Leadership is all about changing the order of things and only leaders can drive change.

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The 10 Fatal Flaws of Leadership

Jack Zenger and Joseph Folkman recently published a poignant list of attributes that “derail leaders” in the June 2009 issue of the Harvard Business Review (p. 18). They are worth considering given that it’s going to take strong leadership–civil and business–to turn our country around. The worst leaders:

1. Lack energy and enthusiasm.

2. Accept their own mediocre performance.

3. Lack clear vision and direction.

4. Have poor judgment.

5. Don’t collaborate.

6. Don’t walk the talk.

7. Resist new ideas.

8. Don’t learn from mistakes.

9. Lack interpersonal skills.

10. Fail to develop others.

Think about the leaders in your life who have influenced you and made a positive impact on you. How many of these attributes did they exhibit regularly? If I were to add an attribute to Zenger and Folkman’s list it would be that the worst leaders believe leadership is about being right, not doing the right thing. This flaw is based on pride, lack of ethics and an unwillingness to recognize that even a leader is falible. And one of the principles taught by Warren Bennis is that managers do things right. Leaders do the right thing.

Are You Cut Out for Entrepreneurship?

Okay, I get the hint. A few people have already emailed me this WSJ article today so I thought I should mention it. Kelly Spors, staff reporter for WSJ, asked 10 poignant questions that effectively challenges one of my recent blog posts where I argued that now is a good time to be an entrepreneur. First, I think her argument is right on the money. Entrepreneurs should definitely ask themselves the following questions before taking the plunge:

1. Are you willing and able to bear great financial risk?
2. Are you willing to sacrifice your lifestyle for potentially many years?
3. Is your significant other on board?
4. Do you like all aspects of running a business?
5. Are you comfortable making decisions on the fly with no playbook?
6. What’s your track record of executing your ideas?
7. How persuasive and well-spoken are you?
8. Do you have a concept you’re passionate about?
9. Are you a self-starter?
10. Do you have a business partner?

Yes, Kelly’s questions relate to the personality and perseverance of an entrepreneur, but I think she overlooked an important question: Do you have a viable exit strategy and the skills to execute it? Too often, entrepreneurs dive into the proverbial swimming pool not knowing how they’re going to get out. They may know what dive to use. They may know how to execute it. They may even know how to avoid landing on other swimmers. But how long should they stay in the pool? Why and what strategy should be used to get out? Okay, that’s enough metaphor talk. You get the point.

Despite the obvious challenges with being an entrepreneur in today’s economy I’m still convinced they represent advantages entrepreneurs can take advantage of, such as cheaper resources or less competition. Still, Kelly makes a good point. It doesn’t matter if resources are cheap or there is less competition because you’ll still struggle or fail when [gasp!] you aren’t cut out for entrepreneurship.

Check it out: http://online.wsj.com/article/SB123498006564714189.html

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Learning Business Strategy from Abshire’s Political Strategy

Strategy is like technology. We all benefit from it, but not everyone knows how to use it. So what does it take to be an effective strategist? David M. Abshire (2008) answers this question in his recent book, A Call to Greatness: Challenging Our Next President (no, this isn’t a book review). Over 70 pages are dedicated to defining strategy and listing the characteristics of grand strategists. Understanding the role of strategy and the development thereof are critical skills entrepreneurs must implement to successfully steer the proverbial ship to profitable waters.

Abshire defines (political) strategy as something more than just a plan. Rather, it is a “pathway” used to achieve a goal that “must be able to constantly adapt to changing circumstances” (p. 106). It must also focus on two basic requirements: maintaining unity of effort and enhancing freedom of action. Abshire identifies six characteristics inherent in effective strategists. While they were originally presented within a political context, they can be applied within an entrepreneurial context.

1. Responding Decisively to a Crisis

Bombardment of Fort Sumter

Bombardment of Fort Sumter

Abshire uses President Lincoln to illustrate his point about responding decisively to a crisis. After Lincoln’s inauguration, the Confederates demanded the evacuation of Fort Sumter in South Carolina. In the face of opposition, e.g. the commanding general, the Secretary of State and other Cabinet members, Lincoln made the prompt decision to hold the fort and immediately enlisted 75,000 militiamen for 90 days. We all know how the story of the Civil War ends. “It was the [Lincoln’s] strategic judgment that decisively… mobilized the North,” Abshire explains.

The Civil War was the biggest crisis of Lincoln’s presidency. Like Lincoln, entrepreneurs must possess or acquire crisis management skills in order to successfully navigate the ambiguity of entrepreneurship, which depends on an acute ability to act quickly–spizrinktum, if you will. Crises demand prompt attention and the finesse to make tough decisions with limited information. No entrepreneur is immune to crises because it is impossible to evaluate all variables that facilitate a totally accurate prediction of the future.

A former business partner taught me a lot about how to manage a crisis. In fact, I recently posted a blog entry about managing angry vendors and much of its content was driven by the lessons I learned from observing him successfully manage our vendor relationships. He dedicated 100% of his attention to those vendors that were screaming the loudest and articulated a recovery strategy. But his attention to the matter was prompt. And speed of response is the common ingredient in all the recipes for successful crisis management.

2. Setting Priorities

Abraham LincolnLincoln’s Cabinet aggressively pushed for war against England while the Union was at war with the South. Abshire reminds us of Lincoln’s absolute temperance when the President responded, “One war at a time.” Had former President Bush followed this counsel, the US may not have engaged in a war with Iraq until after we had completed a victory in Afghanistan, captured bin Laden or eliminated al-Qaeda. Keep in mind, this blog is not meant to be politically biased. I’m simply identifying parallels between entrepreneurship and Abshire’s work on political strategy.

I once made the mistake of losing focus and learned a great deal from the experience. Our company had the opportunity to purchase a new product brand. This opportunity was appealing because the purchase represented relatively immediate access to a potentially lucrative distribution channel. But management already had a lot on its plate and investing in a new product could have distracted them from the task at hand–increasing sales and implementing a new strategic initiative. By passing on the opportunity, my business partners reminded me how important it is to set and maintain priorities.

3. Mobilizing Resources

Inherent in this characteristic is the process of delegation. In fact, the characteristic could probably be renamed “The Ability to Decisively Delegate.” President Roosevelt’s presidency offers a qualified example. Uncoordinated policies and misallocations of resources forced him to confront a series of economic crises, namely corporate strikes and government disorganization. He responded by quickly organizing a powerful coalition of shrewd and appropriately experienced individuals from both public and private sectors to oversee war production and price controls on the domestic front. By mobilizing his available resources and delegating critical responsibilities to the right people, Roosevelt was able to gain greater control over the economy.

Entrepreneurs and small business owners must be able to mobilize their resources in order to control for the success (profitability) of their business. However, this assumes they actually recognize the ace in the hole. Thus, a prerequisite to delegation must be a thorough evaluation of available resources. What is the cash flow situation? Who has available discretionary time? What are the skills of each team member? Will the budget allow for the initiative? Is the sales force large enough? Or what distribution channels or marketing channels do we have access to? These are some of the many questions that must be answered before organizing an entrepreneur’s Dream Team. Once entrepreneurs identify their resources, they must decisively delegate.

4. Maintaining Unity and Shrewd Timing

Abshire appropriately uses President Lincoln again to illustrate his point about maintaining unity and shrewd timing:

“During the Civil War, Abraham Lincoln did everything he could to hold the country together. He denounced slavery, but he also insisted that the war was not being fought to abolish slavery but to prevent the illegal act of secession. This drew criticism from [his allies]…He realized the need to maintain a coalition between the Northern and Border States, where slavery was widely practiced…When the war did change, so did Lincoln. After the victory at Antietam in July 1862, Lincoln judged the time was right to radically expand the basis of the war. This masterful grand strategist conceived the Emancipation Proclamation to achieve a moral as well as tactical reversal. And it was issued with care: Lincoln warned the nation six months in advance. As he promised, in January 1963, he issued the Proclamation, ending slavery in the Confederacy. This move…enabled Lincoln to recruit 180,000 African American troops, mobilize freed slaves leaving the South, and provide much needed idealistic and moral motivation for the Union war effort” (p. 143, emphasis added).

Entrepreneurs (and managers) must be responsible for the unity of their team. Those organizations plagued with dysfunction and misalignment will inevitably find themselves struggling to compete like the hypothetical team described in Patrick Lencioni’s The Five Dysfunctions of a Team (2002). This story is a compelling leadership fable about a team that suffers from a significant lack of unity as its dynamics erode into naming, no accountability, missed deadlines, and declining moral. Such organizations must adopt the creed described in Lincoln’s immortal words, “A house divided against itself cannot stand.”

Timing is everything in business. Launching a new product, for example, demands shrewd timing. If launched too soon, the product may be unable to satisfy consumer needs. If launched too late, potential market share will be lost or the market may not even react at all. The point is that entrepreneurs must get their house in order before they invite company over. But remember, getting a house in order shouldn’t take all day!

5. Communicating an Understandable [Corporate] Strategy

As Communicator-in-Chief, Roosevelt eloquently “utilized the dominant communications technology of his day, the radio,” and conducted regular fireside chats that endeared him to the American public. He articulated his agenda in the famous “Four Freedoms” speech, which was a grand public strategy that encompassed freedom of speech and religion and from want and fear. Abshire explains that “his manner–buoyant in public, shrewd behind the scenes–helped to give his vision of Four Freedoms an aura of destiny.”

Entrepreneurs, like Roosevelt, must communicate their strategy to employees on a frequent basis. It is not enough to give a rousing speech about the corporate agenda and hope your listeners leave the meeting with the same burning passion for success. They must be reminded constantly and multiple channels of communication. Email and corporate memos are indeed the modern day radio. More importantly, the strategy and vision must be a part of the daily dialogue, even every conversation. But there is a big difference between simply telling your employees what is expected of them and actually influencing them to feel passionate about the company’s core ideology, it’s purpose. One of the best ways to help individual team members embrace that passion is to help them understand how exactly they are an essential part of that vision or how the vision cannot be successfully achieved without them.

6. Offering a Vision Beyond

“In his second inaugural address…Abraham Lincoln laid out his vision of reconciling the North and South,” explains Abshire. “The war was not yet over, but Lincoln was already focused on healing the country’s wounds and rifts.”

This is a poignant reminder for struggling entrepreneurs to think long-term, beyond the “war” of the current economic crisis. Grand strategists are not only concerned about their present challenges, but also mindful of what will happen once the crisis is over. Your company may have inflated accounts payable, for example. Your sales may be down. Perhaps your vendors have increased their costs. These are urgent challenges that must be immediately addressed. But strategically minded entrepreneurs must also be about focusing on the future by positioning their company today for stronger growth and market share position once the economy rebounds.

One of the best ways to survive the economic downs is to cut back on the frivolities, such as unnecessary operations, and focus on core competencies. If innovation is your bread and butter then invest in new product development. If legendary customer service is your founding principle then remind your customers using a revamped marketing campaign. Or if streamlined operations are what set you apart, cut out the marketing pork and invest resources in faster production. By focusing on the core companies will be well-positioned to capture more of their market once the economy turns around.

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Don’t Operate on Fear

Spizrinktum and Leadership

Spizrinktum is the art of getting things done. It’s a principle of leadership. Leaders with spizrinktum have intestinal fortitude. Like John Wayne, they have true grit. They have the will to succeed. They’re able to execute because they don’t operate on fear.

Too often we find ourselves unable to make a decision. And it is impossible to execute until we make a decision. Otherwise, what exactly would we execute? Nothing. We need to make the call and go for it.

Analysis Paralysis

The inability to decide is a self-imposed disease. We choose to not decide out of fear. We’re afraid that our decision might be wrong or have damaging effects on our company or personal lives. This is analysis paralysis at the core. But the fact is that waiting too long or not making a decision at all can be just as damaging, if not more so.

Analysis paralysis can be fostered by certain personalities. Those that are cautious and analytical tend to suffer from it more than those who are drivers or activators. Drivers would say, “You’re going to make mistakes anyway because no one is perfect or immune to flaws. So you might as well make your mistakes quickly and learn from them. Then move on.” In fact, Robert T. Kiyosaki, author of Rich Dad, Poor Dad, explained how important it is to make as many mistakes as you can at an early age before you can no longer afford to do so.

However, someone with an analytical personality would say, “Oh contraire, mon frere! It’s important to get all the facts straight before making a decision. Otherwise, you’re just impulsively reacting to the situation and bound to fail.” I think there’s truth to both sides of the story and there’s nothing wrong with being a driver or an analytical. That’s just the way people are. But when the motivating factor behind waiting to execute until “all the facts are straight” is based on fear then you’re in trouble, especially when the choice to wait is driven by the desire to cover your own butt. Besides, is it really possible to get all the facts straight?

What Kills Spizrinktum?

Operating on fear is the kryptonite of spizrinktum. Leaders with spiz are of the opinion that you can check the proverbial swimming pool’s thermometer as much as you want but you’ll never really know how warm it is until you jump in. And if it’s too cold, don’t sit around waiting for it to heat up. Get out! Get out immediately and either find a way to fix the problem or go find another pool (market) to swim in! Leaders understand they are in control of their environment and cannot expect their environment to adapt around them.

This example also has implications of flexibility. In other words, leaders with spiz have to be flexible and adaptable to survive. They can’t be the kind of executors that say, “I have made my decision and I am going to stick with it no matter what!” That’s dangerous. That’s myopia. That’s pride.

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