Leadership vs. Management

The emphasis, these days, on Leadership is so pregnant that many promoters of the concept (mainly consultants ready to offer advice) forget about the importance of Management skills as the foundation of leadership. Sometimes they go as far as minimizing the role of management in the effort to make the case for leadership. I beg to see things in a more traditional light, as I can hardly imagine a sustainably successful leader without great managerial qualities.

After many years of studying, practicing and teaching management and leadership I came to the realization that true leadership (Level five in Jim Collins' book “Good to Great”) represents rather an evolutionary stage than a distinct human capability.

A good Manager with imagination, initiative, charisma and ability to communicate and inspire could make a great leader. As a matter of fact these qualities are so much interrelated that it is impossible to set them in any order of importance.

It would be much more difficult for a charismatic person, with wild imagination, initiating something new every day, and able to talk a good story out of any topics to be regarded as great leader, in absence of good managerial skills. Take management skills out of the personal qualities portfolio and you will end up with a good talker without credibility, form without substance, dreams detached from reality, a funny but sure way of losing money, or with a convoluted series of loose ends.

Any common sense perspective on the subject must take into account the ability to define current reality and future state, to create an environment that enables performance, and to execute the action plan as some of the most relevant traits of a leader. To be recognized for great leadership no one could be only a promoter of ideas. He/She needs to lead people. And if nothing else, the ability to direct, coach, support and hold others accountable – in other words to manage - constitutes the core ingredient of a sound leader.

I agree with the need for strong leadership at the helm of any organization. But the effort to grow future leaders must start with building a good managerial foundation. Once this is accomplished, we are 80% there. The other 20% is not less important, but is trickier. Where the natural talent is available, it might only need a nice polish. However, in absence of the innate aptitudes (intuition, creativity, sensitivity, etc.) it may take a lot more effort and some may never get it.

When people say true leaders are 90% born and 10% made, this is what they are referring to.

Getting to the root of the financial crisis

When I first read the newest book of George Soros – The New Paradigm for Financial Markets – I did not realize how prophetic he was in terms of the collapse of the banking system. He published his book in May and I’ve read it in August. Few weeks later Lehman Brothers went under…

Here are some paragraphs illustrating his foresight:

“When the financial system is endangered, the authorities must cave in. Whether they like it or not, institutions engaged in the credit creation must accept the fact that they are being protected by the authorities. They must, therefore, pay a price for it.

The authorities must exercise more vigilance and control during the expansionary phase. That will undoubtedly limit the profitability of the business. The people engaged in the business will not like it and will lobby against it, but credit creation has to be a regulated business.

Regulators ought to be held accountable if they allow matters to get out of hand so that an institution has to be rescued. In recent years matters did get out of hand . The financial industry was allowed to get far too profitable and far too big.”

It's a scam!

Much has been already said and written about the undercurrents of the financial crisis affecting the US and global economy. The closer one analyses it, the more it looks like a Ponzi scheme. I won't be able to describe it better than what I found on a recent blog:

http://aotearoaawiderperspective.wordpress.com/2008/11/13/the-two-trillion-dollar-black-hole/

How could such a strong economy fall into the trap of creating super bubbles, and then collapsing under its own weight? The answer is “lack of adequate regulations” in the financial system. Signs of self-implosion have been noted periodically in other sectors, but every time the answer was the expansion of trading zones (from national to regional, to continental, to global) in order to attract new people putting money into the pull, and thus keeping alive the illusion of perpetual outstanding returns.

The only difference now is that the inputting resources have reached their limits. The global population of potential contributors has been exhausted for the moment – until the purchasing power of the consumer markets like China, India, Russia and Brazil are brought up to par with the western counterparts.

Unfortunately, this crisis will not be the last one of this type. History will repeat itself years later, in a slightly different form, but fundamentally the same, because greed and irrational behaviour is embedded in the human nature.