by Michael Schrage

From Our:  Ten Most Enduring Ideas

The bitterest business rivalry over the past decade hasn’t been the struggle between free trade and protectionism, between capital and labor, or between Microsoft and everyone else; the bitterest rivalry has been leadership versus management. Leadership won — but it’s been a Pyrrhic victory at best.

Harvard Business School’s Abraham Zaleznik articulated the difference in his classic 1977 essay “Managers and Leaders: Are They Different?” Proclaimed Professor Zaleznik, “Managers and leaders are two very different types of people. Managers’ goals arise out of necessities rather than desires; they excel at defusing conflicts between individuals or departments, placating all sides while ensuring that an organization’s day-to-day business gets done. Leaders, on the other hand, adopt personal, active attitudes toward goals. They look for the opportunities and rewards that lie around the corner, inspiring subordinates and firing up the creative process with their own energy. Their relationships with employees and coworkers are intense, and their working environment is often chaotic.”

With artfully hedged neutrality, Professor Zaleznik declared both management and leadership essential for organizational success. And thus he raised the critical business question: Which offered the superior return on investment?

Global markets provided an unambiguously clear opinion: They craved leadership. The Lord John Brownes, Jack Welches, Percy Barneviks, Carlos Ghosns, Andy Groves, and Bill Gateses are celebrated far more as innovative global leaders than as operational management exemplars. The leadership “brand” has become so powerful and compelling that successful managers are inherently considered “great leaders.” Ironically, however, people tagged as great leaders don’t have to be great business managers. Leadership is the value added; management is what gets automated, rightsized, or outsourced to Bangalore or Guangzhou.

Yet the bursting of the dot-com/telecom bubbles and the disgraceful collapses of Enron, Arthur Andersen, WorldCom, Tyco, Parmalat, etc., have cruelly constrained the brand trajectory of the leadership label. Where governance was once the longest and most elastic of leashes that let leadership stray with minimal attention, it is now a beautifully upholstered cage with 24-hour surveillance and legal advisors on call worldwide.

In other words, the global rise of governance as a business concern reflects the pathological failure of leaders to manage. Accountability, transparency, and oversight will mean something very different to CEOs and the boardroom over the next 10 years than they did in the past. A new ecology of interdependent management, leadership, and governance is arising. Striking a balance among these three imperatives will be a greater challenge in years to come. Will those who meet that challenge emerge with better leadership, better management, and better governance? Today’s “leaders” have lost the right to be the only ones with the authority and legitimacy to answer those questions.