The fundamental purpose of management is to keep the current system functioning, while that of leadership is to produce useful change.

Most of us confuse leadership with management, thinking that these concepts are interchangeable. From an organizational perspective, the top-level executives are referred to as leadership, and the mid-level as management. General perception is that leadership is about bigger decisions, while management is about smaller ones; leadership is long term, while management is day-to-day. From a management student perspective, leadership is one of the many assets that a successful manager must possess. Management is typically about the POSCORB functions (planning, organising, staffing, coordinating, reporting and budgeting) and leadership forms just a part of the coordinating function. Was not Jack Welch a successful manager who boasted of great leadership traits? Is that all? Is it that simple? Or are they two different terms used to refer to basically the same thing?

Management is a Career, Leadership is a Calling

According to Leslie Kossoff, a leading organizational thinker, leaders have clearly defined convictions of their own – and more importantly, the courage to see their convictions manifest into reality. In the case of managers, the courage is about somebody else’s convictions, which include the convictions of bosses, leaders or boards of directors, helping to convert these into organizational realities through clearly defined systems and processes. Management is all about believing in somebody else, while leadership is about believing in oneself. Leadership is about assimilating, learning and understanding your role as guide and steward based on your own most deeply held truths.

Marvin Bower had a stable career after graduating from the Harvard Business School when he felt the calling to take the leap of faith. He accepted the leadership mantle by responding to his conviction and setting up McKinsey and Company. He strived to establish management consultancy as an expert practice, till then unheard of and thought of as an unviable proposition. For Marvin, growth of his client’s businesses was his business and was above all personal interests. Once he stood up boldly in a client meeting pointing out that the biggest risk they faced was the narrow-minded opinions of their president. He ended up losing the client, but not his convictions, guiding him to build McKinsey into one of the most revered management consultancies.

Walt Disney had one of the roughest childhoods one could ever imagine. His father was abusive and they hardly had anything to eat. At the age of 16, Disney left home to join the Red Cross. As he worked on the war front, he realised that his calling was not just helping the injured, but putting a smile on their faces. He turned his whole life around to fit his mission, even as he endured hard times. Working in his dingy animation studio, he often whistled and smiled. For him ‘bringing happiness to millions’ was not just somebody’s mission statement on the wall, it was his life.

You Manage Things, While You Lead People

Jim Clemmer writes that one key distinction between management and leadership is that we manage things and lead people. Things include physical assets, processes, and systems while people include employees, team mates or followers. When dealing with things, we talk about a way of doing. In the people realm, we're talking about a way of being. While management focuses on work and efficiency, leadership focuses on people and their growth.

When Steve Ballmer, the current CEO of Microsoft, met Bill Gates for their first business meeting, he was looking forward to a bright career after his stint at P&G and education at Harvard and Stanford. A start-up, in the still nowhere computer field, was the last thing in his mind. Bill Gates looked into Steve’s eyes and declared that together they can chase a dream of putting a computer on every desk. The dream sounded impossible, but the ring of confidence in Bill’s voice enamoured Steve. He knew for sure that he would never gain such satisfaction other than in the leadership of Bill Gates that he gave up everything else to be an accountant in an unknown garage company.

Management is about Arms and Hands, Leadership is about Heads and Hearts

Warren Bennis says that most companies are over managed and under led, which is not a good sign since leaders are much more successful than managers in harnessing people power. While leadership captures the constituents’ heads and hearts, appealing to their conscience, management buys their arms and hands, through hierarchies. Management gets people to do what needs to be done. Leadership gets people to want to do what needs to be done. Managers get things done through control, by lighting a fire under people; leaders get things done through commitment, by stoking a fire within people.

When the Reliance Industries’ Patalganga refinery was completely submerged in the flash floods of 1989, the managers of Du Pont declared that it is virtually impossible to get the project back on track in less than four months. But Dhirubhai Ambani knew something more - that nothing was impossible if his employees put their hearts and minds into it. And as the foreign consultants looked on, every single employee worked round the clock, sweeping the floor, dismantling the machines and cleaning them, restoring the refinery back to shape in less than three weeks.

Management is about the Present; Leadership is about the Future

According to John Kotter, the fundamental purpose of management is to keep the current system functioning, while that of leadership is to produce useful change. Management tries to deal with complexities that arise in the current system while leadership tries to cope with change. Zaleznik sees managers as fairly passive work-centred operators’ intent on keeping the present show on the road, whereas leaders are seen as people centric, proactive, and intuitive and attracted to situations of high risk where the rewards for success are great.

When Varghese Kurien started chasing his passion, Indian milk was branded as more contaminated than the sewage water in the Western world and the individual milk producers were in the throes of poverty. But the shadow of the present did not hold back his leadership spirits from seeing the future and establishing the Gujarat Cooperative Milk Marketing Federation, a model currently replicated all over, making India the largest milk producer in the world.

Kotter gives a simple illustration. Initially there was the VHS system and the tapes which we were used to. It was a great way of recording and viewing and successful companies kept manufacturing and marketing these tapes and video players. But it took leadership to ask tough questions about the future – whether this was the best way of viewing and whether things could be done better? It took leadership to change the user habits into something better – the VCDs and then to the DVDs and now on to latest technologies like the Blue-ray discs.

High-technology conglomerate United Technologies has written: “People don’t want to be managed. They want to be led. Whoever heard of a ‘world manager?’ A ‘World Leader,’ yes. We know of Educational Leaders, Political Leaders, Religious Leaders, Scout Leaders, Community Leaders, Labour Leaders, and Business Leaders. “They lead. They don’t manage. The leader’s carrot always wins over the manager’s stick. Just ask your horse. You can lead a horse to water, but you can’t manage him to drink. If you want to manage somebody, manage yourself. Do that well and you’ll be ready to stop managing, and start leading.”