Understanding the Difference Between Leadership and Management—and its Political Consequences

Few leaders are exceptional managers and even fewer managers are exceptional leaders.

There are leaders and there are managers. Both are important to the success of an organization or institution, but there is a fundamental philosophical and operational difference between a leader and a manager. And the differences become even more compelling in government.

In simple terms: A leader seeks to transform an organization by painting a vision of the future that both inspires and motivates others to work toward that end. A manager has more of a “paint by the numbers” transactional mindset that uses planning and specific tactics to achieve an objective. Not surprisingly, the results of their efforts are startlingly different.

The more transformational a leader is, the less successful they are as a manager; and the more transactional a manager is, the less successful they are as a leader. A transformational leader’s success is usually directly proportional to their ability to communicate the idea, as well as show respect and concern for others in a way that inspires them to join together to achieve the vision. A transactional manager’s success is usually in direct proportion to their power and authority to direct the actions of others, with little concern for those involved.

While the transformational and transactional styles are mutually exclusive, it is possible to mix-n-match these styles in business. A visionary as CEO has the platform to communicate and inspire; and can hire managers to help fulfill the vision. A manager as CEO has the authority to develop and implement process and procedure. Most often the success of an organization is inspired by a visionary leader and maintained by a manager.

Government is Not a Business

These differences are especially evident in the conduct of government. American government is structured in a way that gives a transactional manager a hopeless assignment. The president is not the CEO of America. The constitution vests the president with the responsibility to lead the country, but not the authority to manage it. The constitution consigns to Congress the power to pass laws, declare war, print money and decide how the country will operate. The president can influence, but cannot command. (In fact, the office of the president was an afterthought of the Constitutional Convention, created as a bulwark to represent the people against the explicit power of Congress.)

It is logical to believe (hope) that in difficult times – especially when the problems are economic in nature – America would benefit from the talents of a successful transactional manager as president; but it is a false hope. The American people have historically recognized this distinction between a leader and a manager in the role as president, because the vast majority of the 44 men elected to the office of president have been transformational leaders. Only two presidents – Herbert Hoover and Jimmy Carter – were clearly transactional, tactical leaders; and their results in office prove it was not an accident that they were one-term presidents. (Is it a coincidence that both were engineers who believed that process and procedure was the path to solving problems?)

Do You Really Want a Transactional President?

Mitt Romney wants us to believe that his experience and success in business will make him the exception to the rule that good managers do not make good presidents. Romney cites his success as CEO of Bain Capital and management of the Salt Lake City Winter Olympics as an example of his leadership. There is no doubt that Romney was exceptionally successful in these endeavors, but neither was the type of success that makes for a successful president. And it is the reason that Mitt Romney is having such a difficult time connecting with the people and inspiring confidence.

Bain Capital is a private equity company and by definition, private equity is a tactical, transactional business. The “vision” of a private equity firm is to “make as much money as possible in any (legal) way possible.” Decisions are made after reviewing scores of potential investments using business plans, graphs and financial analysis. Once the transactional analysis is completed, the decision is made and, without further discussion, the investment is rejected or completed. Mitt Romney proved to be exceptionally talented operating as CEO on this basis. But that’s not how government works; nor should it.

When Mitt Romney was hired to “save” the Winter Olympics, the vision was well established, but the management of the effort was in chaos. Unlike the previous managing director, Romney was given CEO-type authority. He had the top-down power to cut through the bureaucracy and confusion to make decisions and demand compliance. And he did a great job, but again, this is not the way the office of president is structured.

The power and structure in government is bottom-up where needs and actions of the many filter up through a series of checks and balances, shared power, and divergent interests (e.g., the needs of the poor contrasted with the wants of the wealthy). Conversely, the power and structure in business is top-down: direction, decisions and actions are dictated, not debated.

The favored attributes of a transactional corporate manager include a laser-like focus on specific actions, efficient input-output analysis, decisive decision making and an impatience to get things done. And it is fair to judge the manager’s performance on this basis, because they have the power to operate in this manner. The favored attributes of a government leader are a focus on the broad ideology of the purpose of government, the patience to hear the views of many, the ability to cajole diverse centers of power to coalesce to take action and the skill to build broad coalitions that are willing to work together for the benefit of the many, not the few. And it is fair to judge the government leader on this basis, because the power to govern in America comes from the broad base below, not the few at the top.

It would be fair to cite Romney’s time as Governor of Massachusetts, as an example of his experience as a government leader. The only problem is that his record as governor was, at best, mixed. His signature achievement as a one-term governor was passage of a statewide health-care bill; an accomplishment from which he now, some say prudently, distances himself. Many he worked with in government suggest that his manager-type arrogant, aloof attitude became a liability to his ability to govern. It is telling that Romney himself rarely, if ever, mentions his accomplishments as governor, but constantly reminds the electorate of his successful experience at Bain and with the Winter Olympics.

This is not to criticize Romney; he is bright, honest, smooth, polished and clearly a very successful businessman in his brand of capitalism. But political posture does expose his transactional background and training, which is sympathetic to results, not people. The now-famous “47-percenter” tape of Romney talking to a group of wealthy contributors exposes this attitude in Romney’s approach. When viewed from an objective, transactional perspective, there was nothing wrong with Romney’s comments; it is the way he has been trained to act and think as a manager.

Yet, that kind of thinking points out still another difference between the transactional manager and transformative leader. In simple terms, the manager makes decisions based not on ideology, but on a dispassionately sterile, unemotional input-output of facts and figures for the purpose of achieving an objective. If you listen to Romney on that tape, he could just as easily have been a corporate manager dispassionately reporting problems and challenges to a board of directors. He was correct in his assessment as to how the electorate is divided (although his choice expounding on the reasons why leaves something to be desired) and what he had to do to achieve his objective to be elected president. Romney made his comments as a transactional manager, not as a transformational leader.

When you think of Romney, what great transformational, inspirational or motivational vision comes to mind? What vision does he offer other than the nuts-n-bolts of managing the economy? (And, he is not willing to reveal the tools he will use to tighten the nuts-n-bolts.)

Compare that image to what comes to mind when you hear the names of past transformational presidential leaders:

  • Abraham Lincoln – “Preserve the Union”
  • Teddy Roosevelt – “Speak Softly and Carry a Big Stick”
  • Franklin Roosevelt – “The New Deal”
  • John Kennedy – “The New Frontier”
  • Lyndon Johnson – “The Great Society”
  • Ronald Reagan – “A New Dawn in America”

Clearly none of these presidents achieved all they set out to accomplish, but they did set out a marker – a vision – that galvanized the populous. This put pressure on Congress from the bottom-up – from outside Washington – to make changes that the president could not impose from the top-down.

In the end, that is the ultimate difference between a transformational leader and a transactional manager. Leaders are successful only when they gain power from the wide-base below. Transactional managers are successful only when they are vested with power from the top. Transactional management can work well in business, but it is a recipe for soulless leadership and failure in government.

And the Moral of the Story …

Transformational leaders and transactional managers both are necessary and play critical – if different – roles in the success of an organization or institution. Without the ability to conceptualize and communicate a transformational vision that motivates all to participate in the outcome, an individual is not a leader. Without the vested power to impose transactional process and procedure from the top, an individual cannot be an effective manager.

The office of President of the United States is structured in a way that demands transformational leadership; not transactional management. A failure to understand the difference cannot lead to positive results.


2 responses to “Understanding the Difference Between Leadership and Management—and its Political Consequences

  1. Mac
    You’ve been hammering Romney pretty good lately. It’s safe to say you’re not a fan of his. But I don’t see any real vision from Obama either. In four years he’s had a chance to communicate a vision. I couldnt tell you what it is. Last night on 60 minutes Obama asked what the definition of leadership is. Obama replied the same things you do. Setting a vision and a course to follow. However the interviewer didn’t bother to ask him What his vision was the past 4 years and in the future. I’d love to see a blog on what’s made Obama so great and what you feel his great leadership vision is because I don’t see it.

  2. Pingback: A Tribute to our President | Beth Am Shalom

Leave a Reply

Your email address will not be published. Required fields are marked *