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1990 B E S T OF HBR

What Leaders Really Do

The article reprinted here stands on its

own, ofcourse, but it can also be seen

as a crucial contribution to a debate that

began in 1977. when Harvard Business

School professor Abraham Zaleznik

published an HBR article with the

deceptively mild title "Managers and

Leaders: Are They Different?" The piece

caused an uproar in business schools. It argued that the

theoreticians of scientific management, with their organiza-

tional diagrams and time-and-motion studies, were missing

half the p i c t u r e - t h e half filled with inspiration, vision, and

the full spectrum of human drives and desires. The study of

leadership hasn't been the same since.

"What Leaders Really D o " first published im99O, deepens

and extends the insights ofthe 1977 article. Introducing one of

those brand-new ideas that seems obvious once it's expressed,

retired Harvard Business School professor John Kotter pro-

poses that management and leadership are different but com-

plementary, and that in a changing world, one cannot function

withoutthe other. He then enumerates and contrasts the pri-

mary tasks ofthe manager and the leader. His key point bears

repeating: Managers promote stability while leaders press for

change, and only organizations that embrace both sides of

that contradiction can thrive in turbulent times.

They don't make plans; they

don't solve problems; they

don't even organize people.

What leaders really do is

prepare organizations for

change and help them cope

as they struggle through it

by John P. Kotter

I EADERSHIP IS DIFFERENT I management, but not for the rea- ^ ^ sons most people think. Leadership isn't mystical and mysterious. It has nothing to do with having "charisma" or other exotic personality traits. It is not the province of a chosen few. Nor is leadership necessarily better than management or a replacement for i t

Rather, leadership and management are two distinctive and complementary systems of action. Each has its own func- tion and characteristic activities. Both are necessary for success in an increas- ingly complex and volatile business environment.

Most U.S. corporations today are over- managed and underled. They need to develop their capacity to exercise lead- ership. Successful corporations don't wait for leaders to come along. They actively seek out people with leadership potential and expose them to career experiences designed to develop that

BREAKTHROUGH LEADERSHIP DECEMBER 2001 85

BEST OF HBR • What Leaders Really Do

potential. Indeed, with careful selection, nurturing, and encouragement, dozens of people can play important leadership roles in a business organization.

But while improving their ability to lead, companies should remember that strong leadership with weak manage- ment is no better, and is sometimes actually worse, than the reverse. The rea! challenge is to combine strong lead- ership and strong management and use each to balance the other.

Of course, not everyone can be good at both leading and managing. Some people have the capacity to become excellent managers but not strong leaders. Others have great leadership potential but, for a variety of reasons, have great difficulty becoming strong managers. Smart companies value both kinds of people and work hard to make them a part ofthe team.

But when it comes to preparing peo- ple for executive jobs, such companies rightly ignore the recent literature that says people cannot manage and lead. They try to develop leader-managers. Once companies understand the funda- mental difference between leadership and management, they can begin to groom their top people to provide both.

The Difference Between Management and Leadership Management is about coping with com- plexity. Its practices and procedures are largely a response to one ofthe most sig- nificant developments ofthe twentieth century: the emergence of large organi- zations. Without good management, complex enterprises tend to become chaotic in ways that threaten their very

Management is about coping with

complexity. Leadership, by contrast,

is about coping with change.

Now retired, John P. Kotter was a profes- sor of organizational behavior at Harvard Business Sch(X)l in Boston. He is the au- thor of such books as The General Man- agers (Free Press, 1986), The Leadership Factor (Free Press, 19SS), and A Force for Change: How Leadership Differs from Management (Free Press, 1990).

existence. Good management brings a degree of order and consistency to key dimensions like the quality and prof- itability of products.

Leadership, by contrast, is about cop- ing with change. Part of the reason it has become so important in recent years is that the business world has become more competitive and more volatile. Faster technological change, greater in- temational competition, the deregula- tion of markets, overcapacity in capital- intensive industries, an unstable oil cartel, raiders with junk bonds, and the changing demographics of the work- force are among the many factors that have contributed to this shift. The net result is that doing what was done yes- terday, or doing it 5% better, is no longer a formula for success. Major changes are more and more necessary to survive and compete effectively in this new envi- ronment. More change always demands more leadership.

Consider a simple military analogy: A peacetime army can usually survive with good administration and manage- ment up and down the hierarchy, cou- pled with good leadership concentrated at the very top. A wartime army, how- ever, needs competent leadership at all levels. No one yet has figured out how to manage people effectively into battle; they must be led.

These two different functions - cop- ing with complexity and coping with change-shape the characteristic activi- ties of management and leadership. Each system of action involves deciding what needs to be done, creating net- works of people and relationships that can accomplish an agenda, and then try- ing to ensure that those people actually do the job. But each accomplishes these three tasks in different ways.

Companies manage complexity first by planning and budgeting-sen'mg tar- gets or goals for the future (typically forthe next month oryear),establishing detailed steps for achieving those tar- gets, and then allocating resources to accomplish those plans. By contrast, leading an organization to constructive change begins by setting a direction - developing a vision ofthe future (often the distant future) along with strategies for producing the changes needed to achieve that vision.

Management develops the capacity to achieve its plan by organizing and ittT^n^-creating an organizational struc- ture and set of jobs for accomplishing plan requirements, staffing the jobs with qualified individuals, communicating the plan to those people, delegating re- sponsibility for carrying out the plan, and devising systems to monitor imple- mentation. The equivalent leadership activity, however, is aligning people. This means communicating the new direc- tion to those who can create coalitions that understand the vision and are com- mitted to its achievement.

Finally, management ensures plan accomplishment by conm>//(fi^andprob- lem 5(j/i'(Vî - monitoring results versus the plan in some detail, both formally and informally, by means of reports, meetings, and other ttwis; identifying deviations; and then planning and or- ganizing to solve the problems. But for leadership, achieving a vision requires motivating and inspiring-keeping peo- ple moving in the right direction, despite major obstacles to change, by appealing to basic but often untapped human needs, values, and emotions.

A closer examination of each of these activities will help clarify the skills lead- ers need.

86 HARVARD BUSINESS REVIEW

Setting a Direction Versus Planning and Budgeting Since the function of leadership is to produce change, setting the direction of that change is fundamental to leader- ship. Setting direction is never the same as planning or even long-term planning, although people often confuse the two. Planning is a management process, de- ductive in nature and designed to pro- duce orderly results, not change. Setting a direction is more inductive. Leaders gather a broad range of data and look for patterns, relationships, and linkages that help explain things. What's more, the direction-setting aspect of leader- ship does not produce plans; it creates vision and strategies. These describe a business, technology, or corporate cul- ture in terms of what it should become over the long temi and articulate a fea- sible way of achieving this goal.

Most discussions of vision have a ten- dency to degenerate into the mystical. The implication is that a vision is some- thing mysterious that mere mortals, even talented ones, could never hope to have. But developing good business di- rection isn't magic. It is a tough, some- times exhausting process of gathering and analyzing information. People who articulate such visions aren't magicians but broad-based strategic thinkers who are willing to take risks.

Nor do visions and strategies have to be brilliantly innovative; in fact, some of the best are not. Effective business vi- sions regularly have an almost mundane quality, usually consisting of ideas that are already well known. The particular combination or patterning of the ideas may be new, but sometimes even that is not the case.

For example, when CEO Jan Carlzon articulated his vision to make Scandi- navian Airlines System (SAS) the best airline in the world for the frequent business traveler, he was not saying any- thing that everyone in the airline in- dustry didn't already know. Business travelers fly more consistently than

other market segments and are gen- erally willing to pay higher fares. Thus, focusing on business customers offers an airline the possibility of high mar- gins, steady business, and considerable growth. But in an industry known more for bureaucracy than vision, no com- pany had ever put these simple ideas together and dedicated itself to imple- menting them. SAS did, and it worked.

What's crucial about a vision is not its originality but how well it serves the interests of important constituencies ~ customers, stockholders, employees - and how easily it can be translated into a realistic competitive strategy. Bad visions tend to ignore the legitimate needs and rights of important constit- uencies-favoring, say, employees over customers or stockholders. Or they are strategically unsound. When a company that has never been better than a weak competitor in an industry suddenly

starts talking about becoming number one, that is a pipe dream, not a vision.

One of the most frequent mistakes that overmanaged and underled corpo- rations make is to embrace long-term planning as a panacea for their lack of direction and inability to adapt to an increasingly competitive and dynamic business environment. But such an approach misinterprets the nature of direction setting and can never work.

Long-term planning is always time consuming. Whenever something unex- pected happens, plans have to be re- done. In a dynamic business environ- ment, the unexpected often becomes the norm, and long-term planning can become an extraordinarily burdensome activity. That is why most successful cor- porations limit the time frame of their planning activities. Indeed, some even consider "long-term planning" a contra- diction in terms.

BREAKTHROUGH LEADERSHIP DECEMBER 2001 87

BEST OF HBR • What Leaders Really Do

In a company without direction, even short-term planning can become a black hole capable of absorbing an infinite amount of time and energy. With no vi- sion and strategy to provide constraints around the planning process or to guide it, every eventuality deserves a plan. Under these circumstances, contingency planning can go on forever, draining time and attention from far more essen- tial activities,yet without ever providing the clear sense of direction that a com- pany desperately needs. After awhile, managers inevitably become cynical, and the planning prtKess can degenerate into a highly politicized game.

Planning works best not as a substi- tute for direction setting but as a com- plement to it. A competent planning process serves as a useful reality check on direction-setting activities. Likewise, a competent direction-setting process provides a focus in which planning can then be realistically carried out. It helps clarify what kind of planning is essential and what kind is irrelevant

Aligning People Versus Organizing and Staffing A central feature of modern organiza- tions is interdependence, where no one has complete autonomy, where most employees are tied to many others by their work, technology, management systems, and hierarchy. These linkages present a special challenge when orga- nizations attempt to change. Unless many individuals line up and move to- gether in the same direction, people will tend to fall all over one another. To ex- ecutives who are overeducated in man- agement and undereducated in leader- ship, the idea of getting people moving in the same direction appears to be an organizational problem. What execu- tives need to do, however, is not orga- nize people but align them.

Managers"organize"to create human systems that can implement plans as precisely and efficiently as possible.Typ- ically, this requires a number of poten-

tially complex decisions. A company must choose a structure of jobs and re- porting relationships, staff it with indi- viduals suited to the jobs, provide train- ing for those who need it, communicate plans to the workforce, and decide how much authority to delegate and to whom. Economic incentives also need to be constructed to accomplish the plan, as well as systems to monitor its im- plementation. These organizational judgments are much like architectural decisions. It's a question of fit within a particular context.

just because they are understood. An- other big challenge in leadership efforts is credibility-getting people to believe the message. Many things contribute to credibility: the track record of the per- son delivering the message, the content of the message itself, the communica- tor's reputation for integrity and trust- worthiness, and the consistency be- tween words and deeds.

Finally, aligning leads to empower- ment in a way that organizing rarely does. One of the reasons some organi- zations have difficulty adjusting to rapid

The idea of getting people moving in the

same direction appears to be an organizational

problem. But what executives need to do is not

organize people but align them.

Aligning is different. It is more of a communications challenge than a design problem. Aligning invariably involves talking to many more individuals than organizing does. The target population can involve not only a manager's subor- dinates but also bosses, peers, staff in other parts of the organization, as well as suppliers, government officials, and even customers. Anyone who can help imple- ment the vision and strategies or who can block implementation is relevant.

Trying to get people to comprehend a vision of an alternative future is also a communications challenge of a com- pletely different magnitude from orga- nizing them to fulfill a short-term plan. It's much like the difference between a football quarterback attempting to de- scribe to his team the next two or three plays versus his trying to explain to them a totally new approach to the game to be used in the second half of the season.

Whether delivered with many words or a few carefully chosen symbols, such messages are not necessarily accepted

changes in markets or technology is that so many people in those compa- nies feel relatively powerless. They have learned from experience that even if they correctly perceive important ex- ternal changes and then initiate appro- priate actions, they are vulnerable to someone higher up who does not like what they have done. Reprimands can take many different forms: "That's against policy," or "We can't afford it" or"Shut up and do as you're told."

Alignment helps overcome this prob- lem by empowering peopie in at least two ways. First, when a clear sense of direction has been communicated throughout an organization, lower-level employees can initiate actions without the same degree of vulnerability. As long as their behavior is consistent with the vision, superiors will have more difficulty reprimanding them. Second, because everyone is aiming at the same target, the probability is less that one person's initiative will be stalled when it comes into conflict with someone else's.

90 HARVARD BUSINESS REVIEW

What Leaders Really Do • B E S T OF H B R

Motivating People Versus Controlling and Problem Solving since change is the function of leader- ship, being able to generate highly en- ergized behavior is important for coping with the inevitable barriers to change. Just as direction setting identifies an ap- propriate path for movement and just as effective alignment gets people moving down that path, successful motivation ensures that they will have the energy to overcome obstacles.

According to the logic of manage- ment, control mechanisms compare sys- tem behavior with the plan and take ac- tion when a deviation is detected. In a well-managed factory, for example, this means the planning process establishes sensible quality targets, the organizing process builds an organization that can achieve those targets, and a control pro- cess makes sure that quality lapses are spotted immediately, not in 30 or 60 days, and corrected.

For some of the same reasons that control is so central to management, highly motivated or inspired behavior is almost irrelevant. Managerial processes must be as close as possible to fail-safe and risk free. That means they cannot be dependent on the unusual or hard to obtain. The whole purpose of systems and structures is to help normal people who behave in normal ways to complete routine jobs successfully, day after day. It's not exciting or glamorous. But that's management.

Leadership is different. Achieving grand visions always requires a burst of energy. Motivation and inspiration en- ergize people, not by pushing them in the right direction as control mecha- nisms do but by satisfying basic human needs for achievement, a sense of be- longing, recognition, self-esteem, a feel- ing of control over one's life, and the ability to live up to one's ideals. Such feelings touch us deeply and elicit a powerful response.

Good leaders motivate people in a variety of ways. First, they always artic-

Motivation and inspiration energize people,

not by pushing them in the right direction but

by satisfying basic human needs.

ulate the organization's vision in a man- ner that stresses the values ofthe audi- ence they are addressing. This makes the work important to those individu- als. Leaders also regularly involve peo- ple in deciding how to achieve the or- ganization's vision (or the part most relevant to a particular individual). This gives people a sense of control. Another important motivational technique is to support employee efforts to realize the vision by providing coaching, feedback, and role modeling, thereby helping peo- ple grow professionally and enhancing their self-esteem. Finally, good leaders recognize and reward success, which not only gives people a sense of accom- plishment but also makes them feel like they belong to an organization that cares about them. When all this is done, the work itself becomes intrinsically motivating.

The more that change characterizes the business environment, the more that leaders must motivate people to provide leadership as well. When this works, it tends to reproduce leadership across the entire organization, with people occupying multiple leadership roles throughout the hierarchy. This is highly valuable, because coping with change in any complex business de- mands initiatives from a multitude of people. Nothing less will work.

Of course, leadership from many sources does not necessarily converge. To the contrary, it can easily conflict. For multiple leadership roles to work to- gether, people's actions must be care- fully coordinated by mechanisms that differ from those coordinating tradi- tional management roles.

Strong networks of informal rela- tionships-the kind found in companies with healthy cultures-help coordinate

leadership activities in much the same way that formal structure coordinates managerial activities. The key difference is that informal networks can deal with the greater demands for coordination associated with nonroutine activities and change. The multitude of commu- nication channels and the trust among the individuals connected by those chan- nels allow for an ongoing process of ac- commodation and adaptation. When conflicts arise among roles, those same relationships help resolve the conflicts. Perhaps most important, this process of dialogue and accommodation can pro- duce visions that are linked and com- patible instead of remote and competi- tive. All this requires a great deal more communication than is needed to coor- dinate managerial roles, but unlike for- mal structure, strong informal networks can handle it.

Infomial relations of some sort exist in all corporations. But too often these networks are either very weak - some people are well connected but most are n o t - o r they are highly fragmented-a strong network exists inside the mar- keting group and inside R&D but not across the two departments. Such net- works do not support multiple leader- ship initiatives well, in fact, extensive informal networks are so important that if they do not exist, creating them has to be the focus of activity early in a major leadership initiative.

Creating a Culture of Leadership Despite the increasing importance of leadership to business success, the on-the- job experiences of most people actually seem to undermine the development of the attributes needed for leadership. Nevertheless, some companies have consistently demonstrated an ability to

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B E S T OF H B R • What Leaders Really Do

develop people into outstanding leader- managers. Recruiting people with lead- ership potential is only the first step. Equally important is managing their career patterns. Individuals who are effective in large leadership roles often share a number of career experiences.

Perhaps the most typical and most important is significant challenge early in a career. Leaders almost always have had opportunities during their twenties and thirties to actually try to lead, to take a risk, and to leam from both tri- imiphs and failures. Such leaming seems essential in developing a wide range of leadership skills and perspectives. These opportunities also teach people some- thing about both the difficulty of lead- ership and its potential for producing change.

Later in their careers, something equally important happens that has to do with broadening. People who pro- vide effective leadership in important jobs always have a chance, before they get into those jobs, to grow beyond the narrow base that characterizes most managerial careers. This is usually the result of lateral career moves or of early promotions to unusually broad job as- signments. Sometimes other vehicles help, like special task-force assignments or a lengthy general management course. Whatever the case, the breadth of knowledge developed in this way seems to be helpful in all aspects of leadership. So does the network of rela- tionships that is often acquired both in- side and outside the company. When enough people get opportunities like this, the relationships that are built also help create the strong informal net- works needed to support multiple lead- ership initiatives.

Corporations that do a better-than- average job of developing leaders put an emphasis on creating challenging op- portunities for relatively young employ- ees, in many businesses, decentralization is the key. By definition, it pushes re- sponsibility lower in an organization and

in the process creates more challenging jobs at lower levels. Johnson & Johnson, 3M, Hewlett-Packard, General Electric, and many other well-known companies have used that approach quite success- fully. Some of those same companies also create as many small units as possible so there are a lot of challenging lower-level general management jobs available.

Sometimes these businesses develop additional challenging opportunities by stressing growth through new products

Armed with a clear sense of who has considerable leadership potential and what skills they need to develop, execu- tives in these companies then spend time planning for that development. Some- times that is done as part of a formal succession planning or high-potential de- velopment prtKess; often it is more in- formal. In either case, the key ingredient appears to be an intelligent assessment of what feasible development opportu- nities fit each candidate's needs.

Well-led businesses tend to recognize and

reward people who successfully develop leaders.

or services. Over the years, 3M has had a policy that at least 25% of its revenue should come from products introduced within the last five years. That encour- ages small new ventures, which in tum offer hundreds of opportunities to test and stretch young people with leader- ship potential.

Such practices can, almost by them- selves, prepare people for small- and medium-sized leadership jobs. But de- veloping people for important leadership positions requires more work on the part of senior executives, often over a long period of time. That work begins with ef- forts to spot people with great leadership potential early in their careers and to identify what will be needed to stretch and develop them.

Again, there is nothing magic about this process. The methods successful companies use are surprisingly straight- forward. They go out of their way to make young employees and people at lower levels in their organizations visi- ble to senior management. Senior man- agers then judge for themselves who has potential and what the development needs of those people are. Executives also discuss their tentative conclusions among themselves to draw more accu- rate judgments.

To encourage managers to participate in these activities, well-led businesses tend to recognize and reward people wbo successfully develop leaders. This is rarely done as part of a formal compen- sation or bonus formula, simply because it is so difficult to measure such achieve- ments with precisit)n. But it does become a factor in decisions about promotion, especially to the most senior levels, and that seems to make a big difference. When told that future promotions wil! depend to some degree on their ability to nurture leaders, even people who say that leadership cannot be developed somehow find ways to do it

Such strategies help create a corporate culture where people value strong lead- ership and strive to create it. Just as we need more people to provide leadership in the complex organizations that domi- nate our world ttxlay, we also need more people to develop the cultures that will create that leadership, [nstitutionalizing a leadership-centered culture is the ulti- mate act of leadership. ^

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96 HARVARD BUSINESS REVIEW