IT IS A common mistake in the business world to use the concepts of management and leadership interchangeably. However, although the roles may appear the same, they could not be further apart when it comes to their exact functions.78 Understanding the difference between these two concepts and what we use them for is crucial if we want to find out where the most successful applications of algorithms lie in our work context.
Indeed, management and leadership are included in the hierarchical structure of any company, yet their responsibilities and mindset greatly differ. As a result, they influence how employees think, act and feel in different ways. As algorithms are increasingly integrated into our work setting, they will also become part of organizational hierarchies. If this happens, how will management versus leadership be affected?
The art of running an organization
How are organizations being run today? It won’t have escaped anyone’s attention that most organizations have created a culture that is quite bureaucratic in nature. Boxes need to be ticked, comprehensive matrix systems are used, and everyone is being managed to ensure procedures are followed and the stability of the system is maintained. The paperwork that comes along with it has only increased over the years.79 Of course, no one wants to be on a ship where the captain has no control over the vessel, so some commonly agreed procedures and systems are needed. In a similar way, those at the top of the organization want to ensure the company is run in efficient and non-chaotic ways.
But I think many will also agree that with increased bureaucracy, the system seems to be more in charge than the human when it comes to running an organization. In a way, this may not be such a big surprise. Wasn’t it Max Weber who, more than a century ago, said that as “bureaucracy develops the more perfectly, the more it is ‘dehumanized.’” This observation instills a familiar feeling in many of us: that the art of management is very much present in our organizations.
One could say that management today is – more than ever – the foundation upon which companies are run. In fact, large organizations today bury the average first-level employee under eight or more layers of management. Business guru Gary Hamel, visiting professor at London Business School, has even noted that since 1983, the number of managers and administrators in US companies has more than doubled. This increase of numbers cannot be found in any other job category.
Hooray for the administrator
Based on these numbers, it is safe to say that management really matters. So, how then did we arrive in a situation where management has been cultivated into an art form? Well, to answer that we need to go back to the Industrial Revolution – remember, the period where machines replaced our body. Around that time, the size of our organizations increased rapidly and the infrastructure became complex. The inherent risk of such rapid growth is, of course, that chaos will enter the organization. So, how to deal with such growth?
During the Industrial Revolution, very little was known about what was needed to ensure that organizations could grow in a structured and co-ordinated manner. Realizing this gap in our knowledge, the field of modern management – as inspired by people like Chester Barnard – was born. The general idea was that managing an organization required an administrative approach. Specifically, the behavior of individual employees needed to be managed by an administrative system. As such, we entered the age where running an organization became an administrative task where the central focus was on controlling and co-ordinating the behaviors of its human employees.
This administrative focus set the stage for the scholar Frederick Taylor, who in 1911 published his book on The Principles of Scientific Management. In this work, Taylor emphasized that the priority should be to use systems based on control mechanisms rather than relying on man to make organizations function more effectively. Taylor made these claims based on his productivity experiments, which showed that unobserved workers were inefficient. Hence, ever since then, managing organizations has held the underlying assumption that whenever humans are involved, constant performance monitoring is needed.80
The problem with too many managers
The introduction of management as an area of expertise clearly holds important lessons. First, at a little over a century old, management is still a very young field of inquiry. Second, the manager’s role is, in essence, still being classified as an administrative job. As a manager, you keep an eye on the company and keep everything running as smoothly and as efficiently as possible. Borrowed from the French word ménage, meaning the stable running of a household, management is meant to ensure that everything in the company stays quiet and peaceful, with few disruptions and no unwanted changes. Building on the meaning of the word, management became connected to the idea that it helps organizations to work efficiently, so that its employees can deliver what is being required (KPI), forecasted and assessed.
Management is therefore crucial in bringing order and consistency to the workplace.81,82 It does so by planning and budgeting, producing standards that are easy to monitor and adopting a narrow purpose that is not too difficult to measure and easy to maintain. As a result, resources should be allocated in planned ways to increase the efficient working of each department and allow us to make forecasts that are more or less accurate and thus very easily manageable.83,84
Order and stability are obviously not bad words. There is no problem with having management co-ordinate exchanges and work within and between departments. The problem that seems to have occurred, however, is that management has taken its job a little too seriously. In fact, as the number of bureaucrats indicate, the focus on administration within companies seems to have taken over completely. It seems to have even reached the point that managing the maintenance of peace and stability is the only focus left, simply because the corresponding and ever-increasing bureaucracy has left no room to do anything else!
Today, the major complaint is that people have too much paperwork to do and too many boxes to tick. For those who fear change, this may be good news because the system ensures that there is very little risk that work culture will become disrupted and turn into chaos. For those who are averse to maintaining the status quo, and want to encourage change for the sake of growth, this completely overwhelming administrative approach is nothing short of a nightmare.
Why your mindset matters
Most of you will know that it is not only individuals who see this problem, organizations themselves have also reached this conclusion. Companies across the globe complain that they have too many managers and not enough leaders.
Many companies are saying that while administration costs continue to rise, they can only see a work force that is becoming paralyzed (by the paperwork) and, as a result, no real innovation happens anymore. The administrative system, with its high number of managers, may create stability, but its abundance surely does not create the added value companies are looking for. It is one of the reasons why administration has become a dirty word in the business community.
Every year, when – as a business school professor – I confront my (E)MBA students with the fact that they are basically administrators, responses are quite emotional. They range from “no way” to “how dare you say that … we are leaders.” It always takes a moment for them to realize that MBA stands for master of business administration.
After this realization has kicked in, I explain briefly why administration is being used in reference to their education and then quickly move on to make it clear that leadership is not simply a management position. It works every time to help set the stage and motivate aspiring businesspeople to explore their inner selves and explore ambitions beyond those that their formal (management) positions require of them. And, every time, my students realize that it is in that explorative journey where their leadership experience begins.
This anecdote reveals that too many people in business assume that a formal position with the title manager already implies leadership. We have become so accustomed to bureaucracy that many of us have convinced ourselves that administrative work as a manager already constitutes a form of leadership. Unfortunately, this is not the case.
Before diving deeper into why this is not the case, I do want to emphasize that management is not a bad thing. First of all, we cannot all be leaders, so being a manager is not something to be ashamed of. Management is needed to help provide an organization with a stable foundation. As a matter of fact, if an organization does not have this foundation to work with, we would not then see the emergence of those talented individuals that eventually take up leadership roles and promote innovation within the company. In other words, company goals can only be attained if we first lay a stable foundation.
Achieving more means less management
Once this foundation is in place, however, companies do need to create a culture in which employees feel inspired to elevate themselves beyond their formal job requirements and think outside of the box – this is the only way to bring the company closer to its future goals. And, it is in this latter part that the problems usually occur.
Indeed, a major problem today is that most people cannot move beyond the mindset of being a manager – they seem unable to elevate themselves. Rather, the administrative approach that most companies adopt seems to motivate employees simply to make management more perfect. As such, most of us are good at overmanaging. As managers we have become too accustomed to managing the work schedules of others full time, which means that, at the end of the day, everyone monitors others to stick to what we know and do.
If what I am saying here is the general attitude in today’s business world, then we have a real problem. We have a problem because with an over-management mindset nothing will change and although change is not required all the time, when the time does arise we need to know that our company is ready to deliver. Such a reality also requires that we develop enough leaders to make such future decisions. Interestingly, the famous management scholar, Kotter, mentioned that managers are working in the here and now, whereas leaders are coping with the future and the possible changes they see that need to happen.85
Kotter’s analysis is of great value to understanding why some companies are better prepared than others for the future. In fact, he is saying that when a company has only managers, a culture develops where pro-active thinking is not present because the focus remains on what needs to be achieved today (not tomorrow). Such an organizational culture breeds less creativity and innovation and is thus less likely to survive. As Kotterman noted, “when compared to a leader, the workplace manager is often generalized as an ‘unimaginable clod.’”86 I refer to companies with such a mindset as those where a management-only culture is at work. What are the consequences of such a work culture?
The danger of status-quo thinking
A management-only culture means that employees think and act in certain ways. They possess a very specific type of mindset that turns them into the perfect administrator.
What kind of mindset?
Because the narrowly defined purpose of management is to maintain order and stability, employees will primarily have an introspective attitude. They develop the habit of scrutinizing whether the administrative system works within the company and are therefore oversensitive to employees breaking rules. Maintaining the system is key! Such a mindset means that in their view the problems that need to be dealt with are urgent matters and, as a result, they invest all their energy in fighting fires. This ensures that nothing changes and thus prevents growth.
This is the problem with status-quo thinking. Is this such abnormal behavior? Not really. We know that people have a natural tendency to avoid uncertainty and stick to what is known. When we encounter a crisis, our first instinct is to try to return the situation to how it was before. We have a strong desire to believe in the saying that we have always done it this way.
Unfortunately, business today operates in a complex and volatile world, and we therefore need to adopt a more agile perspective to be able to deal with future changes. It is clear that a culture of status-quo thinking will fail in today’s business context. Moreover, status-quo cultures are often overly complex and slow down decision procedures; they promote procrastination and poor communication across different levels within the company, which then become ambiguous and, hence, inefficient.
A status-quo focus also goes hand in hand with a ticking the box mentality. In order to maintain stability and prevent chaos, we implement procedures to achieve clearly-defined targets. The execution of those targets then become the primary focus. Put simply, the targets become the entire job description. If the targets are achieved, we pride ourselves on being an efficient organization. And, we are, from an inward point of view. Within the organization, people do what is being instructed and so everything is at peace. But, of course, does the outside word agree with this assessment? Indeed, the big question is, while a management-only culture increases internal efficiency, is it also successful in a volatile and complex business environment?
Targets make you blind to what really matters
If a company resorts to a technique where people simply have to comply with the wishes and demands of their manager, short-term thinking will prevail. Succeeding in the targets a manager sets out might then be executed without thinking too much about what these targets mean, how they can help the organization, or even whether the employee should try coming up with new ways of approaching the same task. What matters is simply achieving one’s KPI, as soon as possible, without thinking on a long-term basis.
Can we expect other values, such as co-operation, building trust and sustainable ways of working, to be promoted if such a mindset is present? In my view, those values are less likely to surface and influence the behavior of employees. But, even if organizations decide that an emphasis is needed on those other values (beyond one’s KPI), the pervasive presence of a management-only culture will quickly undermine any benefits that could come along with such an emphasis. Why?
What is typical in a management-only culture is the habit of transforming any new initiative into a new target. For example, I know of a company where the idea was fully embraced that storytelling promotes thinking and talking about the organization’s values, and as such leads to greater commitment and engagement. However, what was initially meant as a tool to bring people together and make them think beyond their KPI became yet another assessment tool. How did this happen? Well, the manager demanded that each employee had to tell a story every month. If you did not prepare a story you were evaluated as disengaged. It only took a few months for this manager to transform the so-called open work environment into one that many felt was like working in a police state!
What is clear is that an excessive focus on management often reveals a culture in which change is experienced as a threat and therefore simply not rewarded. What is rewarded the most in these cultures is the achievements of targets that ironically contribute to the status quo. As I mentioned earlier, in such cultures one could even say that employees will be fearful of coming up with any new ways of working. Thoughts of changing anything are futile and if they turn out to be too disruptive, they may even be penalized. If such a philosophy becomes shared, thus creating a collective mindset, any employee – newcomer or old-timer – will quickly develop the habit of blindly following. This doesn’t really sound like the perfect work climate to develop the leaders of the future, does it?
Any leaders out there?
Of course, we need employees to follow those in charge, because in an ideal situation, organizations undergo changes due to developments in the external world and, as such, actions have to be co-ordinated. But, if the culture does not promote creative thinking and co-ordination is mainly perceived as a way to keep things as they are, then followership will become mindless and enforced rather than empowered. People will follow, but simply because they have to (remember their focus on the targets) and they will not show any real engagement or creative thought that leaders need so dearly when engaging in any change project.
If you ask any manager whether they would like to lead teams of employees who think out of the box, bring creative ideas to the table, and pursue those ideas with a kind of entrepreneurial spirit that helps them achieve their goals, almost all of them will respond with a strong “yes”. Sadly though, over-management in reality breeds a workforce with the opposite attitude. It breeds employees who do not think independently because the box is doing the thinking for them. The box says what is important and what they need to do. Management is only out there to follow up and reward the achievement of those given targets.
As a result, management-only cultures foster a climate where people have no judgments and because they have no judgments, they will not take responsibility for their actions. Even worse, they will not experience any ownership of their job. And, it is eventually this lack of ownership that creates employees who are not motivated to think pro-actively and avoid bringing new initiatives to the table, resulting in a complex organization where inertia is king.
Yes, management is needed, but more is required to ensure that the fostering of stability within an organization can be used as a strength, rather than a weakness. Building the foundation should be the first step and, as such, can be used as a strength that allows for room to be agile and creative with the ultimate ambition to grow as a company. As a second step, we would then need leadership to step in and help create long-term value. In fact, in an ever more rapidly changing world, we need more leadership and should not remain committed to over-management.
If we remain too committed to the management-only mindset, the imposed inertia among employees will lead to managers that increasingly fail to bring projects to a successful end. The reason for this is that, although we have created stable conditions to embark on a project, the reality is that throughout any project managers are confronted with disruptions and unanticipated changes and challenges. With a workforce that is not taught, even discouraged, to take the initiative and think differently, projects are likely to fail.
Leadership is not management
At this point, you must feel that the difference between leadership and management has become so clear that it is shouting in your face. Management fuels stability, whereas leaders take the company further and focus on delivering change. Leaders are the ones that communicate a vision. For many of you, vision is a buzz word that is used often, but which remains very ambiguous. How do you develop a vision? Well, a vision shows what can be achieved and what the desired end-state of the change process may look like.
Leadership starts with a vision!
So, leaders are therefore – by definition – not solely focused on the daily management of procedures, but more on enabling employees to do the future work. How do they achieve this? Leaders are expected to inspire others to join in with the change that is being proposed in the vision. Leaders need to empower their people and do so by providing a compelling message that points out the direction the company should take. A leader also explains why this vision, and the resulting direction taken, is the best one to take (given the circumstances being faced). In this sense, leaders add purpose to the vision they communicate. So, in a sense, leadership starts when management finishes the job of providing a stable work environment. Leaders inspire a ready-made workforce and institute a mindset of forward thinking.
Of course, for leadership to succeed, we must remove the mindset that management-only cultures install. Leaders can only motivate people to step forward and contribute to the purpose-driven journey when they are not fearful of thinking outside of the box. Leadership can only succeed if employees are not afraid to express their own judgment and ideas. It is only then that creativity blossoms and the future can become a point of attention.
When focused on a future vision, the purpose of the company will be much more on people’s minds. To reveal this kind of thinking, it is important that, contrary to management, leadership is not a coercive process. It should not be bound to achieving immediate value through setting well-defined targets. Rather, leaders should portray change and disruption as catalysts for thinking outside of the box, as well as encourage transparency and install new ways of working.
If effective leadership is based on making followers think like this, what then can be regarded as the true essence of leadership? All of the creative and forward-looking attitudes are clearly meant to create a better future and thus serve the collective interest of the organization. Effective leadership emerges when leaders are able to influence others to embrace the purpose of the organization; to think and act along with the changes that are required to serve the interests of that same organization. So, leaders with no influence will not achieve change, and will not be able to promote either the short- or long-term collective interest.
Some leadership scholars made it their life’s work to show that influence and persuasion are indeed key elements that make leadership work.87 Put simply, leaders succeed in bringing change because they can influence people to work towards the change. Managers do not use influence in such a way. Rather, they have to resort to more coercive forms of influence. Managerial influence uses protocol to dictate what others need to do and assesses it accordingly. Of course, to be influential based on a vision and its associated values requires a leader that can achieve a sense of connection with others. Contrary to management, social skills are not a luxury but a necessity for leaders.
To establish this connection, leaders need to make sure that others think they can be trusted. Without trust, there is no leadership. When leaders have a clear vision and want others to engage with it, they need to be able to take the perspective of those they wish to persuade and use those insights to convince them that the vision represents their interests as well. If your employees perceive that you care about their interests and wish to align them with the interests of the organization, trust grows. So, trust facilitates influence and ensures that a vision is accepted. Once this happens, the leader can initiate the transformation needed to make change happen.
Of course, the collective goal goes beyond the individual interest of each employee. The trick is to make employees feel they are not only respected and included in the organization, but that their efforts are needed to achieve a goal that transcends the interests of all. That transcending goal is the purpose-driven direction the leader outlines in their vision. The leadership scholar, Bass, put it nicely when he argued that leaders “move followers to go beyond their own self-interests for the good of their group, organization or community, country or society as a whole.”88
Not all hierarchy is algorithmic
Clearly, management and leadership differ in terms of their focus and way of working. In general terms, management requires a focus on the present, and works by evaluating targets and using a formal and rational approach to execution. It is conducted in a consistent way and is therefore easily replicable. Leadership, on the other hand, requires a more pro-active approach, as it focuses on future value to be created. As such, leadership builds connections with others that primarily rely on social connections, which implies a more emotion-based approach to execution, and because of this unique relationship with followers, is therefore less easy to replicate.
When looking at these differences, the attentive reader will probably start to see how and at what level algorithms may be applicable within the organizational hierarchical structure. In the following chapters, I will elaborate on this question by exploring more deeply how the algorithm fits within the management versus leadership framework.
78 Kotter, J.P. (2013). ‘Management is (still) not leadership,’ Harvard Business Review, 9 January. Retrieved from: https://hbr.org/2013/01/management-is-still-not-leadership
79 Hamel, G., & Zanini, M. (2018). ‘Busting bureaucracy.’ Blog retrieved from http://www.garyhamel.com/blog/busting-bureaucracy
80 Saval, N. (2014). ‘Cubed: A secret history of the workplace.’ New York: Doubleday.
81 Kotter, J.P. (1990). ‘Force for change: How leadership differs from management.’ The Free Press.
82 Kotter, J.P. (1995). ‘What leaders really do.’ In J.T. Wren (Ed.), The Leaders Companion (pp. 114-123). The Free Press.
83 Awamleh, R., & Gardner, W. L. (1999). ‘Perceptions of leader charisma and effectiveness: The effects of vision content, delivery, and organizational performance.’ The Leadership Quarterly, 10, 345–373.
84 Kotterman, J. (2006). ‘Leadership versus management: What’s the difference?’ The Journal for Quality and Participation, 29(2), 13-17.
85 Kotter, J.P. (1990). ‘Force for change: How leadership differs from management.’ The Free Press.
86 Kotterman, J. (2006). ‘Leadership versus management: What’s the difference?’ The Journal for Quality and Participation, 29(2), 13-17.
87 Yukl, G. (1998). ‘Leadership in organizations.’ Upper Saddle River, NJ: Prentice Hall.
88 Bass, B.M. (2000). ‘The future of leadership in learning organizations.’ Journal of Leadership & Organizational Studies, 7(3), 18-40.