Management is about coping with complexity.

Leadership is about coping with change

Management practices and procedures are largely a response to one of the most significant developments of the twentieth century: the emergence of large organisations. Without good management, complex enterprises tend to become chaotic in ways that threaten their very existence. Good management brings a degree of order and consistency to key dimensions like quality and profitability of products.

Leadership and Management are two different functions and both involve deciding what needs to be done, creating networks of people and relationships that accomplish an agenda and then trying 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 - setting targets or goals for the future (typically for the next month or year), establishing detailed steps for achieving those targets, and then allocating resources to accomplish those plans. By contrast, leading an organisation to constructive change begins by setting a direction - developing a vision of the future (often the distant future) along with the strategies for producing the changes needed to achieve that vision.

Management develops the capacity to achieve its plan by organising and staffing - creating an organisation structure and set of jobs for accomplishing plan requirements, staffing the jobs with qualified individuals, communicating the plan to those people, delegating responsibility for carrying out the plan, and devising systems to monitor implementation.  The equivalent leadership activity, however, is aligning people. This means communicating the new direction to those who can create coalitions that understand the vision and are committed to its achievement.

Finally, management ensures plan accomplishment by controlling and problem solving - monitoring results versus the plan in some detail, both formally and informally, by means of reports, meetings, and other tools; identifying deviations; and then planning and organising to solve the problems. But for leadership, achieving a vision requires motivating and inspiring - keeping people moving in the right direction, despite major obstacles to change, by appealing to basic but often untapped human needs, values and emotions.

This definition clearly delineates the activities of leadership and management. While the exact boundary might be argued, and other paradigms offered, Kotter’s framework is simple and provides us with a definition that can be easily applied to the Social Economy.

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