Leaders influence, inspire and motivate organisations and teams to a place or situation that may have previously appeared impossible to those team members involved. Leaders are futuristic in their perspective and that is why they stand out from managers. Whilst management was invented to control and optimise production lines and other process oriented ways of working during the industrial revolution, leadership has been around for a good deal longer. Management is about process and metrics, using targets and means of measurement as its tools. Leadership is much more intrinsic in its properties; more about vision and emotion it is much more the art of inspiration rather than the science of measurement. Leadership needs flexibility to match the human instincts it inspires, it needs vision to create and make real the desired end state, it needs trust to create the cohesion and judgement to mange and mitigate the risks and prioritise the available resources.

Strategy is about all this, it consists of four key tenets Vision, Risk Mitigation, Talent Management and the prioritisation of resources. The tenets are interdependent and require an overall strategy to hold them together and keep them synchronised. Strategy is not about two years it’s about 5- 10 years. Strategy is about inspiration and vision in a changing environment, it affords an opportunity to select a course and change a course, dependent upon the situational requirement to map out a route that matches the circumstances and yet still delivers the required end state. Strategy is synonymous with great leadership and it informs and inspires those managers and those teams that work for great leaders. Leaders need to understand and use strategy.

Can leadership prevail in a profit first organisation? Understanding the fundamental differences between leadership and management goes some way to explaining the nature of what I call the Leadership Profit Conundrum.

Though relatively simple the following succinct definitions and broad principles assist in illustrating the conundrum. Firstly, leadership is fundamentally about inspiration, motivation and direction and manifest more in terms of influence and guidance. Secondly, management is fundamentally about control, co-ordination and organisation and manifest more in terms of functional regulation. I believe it is unwise to interchange the meaning and use of the words leadership and management.

In business, leadership is inextricable from organisational performance; by which I mean increasing the bottom line and looking after the shareholders interests first. This is well enough for those at the most senior levels in a business who benefit from performance related bonuses. However, company profit generally does not motivate and influence staff engagement and performance throughout an organisation. In fact, growth linked to actualisation of profit and proportion of profit distributed to workers wages is disproportionate see http://www.bbc.co.uk/news/business-17033039 In essence, profit growth has become detached from wages with shareholder dividends and the highest echelons’ bonuses increasing whilst wages have stagnated and regressed in real terms. Those who are producing growth and ergo profit are receiving a decreasing share. This cannot be very motivating for the majority of individuals who are tasked with improving performance.

By definition, management restricts performance by setting limits, controls and regulation; furthermore, you cannot manage the way to achieving exceptional performance above and beyond expectation. On the other hand, good leaders influence and motivate others to perform successfully and achieve exceptional performance. Three questions come to mind here; is business leadership as we have come to know it really just business management? What is the place of customer service in businesses placing priority on profit return to shareholders? Which approach, leadership or management, is most likely to deal best with the challenges of an ever changing and demanding business environment?

The Leadership Profit Conundrum is management will continue prevail whilst profit is ‘king’ even though the enduring economic climate requires good leadership to prevail in order to succeed. Try this exercise to illustrate my point. Draw three columns on a sheet of paper and in the middle column write a list of words and phrases describing the current economic environment. In the left hand column write a list of words and phrases from definitions of management and in the right hand column do the same for leadership. In order to succeed and thrive in the environment of your middle column you can choose only to go left or right – which path would you choose and why?

The Harvard Business Review (HBR) published an interesting article in 2009 entitled ‘Leadership in a (Permanent) Crisis’ which, in my opinion, remains a worthwhile read and is particularly interesting on two counts.

Firstly, it was published over a year after the time generally acknowledged as the start of our prevailing economic situation. I use the word prevailing rather than current because as we draw to the end of 2011 the current forecasts for 2012 offer little optimism or hope of change for the better. The HBR article refers to ‘the current crisis’ in 2009 and forecasts economic crisis as the future norm existing beyond the recovery from recession. For me, as we enter the fifth consecutive year of ‘current crisis’, this poses the question ‘double dip’ or new economic environment?

Secondly, specialising in leadership, strategy and cohesion; the prevailing economic environment provides opportunities which simply do not exist in a benign situation. As much as regularity, dependability and certainty instil confidence they are the arena of the manager; whereas, irregularity, challenge and uncertainty provide opportunities not otherwise available to a leader. No amount of tweaking of financial mechanisms, directives or policy changes are likely to impact sufficiently on global competition, political instability, energy concerns and climate issues to remove risk and uncertainty.

So what should we do? ‘Batten down the hatches’ and rely on the same old measures and techniques that got us where we are today whilst hoping someone will ‘fix’ something somewhere to make all things good again? Or realise leadership and organisational adaptability are required to overcome the relentless challenges of our ‘new economic environment’? The problem is this, as difficult as the former may be it is undoubtedly a much easier option than the behavioural and organisational change required by the latter. Either way, the outcome is not guaranteed success though one course of action is more likely to succeed than the other.

The message in the HBR article referred to does not appear to have been popular at the time and I doubt it will be today. Perhaps because there is no ‘spoonful of sugar’ offered with the medicinal advice therein. This said, it remains worth reading all the same on http://hbr.org/2009/07/leadership-in-a-permanent-crisis/ar/1

Well we are in the doldrums economically; however we are not going to remain there as the human requirement to drive forward to seek better times begins to take effect. Quite simply when you are the bottom of a well you have two choices drown or start climbing and I believe that we are now beginning our ascent. So as we emerge into a brave new world that will be very different from all that has gone before how are we preparing for it?

Most businesses are anchored in the world of current balance sheets, reducing overheads and expenses, laying off staff and acquiring investment. All of which can have a severe negative impact on a business and its ethos,   few have had the sense to take stock of their position strategically and seize the moment. A former Prime minister who lived through harder times once said:

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty”. – Winston Churchill

So how do we seize the current moment for sure the economic recovery will be slow and for sure the competition will be tough and getting tougher and better. So how do you stand out as an organisation that gives added value?

People buy from people, people do business with people so the answer is there: Develop your people in preparation for the new world, develop your people to take your organisation forward, develop your people to show that you care and are prepared to invest in their futures as well as your own. Customers not bosses are the ones who ultimately pay wages unless you are fortunate enough to have found a generous benefactor.

I am constantly amazed at the lack of preparedness of UK companies to train their staff to gain competitive advantage. UK companies normally train to conform to legislation. A bout 80% of training is paid for by government subsidies and the popular belief is that government funds training. Unfortunately most of this training is below NVQ level 3.  Companies don’t train when they are busy- because there isn’t the time and don’t train when they are slack – because there isn’t the money. Yet if an organisation wants to recover or better its market position in the face of improving competition now is the time to train. Now is the time to give staff the tool set and the culture to provide an organisation with the competitive advantage. Particularly in a future world that is quickly looking very different from the one that took us to the current recession. We have to do something positive to seize the opportunity.

As that same Prime Minister said:

“For myself I am an optimist- it does not seem to be much use being anything else” Winston Churchill