Time to Act
Charlie Goodrich 


Lead people, manage process. You have to do both and be good at both in order to get your organization to where it needs to go.

Today's newsletter explains the difference between leading and managing and provides practical suggestions for increasing your effectiveness in both areas. 
I appreciate your comments. Just click "reply" to send them to me.




Charlie Goodrich 

Founder and Principal

Goodrich & Associates
July 2014 Vol. 3 No. 7
In this issue...
When to Lead, When to Manage, and Why You Must Do Both
Heard on the Street
About Us
Goodrich & Associates
[email protected]
When to Lead, When to Manage, and Why You Must Do Both

When to lead and when to manage? It's an age-old business problem and one that has led many management gurus to suggest that some people are born as leaders while others as managers.

But they are wrong ... good business people do both, simultaneously.

So which is which?

Leadership has to do with getting people and groups of people (organizations) to follow in a clearly defined direction (I wrote about this in the December 2013 newsletter).

Processes, by contrast, are managed. An organization without process will get few things done right, consistently or effectively. Much of Apple's success after Steve Jobs can be attributed to the fact that Apple had many well-honed processes in place to keep doing things right.

Another way of thinking about the distinction is that we lead to change direction but manage to figure out what that direction should be or to keep heading down the same path, consistently. The point is, if you want the right things done right, you need to both lead and manage.

Years ago, I helped overhaul the strategic planning process for Kraft Foods, through several iterations of improvement. We knew the existing process was cumbersome, time consuming and the company wasn't developing the growth initiatives it wanted. We even discovered that the detailed plans submitted only rarely added up to the higher level plans turned in up the line. (For the Country plans in Europe that were submitted in local currencies [way back pre-Euro], only the date on the plan changed!)

So how was leadership and management combined to rectify the problem? It was a two-step effort. The first step focused on managing the process better and the second step focused on leading change in what the process was trying to accomplish.

In Phase One (Management), the process was streamlined, detail was eliminated and linkages to the annual operating plan and share repurchase and dividend policies were put in place. All process management stuff.

Leadership in our group was then required to lead the necessary change in the operating units' staff departments and to establish the linkages between the annual plan and the annual targets that were set.

The result was a big improvement in process - but that alone was not good enough for the CEO.

And so in Phase II (Leadership) - and since a CEO's core job is to lead - he brought in a new head of Strategy and Development (someone who had previously run one of Kraft's largest semiautonomous operations) and had him implement the approach and supporting planning process he used for his business unit and his vision of how Kraft should move forward in how it developed strategies and put plans in place to implement those strategies.

Before the new man arrived, we went through training by outside consultants on how he liked to do business; we quickly understood his vision for how Kraft should go about strategic planning. We then put a process in place to implement that vision and, of course, had to lead those changes through the operating group's support staffs.

Note that in Phase II, leadership (with its vision of where to move the process of strategic planning) was used to radically change the process to manage the company's review and changes in strategies. Here, leadership and managing process are intertwined, even though they are different activities that require different skills.

Does leadership without process make good decisions work? Over the long haul, rarely. In fact, many of my crisis management assignments are a result of just that; strong entrepreneurial leaders who are very effective at moving an organization forward, only to take it over a cliff.

For example, in one of my liquidations, the CEO and part owner was a sales-driven entrepreneur. He led the company to fantastic revenue growth, convincing sophisticated investors to extend loans and others to provide equity along the way. Unfortunately, there was no process to review account bids or the viability of new product designs in what was a fashion-oriented business. With designs that didn't sell to low-priced, big box accounts, the business failed. Strong leader, no process, bad decisions.

A few pointers to keep in mind regarding leadership and managing process:
  1. Even in process-intensive departments, leadership is required to drive change in the process.
  1. Manage the process to get better results. Use leadership to drive change and move an organization forward.
  1. The higher up the organization, the more time is spent on leadership and the time on process spent on developing talent.
  1. Staff can and sometimes must lead. In the Kraft example, staff had to lead the implementation of the changes.
  1. Much has been said about how leaders set direction, vision and so forth. This is true. But these same leaders must manage process to set the best direction.
  1. If poor decisions are being made, the culprit is likely a lack of process. If a business struggles to move forward despite trying to do the right things, a lack of leadership is the likely cause.
So there you have it. Lead people, manage process. You have to do both and be good at both in order to get your organization to where it needs to go.

Heard on the Street
Mohamed A. El-Erian is the famous investor and economist whose career includes stints as Deputy Director of the International Monetary Fund, managing Harvard University's massive endowment and President and Co-Chief Investment Officer of PIMCO, the mega bond house.

And while Mohamed is renowned for his commentary on the global economy and financial markets, as an Egyptian, he also has great insight into the mess in the Middle East. Read Mohamed El-Erian's current thoughts on the subject here.

About Us
Goodrich & Associates is a management consulting firm. We specialize in helping our business clients solve urgent financial problems. Our Founder and Principal, Charlie Goodrich, holds an MBA in Finance from the University of Chicago and a Bachelor's Degree in Economics from the University of Virginia, and has over 30 years experience in this area.

To ensure that you continue to receive emails from us, please add
[email protected] to your address book today.

Goodrich & Associates respects your privacy.
We do not sell, rent, or share your information with anybody.

Copyright © 2014 Goodrich & Associates LLC. All rights reserved.

For more on Goodrich & Associates and the services we offer, click here.

Newsletter developed by Blue Penguin Development