Leadership and management

Management is and has always been difficult to classify. Managers and management gurus often disagree as to whether the activity is art or science or craft or discipline, or whether it is inspirational or mathematical.

This uncertainty is a result of business management being a many-sided task which changes according to inner and outer stimuli. So management rarely arrives at an ultimate truth.

However, this doesn't stop people attempting the impossible. A current example is the enthusiasm for "leadership". But what exactly is leadership, and how can you tell whose is better or best?

You can ask the same questions, of course, in respect of 'management'. Trying to obtain satisfactory answers is a game that has been played many times over the years.

The best guide to management I know is The Drucker Definition. It works because it deals with processes, as opposed to platitudes. According to Drucker, the expert manager knows what to do, and how to do it, but most important of all, he does it.

That last point is the aspect that many managers have difficulty with.

That superior financial performance equates with better management and/or leadership is a weak supposition. But the problem is, if you don't take the financials into your account, what other objective measures of good business management are there?

In an article for the Harvard Business Review on 'The Four Principles of Enduring Success', Christian Stadler, an Innsbruck academic, worked on the basis that comparing the best companies with the second-best gives you more information on corporate rectitude than comparing the best with poor performers.

However, once again, the pundit uses financials to define success. From 1953 to 2006, the Nine Greats gave significantly better returns to shareholders than nine runners-up: $4,077 on a single1953 dollar versus $713. Stadler arrived at his four principles after some careful screening:

• Before you explore, exploit. More money will be made from existing businesses than from all-new ventures.
• Your business portfolio should be diversified. Of course, you have to diversify wisely. Try to keep your suppliers and customers broadly based.
• Don't forget your mistakes. Always remember past failures to ensure they are not repeated.
• When it comes to change, be conservative. Great companies very rarely undertake radical changes. But they always take extreme care in their planning and implementation.

The most surprising aspect of these principles of business management is that they differ greatly from the programme that today's true leaders are urged to follow.

My personal advice would be this: make sure you exploit the old as the basis for breaking truly new ground – not only to diversify, but to build in concentric circles round the core business; to analyse where you succeed just as much as where you fail; and to throw conservatism to the wind, making changes as frequently and as radically as circumstances and opportunities dictate.