Friday, November 1, 2013

My friend Boaz Tamir nails it again.  He has written a piece about the Israeli pharmaceutical company Teva, but it applies to so many others.  An excerpt:
Many people make the mistake of thinking that "management" and "leadership" are synonymous. But the practical implications of that mistake can lead to organizational pathology. The story of the rise and fall of Teva is about a Jerusalem pharmaceutical company that became an innovative global multi-national that developed original pharmaceuticals but is now facing a financial crisis that threatens its very existence. It is the story of a company that lost the balance between management and leadership: Teva is the flagship of Israeli industries, but, like most organizations, it suffers from over-managed and under-lead, and this root problem is casting a pall over the future of this giant company.

Managers deal with preservation. Assessment of the quality of management is based on its ability to preserve stability and continuity within the existing order, through organizational management and operational standards that serve as key resources in achieving product quality and profitability. Managers are concerned with creating and using power: designing processes, performing mergers and acquisitions and implementing organizational systems. And they do all this according to business plans and budget management, while defining jobs and manning positions, measuring performance.

Leaders are concerned with change and effectiveness. Leaders disrupt the existing organizational order. Leadership is neither a trait nor a job: it is a way of behaving. And that behavior of leaders for change has two unique qualities: a. Articulation of a vision, goal and purpose; and b. Enlistment of interested others (customers, workers, suppliers, stockholders and the community ) to fulfill that organizational vision.

Management and leadership are both necessary for the existence of an organization, yet they are by nature contradictory: Management deals with increased efficiency and gradual improvement in the current situation, while leadership for change is directed towards disrupting what currently exists. In a stable environment that allows for linear growth, the balance along the preservation-change axis tips towards the judgment of the managers. In a chaotic environment, external change demands flexibility and readiness for internal change; the tendency to preserve what exists becomes a hindrance that prevents adjustment to changing reality.


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