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Why a good manager might not make for a good leader

The path to become an effective managing director starts with looking beyond industry trends and balancing risk and reward

True leaders understand their company’s position within the market and recognize the barriers to greater success.
True leaders understand their company’s position within the market and recognize the barriers to greater success. (iStockphoto)

We use the concept of the corner office—actual or virtual—as a privileged location from which you can survey the landscape you’ve left behind and enjoy the fruits of your success. But that’s not quite how it works in real life.

Now that we have achieved seniority—maybe even a seat on the management committee or the board of directors—there’s a shift in balance. Duty and responsibility are as important as ever, but now, we dedicate them to the service of the organization, its clients, and our colleagues, peers and juniors. In short, the emphasis now is on leadership.

What does it mean to be a leader? Well, a collection of all the books on the subject would easily pack the Library of Congress to the rafters, but it’s worth going back to the simplest of definitions.

For all the guru guides, business school lore and management theory, it boils down to this—a leader is followed. From that simple description, many things flow. If nobody follows, you’re not leading.

If people do what they do because you instruct them to, they are obeying, not following. You may be an excellent manager, but you’re not a leader.

And you haven’t come all this way to be a manager. Our history is festooned with fine leaders, from Alexander the Great to Winston Churchill, and it wouldn’t be trite to suggest studying them, but ultimately, you will be better off looking closer to home. The best examples are the ones who, when your long journey to the corner office is over and you look back, you realize you’ve respected, emulated and followed during key periods of your career. These are personal examples who inspired and supported you and without whom, you might not have made it.


Published by HarperCollins India.
Published by HarperCollins India.

The following traits, though not exhaustive, describe several of the most effective leadership tools at our disposal. Some of the leaders we’ve observed may focus on certain traits more than others, but most apply them selectively as circumstances require.

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Trait One: Riding the Wave

Managing directors are agents of change. Their primary responsibility is to understand the big challenges facing their organization, devise a strategy to confront those challenges and make sure the right people and processes are in place to pursue it. They recognize that no company can stay successful without change. Rivals eat up a competitive advantage, and clients develop new preferences and expectations. Waves of change wash through entire industries, sweeping away those who fail to adapt in a process that Austrian American economist Joseph Schumpeter called ‘creative destruction’.

Bold, innovative managing directors may bring the energy and vision to create a wave of change on their own; after all, it has to come from somewhere. Look at some of today’s champions of industry—Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos and Tesla’s Elon Musk are fine examples. However, for all the headlines they garner, such cases are rare.

Most good managing directors succeed because they recognize the wave currently driving change in their industry—which is very different from pursuing change for the sake of change. It’s all too common for incoming managing directors to become seduced by a desire to make a mark. They restructure divisions, promote favourites and sideline others. They set unfeasibly ambitious financial targets, call it ‘stretching’, and consider this a strategy. This is bluster, not leadership, and such individuals succeed through luck rather than design.

True leaders understand their company’s position within the market and recognize the barriers to greater success. They will plot a strategy that overcomes those hurdles and gives the business its best chance of developing and holding a competitive advantage, and in doing so, communicate this vision clearly to their staff. Once a strategic direction has been agreed upon, they will apply the discipline that keeps every part of the company in proper alignment so the strategy can be delivered. It becomes part of their very existence.

Trait Two: Courage to Take Risks

Most successful businesses—and a few unlucky failures—understand how to calculate the risks associated with any course of action and balance them against the rewards on offer. Where the reward isn’t worth the risk, companies usually change course. Where risks are high but the reward is higher, companies will protect themselves against said risks and reach for the opportunity. Some fail, but they simply absorb the loss and move on.

This willingness to balance risk and reward works at a personal level too. Managing directors who transform organizations often choose to risk their professional reputation in service to the company’s overarching strategy. The difference is that, while organizations use systematic methods to protect themselves against measurable risks, a leader often puts their neck on the line to deliver what’s right for the firm without a safety net. While this takes courage, the upside for the firm—and therefore, for the leader—often justifies it. On the flip side, if the potential return is minimal, effective leaders will have the courage to drive their teams to either minimize risk or avoid it altogether.

Excerpted from Upgrade: The Not-So-Subtle Art Of Moving Up In Life And Career by Priyesh Khanna and Alasdair Ross, with permission from HarperCollins India.

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