What is the difference between leadership and management?

At first glance, it can be difficult to understand the differences between leadership and management. Leadership, at its core, is about setting a vision, defining your startup’s mission and inspiring others to follow in that vision. In a startup, a leader often defines a company’s “why” and long-term directions. Management, on the other hand, is more concerned with execution and day-to-day operations.

Management also often represents stability and consistency within a business. Managers are tasked with creating stability within the company through setting up and maintaining effective systems to support employees and provide success for clients. In contrast, leadership tends to be focused on innovation and change. Startups are often faced with rapidly changing environments and new challenges, where resilient leaders who are ready for a culture of innovation are necessary.

Other differences include a different focus on timelines. Leadership often has to have a more long-term focus, while management focuses on short-term goals. Leaders also tend to be committed to taking calculated risks, understanding that bold decisions help startups find success in new markets. Managers, on the other hand, tend to be more focused on risk mitigation, providing stability for the company.

So, the next question you might have is: how can you effectively balance leadership and management when the two principles have so many differences?

How do you balance leadership and management?

In startups, successfully integrating leadership and management is crucial. While it’s easy to focus on the differences between the two, it’s also important to consider how leadership and management complement each other. It’s not possible for startups to achieve their goals and navigate challenges in times of change without leadership and management working in tandem together.

During the inception stage of your startup, leadership and management can ensure their long-term goals and basic operations work together. For example, a founder may hope to revolutionise the fashion industry with sustainable materials. Management can ensure this vision is met by securing initial funding and setting up supplier contacts so these materials can be secured.

As your company grows throughout the early growth stages, it’s important for the founders to continue to encourage experimentation and creativity. A tech startup founder might inspire their team to create a never-before-seen feature. Meanwhile, managers can be hired to focus on scaling up the business by handling functions such as product development and marketing.

As your startup then heads into the era of rapid expansion, those in leadership roles should expand their visionary role. They should articulate the company’s culture, values and long-term goals. This might include making a focus on flexible working for employees or creating a goal for the types of clients your startup should work with. Meanwhile, it’s worth considering investing in middle-level management to ensure growing and new departments function effectively. Managers can ensure team processes are refined in line with leadership’s visions for the company’s culture and values.

In the scaling phase of your company, leadership roles should become further distributed throughout the organisation. Founders may encourage department heads or division leaders to set their goals and suggest their visions for the company’s growth. Higher leadership levels should also continue a focus on innovation and how to stay ahead of market trends. At this stage, the company should have a robust management structure in place, with a team of senior managers who are responsible for different divisions. Senior management can help to feedback on performance to drive continuous improvement.

In the mature stages of your company, typically once it's older than five years old, founders may decide to take on more strategic roles, such as exploring working with clients in new sectors and industries or finding disruptive technologies to develop. They should ensure the vision for the company develops for evolving and changing market dynamics. A well-established management team can support this with an emphasis on optimising processes, handling cost control and hiring the best talent.

Of course, the lines between leadership and management may be more or less flexible within your company. However, these guidelines should provide a good understanding of how leadership and management can be effectively balanced and support each other.

It’s inevitable that as a startup evolves, the balance between leadership and management may shift. In the early stages, a lot of the workload may fall on leadership with the founders driving the company’s vision. But with growth, management will likely become increasingly important to ensure operation efficiency and company scalability.

Why balancing leadership and management is important

After understanding how to balance leadership and management, you might be questioning why balancing the two is so important. It’s worth considering company case studies which developed leadership and management as startups to become companies worth millions today.

In 2001, Google co-founders Larry Page and Sergey Brin brought in Eric Schmidt to serve as a CEO three years into their rapidly growing scale-up. Eric himself credited successful management to the billions Google, and its parent company Alphabet, are worth today. He commented: “If you want your company to innovate, your job is to manage the chaos.”

Amazon is another good example. Jeff Bezos founded the company in 1994, demonstrating visionary leadership with his aims to be a disrupter in the online shopping industry and make Amazon the most customer-centric company. But Bezos hasn’t been afraid to hire management to help align his goals. The company’s current CEO, Andy Jassy, joined the company in 1997, holding various leadership roles across the company, including both business-to-business and business-to-consumer. The company’s CFO, Brian T. Olsavsky, also oversees the company's overall financial activities, including controllership, tax, treasury, analysis, investor relations, internal audit and financial operations.  This shows how a founder can focus on risk-taking and innovation while developing a strong management system which focuses on efficiency, logistics and customer service.

Of course, startups often face limited resources making it difficult to find and hire dedicated managers early on. This means founders often have to stretch themselves thin, taking on both leadership and management roles. Founders also may lack experience in management before they can hire management, leading to operational setbacks. This is why it’s important to prioritise finding a balance between leadership and management as early as possible.

To conclude, navigating the challenges which startups commonly face requires a balance between leadership and management. Led by a strong understanding of both roles and regular communication between the two facets, startups can use feedback to make adjustments to best align with their goals. Effective leaders recognise the need to delegate decision-making authority and set the visionary lead for the company. Successful startups find a way to integrate leadership and management effectively, finding a way to balance their core vision and values with sustainable growth.