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What is the difference between management and leadership? It is a question that has been asked more than once and also answered in numerous ways. More than ever, digital transformation requires a clear answer to this in order to prepare the next generation of leaders.

Key to the problem is understanding the difference between management and leadership, says John Kotter, Konosuke Matsushita professor of leadership at Harvard University. He fears that too often, employers use the terms synonymously.

“Management is a set of processes that keep an organization functioning. They make it work today – they make it hit this quarter’s numbers. The processes are about planning, budgeting, staffing, clarifying jobs, measuring performance, and problem-solving when results did not go to plan.”

Finding the right managers is an important task for leadership because management helps us to do well what we already know, notably in the context of large, complex organizations – integral things like planning, staffing, resource allocation, budgeting, measurement, optimization. Without management we can expect chaos.

Still, leadership is very different. Kotter writes, “It is about aligning people to the vision, that means buy-in and communication, motivation and inspiration.”

Leadership doesn’t have to come from visionary CEOs like Steve Jobs or Jeff Bezos. It can come from anyone within your credit union who is passionate and knowledgeable enough to want to make a difference and who can inspire others to follow a vision towards creating something new. Leadership will always be associated with change, exploring new opportunities that reveal the future, a central force in the digital transformation journey. Lack of leadership will lead to failure.

Kotter explains:

“Such best practices are like ornamentssome delightful, to be sureon a holiday tree. But no matter how pretty the decorations, it’s still a holiday tree. After a while, if you keep adding lights and streamers and amazing stars on top, the tree will start to look less, not more, appealing. If you still continue to decorate, at some point the tree will fall over.”

 Credit unions need both management and leadership to survive and prosper. Management ensures structure, stability and reliability. Leadership is at the core of change management, exploring new opportunities, heading into new directions. As credit unions mature, the tendency is to focus more on management, stifling leadership. In the current environment of exponential change, this is a fundamental threat.

“Leadership is unlocking people’s potential to become better.” – Bill Bradley.

How do you address the leadership challenge? Find out at THINK 17. Register now.