Insightful or Administrative Leader

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Before getting into categories of Leaders, let me briefly talk about the relevant context – the main functions of any business. These are Producing and Selling.

Of course, Finance, Accounts, IT, Human Resources and others are very important functions too. But, Producing and Selling are the “Ebitda-determining” functions ;and therefore, the Core of the business. Proficiency in one or both provides an organization its competitive advantage. The others are service functions, meant to support the business in running smoothly and happily.

Three Key Skills of a Leader

There are three sets of skills that a leader can possess:

Core skills – Producing and/or Selling.
People skills – These involve figuring out the roots to motivating people and the attitude, words and energy to motivate.
Governance skills – Conducting effective reviews, setting approval processes in place, creating and managing effective performance management systems; and general administration.

Based on the skills that they possess, leaders fall into two broad categories:-

Administrative Leaders
Insightful Leaders

Administrative Leaders

Administrative Leaders have had little background in the Ebitda-determining functions. They therefore do not truly understand what it takes to produce high quality output (whether a manufactured product or a service) cost-effectively, or build a strong Brand, Channel and Customer / Influencer base and Sell profitably.

Such leaders generally are, at best, competent. The degree of competence will depend on how good they are at the other two skills – People & Governance – and therefore how they manage to get the best out of those in charge of the Core functions. But they will seldom be great leaders. Members of their team who possess skills and insights that are Core to their business will, over time, turn less to them for meaningful guidance; and such leaders will gradually lose relevance. Good Administrative leaders are safe, never brilliant.

For this reason, they do well in ‘holding’ roles. They mind the store diligently. There are occasions in an organization’s life when such a role needs to be performed; and on these occasions, good administrative leaders are as good as gold.

Insightful Leaders

Insightful leaders have a deep understanding of at least one of the Ebitda-determining functions. They know what it takes to keep the business moving forward – they have Insight. This comes from sustained performance in one or both the Core functions; and from constantly wearing their shoes out. Meaningful experience gives conviction to their strategy. People deeply respect an insightful leader and implement their strategies vigorously. Good ideas thrive, and the best of these repeatedly see the light of day, as the leader creates structures and processes to manage them.

Insightful leaders are rare. New businesses can only be created by such leaders. On the obverse side, “superior knowledge” can cause them to become arrogant, and self-destruct (After such self-destruction, Administrative leaders are most likely to be appointed). Periodic doses of humility may be needed.

And so, my advise to young people

Aim to be Insightful leaders. Administrative Leaders are a relative commodity.
Even if your strength lies in the service functions, ask for stints in the Core functions and immerse yourself in the role.
Remember, mere “exposure” to a Core function will not be enough. You will need to perform.
Alternatively, if you are a service function executive and have the urge to move to the corner office, pick an industry where service is the Core function.
Develop Core function insights, by “wearing your shoes out” in the market or on the shop floor.
Stay humble.