Weekly Thoughts



The Difference Between Management and Leadership

When we were in business school, we had the luxury of sitting around all day with our peers debating nuances in business and management theory.  While this was useful for developing our ability to create mental models to evaluate opportunities (and refine the skill of sounding smarter than we are), a problem with this training quickly surfaced when we entered the realm of small business.  Specifically, it was that, as Yogi Berra noted, “in theory, there is no difference between theory and practice. In practice, there is.”

We are well trained in analysis. We can spend days creating a wonderfully complex excel model in support of an investment decision along with a 100-page PowerPoint carefully crafting the financial nuances of a particular opportunity. That is a useful skill.  Unfortunately, in the world of small business, nobody cared.  Shocking, we know. 

It quickly became obvious there was a gap in our training: we struggled to effectively parlay our ideas to the various groups of people responsible for day-to-day implementation.  Some lessons learned along the way: 

  • Hoarding information (particularly bad information) doesn’t protect people; it fuels a rumor mill that is often worse than the reality.
  • Telling people something once doesn’t mean they understand what you saying (they probably are not even listening).
  • Telling one supervisor something doesn’t mean everybody else automatically knows that information.
  • Sending around an excel doesn’t mean anybody will open it.
  • If they do open it, they may not understand any of the content. Overwhelm causes shut down.
  • Sending a long email almost guarantees nobody will read it.
  • Embodying behaviors is good but not sufficient.
  • Cannot assume baseline knowledge of certain concepts (particularly financial); always start with first principles and build from there.
  • Don’t have one person communicating an idea; have multiple voices reiterating ideas in their own way.
  • Share messages through various channels – emails, messages, in-person meetings, etc. Once is not enough!

The list goes on.  We are happy to report that through various trial and error, we have since gotten much better at communicating our ideas, although we still often fall short.  

As a result of our experiences, we were thrilled to have had the opportunity to work with a wonderful professor at the Yale School of Management on a case note about leadership communication in a small business setting. The note, titled On the Nature of CEO Communication Patterns in a Small Business, outlines the importance of thoughtful communication patterns and provides a useful framework for successful CEO communications. It is the note we wish we had seven years ago; it would have saved us some strife! As the note concludes: 

“Communication binds a company together and helps propel it forward. It helps a CEO articulate a crisp message to positively influence how various groups think about, feel toward, and perceive the business. It is one of the major building blocks of culture. Done well, communication is an accelerant for the business; done poorly, it creates an information vacuum that false perceptions might fill. Effective communication does not happen by default. Rather, it must be worked at consistently and with intentionality.”

Effective organizational communication is the true artwork of a small business leader, one that we strive to improve upon consistently.  As Winston Churchill noted “the difference between mere management and leadership is communication.  We guess in business school, we learned how to manage; in the real world, we are learning what is required of a leader. 

Have a great week,

Your Chenmark Team

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