How Important Is Leadership? More Important Than You May Think!

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importance of leadership

There is a lot to be said about management and leadership, as well as how power is derived in organizations.

First, let’s discuss management and leadership.

Here’s what managers do: Plan and budget, organize and staff, and control and problem solve. Here’s what leaders do: Establish direction and vision, align people, and motivate and inspire. Or to break it down.


  • Plan and budget
  • Set targets, goals and guidelines
  • Establish steps for meeting goals, timetables
  • Allocate resources
  • Organize and staff
  • Establish structure and set jobs
  • Staff jobs with qualified individuals
  • Communicate plan
  • Delegate responsibility
  • Establish monitoring systems
  • Control and problem solve
  • Monitor results against plan
  • Identify deviations from plan
  • Plan and organize to solve problems


  • Establish direction
  • Develop vision
  • Develop strategies to achieve vision
  • Align people
  • Communicate the direction and vision
  • Create coalitions that understand the vision and are committed to achieving it
  • Motivate and Inspire
  • Keep people moving in the right direction despite political and bureaucratic barriers, by appealing to basic human needs, values and emotions

Managing is linked to short-term success. Leadership is linked to long-term success. It is imperative to the long-term success and growth of your business that you provide management AND leadership. Depending on your background, it may be more comfortable for you to provide one or the other, but both are imperative. Without strong leadership characteristics, your employees will never be fully on-board, and you will never maximize the potential of your company, regardless of the industry you are in.

Once you’ve developed and communicated a vision for your organization – that is, what will differentiate your organization in the market — it’s imperative that you become the cheerleader for the vision, and model the behaviors dictated by the vision. For example, if your vision is to grow by providing the best possible customer service, then your employees need to witness you providing the best customer service every opportunity that you can. If they observe you spending a great deal of time managing costs at the expense of customer service, then the contradiction of messages will result in your company not maximizing its potential.

Second, let’s address the origins of power in an organization.

There are two types of power – position power and personal power. Position power is that power by virtue of your position in the organization – you own your company so you call the shots – people understand that. Personal power is earned. It is earned by “digging in” with your staff, understanding your industry, the people in your industry, your customers, and modeling the behaviors that support your vision and direction. It is only through earning personal power that you will gain loyalty, trust and respect from your employees, your industry peers, and most important, your customers. With only position power, your staff will never go “the extra mile” for you or a customer.

You can see how important your role is to the success of your business. Your employees, customers, trusted advisors, suppliers and creditors all look to you for direction and vision. I once looked at a business in which the selling owner said that the only thing he did was come in for a few hours a day and count money, in an effort to convince me that buying his business will lead to an easy, cushy life. That business doesn’t exist, or it won’t for long. Don’t ever underestimate the importance of your role in your organization.

In conclusion…

Many times, a person aspires to be an entrepreneur by virtue of their skills in a particular industry, not wanting to answer to someone else, or to personally reap the financial rewards available in a certain industry. But, don’t underestimate the need for leadership abilities. John Kotter, in his book The Leadership Factor, defines the leadership characteristics needed as:

  • Broad knowledge of the industry you are in, general business functions, and your company’s role.
  • Broad set of working relationships in the industry.
  • Great track record and reputation in a broad set of activities.
  • Keen mind and strong interpersonal skills.
  • Integrity – you value people and groups of people.
  • Strong desire to lead.

As an entrepreneur, it is your management and leadership style and behaviors that set the tone and culture for your organization. It will be obvious if you are in it to become wealthy, or for the sheer satisfaction of growing something good and meaningful. If you choose the latter – the rewards will follow.

Jeff Kraft is an entrepreneur and consultant. He currently is a Principal with Denver-based Human Capital Connection, a consulting firm helping business owners connect their people to business strategy.