Leadership not management is now the key to driving out more production, outstanding creative work and new ideas. So why are we small businesses having so many problems? Well we’re selling more intellect and less material. The emphasis today is on managing the human imagination not production lines. Our peoples expectations have changed but ours haven’t and our customer’s expectations have changed but perhaps ours have not! Trust, respect and loyalty are missing and we only have ourselves to blame.

There are some key concerns….many small businesses have done just the opposite of what they should have done – order and conformity rather than free thinking and risk taking. Many small businesses could not have frustrated their people any more if they had tried to and as small business owners/managers we are so reluctant to let go. It all leads to limited growth and mediocre performance in many cases.

So, small businesses will need to be able to manage change better in the future. They will have to be less organised and less controlled by a single brain. Founders, managing directors beware! Growth will be limited not by production or developing the latest product but by your ability to recruit and retain the best people in the business.

The widespread trend towards interconnectedness will accelerate continuously leading us towards being more nimble, innovative and continuously self modifying. Small, autonomous, flexible businesses will be the ideal structure in the future and your people will have a share equity in those same businesses.

We’re going to have to share responsibility, demand accountability and drive towards common goals. Our jobs as Directors will be less about control and more about disrupting the status quo.

A little exercise……Sit down with two or three colleagues (preferably motivated ones) and launch informally into a discussion around:

WHO ARE WE?

WHAT DO WE STAND FOR?

HOW DO WE STAND OUT FROM OUR COMPETITORS?

WHAT EXPERIENCE DO WE WANT OUR CUSTOMERS TO HAVE?

Honest answers only please! With those same two or three colleagues map out what a great (the business your’e in) would look like? What should it feel like when customers engage with you? Make a list of what you need to do, then go ask some of your clients the same thing…….

Times are tough, the buzzword of the moment is recession and the strong economic climate looks like it’s taking a battering and for some time to come. Customer confidence is wobbling, cash is tight and we are all feeling more than a pinch. So its easy to take a knee jerk reaction and try to cut costs, yet perhaps thats the easy route and a route to nothing. So what are you going to do?

The best answer is before you do anything…….. ‘think.’ Here I offer some thoughts:

1. It’s a long haul - whilst there may be some quick hits you can implement, make sure you don’t cut costs too much, an anorexic business ain’t going to get you far in the long term. Being overstretched will only work for so long.

2. Understand what creates the true value in your business. Is it the staff? Is it employees? Is is your products? Is it your customers? Whoever provides the value, they are providing the profit and they need supporting it’s as simple as that.

3. Differentiate, differentiate, differentiate. Get to grips with why people buy from you, invest in marketing and sales tactics that communicate that and if you have creative thinkers…..these are the last people you get rid of in these tough times.

4. Lead your team through this period. Don’t make it tougher for your staff. Encourage, engage, motivate and inspire them to become better at what they do and more productive. If they are led with those words in mind they will come up with the solutions and make it easier for you. Keep morale high and don’t start slashing expenses, bonuses without doing it properly. Strong, clear communication is priceless.

5. Concentrate on customers even more. Identify your top 20% of customer performers ie: those contributing to profit, growth and cash and go visit them. The last thing you want to do is lose customers at this time because in the panic you forgot about them. Set targets for increased spend from these customers. If your top 20% of customers spend 10% more this next year, what difference would that make?

6. Do something now. Get on with it and don’t put it off…you don’t want it biting you on the bum in the next few months. Think, understand and prepare for the actions required. Don’t let decisions be forced on you and think long term solutions.

Looking back on these points, perhaps it’s timely reminder that tightening the old belt can sometimes be good for us!

One of my most popular slides in the seminars I deliver is from the Leadership Challenge course we designed a couple of years ago so I thought I would share it with you. A few delegates reminded me the other day how it made a difference to them!

In an interconnected world where boundaries are increasingly cultural not geographic, where we are managing the human imagination not muscle power, where expectations are hugely different from 30 years ago and where change is spirally out of control, it’s important to understand and practice those things that help leaders of people make a contribution, add value and bring that extra dynamism to the organisation that ensures order, yet creativity at the same time.

So what is the difference between managers and leaders, well here is my stab at it:

1. Managers does things right, the leader does the right thing
2. Managers focus on the now, leaders focus on the future
3. The manager seeks control, leaders relish change
4. Managers appeal to reason not emotion, leaders appeal to both
5. A manager will use control, a leader relies on trust because they have created that culture
6. Managers organise and will often do the work, leaders engage people to do the work
7. Managers will often apply incentives (typically financial), leaders inspire
8. A manager will use the official approach, leaders will always appeal to the common approach
9. The managers goal is efficiency, the leaders, effectiveness and added value
10. A manager will often use positional authority, a leader personally influences
11. A manager will ask what contribution their staff are making, a leader will ask him/herself, what contribution am I making first
12. A manager will say they have all the answers, a leader will truly believe that together they have all the answers

I could go on and, okay, I accept that occasionally you have to be both, particularly in a small business. But and its a big but, if you are the head, director, owner, MD, of a small business, you should be behaving as a leader at least 80% of the time with your managers/supervisors, employees behaving like managers.

Behaving like a leader gives you time, time to catch your breath and think about where your heading. What the purpose is, the true purpose of your business and it gives you chance to stay ahead of the strategic curve and manage the rapid change more effectively.