LEADERSHIP FROM INSIDE AND OUT We need leaders instead of managers, sure, but what is the difference? A doer and a thinker try to explain.
By WARREN BENNIS WARREN BENNIS is distinguished professor of business administration at the University of Southern California and author of Learning to Lead.

(FORTUNE Magazine) – The great French painter Braque once said that the only thing that really matters about painting can't be explained. The same can be said about ^ leadership, which may be why books by or about leaders are more interesting -- and often more enlightening -- than books about leadership (my own excluded, naturally). Moments of Truth (Ballinger Publishers, $16.95), a chronicle of Jan Carlzon's career at Scandinavian Airlines System, describes how he turned around two subsidiaries and then SAS itself by finding out what customers wanted and giving it to them. The Leadership Factor (Free Press, $19.95), by John P. Kotter, a professor at the Harvard business school, discusses the need for effective leadership and how to encourage it. Taken together, the books make a nice match: Carlzon embodies what Kotter describes. As in his previous books, Kotter puts leadership under a microscope to see as much as possible about the subject from an outsider's point of view. Carlzon puts himself in the corner office and describes what the heat feels like and how he added considerable light to it. Both writers look back on the years from the 1950s through the early 1970s as a period of stability and relative ease compared with the volatile years that followed. Growth, deregulation, maturation of markets, globalization, international competition, and increasingly sophisticated technologies have, according to both writers, created a climate of chronic uncertainty in the executive suite. Yet it was during the fat years that leadership declined. America's vast industrial empire had been built by leaders -- men of vision, conviction, determination, and luck. Manifestly, they were in the right place at the right time. Ultimately, perhaps even inevitably, they were replaced by managers. The difference between managers and leaders is fundamental. The manager administers, the leader innovates. The manager maintains, the leader develops. The manager relies on systems, the leader relies on people. The manager counts on control, the leader counts on trust. The manager does things right, the leader does the right thing. In the 1950s, Kotter says, leaders were actually seen as counterproductive. They tended to disrupt the routine. Ironically, if the routine had been disrupted, American business might not be in the fix it is in today. Managers' faith in business as usual led in many cases to their failure to meet, match, and beat competition from abroad. Further, with managers in control, corporate structures tended to get bigger, more complex, and more rigid, rather than more efficient and more responsive. America's managers were capable of operating the country's businesses but had no gifts for changing, much less improving, them. Today American business needs leaders to rescue it from a kind of bureaucratic swamp. But a generation of manager mania has led to a critical leadership shortage. The new leader Kotter is looking for, however, is not quite the kind of one- man band who built many American businesses. Companies have grown too big and complex for even a corporate baron of old to handle. The new leader should have the same kind of vision as before, but in addition he needs the ability to build a network of people and resources to implement the strategy. According to Kotter, not everyone has leadership potential. Leaders are born, and then made. As ever, that's easier said than done. Developing leaders is harder than developing managers, Kotter says, and developing managers who can lead is even harder. HE BELIEVES that leadership potential is based on inborn traits, such as a high energy level, that are then built on in early childhood, in college, and through experiences on the job. A lot of people have the potential, but business's efforts to develop them have been mostly insufficient. In Kotter's own survey of corporate executives, the majority said their companies are inadequate in attracting, keeping, and motivating talented leaders. To illustrate his thesis, Kotter cites a firm he calls West Products, which doesn't make any effort to develop leaders or create a positive corporate culture because it is in the hands of an ''unresponsive bureaucracy'' that actually works to sabotage any manifestations of leadership. As Kotter tells the story, a young MBA rose rapidly through West's ranks and was suddenly elevated from manager of advertising and promotion with a staff of 12 to vice president of stores, supervising 600 people. He immediately faced several crises, which he managed to resolve to everyone's satisfaction. But when he tried to design a means of avoiding further such problems, he was criticized by his superiors and then demoted. Two years after he was made a vice president, he left West. To anyone who knows anything about the current corporate scene, none of this will come as a surprise. Nor will Kotter's conclusion: The key to corporate success is a flexible, responsive corporate structure run by a CEO who is, above all, an effective leader. It is likely that Kotter would give Carlzon and his company high marks on . all counts. In fact, Carlzon seems to have made all of Kotter's theories manifest. At 32 he became president of an SAS subsidiary that offered tours, he moved on at 36 to the presidency of the company's domestic airline, and two years later he took over SAS itself. The domestic European airline business is a cozy cartel, but its members can lose big money on international routes. When Carlzon took over in 1981, SAS had sunk into the red, but he turned it around in a year. Embodying all the attributes and skills Kotter cites as requisites, Carlzon is, first of all, a listener, a CEO who turns other people's thoughts into highly profitable action. Instead of relying on marketing surveys and studies, he put his marketing people behind ticket counters, face to face with the buyers. SAS's new planes were designed to suit SAS passengers rather than reflect the latest technology. Terminals and schedules were tailored to customers' needs. One of Carlzon's mottos is ''Run through walls.'' At SAS people at all levels regularly run through walls, secure in the knowledge that a wrong decision will not cost them their jobs and that right decisions will win them praise, even rewards. One day an important Swedish executive called to say he would be a few minutes late for his SAS flight, obviously expecting it to be held for him. Since punctuality has been a big factor in SAS's recent success, the passenger agent let the plane depart on time and booked the executive on a KLM flight leaving a half hour later. Carlzon closes his narrative with the old story of the two stonecutters. When asked what they were doing, the first says, ''I'm cutting this damned stone into a block,'' while the second says, ''I'm on this team that's building a cathedral.'' Unfortunately, far more blocks than cathedrals are being built in America today, far more examples of ''West Products'' than SAS, perhaps because too many U.S. companies have forgotten that profit resides wholly in satisfied customers. I have long argued that organizations can and must encourage their executives to take chances, to see problems as opportunities, and to attempt big victories rather than settle for small wins. I have also urged leaders to listen -- to everyone. Happily, Jan Carlzon's practices prove the validity of my preaching. There is nothing truly new or different in Kotter's book, but it is a well- crafted and serious study of the crucial role business itself plays in the making of leaders -- and in too many cases its failure to play a role. These two books confirm the urgent need not merely for leadership in America, but for a new kind of leadership -- in which the generals join the dogfaces in the trenches and finally understand what's going on.