Over the years I have been amazed by the fact that these terms are used interchangeably in many professional engineering organizations. The cold hard facts are that not all managers are leaders, not all leaders are managers, and management or leadership skills are not magically created in individuals when they become owners. Failure to understand and communicate the differences between these roles is a major source of ownership transition problems.
Grace Hopper, the first woman to achieve the rank of admiral in the U.S. Navy, is reported to have said, "You manage things, but you lead people." People, especially professional people, resist being closely controlled (managed), however, they tend seek out and flourish under strong leadership.
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...leaders provide the visionary drive and strategic direction that energize an organization.
Most firms I see have a reasonably good grasp of management basics - organization charts, business plans, management reports, project control systems, position descriptions, etc., and most senior managers are conversant in the basic concepts of management. However, when the topic is leadership the situation is far different. Everyone has their own definition of leadership, and most fail to draw a clear distinction between leadership and management.
From my perspective, leaders provide the visionary drive and strategic direction that energize an organization. They communicate that vision to others, and motivate and inspire them to work in a unified manner to achieve that vision. Leaders provide the spark that causes one organization to constantly out perform other seemingly comparable organizations.
Failure to recognize the distinction between leaders, managers, and owners can cause serious transition problems. Ownership is first and foremost a financial condition. It does not and should not carry with it any automatic leadership or management prerogatives. Leaders and managers can be owners, but owners are not by definition leaders or managers. The expectation (conscious or unconscious) that new owners assume leadership or management roles and/or skills by virtue of becoming owners is a common problem. True, a new owner may have a keener interest in how the firm is managed, but ownership does not in and of itself make an individual qualified to manage or lead.
As we deal with a constantly changing business environment, our firms must continually undergo real change to keep up, and leadership is the keystone of successful change. Identifying managers that have leadership potential, and helping them develop that potential, may well be the most important thing you can do to assure the continued success of your firm.
Remember your future leaders should be owners, your key managers could be owners, but owners are not necessarily leaders or managers. Understanding and communicating the roles, responsibilities and expectations of leaders, managers and owners is vital to the successful transition of ownership.