Great leadership needs great information

The difference between leadership and mere management often boils down to just one thing: vision. People follow leaders because they are able to paint a picture of a future that is so desirable that it inspires people to do what they ordinarily wouldn’t.

But to be inspiring, a vision also needs to be believable. Otherwise, it’s just a fantasy and most people know enough to recognise a fantasy when they see one. How often have grand top-down strategies faltered because the people tasked with actually implementing them knew they were chasing a unicorn?

Real vision is grounded in reality. To create such a vision and carry it through you need to know what’s going on — you need good information.

The bigger the organisation of course, the more difficult it is to get that information and to know that what you’re getting is accurate. Implementing organisation-wide ERP systems can help but often the information they yield is hard to understand for anyone who is not a financial professional. Individual managers end up creating their own private systems to make sense of it all invariably on lovingly crafted spreadsheets.

Spreadsheets are a great tool for managing information when there’s only one person to manage it. But when that information needs to be shared across an organisation — like when all those departmental budgets need to be brought together — they can create confusion and disagreement. Which version is the latest one? Which version is the accurate one? Why are your figures different from mine?

To avoid this, you need a central place where all information is stored. But you also need to make that information available in a way that’s intelligible to everyone who needs to use it — or they will quietly make their own plans.

When financial information is easily available and intelligible by non-financial managers they are empowered to manage the activities that create the information. The key is knowing how your actual performance relates to your budget, day by day rather than month-by-month and several weeks in arrears.

When information is accurate, realtime, easy to understand and easy to communicate, the best course of action is usually obvious. If persuasion is needed, it’s easier to persuade with good information. When the time comes to delegate good information helps make goals and expectations clear.

“Goal congruency” is the jargon word for what happens when everyone is pulling in the same direction. It’s characterised by open, clear communication that flows in multiple directions through the organisation, from top to bottom, bottom to top and side to side.

When this communication flows you get good information. Good information leads to good decisions, which increases the trust people have in their leaders, which then leads to better communication which leads to better information and even better decisions. It’s a virtuous circle.

Obviously creating this virtuous circle takes more than just having good tools — you need the right attitude at the top. But you can’t do it without the tools, either. Equipping your organisation with the right information tools is the first step to taking charge of its direction and making the leap from idealistic to visionary leadership.