Leadership is the art of motivating a group of people to act toward achieving a common goal. In a business setting, this can mean directing workers and colleagues with a strategy to meet the company's needs.

Leadership captures the essentials of being able and prepared to inspire others. Effective leadership is based upon ideas—both original and borrowed—that are effectively communicated to others in a way that engages them enough to act as the leader wants them to act.

A leader inspires others to act while simultaneously directing the way that they act. They must be personable enough for others to follow their orders, and they must have the critical thinking skills to know the best way to use the resources at an organization's disposal.

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How Does Leadership Work?

In business, leadership is linked to performance, and any leadership definition has to take that into account. Therefore, while leadership isn't intrinsically linked to profit, those who are viewed as effective leaders in corporate contexts are the ones who increase their company's bottom line.

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Leadership v/s Management

The terms leadership and management tend to be used interchangeably, but they're not the same. Leadership requires traits that extend beyond management duties. Both leaders and managers have to manage the resources at their disposal, but true leadership requires more. For example, managers may or may not be described as inspiring by the people working under them, but a leader must inspire those who follow them.

Another difference between leaders and managers is that leaders emphasize innovation above all else. Whereas a manager seeks to inspire their team to meet goals while following company rules, a leader may be more concerned with setting and achieving lofty goals—even at the expense of existing corporate structures. When a worker has a radical new idea for how to tackle an issue, a leader is likely to encourage that person to pursue the idea.

Managers may be more likely to preserve existing structures because they themselves operate within that structure. They may have bosses above them, so they have less freedom to break rules in the pursuit of lofty goals. Leaders, on the other hand, often operate fairly independently. That allows them to tolerate a greater amount of chaos, so long as they believe it will be worth it in the end.

However, the leader's devotion to innovation can sometimes come at a cost. Chaos and high-pressure work environments can create interpersonal issues. When such issues arise, a manager is more likely to see it as their duty to smooth over problems between employees. Leaders can sometimes be so singularly focused on achieving lofty goals that they let interpersonal issues and employee welfare fall to the wayside.

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