Corporations are often terrible places to exercise leadership because they too often place an emphasis on management. That might seem reasonable on the surface. How can you have a company without management directing the operations? You generally can't, but the question becomes what form of management is in effect.
Control Versus Guidance
Businesses face their greatest management challenge when the people in charge think they must take control. Sometimes it may be true that someone has to make a decision from among a number of possibilities. Unfortunately, when managers focus too long on the moment of that final decision, they may lose sight of the prior deliberation and discussion process.
Management-speak has a term that applies: command and control. When an organization uses such a structure, it relies on highly centralized authority that only allows operations and initiatives to happen by order from above.
Organizational Interest Versus Self-Interest
Another major factor is the interest that directs the actions of managers. Everyone has reasons for doing what they do. You've heard of doing the right thing for the wrong reason and the other way around. Sometimes the intent doesn't change the outcome of what you do.
As some of the great corporate governance disasters of the early twenty-first century suggest, people at the top are sometimes more interested in their own bank accounts and futures than those of the companies that employ them.
But intent can make all the difference in the world because it drives individual choice. Different interests may occasionally spawn decisions that seem identical on the surface — though not when it comes to the role the decision has in a larger context. More often the choices go in diverging directions.
You'll get one type of result when people keep the interests of the organization front and center. Emphasizing self-interest, on the whole, produces self-interested employees. When people approach management with themselves in mind, they will, on the average, make choices that reduce the participation necessary for leadership.
A third problem for organizations is a subtler remnant of business history. For many decades, management structured corporations into separate pieces. Whether formed by business function (called silos) or independent business units, these different divisions or sections each had their own budget and strategic aims — all well and good, except that eventually it was realized that the goals could conflict.
What should be important in a corporation is the company's overall health and success. Breaking the organization down into pieces, each with its own measures of success, can wreak havoc with the success of the whole business. The manager of each division has incentives to meet the goals for that group, but they may conflict with the goals of another division.
Suboptimization is the term experts use when a company optimizes for the performance of every part separately, but that process doesn't take into account whether that actually results in better operations for the business as a whole. Instead of working together to achieve a necessary balance, divisions try to do the best that they can.
You could imagine an automobile company in which the design engineers looked at each system as completely separate from the others. The people creating the body might use an abundance of heavy steel for safety without considering that the extra weight might be more than the engine could power.
Having departments focus on their own needs is similar to letting people make decisions based on their personal needs. The motive may be slightly different, but the impact is about the same — individual need versus the needs of the organization.