Management experts devise leadership theories to identify what makes successful leaders excel, how they evaluate options and why they make adjustments. These experts define leadership style, on the other hand, to explain how the traits and behaviors of leaders enable them to function successfully under specific circumstances. Understanding both theory and style helps you learn to respond appropriately under stress and choose the best action as an effective leader.


Leadership theories, including trait, behavior, contingency and power, explain why some leaders succeed and others fail. Trait theories identify the qualities associated with successful leaders, such as integrity, assertiveness and empathy, while behavioral theories define how leaders function. In the 1930s, Kurt Lewin described three types of behavior: autocratic, democratic and laissez-faire. Other theories, known as contingency theories, try to predict which leadership style works best in which situation, while power theories examine how influence impacts successful leadership.

Theory Application

Applying the right leadership theory in your small business depends on what you want to achieve. By aligning your behavior with your strategic goals, you can focus on learning more about the theories that make the most sense for your company. For example, if you need to adjust to rapid industry change due to improvements in technology, focus on the contingency and transformational leadership theories. The Hersey-Blanchard Situational Leadership Theory explains how to link your leadership approach with the skill and experience level of your subordinates. The more experienced employees are, the less you need to be involved in day-to-day leadership activities.


Leadership style, such as visionary, coaching, collaborative, consensus, pace-setting and commanding, describes the actions leaders take with their subordinates to achieve short- and long-term goals. Typically, everyone in the organization uses a leadership style at one point or another during their day. To promote learning and development, provide opportunities for your employees to develop awareness of their own leadership style and develop skills and knowledge in critical competencies for your company. The Massachusetts Institute of Technology OpenCourseWare program provides access to free course materials for leadership development.

Style Application

Applying leadership style effectively to a situation involves a comprehensive initial assessment, consideration of alternatives and actions, and an evaluation of the outcome. Effective leaders learn from their mistakes and adjust their style in subsequent occasions. For example, during a transition to a new way of working, an effective leader typically chooses a visionary style to enthusiastically communicate the future state, describe the need for change and motivate subordinates to follow his example. Using a commanding style in this instance tends to disenfranchise employees and contribute to low morale, decreased productivity and poor employee retention rates.