Leadership plays a crucial role in company performance, and arguably is even more fundamental for startups, where it can make the difference between success or failure.
According to a study published by Harvard Business School, bad management is the prime reason why startups fail, with 82% of startups failing because of bad management and leadership inexperience. With the odds stacked against startups, having the right leaders in place is critical if new businesses are to thrive.
Similarly, success doesn’t just rely on having a great idea or a solid business model. Dedication to building a great team – and one that has the potential to expand globally – is key when embarking on any entrepreneurial venture. But, the reality is that not everyone is instinctively cut out to lead and to run a successful startup. It requires a certain mindset which distinguishes the need to be a boss who precisely directs every aspect of the way the organisation works, from being a leader who clearly articulates its values and inspires colleagues to join them on the journey.
Clearly, most startups are guided by a vision focused around a product or service that the founders believe in, but how many go further to develop their leadership vision with anything like the same energy? Part of the problem can be that among the many priorities facing startup founders, the nuances of effective leadership might not initially be top of mind. To an extent this is understandable, given the focus that is required to build a product or service that is viable, maybe even capable of attracting funding or that can deliver sustained growth.
As a result, the true importance of leadership often only becomes apparent to startup founders as their organisation scales, when they have to manage more than their own time and demonstrate an ability to articulate the company vision so that it enables others to do their job. A boss, for example, can often be characterised by a tendency to micro-manage. This can be especially apparent in relation to their areas of core competence and experience, where the ability to let go and allow others bring their unique capabilities to challenges can be hard to achieve.
Micro-management can also lead to flawed decision making that focuses on narrow criteria. This can often be seen in the leadership styles of people that transition from small to large organisations, where the approaches to leadership can be quite different and a management style that is too controlling can build stress and frustration within a team.
Learning To Lead
Truly effective leadership, on the other hand, benefits hugely from self-awareness, empathy and a willingness to consider how style and process might affect others. For many people, these are intangible qualities that seem a million miles away from the skills which got their business off the ground in the first place. They are, however, no less important.
Ultimately, effective leadership is often a question of mindset. Think of it this way: many startups succeed because of a mindset where a willingness to experiment and iterate around their core product or service is valued in full knowledge that failure is a beneficial part of the process that leads to better outcomes.
Adopting a similar approach to leadership is key, and startup founders in particular should be prepared to modify, iterate and evolve their own leadership style until they find an approach that optimises the positive impact they can have on the business and the people it employs. In doing so, things are likely to go wrong, but leaders need learning experiences, a willingness to admit mistakes and the ability to turn challenges into positive progress.
Leadership vision is likely to evolve over time, and in some situations pivot entirely according to changing circumstances and new opportunities. The risk here is that organisational culture – the tone of which is set by leaders – can easily blur or be lost entirely if there are too many changes.
Startups that view leadership as part of their DNA on an equal footing with issues such as their IP, funding or customer experience will be more effectively placed to embrace and manage organisational growth. In doing so, there is more scope to create a stronger, more genuine culture that everyone in the organisation can support without compromise, and instead of being directed by a boss, be inspired by a leader.