Progressive leadership for a dynamic start up… why
consultative leadership is so important…
We all know of the
stories coming out of technology like San Francisco’s
very own Airbnb, who ‘stole the show’ after renting out their apartment in San Francisco
on conference weekend. It was a tough slog for Brian Chesky and Joe Gebbia who
had the foresight, wisdom and mental acuity to make the right decisions at the
right time. Their good decisions married with exceptional luck gave birth to
the Airbnb we know today. Kudos to them both for a job well done!
What we rarely hear of
is that over 90% of all startups fail due to issues such as lacklustre
marketplace need, misjudgement of costs, unforeseen disruption and funding
issues. When you add internal development issues, founder disputes and bad
leadership practices (often stress driven), then you can see why Airbnb’s ‘Cinderella
story of success’ is the exception rather than the norm.
As a Technologist, I
found a tech start up survey
report on Inc.com to be very insightful indeed. An MIT doctoral student
called Jorge Guzman did a survey on Silicon Valley failures and found some
interesting patterns from using “pattern recognition” algorithms on start up
registrations in California from 2001 to 2006. I thought some of his findings
to be very insightful of tech start ups globally and are as follows:
Short
Names - companies with short
names are more likely to succeed. It makes sense when you think of branding and
how word association works for companies in the marketplace.
Incorporate - companies who incorporate to a
LTD/LLC/etc are more likely to succeed. It makes great sense once again on
branding grounds. It also signals commitment by the founders to the project along
with serious intent to be successful. Those who project a confidence of success
with a well organised and structured start up are more likely to be trusted in
business ergo are more likely to succeed.
Products - start ups with a patent are likely to
experience a growth dividend of 25% above those who don’t. If the patent has a
unique take on something that creates value in the eyes of the company, this
conclusion makes perfect sense.
Networking - companies who are located in Silicon
Valley V elsewhere in California are 60% more likely to succeed. This makes
perfect sense to me for a tech start up as networking is key to any success,
especially in technology.
So with all of insights,
it is reasonable to think a good business idea has a better chance of being a
roaring success, but that’s only a portion of the criteria for a successful
start up. If the founders are not consultative leaders, they are increasing
their chances of failure by attracting, employing and leading a personality
type that cannot and/or will not meaningfully contribute to their success.
Participative leaders who want the group to direct the strategy will not gain
traction in a start up when employees are expected to do many things at once in
a near uncontrolled environment. Dictatorial leaders who set a false sense of
structure and then micro-manage employees into leaving will always have a work
deficit and an opportunity cost that can cost the very same directors their
business. Richard Branson once said “take care of your employees and they will
take care of your business”, he is quite right!
One of Silicon valley’s
best kept secrets is how start up successes lead their companies. They use
consultative leadership models that have the following attributes:
Strategy
Setter – Management sets the
direction the company needs to go with high level strategic goals defining the general
direction for staff to brainstorm around so they can strategise how to
operationally get there.
Employee
Positioning -
This has everything to do with people and little to nothing to do with HR. Management
treat staff as assets (not cost overheads) and by definition actively harness
feedback from them on the business and how things could be done better feeding
into a Kaizen improvement cycle that keeps the company lean and current.
Marketing - The employee revered by management as a
primary asset is also able to contribute to working conditions, how things get
done and how the company could market itself better. Company events, idea boxes
and regular team meetings provide good feedback in a structure for idea
generation and capture.
Culture - The consultative leadership model works
well in a clan or adhocracy culture. The focus on people gives everybody a
sense of belonging and security insofar as they are directly contributing to
their own success or failure with their colleagues in the company. Good
founders start with the end in mind and socially engineer good relationships
with employees that are Givers (v Matchers or Takers) by nature, thus a good
fit with clan or adhocracy cultures. Team players are important and the
consultative leadership practice; if done correctly in a collaborative
environment creates a structured people centric culture, which is critical to
success, longevity and innovation.
Communication – A two way (respectful) communication
style in verbal and non verbals is a key attribute of success where staff are
respected by founders for speaking their minds, even if the founders may not
agree.
Combine all of this with
strong founder vision and a willingness to be a real leader especially when
stress levels are high, than it’s easy to see why balanced judgement is worth
its weight in gold.
What happens after an
initial growth period in a ‘successful’ startup can often damage a company's
longer term prospects. Some founders fork from Silicon Valley’s magic formula
of success by cutting employees out of the decision making process and
withholding information relevant to their roles. Others cut them out of stock
options that now hold worth due to “our” success. For good employees who
invested in the founders through the currency of commitment, there is no
greater betrayal! Other issues are the entrepreneur who cannot let go,
scalability becomes an issue and as the pressure mounts, the ability to lead
competently becomes compromised with employee morale sinking as a result.
With all the learned
lessons out there, it’s incredible to think how anyone could make those
mistakes but they do. There is no rulebook saying a start up cannot recover to
become a success. However, if the founders do not genuinely believe in the
power of their people, how can their people genuinely believe in them? Place
any half belief on the part of the founders under the pressure of a start up
gaining traction and you have a route of potential success to definite failure.
The big take away for a
success in a start up is this… if you bring your people with you, they will
make sure you get to your destination! It’s not a bad sentiment when you think
of how many fail. As the old saying goes ‘Surround yourself with like minded
people and you will do great things!’ Do you agree? Share your start up
experiences by leaving a comment…
Sources/Credits
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