Leadership styles and Startups

For the most part of my life as an entrepreneur, I’ve often believed that it is really important to drive the vision of the company into every single employee and that it was my job to ensure that everyone is aligned to the vision.

However, there were a lot of times that beliefs were wrong simply because there was no product market fit and our vision was unnecessarily rigid.

This, combined with our ego often left us to bleed money until the harsh reality dawned upon us that perhaps, we could have been wrong and that other folks from within the company or outside including the second level of leadership had a view point that was right.

And more than once, false positives and small sample sets of customers skewed our view points; combine that with an authoritarian leadership and that represents a recipe for disaster. This brings to question about leaderships styles in startups and how it impacts startups.

Leadership styles

While there are several types of leadership styles recognized today, the most major / early study of leadership styles was performed in 1939 by Kurt Lewin who led a group of researchers to identify different styles of leadership (Lewin, Lippit, White, 1939).

  • Authoritarian or autocratic — the leader tells his or her employees what to do and how to do it, without getting their advice.
  • Democratic or participative — the leader includes one or more employees in the decision making process, but the leader normally maintains the final decision making authority.
  • Delegative or laissez-fair (free-rein) — the leader allows the employees to the decisions, however, the leader is still responsible for the decisions that are made.

Authoritarian leadership and Startups

The most cited example of an authoritarian leader is Steve Jobs. However it is important to understand that Steve Jobs found it extremely important to convince his fellow team members to be a part of his reality distortion field and that happens to be the single most important thing in building an organization that lasts forever.

Effectively, I think that Steve Jobs transitioned from an overbearing but democratic leadership during the early stages of his entrepreneurship to an authoritarian when the company’s size became too big to yield the desired results that he wanted to realize.

Authoritarian and autocratic styles work for leaders who are indeed visionary and they have proven capability to be able to drive phenomenal success through their products.

If you don’t have an extremely proven background, don’t try to thrust your vision onto someone else without convincing them first.

More often than not — if people remain unconvinced, shoving down your vision may not work even if you’re right.

Participative style and startups

Participative style of leadership can be a good driver of growth in fast growing startups. It helps for leaders to ask for opinions and also delegate after trusting the next level of leadership. Participative leadership is when the leader lets decisioning be democratic and while the final decision is still owed by the leader, the subordinates often are allowed to discuss / debate and propose solutions and the the risks that are associated along with the decisions.

This type of decisioning depends upon trust. The more you trust your team, the more likely they are to rally around you when you need it the most. This style of leadership has known to build long lasting organizations and a work culture that is more of a cult than anything else.

Delegative or laissez-fair decisioning lets employees partake in all critical decisions where the leader is generally hands off. Laissez-fair decisioning considered to be useful in more creative situations or in early stage companies central decisioning is not needed and may not necessarily add value to the organization.

With respect to startups, I’d think that delegative decisioning works best in early stage startups where either there’s no concern for cash burn or until the point when the startup ceases to be an idea and becomes a business. It could also be useful in creative / media startups where creative freedom is more important.

I believe that this kind of leaderships also works very well with later stage startups where a fair amount of product market fit is well established and leaders don’t necessarily want to be in charge of details.

With respect to startups, I would say that this form of leadership might be well suited for startups where there’s tremendous growth and focus on more things that the entrepreneurs or the CXOs can handle. However to mitigate risk, it is best to then treat the employees’s decisions as a series of minor pivots, as much as risky as it sounds — an experiment can be conducted and a decision can be taken to move or not move in that direction, with employees heavily participating in the decision. Quick decisioning, data driven feedback and logical reason would be enough ways to checkpoint faulty decisions.

In Conclusion

Both from my own experience and observations, I’d like to summarize a few points:

Until a product market fit is established and or your startup is experiencing tremendous growth or profitability, your decisions as a leader are always questionable. Your vision maybe in a state of flux and there’s a good chance that you are wrong about a lot of things.

To that effect, start-up leadership leadership has to be less autocratic and more democratic or even laissez-fair in the initial phases until a clear growth trajectory is established.

It is important to get your team’s perspective, and enable the right kind of leadership style for yourself and your startup, that will deliver the best kind of success in each phase of growth.

[This is a work in progress blog. Will continue making minor edits based on feedback received.]

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