The Case of the Missing Work Ethic Part I

I was sitting with the CEO of a mid size organisation a couple of weeks ago. We were discussing the big challenge facing all CEOs today, irrespective of which country they operate in: execution of strategy to achieve business results. I’ve spoken to many CEOs about this challenge while working with their leadership teams to facilitate their execution and achieving business results. They all agree that accountability is a huge barrier to successful execution. And this is true not just in India, but all over the world. This CEO expressed the same thoughts about accountability.

Since we have a proprietary method that builds accountability cultures in organizations, the conversation revolved around how accountability can enhance execution. Then, the CEO made an interesting statement. He said, ‘the big problem I find is that people are not serious about work today. They are not loyal to the organization and there is a lack of commitment. Their work ethic is missing.’

I found this statement very interesting. And true. The rapid growth in the Indian business environment in the last few years has resulted in two trends that are common to different industries and organizations. Both these trends have arisen as a direct result of the talent crunch: a shortage of talented leaders who can hit the ground running; an issue that I have written about in an earlier article.

Two trends in talent availability and career growth
The first trend is that people have been promoted rapidly to fill in vacancies that appeared as a result of rapid growth. With organizations desperate to fill these vacant leadership positions, people have been promoted on the basis of perceived future potential; sometimes even when they have not had sufficient time in their previous or current assignments to prove themselves and deliver results.

The second trend is that the boom in business led to a proliferation of opportunities for talented people. With a wider availability of options, people began switching organizations with ease, often across industries. Once again, faced with limited choices to hire top talent, organizations often appointed leaders in positions where they had limited or no experience (in terms of leadership, not domain expertise) and sometimes even when they had yet to prove their ability to deliver results in their present positions.

While I am loath, without empirical evidence, to ascribe the perceived lack of a work ethic among today’s employees to either of these two trends, it is possible that they have played an important role in the demise of the work ethic as defined by the CEO whom I have quoted.

The question here is: can external environmental factors be blamed entirely for the lack of a work ethic among employees to the organization they work for? Or are there also factors within the organization that can influence this trend one way or the other?

While I’d welcome a debate and discussion on this and am eager to hear from readers about their thoughts and experiences, based on my experience I believe that the organization itself has a large role to play in this matter.

My next post will expand on the role of the organization in creating and sustaining the work ethic and a simple exercise to help you determine how effective your organization is in this matter.

Is your strategic plan a piece of paper?

One of the biggest challenges facing any manager is execution. Most organisations are fairly competent at strategic planning. However, when it comes to execution of these plans there is a yawning gap between the plan and implementation. A very small percentage of strategic plans actually get executed.
Our experience with facilitating the execution of strategic plans for organisations across the globe suggests that three key steps are essential to bridge the gap between strategic planning and execution.
But before we discuss execution, let us step back a moment and understand the nature of a strategic plan. The usual perception is that of a “big picture” plan that is created and developed at the highest echelons of management, and only parts of which get filtered down to the operational areas of management.
In addition, there are strategic plans at every level of the business, which dovetail into the grand organisational plan. A recruitment plan that lays down how to attract, retain and develop talent at all levels of the organisation, a business development plan that describes strategies to attract and retain customers, a marketing plan that explains how the organisation’s products and services or brands will be positioned, an operational plan that lays down a strategy to reduce operational costs; these are all strategic plans, and each one of them impacts the “big picture”.
So, how do we ensure that these plans get implemented successfully? The answer will vary for each organisation depending on the nature of the leadership, the organisational culture, the willingness of senior management to be open to new ideas for better performance, and the unique operational challenges facing the organisation. Nevertheless, broadly speaking, a focus on three key areas can help improve the success rate of implementation of strategy.

Step 1: Involvement and buy in

Success in execution begins during the planning phase itself by getting a high level of involvement, not just from the senior executives who are part of the planning process, but also from the key managers who will be critical to the implementation of the plan. Who these key managers are will vary across organisations, and differ from department to department, depending on various factors such as organisational structure, key result areas and functional responsibilities. But it is important to identify them and involve them in the planning process. This means ensuring they understand the organisation’s strategy, soliciting their inputs in the planning process, obtaining feedback from them on challenges and opportunities that success is contingent on, and doing a reality check on actions to execute.
With involvement, comes buy in. It is an established fact that, even when people give inputs that are not finally integrated in the strategy, they still feel a sense of involvement and contribution, which helps increase buy in.

Step 2: Commitment

Enhancing and reinforcing the commitment level of people who are responsible for implementation of the strategy is critical to successful execution.
Higher levels of involvement and buy in to a strategic plan also lead to higher levels of commitment for execution. This is why the first step of involvement needs to be applied to all the key people who will be involved in execution. If they have a greater buy in to the plan, they will be more committed to execution of the plan and ensuring its success.

Step 3: Accountability

In most organisations, accountability is a euphemism for allocating responsibility for a problem or for finding someone to blame for mistakes made. The word accountability evokes negative emotions.
We work with organisations to build cultures of accountability by removing the negative emotions associated with the word and building a positive energy around it. The implementation of accountability in its true, positive sense, leads to enhanced performance. This happens because, when people work in organisations that have a culture of accountability, they deliver on their commitments to a greater degree and this leads to more effective execution, which enhances performance.
It is a proven fact that a culture of accountability can enhance the success rate of strategic plans being executed.
It is important here to distinguish between being committed and keeping commitments. These are two very separate things. While involvement and buy in enhance a person’s commitment to the success of a strategy, that does not necessarily mean that this will lead to that person keeping all their commitments. The first pertains to intention and the second to action.
This is why accountability is so critical to successful execution. By focusing on action, it ensures that intention is converted into reality.

Exercise
Here’s a small exercise that can help you assess where your team stands right now. Score the following statements on a scale of 1 to 4, where 1 implies strongly disagree and 4 means strongly agree.
1. My organisation /leadership involves every key member of the team who is responsible for planning and execution of strategy
2. My organisation/leadership has a well defined and effective process or method for reinforcing the commitment of all team members towards the execution of strategy
3. My organisation/leadership has a well defined and effective method for implementing accountability across all levels of the hierarchy
4. In my team people at all levels of management are very clear about the organisation strategy and how it is to be executed
5. In my team at all levels of management agree with and are fully committed to the execution of the strategy
6. In my team people hold each other accountable for delivering commitments

Now, add the scores to get a total. If the total is less than 18 you need to work on making the execution of strategy more effective in your organisation or team by applying the three step process described here within the framework of your organisation structure, organisational culture and operational constraints.

LEADERSHIP IN TIMES OF UNCERTAINTY

LEADERSHIP IN TIMES OF UNCERTAINTY

A 5 POINT STRATEGY FOR LEADERS TO NAVIGATE IN TODAY’S WORLD


We live today in uncertain times. Forecasts, both business and economic, are being revised almost every month, if not more frequently. Even in emerging economies, which seem to have recovered and are faring better than the developed economies – at least in terms of GDP growth – optimism is tinged with caution. The events of the last two years have left an indelible imprint on how business is run and managed; One key learning has emerged, if nothing else: for the foreseeable future, at least, it is prudent not to assume anything.

So, what does this mean for leaders? While there is no manager or leader in the world today who has any sort of experience of managing the business environment we have all experienced over the last two years, there are some basic rules which, if followed diligently, can help leaders navigate their way through a troubled business environment. In fact, all the wisdom of leadership in troubled times can be condensed into a five point strategy that can help leaders move ahead. These five points are basic and simple, probably even obvious. Unfortunately, however, I see many leaders who are aware of them, but for some reason or other are unable to follow them. But this five point strategy can stand leaders in good stead not just today, but even when times are good and business needs to grow, consolidate and become more efficient.

Who can benefit from this strategy? Any one who leads. You could be leading a business, a team within a business or even a specific function. The strategy is agnostic to the kind of leader you are. But the benefits are tangible. They have worked for me in the past and in the current environment and I have seen them work for others as well.

Here are the five points that form the pillars of the leadership strategy that I recommend:

1. Have a vision and have faith in the vision: even if your business is going through the most difficult of times, remember that where there is a trough there will also be a peak. If you are going through bad times, do you have a vision for what you will do when you emerge from the trough or when you are at the peak? If you do not, then you will lose opportunities at the peak. The time for planning and strategising for the peak is when you are in the trough. Unfortunately, it is human nature to get overwhelmed by circumstances and environmental considerations. Very often, leaders tend to get bogged down in the here and now because dealing with the present is also critical. You do need to get out of the trough in order to reach the peak, after all! But that does not mean that you lose sight of the future. It is very important to have a vision and even more important to have faith in the vision. If you, as a leader, are not confident about your vision, how do you expect your team to follow you through the storm?

2. Always introspect: having faith or confidence in your vision, however, does not mean that you leave yourself open to overconfidence. I have seen many leaders fail because of overconfidence; sometimes even hubris. Introspect. It is important. Understand the motivations, the rationale behind your vision. Ensure that it is, to the best of your belief, the best vision you can have. How do you test it? Ask yourself: is my vision the best possible for:

a. The business/team/function that I am responsible for?
b. The company I work for?
c. The people I lead?

If the answer to any of these questions is “no”, then you need to re-think your vision. Very often, leaders do think about the first two questions, but ignore the third question. People sometimes come last or don’t come to mind at all as an important consideration while testing a leader’s vision. But people are important for a vision to be achieved, as we shall see in just a moment.

3. Don’t get operational: this is another trap that many leaders fall into when confronted with tough times. It is easy to give into the temptation of rolling up your sleeves and getting to work in a hands-on way. And sometimes, that may be inevitable. But is it always the best way to get through a trough? Not really. If you are to achieve your vision, your focus must stay on your vision and not waver. And that is just not possible if you get bogged down with operational details. Even if you are most adept at multi-tasking or highly skilled in operational details. Imagine you are the general of an army leading it into battle. Where would you get the best view of the battle from in order to determine if it is going the way you planned? On the ground, surrounded by your own and enemy troops, cutting your way through the enemy ranks? Or in a helicopter high above, surveying the action below; or, as in ancient times, standing on a nearby hill or higher ground, assessing the state of the action far below? But operational details are important, so how do you ensure that they are not neglected in difficult times? By ensuring that you have the best people around. Hire people who are smarter than you; they will prop you up when you need someone to delegate the operational details to. If they are smart and skilled, they will not need close supervision but can run things independently, leaving you as a leader to focus on the vision.

4. Communicate: Sounds simple and obvious doesn’t it? But you’ll be surprised at the number of leaders who don’t communicate effectively. Communication is not just about talking to your team. Actually, communication works two ways. First, your communication to the team must be clear, specific and relevant. It should convey your expectations, detail your vision and create an inspiring visual of what you want your team to achieve. This gives them something to work towards. How often do you check with your team to ensure that they have interpreted your communication the way you wanted them to? Have they understood your vision and expectations? Or have they made assumptions that distort the meaning of your communication? All of us have filters which influence our interpretation of what we hear. In order for communication to be effective you need to ensure that you get your message past those filters without it getting distorted in any way. Second, your team should be able to communicate with you. How accessible are you to your team? How free does your team feel to be able to say something to you? If they are holding back information or data, it will affect the achievement of your vision. You need to ensure that your team has every opportunity to communicate with you and when they do communicate, they are not inhibited from speaking their minds.

5. Lead: shouldn’t this have been the first point in this list? Perhaps, but leading is an amalgamation of all the points that have preceded this one. If you have a vision you are confident of, you stay focused on it, introspect and communicate you are already more than halfway on the path of true leadership. But there is more to leading than this. The key to leadership is to be inspirational to people who follow you. They must want to follow you; they must be motivated to follow you. And the biggest motivator is integrity. Integrity not just to principles and financials. But integrity to words, thought and intent. You must live the words you speak and the thoughts you voice. A leader does not just articulate the vision and the strategy to achieve it. A true leader lives the path to achieving the vision. It may sound simple, but implementing this in practice is very difficult. But if you follow the first four points, you will find that being a true leader is much easier. And you will find people willingly and happily following you, even through difficult times!

Preparing for the Upturn: Part VI

In an earlier post, I had briefly dwelt on how organizations can focus on making their processes more efficient. I quote from that post:

“The downturn, then, is a great opportunity to weed these inefficiencies out of the system and trim the flab. This will create a leaner and nimbler organization which will be well prepared to grow rapidly when the upturn begins.”

What does this mean for the recovery and how does this help?

The answer lies, not in trying to make the organization even more efficient during the upturn, but in maintaining the efficiencies achieved during the downturn. It is relatively easy to trim the flab during a downturn. The circumstances and the environment compel a firm to put its processes under a microscope and examine them in detail to understand the cost benefits that can be squeezed out of them by making them more efficient.

But, once a recovery sets in, the microscope is set aside all too soon, in favour of a telescope that peeks out at the external environment, seeking out opportunities thrown up by the upturn. Furthermore, any introspection concerns itself with what internal changes are required in order to exploit these opportunities and maximize returns.

It is at this time that the firm faces a very real danger; that of the flab returning and the efficiencies built during the downturn being discarded or ignored in the pursuit of growth. Remember, after all, that this is how the flab had accumulated in the first place.

Organisations that recognize this put in place systems and processes to ensure that there is an eagle eye focus, even in the upturn, on maintaining efficiencies wrung out of their processes during the downturn. This ensures that, even while the topline growth is pursued, the bottomline is protected by sustaining cost savings derived through optimization during the downturn.

In my next post on the upturn, I will examine how talent management and talent development during the downturn can serve an organization well during the recovery.

Preparing for the Upturn: Part V

Here’s how planning helps to prepare for the upturn. Apart from determining long term strategies, it is also important to identify the resources that will be required to implement them.

For a firm to rapidly expand during a recovery, financial resources will be required. These could be either internally generated or external sources of funding. To garner the levels of finance that are required to fund the expansion when it happens, the firm needs to ensure that certain pre-requisites are in place. These could pertain to building up the internal reserves of the firm or ensuring that the firm is credit worthy or attractive to external investors when the recovery starts. And this process must begin in the downturn, supported by short term strategies that enhance survival but do not have a negative impact on these factors in the long term.

A similar logic applies to human resources. I have dwelt at length on cost reduction through headcount management in earlier posts, so I will not go into details here. It will suffice to say that planned human resource management during the downturn will go a long way towards conserving them in the long term. This will enhance the firm’s ability to take advantage of the recovery.

Planning can also be applied to other resources. Infrastructure and support systems is another area. Once again, this process begins during the downturn itself. Very often, organizations cut down on infrastructure development or the implementation of support systems, citing cost reduction as a reason. This reasoning is myopic. Infrastructure never delivers results in the short term. Expecting it to produce immediate returns is unreasonable. And neglecting infrastructure or support systems essentially results in depriving the firm of long term resources, when they may be needed. There is a gap between the planning of infrastructure and its development. And there is a further gap between its development and utilization. So, by cutting down on infrastructure development during the downturn, the firm is substituting long term utilization of infrastructure with short term cost benefits, a trade off which can severely impair the ability of the firm to respond swiftly to market opportunities that may open up in the long term.

If a firm recognizes this, planning for infrastructure can be derived from the long term strategies that have been set, as described in an earlier post. If the strategies develop as planned, the infrastructure will be utilized in the time frame envisaged, and will deliver the return on investment that was planned. And, if the firm follows the scenario planning method I have mentioned in an earlier post, it is possible to tweak the infrastructure plans (though not significantly, as infrastructure is largely a sunk investment), to match the scenario that eventually develops and the strategy that is finally followed. The important thing to remember is that, irrespective of the scenario that unfolds and the environment that prevails, infrastructure and support systems will always be required in the long run. Compromising on these debilitates the firm in the long term, even if it delivers cost benefits in the short term.

In my next post, I will examine how the need to optimize efficiencies during a downturn can serve an organization well once the recovery sets in.

Preparing for the Upturn: Part IV

So, how does one prepare long term strategies when short term forecasting is difficult?

One answer is scenario planning.

This is how it works. When the future is uncertain, there could be a range of possibilities. While it is difficult to determine exactly which set of possibilities will eventually hold sway, it is possible to arrive at different scenarios with varying probabilities of occurring. Given that in this specific instance we are talking about scenario planning for a recovery, the upside risks will be significantly higher than the downside risks. Which makes it much easier to put together the scenarios, since one can usually anticipate the different opportunities that present themselves during an upturn.

Based on these scenarios, strategies to capitalize on the opportunities presented by each scenario can be prepared. Since each scenario has already been assigned a probability of occurrence, it is relatively easy to prioritise the strategies.

This is just one method of setting long term strategies. If anyone out there has any other suggestions, I’d be glad to hear them.

In my next post, I am going to talk a bit more about planning and how it can help prepare for the upturn.

Preparing for the Upturn: Part III

The second implication for business leaders is planning. Vision helps stay focused on the big picture, so we don’t miss the woods for the trees. Planning ensures that the vision is articulated and the organization works towards achieving the vision.

Vision, by definition, is warm and fuzzy. It lacks structure, but provides purpose. It is all too easy to get lost in the swamplands of the downturn. Planning helps the organization to stay on track.

And this process begins during the downturn, concomitant with the vision.

Based on the vision, a long term plan needs to be drawn up. This plan should reflect not just short term measures to negotiate the downturn, but also long term strategies to capitalize on the recovery. And the short term measures should be evaluated in the perspective of the long term strategies. Each measure should be judged by the value it adds or subtracts from the achievement of the long term strategies. This ensures that short-sighted measures that dilute the resources of the firm are not chosen over actions that will silently reinforce the ability of the firm to accelerate its growth when the upturn begins.

Some of these short term measures that add value to the long term strategies have been discussed in earlier posts, and juxtaposed against those measures that detract from the firm’s long term abilities and resources.

I can hear howls of protest from certain quarters when I speak of long term strategies during a downturn.

The volatility and uncertainty engendered by the current global recession has given rise to a short term mindset.

Where is the ability, you may ask, to forecast sufficiently accurately in the long term, when short term visibility is low? To use the analogy of the ship again, this is like steering a ship through a dense fog, aiming for land thousands of miles away, when you cannot see three feet ahead in the mist.

There is certainly logic in this suggestion. But there is also a solution. And I will explore that solution in my next post.

Preparing for the Upturn: Part II

Following up from the last post, the first implication for business leaders is the need for consistency of vision. Vision is long term and by definition, cannot change irrespective of the change in the external business environment. If this sounds like a paradox, consider this.

Imagine the organization to be a ship that sets sail from Port A, with the destination as Port B. There are several routes across the ocean that can be followed to get from the port of origin to the final destination. There will be a direct route, but that may have challenges and dangers that lie in the path of the ship, which could endanger the ship and crew (read the business and its human capital). So, the ship will need to take a route that circumvents these ocean based perils, which may involve tortuous detours and the deployment of additional resources. Based on the knowledge of the ocean, a route is fixed (read strategy for business).

However, there will always be dangers that are unknown or that may come upon the ship unexpectedly. For example, the weather could change suddenly while at sea; storms can blow up and ocean currents can change without warning. These are changes in the external environment of the ship that cannot be predicted. At best, the ship’s captain and crew can anticipate the probability of encountering such unexpected challenges and prepare contingency plans to counter them.

Does this sound familiar? Can you relate this metaphor to business?

So how is this related to vision? The long term vision for the ship is not confined just to the ship’s journey. It relates to the big picture: the fact that the ship must make multiple journeys back and forth across the ocean and must remain sea worthy to do so.

What is true of the ship is equally true of the business enterprise. It is an animal that needs to endure the hardships and challenges of the business environment, weather all kinds of economic and financial storms and skillfully negotiate the adverse currents of risk.

It must do so to survive the short term and make it out of the downturn, much as the ship must emerged unscathed from the storm. But, as importantly, just as the ship needs to stay seaworthy to make all those future trips across the ocean, the enterprise must stay equipped to flourish in the long term.

This is the vision that must guide business leaders through the downturn. And this is the first step to prepare for the upturn.

Preparing for the Upturn: Part I

Strange as it may sound, preparing for the upturn actually begins in the downturn. Yes, that’s right! Most of the strategies that I’ve described in earlier posts, which help manage the downturn, are double edged strategies that also help organizations prepare for the recovery. And that is why I’ve been at pains to emphasise that while managing a downturn, it is imperative to keep a longer term focus and not resort to knee jerk reactions that may have short term benefits that are superficial in nature, but may simultaneously chip away at the long term competitiveness of the organization by depriving it of resources and competences that will be required once the recovery sets in.

Preparing for the upturn is all about ensuring that processes and resources within the organization are in place to exploit opportunities that will begin to present themselves once the recovery begins. And, as we all know, rigorous preparation can never be done in a day. It takes time, patience and planning. Which is why the downturn itself is a good enough time as any to start. If an organization decides to wait out the downturn, in order to conserve resources, reduce costs and manage profits during the downturn, it may find itself lagging behind competition once recovery sets in, and it may miss the bus when opportunities present themselves. And this will happen precisely for the reasons the organization has waited so long. Since it has conserved resources, it will not have the time to begin building up the resources in time to seize the advantage; its cost reduction measures would have become hardwired in the system and difficult (and costly, ironically!) to reverse, proving to be the proverbial millstone.

What does this mean for the leadership of the organization? The implications will be the subject of the next few posts.

Leadership in a start up

Here's another article I wrote for SHRM....


As I sat down to write this article, I was wondering where I should begin. The topic of leadership in a start up is so interesting and has so many facets that, for a moment, I was undecided about which aspect I should start with.
Then, I realised that, in some respects, the dilemma I was facing while thinking about commencing the article was the same that a leader faces in a start up. There is one critical question that needs to be answered: Where do I start?
However, if you were expecting me to give you an answer to this question, I am sorry I must disappoint you. The answer is that there is no single place to start. And that is what makes the job of starting up a new company or business unit such an exciting and challenging assignment. There is a whole bunch of moving parts that need to be dealt with and managed, and sequential processing is either not possible or undesirable. Let me explain why.
Most start ups, whether entrepreneurial in nature or as subsidiaries of a large (multinational or Indian) corporation have specific timelines within which the operation has to be established, a high quality team recruited, systems and processes put in place, strategies put together and executed, and, most important, revenues to be generated in order to meet a predefined profit or loss target. If these activities are undertaken on a sequential basis and managed piecemeal, two outcomes are possible.
First, at best, the start up will be delayed vis a vis plans and targets, which will be achieved much later than timelines normally set for such operations. Whether it is a venture capitalist or private equity fund or a large parent corporation that is funding the operation, the investing entity expects the start up to take off and begin generating revenues as soon as possible. A reasonable amount of time is normally accepted as a gestation period, during which critical activities such as recruitment and engagement of a team, implementing processes and putting together strategies can be done. However, my experience is that this gestation period is almost always desperately short of what should be the ideal situation. There is always time pressure. Which is understandable.
Second, at worst, the start up may fail to take off at all.
So, the biggest challenge for a leader in a start up is to confront these circumstances and make the best of them. There is no point complaining about time constraints. They will not go away. So how does one tackle them?
The critical competence that supports a leader in this situation is the ability to manage chaos and build a structure out of nothing. Being able to multi-task is very important, as is the ability to run multiple projects simultaneously without taking the eye off any one of them. And since the environment is dynamic and things are constantly developing, it is a bit like a hunter trying to focus simultaneously on several moving targets and trying to hit each one of them all the time.
Sounds impossible? Actually, it’s not. But if you’re accustomed to working in a large organisation, with established systems and processes and a comfortable support system to fall back on (in terms of HR, finance, operations and administration etc), then it becomes very difficult to adjust to a fluid environment where nothing is certain and anything can happen. I know. I’ve been through this when I worked in my first start up, straight out of a large multinational company where I had an assistant, a large operations team, an established sales team and a strong HR and finance support system at head office. From this comfortable and safe environment I jumped straight into a start up where there was nothing. No office, no assistant, no team. Even financial and HR systems were to be established.
It wasn’t easy. But it wasn’t impossible either, and since then I’ve done it many times over again. The key is to be adaptable and change your mindset. If you are able to let go of the cushy perquisites of working in an established organisational structure, it becomes rather simple. Actually, it is extremely enjoyable and very satisfying once you get down to putting the start up together. You may well ask why? Because, instead of inheriting something that you may or may not like (as most managers do, and I’ve done on occasions), you start with a clean slate in a start up. You can build the organisation the way you want to. You can recruit the people you want. There is no inherited baggage of any kind. Who could ask for more?
So much for the challenge of starting up. The other key competence a leader needs in a start up is the ability to lead people. Notice that I didn’t say manage people. True leadership, of the transformational kind, is required. To begin with, the team in a start up is so small that it is extremely critical that everyone works together and at the same pace. Due to cost constraints, it is often possible that the start up begins by recruiting less people than it actually needs to run at an optimal level. Which means that, like the leader, others in the team need to be willing and able to multi-task. There is no room for development of silos or reluctance to go beyond the official job description. In some sense, the job description only provides a guide to the primary responsibilities of the team member. It does not describe the boundaries or limits to what may be required of the team member.
What does this mean for leadership?
First, the leader cannot afford to stay aloof of the operations and expect to delegate everything. The leader must lead by example and be willing to roll up his/her sleeves and get down to brass tacks. Others will follow. Second, the ability to build strong relationships based on mutual trust and respect is extremely important. In a start up, more than instruction, leadership and guidance are required. If the relationships are strong, people will follow the leader. Third, communication is critical. The leader should be able to articulate and communicate the broad vision to the team, which they will then implement. If a single member of a small team is out of synch with the broad vision and strategy or does not understand or agree with a direction or the need for an action, it becomes extremely difficult to build the business with any degree of success. This does not mean that unanimity is a pre-requisite. It simply means that everyone has to be on the same page where strategic direction is concerned. Getting all team members on board irrespective of their personal opinions is the responsibility of the leader. And communication plays a crucial role in this process.
This competence has important implications for motivation and satisfaction. In many cases, especially in start ups funded by venture capitalists, employees are often hired at lower than market levels of remuneration and compensated through stock options or share of profits. Even if employees are hired at normal levels of remunerations, the time pressures and challenges of putting together a start up are so immense that it is easy for people to get frustrated and for motivation to suffer. This is especially true when the start up is a small part of a much larger organisation. There could be any number of challenges in dealing with the parent organisation. Bureaucracy in decision making and financial or other approvals, political issues in dealing with different hierarchies in the parent organisation, clashes of culture between the start up and the parent organisation (yes, this can happen, especially when the leader consciously cultivates a culture in the start up that is different, because he/she feels that culture is better suited to achieve the objectives of the start up); these are just some of the issues that can stymie the efforts of team members in the start up and lead to dissatisfaction and can affect employee morale.
In such situations, the leader has to be able to handle the issues with the parent organisation in a non antagonistic manner, while simultaneously managing the motivation levels of his/her own team to ensure that they are buffered against any negative signals that may emanate as a result of the issues with the parent organisation. This can be quite a tightrope to walk and the leader’s personal credibility and relationships with his/her team members play a very important role in keeping the team morale high.
There is more to leading in a startup, and one could write a book on this, but for the purposes of this article I hope I have been able to provide a glimpse of what leadership in a start up is all about. It is exciting, fulfilling and challenging to build a business from scratch, but the issues that I have highlighted need to be kept in mind in order to succeed.