Leadership: the essential element to business success
Do you have a worthy destination in business and the ability to communicate that to other people? Can you relate it to others in such a way that they want to involve themselves in what you are doing in meaningful way?
What you do in business – in your business – needs to be both profitable and meaningful to you and to those people who work with you. Structuring this and being able to communicate it clearly is the essence of leadership.
Shared goals – ones that you and your co-workers willingly contribute to – is the kernel of why people join you and why they stay with you. Pursing those goals must add value to both your life and your co-worker’s lives.
Why leadership matters
Leadership is the necessary ingredient to the success of a business – like a chemical reaction that needs a certain element – and even a business that has every other quality necessary to succeed will require good leadership to thrive. Great leadership can improve the success of a less-capable team, both as a community and in their goals, and poor leadership can scuttle and threaten the best ideas and efforts of the most capable people.
By the numbers: leadership failure costs 5-10% in productivity, 7% of annual sales, and between 9-32% of employee turnover.1GBS: The cost of poor leadership on revenue and culture Noam Wasserman’s research2The Founder’s Dilemma at Harvard found that only 18% of founders have management experience before they launch a business, and four out of five are forced to step down as CEO by investors.
Leadership matters a lot. In addition to the financial effects, a well-led organization is a stable and productive part of its community, giving meaning to people who work for it.
While solitary and isolated acts are less affected by leadership, group efforts heavily depend on it. A business is a community of people, and the success or failure of a business relies on:
- Understanding of values and purposes
Although these elements always influence your business, how the influence unfolds depends on how you lead.
How the demands on a leader change
For those who run businesses that they founded, it is critical to understand how the demands of leadership change as your business grows. The skills that you need to start a business are not the same skills you need to run one, and every leader recognizes this, either voluntarily or after a few very difficult lessons.
We can roughly divide the growth of a business into three parts to illustrate how the demands on a leader change. These three phases overlap each other, and we describe them here only to illustrate how the role of leadership changes and becomes more important, and this helps leaders prepare and shepherd their business.
The first phase is the start of your business – you and possibly your co-founders spend virtually all your effort converting your idea into something tangible: your MVP, your initial offering, or research and testing. Leadership is a small part of this effort, mostly because there really isn’t a team to lead.
The second phase is building the business, and this phase is marked by constructing a team, making policy, procedures, rules and coordinating people to execute what the business needs done. This phase plants the seeds of culture in your business, and how you lead during this time has a massive effect on how well your organization works, who you can attract and keep on your team, and the impression that your business makes to customers.
The third phase is when your business becomes more stable, profitable and needs more maintenance that building. This period of thriving is also massively impacted by your leadership, but in a different way: how you deal with what you’ve built, and how you expand and interact with the communities of customers, competitors and industry determines how well your business performs and how happy you and your team is with the work.
Leadership becomes more important as your company grows, and quickly becomes more critical than anything else. While you will need to hone and learn other skills, becoming a solid leader is the skill that will enable your business – the group of people you’ve organized to achieve your goal – to be successful.
Leadership is learnable
And it’s only learnable. Despite characters in movies, there are no born leaders – only people who have worked hard at learning and practicing leadership.
The act of learning is a conscious and deliberate choice to better our skills, and therefore better our business. We learn from failure, and choosing to learn makes us more likely to thrive.
The first step in learning is the awareness that there are things that we don’t know or can’t do. You would need to know that you can’t speak a foreign language before you make the decision to take lessons in it. Acknowledging and accepting our shortcomings is often a difficult step for many of us who have founded a business, because on the face of it, leadership seems quite straightforward – “I know what needs to be done and can tell people how to do it.”
The truth – which I very much hope people who found businesses don’t find out too late – is that the skill of leading your team, the very people who will execute and grow your initial idea, becomes the most important element of business success after the business is founded.
So make the decision to use the intelligence, skills and determination that you used to found your business and become a practicing student of leadership.
You are being watched
How you choose and behave as a leader has a disproportionate influence over the culture of your business compared to others in it. There is no way around this, we are social animals and we are biologically driven to imitate each other.
Your interactions, how you enforce (or don’t) policy and expectations, how you do you own work, how you treat others, address goals, failures and transgressions – literally everything you do at work – is part of the complex calculus of your company’s culture and how others imitate what they see. Your influence can be unconscious, subliminal, overt or reactionary, but it always happens.
See what you do in your company in this light, and make your decisions wisely.
Don’t confuse leadership with management
A business needs managers – people who orchestrate and monitor how a group functions based on a defined set of rules. Managers keep progress moving on a track, alert others to deviations, problems, and help manage expectations. Great managers are invaluable to a business.
But management is not leadership, and you are not a manager. Although you do some things that are similar to a manager, you are responsible for the culture, values and purpose of the business – in fact, your team depends on you not being a manager.
What you can do
Deciding to intentionally learn about being good leader is the most important step you can take towards being one. The legend of King Arthur and his Knights of the Round Table impart two lessons that can help a young leader.
The first is that what we most need in life is in the darkest part of the forest, where we most want to avoid. This translates to a young leader’s journey this way: you need to address and face those things that make you uncomfortable, and that maybe you consider weaknesses, in order to become strong in the way that your business needs.
And the truth is, if you’ve founded a business, if you’ve made it through the trials and can say “I have a business,” then you have the qualities that you need to face your next challenges. Now you must decide to do so, and take the first steps.
The second lesson we can take from King Arthur is that his table was round, and that was intentional.3Putin is not King Arthur. King Arthur saw his Knights – the people he served – as his peers. Obviously he was king and they were not, but the table signified that no one was at the head of it, and that they were working together, despite the differences in title and hierarchy.
Take this attitude towards the people you serve as leader.
In many ways, leadership is like parenting. The effort to be a good parent, showing up, consistently trying, and being patient with yourself and everyone else in the process is often much more important and significant to results than techniques, tips, and specific experience.
Think of leaders that you’ve had – both good and bad – and ask yourself why you performed well, learned, or made progress. Working with a leader who cares, is present and patient is often enough to positively affect your experience.
This website and my work are grounded in leadership and helping people who are learning. An overview of the journey:
- Consciously decide and then commit to learning about leadership
- Find a mentor or advisor who can be direct, honest and has no skin the business
- Listen carefully and honestly
- Be deliberate in what you do
- Examine your own behavior, speech, and biases
- Work on your story, the story of the business, and discover individual team member’s stories.
- Define your business purpose and values, and compare that to how your business operates.
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