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How not to let people problems kill your startup

August 24th, 2015
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Will your leadership style give your startup a better than 50-50 chance of success?

While startup businesses may have highly innovative products, services and funding, the success or failure of the business will rest primarily on the ability of the founder/CEO to hire, lead, and inspire the right people.

According to Harvard Business School professor Noam Wasserman people problems, such as bad leadership and hiring the wrong people, were the main reasons for the majority of business failures among 10,000 startup companies surveyed for his book, The Founder’s Dilemma (Princeton University Press, 2012).

A founder/CEO has a driving ambition to make his/her vision a reality. Their skill sets must include the ability to persuade people to invest time and energy in the company and motivate people to take ‘ownership’ of the vision, even though the odds of survival beyond one year are well below 50 percent. If their ambitions include the global marketplace, there will be an added level of leadership, decision-making, and multicultural appreciation to survive in a very dynamic environment.

Know your strengths & weaknesses as a leader

One of the most important survival skills a founder can develop is self-awareness of their leadership and communication styles, strengths and weaknesses; as well as that of their staff.

A revered high tech titan like Steve Jobs was renowned for having a volcanic temper and scathing criticism of subordinates who didn’t meet his standards, a combination that could have made Apple just another failed startup.

But Jobs had enough self-awareness to recognize that his style of leadership would only work if his key reports were not just talented but had enough self-confidence to deal with his mercurial temperament. He hired Tim Cook, Jonathan Ive and others because they were committed to his strategic vision and capable of realizing it without him being in the picture.

Have other high-profile Digital Age start-up companies learned from these experiences? Two of the best known, Google and Facebook, appear to have made the connection. Both companies have received kudos for executive leadership and as great places to work. The jury is still out on newer companies that have visionary leaders with strong personalities, such as Tesla and Uber.

Be aware of your blind spots

Startup founders must dream big in order to fuel their ambitions; however, does their staff share in the vision? Far too many entrepreneurs cannot answer this basic question. Having an unflagging sense of self-confidence helps them stay true to their strategic vision through the slog of product development, raising capital and a myriad of other challenges. This can-do attitude may help to overcome barriers but also cover up blind spots when making people decisions and earning their commitment to the vision.

In early stage startups, budget considerations may allow only for paid external advisers to provide expertise in essential areas, such as legal and accounting/auditing. However, it is also a period in the life of a company where getting good advice could make the difference between success and failure.

Don’t be afraid to ask for help

One option for the budget conscious founder is to form a “kitchen cabinet” of unofficial external advisers that could share their expertise as well as frank and honest feedback.

My kitchen cabinet is comprised of people with varied backgrounds and experiences in the US and global marketplace, such as entrepreneurs, financial professionals, lawyers and business services. Their advice has often kept me from stepping into sinkholes. All decisions have consequences and impacts, so adding a diversity of staff, both position and gender, to the kitchen cabinet can prove to be quite valuable.

Frank advice from trusted advisers can help a founder to become self-aware of their leadership and communication styles, strengths and weaknesses, which would be helpful in deciding whether finding a co-founder with complimentary skills would make good business sense.

Hiring key staff at different stages of a startup’s life cycle is another challenge. Multi-tasking and O.J.T. may be the norm for most startups, but not for businesses that want sustainable growth. Again, having the benefit of the expertise provided by trusted advisers could help to prevent making costly mistakes.

Are you planning to go global? The international markets could create huge demand for your products or services. Getting good advice is the key to making the right strategic decisions that could make or break a company, such as finding the right foreign partners, in-country managers and employees.

At some point, most startups will need to develop internal capabilities or hire external expertise to manage these key areas for growing the business.

The self-aware startup founder that knows his/her leadership strengths and weaknesses and has enough self-confidence to ask for advice is more likely to make the right people decisions and keep her company at the 50 + percent survival rate.

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