Founding a startup and developing an idea into a product takes more than one person. Startup teams may be small, but they can be highly efficient, especially when they’re supported by a strong leader. But what constitutes a strong leader in the context of a startup? And what is the best startup leadership style?
In our last blog post, we examined why being a scared and therefore scary leader is inefficient. In this post, we’re picking up where that post left off and focusing on three leadership styles that have been proven to be successful for startups. Read on for more.
Leaders vs Managers – What’s the Difference?
Sometimes, it’s easy to get lost in the semantics of it all, but I thought it’s worth clarifying the difference between leaders and managers. In some cases, startup leaders are also day-to-day managers, but as a team grows roles often become more clearly defined.
What differentiates a leader from a manager? In 2019, Richard Sudek, the Executive Director of the University of California at Irvine (UCI)’ Applied Innovation division, summed it up like this: “A leader creates mission and purpose, and managers implement that mission or vision.”
This short sentence contains more leadership requirements than you might initially think. Here are a few key observations:
- Leaders need to have a clear vision
- Leaders need to be able to communicate their vision
- Leaders need to delegate some of their responsibility to others
- Leaders are role models
What Makes a Startup Founder a Role Model?
Throughout our lives, we model our behaviour on people that we look up to. When we’re children, parents or teachers may have been traditional role models. But there are also athletes, community leaders and celebrities who can become role models. For startup founders, other successful founders who have already realised the dream of building and scaling their companies may become role models.
As a founder, you need to realise that you’re a role model, too. The way founders act sets the tone for their teams. A founder who prioritises product quality and reliable customer service while also caring for the well-being of his team is more likely to inspire similar behaviours from team members. Put simply, treat your employees and your customers like you would want them to treat you, and you’re (almost) automatically acting like a role model.
With that in mind, let’s look closely at leadership styles.
Three Key Startup Leadership Styles
Before looking at different styles, I want to make it clear that few leaders will stick to one single leadership style throughout any given project, much less their entire career. Most will borrow from various styles, although they tend to have a prevalent style.
1. Democratic Leadership
Like in politics, democratic leadership in business involves the entire team. Democratic leaders involve their teams in the decision-making process. They have a vision they’d like to realise, but the details of that are up for discussion.
Startups that are led democratically tend to have a positive work culture. As a democratic leader, you may find it easier to retain your team and attract talented people. Social media management company Buffer is an example where an inclusive approach has resulted in a period of growth.
On the other hand, companies that are led like this may take longer to make decisions than their competitors. Listening to diverse opinions takes time, and democratic leaders may run the risk of missing opportunities when they can’t move fast.
2. Transformational Leadership
Transformational leadership is another type of leadership that is based on creating a positive company culture. Transformational leaders tend to have a strong vision for the business they’re heading.
One example of such a leader is the former Starbucks CEO Howard Schultz who had the foresight to imagine a company that could grow from a local coffee shop to become a global player. Transformational leaders motivate and inspire their employees to embrace change and to think creatively.
This type of leadership can be extremely effective for startups because it encourages adaptability and agility. Bill Gates is another example of a leader who consistently pushed his team to search for groundbreaking innovations and now pursues equally inspirational goals outside of Microsoft.
Transformational leaders tend to be strong, charismatic personalities, and they have been known for pushing some of their team members to their limits. Take Elon Musk, for example. Aside from courting controversies, he is known for working extremely long hours. That may inspire some team members, but it can also put off others who prefer a different style of balancing their work and personal lives.
3. Laissez-Faire Leadership
Does it ever work to leave your team to their own devices? If you’re in the very early stages of building your business, you may find yourself shaking your head at this suggestion. But if you’re a little further along in your development and have a strong team in place, then why not allow employees to do their jobs without interfering too much?
Laissez-faire leadership doesn’t mean stepping away completely. This approach simply prioritises autonomy and guidance over (too-)close control. If you have built a highly engaged and skilled team, this leadership style can give you as a founder an excellent opportunity to free up your time and perhaps pursue new funding sources.
Which Approach is Right for You?
By now, you may have realised that there is no one-size-fits-all answer to choosing the right leadership style. For most founders, the answer lies in combining different approaches. Situational leadership is a concept that embraces this idea.
Situational leadership means nothing other than adapting your leadership style to the circumstances in front of you. That may mean taking more control at one time while giving the team more space at other times.
For many startups, the best choice of leadership style will vary as they develop. Each style above allows for role model behaviour, but perhaps none more so than laissez-faire leadership. While other leadership types set clearer rules, the laissez-faire approach gives team members more freedom. As a consequence, they may be more likely to look to the company founder for inspiration and guidance.
No matter their chosen leadership style, to be or to remain effective, founders must keep an open mind and be ready to adapt and grow with the business. Do that, and you’re putting your startup in an excellent position for growth. Need more inspiration? Get in touch.