Leadership

Why Leadership Is not Acknowledged in the Startup Industry

The real reason for the failure of any business is lack of leadership, which is driven by a purpose and vision.
Why Leadership Is not Acknowledged in the Startup Industry
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CFA,Chief Investment Officer - Dayim Holdings, Kingdom of Saudi Arabia
4 min read
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It’s often said that at the core of any successful business or startup is a unique idea. My take is a bit different on this. I truly believe that at the core of any successful business is an inspired leader, who is able to motivate its team to perform at their full potential. These kinds of leaders are able to create an environment within the organization, where people, even with average talent are able to achieve remarkable things.

Most of the time, the failure of any business is attributed to a bad business idea, undercapitalization, poor marketing strategies or unfavorable market environment. However, I believe that the real reason for the failure of any business is lack of leadership, which is driven by a purpose and vision. This kind of leaders are able to attract people, who will not be motivated by paychecks, but by the same vision and mission as that of a leader. I have seen numerous examples, where businesses are not achieving their full potential, despite of a great business model, because of distracted or laid back leadership, which creates an environment, where even the best of the talent end up giving sub-par performances.

My belief is that; majority of people generally perform only till the minimum acceptable standards. These standards could be perceived standards in their own heads or generally acceptable standards in the organization. When people are left to their own, they tend to just meet the lower of these two standards. An employee’s success and performance is heavily influenced by the types of leaders & mentors, they are able to observe and learn from. One of the most important quality of the leader is to motivate the team perform to their full potential if not beyond. Leadership commands an even more significant role in a startup since it’s difficult for new businesses to attract the best talent due to limited resources.

Leadership Teams

If you dig the history of successful startups, you will find that beside a good business idea, most of these successful businesses, had leaders, who were never bestowed with all resources in the world, but had a vision and were internally driven and motivated by a cause and purpose.

Let’s get a step further into the type of leadership styles. When we talk about leadership, we have two kinds of leaders. One with the trait of staying calm in tough market conditions and thereby giving a lot of comfort, assurance and freedom to the whole organization. This assurance and confidence, brings out the best from the whole organization and allows them to express themselves. These kinds of leaders are able to think two steps ahead of situations, take the responsibility and make the right moves. Then you have leaders who take the lead in every situation and inspire the team just by their extraordinary work ethics and their desire to perform in every situation. This kind of leadership is so contagious that it pushes everybody in the organization to pick themselves up and perform exceedingly well in their roles.

Impact of a Leader

Leaders who are motivated by wrong things attract employees who are motivated by pay checks. Leaders who are motivated by a purpose, attract and retain employees who will work with their blood, sweat and tears, as they share a common purpose & belief, as that of the leader.

Leadership not only has an impact on the employees alone, it has a great impact on the customers as well. Customers buy products & services, not because of how and what companies are selling it, but why companies are selling it. What is the leader’s vision behind the company and products which plays a crucial role in the acceptability of any new product. I would refer here to the law of diffusion of innovation, which states that first 16% percent of the users of any new product are classified into innovators (2.5%) and early adopters (13.5%), followed by 34% early majority, 34% late majority and 16% laggards.

The rate of adoption among the innovators and early adopters is highly influenced by the vision and the purpose of the leadership in any company. Once a company is able to cross this 16%, the rest just follow. Only after crossing this tipping point, the business has a  market success.

The role and personality of the leaders is one of the most important determinant of the success of a company, besides the business idea. However, in the startup world, a disproportionate credit has always been given to the core business idea.

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