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Five Ways A Startup Leader Fails The Team And The Company The character of the business itself trickles down from the top.

By Neil Petch

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The boss is always ultimately accountable. The character of the business itself trickles down from the top. That's why a toxic leader will develop a toxic team and a productive leader will drive a positive team.

A poorly performing manager with an inflated sense of self (or one who can't make decisions) is likely to create more challenges than solutions. The result of bad leadership can be conflicts with and between staff- and a business that will turn in the wrong direction. Bad leadership could easily derail a startup. So it's crucial to develop a team intelligence and drive, a cohesive machine of productivity rather than a fractured band of rogue workers each fighting for status or just not doing their jobs correctly.

In his book The Heart of a Leader, management expert Ken Blanchard expresses it this way: "None of us is as smart as all of us." It's about the collective. He adds that, "the key to successful leadership is influence, not authority." You get more out of people who are onside, working in the same clear direction, with the same motivation as you. On the flipside, if the boss manages the team badly, the team will fail and the business will fail. It's that simple.

So here we identify those negative traits that will likely mean a founder doesn't get good results from employees.

1. Lacking a crystal-clear focus

In an article "Beware the Busy Manager" in the Harvard Business Review, Heike Bruch and Sumantra Ghoshal studied business managers for ten years to find out what made them achieve goals- and in contrast what made them ineffective. The researchers observed: "Very few managers use their time as effectively as they could. They think they're attending to pressing matters, but they are really just spinning the wheels."

Managers get caught up by daily routines that drain their time to drive the business forward effectively. They spend too much time checking emails, writing and reading reports, running about "firefighting' small house-keeping tasks and going to endless meetings.

"After observing scores of managers for many years," the researchers noted, "we came to the conclusion that managers who take effective action – those who make difficult, even seemingly impossible things happen – rely on a combination of two traits: Focus and energy."

Focused managers aren't reactive, they have a laser-like focus to see a task through. They don't get side-tracked by emails and meetings and things that go wrong- they simply see the goal and do it.

2. Lacking organisation

If your sales team does not work with your product team, if your accountant hasn't got the right information, or your website is out of date, well- this is what leadership is about. The skill is knowing how to run the show in such a way that nothing can be out of sync and your team is not confused about what they should be doing.

A manager's good organisational skills will be even more essential if the company grows- as additional tiers of management will be needed, and more complex budgets planned. Progress makes work exponential and that needs to be managed so that everyone copes. The more organised the leader from the outset – the more functional the business will be.

Entrepreneur Steve Blank headed eight tech companies and is a philosopher on all things Silicon Valley. He talks about a phenomenon he calls "organisational debt" that can kill a company very quickly: "Organisational debt is all the people/culture compromises made to 'just get it done' in the early stages of a startup. Just when things should be going great, organisational debt can turn a growing company into a chaotic nightmare."

Organisational skills also lead to a better service. The more organised you are, the more productive you are and the better quality of service you provide. Yes, one of the leader's main jobs is to get things to a high level of order, because order equals efficiency, and efficiency can make a huge difference to your bottom line.

3. Lacking enthusiasm

Enthusiasm is sometimes hard to muster when you are up against the numerous challenges that running a startup can throw at you. But without demonstrating motivation to those who work for you it will be almost impossible to succeed.

In one study published in the Journal of Experimental Education, authors Brian C. Patrick, Jennifer Hisley and Toni Kempler looked at how teachers motivate students. It was found that "among the teacher variables, enthusiasm was the most powerful unique predictor of students' intrinsic motivation and vitality."

This principal has the same relevance for a manager's interaction with the team. People respond to enthusiasm with positivity and belief in the leadership. Walter Chrysler, who founded the automobile company that carries his name, said "the real secret of success is enthusiasm."

Related: Finding Your Signature Leadership Style

4. Lacking attention to detail during the hiring process

Hiring the right people when you are starting out in business can make or break the company- if the sales executive can't hit the target, if the marketing manager's campaigns have no impact, then all you have is a salary to pay and no return on that investment. The money pit from a bad hire gets deeper and deeper with each moment that person is in the role due to the cost of all the opportunities they miss and mistakes they make.

Tony Hsieh is the CEO of online clothing company Zappos- he puts bad hires down as the biggest category of mistake for his firm, with the unnecessary cost estimated at US$100 million, factoring in the mistakes those hires made and the people they hired that were not suitable either.

Unproductive workers can sit in a role indefinitely if you let them- clock-in, clock-out and achieve nothing for you. They burn a hole in your capital and dismantle your dreams of success through their apathy or poor performance.

In truth, this is a problem that all businesses face, regardless of size. It's tough to get the right people in the right roles. A report by PwC titled The Talent Challenge, Adapting to Growth (based on interviews of 1,344 CEOs from 68 countries) found that 93% of CEOs recognize a need to change their strategy for attracting and retaining talent yet 61% haven't even taken the first step in doing so.

It's clear that the main way a founder can fail both company and team in one swoop is to litter that team with ineffective or counter-productive employees.

5. Lacking communication skills

Communicating a vision with clarity to the team, the tasks they must complete and the commitment needed to succeed, is all part of the essential make-up of an effective leader. Having a vision in your head is one thing- but sharing that vision and outlining the steps to get there is another.

Communication is a common flaw in managers and part of the problem is that leaders often think of communication as one-way instead of two-way. Managers can speak over subordinates without checking if they understand or even recognise why they are being asked to do something.

Think of it this way: "Developing excellent communication skills is absolutely essential to effective leadership. The leader must be able to share knowledge and ideas to transmit a sense of urgency and enthusiasm to others. If a leader can't get a message across clearly and motivate others to act on it, then having a message doesn't even matter." That is pretty conclusive- from none less than Gilbert Amelio, former CEO at National Superconductor and Apple, writing in the book Pathways to Success.

Lead, be inspiring, and listen

As a startup leader, your soft skills are as important as your technical skills and business plan. The people who work for you are your business, so make sure that they get the best direction from you. Everyone's role should count and be part of the growth of the business.

Whether you are interviewing for jobs or conducting your daily catch-ups with staff, listen to them, observe their reactions, be aware if they have issues and make sure they understand you well. If you make bad hires, if you leave your team to fend for themselves or let them slide into a stale routine then your business will suffer as a result.

Related: Nine Things That True Leaders (Should) Never Do

Neil Petch

Founder and Chairman, Virtugroup

Neil Petch actively assists over 300 entrepreneurs and startups to conceive, plan, and build their businesses on a monthly basis.

After launching Virtuzone as the first private company formation business in the region over 10 years ago, Neil has led the company to set up more than 16,000 businesses, making it the largest, fastest-growing and best-known setup operator in the Middle East.

As the chairman of the holding company, Virtugroup, Neil also leads VirtuVest, an in-house angel investment vehicle; Virtuzone Mainland, a provider of directorship services, corporate sponsorship and facilitator of local Dubai and Abu Dhabi company setups; and Next Generation Equity, a citizenship-by-investment firm. Virtugroup has invested in and supported the growth of multiple companies and delivered passports in over 10 different jurisdictions. Virtugroup also enjoys partnerships with Dubai FDI, the Chamber of Commerce, Dubai Holdings (ARN), VFS, Regus, Etisalat, KPMG, Aramex and Beehive, and has received awards from Arabian Business and Entrepreneur Magazine, among others.

In addition to starting up businesses, Neil has held leadership roles in several companies. He helped establish ITP, the largest media publishing house in the Gulf, which he oversaw growing from two to 600 employees. At ITP, he spearheaded the launch of over 60 digital and print titles, including Time Out, Harper’s Bazaar, Arabian Business, Ahlan and Grazia.

As Managing Director of ENG Media, Neil launched the Coast FM radio station and numerous magazines, including MediaWeek. For the last seven years, Neil has also served as Chairman of GMG, the world’s first interbank financial brokerage based out of Dubai, with offices in DIFC and London. Due to his extensive knowledge and expertise, Neil has been appointed a member of the ‘Ease of Banking’ panel organised by the Chamber of Commerce.

Having lived in over a dozen countries and with a career spanning over 25 years in the UAE, Neil has the ability to merge astute cultural insight with fresh thinking, leveraging his seasoned business acumen, intuition and black book to repeatedly bring ideas to living, breathing success stories.

Neil has appeared in BBC (Dubai Dreams) and ITV (Piers Morgan) features on Dubai, as well as programmes on BBC World and Sky. He has participated as a judge on the radio programme Falcons’ Lair, an entrepreneurship reality show loosely based on the BBC production Dragons’ Den, as well as a similar TV competition hosted by MAD Talks. He now hosts Starting Up on Dubai Eye 103.8FM, the only national weekly show for the startup community in the world’s startup capital.

Neil also lends his in-depth market insight to fellow entrepreneurs and helps cultivate Public Private Partnerships as a Task Force Member of the Advisory Council, a coalition of key decision-makers and prominent movers of the UAE business landscape, led by EMIR and the Ministry of Economy.

He is also a regular speaker, panelist, and economic commentator, specialising in the SME sector.


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