The Leadership Challenge at Start-ups

Most start-up founders tend to have an amazing journey in the beginning, largely because of a brilliant idea and their ability to identify that unique opportunity, which had not been visible to most.

However, the first mover advantage typically doesn't last for a very long time, particularly in today's competitive business scenario. So, what differentiates successful start-ups from the rest? Is it that one leader who came up with the idea or is it the set of people who rallied around it and made it come alive?

The Common Challenges at most Start-ups

The biggest challenge that leaders at start-ups face is what I like to call mixing up "Leadership Courage' with "Bravado.' There is a thin line between the two. Several co-founders have a lot of bravadoes, which in many cases has been a key element in their success – their willingness to take daunting risks. But on the flip side, bravado could also lead to arrogance.

Courage, on the other hand, requires leaders to not only take risks but make consistent, well thought out decisions, incorporating diverse views. The other leadership challenge that is faced by start-ups is the short term vs. long term focus, also known as a drive for valuation vs. value creation.

While some entrepreneurs have a long-term vision for their companies and are focused on growing and scaling, many are focused on getting immediate funding, creating an early exit option and pushing for immediate gains. Thus, the toggle between building for legacy or for the "next sell' is one that many entrepreneurs struggle with.

Thirdly, a start-up leader is not only expected to be a "jack of all trades,' but a master of some as well. Leaders need to have an appetite to continuously learn and be open to diverse perspectives. Maintaining this balance of depth and breadth is again very difficult and most start-up leaders struggle with it, resulting in leadership either micromanaging the growth or being too distant from the growth.

Another challenge is the leaders' ability to build a winning team.There are several conflicts a growing organization encounters in its adolescent phase, when the founder can no longer individually manage it and there is a need to hire experienced managers.

This typically leads to a conflict with the original team who resents this induction of experienced managers. The biggest challenge at this stage is the ability of the founder to change his/her leadership style.

Finally, one of the most common challenges in startups is the ability to define the human resources and leadership function and mandate. With all hands on deck, these two functions become very fuzzy and the assumption is that they can be done by all.

The reality is that this often becomes the biggest bottleneck for start-ups, the moment they reach a certain headcount and are trying to set out on an enterprise journey. Unfortunately, by then, all the senior members would have built their turfs, are comfortable in their ways and hence changing anything is far more difficult.

Form of Leadership Required Today

The primary goal of any leader is to actualize the organizational vision. It's not enough to cascade the vision; a good leader will have to build buy in and ensure an equal amount of ownership for the dream.

But that will only happen when their ego doesn't come in the way of others being able to own the dream. One of the other important leadership quality that differentiates the success of the start-up is leadership maturity.

Mature leaders recognize the importance of building diversity in the team and broadening perspectives. Finally, the key to success is to "Think Team' - no matter how brilliant their mind or strategy is.

Celebrate the Small Wins, but look for the Next Win

It's the leader's job to set the agenda and look for more improvement. And the thing one needs to remind people all the time is - we're really good compared to five years ago, but we suck compared to what we're going to be in five years.

But that will only happen when their ego doesn't come in the way of others being able to own the dream. One of the other important leadership quality that differentiates the success of the start-up is leadership maturity.

Mature leaders recognize the importance of building diversity in the team and broadening perspectives. Finally, the key to success is to "Think Team' - no matter how brilliant their mind or strategy is. Celebrate the Small Wins, but look for the Next Win It's the leader's job to set the agenda and look for more improvement. And the thing one needs to remind people all the time is - we're really good compared to five years ago, but we suck compared to what we're going to be in five years.

(This article was first published in the June issue of Entrepreneur Magazine. To subscribe, click here)