Leadership Lessons For Emerging Growth Companies
Stage #1 – Raw Startup and Ideation

A mini-series on practical leadership focus for start-ups and emerging growth company senior executives
This is the second of a 5-part special series

This series explores how leadership focus and skills must evolve as a company grows from a raw startup to a successful enterprise in an expansion stage. Last week we used the five stages of a company’s development to explore how leadership evolves from a raw startup to a mature company (If you missed the first part, you can read it here.) This week we will look at the appropriate leadership style in more depth for a Stage 1 company.

Stage #1 Leadership Focus Keys

During the formation of a raw startup, a leader needs to find a few key people that will complement his or her own skill sets and experience. Without these other perspectives, you will make more mistakes, take more time, and eat more capital. No one can expect to understand every business discipline today or keep up with the rapidly changing landscape in all areas. This implies you may need a couple of fairly high-level experts to buy into your vision of a new company. 

The people you need must have lots of experience and strong opinions of their own. They should be skeptical and will know that the odds of success launching a new company are not great. It is easy to hire and convince individual contributors who are simply looking for a daily wage. It is much more difficult to convince the senior people you need at this stage. Therefore, your leadership skills and wisdom must be shown quickly and effectively.

So what are the keys to leadership at this formative stage? Well, here is a list to ponder, remembering they must be shown effectively one-on-one.

1. Deep expertise in the area(s) required for success in the business. Generally, domain expertise in the industry or a business model like it in other industries. Typically, a deep understanding of a problem that you know how to solve that others are ignoring.
2. Pay attention to detail concerning product development and customer value creation; don’t just have a big-picture idea and entrust it to others to implement everything.
3. Creativity and flexibility. Your business is a heat-seeking missile that must make large course changes initially and then smaller corrections over time as you approach your target more closely. Believing you know it all on day one is the kiss of death.
4. A past reputation of success is certainly helpful, as most people are greatly influenced by this. You must be able to articulate to others what you have accomplished and why this makes you highly qualified to start this company. You are selling yourself and your abilities, and these people are taking a risk by joining you.

Confidence in the value the new company can deliver will sometimes border on arrogance. Yet the concept that “all progress is the result of unreasonable men” says that there will be many detractors and doubters. Can you articulate why and how you will create value for customers in a way that others are not providing today? Any wavering or doubt here can cause major problems, including loss of confidence company-wide. 

You should not be hiring people until you are sure you have found a way to create value for customers, at least in theory. This does not mean you have all the answers; on the contrary, you must have a participatory management style and seek input on how to deliver this value to the market. It does not mean you know everything needed to make the business successful either, just that the core value delivered to the customer is powerful enough to be the reason for forming a new venture that can be successful.

Your attitude in all major decisions should be one of quiet confidence, leadership oozing out of your pores, not by mandate or ownership, which will seem defensive and arrogant. The natural authority granted as a result of your deep understanding of the business is what people will trust and follow.

In very large companies, the CEO need not know that much about the many products and services. How much do you think Jack Welch knows about jet engines or medical devices? However, during this formation stage, you must understand the customer and value proposition that the company will deliver better than anyone else. This gets people to follow you because they want to, which is ten times more powerful than following you because they have to get their paycheck.

So leadership at this stage is mainly about being an expert in the business and a good manager of people directly. The transition from manager to founder is actually not that difficult because, as a good manager, you probably have already learned to do most of these things.

All of these key principles must continue to be present for leaders to be successful in larger organizations, but the way they are shown and delivered will evolve dramatically as the organization grows.

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