Leadership challenges vary depending on the size of the business. The nature of startups and SMEs, however, make them go more often through transformations, and much faster.
Let’s delve into the dynamic world of executive leadership within these companies to explore critical strategies for success, including fostering innovation, managing financial constraints, and cultivating talent, while also examining the hurdles CEOs must overcome to achieve sustainable growth and maintain a competitive edge in today’s rapidly evolving market.
What is a CEO’s mind like?
CEOs tend to do many things at the same time, as their role itself requires a multitasking mind. However, unless these skills are honed, they end up losing focus. To develop their organisation without losing this focus, particularly when diving into a routine or doing all things as a jack-of-all-trades / master-of-none, (for example, also overseeing HR, accounting, operations, business development and project management), they need to stop doing everything and stay resolute on what they do best, i.e. be the leader of the organisation.
An example can be seen in the restaurant industry – a great chef decides to open a restaurant; however, he doesn’t know once it’s open, he won’t be able to cook anymore. He’ll need to manage the business, take care of legalities and day to day operations, hire a team etc.
Every founder needs to make a call if he or she wants to continue doing what he/she is good at and hire a manager for their business, or to become a manager and hire specialists to do the work. Many CEOs get confused here, try to do both, losing focus, failing in managing their business and then go back to being a specialist in someone else’s business.
If one does go down the route of hiring specialists, it isn’t easy to attract top talent while you are still a small business and not well-known on the market. Talent management and recruitment is something that may be difficult for an SME or startup founder to do on their own as there are millions of other tasks that will keep distracting.
That’s even before we start talking about how to build a full team. Finding people who can work together efficiently and purposefully, towards a common goal while keeping them motivated for months and years, this is a herculean task that many who have full time jobs in companies don’t realise the gravity of. That’s because it’s always ‘someone else’s job’ to do this when you’re a salaried employee.
Once you’ve set up and have the right people in place, the next challenge a leader will face is the rapid pace of change in a volatile economy. Take for example the current situations successful startups are facing worldwide, which saw a spate of firings and redundancies being announced in the first half of 2023.
Market factors, legislative changes, rapid evolution of technologies like AI, many other elements can completely disrupt a business overnight. A strong, efficient leader can navigate these changes due to their skills in adapting to situations no matter the intensity. This brings us to another required skill: decision making in difficult situations.
The journey to the top may have many steps, but once you reach there, it is a lonely endeavour. You have only your wits, your experience and your gut instinct to rely on.
Building your corporate culture around your leadership style
Managing personalities – that’s the key to building a powerful and efficient corporate culture. A leader needs to understand and acknowledge the difference between his A-players and B- or C-players. They all need to be managed differently.
If CEO focuses on the development of top performers only, which is usually only 10% of a workforce, they will have an ineffective team. If they keep developing B- and C- players, A-players will leave an organisation as there is no drive and development for them there.
This, coupled with the fact that every person has a different personality e.g. proactive, reactive, submissive, assertive, aggressive, sublime, makes it more evident that senior leadership is more about people management than business management. Richard Branson keeps stressing that a leader should focus on his people, and the people will take care of the business in turn.
Aligning your team
It is critical to ensure your processes are geared towards a cohesive understanding of the business itself among your team members. While tasks come and go, the underlying deliverable should always be the growth and success of the business itself. Once this becomes second nature to the team, all processes become attuned to this deliverable.
From regular catch-up sessions with leadership teams to revisiting the company’s vision and mission from time to time, it’s important to make sure this cohesiveness is communicated. Your vision should be broken down into a yearly strategy, the strategy into quarterly plan, the quarterly plan into monthly KPIs and focus areas. This helps everyone stay focused, from the top down.
Balancing risk-taking and innovation with stability and consistency as a leader
Everyone has a different leadership style, borne off their strengths and weaknesses. Thus, it is highly recommended to have a founders in a business or a founder plus executive team with varying expertise and performance styles.
If your personality is that of a go-getter, it’s recommended to have an analytical person with you to balance that risk taking, outgoing approach and get 2nd opinion to vet ideas and strategies. Quite often, an analytical person runs a business, while a go-getter leader is responsible for innovation and business development.
Developing future leaders
A business can only grow based on the growth trajectory of its people. Businesses that provide opportunities for their team to grow into leadership roles usually thrive as a sense of ownership is instilled in said team members. However, two things are critical for this to succeed: a healthy feedback and coaching environment where areas for improvement and development are identified.
It is important to remember that a business, especially, small businesses, must be accountable to itself first, then to its shareholders and customers. The effectiveness of leadership strategies should be measured by setting clear goals, tracking progress towards those goals, gathering feedback from team members and stakeholders, and assessing the impact of the strategies on the organisation’s performance and culture.
Without this, a business is just working on feelings and emotions of founders rather than actual results and impact. Leadership is many things at once, and while it can take years to master, just being on that path of learning is enough to help your business grow.
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