Chapter 17
Leading the Way
IN THIS CHAPTER
Promoting leadership in yourself and others
Acquiring the necessary business skills and traits
Establishing your company culture
Nurturing your company vision and moving forward
One key to success in business is seizing opportunities. If you ask successful business owners how they made it, they usually list two things: They had a solid business plan in place, and when they saw their opportunity, they stuck to that plan. One thing they usually don’t mention, at least not publicly, is that they also were lucky — they were the right person with the right idea at the right time. But having a plan when the fickle finger of fate strikes is what separates them from those folks who got hit by the lightning of luck — and soon perished. Luck always helps; luck plus planning spells success.
Right now, your business plan represents an opportunity. One of the biggest mistakes that companies make is not taking full advantage of the business plans they work so hard on. We’ve seen companies use their plans to raise loads of money and put together a dynamite management team — only to toss the plan into a top drawer once the check arrives. Six months or a year later, the owners wonder why their business is sputtering. We’ve watched entrepreneurs with great ideas and a sound business strategy never get their companies off the ground because they fail to follow through with their plans. Putting your business plan together isn’t enough; you have to lead the way and put your plan to work. This chapter can help.
Encouraging Leadership Roles
In reviewing your completed business plan, what do you see as the most important parts of your company? Maybe you think of your business mainly in terms of the products that you offer or the services that you provide. Is the image that first comes to mind a cool website flashing your logo, or a building with your name posted prominently on the front? Perhaps you also think of the organization itself, your way of doing business, and the reputation you want to cultivate. Your company is a combination of all these things and more. But most importantly, the people in your firm — including you — define your business.
Leading from the front or the back
If you want people to follow you into the bright future laid out in your business plan, you have to lead them. One famous leadership maxim says, “Lead from the front — don’t ask underlings to do something that you wouldn’t do yourself.” This sounds inspirational, but its application only goes so far. Sometimes you have to lead from behind, persuading the people in the organization that it’s their responsibility to be out front if they want to succeed. This formulation of leadership was described by Nelson Mandela, universally recognized as one of the world’s great leaders of recent times. He wrote that a successful leader was like a shepherd: “He stays behind the flock, letting the most nimble go out ahead, whereupon the others follow, not realizing that all along they are being directed from behind.”
So which one is it? What does it really mean to be a leader, and how can you encourage others to take on leadership roles? These are tough questions. In fact, there really aren’t any easy formulas that we can pass on to you that will turn you into a business leader. There are literally not hundreds but thousands of books and articles today on this topic. Why so many? Probably because no one has yet found the definitive answer.
But another reason that the topic of leadership is so popular is because it’s so important. Leadership is the ultimate resource that creates successful businesses (and many other endeavors as well). Let’s begin, though, with an important distinction: leadership and management are two very different things. In this book we give you (we hope!) a comprehensive guide to improve the odds of success in your business venture by providing management know-how. These skills can be learned. Leadership, on the other hand, is a competence that some are born with and some never acquire because of their personality quirks. But that being said, there are still some tips and insights that can put you on a high road if you’re willing to be honest with yourself and undertake the changes that are required.
Looking at leadership styles
Effective leaders lead in many different ways, depending on the circumstances at hand. The charismatic leader is often associated with start-ups. This is an individual who can inspire, rouse colleagues to reach a higher level, excite everyone around with their enthusiasm and passion. When a business firm has found its groove and is moving forward at a decent pace, effective leadership often shows itself in people who are steady in their composure, competent in their work, and very good at shepherding colleagues with a gentle but sure touch — more the guide by your side than the sage on the stage.
These are generalizations. Just look around, and you’ll see what we mean. Though there is a relationship of some kind between leadership style and a business situation, it is not ironclad. Think of Winston Churchill, who usually tops or is near the top of a list of “greatest leaders in modern history” (boy, do we Americans love those top ten lists). What do we find? A politician who failed consistently, but when the situation finally arose that aligned his temperament with the required decision, he met the challenge and prevailed.
But you can’t always just sit and wait for that moment of destiny to arrive. Rather, when you find yourself in different business situations, and you will, you do have to be prepared to alter the way you lead. Business rarely gives you a second chance. Consider the following leadership styles and behaviors:
- The advisor: If you want your people to take on responsibility over time, you have to let them go off and try to accomplish the tasks you give them on their own. And you also have to be willing to accept less-than-perfect outcomes; success sometimes comes only with experiences that involved failure. Make sure your people know how to ask for help when they know they need it — and that asking is not an admission of incompetence or shame.
- The colleague: As you bring people into your company and develop strong working relationships over time, your leadership may become almost invisible. On the surface, you behave more like a colleague — one among equals. In this case, you lead in subtle ways and often by example. If you demand the best of yourself, others excel in your shadow. If you meet deadlines, your employees strive to meet them, too.
- The boss: Sometimes, you simply have to tell people what to do, either because they don’t know how to proceed or because you have definite ideas about what should happen next — that’s why you’re the boss and they’re not. Even when you lead as the boss, however, remember that you get the most out of people by giving them good reasons to carry out what you ask of them. No one likes to be dictated to, but most can be persuaded and educated by a thoughtful and courteous discussion void of acrimony.
We leave it up to you to determine what your base point leadership style is — and whether you have the ability to alter it as the situation determines. One tip: The best leaders are able to do this.
Developing Business Skills (And Having the Right Personality Traits)
Your employees are responsible for turning your business plan into reality. You can’t just pick any bunch of random people who are willing and able to work (not if you want your plan to work, that is). The people you bring on board must have the right skills and personality to do what you ask them to do.
Evaluating personality traits
Personality characteristics have been studied by psychologists for generations now. There is a consensus that individuals who are in organizational settings (like a business firm) can be evaluated according to five major traits that are indicators of how well they will fit in and perform:
- Emotional stability
- Extroversion
- Openness
- Agreeableness
- Conscientiousness
In general, people who demonstrate these traits tend to perform at higher levels in an organization than do those who have deficiencies. Though not everyone in your firm might need to shine in all of the so-called “Big Five,” any evidence of a strong negative score should be a red flag. For example, someone who is in sales but has a highly introverted personality might not be the best fit. A person working in accounting or finance who isn’t terribly conscientious could lead to problems.
A variety of tools can be used to measure how well someone matches up against the Big Five. Here are a couple of online sites that can be consulted, but you can check out others as well:
Distinguishing appropriate skills
Good personality traits are important for people who work in your business. But they also need appropriate skills. You want your people to be tops in their own functional areas of responsibility, whether they work in engineering or operations, accounting, or sales. Yet today, they often need additional skills that are different than they were just 10 or 15 years ago. This is due to the revolution in business enabled by technology and globalization. Employees in business now need to have more general abilities and competencies that allow them to succeed in the company you want to build for the future. In short, the people around you should excel in one or more of the following activities:
- Managing information: Employees should be able to deal with an avalanche of information on almost every imaginable aspect of your company and industry. Although it’s not always an absolute necessity, having a good working knowledge of digital sources and tools is very important today. Another skill is data manipulation — not being a coder perhaps, but definitely being able to understand quantitative data when it’s presented.
- Thinking independently: Employees should be able to tackle business issues as they crop up. If you want to get the most out of your company, your associates have to take initiative, think on their own, and come up with answers to the business problems they face every day.
- Working in teams and communicating effectively: Employees should be able to get work done as part of a group. The need for speed in a complex business world makes it hard to get anything big accomplished without pooling resources, talent, and expertise. Collaboration counts.
- Dealing with change: Employees should be able to complete tasks in different ways, take on new responsibilities, and adapt to unfamiliar situations. Industries don’t stand still anymore, and if you want your company to keep up, you need people around you who can keep pace with a constantly changing business world — accepting the reality of change rather than always fighting it.
- Acquiring new skills: Employees should be able to keep on learning. If you want your company to move forward, your employees have to move ahead as well. You should provide avenues for employees to continue their professional education and encourage them to master new skills.
Creating the Right Culture
Business media today seems to report an endless cycle of accusations and controversies surrounding a clash of cultures in organizations. Younger employees — Millennials and Gen Xers raised in a different environment than prior generations — have brought a different standard of excellence to the workplace. Business leaders who ignore this, or flaunt the current expectations of acceptable behavior, often find themselves in hot water. In some cases, ranking executives have been terminated.
Organizational culture has been the focus of increased scrutiny of late as business firms learned the hard way that a toxic company environment could hurt. The CEO of one firm caught up in scandal stated: “There’s a high cost to a bad reputation.” If you’re starting up a new venture, you need to ensure that the values of your firm take hold in the way you want. If your business is already in operation, you need to know what values currently drive behavior — and if they are not aligned with your business plan, then you need a strategy to change them.
Your company culture comes from the common attitudes, beliefs, and behaviors of the people involved in your organization. In that sense, company culture resembles a nation’s culture. But remember: People aren’t born working for your company. In most cases they arrive with a prior set of deeply embedded notions of how to act. This is why testing new employees on the Big Five personality traits or some comparable evaluation is important (we discuss personality traits earlier in this chapter). It’s difficult to get people to change (duh!) — especially as they get older and past behaviors become more hard-wired.
When you attempt to curate a company culture, by either establishing one for a newly formed firm or pushing for change in an existing company, you bring together people of different backgrounds and try to give them a common outlook. Unfortunately, you can’t simply command people to have a particular point of view. They find ways to resist if they believe they are right and you are wrong. This is why leadership plays such a powerful role in the formation or change of organizational culture. There is ample evidence that the strongest company cultures often thrive when they have effective leaders, or erode when leadership begins to fade.
You have to think hard about the values that you want to define your business. That’s why we raise these early, in Chapters 3 and 4. You also need to ensure that your own behavior as a leader always reflects those values; to those who work with you, you’re the boss 24/7, not just 9 to 5. And whether you like it or not, everyone around you will be looking for the slightest hint at what constitutes behavior that’s acceptable or not. If something you do is perceived to have crossed a line, it will flash through your organization like a laser.
We’ve worked with some older business leaders who believe their younger employees are simply going through a phase. Over time, these gray hairs intone, youth will adjust to the realities of the business world. (We hope this doesn’t describe you.) But let’s admit it: A lot of young people today weren’t dealt the best of hands, and they want something better for their work life and future. They demand that the people around them — be they above, below, or at the same level — live up to the standards that are so easily preached but not always practiced. And they’re not shy about broadcasting their opinions. It’s easy to dismiss proponents of “wokeness,” but even a cursory review of their desires often reveals a powerful foundational truth: They want a better and more just world. Why would you argue with that?
The demands on business firms today go beyond good products and services; these are givens, the ante just to get into the game. They now also include positive organizational policies regarding diversity and inclusion in the workforce, socially responsible behavior, and appropriate concern for the environment. Common business terms that encompass these policies are CSR and ESG:
- CSR — corporate social responsibility — has been promoted for generations, as citizens came to recognize the central role that business plays in American life and how the internal policies of business firms can and should extend well beyond the bottom line.
- More recently, ESG has expanded this recognition. Advocates want businesses to demonstrate respect for the environment (E), social issues (S), and also enact internal firm governance procedures (G) that are transparent and equitable for all stakeholders. These are not unique issues for U.S.-based companies, BTW (“by the way” in Millennial-speak). In fact, European nations have mandated that businesses operating there comply with ESG standards by law. Failure can have severe financial penalties.
What all of this boils down to is that you need to be deeply concerned with your organization’s culture. You need to be absolutely sure that the values you publicly express are internally consistent with your goals and objectives as a business, and carried out by everyone in the firm, starting with you:
- Are women, people of color, and other such groupings of people given equal opportunities for recruitment, training, and advancement in your company? Are they treated with respect by all?
- Do the procedures you install in the workplace contribute to sustainability in the environment? Are there cost-effective changes you can make in this area that could lessen the degradation of the planet?
- What mechanisms do you use to ensure that the voices of all your colleagues can be heard? Do you communicate important information clearly and openly? Are channels available for employees to signal concerns, without fear of retaliation or retribution?
Some firms have found it useful to have an outside source conduct a periodic “climate survey.” This is a means to get an unfiltered perspective on the culture of your firm as it is perceived by the people who work there. If there are discrepancies between the reality on the ground and the noble-sounding values found on your vision and values statements, you have a problem. The survey will also give you a guide for change.
Following Through with Your Vision
In the end, your business plan represents the ultimate vision of what you want your company to become, right down to the last market initiative and financial projection. A company vision creates a sense of shared commitment and direction (see Chapter 3 for more info), and your business plan is a terrific way to communicate your vision to everyone who has a stake in your company. To keep your business plan a living, breathing document that conveys and refreshes your company vision, make use of the following suggestions on a regular basis:
- Reproduce your mission and vision statements on your website, in company newsletters, employee handbooks, and even on business cards. We’ve even seen these inscribed on the walls and doors of the firm, visible for all to see.
- Refer to your business plan whenever appropriate — during marketing strategy meetings or new product development forums, for example. Show how decisions made in functional areas of the business align with your firm’s vision, values, and mission.
- Use the plan as a yardstick to evaluate all programs and initiatives.
- Use your business goals and objectives as the primary guide when you conduct employee performance evaluations.
- Actively enlist feedback from everyone in the company when you prepare to assess and revise your business plan. Don’t let a small group of insiders capture it for themselves only.
“All parents reach a time when they must let go and trust that the values imparted will live on within their children. That time has nearly come for me and for Whole Foods.” John Mackey, co-founder and CEO of the Whole Foods grocery chain, made this statement when he stepped down. You, too, are likely not to be with your organization forever. Will you leave a legacy of value, or one of ashes?
Bringing Your Plan to Life (And Making a Final Check)
First impressions count. Get it wrong the first time, and it’s hard to recover. After you put your business plan down on paper (virtual or real), take the time to read it — and we mean really read it. Don’t just check for typos and bad grammar; remind yourself of what it actually says and is supposed to do. If you’re seeking funding from a financial institution or a venture capital (VC) group, trust us — they will read it in excruciating detail. They will look for the inconsistencies, flawed logic, or incomplete information that too often creeps into business plans. You don’t want to embarrass yourself before your judge and jury. You may find it useful to have a trusted advisor review your plan — someone not too close to the business — so you can receive some objective feedback.
With this book, you’re now prepared to be on the winning side with your venture, be it something new and exciting, or a re-think of how you will succeed in your ongoing business. Whatever it is, we’re with you, dear reader. Go forth and conquer!