CHAPTER I
Leadership Basics

Leadership Styles

Which style do you use? Which ones should you learn?

BY THE TIME you decide you want to start your own business, you’ve already experienced virtually every style of leadership there is. You may not realize it, but you’ve already become one type of leader or another—you have a natural leadership style. The question now is whether the leader you are is the leader you want to be. And also, whether learning to use other leadership styles will pay off for you.

Parents, teachers, older siblings, bosses, police officers, military superiors—we’ve all had them for most of our lives. Some pulled productivity and efficiency out of us by enabling and encouraging us. A few were demanding, and that may have been just what we needed. Others were easy-going, and that did the trick. Different styles work for different types of people and in different situations.

Think for a moment—which ones worked for you? More importantly, which ones didn’t work for you? As the founder of your enterprise, you are its leader. But it’s not all about you—or at least it shouldn’t be. You’re not the one executing the work; your people are. Your job as a leader is to empower them to be productive, and sometimes that might mean trying methods that may not have worked with you in the past. But they might work with them.

Be smart about this, however. Picture a continuum stretching from accommodating to intimidating leadership styles. According to Leigh Bailey and Maureen Haben Bailey,* Accommodators need acceptance and Intimidators need control. Both styles have good and bad aspects, and both styles can be harmful if a leader puts personal needs ahead of the good of the company.

While research suggests that being overly dominant presents the greatest risk of leadership derailment, the appropriate use of a forceful leadership style is critical to a leader’s success. So let’s say you are mainly an accommodating leader. Should you learn to be more forceful? The answer is yes, for some situations, like when you need to firmly commit your organization to a certain change, or to deal with a challenging person or situation. If you tend to be an Intimidator, you can benefit from loosening your grip and taking more risks to allow your people to learn from their successes and failures. The idea is to discover your natural style and then learn others so you can be a versatile leader, one who is effective in many different kinds of leadership situations.

Of course, nobody likes to be degraded or made to feel stupid or unappreciated, especially in front of others. Depending on the situation, a bit of “tough love” might work on certain employees, but be very careful with it. Think long and hard about how you’re going to use it.

In my organization, when it comes to tough love, I tend to work up to it. I see difficult people as a valid leadership challenge. You can’t just go around firing people—they are assets to your business and it’s your responsibility to find out how to get good work from them. As you know, your leadership position makes you very visible. If you don’t succeed with difficult people, you may get a reputation as a poor leader, which is the last thing you want. Nevertheless, sometimes people just don’t work out, and that’s life in business. That’s another decision for another day.

Today, we’re thinking about what type of leader you should be to get the most out of people. While taking more control has its place, here’s a hint from history: Tyrannical leaders rarely last long and their dethroning is usually a painful event, so don’t go too far in that direction. But doormat leaders don’t get things done. It’s best to recognize that each person and situation will respond best to a certain style of leadership, and to be able to be versatile enough to use the right one from moment to moment.

To this end, analyze what types of people you are dealing with and ask yourself what you can do to make them feel secure with your organization. Most need to feel motivated and guided by you.

It’s always good to lead by example. If people have to work late to finish a big project, it would be good if you join them (if you’re not in the way!), to show them that you are willing to go through hard times with them. If you have other obligations, come back later with some coffee or snacks.

Don’t micro-manage them, however. Nothing stifles productivity like a pair of eyes constantly looking over your shoulder.

It’s common for entrepreneurs to complain that with all the interruptions they get from freelancers, employees, vendors, the bank, and even their kids, they just can’t get their own work done. So they close their office door to make progress. That makes sense, but don’t make it a full-time habit. Try to schedule open door time—or if you can afford it, keep the door open almost all the time. People need and like to know that you are there with them.

As you think about what kind of business leader you want to be, think in specifics: consider that difficult person or that upcoming event, and ask yourself what style of leadership would work best. If you do your homework right, you will immediately be pointed in the right direction. Then just go for it and learn from your experience.

S.G.

Effective Leadership Theories

Leaders aren’t born, they’re made. Here’s how to transform yourself into one.

TO LEAD an organization successfully, you have to be more than a manager: You must also be an organizer and problem solver. You must effectively support and direct others, thinking internally, as well as handle the challenges brought on by external factors, like economic developments or new technologies. It doesn’t matter how large or small your enterprise is. A lot rests on your shoulders.

Leadership theories

Among the many theories of leadership, three are intriguing and effective in practice: McGregor’s Theory X and Theory Y, Action-Centered Leadership, and the Strategic Leadership Theory.

Douglas McGregor’s Theory X and Theory Y were developed in the 1960s but are still commonly used. Both theories focus on motivation and on how leadership has a profound effect on employee productivity and attitude.*

Theories X and Y have been a topic of spirited debate among researchers and professionals alike for years. Theory X says that the average worker inherently dislikes work and tries to avoid it. He or she wants security, but lacks ambition. As a result, this worker must be controlled, directed and possibly threatened in order to perform well. This theory describes a leader who has control issues and is pessimistic about his team, which results in the leader taking an authoritative, iron-fisted approach.

Theory Y says that the average worker is naturally motivated to work, is very self-directed or self-controlled, seeks and accepts responsibility without reservation, and applies ambition and creativity. The potential contributions of this type of worker are only partially used. In this view, it is the leader’s responsibility to organize a team so people can work freely and to adopt a coaching approach. This theory describes a leader who has a positive view of her team and sees members as equal contributors to the organization and its goals.

Take a look at your own perceptions of your employees, and consider how they may enhance or hinder the way you manage and lead them. As with many schemas, you may find that you modify them in practice, but still, these models of two very different perceptions are worthwhile tools to guide your actions.

Developed by John Adair, the Action-Centered Leadership model focuses on what a leader has to actually do in order to make his or her team effective.** The model consists of three main activities: achieving the task, building and maintaining the team, and developing each individual within the team. For entrepreneurs who manage employees, this model is vital because a successful business rides on the shoulders of a strong team. Conversely, a weak team can destroy an otherwise solid business model.

The Strategic Leadership theory is a relatively new concept that focuses on strategy development and change.*** Everyone uses some elements of strategic leadership in their job. Professor Roger Gill argues that six components of strategic leadership include determining your strategic direction (as in writing an operations plan), developing your capabilities (as in conducting a self-evaluation on your true capabilities), and exploiting and maintaining your strengths (as in simply accentuating your positives). This theory describes everyone as a leader of sorts, with you as the top leader, creating a shared vision, linking everyone’s efforts and contributions to the organization’s goals, and making improvements in it.

Weaknesses of contemporary models

It’s notable that many contemporary leadership models fail to address the importance of a vision for the future and a leader’s need for awareness of external factors. These factors can include recognizing new trends in business, understanding cultural diversity, embracing the latest technologies, networking, and even sharing leadership roles. As an entrepreneur, you’ll have to use common sense in paying attention to these equally important factors.

Influencing change and creating a culture

If your company has been around for a while, you may have already experienced the need to change significantly. Dawn Price, Regional Director for ZRS Management in Orlando, Florida has observed in a speech, “A great leader in some organizations can be more effective than the CEO.” An effective leader thrives on change, identifying opportunities for it, initiating and managing it, planning to implement it, involving people who will be affected by it, and listening to people’s reactions to it. None of this is easy, but it’s your responsibility to steer the course.

Much of the same can be said about your role in defining or creating a corporate culture within your company. Roger Gill notes that a people-oriented corporate culture that fosters empowerment, mutual trust, and respect is more conducive to high performance than one that is not.

Personal values are another factor that influences a leader’s success. Research has found that personal integrity, ambition, concern for others, loyalty and self-awareness support it. And of course, a fundamental value that cannot be ignored is proper business ethics.

All of this may seem hopelessly high-minded and a bit abstract, but as an entrepreneur you already know—or soon will learn—that the ability to translate the gleam in your eyes into a working proposition and business success starts and ends with you and your ability to engage others in making your vision a reality.

Leading a Learning Culture

Regardless of the scope or size of your business, a learning culture underpins sustainable success.

IF YOU ASK TEN PEOPLE to give you the definition of management, you will get as many interpretations. That’s not much help to you as an entrepreneur with a business to manage. But here’s a good one: George R. Jones and Jennifer M. George describe management as “The planning, organizing, leading and controlling of human and other resources to achieve organizational goals efficiently and effectively.”*

From the local entrepreneur to the largest global player in the biggest of industries, the fundamentals of management still apply. When you are a one-person enterprise, it’s a ton of hard work, but it’s actually fairly simple to manage your operation. Meetings are a matter of sitting yourself down, focusing and thinking clearly. Planning is so often dictated by external factors that you may feel there’s no room to consider options. However, if you manage yourself well, keep on learning, and survive long enough to expand, your organization can grow, and new and more complex layers of management can become necessary. At that point, even if management doesn’t appeal to you, you have to manage more people than just yourself. Later, you will probably be called on to manage and monitor others in management roles.

In an expanding business, if you still run it like you did when you were on your own, you’ll pay the price. If you remain the sole source of growth, innovation, responsibility and momentum, you’ll limit your company’s rich opportunities for success. From the start, create a culture of learning, and you will see mushrooming growth.

A corporate culture of learning

In one of my entrepreneurial projects some years ago, my consulting firm was recruited by an organization in the credit and financial literacy arena to take on a large-scale, nationwide project. This very public position required expert knowledge of the industry, vast media and public speaking skills, and managing a sizeable workforce. Looking back at both the success of the project and the organization itself, it was clear that my client’s excellent management was the key factor of the organization’s success. My work with them showed me the value of first-class management and became the blueprint for my own management activity.

The industry I was hired into was constantly bombarded by external change. Compliance issues, government rulings, new statistics and the status of the economy were only a few of the critical factors demanding constant attention. Managers with these responsibilities had to monitor and respond to an ever-changing landscape. They had to make independent judgments and take action on their own, with enormous consequences and serious accountability.

How was this possible? This organization had its hierarchy and decision-making processes, like most businesses. The results it achieved, however, were staggering. Its success came from its culture: It was a learning organization, one which empowers its managers to be creative, innovative and even self-sufficient at times. And it functioned as a team environment.

What’s in this tale for you as an entrepreneur? The learning environment was present even in the organization’s early existence. There was an unwritten rule: to vigorously encourage creativity through new ideas (and valid feedback when necessary), throughout the entire workforce. The place radiated fresh ideas, unique perspectives, and new strategies. This practice had another bonus: employees knew their efforts were being not only recognized, but implemented as policy. It gave them a sense of ownership and loyalty.

One example was an innovative control system feature that was suggested, designed and put into action on all products available through the organization’s multiple websites. This breakthrough was a smash hit, hailed by top executives and consumers alike. Consumer confidence skyrocketed, sales took off, and high profits resulted.

So even if you are on your own, and certainly if your company has grown so that a corporate culture has started to develop, think about the massive benefits of making it a place where employees really feel able to make a difference, and pour their best work into making that happen.

M.P.

Basic Leadership Skills

As a leader, your employees aren’t much without you, but you’re not much without them either.

SOME PEOPLE ARE BORN with leadership qualities—others acquire them through experience. Leadership is the ability to align and motivate a group of people so you all can achieve a common goal. The following are some qualities of an effective leader:

• Excellent listening skills. Active listening goes hand-in-hand with action and it includes effective interpretation of both verbal and nonverbal cues. Promptly reply to people’s concerns. If a stalemate develops in a group, address the matter before it gets out of control. Don’t expect that it will solve itself if you don’t take any action. Remember as well that if a stalemate develops, is up to you as the leader to choose a solution and to stick to it.

• Impartiality. Avoid taking sides or giving special attention to particular members of a group. Don’t support those who like your ideas and reject those who oppose them. Furthermore, avoid showing more concern to people who share the same background as you while opposing ones who are dissimilar in terms of beliefs, culture, life style or race.

• Respect. When conflict arises in a group, arrange a meeting with dissatisfied group members to establish a common ground for both sides. Don’t suspend or expel dissenting voices. A variety of perspectives is healthy. And if people are not treated with respect, they could even decide to take legal action against you.

• Good communication skills. You must be able to express your ideas effectively. Radiate calm confidence and aim at clear, simple, actionable statements. Where necessary, use relevant examples to explain complex ideas. Adapt your speech to the needs and interest of your audience. Boring people to death is not a sign of leadership, nor is talking down to people. And when you take a significant action, ask yourself, “Who needs to know about this?” Keeping people in the loop gains their support.

• Cultural sensitivity. Sensitivity to intercultural nuances can also help in leading your group. Try to understand the cultural dynamics motivating each member. What is considered acceptable by one culture may be rejected by another, and the way one culture expresses its ideas may be foreign to the next culture. If you can identify these influences, you can bring together various cultures for a common good.

• Dedication to give and take. Communication is a two-way process of giving and receiving feedback. Don’t speak nonstop, except when it’s really a speech. Attune yourself to the group’s mood and call for participation. Some leaders even declare that “Silence means agreement”, to encourage a free flow of ideas and opinions. If you don’t give the group time to respond to your statements, they will view you as domineering and start to disconnect.

• Ability to delegate. When you delegate a task, make sure your message is clear, concise, actionable, and that the outcome (a report, for example) is defined for delivery (end of day next Thursday). If you are leading a group through a series of meetings, it is smart to appoint a co-leader who can carry on with duties in case you are absent. Delegation of duty should not be done by favor, but rather on merit.

• Clear about expectations. As with delegating, making your expectations clear helps you to lead effectively. You can’t expect people to read your mind. So if you ask someone to check on the competition’s pricing, explain whether this information should be delivered in a formal report with graphs and charts, a phone call, or a sticky note. If you form a group to accomplish a goal, make sure the members know why they are included and what you expect them to bring to the table (even literally!).

• Flexible within reason. Neither rigidity nor wishy-washiness works in leadership. If you resist adopting valid new ideas proposed by others, you stifle creativity and may miss important breakthroughs. Good leaders never think they are the only ones with solutions, even if their experience and insight raises their odds of good judgment. Ability to change with time and openness to new thinking and action mark good leaders. And they take decisions in a timely way. Not deciding is deciding, and that frustrates others immensely.

• Accessible. You have lots to do, but if you avoid certain individuals or set yourself apart from your group by closing doors, being super busy, etc., you send a message that is certainly not leader-like.

• Humble. A leader should follow company rules he expects other group members to abide by.

• Credible. As the leader of your enterprise, you are its most visible public face. Your dealings with the banks, vendors, customers and other parties all reflect on your company. Professional, credible behavior will win respect and willingness to work with you, both inside and outside your organization.

The good news is that even if you aren’t a born leader, you can polish up your leadership skills. Self-awareness and thinking about how you come off to others is a good place to start. Really building rapport and earning people’s respect can then follow. Try to keep a positive, creative, adaptive and flexible attitude, and people will follow your lead.