CHAPTER 2

ENTREPRENEURS, MANAGERS & LEADERS

Three friends are going to have a party – it’s Halloween. The first one comes up with an idea, it’s a nightclub transformed into a moon base and the theme is punk zombies in space. Then the second friend takes care of the logistics because she loves planning and preparation: booking the venue, administering the guest list, sending out invitations, managing food and drinks, registering the RSVPs in a spreadsheet, sending out reminders, and so forth. On the night of the party, though, it’s the third friend who really takes care of all the guests and makes sure that everybody is having a great time.

They have all contributed to the party. One had the original idea, one ran the project and on the party night they all put their energy into making it a great event. But while friend number one was mostly worrying whether the party was living up to the punk zombie idea, and friend number two was arranging the seating, it was friend number three who focused on each and every guest, giving them all the attention. Who of the three friends are you?

How would you define yourself? What are you really at heart? An entrepreneur, a manager or a leader? Are you idea-driven, administration-driven or people-driven?

This chapter is about finding your leadership style.

#007 Entrepreneurs, Managers & Leaders (EML)

What is your leadership strength?

Your personality, genes, upbringing, approach, skills, passions, beliefs, stage in life, role in a business, mindset and life experience are all factors that go into making you who you are. They will also define your leadership strength and style. Now, that strength and style can change as you mature and learn, your company grows, or your responsibilities expand. If you know yourself you’re likely to have a core of values that never changes, but your style and how you behave and express yourself may go through transformations over time.

There are many stories about how a board of directors, investors, colleagues or a co-founder of a company finally came to the conclusion that the founding entrepreneur had to go. Yes, it was a great idea and good start and nobody else could have done it. But now the entrepreneur has become a liability, making others uncomfortable. He’s being unruly, obstinate, single-minded, uncooperative, uneconomical, unstructured and unmanageable. Time to bring in the manager. Then finally the leader.

By taking a constant beating from reality in my various start-ups, I’ve developed from being an Entrepreneur to becoming a Manager to finally facing the challenges of the Leader. Now, you might ask, what’s the difference? I think there’s a huge difference, and it’s all about your focus, skills and strengths. I suggest that leadership comes in three different main styles: the Entrepreneur, the Manager and the Leader.

• The Entrepreneur – my job is to realize my ideas (it’s all about me)
• The Manager – my job is administration (it’s all about an efficient organization)
• The Leader – my job is people (it’s all about others)

The first transformation, from entrepreneur to manager, was no real challenge for me as a graduate from business school. When I started my first company I wasn’t new to the world of finance, strategy and organizational charts. However, I cared more about realizing my ideas than I did about the people I worked with. So let’s start with the starter.

The Entrepreneur

The Entrepreneur is an innovator, bringing new ideas. The essence of entrepreneurship is really to get others to believe in your idea – customers, people you recruit, investors and others who you need to make your dream come true. You need to communicate, to be relentless, persistent, energetic and trust that your instincts are right when everybody is trying to prove you wrong – or when they are just plainly indifferent to whatever your vision is.

This has also created the cliché of the lone entrepreneur: a man (and increasingly a woman) fighting against the ignorance of a world that doesn’t care – just to win in the end and become stinking rich. In any case, the mindset of the Entrepreneur is focused on the idea. It’s also a very egocentric mindset. Me, me, me. My idea, my idea, my idea.

There are just as many reasons for starting a business, organization or project as there are entrepreneurs. However, in my experience it’s usually not about the money or the glory; it’s because there are no alternatives. You just have to try that idea that will not leave your head.

Many people think that entrepreneurs are risk-takers with an appetite for adventures and life in the fast lane. I can only speak for myself. I never saw start-ups as a way to get my adrenaline kicks. Quite the opposite, I think it’s a way to reduce risk. In your own company you can control your destiny far more easily than if you’re playing a small role in a big corporation under constant pressure from the stock market and the risk of restructuring and lay-offs. Of course, it all depends on how you view it. Starting companies from scratch and making ideas come true – all the way from a blank sheet of paper to a successful business – is a lifestyle that requires much energy and persistence. But in the end it’s nothing more than a job, nothing glamorous. The entrepreneur just does what they have to do. If your goal is to make money, then it’s maybe easier to become an investment banker.

The Manager

When a young company grows, it’s less about the idea and more about managing a growing organization and allocating the resources needed for growth. The Manager needs to decide, together with his board and management team, how much revenue to expect, how much the business will cost to run, what capital you need, how to structure the business and its organization, what people you need and what their roles and titles are – as well as resolving conflicts when people aren’t satisfied with their titles on their business cards. You need to cooperate with people and make compromises, not be a single-minded rebel.

The Entrepreneur who stays with the company becomes a Manager, destined not to their own calling in life but to call budget meetings and performance follow-ups, and to draw organization charts with boxes and lines. This is usually the time when the Entrepreneur realizes they are more of a ‘starter’, and the board calls in someone experienced to manage the business. This someone will accordingly define themselves like this: ‘I’m not a starter. But I’m good at running a business.’

This is also the time in a company’s history when people begin to say, ‘Now we’re getting bigger, we must not lose our entrepreneurial spirit.’ Everyone will feel that the focus of their work is more about managing than entrepreneurship. The mindset of the Manager is administration. This is also one of the critical points in the life of the Entrepreneur who stays on. Do you have what it takes to make the transition from entrepreneurship (me, me, me – my idea, my idea, my idea) to the quite different focus that is the meaning of management (planning, organizing, budgeting, efficiency, controlling, structure)?

The bulk of knowledge, competence, literature, experience, best practice, training, education and ideas in the business world centres on the concept of management. The symbol of the career-minded professional is the MBA, the Master of Business Administration. Efficiency, structure, economies of scale and organization were key when the Western world was industrialized. Business schools are meant to prepare their students for managing production resources and administrating organizations. The subjects of entrepreneurship and leadership are much less explored, and in the industrial era, they are much less easy to understand. Return on capital is tangible; the motivation of people is fuzzy.

So it should come as no surprise, then, that there are probably more managers around than there are entrepreneurs and leaders. This also implies that if you are an entrepreneur at heart and want to stay a ‘starter’, you’re likely to find many good and able people to take on the next stage of your business. And if you stay an entrepreneur and surround yourself with capable managers, you will probably need to tune down your egocentricity to focus on a growing organization and the people you are working with.

The Leader

I would argue, however, that the long-term success of any organization, group or project will depend neither on ideas nor on management. It will be about leadership.

Yes, ideas are wonderful, beautiful and powerful, and they can change the daily lives of millions, as great entrepreneurs have shown. But they’re also a hassle, they’re useless until someone executes them, they’re endless, they change all the time and they take a lot of time and effort. Ideas themselves do not create success.

Yes, administration and management are necessary to run a company. You need some form of structure and strategy, but it doesn’t create much value in itself.

The success will ultimately depend on people, and the company where the people work and spend a great deal of their time. People together make ideas come true. Culture matters because it’s the operative system of the company, guiding actions and behaviour. It is also what ideally makes it fun to go to work and like your job.

Leadership is not about yourself (even if you have to know all your strengths and flaws inside out) but about supporting others to grow, about being there for your team and coaching them into becoming winners – into leaders. It is also about great, diverse and cohesive teams that can work well together and make fast decisions. The mindset of the Leader is people. At the core of the Leader is empathy (the ability to understand emotions of other people), one of the five components of Emotional Intelligence, as suggested by Daniel Goleman. It’s hard stuff to learn for the Entrepreneur who mostly cares about his ideas, or for the Manager who cares more about organizational charts.

I wouldn’t say that the Leader’s job is primarily to motivate people (even if that’s sometimes needed), but to develop other leaders who find their own motivation from within.

In Frank Baum’s children’s novel The Wonderful Wizard of Oz, the Scarecrow wants to get a brain, the Tin Woodman a heart, and the Cowardly Lion courage. They all believe that the Wizard can solve their troubles. In the book that you are now reading, courage is the symbol of entrepreneurship, brains the sign of management and the heart stands for leadership. As a leader, you ideally want all three, and just as in the novel, you have to find them yourself, within yourself.

You are never only an Entrepreneur, a Manager or a Leader: you always have all three characteristics in you, to varying degrees and according to your personal mix. Your mission is to find out where your strengths are, and your leadership profile, and continue building on that understanding.

A company, essentially, consists of 1) ideas, 2) a structure/organization for value creation and 3) people functioning together in this context. That is also why you would like to have the right mix of people with skills for working with ideas (Entrepreneurs), administration (Managers) and people (Leaders).

There are accordingly three different ways to run a business: the Entrepreneur’s way, the Manager’s way and the Leader’s way. You can also call it three different lenses:

• The Entrepreneur’s Lens: your main focus is to constantly create new realities from ideas. With passion, drive and persistence you motivate to realize your vision, your way.
• The Manager’s Lens: your mindset is to allocate resources to create value. You are essentially an administrator. Growth comes from management and execution, to manage ideas.
• The Leader’s Lens: you can avoid neither ideas nor management, but your focus is helping people to succeed, supporting them when they fail and celebrating when they win.

Another way to put it: are you at heart idea-driven, administration-driven or people-driven? Your management style can develop continuously from Entrepreneur to Manager and Leader (or any other path). It also requires three different lenses or mindsets as you run a company or organization, or when you interact at home, with your friends, sports team or your children. In any given situation, do you look at it through the idea lens (are we in line with vision …), the administration lens (how can we do this efficiently …) or the people lens (what are the behaviours …)?

As a Leader, you have to combine these mindsets or lenses depending on the situation, sometimes adopting an entrepreneurial approach, at other times managing a process and then again supporting your colleague to reach a target. The ultimate mission of the combined Entrepreneur/Manager/Leader is to make things happen in a great way for the benefit of all stakeholders, based on your personality and your way of doing things. Call it value creation, in short. And as you surely see by now, there is not one way of leadership, only your way.

It’s a choice to think as a Leader. As the CEO and co-founder of fast-growing companies, one of my main challenges has always been leadership at all levels, from the top management in a turbulent and dynamic industry to the day-to-day leadership carried out by everybody. And I do mean everybody. Even if you do not define yourself as an ‘Entrepreneur’ (since you are not the founder of the company), you may still be innovative. If you are not technically a ‘Manager’ (since you do not have any formal management role), you may thrive on finding more efficient ways of doing things. And whatever your role in life, by conducting yourself with positive proactivity and bringing out these qualities in others, you are free to call yourself a ‘Leader’.

#008 Results Is Behaviour (RIB)

Results are the outcome, but people are the source.

The ultimate goal of leadership is not to find your style, it is to create results. Whatever style that gets results, works. It is more a question of finding your style and strengths, and building on those strengths, while understanding your approach to leadership and getting things done. But in any case, if results are the outcome, people are usually the source of the results.

In the business world, your leadership is measured quantitatively by the performance it delivers. It’s about numbers: growth, income, revenue, profits, market share and other Key Performance Indicators. The KPIs are the signs, that you have defined, of winning or losing. There can, of course, be other measures of performance depending on your organization and work. (Please also see Adding Up Numbers #084 AUN.) That’s looking at the outcome though, not the source of success.

The 4 Disciplines of Execution by Chris McChesney, Sean Covey and Jim Huling outlines the difference between a lag measure and a lead measure. The lag measure tells you if you’ve achieved the goal. It’s a backward-looking indicator, like quarterly results or a golf score. Lead measures are what you have to do to reach the goal, they ‘lead’ to the results. So lags measure the goal (like looking in the rear-view mirror), leads are predictive and influenceable (they tell you how to drive). Using that terminology, the goal in leadership is results (what you want), but the way to get there is people (how to do it).

Leadership is about results, which are delivered through behaviour, which equals people. Results > Behaviour > People = Leadership. That is also why you would like to have a strong culture that guides that behaviour. Read more about the ‘operating system’ in Chapter 6.

#009 Your Leadership Profile (YLP)

Who are you?

What is your leadership style? The point is that we all have a little bit of entrepreneur, manager and leader in us. Your task is to identify your strengths and core skills and compile your Leadership Profile. So, what’s the purpose of this?

Equipped with a better understanding about your Leadership Profile, you will have a tool for leading yourself and helping the people around you succeed. Knowing your leadership style and core skills will allow you to better apply and build on those strengths. When recruiting, forming teams, supporting colleagues, try to think in terms of Leadership Profiles. What is the mix of Entrepreneur, Manager and Leader here? Am I facing an idea-person, a structure-person or a people-person?

When forming a team, you would ideally want a heterogeneous group. Look for participants who can contribute ideas, someone who can turn them into execution and structure, and people who can smooth things over when a crisis arises or when personal relations break down. You want diverse, cohesive teams. Imagine a group with only single-minded, creative idea-people; it would soon implode. Then think of a group with only managers who can’t dream up any new ideas; the company or organization would stagnate (but be well organized). A group solely made up of people-people with more regard for feelings and empathy and little concern for structure and ideas wouldn’t create much either long term. The bottom line is that you would like to find the right ‘leadership mix’. This concept, that a team is a group of leaders, is in itself different from the traditional approach where there is a group with one leader.

You would also like to understand Leadership Profiles to help match the right individual with the right role and task. For example, it’s good if the one who’s responsible for a big and complex project possesses some Manager skills, the head of team has Leader skills, and it helps if the Chief Financial Officer (besides being a great Manager) also is a bit of an Entrepreneur to get the business from an innovative perspective.

Another way to use your Leadership Profile is to set out to change it to develop your leadership. My own profile a few years ago was a strong Entrepreneur with some average Manager skills but poor Leader skills (i.e. not that good with things like empathy and listening). Now, my Leadership Profile is quite different, with more focus on the people I work with. I know that the Entrepreneur will be the strongest part of me, but my analysis of my Leadership Profile, and the feedback I got from others, enabled me to understand that I had to work to develop my Leader (people) side.

Furthermore, with a better understanding of your strengths and weaknesses, you can proactively look for people who can complement you. If you are a strong idea-driven Entrepreneur, but with limited skills for administration and personal relations, you might want to find a Manager who can balance your shortcomings. One of my early mentors told me to hire people who are ‘better than yourself’, i.e. are stronger in areas where you have identified that you are relatively weaker. To hire people ‘better than yourself’ is a humble way to say that you have acknowledged your own profile.

I have found that a simple tool for understanding both yourself and the profile of the people around you can help you to be more successful and effective in your leadership. Of course, people and the relations between them are complex things and a simple analysis and general approach will not be sufficient if you need to go deeper. However, the assessment of Leadership Profiles is a handy tool to help you develop yourself, your team and your whole company in a proactive way.

You can find out your Leadership Profile using Leaderchart, which includes a test at the end of this book, and compare your profile with 27 Leadership Profiles. You can also find out more about the test at arnander.com.