Helping Entrepreneurs Transition to Leaders

Helping Entrepreneurs Transition to Leaders

High achieving, hard drivers can sabotage the enterprises they create.

 

As I was driving in my car on a Sunday morning recently, I turned on my radio which was tuned to a talk show which focuses on giving advice to start-up aspirants and new business owners.  On this particular morning the host had on a guest who was very successful at starting, funding, and building information technology businesses.  The guest was asked, what is the greatest challenge the entrepreneurs faced in starting up and running the businesses in his investment portfolio?  His answer did not surprise me.

The guest said in searching for businesses in which to invest, he was very focused on the start-up person.  In making his decision, he was attracted to the person who was bright, competent, driven, determined, and passionate about his/her business idea.  And he went on to say that most or his selections were good ones using that criteria. His selections turned out to be dedicated individuals who worked tirelessly in order to make the business successful.  However, once the businesses were successful in getting off the ground and running, the same individuals who were great at starting the business were not so good at growing the business as leaders.

The main problem he cited was the qualities that made these individuals attractive as business start-up candidates were the same qualities acting as deterrents in growing the businesses.  More specifically, the driven, determined, and passionate entrepreneurs turned out to be authoritative and controlling micromanagers.  This resulted in losing may talented employees who had similar qualities to them, but like them, did not want to be controlled and micromanaged.  As they say, “like attracts like”.

As I stated earlier, this answer did not surprise me.  Throughout my years as an executive coach, I have learned an axiom I share with all executive leaders I coach:  Any personal strength, taken to an extreme, can become a weakness.  It is good to be driven, decisive, determined and focused.  But these qualities, when taken to an extreme, can easily turn into negative behaviors when one transitions from performing as a doer to performing as a leader.

I am reminded of a similar situation, which is true story   I use it as a case study in the leadership course I teach.  Here is an abbreviated version:

Sam, an experienced and successful stock broker decided to start up a plastics recycling business in an inner city neighborhood.  Land was cheap and so was abundant labor.  Plus, he thought it would give inner city dwellers an opportunity to work for decent wages and benefits while providing for themselves and their families.

Things started out great.  Sam was great boss.  He was friendly, outgoing, and enthusiastic.  He would do things like have beer parties at the end of the shift on Friday, lend employees money, even give rides home to those who were stuck.  But things drastically changed - for the worse.  Fights broke out at the plant, employees came to work drunk and on drugs, and an accident occurred as a result of an employee who was drinking right before coming to work.

Sam was now faced with lawsuits, the EEOC, the state labor board and a host of other employee related problems.  What to do?  Sam’s close confident and partial investor was a lawyer. He urged Sam to get firmer, implement discipline with written work rules, drug testing, and other disciplinary policies.  Sam followed his advice and implemented stricter work environment.  The result was a less inspired, less productive workforce who did not now trust the leader/founder of the company who was once a happy-go lucky compassionate and caring person.

Here is an example of an entrepreneur, Sam, who was a very successful stock broker who was a very warm and outgoing person which contributed to his success as a stock broker.  But when he transitioned into a leadership role, the strengths, overstated, became a weakness.

So the obvious question from these examples is, can successful entrepreneurs become effective leaders?  The answer to that question can be found by examining three possible outcomes.

One - Can they become effective leaders?

The answer to the first question is simple.  Yes, they can. This is the most basic and most often-asked question: Are leaders born, or made? To cut to the chase, the answer is: ‘mostly made.' According to the Center for Creative Leadership, the best estimates offered by research is that leadership is about one-third born and two-thirds made. The job of leading an organization, a department, a unit, or a team, and doing so effectively, is very complex. To expect that a person would be born with all of the tools needed to lead just doesn't make sense based on what we know about the complexity of social groups and processes. It has been my experience that qualities, skills, knowledge and behaviors of effective leaders can be acquired and developed.  Some have more of a disposition toward having and/or acquiring these characteristics than others, but nonetheless, they can be acquired and developed.

Two - Will they become effective leaders?

The answer to the second question is a little trickier. Not all entrepreneurs want to become leaders.  Why?  Because transitioning from an entrepreneur to a leader requires a different skill set, a different mindset, a different outlook, and a different role orientation.  I remember my days back at Penn State University when companies would send their executives and managers to our leadership seminars.  And when they returned, most companies would rave about how their people learned and benefited from the program. However, some companies would complain that their executives and managers were still ineffective at leading.

Being present at many of the programs, I personally observed the participants and I could easily pick out the ones who did not want to be there by their attitudes and behaviors.  Why didn’t they want to be there?  Because they did not want to become leaders in the first place.  They were very successful sales people, engineers, purchasing agents, financial analysts, or successful contributors as doers working in some capacity for their respective organization.  They were happy dong what they were doing, and quite successful.  Then someone decided they should become a manager and completely change their role orientation.  It would be like a publishing company announcing to William Falkner at a young age that he was no longer going to be an author, but a manager of authors.  Can you imagining how effective Falkner would have been as manager, not to mention the absence of his valuable writings we would have been deprived of?

Everyone does not have the will or desire to become a leader.   And that’s OK. You do not have to be in a leadership position to succeed in life.  If someone does not have right mix of interest, aptitude, and personality characteristics to become a leader, we would say, in HR parlance, that person is not a good fit for a leadership position but perhaps is a better fit for another position.  In the situation involving an entrepreneur, a better fit may be a position/role as venture start-up specialist, a software developer, a business analyst, a marketing specialist, an M & A specialist, or a business consultant.

The bottom line here is that entrepreneurs may not be the perfect match to serve as an effective leader, but they can be helped to learn and adapt to become an effective leader.  This brings us to the next and last issue.

Three - How will they become effective leaders?

When individuals start up businesses, they need two things to make the company succeed and grow:  business know-how and leadership know-how. I love the term ‘know-how’.  To explain its meaning, I like to refer to Casey Stengel who took over the NY Mets after being fired by the NY Yankees.  The early Mets team was struggling under Stengel, losing many more games than winning.  In one particular game in which the Mets were being badly beaten, Casey stood at the top of the dugout and uttered this famous line to his ball players, “Doesn’t anyone know how to play this here game?”

Casey knew his players were skilled at throwing, hitting, running, and catching.  But he observed they lacked the ‘know-how’ of the game.  They didn’t know when to take a pitch, or how to do a run down, or how to lay down a bunt to bring in a run.  This ‘know-how’ is what they lacked because of they didn’t have the knowledge and experience, which are vital elements of ‘know-how’. No one ever taught them how to perform these finer, but important points of the game.  So we define ‘know-how’ as the knowledge, skills, abilities, and experience one needs to be successful at performing a certain task or function.  Entrepreneurs usually lack business know-how and leadership know-how; so how can they acquire it?

Owners, sponsors, and investors of business start-ups usually provide assistance in business know-how by forming what is commonly known as advisory boards.  This is a body that provides non-binding strategic advice to the entrepreneur starting the business. The informal nature of an advisory board gives greater flexibility in structure and management compared to the board of directors. Unlike the board of directors, the advisory board does not have authority to vote on corporate matters or bear legal fiduciary responsibilities. Many new or small businesses choose to have advisory boards in order to benefit from the knowledge of others, without the expense or formality of the board of directors.

The function of an advisory board is to offer assistance to enterprises in a variety of areas such as marketing, funding assistance, industry knowledge, or human resources. Advisory boards are usually composed of accomplished experts offering innovative advice and dynamic perspectives.  They usually meet quarterly or biannually, and can provide strategic direction, guide quality improvement, and assess program effectiveness.  Thus, the advisory can help the entrepreneur in gaining business know-how.  But what about leadership know-how; how should this need be met?

The most effective way to provide leadership know-how is through leadership advisory service.  Advisory service is different from advisory board, where advisory service only offers short-term guidance by payment, whereas advisory board is a body that offers long-term guidance and receives a variety of compensations.  Business startups often need advisory services to guide them in setting up the business.   And is the most effective manner in helping the start-up entrepreneur acquire the necessary leadership know-how in running and growing the business.

The advisory service should include professional assistance in these three major areas:

  1. Leadership Coaching:  Start-up leaders need a coach to counsel, guide and develop them as leaders.  Recommending they go to seminars or some other type of leadership training is not effective.  And recommending one’s favorite leadership book in equally ineffective in helping them develop for a long term leadership role.
  2. Advising:  Early on, formation of the company’s direction and culture is critical.  The vision, mission, goals, and critical factors need to be formulated.  Also, the company’s culture needs to be defined.  What values, principles & practices are to be integrated into the fabric of the company that will guide the hiring, performance, and behaviors of all employees?  Start-up leaders have very little knowledge and experience in these areas.
  3. Facilitation:   As members are added to the leadership team, and to the organization, a facilitator should be provided to assist in the involvement of others in formulation of the direction and culture of the company.  This cannot be an isolated activity performed by the start-up leader without the assistance, input, and involvement of others.  Without a high level of involvement, there will be no buy-in throughout the organization as it continues to grow and develop.

Advisory boards can be invaluable to the growth and success of start-up companies.  And as important as it is to select the right individuals to serve on the board, it is equally important to select the right leadership advisory services to complement the board’s business advise in helping the start-up leader successfully launch and grow the enterprise.


 

Stanley D. Truskie, Ph.D. is an international executive coach, organizational leadership professor, author, speaker and board advisor with over 25 years’ experience coaching executives and advising boards on leadership/organizational performance and governance issues. He brings a wealth of knowledge and experience in executive development, strategic/business planning, succession planning, business development, and company culture formation. He has the unique experience of advising public, private, and not-for profit organizations, as well as family owned/operated businesses.

Currently, Dr. Truskie operates a private consulting firm, MSD Leadership Consultants, Inc. which he founded in 2002. He has worked with over 50 companies ranging from small family owned private businesses to Fortune 500 corporations offering advice on executive leadership, organizational/business strategic planning, and governance issues. He has advised enterprises of various sizes at different stages of growth from start-up to turn-around situations, and contributed to improved business performance, increased revenues, and outstanding bottom line results. He has coached over 300 senior level executives, many of whom have been advanced to top leadership positions in their respective companies.