Leadership approach in startups today

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Leadership approach in startups today

Sunday, 30 June 2019 | Raj Kumar

Small enterprises usually follow a bottom-up approach in which employees’ voices are heard and encouraged, writes Raj Kumar

Since the turn of the century, the structure of organisations, the expectations of employees, and leadership styles have changed. Instead of a top-down management style, many organisations, especially startups, follow a bottom-up approach in which employees’ voices are heard and encouraged. Traditional authoritarian leadership styles are gradually being replaced by democratic and laissez-fair leadership.

Reasons behind the Change

Millennials make up a large segment of the workforce and have expectations that are different from those who are older. While still motivated by money, millennials are even more likely to be motivated by recognition. So while traditional leaders could acknowledge employees best by paying more, today’s leaders understand that millennials respond even better to recognition and being assigned greater responsibility than higher salaries. Good leaders who want to reward work often do so by acknowledging an employee publically. A number of young nimble startups are populated by millennials who have an inclusive mindset that favours teamwork over competition. While corporate offices are still highly competitive, among younger employees, cutthroat competition is gradually being replaced by a more collaborative atmosphere. In such settings, young employees expect their boss to also be a mentor. Certainly, every leader’s decision is valued and adhered to. However, a leader is not expected to be a one-man show; rather a leader is expected to carefully consider viewpoints of employees before making crucial decisions.   

Small Enterprises Shun Hierarchy 

A startup is energetic and places less emphasis on hierarchy. In such organisations, the atmosphere is less formal and highly fluid. The leader of such an organisation may be in his 20s, while a large number of employees may be in their 30s, 40s, or older. Because of changing dynamics and disruptive economies in which startups succeed, many young people are leading companies. This is leading to a disruption of the traditional reporting structure, which is being transformed into one where age and seniority mean less than the value added by employees.

A leader in startups is expected to lead, inspire, mentor, and even befriend employees. The power distance between bosses and employees is smaller in startups than in large organisations. A low power distance allows employees to approach their boss and dispense with many formalities. In traditional organisations, employees are still expected to pay deference to leaders, however, new leaders at startups encourage a friendly and participatory atmosphere. 

Small Teams Make Organisations Nimble

One of the most important reasons why startups compete effectively against incumbents is that they have small teams that rapidly assess challenges and swiftly spot opportunities. Google was a startup before the word ‘startup’ entered the popular lexicon, and its success was largely based on the small size of teams in the company. The founders of the company acknowledged a small team size lead to good communication and had wanted to ensure that the size of teams at Google remained small. Since the company has grown, so have team sizes at Google. However, the advantages of small teams are understood by many startups. Individuals leading small teams have a crucial role to play. Such leaders have to be amiable towards team members and are expected to have discussions unrelated to work with them. The structure of smaller teams is less formal and rigid. This means team members don’t necessarily communicate through an established chain of command, rather discussions are open and informal.  In such teams, when even the most junior member wants to make a suggestion, they are heard and their words are considered. Unlike a traditional authoritarian structure, where a leader’s orders are followed unquestioningly, in a startup, team members are free to question their bosses and make counter suggestions. 

Engaging Team Members is Important

In a startup, employees want to understand how they are adding value. While in large organisations, which follow traditional leadership styles, older employees remain content simply doing their jobs, younger employees in startups want to know how they’re contributing. This means leaders in startups have to be able to objectively define team members’ efforts and contributions. Leaders in startups must have a repertoire with team members that encourages, points out mistakes, and communicates where improvement is needed. Such leaders need a nuanced approach when communicating with team members because shouting matches will rapidly erode respect in a small team.

Leveraging Diversity, Celebrating Differences

Leaders in startups understand that a diverse workforce is a huge enabler. A diverse workforce allows companies to penetrate new markets by revealing the preferences of different communities. Traditional leaders excelled at managing relatively homogenous workforces, often many employed in a company were from the same region or of the same ethnicity. Today, leaders understand that a diverse workforce offers advantages a uniform workforce can’t. This is why successful leaders in startups and younger leaders in larger companies are open to new experiences and cultures. Rather than viewing individuals through a stereotypical lens, they’re trained to see people as individuals first. By remaining open to different cultures and having new experiences, leaders in small companies are more accepting of differences, leading to tremendous professional and personal growth.

Startups will be vital to the Indian economy in the decade ahead. Some startups in the food and beverage space are competing effectively against incumbents and have changed what consumers buy by making them see exceptional value in startups products. The overthrow of incumbents would not have been possible without the new leadership style in startups. Using engaging and holistic leadership, a new generation of leaders are creating the blue-chip companies of tomorrow that will transform society and the economy.

The writer is CEO, Deshwal Waste Management Pvt Ltd

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