What makes it difficult to lead startups into profitable businesses over time? Challenges, both external and internal to the company, are thrown at CEOs who often are responsible for every aspect of the startup being at the helm. For startups that have a great journey during its early years, many depend on their ideas and their ability to tap into a ‘unique opportunity’ that makes their offering new for customers. But such first-mover advantages often comes with its expiry date as startup markets remain extremely competitive and decentralized access to technology ensures that people with similar visions end up creating similar products. Once we look beyond the technological and capital aspect that funnels startups out during their early parts, managing teams and rallying talented employees towards a core vision emerges as a major challenge.
As the startup size grows and more people join in to build parts of the company in their vision, the task of the CEOs becomes even more varied and specific. They have to ensure that their budding company stays on track and its workforce remains tuned towards ensuring such alignment to organizational goals. This is why many startups choose to remain lean and often have small, effective teams of skilled individuals. But without the right set of leadership skills on the part of CEOs, even such a lean organizational culture might not be able to transform fledgling ideas into sustainable businesses.
Then what are these skills that hold the coveted to key unlocking the solution for leaders within startups? It is important to know that there isn’t a one-size-fits-solution towards managing startups. The context in which each operates can be greatly different owing to the complexity and dynamism within markets today. But many share similar traits
- The ability to balance long term and short term goals: While some entrepreneurs have a long-term vision for their companies and are focused on growing and scaling, many are focused on getting immediate funding, creating an early exit option and pushing for immediate gains. Thus, the toggle between building for legacy or the ‘next sell’ is one that many entrepreneurs struggle with
- Get teams to think outside the box: This must be one of the most overused terms within the business context in recent times, but often with the right reason. The ability to take risks and keep innovating proves critical in building profitable practices within startups who often run on very tight budgets and funds. Although leaders themselves are in charge of innovating, a startup that decentralizes innovation and motivates its teams to innovate is bound to better than a leader who does it solely on his own.
- A keen focus on creating value: CEOs across the startup landscape know this to be supremely important yardstick when it comes to leading their companies through newer ventures. But in the chaos that often ensues while managing startups, they often lose sight of what is important and what's not. Focusing on creating value can not only help startups stay on the right track often does more in terms of customer retention than spending heavily on marketing initiatives.
- Balancing decisiveness and self-awareness: Startup CEOs have to show high levels of self-awareness when it comes to decision making. Not every area might be under their expertise and in such places, listening and asking the right questions plays a far more important role than going ahead based on ‘intuition’. But it's also critical to temper such self-awareness with the need to be decisive and take timely decisions.
- Communication and engagement: CEOs often rate technology as the supreme driver of their business and often not without the right reason. But beyond a point, as the technological application becomes similar, it's often the quality and motivation level of people working within the startups that provide it the edge. Effective communication and engaging all levels of the startup, from contractual workers to leaders of different functions proves critical in leading startups.
Startups that falter in their journey to become a profitable business with a long term vision are often found wanting in the areas of having a constant focus on creating better customer value, engaging proactively with all its stakeholders, and fostering the ability to innovate. To delve deeper into such issues would be to look at how CEOs within such startups across sectors are unable to build and lead effective teams, often unable to guide them to achieve results across all these three core pillars.
Only once clear strategies on how to achieve these have been build can CEOs go on to develop their startups’ USP, build a powerful brand, boost customer retention. But to do that is a process of constant leadership where CEOs are required to focus on talent management practices more closely. An issue which is noted to grow with the size of the company.