What Differentiates a Leader from the Also-Ran in Startups

In a high growth environment that many startups are experiencing today, I believe 3 traits differentiate those that break through the clutter and get to the leadership spots from the also-rans. How easy or difficult it is for startups to cultivate these traits is a topic for another day. For the moment I will confine myself to identifying these 3 traits.

1. Firms that are cut out to be leaders encourage, and actively nurture, constructive conflict between teams.

This conflict keeps everyone on their toes. Take an example: revenue growth is a function of Marketing creating demand and Operations being able to fulfill the demand. Simple as it sounds it is not that easy. If Operations are not ready with their supply chain, or technology, when demand has been generated, then two things happen – a) marketing dollars are lost, and b) customers that are trying out a new service have a bad experience and would be very reluctant to try out the service or product again. Similarly if Operations have their ducks all lined up and Marketing is unable to generate demand, there is again a somewhat similar situation. So, what mediocre companies do is to try and achieve a fine balance with each function taking incremental steps so that the other team is not derailed. Firms that go on to become leaders on the other hand deliberately try and create an imbalance where each of the two functions try and get their act right and put the other function in the spot light. This way, it becomes clear where the bottleneck exactly is in terms of both talent as well as the growth engine. If you find everything calm and hunky dory in a firm, you can be sure that the DNA is not that of a leader.  I can give you many more similar examples, but this should be enough to drive home the point. 

1. Internal recipients of service (and those facing customers) call the shots while Corporate functions are service providers that offer consulting help and remove process bottlenecks.

In the also ran companies, it is the exact reverse. Corporate functions ask questions and approve requests while customer facing recipients of service, and growth generators are made to feel as if they are in the dock and need to be explaining everything, with no idea which request would be approved and which wouldn’t. In those destined to be leaders, the customer facing teams always call the shots and corporate functions have to have a very strong justification for turning down something. Statements like, “if you think that’s the way we should do it, you better come and run it” are par for the course. In the also ran, things never get this far. If corporate says “no”, that’s final. The foolproof test to figure out whether a company is customer centric is to watch how internal customers are treated by corporate functions and what happens to those that do not demonstrate customer centricity.

1. Decision making is quick, and difficult issues are openly discussed.

They do not spend too much time debating issues. There is complete clarity on who has the casting vote in case of a tie. One of the most powerful drivers of a start-up is the collective ability of the leadership team to have candid conversations and take quick decisions. Some teams demonstrate this ability while some others avoid conflict, skirt difficult issues, bring them up obliquely with the wrong people and end up politicizing them. Issues therefore never get resolved and fester underneath. In great startups, whenever differences arise between two teams or there is a problem (say customer dissatisfaction), the two individuals concerned (say Head of Marketing and Head of Customer Service) would discuss this issue transparently to fix the issue. In the also ran, these issues do not surface until they reach breaking point. In a great startup, because everyone is dead serious about meeting their goals, they are intolerant of anyone else (or any other function) that slows them down or comes in the way. This impatience results in the issue bubbling up in a timely manner. The speed of decision making applies to every area – including acting on non performers. Non performers are not accommodated. In an also ran company, if you look around you will see a good number of people who you are not sure as to what exactly they are doing. 

The fact that those that go on to become leaders also strategize better and execute better is obvious (and well documented). In this article, my aim was to touch on the rather less well known differentiators.