Leadership… The one thing people strive for, however forget how to integrate together to make successful companies and teams.
The concept of leadership is well known. Especially in the scale up community, leadership is one of the most critical factors in the ability of a company to find product- market- fit, scale revenue, and then grow into a unicorn or become a household name. Everyone knows they need it, however many scale ups fail to understand the types of leadership styles and how those styles can impact the success or failure of the company growth and company culture. Here are a few of the most common leadership styles and company cultures.
Authoritarian/ Autocratic Leadership:
As the name implies, this type of leadership style is extremely top-down. It comes from a history of military operations where everyone has a specific title and rank that confers different levels of authority. It is one of the oldest leadership styles in existence and has transferred into different companies large and small across many different markets around the world. One of the best known examples of this type of cultural leadership style is Amazon. In fact, during Amazon’s scaling journey it was a practice to hire former military officials into the executive ranks of the company to further enhance this type of leadership style and culture.
Advantages of this style:
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Everyone knows who they report into and who has the authority to make decisions
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Compartmentalised/ Matrixed teams: This type of style tends to create hyper-matrixed and siloed teams that focus on making precise decisions. This can be great in larger organisations where optimisations need to take place.
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Just like the control and ability to make decisions, this type of style clearly delineates who has the responsibility for decisions that are made
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This type of leadership is also one of the best types to lead in higher pressure environments or when there are strict deadlines
Disadvantages of this style:
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Authoritarian leadership styles tend to stifle creativity. When people on the team feel like they are not empowered to make decisions, their desire to contribute becomes minimal in favour of a focus on the process. This type of leadership style loves processes because it assumes that control over the process will have control over the outcome. In scale-up environments this tends to be counterproductive as scale-ups need to be creative and nimble with everyone contributing equally in order to grow.
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This type of leadership style tends to attract individuals who prefer control over empowerment. This is a natural case of the situation itself. Usually the best individuals to execute in an authoritarian culture are the ones who value control. It can be beneficial in cases where projects need clear command and leadership, however can be extremely difficult in building cohesive teams built on trust, empathy, and contributing to a safe space for team members.
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Presiding vs. Building: This type of leadership style and company culture tends to attract leaders who want to “preside”, meaning that they draw authority being in authority itself vs stewardship of the people on their teams or outcomes that they generate. Rarely does this type of leadership style or company culture produce situations that build products, grow people, or scale companies (which is critical to scale-ups at the Seed, Series A, and Series B stages). This type of style is better implemented at Series C, D, and later stages when companies begin to slow down their pace and focus on process. When evaluating leaders and company cultures it is important to understand what stage of growth you are in and what is needed to make the company successful at that stage.
Laissez-Faire (Flat Hierarchy / No Hierarchy):
On the flipside is the opposite of the authoritarian type of leadership style which is the Laissez-Faire/ Flat Hierarchy type of style. In this type of style, the belief system is that the individuals who are hired into an organisation are capable of producing the best outcomes themselves and thus do not need structured organisational protocols. This is very common in scale-ups at the Seed, Series A, and Series B stages with FTE (full time employee) count up to approximately 50 people. This type of leadership style is more likely to be found in very early stage scale-ups where the Founder is literally doing everything. If everyone reports into the Founder or the CEO, then you know you are dealing with this type of culture.
Advantages of this style:
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Creativity is optimised. Team members are encouraged to be individual creators who actively work with the CEO or Founders to solve challenges and grow the company
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Processes are limited or non-existent: This type of leadership style values quick results and is the essence of where the term “growth hacking” took stride
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In an extremely fast-paced environment, this type of leadership style and culture can enable extreme nimbleness which can be advantageous
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As a leadership personality type, this style can be extremely accommodating and flexible as it implies that there is limited structure
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Community building and consensus-driven decision making: When looking at this from the positive end, it can build an internal culture and community quickly. This can be exemplified by cultures where everyone in the company does a stand-up every day together to speak about their work and what is being achieved. While this type of community-driven activity might seem like a great idea at the beginning, the execution of this is difficult to scale.
Disadvantages of this style:
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Many team members who work in a company culture like this one or with leaders like this have commented how it is difficult to get decisions made or in the worst cases, they might not know who they report into or who is supposed to make the final decision on a project, and so on
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Consensus-driven decision making can also be very positive at the earlier stages when there is minimal FTE count, however as a company scales it can be counterproductive and either slow down decisions or stifle the best ideas for the ones that are most commonly accepted (the common denominator which is usually not the highest quality or most innovative)
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Founders or Founder CEOs tend to get burnt out with this type of style more easily due to their inability to delegate tasks or to relinquish control. This friction becomes even more tense as the organisation outgrows this type of style and it becomes very clear that functional executive leadership needs to be implemented to scale the company and free up the Founder/CEO to continue to be the innovator.
Servant Leadership:
In the middle is the more balanced type of company culture and leadership style which is Servant Leadership. In this style leaders focus on the growth and empowerment of their teams, while also focusing on the efficiency and growth of the company. This type of style can be applied to both earlier stage companies (Series A-C) as well as larger organisations since it is more about the style of the leader themself and company culture instead of the company structure. Company structures change as a company scales, however this type of leadership style is one that can be carried throughout the growth journey with effective results. In the Servant Leadership style, the leader focuses on how to empower the team members and how to lead by being of service. This requires a higher level of Emotional IQ from the leader as they focus on both growing individual team members through both professional and personal challenges. This style can also be adapted for the most common leadership needs of the organisation throughout the scaling journey whether it be a need for a “Player-Coach” type of leader or even a “Manager of Managers”. This type of leadership style is one of the most versatile and adaptable.
Advantages of this style:
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The Servant Leadership style is one that is the most adaptable to company cultures
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It focuses on the empowerment, development, and success of the employees whilst also driving positive outcomes for the company’s strategic or revenue goals
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Servant Leaders tend to create cultures that are inclusive and empower employees from all backgrounds, working styles, and personalities; regardless if they are extroverts or introverts.
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They also tend to create company cultures that provide safe spaces for teams to build trust which creates more long term and sustainable outcomes for the company
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Servant Leadership styles can scale with the company regardless of the size or geographical location
Disadvantages of this style:
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The Servant Leadership style requires leaders to embrace a higher Emotional IQ, meaning that they need a higher level of personal awareness to understand the effects of their actions and words on those around them. They also need to have a higher level of awareness regarding personality types and how to best balance those to create high producing teams.
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This type of leadership style requires a certain mindset within the company culture to be able to be successful. It requires a top-down commitment from the executive leadership team for full adoption. It will not be successful if there is an internal struggle regarding company culture and mindset.
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To start, this type of leadership style will focus on understanding individuals and what drives them as well as understanding their triggers to enable optimal individual and team performance. The initial period may seem slow to organisations who value authoritarian leadership styles, however the servant leadership style will produce better outcomes in the longer term. The best way to this is longer term vs shorter term results.
Note on Leadership Styles and Company Culture
There is no one tried and true method or right way to establish company culture or leadership styles – this is why they are called “cultures” or “styles”. They are all different and all have advantages and disadvantages which need to be carefully thought through to be applied in the right way and achieve the outcomes you are looking for in your scaling journey. The key is to understand your own leadership style, how that is applied to your own company culture, and the outcomes it produces in terms of material results as well as cohesiveness of your teams.
***A Special Note on the Application of FAANG cultural models ( Facebook, Amazon, Apple, Netflix, & Google) : Many scaling technology companies will attempt to implement different cultural models from prominent technology companies without understanding if it fits the culture of their own organisation or the outcomes they are looking for. The point to remember is just because a process, method, or cultural value is successful at a larger or more prominent company, does not mean it is the right thing for your company to implement. Take a very serious look at the balance of your productivity goals and well-being of your team members before applying any popular method or process.
In summary, leadership styles and company cultures are created and developed by the people within each company. The wonderful thing is that these styles and cultures can be shaped and reshaped over time. The important piece is to understand what your values are as a leader, how it fits within the company you are leading, and then how to effectively apply specific leadership styles to achieve the best results for the company and the people who work there.
