Becoming a Small Business Leader – How to Bootstrap Your Leadership

BECOMING A LEADER

Much has been written on the subject of leadership. This paper addresses the evolution of small company leadership and proposes a roadmap of sorts for identification of where you are and where you’re going as a leader.

Early Stages of Small Business

You’re the “doer” and the prime mover of the business. You probably had or learned the skills growing up. Some of you may have learned machining from your father. You’re most likely an expert even if it was just your idea (“creativity”) and you invested many years of “sweat equity” building the business.

In this stage most likely a lot of your time goes into creative activities and solving problems. In his 1972 Harvard Business Review article, Larry Greiner proposed the model below.

Evolution

His study proposed that in the early stages almost all activities were collaborative, creative, and very little time was available for management. There might even be a disdain for management activities. But eventually the need for leadership would emerge calling for an evolution to having someone “in charge.”

Each stage results from a “crisis” – the words on top are how the company evolved, and at the limit of that evolution, a new “crisis” presents itself as a strong need that is solved by the next evolution. In our case we are at the bottom right – we have evolved through hard work and creativity, and now the organization is successful and requires leadership to evolve to the next level. Leadership provides more direction and the organization grows and evolves until the need for autonomy becomes a crisis born by a leader who has become too strong, too directing, to demanding, too constraining, and a limit on continued growth. And the cycle continues. But let’s go back to the beginning and start there.

If the business is successful then you begin to get into the fringes of managing – things such as hiring, coaching employees, training, and more. But nevertheless in this stage you continue to work shoulder to shoulder with everyone and you feel less comfortable sitting in an office doing “management” duties (whatever that is).

Success Leads to Growth – Someone Needs to Manage

Why does someone need to manage anyway? We’re all adults. Can’t everyone just figure it out? But things start to surface.

People need direction.

Hiring – we need more people and someone needs to make sure we get the right ones. This is often the first management task that we experience. I remember my first hiring experience as a new manager. It wasn’t until I got into the room and sat down that I realized I had no idea what to do. At that point my goal became, “Get through this interview.” I suspect that I did more talking than listening. And as a result, most of our experience in this early stage of management is bad hiring – people who don’t fit, or become a problem later on. It becomes apparent that more attention and effort needs to go into hiring.

That realization is often followed with a series of quick fixes. Make a list of questions. Get more people to interview them. Make sure you check their references better. It’s not until later that you realize that repeating a lot of poor interviews just makes it more likely you’ll hire the wrong person. Not to mention we usually follow-up poor hiring practices with poor training practices. We put the new person with the old person.

Managing People – the next thing that usually surfaces that needs management is people. It turns out if you put a bunch of people on machines with plenty of work to do, they don’t necessarily work productively. Things happen. Mary doesn’t like Jim and is trying to make him look bad. John does like the work he’s doing and is looking for something else. Fred and Jerry are spending a lot of time in the break room or hiding out in the restroom.

High performance is not a natural act.

It takes a good manager to set clear goals for people, instruct them on behaviors that are out of bounds, provide for motivation when they’re doing things right, and to keep one bad apple from spoiling the whole bunch. Adults aren’t automatically good coaches – just go to your son’s soccer game and you’ll see that it takes a lot of hard work and study to become a good coach. More people means more needs for management. Eventually the demands of the business require you to manage and not just do.

Managing Customer Issues – at some point the customers are so large that making a mistake can be disastrous so you need to spend more time backing up your sales force – assuming you have one. Some customer problems demand management attention. They want to visit and tour your facility. They want to meet the “big guy” and you’re in a command performance.

Success Leads to Leadership

There are many definitions for leadership. Why do we need it? Because eventually managing things just isn’t enough to ensure success. Just solving problems and maintaining the status quo isn’t enough. Some simply say leadership is being someone who others will follow. I like the example of the informal leader. Sometimes there are certain people who others just naturally listen to. I’ve seen people try to fake that by using recommended tricks and techniques. That doesn’t seem to work well. Being someone who others want to follow seems to be who you are – it’s in the bones. For those who watched the hit series LOST ending in 2010 after 6 successful seasons, Jack Shephard was the unquestionable leader even though many times you had to wonder why anyone would follow him – but he was the guy that everyone just wanted to follow in spite of many obvious flaws.

It takes a decision to be a leader.

You must decide with confidence that you will step out and lead. We see this informally all the time as we watch kids on the playground and people at work. Everywhere we see the challenge of leadership picked up by someone – the group looks around at faces that say, “it’s not me you’re looking for,” and one person steps forward and says, “OK, let’s get started.”

It’s very comfortable being a manager once you contemplate the transition to leadership. Leadership is so much less tangible. As a manager you can place most of your focus on maintaining the status quo. You solve problems to bring things back to a norm. You “project manage” the business, the customers, the employees.

A leader is mainly concerned with challenging and changing the status quo. As a leader, you’re operating from a vision of the business where breakthrough performance is normal and daily miracles are common.

As I said in the beginning of this paper, there are plenty of good books on leadership – servant leadership, principled leadership, situational leadership, and more. What I want to do is focus specifically on how a small business owner can transition from doer to manager to leader. How do we focus our efforts and develop ourselves to become that leader that people wish to follow?

Small companies eventually stagnate under a manager. Sometimes that becomes a generational issue. For instance, the father manages the business until retirement and at retirement the transition to the son or daughter comes after they have acquired an MBA at a top business school and are prepared to take over the business. But the father wants to see continuing revenue and the business has declined under management control for so many years. The future survival of the business depends on leadership but the father insists on management to ensure future success.

In one case I watched the father eject the son because he feared that the son could not manage the business when clearly their survival in the market would require a transition to leadership no matter how “rocky” that transition might be.

So I will suggest that in order to transition yourself to leadership – to become that person that others wish to follow – this pathway or roadmap may resonate and make sense to you. To gain the trust and respect of others there are certain “foundational” values and skills that must be adopted. I am suggesting that you focus on the following values.

Authenticity

There are widely varying views on the meaning of authenticity. You hear words like reliable, truthful, genuine, trustworthy. In existentialism, authenticity is the degree to which one is true to one’s own personality, spirit, or character, despite external pressures. In the more general sense, people refer to authenticity as being true to oneself.

It is perhaps easier to identify in-authenticity as a way to define authenticity. We have all experienced a manager who says he has our interests at heart but behaves immediately in a manner that tells us he doesn’t. Or a leader who claims humanitarian motives but behaves consistent with self-serving ones.

Perhaps an authentic leader is one who has resolved the inner and outer conflicts to arrive at the truth about their core motivation and then is able to speak from that in a manner that instantly strikes everyone as true and accurate.

Another way to say that is to say that it is where you come from that’s important, not what you say.

We all have a kind of “radar” that works reliably almost 100% of the time if we listen. Some might call it a “BS Meter” but it mainly ignores the words (which according to psychologists holds only about 20% or less of the meaning of any communication) and seems to work off the non-verbal cues and even things that occur subconsciously and unexplainably in the background.

When a leader has internal conflicts between what they value and believe, and what they are saying, those conflicts are apparent. “Go ahead – it’s safe,” takes on different meanings spoken by different leaders and we seem to have a sixth sense about who we can trust when we hear these words and who we can’t.

So when a leader pretends to be unafraid, but is secretly afraid, a statement like, “Come on, let’s go – this is going to work,” raises the needle on the BS Meter while a statement like, “I’m feeling afraid, but I’m going to overcome that fear and move forward. Are you with me?” rings true as the authentic representation of the leader’s thoughts and feelings.

Leaders who try to appear confident when they’re not, fearless when they’re not, strong when they’re not, etc. just keep triggering the BS Meter until everyone with any self-worth at all has found other places to be. One of my favorite quotes is from a poster I saw, it said, “Once you lose all your eagles, you’re left with nothing but vultures.” It shows an office building full of vultures with green eye-shades and outside the windows eagles soaring free.

Conviction and commitment are powerful things. They can overcome feelings of fear and most other reservations in a very authentic manner.

When conviction and commitment are where you come from, people can read that and will follow.

For most people, developing authenticity might take multiple lifetimes of practice. The shortest route to authenticity is to hire an executive coach who can observe you and provide candid feedback about how you are doing day by day. In this respect, feedback is the “breakfast of champions.”

Integrity

Some will understand the word integrity to mean honesty, truthfulness, honor, frankness, candor, or openness. I dislike these words that describe integrity because when someone says you lack integrity you feel like they are insulting you and miss the point. I like to think about integrity in other terms that are less laden with emotion and potential disrespect.

Integrity is the degree of consistency between your words and your actions. Consider these examples:

  • You schedule a meeting with someone and at the appointed time they are nowhere to be found. You know they have a cell phone – they have your cell number – they can also text you – and they can call someone else and enlist aide in contacting you. But they simply “no-show” without notice and when you finally speak to them they tell you a story that’s equivalent to “the dog ate my homework.” No integrity.
  • You have a project planning meeting and work out a schedule of activities. Everyone agrees that the timeframes are reasonable and can be met. All of the tasks are due to be completed with two weeks. At the end of the first week you check in with someone and they haven’t yet begun their tasks. Two days later they begin talking about why they will never complete in time because the dog ate their homework. No integrity.
  • You meet with someone to discuss a project you’re working on together. You agree on five requirements. The person takes notes – you watch them. Several days later you check in to see what they’re doing and their work has omitted 3 of the 5 requirements. When you ask why they didn’t observe their notes from the meeting you discover that the dog ate their homework – again.

People who lack integrity have a plethora of excuses that they themselves believe to be adequate. Everyone else knows these excuses are just that. People who use excuses like this are labeled unofficially as people who cannot be counted on – they lack integrity.

But integrity is the thing that nobody will speak about openly because everyone understands it to be an insult to their character.

Leaders who lack integrity are surrounded by people who have given up on you. These people have signed up to the “willing to be let down every time” club. Like the night watchman who sleeps in the park every night and doesn’t wake up for the clock chiming, they have steeled themselves to your supreme lack of integrity. You’re surrounded by people who do not give you feedback and do not call you to account. They’re comfortable because they know they can get away with the same thing – like having infinite “get outa jail free” cards.

In fact, some people get so good at failing to keep their word, that they make a new persona about it. So you become the guy who doesn’t have to keep his word because he’s so important and important people don’t keep their word – they’re creative, they’re spontaneous, they’re dynamic, energetic, and surrounded by people who can live with that.

Your considerations about the integrity of others un-communicated keeps them stuck the way they are.

And if you work for someone like that and don’t give them feedback, you get to have them exactly the way they are forever.

Leaders who lack integrity feel extremely uncomfortable around people who expect integrity.

Managers who wish to become leaders must focus on moving from keeping things in their head or on “things to do” lists to keeping a calendar. Modern PDAs like an iphone make this very simple. Put something in your calendar on the computer and two seconds later it’s on your phone. Everything in your calendar can have a reminder. No excuse for not knowing you’re about to miss a meeting or phone call. No excuse for missing a project deadline. Everything you promise to do is moved into a calendar that warns you in advance that you need to do something. You can ask someone to send you a calendar invite so you know that it will get into your calendar.

Moving from a list to a calendar is square one for being a leader with integrity.

Taking notes in every meeting in a log, notebook, or daily diary is square two for high integrity leaders. You can’t be expected to remember everything you hear and everything you agree to. But consider this question – which of these two leaders do I believe has integrity? Which is more likely to impress me? Which am I going to trust and which am I going to follow-up on constantly? Which am I going to promote?

  1. Someone who takes detailed notes during a meeting and references those notes later.
  2. Someone who doesn’t take notes and has a track record of forgetting to do things.

Let’s face it, the beginning of integrity is when someone behaves in a manner that demonstrates a commitment to do what they said they would.

Nobody trusts a victim who’s constantly missing deadlines and makes “dog ate my homework” excuses. That’s right – this is a victim of life – everything that happens becomes an excuse based on their inability to deal with life – to master it’s ups and downs.

Try checking the items on this list that would excuse being on a conference call on-time as you promised or contacting the other party ahead of time to delay or reschedule…

  1. Got up late.
  2. Ran into traffic on the way to work.
  3. Cell phone battery ran down.
  4. Airplane was delayed.
  5. Car broke down.
  6. Last phone call or meeting ran long.
  7. Starbucks was running late on making coffees.
  8. Too many conflicting priorities.
  9. Dog ate my homework.

Did you check any of these? If you did, you’re the guy we’re talking about. None of these are insurmountable. None of these keep you from contacting someone to communicate that you will not be able to keep your promise.

The way people judge your integrity is not absolute. They don’t expect you to keep your promises every single time. What they do expect is that you will behave in a manner consistent with a commitment to do what you said you would.

Everything that interferes with your power to become an authentic leader rests on a lack of integrity. Therefore I would call integrity like authenticity, a foundational skill. It’s part of the bedrock on which you can build credibility as a formal or informal leader.

Some managers develop the belief that having the prerogative to blow off meetings and phone calls demonstrates their power and standing. They come to believe that everyone must wait and swallow hard while they indulge themselves in doing what they want when they want to or not – like a whim.

I can admit that you see a lot of this in the movies where everything is on a script and employees seem to ignore these abuses. But in real life that isn’t the case. Leaders who act like that wake up one day and the only people who are still with them are those who have no possibility of getting a job anywhere else. Movies and TV series are not reality when it comes to running a company. I’m surprised how many people haven’t realized this yet.

Another type of integrity comes when we vouch for others. If I tell you that Jim works for AT&T and later you find out that Jim does not work for AT&T, you wonder about my integrity. This is because in sharing a fact with you, you expect me to at least make sure my facts are accurate. As a leader, this is a standard that always applies, while as an individual contributor – not an analyst, accountant, or attorney – I might get away with this. Leaders are held to the same standards by those they lead as you would an attorney, accountant, or analyst. These are folks you expect to be certain about events, details, facts, etc. People in these roles have a form of “due diligence” that includes checking sources of facts they consider to be important. They may adopt a personal policy of checking facts with more than one person. If Jim says he works for AT&T, you might look at Jim’s business card, or ask someone else if they know where Jim works.

People expect a higher standard from their leaders. Leaders who cannot ensure that information they use and communicate is accurate within reason will not be trusted by those that follow them.

Service

Leaders that people want to follow have made a fundamental decision. Do those that I lead exist to serve me or do I exist to serve them? As a leader we need to look inside to see how we already answered this question. It’s easy because it is reflected in our behavior every day.

How can you lead and serve? More than one book has been written about this starting with the bible.

“You know that those who are considered rulers over the Gentiles lord it over them, and their great ones exercise authority over them. Yet it shall not be so among you; but whoever desires to become great among you shall be your servant. And whoever of you desires to be first shall be slave of all. For even the Son of Man did not come to be served, but to serve, and to give His life a ransom for many.” Mark 10:42-45

Robert Greenleaf is credited with coining the phrase “servant leadership” from an essay he authored in 1970 called “The Servant as Leader.”

“The servant-leader is servant first… It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead. That person is sharply different from one who is leader first, perhaps because of the need to assuage an unusual power drive or to acquire material possessions…The leader-first and the servant-first are two extreme types. Between them there are shadings and blends that are part of the infinite variety of human nature. The difference manifests itself in the care taken by the servant-first to make sure that other people’s highest priority needs are being served. The best test, and difficult to administer, is: Do those served grow as persons? Do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants? And, what is the effect on the least privileged in society? Will they benefit or at least not be further deprived?“

For a small business owner this may be too esoteric – obscure, cryptic, conceptual. Those who are the second and third generation family to manage a company that has grown tend to be more practical and pragmatic – their roots are strongly connected to the “Captains of Industry” – the leadership styles of the early 1900s.

Employees do or don’t do. The job is simple. Fire those who can’t do. Give those who can but don’t a second chance. Reward those who can do and do by letting them keep their jobs. What could be simpler?

National discretionary effort surveys have long identified the gap between the energy and effort it takes to remain employed and what people can really give when both their hearts and minds are present. But the Captains of Industry rarely captured the hearts of the workforce. You may recall that was the same era that unions were born and perhaps for very good reason.

What level of effort does it take to remain employed? Perhaps 60-70% effort at most. If everyone silently collaborates to keep performance expectations low, the 60%ers can be superstars. The 90%ers who join the company quickly get beaten down or ejected with prejudice. You have to “fit in.”

What if there is a 30-40% gap as most industrial psychologists agree? The performance differences are astounding between high performing companies and those who are just status quo.

“We are going to win, and the industrial West is going to lose: There’s nothing much you can do about it because the reasons for your failure are within yourselves.”  – Konosuke Matsushita

Our competitors have long believed that American business leaders do not know how to lead. We simply manage the business to a status quo but don’t do the hard work of inspiring high performance and the problem is rooted so deeply inside us that we cannot see it much less exorcise it.

We really, fundamentally, don’t want to believe that our job as leader is to free the intellectual resources of our enterprise. We believe that perhaps somehow good enough will be good enough, and we believe it is a risk to try to ask for more. We believe that control is the only thing keeping it all together.

“When we are no longer able to change a situation—we are challenged to change ourselves.” – Viktor Frankl

So what is the one thing that I can do that changes everything? What is the one thing that if I do it consistently, everyone will know that I intend to be a good leader – one that people will eventually follow? Notice I said “eventually” because those you lead have a strong interest in you remaining the way you are. You’re predictable and can be manipulated based on that predictability.

I knew a great man once. He had amassed a great fortune growing his own company. Loyal friends and supporters surrounded him. He asked me to consult by taking a look at his business and giving him feedback. His friends and loyal supporters were fearful and jealous. I only had to test it once – I said something that could be interpreted several ways to one subordinate and soon his team had used that to launch an ejection campaign to remove me. I asked him if he believed I would say something negative to a subordinate without a purpose and he said “goodbye.”

Your subordinates have an interest in keeping you the way you are and they don’t like you changing for the better.

But if you want to do the one thing that will change everything, you must become the person who achieves success through others. You must become extremely interested in supporting those who work at your company to achieve their own successes. You must serve their higher good and achieve results through them. This is the fundamental change in thinking that our offshore competitors are hoping we never discover.

Simply commit to change your mind and your actions will fall into line over time behind that. And eventually people will give up and allow you to change.

Respect

A good starting definition for respect is, “A feeling of deep admiration for someone or something elicited by their abilities, qualities, or achievements.” It seems like a fitting definition when we think about the leaders we have known – those we respect and those we do not.

But thinking more deeply about the subject, we may realize that we never found it easy to respect those who did not respect us. Leaders are able to trigger deep-seated memories – you might even say “cellular memories” – memories that are so engrained into our consciousness (even though many of these might be subconscious) and beliefs that we can hardly escape the similarities between the leader and those earlier memories.

Leaders can trigger memories of mistreatment by a parent, a teacher, a bully, a boss, and more. Anytime someone has a natural “positional power” over you – one born of an organizational chart – they automatically become the victim of the negative memories of those they lead.

And so people come to work pre-disposed to react poorly to a leader who doesn’t show respect.

And, it could be said that people crave respect more than they are willing to give it.

While leaving a club late in the city, we walked to the valet stand where a single young man stood ready to retrieve our car. As we stood in the street waiting we became aware of several young men and a woman moving toward us across the street. They walked up to us and stood closely to address us. They were dressed as people who might have lived on the street or in a car for while. They seemed nervous – asking where we had come from and what we were waiting for. It was clear that they were desperate and intended to do us harm. The respect we showed them disarmed them. Our kindness and fearlessness brought back memories of a parent or teacher who also respected them. Their conviction to act was softening. We asked if they needed help and their immediate reaction was “no” but after consideration they said they could use some money. We gave them $20 and they thanked us profusely and moved away with fond farewells.

Respect is so rare in the world as to disarm those who have all but given up their pursuit of it.

The “Urban Dictionary” defines respect as…

“It means valuing each others points of views. It means being open to being wrong. It means accepting people as they are. It means not dumping on someone because you’re having a bad day. It means being polite and kind always, because being kind to people is not negotiable. It means not dissing people because they’re different to you. It means not gossiping about people or spreading lies.”

Leaders who are disrespectful to others collect followers who are willing to be disrespected. Over time, anyone who truly respects themselves will find other places to be leaving those who do not.

What kinds of people are attracted to leaders who have a fundamental respect for others?

I’m not concerned with your liking or disliking me… All I ask is that you respect me as a human being.
Jackie Robinson

Knowledge will give you power, but character respect.
Bruce Lee

It’s true that people are prone to respect a principled leader – a leader with character.

Some textbook definitions for character are:

1. The aggregate of features and traits that form the individual nature of some person or thing.

2. One such feature or trait; characteristic.

3. Moral or ethical quality: a man of fine, honorable character.

4. Qualities of honesty, courage, or the like; integrity: It takes character to face up to a bully.

5. Reputation: a stain on one’s character.

The best leaders have a “code” of sorts – a list of values that they intend to use to guide their actions. Some typical values to live by as a leader are:

Integrity – I’m going to say what I mean and do what I say.

Honesty – I’m going to be straight-forward with my feelings and intentions.

Respectful – I’m going to respect and be kind to everyone and not allow fear or anger to get the best of me.

You may have a more extensive list of values but the point is, even if you were to fully accomplish these three, most people would follow you to the ends of the earth.

If you develop your own personal “code” and focus on evaluating yourself daily on how you exemplified your values, you would find that the reaction you begin to see from others would re-enforce your commitment to change.

Summary

Leading a small business is a different challenge from leading a larger business. But both jobs require some of the same skills and qualities, just exercised on a much smaller scale.

Having people follow you out of respect is a rewarding experience. Leading others correctly make a huge contribution to hundreds of workers and in turn their families. Those who work for you take good examples of leadership home. The impact of good leadership is felt at work as well as at home.

Good leadership makes a contribution to everyone and develops leadership within your own business. A good bench strength of leadership in your business multiplies your benefits because the lack of good leadership in small business severely constrained the building of a high-performance enterprise.