What is strategic leadership for entrepreneurs?
Entrepreneurial success depends on the ability to think strategically, have a clear strategic vision, and achieve results quickly. Richard Siegelman, general partner at Kleiner Perkins, probes to find out how people got together and what motivates them as a group. He asks, “Is there a shared vision and culture?”
According to Siegelman, “Some people may have strong technical dreams, and others may be completely different-a warning signal.” Learn how you can focus on, and achieve long-term entrepreneurial success. Success depends on the ability to think strategically and achieve results quickly.
As Jack Stack says, “the challenge for entrepreneurs is to get people to follow their big idea, whether it’s the investment community or the people inside the organization. When entrepreneurs are able to sell their ideas, they become leaders.”
The goal of leadership is to quickly inspire and motivate a venture team with a common vision and purpose and then guide them in converting this shared vision into reality.
Richard Siegelman, general partner at Kleiner Perkins, probes to find out how people got together and what motivates them as a group. He asks, “Is there a shared vision and culture?” According to Siegelman, “Some people may have strong technical dreams, and others may be completely different-a warning signal.”
John Hamm, a partner at Redpoint Ventures, believes that leaders who are able to scale their business quickly understand the importance of a focused, streamlined strategy. They learn to extract a handful of goals from a longer list and know how to focus their team accordingly.
Rebecca Smith, a judge with Ernst & Young’s Entrepreneur of the Year Awards program, explains: “You have to be more than a strategist. You have to be dynamic, because once you develop a strategy, you have to lead people to your conclusion.”
Strategic planning is a logical, analytical process for choosing your venture’s future positions vis a vis the environment. The most common defect of entrepreneurs is myopia, a lack of long-range perspective in thinking or planning. In the sports world they say, “Luck is where preparation meets opportunity.” Lance Armstrong, a bicyclist with five consecutive Tour de France wins to his name, prepares by “thinking the race through” before he ever starts down the road.
It Begins with a Strategic Vision
Research has shown that successful entrepreneurs create visions of the future, which inspires others to get involved in the venture.
Howard Schultz, founder and CEO of Starbucks Coffee, says, “Vision is what they call it when others can’t see what you see.” Entrepreneurs are those with a distinct vision or keen insight to an opportunity and drive it to its endpoint.
Such a strategic focus is important because it fuels the persistence required to bring opportunities to fruition once they are recognized as relevant. Also, employees “will go above and beyond the call of duty to help accomplish far-reaching goals.” Your strategic intent is based on your vision and focus. It is what you see your venture will be doing in the future, and what it should be doing today in order to get there.
Think of what Jack Nicklaus, one of the most successful golfers of all time, said: “I never missed a putt in my mind.”
We have found that on the road to entrepreneurial success there are no shortcuts. If you are bent on finding a shortcut-the easy way-you are not working hard enough on the fundamentals. As we witnessed in the Perfect Storm, some entrepreneurs may get away with it for a while, but there are no substitutes for the basics. And the first basic is good, old-fashioned hard work. Even with a lot of hard work, no business venture is going to grow unless it has a strong and sturdy foundation.
One of the most important skills or qualities is strategic leadership. Leadership in fundamentally new business activities is a long-term risk that requires a long-term strategic vision. Leadership in a new industry is seldom built in anything less than ten to fifteen years of very hard committed work. Strategic leaders are expert risk-technicians. They are experts at identifying risks, knowing how to manage around risks, and becoming comfortable in high-risk environments. They know that developing an effective strategy for dealing with risk and uncertainty sets apart the winners from those lost at sea.
In the darkest of dark nights, for thousands of years, from anywhere in the world sailors could look to the North Star Polaris for guidance. Strategic leaders too have that long-term vision-they can always look to their North Star and get back on the heading toward success. Strategic leaders must also have the capacity to solve an enormous set of problems. In sum, they must know how to choose which mountains to climb and which seas to cross. They need to know how to inspire their team to keep going, even in the fog of war-and most importantly how to stay together all the way to success.
How do these qualities differ from those required to run a large corporation?
Entrepreneurs are directly involved in the dynamic, and very complex, interrelationship between financial management and business strategy. This is the significant difference that sets entrepreneurial management apart from all business management practices.
In almost all cases, the person making the decisions has personal risk at stake. The worst-case scenario for folks “at work” is getting fired. The worst case for entrepreneurs is losing their home, personal credit, and lifestyle, as well as the destruction of family relationships.
But what does it take to be the lead entrepreneur? It is not easy to be the boss if you have never been one, and the mistakes you make early on can come back to haunt you. In fact, the first-time entrepreneur faces perhaps no challenge greater than learning how to be the boss. But there is more. Does the opportunity fit with what you truly want to do? Are you really ready to quit your day job? Conducting an internal self-assessment is the hardest thing for entrepreneurs to do, but if you do not do it, you will really get into trouble. And what makes you the right CEO to lead this venture now? Are you prepared to face an immediate tidal wave of responsibility?
It is normally assumed that the founder, or lead entrepreneur, serves at the outset as the chief executive officer (CEO). It is the CEO’s job to build the venture team, and to provide the leadership, strategic vision, and motivation. Much like a project manager, the CEO first has to prepare a preliminary budget and schedule of activities, and then assign the routine details necessary to get the venture moving ahead.
Then the tidal wave hits: motivating the venture team; meeting with legal and structuring the venture; acquiring adequate resources; dealing with obstacles, roadblocks, and challenges; making thousands of decisions and trade-offs among goals, cost, time, performance, and profitability; and finally, negotiating the risk and fear of failure.
Managing a new venture differs from managing an existing operation along five key management issues: strategic orientation, commitment to opportunity, commitment of resources, control of resources, and management structure. The entrepreneurs born with these management skills come from a rare breed of people with intelligence, great heart, and creative skills. They are visionary and self-confident, good communicators with unlimited energy, and have a strong passion for what they do.
Can these skills be learned?
To learn more about what it takes to be a great organizational leader, we listened to the CEO of the world’s largest organization, Richard Danzig, the chief naval officer (CNO) of the U.S. Navy. During the late 1990s, CNO Danzig was in charge of some 200 separate organizational networks, over 100 ships deployed around the world, a $90 billion budget, and 900,000 employees. He said that the CEO has to project a theory that is deeper than the once popular mission statement. This “theory of the organization” leads the culture and expectations. The CEO also provides what he calls “the central nervous system” that draws the whole organization around to support the theory of the organization.
Among some of the sports leaders we talked to, John Elway, former quarterback of the Denver Broncos, is one who stands out. As the CEO on the football field between 1987 and 1999, he led his team to five Super Bowl games and two Super Bowl championships. In the 1999 game he was given the Most Valuable Player award. According to Elway, leaders must have the vision and capability of seeing through endless walls and roadblocks. Facing times of uncertainty, they must spot the possibility and motivate the team to success. Elway cited a championship game against Cleveland in 1989 when Denver moved the ball 98 yards in fifteen plays to win the game, still today referred to as “The Drive.” Finally, there is the persistence that is required to keep going. According to Elway, “Nothing in the world takes the place of persistence; not talent, not education; nothing.”
Entrepreneurs must be more than just general managers. They must be able to spot the need for change and convince others of this change. And they need to get potential team members, including advisors and directors, to accept the idea of being on a venture team and to feel comfortable working with people from other functional areas and disciplines.
Fortunately for those of you who were not born blessed with these skills running through your blood, we know that the most critical skills in launching and running a new venture can be learned. We will teach you some of the most important ones.