Lesson #8: Leadership Defines Your Business

“Leadership is defined by results, not attributes” – Peter Drucker

Let’s begin with this statement: Leadership is the ability to be independent through a measurable support system. It is the understanding that your business does not succeed without internal and external controls. Leadership isn’t about managing first; it is about creating a vision and building the mechanism so that the vision can be successfully carried out by yourself and people who share your vision.  

For most entrepreneurs, leadership is a role that seems somewhere down the road when you have employees. We tend to mix up leadership with management. The practice of leadership needs to happen before you open your doors because your mindset should be about two main areas: leadership within your industry and leadership of your operations. Too often, many new small business owners go into their launch skilled around their end product without regard for the bigger picture of what the company will look like in ten years. When you give the proper perspective to your business, you will view the future as a key component of your immediate priorities. The clearer the vision, the easier to describe it.

Management Versus Leadership

Management, on the other hand, is about managing the work necessary to carry out the vision. There isn’t much visioneering about management. Peter Drucker defined the difference between management and leadership: “Management is doing things right. Leadership is doing the right things.” Management is specific to managing your business on various levels. In fact, it might be detrimental for managers to practice visioneering while managing. It should be made clear that the vision is either the sole responsibility of you as the owner or with your leadership in a group strategy/vision session(s) as your business grows. Management means defining and systematizing your needs in order to carry out your vision.

Leadership is your ability to grow the company internally and externally through your vision and essential details of what your business will look like in a decade’s time. Leadership is the difference between being self employed versus being self independent. It is this leadership that will provide the mechanisms to grow your company to the point where others are happily attaining the goals you’ve established. As a leaders, don’t forget this concept: “You are either working on your GPS or you are working on someone else’s GPS.”

The Big Question: How Does One Become a Leader?

If you were to study the young lives of such leaders as Martin Luther King, Bill Gates, Barack Obama and John Wooden, you would never have guessed that they would turn out as they have. What led to their rise as leaders was the passion and commitment they made to their work. They were not born with anything out of the ordinary. But they were able to discover the world through the acquisition of knowledge that sparked an interest, an interest so profound that it would lead to their legendary rise. It is a long process of maturation, not a genetic gift. And that might be the most important lesson of leadership: it’s a marathon of “deliberate practice” that runs on an endless road. For many people who have excelled in their leadership capacity, it was their passion that served as their lifelong partner.

And where did this passion come from? In many cases, it was the encouragement of a grade school teacher, a parent or even an acquaintance who happen to see something being performed well. In most cases it was something just above the ordinary, but it was this voice of encouragement that sparked an interest which planted a seed of pride and accomplishment. Studies into the origins of performance excellence always indicate that when a child is identified with an interest in a field, the ability of the parent or guardian to encourage that child is critical in his/her development. Knowing the guidelines for deliberate practice make it more organized and “scientific” if you will. However, the role of how parents should implement deliberate practice has never been studied. Anders Ericsson, the pioneer in deliberate practice, confesses that scientists are far from getting the exact answers to how parents should fit into their child’s development. But, he warns, “Push children too hard and they respond with anger.” He believes that parents must learn to help their children grow with a greater sense of independence so that they will choose to participate in their activity. “It’s how you as a parent can make individuals feel freed to reach these levels and aware that this is going to be a long process.”

Too Old?

But what if you’re already an adult and you’ve made the decision to excel in a field of your choice? The ideals of entrepreneurship fully embrace the dawning of adults into their passionate pursuits. In one obvious way, an adult who develops into a “prodigy” may simply require less time than a child because some experiences accumulated over a lifetime can be “credited” as time spent in deliberate practice. The very idea that most new entrepreneurs begin their businesses after the age of 50 should attest to the shortened learning curve and the willingness to move forward. AARP magazine noted that in 2008, over one million new businesses in the United States were started by those over 50, making it the largest segment of the population to enter entrepreneurship.

But younger adults have also built “credit” through their education, experiences and expanding worldly understanding especially with the information available on the Internet. While it might still be difficult for some adults to identify their passion in the beginning, it nevertheless, becomes a desirable outcome to pursue. As with any deliberate practice, we understand that nothing comes in a flash but works itself slowly over a long period of time with specific training that hones the specialized skills necessary to achieve greatness. The key ingredient is commitment.

Charisma is a Reversed Concept

Often times, we hear about “charismatic” leaders as if you need to be charismatic in order to be a leader. Because many leaders gained success and notoriety, we tend to attribute that - at least partially - to their charisma.  Instead, it’s the other way around: they became charismatic when they became leaders; not in their eyes but ours. They remained oblivious as they forged ahead with tenacious drive, and we placed them on a pedestal in admiration of their accomplishment. That’s what we took for charisma. 

Let’s broaden the definition of charisma. Charisma does not necessarily mean a leader with a commanding presence. What we tend to see most often are well-spoken charismatic leaders but not so often, are those who lead with less fanfare and yet, have as much impact. Without a doubt, charismatic leaders with the gift of gab, draw the most attention and make for great sound bites. We are emotionally drawn to their passionate ability to get their message across. But Bill Gates rarely speaks with emotional content yet his leadership was one of the most profound influences in the computer industry. 

Same could be said for Calvin Coolidge, a Republican, whose lack of verbal charisma still won him the presidency in 1923. He was known more for his “distinguished” leadership and ability to “restore the dignity and prestige of presidency,” as Democratic Alfred Smith said at the time.  There is a story about Coolidge’s infamous verbal shortfall that shows that a message can be delivered effectively without the need for a powerful presence. After he became president, an inaugural party with members of Congress was held. On a bet, a senator came up to Coolidge and said, “My friend over there bet me that I can’t make you say three words.” Coolidge replied, “You lose.”

Your Passions Will Grow

So don’t confuse your lack of charisma as a weakness. Instead get to the thing that makes your heart flutter with excitement and engages your mind as if time stood still. Then, work like hell, and it may be so engaging you won’t notice how hard it is. One of the things that will happen is that as you become an expert, your desire to express your new knowledge finds an enthused voice. 

As more people who desire your company’s offerings find out about you, they seek your expertise, and you naturally find opportunities to speak. And the more often you practice your lines, the finer you are able to deliver your message. (Martin Luther King’s “I Have A Dream” speech had been recited dozens of times before his most famous rendition in Washington D.C.) For many, the passion can’t be restrained and the flow of words comes out in colorful imageries. That’s when others begin to see you as a charismatic leader. When the dust settles, you too may be standing on that pedestal without knowing it.

Self Employment Isn’t Self Independence or a Factor of Leadership

Self employment is you doing all the work yourself and working 12 hours a day. Self independence is organizing your business so that it can function efficiently with or without you while you continue to reap the benefits. This doesn’t mean you aren’t working anymore. It means you’re still required to work but it also means you’ve established systems that keep you organized and in control – something that many self-employed entrepreneurs seem to lack. (If you want evidence, read “Outliers – The Story of Success” by Malcolm Gladwell, Little, Brown Publishers, 2008 and “Tribes” by Seth Godin, Penguin Group, 2008.)

Leadership means bucking the status quo and understanding that change is inevitable and desirable because improvements are a necessary part of your business. Constant social and economic changes will happen and your role as company owner is to anticipate and take control of your future. Social trends and technological breakthroughs will either have a detrimental or positive effect on your business and it will be your job to take advantage of each change. With or without you, change will happen so always look to it as a positive step forward. When you take that attitude, you are leading not following. Leaders know this and look forward to opportunities that will come about.

Take Time to Sharpen Your Saw

Remember, your best tools for utilizing change are the information you gather from the various sources that will have an impact on your business. By staying atop what is happening, you will remain a step ahead of your competition. Let’s face it: it takes work to keep a competitive edge and the majority of small business owners conduct information gathering and skills upgrade as if it’s a burden. Some don’t even bother. Instead, you should look upon this necessity as “sharpening the saw” as Stephen Covey calls it in “Seven Habits of Highly Effective People” Simon and Schuster, 1989. It is your opportunity – your responsibility – to improve your skills and to improve the offerings of your company. It must become a key component of your company’s culture. If you love what you do, seeking information should feel like being a kid again running rampant in a candy store without any big people bossing you around!

As a leader, you’ll also be up against many people who author Seth Godin calls “sheepwalkers” in “Tribes,” (one of Business Week’s Top Ten books of 2008).  He defines them as “people who have been raised to be obedient and giving them brain-dead jobs and enough fear to keep them in line.” They and their compatriots will fight you even when they’re losing their jobs to outsourcing, cheaper labor and automation – fighting the changes that result from our global economy.

Everything Has Already Been Invented

A classic story of a sheepwalkers is that of the director of the US Patent Office who in 1899 said that his office was no longer necessary because everything that man would invent has already been invented! Had we lazily sheepwalked to his way of thinking, we’d still be using typewriters and slicing our own bread. Unfortunately, that way of thinking still exists where many people are so use to the way they live and work that they are unwilling to change, even for the better. It’s of the same syndrome as the battered wife who refuses to leave her abusive husband because at least she knows what lies ahead rather than getting a divorce. Her mental world has shrunk into a cubicle to the point that she fears moving outward into the unknown. It goes without saying: “no knowledge, no future.”

You’ll find that sheepwalkers and their allies make up the majority and so your role as a leader will be as a minority challenger who is characterized as a black sheep to the status quo. Godin makes the case that leaders must be of the mindset that they are underdogs: “That’s because leaders work to change things and the people who are winning rarely do.” It’s the honky dories versus the underdogs! 

But in order to succeed as underdogs, we need to get our message out there, get people to learn about our passion, and in our case, our entrepreneurial passions. The idea would be to find people who support you and want your stuff too. Even better is if they share the same passion and are looking for a leader (or business owner) who’ll help them find their own nirvana. This doesn’t mean just talking about it or sending off emails to all your friends and family. It requires a campaign, a “micro-movement” as Godin calls it. Imagine applying these ideas to your marketing research and the design of your company’s culture.

Godin says a micro-movement requires five things-to-do and six principles in order to be effective:

Things To Do:

1. Publish a manifesto. Get it out there and make it easy for others to see. It doesn’t have to be written or printed. It can be a motto or a graphical representation. “It unites your tribe and gives them a structure.” In your business, this might be simplicity in message so that your clients get it right away.
2. Make it easy for your followers to connect with you. Make it so visiting you, emailing you is a snap. And given your clients’ technical savvy, it might be an interactive process on a blog, Facebook, MySpace, LinkedIn, etc.
3. Make it easy for your followers to connect with one another. Consider that in your company or prior to your financial ability to hire others, there will be a need to unite those who believe in your business and need to gather in order to go forward. Give them plenty of opportunities to connect because the more they connect, the better their understanding of each other, their common goals and their ability to work together.
4. Realize that money is not the point of a movement. If you believe that your business has an end result of financial intentions, then the movement is no longer a movement. Money enables the movement, not the other way around. At the point money becomes the dominant figure, there is no point to your movement. 
5. Track your progress. This provides a method for you and your compatriots to see where you’ve been and where you’re heading. It provides a method for everyone to contribute to your on-going progress.

Principles:

1. Transparency really is your only option. Keeping everything above board and in the open gives everyone a sense of trust and improves their engagement.
2. Your movement needs to be bigger than you. So often, successful people talk about how what they do isn’t as important as the end result.
3. Movements that grow, thrive. And in order to grow, one needs to innovative, get better and more meaningful to those that matter in the movement. It reinforces the very existence of the movement.
4. Movements are made most clear when compared to the status quo or to movements that work to push the other direction. What is the impact on the greater society that your movement has and aligning your movement with similar movements strengthens your common cause.
5. Exclude outsiders. Identifying who doesn’t belong to your movement provides a way for you to understand who should be in your movement.
6. Tearing others down is never a helpful to a movement as building your followers up. One of the worst things you can do in a movement or business is to disparage your competition with negativity. The message then becomes negative altogether. 

Leaders As Servants

When we speak of leadership, our youthful image might be of a boss who dictates everything and says, “It’s my way or the highway.” Granted, companies require a set of rules that all employees are guided by including your one-person operation, but is it not possible to get the same results (if not better results) by doing three things: 1) drawing up the vision of where you see your company going and getting people excited about it, 2) allowing openness, creativity and people’s desire to succeed as the company culture and 3) devoting your company’s mantra as leading through service to others? What, you say, does it mean “service to others?” As a leader, are you not suppose to take on the role of being served by others?

To get the quick and dirty answer to that question, you might want to refer to the “21 Lessons of Successful Entrepreneurs” and read over Chunk #3. The role of leadership is one of the most important questions you should be asking yourself when you’re considering your business philosophy. As Benjamin Disraeli, British Prime Minister (1804 -1881) said: “I must follow the people. Am I not their leader?”

Perhaps no time in our modern history has the role of business leadership become scrutinized so much: first by the baby boomers of the Sixties who saw the relationships that business developed in the Vietnam War - of the massive “military-industrial complex” and its death-in-profits war machine. Later in the 1980s, as many of our major companies closed down their factories and outsourced their manufacturing, leaving millions unemployed. And today, as our financial and economic systems collapse into the worst recession since the Great Depression, brought on by the greed and unregulated transactions of our biggest financial institutions. If our business leaders can operate with such callous disregard for the rest of us, why trust leadership when it has led to many horrific results? How is it possible that business executives on Wall Street gave themselves over $18 billion in bonuses for 2008 when their companies were going under and millions of investors were losing their life savings?

Changing Our Concepts of Leadership

These and other episodes have brought about a shift in the way many people consider leadership, especially leadership that hides its mistakes and refuses responsibilities of its failings. Many Americans including the new rise in entrepreneurs have redefined their own paradigms of leadership to mean more social responsibility and personal enrichment. We have decided in greater droves that working for ourselves is a better form of leadership than working under “traditional” forms of leadership that seem too corrupt and too arrogant for our tastes.

In the Urban FIRE concepts, leadership serves the people it affects the most: its employees, its customers and the community in which it resides. It does so by creating products and services that enhance our lives while providing a livelihood that allows us to continue improving our offering. We also define leadership as your ability to make your new enterprise stand out amongst its many competitors and not merely exist as another new company. The combination of the two roles are critical ingredients in first distinguishing your business, second, in stabilizing its existence and third, in giving it longevity and financial security.

We Are Members of Our Communities

One word about community in our last paragraph: don’t ignore it (which most companies do in real terms – that is, lots of talk and little action but always around for photo ops). By ignoring community, we give no appreciation to our ability to exist as a company. And if you think about what makes for a successful company, it is in solving problems, in building partnerships with clients and vendors and formulating creative innovations that launch new paradigms. All of these factors would not happen unless we had not listened and served those around us. Why then would leadership not believe in the consistency of this interconnectivity? That takes our new definition of leadership.

We should realize too that our very existence as leaders and our ability to start a business is a matter of privilege and choice. For this we need to believe in the importance of gratitude in how we conduct ourselves. The brashness and egomaniacal legends of the Donald Trumps are great television and gossip, but they do nothing to serve our purposes in starting a business or in succeeding through an imitation of their character.

Defining Leadership

Let’s take the essence of leadership and give it a practical definition. According to the Merriam Webster Dictionary: to lead means “to direct on a course; to direct the operations, activity or performance of; to tend towards a definite result.”  Again, notice that it doesn’t say “manage.” It means that you as a leader of your new enterprise must have a purpose in taking charge of going forward. It also means having the knowledge to lead this charge even if it’s just directing you. In other words, leadership should begin with a plan, a business plan, to show where you want to take your company.

As we said earlier, leaders are made, not born. Leaders arise out of a passion to change and improve something and the powerful desire for continuous knowledge to make it happen – the ability to grasp information and put it into practical use. If you can’t do that, then you can’t lead. Actually, most great leaders all worked for someone, learning the ropes and understanding how great leaders conducted themselves. So if you’re young, the odds are your leadership skills will be lacking. This, however, doesn’t mean you shouldn’t start a company; it does means you’ll have to acknowledge your lack of knowledge and experience and take up extra duty studying the mechanisms of leadership. So why not work under someone as an apprentice, as a junior executive, as a mailroom clerk – all in the effort to gain the experience and knowledge? You can be in training while you’re setting up your business. All great leaders had others who they looked up to and learned from. They included mentors and senior business associates. And when a physical person wasn’t available, they relied on email correspondence and sometime through biographies and autobiographies.

My Life Flashed Before Me

In my own situation, I was determined from a young age to run my own business. Getting fired from your first five jobs will do that. As I progress into college, the thought of graduating, working 40-hour work weeks, getting two weeks vacation, retiring at 65 and then dropping dead seemed a waste of a good life. So I self-taught myself just enough skills and ventured into business without a clue as to what I was doing. It was, however, exciting, chaotic and a great deal of work – mostly correcting my mistakes.

It didn’t take me long to realize that I needed more information to do this entrepreneurship thing but I dreaded the very idea of returning to school for business – a subject that seemed both boring and difficult. Instead I decided my best course of action was to work for companies that offered me a chance to learn just by immersing myself. Later, however, I realized that studying entrepreneurship through research, mentors, biographers and experience were necessary components of the broader picture.

Learning By Doing

So to make a long story short my business education during my 20s was all hands. I targeted small companies because I figured small companies offered me more flexibility, working in several departments rather than one. I never thought about whether some chore was in my “job description” because if it offered me an opportunity to gain an entrepreneurial skill, I’d do it. Of course there were lots of things I didn’t want to do but that came with the territory (such as counting inventory – torture!) but I learned the importance of inventory control and how your money gets stuck in products rather than available cash to grow your business.

The idea wasn’t to establish myself in any one company, it was to learn and move on because my true goal was learning and creating the company that would have my signature on it and provide me with joy, contentment and maybe a few girlfriends. I worked for three companies during that time and with each, I learned, took my lumps but always kept notes on what I considered were the key factors of a successful company. With each successive company, I also rose in responsibility and gained even greater insights to the making of a sustainable, if not great, company.

The Fallacy of Leadership Traits

And what about all those leaders who we think of as geniuses and brilliant innovators? To burst your bubble, here’s a list of what corporate headhunters say are the top traits of leadership. In “Talent Is Overrated,” author Geoffrey Colvin, Penguin Book Publishers, 2008, shows that top corporations are looking for isn’t brainiacs but those with the following characteristics:

• A clear thinker
• Imaginative
• Inclusive leader
• Externally focused
• A confident expert

Jack Welch, the legendary former leader of General Electric had the Four “E’s of leadership:

• Energy
• Ability to energize
• Edge (meaning decisiveness)
• Ability to execute

Seth Godin’s “The Elements of Leadership” from “Tribes.”  

• Leaders challenge the status quo.
• Leaders create a culture around their goal and involve others in that culture.
• Leaders have an extraordinary amount of curiosity about the world they’re trying to change.
• Leaders use charisma (in a variety of forms) to attract and motivate followers.
• Leaders communicate their vision of the future.
• Leaders commit to a vision and make decisions based on that commitment.
• Leaders connect their followers to one another.

The above are lists of behaviors not birth traits. By understanding what is necessary, it is highly possible for anyone to gather these behaviors through deliberate practice – repeating the practices until it becomes second nature. It won’t happen in a month but repetition will eventually prove itself.

One other important rule about leadership: you never, ever stop learning to be a leader. Think how many times, our society has changed; how we used typewriters in the 1970s and all of a sudden in the 80s, we converted to computers. How about the implementation of fax machines, cell phones, the wireless transmitters, high definition TV, Internet dating, hybrid cars, the global marketplace and online communities and blogs? These are change agents that need to be reckoned with and utilized as we mature as leaders.

Domain Knowledge

One of the most important areas for leaders and business owners to learn is called “Domain Knowledge.” While we have no problem learning and growing passionate about the product or service we sell, there is little emphasis on understanding all the other aspects of running a business. In fact there is little explicit education with on-the-job training or in school to teach these skills. Seems extremely dumb not to provide this level of education but most people assume you’ll learn it as you build your company. Yes, you will through trial and error but wouldn’t it be great if you could – at least – learn the fundamentals before you step into the real world? How does your business work?

Just so we’re clear, if “domain knowledge” isn’t available, here’s the areas you need to consider:

• Company internal structure and operations
• The particulars of your industry (join an industry association)
• Financial relationships (banking or investor relations)
• Tracking your financials (get QuickBooks and learn it – it’s easy!)
• Employment policies and regulations

The Importance of Structured Knowledge

Geoffrey Colvin’s “Talent is Overrated” has this to say about domain knowledge:

“Imagine the difference if you made domain knowledge a direct objective rather than a byproduct of work. If you set a goal of becoming an expert on your business, you would immediately start doing all kinds of things you don’t do now. You would study the history of the business, identify today’s leading experts, read everything you could find, interview people inside your organization and outside it who could provide new perspectives, track key statistics and trends. . . . With time, your knowledge advantage over others would become large.”

The advantage you now achieve is a superior understanding of what creates profits and avoids losses for your business. But it goes beyond just financials because it also provides a huge database in your head that allows you to make more intelligent decisions for your company. Colvin calls it a “mental model” which contributes in three ways:

1. A mental model forms the framework on which you hang your growing knowledge of your domain
2. A mental model helps you distinguish relevant information from irrelevant information.
3. A mental model enables you to project what will happen next.

Leadership is a set of acquired skills. As much as we’ve discussed the various aspects of leadership, your ability to gain it is based on two questions:

1. Are you willing to attack whatever it takes to achieve it?
2. Do you believe that if you put in all the hours, all the training, all the studying, you will actually gain a level of performance that will distinguish you above others?

Do You Truly Believe You Can Succeed?

So it comes down to an internal passion that requires an environment of positive motivation. It means that there will be many failures but that your environment and ultimately, you, are determined to achieving greatness. The second question is a matter of confidence, not artificial confidence that most people attempt to engage by trying to convince themselves. It is a deep rooted belief that probably comes from childhood or early work experiences. Do you really believe you can succeed or do you believe that even if you worked hard at attaining these skills, you’d fall short – perhaps relating to a condition that happened in the past. If you’re honest and cite the second half of the above sentence, then you won’t do the work necessary. You aren’t mentally ready yet. As Henry Ford quipped: “If you think you can, you will. If you think you can’t, you won’t.”

So face it: there is no reason why you can’t lead. It’s tough, it’ll probably exhaust you and mentally tax you, but the solution is in front of us because all the research on human performance and leadership during the past 30 years has built enough evidence to structure a course of action that anyone can use to gain success. It begins with this fact: all great success stories met with great difficulties along the way. 

You have two choices when you come upon a roadblock: 1. turn around and go home or 2. figure out a way to punch through it. If you make the first choice, you’ll do no better than the majority of people. If you take the second, your intelligence will gain confidence, exponentially growing and expanding your abilities. That’s why there are so few leaders and so many people who are looking for leaders to follow. No one succeeds without the willingness to fall down and feel the pain. Those battle scars emerge as our badge of courage, our windows of experience and the best lessons of our lives.

People Will Laugh At You

Anyone can do this. You’ll fail, people will laugh at you, you might look foolish and you might cry and scream but each entrepreneurial episode will be a test and a way for your brain to take in the lessons. In the book, “How We Decide,” author Jonah Lehrer, MHM Publishing, 2009, chronicles the latest research on training our brains to increase our abilities. Through new imaging technologies, scientists have witnessed how the brain learns. The greatest discovery was how activities in which failure occurred also provided the brain with the most productive learning experience. When failure was not in the equation, the lesson was not as impactful.  

The decision is up to you. There are no reasons you cannot be a leader if you’re determined to build a sustainable future. It just requires your commitment to make it a conscientious component of your entrepreneurial life from this moment on. As Walt Disney would tell you: “The way to get started is to quit talking and begin doing” which appears universal in the broadest sense. And as Yoda said in Star Wars from a galaxy far, far away: “there is only doing.”    

To be continued by you.