Categorized | Entrepreneurs as leaders

The top ten reasons leaders fail

Jack Zenger and Joseph Folkman of the corporate leadership consultancy,Zenger/Folkman, and authors of The Extraordinary Leader, have completed a study on why leaders fail. Conducting a 360-degree feedback analysis of 450 Fortune 500 executives and comparing the characteristics of those executives fired within three years of the feedback with the characteristics of the bottom 10% of 11,000 executives profiled, they came up with a short list of the top ten flaws of failed leadership which they published in this month’s Harvard Business Review.

Because there is so much overlap between corporate leadership and entrepreneurship, I decided to compare the list with my many years of experience as a consultant to start-ups and small businesses.

Zenger and Folkman argue that failed or ineffective business leaders have one or more of the following ten flaws:

  • Lack of energy and enthusiasm.
  • Accept their own mediocre performance.
  • Lack clear vision and direction.
  • Poor judgment.
  • Are noncollaborative.
  • Don’t walk the talk.
  • Resist new ideas.
  • Don’t learn from mistakes.
  • Lack interpersonal skills.
  • Fail to develop others.

    Many of these are flaws that are more frequently encountered in a corporate setting (like “Don’t walk the talk) than a small business or start-up setting. Others (Don’t learn from mistakes, Lack interpersonal skills, Accept their own mediocre performance) are formulas for failure in any endeavor, whether you’re a CEO or a lowly proofreader.

    Every person starting a new endeavor should examine who they are, how they think, how the react, how they get along with people, how they work, and what life means to them. A start-up faces a veritable army of business-killers, but the most fatal of them involve the start-up entrepreneurs themselves.

    The most fatal flaw I’ve encountered in entrepreneurs and small business owners is not having the energy or enthusiasm to carry the entire project through. Losing the drive is the single biggest business killer I’ve come across. It takes a long time to wind down a corporate business unit, but when the owner of a small business or the entrepreneur behind it loses their energy and enthusiasm, this frequently amplifies itself throughout the organization.

    To make matters worse, entrepreneurs and small business owners deal constantly with business-threatening failure. They can’t find customers. They can’t find retailers. Important clients drop them. Large corporate managers deal with stress, but entrepreneurship, like being a novelist, involves enduring through crushing failures and setbacks.

    So the first question every entrepreneur or small business owner must ask is, do I have what it takes to maintain my motivation and drive for the long term and through devestating rejections and failures? That means not just enduring, but maintaining your cheerfulness and hope in the face of the struggle.

    The second biggest character flaw I’ve encountered in entrepreneurs and small business owners is a lack of focus. Entrepreneurs are by nature energetic and ready to pounce on opportunity. But success depends on focusing one’s efforts and staying the course. The absolute worst thing that can happen to a start-up or small business — and I speak from experience — is to divide the leadership’s energy and attention across several different ventures or unrelated projects.

    The third most common flaw is not what I would call “resistance to new ideas,” a peculiarly corporate kind of character flaw, but more like resistance to old ideas. Entrepreneurs are, by their very nature, crucibles of new ideas. But new ideas can bind and blind just as much as old ideas. So, while fusty corporate managers are stuck on the old ways of doing things, entrepreneurs are frequently stuck on the new ways of doing things and have no patience for the tried, tested, and true. A very, very wise woman, Carol Worthington-Levy, one of the true direct marketing and catalog geniuses I’ve ever met, put it this way:

    “Creativity and innovate thinking isn’t about swimming against the current. It’s about building a motorboat so that you can go faster than everyone else swimming with the current.”

    I have seen more start-ups fail because their leaders fail to do, in their stubborn attachment to the “new,” the “old” that every other business knows how to do well.

    Finally, most failed entrepreneurs exercise something quite different from “poor judgment.” For lack of a better word, I’ll call it snap judgment. Despite what Malcom Gladwell claims in Blink, intuitive thinking is not the be-all and end-all. The best intuitive thinkers can reconstruct the process that led them to their leaps in thinking.

    Some folks are excellent at intuitive judgments, some not; but none of them can really persuade the people they work with unless they can reconstruct some kind of process that connects A to Z. So while snap judgments frequently lead to poor judgments, they always lead to imperfect execution and poor teamwork.

    The best and most successful entrepreneurs I’ve worked with are startlingly disconcerting intuitive thinkers, but they can always bring everyone in the room along for the ride, which translates into motivated teamwork and flawless execution. The failed ones jump from A to Z and leaves everyone else to scratch their heads in confusion — because they’re still on A — and mutter, “What the hell is he talking about?”

    Finally, it is the bain of all small business owners and start-up entrepreneurs to live with mediocrity. Few, if any, are ever happy with their own subpar performance, but they handily live with business-killing mediocrity from contractors and employees. As small business owners and entrepreneurs without overflowing bank accounts, we don’t often get the best dodgeball players on the playground. Being stuck with the mediocre is a start-up and small business problem I’ve seen too many times to count, and it inevitably cripples and often kills the business. Whereas every start-up and small business that hires and motivates the best performers inevitably succeeds.

    But how to do that is the subject of another book (in fact, I’ve already finished it — it’s called The Million Dollar Employee).

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