Critical Competencies for Start-Up Leaders

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Our research at Zenger Folkman typically analyzes data from thousands of leaders to identify global trends. Recently, we revisited some intriguing data collected a few years ago from a smaller sample of start-up CEOs. While this data set is not large enough to make universal claims, subsequent findings from other start-up organizations have supported these initial results, making them worth sharing.

Our analysis focused on 10 CEOs leading venture-funded start-ups, each of whom participated in a 360-degree assessment. This comprehensive evaluation involved feedback from board members, direct reports, peers, and others, measuring effectiveness across 19 leadership competencies derived from our research on what distinguishes great leaders from poor ones. Each CEO was evaluated by an average of 10 raters, and their results were compared against our extensive database of over 150,000 global leaders.

The findings revealed that start-up CEOs excel in areas such as developing strategic perspectives, taking risks, and focusing on customers and external stakeholders. Notably, the competency "Inspires and Motivates Others" was ranked significantly higher among start-up leaders compared to the global average, where it is typically one of the lowest-scoring competencies. This unique profile suggests that start-up CEOs are:

• Highly strategic
• Willing to take risks
• Customer-oriented
• Proactive
• Inspiring

However, the three lowest-scoring competencies for these CEOs were Drive for Results, Collaboration and Teamwork, and Develops Others. Interestingly, while Drive for Results is one of the top-rated competencies globally, it ranked lower among start-up leaders. Despite this, evaluators identified inspiring and motivating others as the most crucial competency for organizational success, with driving results as the second most important.

Our global data indicates a stark contrast: 76% of leaders score higher on driving for results than on inspiring others, whereas 60% of start-up CEOs excel more in inspiring and motivating. Both traits are essential—leaders who inspire bring energy and optimism, while those who drive for results emphasize goal achievement and meeting deadlines.

In start-ups, where inspiring and motivating are highly valued, it's crucial to balance these traits with the ability to deliver tangible results. According to some research in Harvard Business Review, as much as 75% of venture capital-backed companies fail to repay their investment. There are a number of potential problems for start-ups, including lack of market demand, problems scaling, poor business models, cash flow, competition, and legal, regulatory, and company culture issues. Venture capital allows start-ups to spend other people's money. Without accountability (e.g., what results were generated from the money), a start-up may have an inspiring vision of the future with little tangible results to accomplish that vision.

It is challenging to start a new business when the CEO is highly skilled at strategic perspective and inspiring but not as skilled at delivering results. This combination frequently appears to end in failure.  

Implications for Start-up Leaders

1. Hold yourself and other staff members accountable for delivering measurable results on an aggressive timeline. Do not allow yourself or others to make excuses.
2. Make sure that there are real consequences for not reaching goals.
3. Celebrate and praise yourself and others when a significant goal is achieved.
4. Ask a trusted coach or colleague to check-in with you regularly on your effectiveness at delivering results and encourage them to provide a performance rating compared to past accomplishments.
5. Be a role model for delivering results. Be willing to come in early, stay late, and work weekends if necessary. Share with spouses and family members a time frame for when it is critical to be working at full speed and other times when you will have more balance.
6. Set stretch goals that others might perceive as impossible. There is some magic that oftentimes happens when you set a goal that others perceive as impossible. You will get some resistance but if you exert confidence that you believe that goal is possible often it is achieved. Even when the goal is not achieved, significant progress is made in a short amount of time. 

The data we analyzed underscores a crucial insight: successful start-up CEOs are those who master both the art of inspiration and the science of execution.

This dual capability is not just a desirable trait but a critical necessity in the high-stakes environment of start-ups, where visionary ideas must be swiftly transformed into concrete achievements.

By embracing the outlined strategies—holding oneself and the team accountable, celebrating successes, seeking continuous feedback, modeling dedication, and setting ambitious goals—start-up leaders can cultivate a balanced leadership approach. This not only improves their chances of success but also builds a resilient and motivated team capable of overcoming the myriad challenges of the start-up world.

Joe Folkman

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Check out The 90th Percentile: An Unconventional Leadership Podcast ranked Top 20 on Apple Business Management list.

Each week we analyze different leadership traits, trends, and what it really takes to get to the 90th percentile. These short episodes feature compelling stories, research, and actions that leaders can take to improve.

Listen to Episode 51: 9 Habits That Lead to Terrible Decisions.

ABOUT THE AUTHOR

Joe Folkman is globally recognized as a top leader in the field of psychometrics and leadership. He is the co-founder and President of Zenger Folkman, a firm specializing in 360 Assessments, leadership, and organizational development. He has over 30 years of experience consulting with some of the world’s most prestigious and successful organizations, public and private. As the 2021 recipient of ATD’s Distinguished Contribution to Talent Development Award, Joe was recognized for his extensive research and contributions to the learning and development industry. He is a best-selling author/co-author of nine books, including his new bestseller, The Trifecta of Trust. and a sought-after speaker, consultant, and executive coach with the ability to connect with audiences through compelling research and inspiring stories. Joe is the co-host of The 90th Percentile Podcast.