August 12, 2021
Previously I’ve discussed how functional dysfunctionality and leadership lag are the two principal challenges that organisations face when trying to create successful leadership teams.
I’ll submit that there’s a third, perhaps greater challenge. Greater because it relates to the nascent building process of a leadership group from which all other hurdles follow. In short, how do founder/owners know what a good leadership team looks like? And how and where should they get their frame of reference from?
This challenge frequently arises because nobody goes into business for the love of creating a management team. Yes, it’s a necessary condition on the way to creating a successful business, but it’s not a primary motivator.
This is where leadership by design steps in as a principal philosophy that underpins a lot of what we do.
The way leadership works is complicated but there are patterns and trends and fundamental ways in which successful leaders operate. The way you know them is by looking at businesses in the aggregate and having an objective view on what works. We do this by tracking leadership patterns over time, across businesses, and across sectors.
We’re actually doing a piece of work at the moment with a start-up financial services business. The founders have superior domain knowledge and are well placed to execute, but none among them have had CEO or CFO experience so they don’t know which way is up when it comes to building a successful leadership team.
Start-up teams can fall foul if they look to well-known businesses as points of reference. Amazon’s senior set-up, for example, is not the right leadership model for a small e-commerce firm. Moreover, in each business you need to create the right cultural fit to deal with the issues of functional dysfunctionality and leadership lag as and when they arise.
Via our Leadership Dynamics, we’re able to address these challenges and provide data-led insights in place of vague intuition. Through the leadership dynamics product we bring a perspective that leans on, and learns from, every transaction in private equity since 2010.
We’re able to right-size, right-fit and account for all the complexities that arise in particular markets and value creation plans, and around keystone members of leadership teams.
Doing so, however, requires a grounded perspective on successful leadership that is relevant and coherent to the situation a business is in, rather than the application of absolute principles or the application of gut feeling by an incumbent team.
Given the complexities of building a leadership team, it is no wonder that founders often make do and allow teams to develop organically. But the impact a good leadership group can have on value creation cannot be overstated.
To this end, Leadership Dynamics is a powerful framework that serves as an extension to a business’s leadership capital requirements – and ultimately helps provide confidence that the senior hires around the founder will be a complementary fit.
Director, Head of Leadership Dynamics