As entrepreneurial firms transition from start-ups to becoming established corporations, the leadership style is often given as much credit as the product or service they offer. Entrepreneurs are often brash risk takers fighting odds and challenging conventions while corporate leaders are expected to be team builders assessing odds and finding a safe path. The transition is not an easy one and business history is full of various examples of those who made it and established their firms on a stable footing.
There is the dogged perseverance of Bill Gates establishing the dominance and reach of Microsoft, along with the mercurial idiosyncrasies of Steve Jobs whose style got him thrown out of his own company only to return to it with renewed vigour. Richard Branson who built the Virgin Group is a creative adventurer who thought big as is Elon Musk bringing an intense and controversial presence to SpaceX and Tesla.
Jeff Bezos, who built Amazon from his garage into a global enterprise and continues to lead it belongs to this successful group. His decentralised structure with small teams is said to be a contributing factor. He has paid attention to building a culture at Amazon including drawing up 14 leadership principles meant to guide employee behaviour. His obsession with detail, measuring performance, and using metrics has helped the transition from being an entrepreneur to running a high performance corporation.
Uber’s Travis Kalanick provided valuable lessons on what not to do. He started with an aggressive style suitable for a business that was a major disrupter in the taxi business. While rapidly growing the company, he was fighting everyone. He began fighting the drivers working for the company about compensation structure and rules, fought taxi cab companies who saw him as a rival undercutting them, fought governments around the world who were restricting Uber’s operations on grounds of security, and took many of those he was fighting to the courts.
Finally, when word got out that the company’s culture downplayed sexual harassment within and was using software to fool law-enforcement authorities, it became time for him to leave. His fighting culture would not work for a 12,000 employee company at about $70 billion valuation and a new CEO was needed.
The most recent disaster case, of course, is Adam Neumann. He started We Co., which owns WeWork, the office leasing company. He is reputed to be a very charismatic individual and a very good salesman. Employees loved his partying culture. Although he was really in the real estate business (leasing large spaces and sub-leasing them to start-ups), he managed to convince very smart investors that he was really a technology company who was changing how people work.
They all went along for the ride as the company’s valuation soared. When the time for an IPO came, the truth started leaking out. Misleading information about operations, questionable corporate governance practices mixed up with an extravagant life style on company expense and suspected marijuana use on official trips brought the valuation crashing. Neumann had to step aside.
Quite often, the newcomers who take charge of these disaster cases have a tougher job — that of undoing the rot and building a new culture. In the WeWork case, Neumann is still the Chairman and his presence will make it even tougher for the new CEO.
While entrepreneurs are a breed of their own, there is clearly nothing inherent in an entrepreneurial style to prevent the leadership becoming consistent with corporate respectability. It is the free-wheeling dynamism of an entrepreneur that lets him or her believe that all rules and conventions can be overridden. The smart ones looking for long-term growth have the sense to understand which rules to break and which to keep.
The author is a professor at Suffolk University, Boston