Failure in leadership is a crisis of misdirection. The founder sets out to lead by example but ends up doing all of the work. He or she births a brilliant new idea that attracts customers and investors, but then suddenly becomes a tyrant who insists on only having the "good" ideas. Ironically, the leadership skills that sometimes help build a company from nothing--having the most enthusiasm, exhibiting an incredible knowledge of the subject matter, showing the determination to reach a personal business goal--are sometimes the very traits that get in the way of building a lasting company.

Simon Sinek has seen how this all plays out many times. The popular motivational speaker and author of the recent book Leaders Eat Last: Why Some Teams Pull Together and Others Don't has studied workplace dynamics and leadership models to discover what works and what often leads to failure. In his book, he explains how leadership is a servant role and one of guidance and encouragement; it's not a dictator role. I talked to him recently about the causes for failure in a startup when the founder gets in the way.

1. They don't realize it takes people to grow the company

Sinek told me one of the most interesting causes for failure in a startup is that the founder is really good at birthing a company and generating excitement, but not as good at building a team for long-term growth. Their leadership style is to tell people what to do and how to do it, rather than instilling an innate desire to do the work.

"Their idea is good enough to start a business but the people determine whether the company will be successful," he says. "It's a fascinating transition that every founder has the opportunity to become a leader who understands that it is the people will make or break the company."

2. They focus on getting a fancy office

One of the curious predicaments that seems to occur with any new company is that there is a goal to move into a fancy office space--it says the company has arrived. Sinek told me there's a reason most companies that last the longest often start in the garage--it's because the founders care more about the people and the product than where they actually do the work. "Starting out in a garage means the people who work for you want to see the company succeed and they think that is exciting enough," he says.

3. They take away responsibility for hard work

It's a common fallacy with company founders to think the company will live or die based on their efforts. That's why Sinek says many entrepreneurs think they are doing their staff a favor by sending them home early. In reality, he says, it creates a false impression. The employees don't really have to own the hard work and instead tend to let tasks slip easily. "When you take away their responsibility for hard work, you also take away the amazing feeling that comes from the hard work," he says.

4. They don't use open book accounting

Small companies might not be raking in the cash right away, but there is at least some income (and maybe even some profit). Sinek says one mistake founders make is related to open book accounting. It's OK to share the stress load of how much money the company makes with the employees. He told me one story of an employee at a startup who knew about a dip in business income. She came into work one day and asked for a pay cut to help the company get things back on track. Founders sometimes obfuscate the ebb and flow of business income from the staff, but that leaves employees out of the loop and they don't have as much ownership to the big wins--and big losses. "It becomes their choice to make that sacrifice for the sake of the company," says Sinek.

5. They never let their employees fail

Sinek really hit home the point about letting people try new things and letting them fail. He says you just never know when someone might try a new task and figure something out that surprises you. You might not even know about a talent or skill. If someone fails, it's important to let them keep trying. In attempting new things, letting someone without the exact job description for sales or some other task take on a new role, the founder can push the company forward and achieve new goals. "Innovation requires experimentation," he says, suggesting that innovation also involves failure.

Published on: Nov 7, 2014
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