Startups and scale-ups are highly dynamic environments characterized by rapid growth, pressure to innovate, and constant change. The challenges faced by founders and young companies are large and numerous – and often there is little to no time to engage with the development of leadership competencies. Yet this is precisely what’s crucial, not just for managing day-to-day business but also for laying the foundation for sustainable growth and long-term success.
Technical expertise does not equal leadership competence
In young companies, leadership levels are often introduced spontaneously and reactively. The team grows, complexity increases, and suddenly it becomes clear that the founders can no longer handle everything on their own. New leaders are often recruited from within the existing team because they are technically skilled and familiar with the company. But technical expertise is not the same as leadership competence. This frequently leads to problems that can negatively impact company culture and efficiency. Another common issue is the founders’ lack of experience in personnel and leadership matters. Particularly in tech startups, founders often come from technical or scientific fields where personnel management plays a minor role. Important aspects such as clear communication, feedback culture, or talent development are often neglected.
Why leadership coaching?
Targeted coaching for leaders is a powerful tool to address these challenges. While leadership development has long been established in large companies, it is still often neglected in startups. Yet this is precisely where the benefits are particularly evident:
- Scalable organizational development: A solid foundation in leadership skills ensures that the organization can grow with the company. It helps to avoid chaos and to create structures that offer both flexibility and stability.
- Corporate culture as a success factor: Company culture often develops unconsciously and can quickly drift in an undesirable direction. Leaders who are aware of their role can consciously model and establish a positive culture.
- Increasing employee retention: Especially during the growth phase, it is crucial not only to attract but also to retain talent. Well-led teams are more motivated, productive, and loyal.
- Relieving the founders: By delegating leadership tasks and ensuring that they are carried out professionally, founders gain more time for strategic tasks and decisions.
Aspects of leadership coaching
There are many forms and alternatives to leadership coaching. An effective coaching program for leaders in startups should cover the following aspects:
- Self-reflection and personal development: Leadership begins with self-leadership. Founders and managers must know their own strengths, weaknesses, and blind spots.
- Practical tools: Communication techniques, conflict management, delegation, and decision-making – these core competencies should be taught in a practical way.
- Individual approaches: Every company and every leader has specific challenges. Good coaching responds individually to these and offers tailored solutions.
- Consistency: A one-off workshop is not enough. Continuous support ensures that leadership competencies are sustainably embedded.
Leadership development is not a luxury, but a necessity – especially in startups and scale-ups. It forms the backbone of healthy organizational development and ensures that the company grows not only quantitatively, but also qualitatively. Founders and C-level managers should deliberately invest in their own leadership competencies and those of their teams. The cost and time required for coaching and development are small compared to the risks that poor leadership entails. Those who act early lay the foundation for long-term success – and create a company that is not only innovative, but also sustainably successful.
Which leadership style fits best?
There are countless books and articles about leadership styles, and each style certainly has its advantages and disadvantages. Especially in startups and scale-ups, I have often heard that employees need to be “kept on a short leash”. This is often reinforced by the pressure from investors, who do not always prioritize long-term organizational development or company culture but rather focus on other goals such as above-average growth. After many years of building, taking over, restructuring, and – at east from my and others’ perspectives – mostly successfully leading countless teams, I am a strong advocate of the coaching leadership style, which is primarily characterized by the following:
- Transferring responsibility to the team
- Delegating tasks to the team
- Encouraging the team to consciously take risks and try new things
- Demonstrating how the team contributes to overarching goals
- Supporting employees in being successful and developing themselves
Coaching leadership fosters engagement, builds relationships, and improves overall team performance. Coaching leaders see themselves as successful when their team is successful. They delegate and empower team members to work on challenging tasks. They ensure that employees have all the necessary resources to succeed. Coaching managers are empathetic and create an environment in which everyone can realize their potential. To avoid misunderstandings, it should be stated that there are, of course, situations in which coaching leadership is not appropriate and probably won’t work at all. In crisis situations, for example, it may be necessary to adopt a more authoritarian and directive leadership style. Creating this balance is not always easy—especially for young leaders under pressure to deliver quick results.
The right mix makes the difference
In my work with startups and scale-ups, I have seen many facets of leadership – from strictly directive micromanagement to the “comfort zone” approach. One thing I can say without a doubt: neither of the extremes leads to success. While micromanagement may deliver some short-term results, it quickly leads to demotivation and, later, employee turnover – especially among top performers who are most needed in difficult times. On the other hand, when the team environment is too cozy, tangible results are often lacking, and progress stalls. For those in the team who actually want to make a difference, this quickly turns into frustration. In such teams, it’s often frowned upon if someone stands out or excels, as it may be seen as overshadowing others. As with many things, the right approach lies somewhere in the middle. When should I “tighten the reins”, and when can I give the team more autonomy again? A good leader must have or develop this instinct. The best leaders gradually reduce their level of control, enabling their team to become more independent step by step. Feedback and constructive criticism are extremely important. Even more important are empathy and trust. You need to understand people on an emotional level. This requires a great deal of sensitivity. You need to be able to read body language and respect the personal circumstances of each individual. This emotional dimension is something you must naturally possess it is difficult or even impossible to learn. That’s why the best developer is not necessarily the best development lead, and the top sales rep is not automatically the best sales manager. Why do I explicitly mention this here again? Because this is precisely how new leadership positions are often filled in startups and scale-ups.
Competence Is revealed in crisis
In the early years of a successful startup – when everything is going well, when there are above-average growth rates because the company launched the right product at the right time in the right place – everyone is a hero, and there’s a celebratory mood. Success conceals organizational weaknesses, and during hiring, scrutiny is often minimal because help is urgently needed to manage the influx of customers. But this trend doesn’t last forever. Growth eventually slows or even stagnates. Suddenly, the company faces choppy waters. In the worst case, revenue no longer covers the now significantly increased costs. Then the company climate changes quickly. Everything becomes a “top-level issue” again, because the leaders who were hastily appointed during the boom may now be overwhelmed and no longer perform as expected. But did these leaders really get the chance – and the necessary foundation – to do the job they were hired for? Especially when things aren’t going smoothly or the company is in a full-blown crisis, leaders who can coach their teams through such phases are in high demand. During crises, many things suddenly surface that were already present but were either consciously or unconsciously swept under the rug of shared success. Decisions are once again made top-down by the founders or the C-level, and micromanagement becomes the norm. Suddenly, it becomes clear that things aren’t as harmonious as they seemed. Now, real team leads are missing. Now, the leadership competence that was never truly developed is lacking. That’s precisely why leadership development and coaching cannot start early enough. Ideally, it should begin when things are going well, and when there is both time and financial freedom. That’s what enables a company to weather the storm when challenges arise.