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Every startup dreams of making it big, breaking through the noise, and finding life-changing success in a competitive landscape.
But founders are always aware of the odds stacked against them.
Around 90% of startups fail, many within just a few years.
If you’re reading this, then you’re determined not to become another statistic. You want to do everything in your power to make your startup a success.
So how important is leadership?
If you’re interested in the impact that leadership has on startup outcomes, you’re on the right track. Leadership is one of the most critical factors in a startup’s success as it helps to shape both individual and collective performance.
In this blog post, we’re diving into 7 proven ways that strong leadership can influence and elevate your startup’s trajectory.
A Cautionary Tale – How Bad Leadership Brought a $10 Billion Company to Ruin
If you’re looking for motivation to be a good leader… here’s a story for you.
An extreme one.
But it is an important cautionary tale for any startup looking to implement good leadership in their teams and work culture.
It’s the story of Theranos.
Theranos once held the promise of revolutionizing the medical industry with technology that could run hundreds of blood tests from just a single drop. Elizabeth Holmes founded the company in 2003, and by 2013-2014 it had a valuation of $10 billion.
Investors who flocked to Theranos included high-profile backers like:
- Rupert Murdoch (Australian-American investor and owner of Fox News)
- The Walton family (founder of Walmart)
- Betsy DeVos (Former United States Secretary of Education)
But by 2016, the company’s valuation had plummeted to $0 and Holmes faced criminal charges for fraud.
Three aspects of Holmes’ leadership contributed to this spectacular downfall:
- Dishonesty – Holmes repeatedly claimed that Theranos’ proprietary device, the Edison, could accurately test for numerous conditions from a minimal blood sample. But it couldn’t. Holmes ignored serious technological flaws and battled with her own skeptical internal staff.
- Culture of fear – Employees faced intimidation, legal threats, and even surveillance to keep them from questioning the technology’s validity or discussing the truth outside the company. This environment discouraged transparency and innovation, as employees feared retribution for raising critical concerns.
- Failure – With leaders more focused on maintaining appearances and avoiding scrutiny, the company couldn’t produce technology capable of delivering on its promises. Internal resources were drained, talent was wasted, and the company lost the trust it needed to move forward.
7 Reasons Leadership is Essential in Startups
1. Movements are More Powerful With a Leader
In Expert Secrets, Russell Brunson reveals that every mass movement – whether political, religious, or business-oriented – has a powerful leader at its core.
Leaders are the focal point that helps rally people around a common vision.
The more charismatic, transformational, and inspiring a leader is then the stronger the movement becomes.
Russell explains that the leader’s ability to tell compelling stories plays a huge role in this process.
In his book, he helps entrepreneurs tap into their unique experiences to craft powerful narratives that resonate with audiences, transforming personal insights into sales scripts that elevate their businesses.
In fact, Russell applied these very principles to build a movement around ClickFunnels, which helped the company reach $100 million in sales within just three years.
Get Your Copy Of Expert Secrets For Free!
2. People Look to Leaders for Guidance
In Expert Secrets, Russell Brunson dives deeper into why leaders hold such influence: people look for guidance from those who are living the life they want to lead.
When a person embodies the values and success that others desire, they become a magnet for people seeking direction.
This is why having a person at the helm of a business is so powerful.
A person or leader is more powerful than any motto, logo, or branding could offer.
Followers connect emotionally with real people, not just ideas, and this connection drives loyalty, engagement, and growth.
Expert Secrets how to turn elements of your backstory into an ‘Attractive Character’ which can increase the potency of your sales messages.
Get Your Copy Of Expert Secrets For Free!
3. Transformational Leadership Has a Direct Impact on Startup Performance
A 2017 study published in the Journal Researching Entrepreneurship found that leadership style has a direct impact on startup performance.
Analyzing 102 startups and gathering feedback from 372 employees, the study revealed that “transformational leaders” positively influence performance.
Meanwhile “transactional” or “laissez-faire” (non-intervention) leadership styles had a negative effect in early-stage startups.
What is “transformational leadership”?
Transformational leadership involves leaders who inspire and motivate their teams, showing genuine care for employees’ and customers’ well-being, personal growth, and development.
This type of leader fosters trust and engagement, which in turn drives productivity and morale.
4. Leadership is Crucial to Navigate the Challenges of Early-Stage Startups
A study from the Blekinge Institute of Technology in Sweden highlights how crucial strong leadership is in early-stage startups.
Researchers interviewed successful founders and discovered that motivational, capable leaders play a central role in holding a startup together through the early-stage challenges of:
- financial constraints
- talent acquisition
- scaling demands
These founders reported that good leadership provides the necessary stability and focus, helping teams stay resilient and cohesive even when resources are tight or goals feel daunting.
5. Leaders Who Don’t Communicate Well Lose the Trust of Their Team
The State Of Workplace Communication In 2024 report from Forbes reveals powerful insights on how poor communication from leaders can erode trust within teams.
For over 40% of workers, inadequate communication led to reduced confidence in their leaders-
The number rose to 52% among remote workers.
This breakdown in trust often stems from actions that increase stress and disrupt work-life balance, such as leaders calling employees after hours or scheduling last-minute video calls.
By working on building clear rules of communication and being respectful of those rules, you can contribute to building trust in the workplace culture.
6. Well-Trained Leaders are Proven to be More Productive
A 2017 study in the Journal of Applied Psychology found that managers who received executive coaching and leadership training saw an 88% boost in their productivity.
This productivity surge was linked to specific, impactful elements of leadership training programs.
7. Leaders Increase Motivation in Their Teams
More than just generally boosting productivity, leaders can also increase the motivation their team members feel.
This was proved in a 2022 review from Frontiers in Psychology, after analyzing data from 50 independent samples and over 21,000 participants.
The review found that leadership styles like transformational, ethical, leader-member exchange (LMX), servant, and empowering leadership all positively influence motivation.
Specifically, this kind of positive leadership style helped employees feel valued, autonomous, and committed to their work.
In contrast, abusive supervision had a detrimental effect on decreasing motivation and morale.
The findings suggest that leaders who prioritize ethical values, team empowerment, and strong relationships cultivate a motivated workforce which can lead to greater chances of success.
Final Thoughts: The Role of Leadership in a Startup
Strong leadership is a game-changer for startups.
From building a motivated team to navigating early-stage challenges, leaders set the direction and tone for success.
As we’ve seen in this article, effective leaders inspire loyalty, foster trust through clear communication, and create environments where teams can thrive.
Studies consistently show that “transformational” leadership styles positively impact team performance, motivation, and even the overall productivity of the organization.
On the flip side, poor communication and toxic leadership erodes trust and damages growth.
For founders and leaders looking to refine their approach, Russell Brunson’s Expert Secrets offers a powerful framework. Russell teaches how to create an “attractive character” – a relatable and inspiring persona that becomes the face of a brand or movement.
This concept helps founders build authentic connections with their teams and audiences.
With the “attractive character” cheat sheet from Expert Secrets, you’ll also learn to craft compelling sales pitches and scripts that resonate deeply with your target audience.
Click below to get your copy free!
Get Your Copy Of Expert Secrets For Free!
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