Leaders or Managers: Which Do Startups Need More?

In the business world, you’ve likely heard the terms ‘leader’ and ‘manager’ being thrown around quite frequently. While some people use the two terms synonymously, the roles are actually quite distinct, with each offering unique benefits to their organizations. This begs the question: does one provide more value than the other? When it comes to leaders versus managers, which do startups need more? Let’s take a look in the analysis below.

Understanding the Difference

You may be asking yourself: what is the difference between a leader and manager? There are a few key differences between the two roles. Leaders focus on vision, while managers focus on goals for the organization. Managers engage the brains of employees, whereas leaders typically engage their hearts. While managers are responsible for maintaining structure and following processes, leaders often explore outside the realm of these parameters to find and integrate new, fresh ideas.

According to the Harvard Business Review, leaders and managers can be differentiated in a number of additional ways. Managers count value, while leaders create value. Managers have circles of power (i.e. people that report to them), while leaders have circles of influence (i.e. people who are inspired by them).

What Startups Need to Succeed

To identify what startups need to succeed, let’s first take a look at what causes startups to fail. There are several reasons a startup business might fail, but some of the most common causes for failure within the first year include:

• Lack of market demand (and lack of an effective marketing strategy)
• Lack of skills in the business founders
• Poor control of funds
• Lack of customer feedback
• Poor leadership and weak teamwork

Poor leadership is one of the leading causes for startup failure within the first year of operation. Poor leadership means lack of vision and inspiration, both of which are crucial for a startup to succeed.

Similarly, according to research from Harvard Business School, bad management is also a prime reason that startups fail. Researchers surveyed venture capitalists and 65% of respondents shared that bad management at the senior level was the main contributing factor leading to failure in high-potential startups. In addition to strong leadership and management, startups require a few extra components to improve their chances at success, such as:

• Good timing
• Excellent teamwork
• Adequate funding
• Unique ideas
• Strong business model

Endnote

The question remains: do startups need managers or leaders more to ensure their success? To put it plainly, they need both. Managers and leaders both play an integral role in developing and advancing a startup, as well as improving its chances for success. Managers are vital for establishing goals, implementing measures to achieve these objectives and monitoring staff performance. However, without leaders to establish the vision and inspire employees, there would be no goals to develop and no staff to monitor. When both roles are filled by well-rounded professionals, they can complement each other wonderfully and enhance the overall efficiency of the company.