8 Principles of Great Leadership

Feb 15, 2017
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Feb 15, 2017

Inspired by our piece ‘A Deficit of Leadership’, two up-and-coming leaders in our community shared some of the most important principles of leadership below. We’re excited to see what’s next for Aneesh Pappu and Josh Singer.

As a founder, learning how to launch your startup is incredibly important. But as your project grows, you will have more and more people following your lead. Many founders are inexperienced at the art of leadership and lack the management principles necessary to build an enduring company. History ー even the history of Silicon Valley ー furnishes many illustrations of skillful leadership and of principles that every leader should adhere to.

Goal of a leader: The most important quality of a good leader is to empower those you lead to do their best.

Principle 1: Plan and prepare for situations that are under your control, but also recognize randomness and things out of your control.

As a leader, you have to recognize that many factors are out of your control. You must simultaneously plan for the future and prepare for randomness. Only the best master the art of adapting to black swan events with planning and prep.

Never confuse uncertainty with risk when making decisions. Risk is the range of possible outcomes for your action and their associated probabilities — it’s a feature of the external world. Uncertainty is not knowing the entire range of possible outcomes — it’s a feature of your mindset and knowledge base. Successful leaders are able to make ‘flexible’ plans which hedge against uncertainty.

“You need to try to do the impossible, to anticipate the unexpected. And when the unexpected happens, you should double the efforts to make order from the disorder it creates in your life. The motto I’m advocating is — Let chaos reign, then rein chaos. Does that mean that you shouldn’t plan? Not at all. You need to plan the way a fire department plans. It cannot anticipate fires, so it has to shape a flexible organization that is capable of responding to unpredictable events.” ー Andy Grove [1]

Principle 2: Self-awareness is one of the most important qualities of a world-class leader

Leadership is a particular exercise of power; it is predicated on one’s ability to influence others. In order to be a great leader, you must have a clear view of the ways you channel power and the magnitude of your intended actions. In addition, you should recognize your own deficiencies and take steps to account for those deficiencies.

Self-awareness grows exponentially more difficult as the size of your team and your responsibilities grow. Business successes reinforce your belief that you know what you are doing because those around you become more likely to defer to your authority. Unless you are maximally self-aware, you will be less likely to question your immediate thinking, which will ultimately lead to poor decision-making. Great leaders must avoid this debilitating cognitive bias.

Within Silicon Valley, the canonical example of such a self-awareness is the COO hire. Many great CEOs have realized their personal deficiencies and have brought in great COOs to complement those deficiencies [2]. Steve Jobs, when coming back to Apple in 1997, hired Tim Cook to allow Jobs focus on his strengths. Bill Gates hired Jon Shirley to help with operations, and Mark Zuckerberg brought in Sheryl Sandberg to help transition Facebook from a great product to a great business.

As we see more and more technical founders start companies, we will see more technical CEOs with bias towards engineering and product. It is crucial for CEOs to recognize their likely weakness in an area and plan accordingly to fill the gap.

Principle 3: Align the incentives of each and every member of your team

Each person on your team is human and therefore has incentives. It’s your duty as a leader to craft a system that aligns your follower’s incentives.

“To understand the true quality of people, you must look into their minds, and examine their pursuits and aversions.” — Marcus Aurelius

The first step is to determine your followers’ real desires. Then, you must lead them to their desires through efficient action, and clearly communicate to them that following you will lead them to fulfillment.

Incentives are complex; there is far more at play than simple profit-motive. Understand that people are human and have emotions such as dignity and pride. Don’t ever underestimate those emotions in decision-making and execution, and factor them into how you structure your organization and policies. These emotions play just as much a role as explicit incentives do.

Napoleon did this well. He took a band of weak soldiers and empowered them by appealing to their incentives. That band of soldiers then helped him build France into an empire.

“Soldiers, you are naked and ill fed… no fame is reflected upon you. I seek to lead you into the most fertile plains in the world… there you will find honor, glory and riches.” — Napoleon [3]

It’s important to design your structures such that human emotional incentives are taken into account. Not doing so can create negative unintended consequences. Ben Horowitz, CEO of LoudCloud and Opsware, discusses the importance of taking into account the natural incentive of wanting to be recognized and rewarded when designing promotion procedures. In The Hard Thing About Hard Things, he says, “Every time your company gives someone a promotion, everyone at that person’s organizational level evaluates the promotion and judges whether merit or political favors yielded it.” [4] Ensure that you structure your policies rigorously so that these second order effects of your decisions based on others’ emotions are known ahead of time.

There are many ways to apply this principle to modern-day Silicon Valley. For example, during salary negotiations, recognizing what an employee wants (whether more salary or equity) is key. Second, establishing a fair set of compensation principles will keep people’s dignity and pride safe.

Principle 4: Have trust in your team’s commitment to excellence

“Realize that many mistakes, even egregious ones, are the result of ignorance.” ー Marcus Aurelius

It’s important to have the mindset that your team is committed to excellence ー if you don’t believe this, then you’ve probably hired the wrong team. Having this mindset is key to navigating mistakes when they occur.

It’s inevitable that your team will make mistakes. As a leader, you must trust that mistakes come from a place of ignorance unless proven otherwise.

Trusting your team empowers them to do well. However the flip side is that it can cause your team to be overconfident in their abilities and consequently underestimate the likelihood that they have made a mistake. So, while trusting your team’s commitment to achieving top performance, you must take the responsibility to check in often enough to catch mistakes.

A great example of how to balance trust with verification is Andy Grove’s take on open door policies (i.e. ‘my door is always open if you have questions or run into trouble’). He pointed out that open door policies seldom work because people are not likely to bring up potential mistakes proactively [1]. A leader who remembers that people are naturally overconfident and prideful will instead take the onus upon themselves to check in at times when their team members could be failing.

Making these corrections in an educational manner (by reinforcing the team’s goals and explaining why correction is necessary) and not a punitive manner (by overly chastising or reprimanding) is integral to this principle. If you as a leader fully believe that mistakes are because of ignorance, you will see that there is no reason to be angry. Furthermore, creating a culture in which admitting error is OKーand is actually positive and neededーwill align individual incentives towards team success over personal gain or ‘saving face’.

Sheryl Sandberg, a great modern leader in Silicon Valley, is great at giving quality feedback. In an interview, Kim Scott, a previous employee, talks about how Sandberg had a way of giving critical feedback while simultaneously assuring employees that she fully trusted their ability. “Part of the reason Sheryl was able to say to me so bluntly, ‘You sounded stupid,’ was that I knew that she cared personally about me. She had done a thousand things that showed me that” [5]. This is a perfect example of believing in your team’s commitment to excellence.

Principle 5: Be appropriately optimistic

As a leader, it’s important to convey your belief and optimism in the team and the overall success of the company. Your followers benefit from this optimism because it increases their belief that their work will be meaningful. However, if you are too optimistic in terrible times, your team will 1) see through it and lose trust in you and the direction of the company and 2) won’t be personally motivated to fix the issues.

In The Hard Thing About Hard Things, Horowitz discusses the importance of optimism and the appropriate application of such optimism in leadership, for instance in the classic example of CEOs hiding bad news. He writes, “As the highest-ranking person in the company, I thought that I would be best able to handle bad news. The opposite was true: Nobody took bad news harder than I did. Engineers easily brushed off things that kept me awake all night… If things went horribly wrong, they could walk away, but I could not. As a consequence, the employees handled losses much better.” [4]

The key is to be optimistic about the future, but absolutely realistic about the present. You must “tell it like it is”, as Horowitz would say (see next principle).

A Silicon Valley analog is sharing the contextualized high points each week with your team. For example, if your company grows by 20% more than expected in a certain metric, share that with your team! However, the flip side of this can be seen when new rounds are raised. For many Silicon Valley companies, there’s overzealous celebration after a new round of fundraising has been finished. Although a good funding round is important, it by no means says that a company has made it or is doing ridiculously well; it just means that investors think highly of the company. Recognize that certain situations warrant a certain amount of optimism, and that you should convey that appropriate amount of optimism to your team.

Principle 6: Transparency is of utmost importance

Being transparent as a leader is necessary to the success of your team. Acting on this principle accomplishes the following:

It builds your team’s trust in you. Horowitz points out that “As a company grows, communication becomes its biggest challenge… if the employees fundamentally trust the CEO, then communications will be vastly more efficient than if they don’t. Telling things as they are is a critical part of building this trust.”

It establishes a culture of problem-solving rather than problem-hiding, which is crucial for team success. Horowitz points out that honesty creates “a culture that rewards — not punishes — people for getting problems into the open where they can be solved.” Also, getting problems out as soon as possible allows your company’s best minds to attack them. You didn’t hire good engineers so that you could stress out and try to solve the hard problems yourself.

It inspires your team. When you share more information with your organization/followers, you help catalyze a sense of ownership. As your followers get more and more information about the internals of a company, they psychologically attach themselves to the company and its future. And as a result of that attachment, they feel more inclined to ensure its success.

The highest form of inspiration is when your followers clearly understand both what to do and why.

For many Silicon Valley companies, transparency is one of the more defining aspects of a successful company culture. Many of the most successful companies have instituted a policy of nearly or completely universal access to the codebase and weekly Q&A’s with leadership.

Principle 7: When it’s time to execute, execute quickly and efficiently

“You may delay, but time will not, and lost time is never found again.” — Benjamin Franklin

You do a disservice to your followers when you procrastinate, and delaying your action conveys an uncertainty that will ripple throughout your following. When you are uncertain, evaluate. But when you make a decision, execute.

As a leader, especially within the fast-paced environment of Silicon Valley, you have a commitment to keeping your team successful. If a competitor builds a new feature that will put your team out of business, it’s your duty as a leader to take precautions to keep your team in the game. To be truly successful within Silicon Valley, you must learn to reconcile perfectionism and thoughtfulness with the will to execute.

Take Uber for example. Lyft was first to market in ride sharing with sedans when Uber still only had black car. Uber rolled around one month later (June to July 2012) and continually has done whatever it takes to beat Lyft, whether keeping up with price reductions or hiring city officials in order to expedite expanding there (i.e. New York).

Principle 8: Be the servant to each and every one of your followers

“The job of a manager is to support his or her staff, not vice versa and that begins by being among them.” ー Hewlett and Packard [6]

An effective leader prioritizes the wellbeing of his/her team members. If you aren’t there to help your team, what is your team there to do in the first place? Leadership is a bidirectional structure. Your followers need a leader to follow, and you need followers to lead. Your investment in them is an investment in yourself.

Acting on this principle does two things. First, it fosters your empathy for those on your team: to serve someone, you have to fully understand the problems they have. As a leader, resolving those problems is your most important job, and you must exemplify that your team’s culture is one of helping. Second, it motivates your followers to reach their potential, because your investment of time is a signal that they will grow.

One classic and often overlooked example is the importance of one on one meetings in any management structure. Andy Grove is most famously known for championing the importance of one-on-ones, asserting that any manager who doesn’t invest in one-on-ones for lack of time is making short term optimizations ー “Ninety minutes of your time can enhance the quality of your subordinate’s work for two weeks, or for some eighty-plus hours.” [1] Investing in the growth of the individual members of your team as a leader is your #1 priority and will yield the most returns.

“It is very important to grasp that… leadership is not just about humility and modesty. It is equally about ferocious resolve, an almost stoic determination to do whatever needs to be done to make the company great.” — Jim Collins in Good to Great [7]

Principles are fundamental beliefs; this set of principles represents strategies that leaders have historically proven to be successful. As a leader, your ultimate goal is to empower your team to do well. On you and your team’s journey to accomplish your mission, you will face a unique set of challenges specific to your goal that require unique methodology to tackle. To be a truly great leader, you must reconcile general principles, like the ones outlined, with your own methodology to overcome your distinct set of challenges.

— Josh Singer and Aneesh Pappu

  1. Grove, Andrew S. High Output Management. New York: Random House, 1983. Print.
  2. Blanding, Michael. “The 5 Strategy Rules of Bill Gates, Andy Grove, and Steve Jobs.” HBS Working Knowledge. Harvard Business School, 20 Apr. 2015. Web. Nov. 2017
  3. Napoleon Bonaparte, “Proclamations to French Troops in Italy (1796).” University of Pittsburgh. University of Pittsburgh, n.d. Web. Oct. 2016.
  4. Horowitz, Ben. The Hard Thing about Hard Things: Building a Business When There Are No Easy Answers. New York: Harper Business, 2014. Print.
  5. “Radical Candor — The Surprising Secret to Being a Good Boss.” First Round Review. First Round Review, n.d. Web. Oct. 2016.
  6. Malone, Michael S. Bill & Dave: How Hewlett and Packard Built the World’s Greatest Company. New York, NY: Portfolio, 2007. Print.
  7. Collins, James C. Good to Great: Why Some Companies Make the Leap … and Others Don’t. New York, NY: HarperBusiness, 2001. Print.

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