The key to success for any business? “The psychology of the founder”, says James Hardy. The co-founding CEO of Avenue51 and former Head of Alibaba Europe led a session with IVUK’s CEOs on effective strategies and mindsets as a business leader.
Debunking the myth that successful organisations can rely primarily on a strong marketing strategy, James set out his belief that the disciplined, resilient mindset of a founder (or CEO) is the key success indicator of a business. We summarise James’ six leadership traits that define the culture, systems and values of a scalable business.
1. Good leaders harness opportunities
People say that a start-up’s “lucky break” marks their pivotal moment towards success, yet for James, “failure and luck don’t go hand in hand”. How do leaders therefore position their businesses for success? With reference to Richard Wiseman, James concluded that leaders who seize opportunities are more likely to see their businesses flourish. He further cited Wiseman’s theory that people who consider themselves as “lucky” generally display positive expectations, escape regular routines, follow their hunches and see the positive side of their misfortunes. Leaders are more likely to see a positive correlation with their company’s growth. When adopting these attitudes, they are better positioned to harness opportunities in domains outside of their own.
James’ advice to CEOs and founders is to therefore break out of their familiar environments and to say “yes to the random”. This openness towards discovery will eventually reflect well on their businesses.
2. Good leaders nail productivity
James’ productivity theory is simple; “There are two types of activities from a business leader’s point of view. Mission-critical work and everything else”. In other words, leaders must assess a task’s importance against the long-term success of their business. The outcomes are binary; if it isn’t important, then it should be delegated (or completed once to set a precedent). If it is mission-critical, time should be commensurate with the project’s importance – and then that time allocation is rigidly adhered to. This discipline and rejection of perfectionism is the only way to prevent work-overload and focus on the core challenge of building a scalable business model. As part of this, at least 90 minutes should be dedicated each day to “deep work time” for focussing on the issues that matter.
3. Good leaders delegate effectively for enhanced business development
Channelling productivity into business and pipeline management is crucial to closing deals and seeing company growth, acknowledges James. A leader cannot afford to be bombarded by options that detract from business traction. Once again, delegation is an essential tool. However, James emphasised the importance of identifying the “no’s” in the pipeline to allow time to focus on the “yes” clients. “Timewasters are everywhere”, and removing them as quickly as possible will save time and money.
4. Good leaders lead
Amongst the various theories behind effective management, James summarised three rules that will inspire confidence in a leader:
- Challenge directly and care personally for your staff. This is taken from Kim Scott’s theory that advises “radical candour” to get the best out of employees. Leadership advice is everywhere and the simplicity of this model is what makes it powerful.
- Emit the qualities of people you respect, or adopt the “Responsibility Transfer” advocated by Olivia Fox Cabane. By emulating the qualities of someone you admire in situations where that person is an expert, you borrow their strengths to channel good business practices.
- Look at every decision from the employees’ point of view. This derives from Ben Horowitz’ lecture on “How to Manage”. To inform better judgements, leaders must evaluate what employees as a collective would think about any decisions they make.
5. Building robust systems and processes
Building seamless operations may not be glamorous, but it is the key to a scalable business, says James. He argued that a fully-functioning and documented system will avoid repeatable problems and create long-term solutions. Franchises are the example of how this works best. As per Michael Gerber, these are four times less likely to fail than start-ups. James therefore recommends an operational mindset as if running a franchise business, which are systems-based rather than people-based solutions. The businesses and franchises that have seen large-scale success tend to have consistent and predictable quality of services or products; these in turn deliver the best experiences and products to their clients. Imitating this approach will therefore account for client, employee and geographic scale that is less affected by variations in management practices.
6. Managing stress
Finding time to minimise or avoid stress is vital, explains James, as entrepreneurs are notoriously exposed to mental health issues due to their attachment and the accountability held to their business. Drawing from his own experiences, James presented a game plan to maintain a healthy and balanced mindset:
- Control: Research indicates that starting each day with a plan of action is the most effective way to maintain a feeling of control.
- Socialise: Maintaining an active social life is crucial for cognitive functioning, meaning productivity at work.
- Limit working hours: If leaders are working past 9pm and from 4am every day then something is wrong with their systems and processes. Working hard, but maintaining discipline is crucial to allow time for all other parts of the game plan.
- Play: This is innate to humans and essential for counteracting depression.
- Exercise: It’s no secret that exercise promotes overall wellbeing. If possible, combine it with play to save time and create complete distraction from the business.
- Develop a bulletproof mindset: James reverts to the “Responsibility Transfer” (see Effective Leadership) as an effective tool. He also encourages leaders to ask themselves, “How do I make this a good thing?” or identify positive outcomes within negative situations. This resilient attitude, echoing Wiseman’s “Luck Factor” theory, encourages positive behaviours that lead to greater outcomes.
James’ final word of advice? “Don’t be playing at business”. He urges leaders to focus on the business rather than be distracted by routes to funding (“that’s someone else’s business”). As its key visionary, leaders must focus on how to build a scaling and scalable business. “If that’s all you’re relentlessly focused on, you will never have a problem with your runway”. For some leaders, their business may of course be their “play.”
IVUK’s CEO Programme is a support and educational scheme for the fund’s network of CEOs, to help their personal development and tackle common issues that apply to their businesses. For more information, please contact Jo Fackler.