Five Must Have Leadership Skills

Organizations spend over 50 billion dollars a year on leadership training. Much of it misses the mark. When pressed for a full pipeline of leaders they spend even more money to find new "potential" leaders only to find that many they believed had leadership potential exhibited little or no leadership qualities at all. No wonder corporations spend so much money on leadership. They are constantly involved in a non-productive cycle of hire-fire-hire again hope for a better outcome.


The vicious cycle of hiring, developing, firing, and costing even more money is for the birds and unnecessary. We too have spent a lot of money, (over a half-million dollars) but we have spent our money seeking to find out why, seemingly good, leadership candidates fail to live up to expectations.

A half-million dollars and 30 years later we believe we have a handle on what we call "Leadership Wilt." Leadership Wilt is an insidious disease that attacks organizations from the inside out. It attacks even the best leadership candidates among all organizations, worldwide. The disease attacks without warning and transforms potential leaders into managers that are weak, ineffective and even dangerous.

So, what did we find that would allow us to do a better job of identifying real leaders and helping them advance their skills? Through arduous research, trial and error, real commitment and perseverance we have identified five skills that leaders must have to function at the highest level. Those five skills are: Self-Awareness, Optimism, Empathy, Reality Testing and Followership. The good news here is that 4 of these essential leadership skills are measurable and the 5th is discernable. That being the case, lets visit the four that are measurable, first, and then address the one that is only discernable.

In the early 1980s Ruevon Bar-On and Howard Gardner began raising the issue of emotional influence and discussing how emotions played a larger role than originally thought regarding personal performance. Later John Mayers and Peter Salovey officially gave that influence a term-Emotional Intelligence and in 1995, Dan Goleman wrote the best selling book, Emotional Intelligence. From that early work sprang many tools designed to measure Emotional Intelligence, defined generally as "one's ability to recognize your own emotions and those of other and work the two together for good." Today, a tool called the EQi has become the most scientifically validated instrument for measuring Emotional Intelligence and because of its validity, the most popular tool used for that purpose around the world.

The EQi measures many fine skills but none more useful than Emotional Self Awareness, Empathy, Reality Testing, and Optimism. This is not a commercial for the EQi, so let’s talk about those 5 essential leadership skills.

Self-Awareness

Self Awareness may be the single most important of all five essential skills. You can not create that "presence," so critical to leadership, without being deeply, self-aware. Knowing yourself is the first step to understanding others and without others, there is no leadership. Emotional Self Awareness is large part of Self Awareness but, not all of it. To be sure, a superior leader must be emotionally self-aware but, also aware of your other strengths and weaknesses.

Empathy

Empathy is almost an extension of Self-Awareness, in that it requires you to see and feel emotions, but through other peoples shoes and eyes. It requires listening to others versus listening to self. Empathy requires you to understand others but even more, it requires you to emotionally connect with others. High Empathy levels indicate an individual has the ability to build the relationships necessary to grow spans of influence and create a more effective leadership bond with people. When people know you care for them, they begin to care about you.

Reality Testing

This is a term is really jargon used by the EQi people to describe one's ability to recognize the real from the not likely. Jim Kouzes and Barry Posner, the writers of the Leadership Challenge share that people admire people with vision, and that is certainly true. But to lead you need to have a vision and be able to communicate it an inspirational way, but you better be able to explain the practicality of that vision. People are quick to abandon ship once they sense the leader's vision is not very practical or, at least within reach. The skill of Reality Testing is not a nice to have, it is a must have quality.

Optimism

Well, what can I really say about optimism that better expresses the need for it than ask the question; How many people do you know who rush to join a pessimist in an important journey? Probably not many, if any, I would think. Few wish to be a part of anything viewed in a negative light and to gather followers, one needs optimism. Most of us need a positive view of where we are going. Everyone want to be a winner!

Followership

I am saying that you can not be a good leader unless you have been a good follower. All leaders are followers and have been followers. So don't expect those who have been poor followers to morph in to exceptional leaders. They will not.

Now a word about my earlier comments regarding measurability and that Self-Awareness, Empathy, Reality Testing, and Optimism are measurable and Followership is not. At least, it is not measurable before you hire the person unless you have observed them, in action, at a previous employer.

For the most part, Self Awareness, Empathy, Reality Testing and Optimism can be measured as they are subscales within many Emotional Intelligence assessment tools. Followership can only be judged through observation, in action. Often we do not have the opportunity to observe a potential leader before we hire them but they can be observed immediately after the hire and from there on. Regardless of the method you develop for measuring the potential followership skill, training and direction needs be given to all to improve their contribution to the organization and their potential for leadership.

Previously, we have identified Four Essential Leadership skills that can measured before you make a hire and one that can be judged very early in the employment cycle. Organizations that insist upon the presence of these 5 qualities in their every hire have a leadership pipeline full of quality candidates with fewer surprises. They have profits that far exceed those who have no focused and validated selection system and On-boarding policies. Screen all potential leaders for Self-Awareness, Empathy, Optimism and Reality Testing and watch you profits rise. Offer followership training to all hires, early in the employment cycle and watch leaders grow. Avoid "Leadership Wilt," hire with a plan.

How Emotions Affect Leadership Behavior

James Kouzes, Dean's Executive Professor of Leadership, Leavey School of Business at Santa Clara University and Barry Posner, PH.D., Dean of the Leavey School of Business at Santa Clara University are the co-authors of Leadership Challenge, a seminal book on Leadership.
                                                  
For over 20 years they have surveyed workers, around the globe, asking what they admired most about their leaders. From their survey they identified four qualities/attributes a leader must demonstrate to attract followers:

I use Multiple Health System's model of Emotional Intelligence EQi 2.0 which has five major categories (Self-Perception, Self-Expression, Interpersonal, Decision Making, and Stress Management) and 15 sub-categories

• Honesty

• Forward-looking
• Inspiring
• Competent

It is my belief that these four attributes are partially driven by Emotional Intelligence (EI). **Emotional Intelligence is a driver of behavior— good or bad.** Each of these four attributes include behaviors of admired leaders. Many times leadership-behavior can be enhanced by good emotions or destroyed by bad emotions. A very good question might be, “How does Emotional Intelligence impact these four most admired traits of leaders?”

The best way to answer that question is to apply the Emotional Intelligence model— one of the most widely used, highly validated Emotional Intelligence, self-assessments available today. How, then, does Emotional Intelligence enhance these four leadership skills:

Honesty?
I believe it is very difficult to be honest without high levels of Empathy and Social Responsibility. Empathy, the ability to recognize or understand how others feel is crucial to building trust and trust is the foundation of effective leadership. Empathy plays here because it is difficult to be dishonest if one has a real sense of what one feels when you have been deceived. To understand how others feel when they have been deceived is a motivator to honesty and requires empathy.

Social Responsibility, is one's moral compass that directs behavior toward promoting the greater good and contributing to society and other social groups. If one feels a high level of Social Responsibility, they are more likely to be honest with others than those sensing a lower or none.

Forward Looking?
Being a Visionary requires higher levels of Reality Testing and Optimism that have the greatest impact on one's ability to look forward or be a visionary. To want to see what the future holds, one needs Optimism. Few pessimists want to look forward and even if they do, what they see is not motivating to others. A sense of Optimism and an exciting future draws followers like a magnate. However, a leader needs to be realistic about what they see and communicate reality to others. Reality Testing or the ability to see things as they really are is accurately sizing up the environment, resources, and future trends to build realistic plans and goals.

Inspiring?
Being Inspirational requires higher levels of Emotional Expression and Assertiveness. Emotionally Expressive individuals can readily express emotions and convey their feelings in a way that is constructive for others. They have a unique ability to use facial expressions and body language to express emotions and are especially adept at finding ways to express emotions both positive and negative— in ways that are well received. Assertiveness is often perceived as a negative trait but frankly it is essential to effective leadership and a big part of being inspirational. Assertiveness allows one to draw a line between passive and aggressive words and deeds. It allows one to effectively communicate goals, dreams and a future in a manner that is clear and concise.

Competent?
Competency is often thought of as more cognitive thinking than emotional. But emotional intelligence plays a big part in being capable, in the eyes of others. Those who are thought of as being highly competent are often found to have higher than normal scores in Self-Actualization and Emotionally Self-Aware. Self-Actualization allows one to be aware of things that are important in a manner that eludes to a plan. A higher score in this area indicates that you will not likely be satisfied with the status quo.

To be Emotionally Self-Aware is the beginning of understanding others. Competency in one's role demands awareness of your own emotions, as well as others. You must be Self-Aware before you can be aware of others.

To determine leadership potential and/or build on strengths and manage weaknesses of existing and potential leaders, I have found the measurement of Emotional Intelligence levels to be an excellent indicator of potential and a great coaching tool. In building and coaching leaders we have found that high levels of overall Emotional Intelligence and higher scores in the EQi 2.0 subscales: Empathy, Social Responsibility, Optimism, Reality Testing, Emotional Expression, Assertiveness, Self-Actualization and Emotional Self-Awareness are excellent indicators of leadership potential and provide great opportunities to coach leaders to even more productive level.

Steps to Raising Money

There is no single best way to raise money for your new venture. What works for me may be less than effective for you. However, there are some guidelines that can be very helpful if this is your first effort in raising money. Here are a few guidelines that can make the job easier and hopefully, more effective.

First, determine how much money you want to raise. It is likely, if this is your first money raising effort, that you will be talking to angel investors or micro Venture Capital firms and sums of money less than $1,000,000. The amount of money you will need should be determined by understanding the next major milestone in the business growth process, how you believe you can get there, what you will need to reach the goal, and how long it will take to get there. For instance, if you are developing software and are currently in the "beta stage," how long will it take to have a marketable product and what will it cost to run the company until you get there, also know as the burn rate. It may take $30,000/month for 10 months or $300,000 to get that marketable product. One thing you can be sure of is that you will most likely be wrong in the time it will take but you should not be far off when it comes to your monthly expenses. Give yourself a month or two cushion in case you encounter problems and ask for $360,000, first round. Being specific gives the investors confidence that you are reasonable sure of achieving your goal and reasonably sure of reaching it in the estimated time frame.

Second, you will need a few documents that describe your business. One being the "One Line Pitch" like "The patented Grey-Spook widget is recommended by Doctors at the Madness Clinic and designed to reduce the pain of surgery by simply holding it between your teeth for 14 minutes immediately after you awaken from anesthesia." Another being the Business Summary, a paragraph that explains the business process and what your product does, like: "Grey Spook, pain relief widgets are used everywhere to reduce pain and discomfort from surgery. Patients rave about the effectiveness of this simple, yet effective tool for managing pain. The "Grey-Spook" is priced at only $25 and we estimate the market to be three billion annually. There are no known competitors." Finally, you should have a Management Summary, something like: "Robert E. Nuff, invented Grey-Spook and has had 15 years managing pain relief at Robert E. Lee hospital in Houston TX as head nurse. Tammy Toogood has 30 years manufacturing experience with the leading manufacturer of pain management devices in Galveston, TX. " These tools are intended to impart maximum knowledge in the shortest possible time.

Once you have gotten the attention of a potential investor be prepared to deliver a more detailed Executive Summary, possibly as long as 3-4 pages. This short, focused description should be carefully crafted and void of anything that resembles "fluff." It will likely be the first substantive information several investors will ever see regarding your company, so make it good. In this summary, you should include the problem you are solving, why it needs solving, how your product solves the problem in unique and intriguing ways and finally why you and your team are the best choice to "deliver the goods." End with a "hook" about the financial end-game and how your approach will distance you from any competition. Don't go overboard here, but do be aggressive. Have this summary prepared and send to any VC that requests it. Wait, however, until it is requested. Be a little hard to get, not too much so, but a little.

Lastly, build a 7-15 page Power-Point Presentation. This should be your most detailed description, yet. Understand that, on average each page (I still call them slides) will take about 3 minutes to present. So, on average a 7 pager will take 21 minutes to present and leave 9 minutes for questions in a 30 minute presentation and a 15 pager will take 45 minutes and leave 15 minutes for questions in an hour presentation. It is good to have at least 2 versions as you are often time limited and 2 versions will allow flexibility to meet most needs. Remember in preparing your pages (slides) keep the information on the slide at a minimum. Never have to say, "I know you can't see this very well." The Power-Point presentation should be practiced using key words and leveraging "attention getters." Be certain you include summary financials and how you will use them. Most good presentations are the shorter versions.

This brief, and certainly not "all inclusive" commentary is intended to give a quick overview of what investors ask for and need to make decisions about investing in your company. Follow them and increase your chances of success.

The Five Point Job Recovery Plan

Entrepreneurs don't often do the things they do, for the money. They often do them for the passion they have or simply to prove that they can do it. Even though 500,000 new businesses starting each year (the number of startups in 2010) seems like a big number, it is actually an all time low during the recent past (2006 startups numbered 667,000).

"Why" you ask, "is this important?" Here is why; Businesses, less than five years old, have contributed all the net new jobs in the United States in the last decade. And most startup businesses have no employees. So, those that do are ever-so-much more important in our effort to dig our way out of this recession. While I would not be so bold to say that Entrepreneurism alone will return us to full employment ( 5%), it is certainly an important factor.

So, an interesting and important question might be: Why are new business startups off nearly 25 % from their all time high in 2006? And/or; What needs to be done to restore the startup level to the 2006 high and beyond? And/or; How do we go about greasing the sled for Entrepreneurs and Business Startups?

I believe that this five point strategy will go a long way to restoring the climate in this country that incentivizes not just Entrepreneurship but Successful Entrepreneurship (establishing a means of improving the 5 year success rate of startup from 30 to 50 percent).                                           


1. Most money for a startup business comes from the owner's savings which includes the equity of their home or retirement savings. Money, from home equity and/or retirement savings, has shrunk considerably since 2007, for reason I won't go into here. Considerable losses have occurred in those two areas since 2007. I suggest that we compensate for that difficulty by giving those who start businesses a TAX CREDIT up to $25,000 for money invested in a start-up business.

2. Reward those Entrepreneurs that are successful with a one-time 150% deduction for annual wages of new employees, during the first 5 years of operation.

3. Streamline and reorganize the US Patent office which now takes an average of over 3 years to approve a patent application. Begin by giving first time patent appliers a guaranteed 90 day up or down answer.

4. Reward Entrepreneurs that start businesses in the potential high-growth industries of tomorrow: health care, business services, leisure, construction, manufacturing and retail. Give all business startups, surviving the first year in those industries, a $25,000 grant to purchase needed equipment or software.

5. Provide TAX REBATES, up to $5000 a year for the first 5 years of Entrepreneurial activity involving a business with 5 employees or more, provided they can show evidence of investment in specified Entrepreneurial education.


I am calling this five point strategy, The Entrepreneurs R Us Job Recovery Strategy. If you feel this would benefit you or someone you know who is in a startup business situation or thinking of engaging in one please write us.                                    

                                                                          

Startup Success Formula

The Startup Genome project has issued its first report based on a study of 650 Internet Startup companies by the authors Max Marmer, Bjoern Lasse Herrmann and Ron Berman. Their goal was to lay the groundwork for a better understanding of how startups progressed through the business cycle. No doubt their hope is to better understand the likelihood of success by startup companies in the Internet space.

Their findings, though preliminary, would be of value to venture capital firms evaluating possible investment opportunities as well as those who might be considering a business startup. Though their studies involved only Internet businesses it is interesting to think how effective their finding might be in evaluating startups in other industries.

Based on a paper only recently published, they established two important foundation tools for evaluating the likely success of Internet startup companies. I think that those findings are valuable to all and I will share, with you my understanding of those discoveries.

To begin, they established a startup Life cycle consisting of 6 stages:

1. Discovery
2. Validation
3. Efficiency
4. Scale
5. Maximizing Profits
6. Renewal

The authors defined each stage and I believe it would be beneficial for us to review those definitions:

Discovery-Startups in this stage are focused on the understanding of whether or not their idea or concept has value. In other words, would anybody pay to get what the idea or concept would provide.

Activities that startups might be engaged in during this phase might be interview of those that make up the potential market, produce some prototypes of the product or service, joining and incubator or accelerator group, seeking financing from friends and family, seeking and establishing relationships with the fires mentors and advisors.

Validation-First attempts to sell the product or service and gauge the potential market and its value as well as experience in how best to achieve sales. Evaluate the efficiency with which customers can be captured and kept.

Activities at this stage are: refining the product, establishing the metrics, obtaining of seed funding and making the first key hires.

Efficiency-Customers must be acquired efficiently, product must be deliverable at a profit and business model must be fine-tuned.

Activities that are likely to occur at this stage are clarifying the value proposition, refining the customer experience, enhancing the growth process, and creating scalability or sales.

Scale- Attempts to drive firm growth aggressively

Activities at this stage typically are: A Round financing, executive hires, process refinement, and scalability improvements.

(Stages 5 and 6 were not discussed)

It was found that 5-9 months were required during each step and that activities vary, somewhat, by type of startup. However, the top challenge during each of the four stages was Customer Acquisition; Spotlighting the need for creating clarity around the value proposition and the sales process.

This brings us the second important finding of the study, the four types of startups. I found this most interesting and helpful in understanding how business might have different needs and rates of growth. The four types of startups are:

1. The Atomizers
2. The Social Transformers
3. The Integrators
4. The Challengers

The Atomizers-Common characteristics: Customer focused, product centric, execute quickly, and often simply automate a manual process. Examples: Google, Dropbox, Zynga, and Hipmunk.

The Social Transformers-Common characteristics: self-service customer acquisition, winner take all markets, and typically create new ways for people to interact with others.

Examples: eBay, Skype, Craigslist, Twitter and YouTube.

The Integrators- Common characteristics: take innovations from Internet and rebuild and fit for smaller organizations, high certainty of success, gather leads from inside sales reps and smaller markets. Examples: Uservoice, GetSatisfaction and Flowtown.

The Challengers-Enterprise sales repeatable sales process, rigid markets, and high customer dependency. Examples: Oracle, MySQL, and Jive.

Some additional finding that may be even more important to those of you planning a business start up are:

1. Mentors are important. The study found that business start ups who sought and found mentors were able to raise 7 times more money than those who did not. It almost seem like a given that someone starting a business would seek and get all the advise they could.

2. Many Investors Invest Too Much. In fact the study found that investors put 2.3 times to much money in deals. Translation? Due Diligence!

3. Development is faster with co-founders. Founding teams of 2 were 3.6 times faster to reach scale stage.

4. Sales driven startups are 6.2 times more likely to reach scale stage than product driven businesses

5. Balanced founding teams are more likely to succeed. Team of technical, and business founder raise more money and reach scale stage quicker.

In all the study, provides a foundation to better evaluate startups by standardizing terms and classifying types of organizations there was much, much more to be gleaned for the Startup Genome project and we will follow-up with you to share the wealth of knowledge provided by the project. Stay tuned for more of the Startup Genome project.

Leading a Successful Start-up

There is no more precarious role than leading a start-up business. According to the latest research, seven of ten will fail in 10 years or less. But, since start-ups contribute most of the jobs in the United States and have done so for the last several years, we would all be well-served to understand what contributes to the success of those leading start-up businesses.

A recent study by Multiple Heath Systems (MHS), Toronto, Canada and the University of Toronto in which they compared Emotional Intelligence (EI) scores of top executives belonging to the Young Presidents Organization (YPO) against the general population revealed some interesting areas of differences between the two groups. Using an instrument that measures Emotional Intelligence (EI) known as the EQi, MHS and the University of Toronto found significant differences between the executives leading young companies and the normative population. The EQi measures 15 different subsets of individual traits and the Executive group was found to score substantially higher in 8 of the 15 subsets. Four of the greatest differences occurred in scores involving Empathy, Self Regard, Reality Testing and Problem Solving. Executives who possessed higher scores in these four areas were more likely to achieve higher levels of performance and profits which some would define as success.

Before we talk about the practical value of this data, lets review the meaning of each of these four attributes:

• Empathy - the ability to recognize, understand and appreciate the emotions, moods and feelings of others

• Self Regard - the ability to know and understand one's strengths and weaknesses

• Reality Testing - the ability to assess what is realistic and what is not

• Problem Solving - the ability to solve personal and interpersonal problems

Certainly, the "Fabulous Four," as I call them, almost look like common sense answers to the question; What skills does a person need to succeed in starting a business? Possibly they are, but having above average capacity in those four areas is somewhat rare and makes the leadership job much easier, somewhat like a 6'8" basketball player dunking the ball through a 10' high basket - not too challenging.

So why don't we just line up people with superior capacities in the "Fabulous Four" and have them start a business. We wish it were that simple. But, unfortunately, there are other dimensions to success, in starting a business. The "Fabulous Four" can enhance your leadership success but without the remaining two essentials: Passion and Luck start-up success may be elusive.

Having "Hair On Fire" passion for what you do is an essential ingredient to start-up success. You are not likely to have a successful start-up with out unparalleled Passion for the business. All that being said, we have found Passion to be the necessary fuel that keep a business going in spite of obstacles.

Few will ever acknowledge just plain luck as an ingredient for start-up success. Yes, a certain degree of luck, though not essential to success, is frequently a major part of it. Having started four new businesses, succeeded in two and failed in two, I can personally attest to luck, both good and bad, playing a role in the success and failure of a start-up.

Earlier, I spoke of the "practical value" of this information. Here it is, as practical as it will ever get. If you are wanting to maximize your success, as a leader of a small business start-up, build your skills in the "Fabulous Four" (Empathy, Self-Regard, Reality Testing and Problem Solving). Do so with Passion and hope for a little Luck. Good Luck, that is.

Businesses Fail at an Alarming Rate

Eight of ten business fail. Eight of ten is breathtaking, to say the least. If it happens so often, why is business failure so painful? Possibly it is because most start-up businesses are a direct reflection of the founder/entrepreneur.
No one starts a business with a goal of failure. Everyone begins with visions of success. When a business fails it gobbles up all involved and takes them "down with the ship."
Perhaps, before we start a business, it would be important to consider why business fail. There are many, of course, but some of the more common are listed in the poll: 
http://polls.linkedin.com/p/94999/xxzyp  Please give us your opinion.
Thanks!

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