In her new interview, our People Management Partner and Executive Coach, Marianna Krell, sat down with Dr. Richard Claydon, Chief Cognitive Officer of EQ Lab, Executive Coach at The Human Factor, Senior Lecturer in Leadership at Macquarie Graduate School of Management, to discuss the challenges that the post-COVID era poses for startup founders and business leaders and how to overcome them, whether founders can be leaders and vice versa, and the critical leadership strategies to consider at different stages of organizational development.
Marianna Krell: Richard, the last time we spoke was during COVID, and it feels like a lifetime ago. How do you think transitioning from the COVID era back to normal times affects people and companies?
Richard Claydon: I don't think we're back to normal. We're still going through the motions of COVID. It's not as deadly as it used to be, but people still get sick. They also deal with mental challenges, such as trauma and burnout, from working hard from home to keep their companies alive. Management thinks that now that people are back in the office, they can keep up the pace. But people are broken. They need a break to figure out and reflect on what has happened to them. So when an organization says, "We're back to normal," that's problematic.
Companies want to return to business as usual, as if the pandemic never happened. But in doing so, they won’t learn any important lessons from the situation. We can see that mental health challenges are increasing all over the world. And we're just at the beginning; it will get worse. There have been signs since 2007-2008 that this was going to happen, but COVID has accelerated this trend.
Things changed, and leaders must consider "How do we deal with these changes? How do we take it seriously? And how do we redesign or reimagine the organization so that people can live their lives to the fullest despite what they've been through?”
Suppose you look at the trends in the broader market. In that case, you see that organizations aren't covering inflationary changes, and people aren't enjoying their time in the organization because of the mental health challenges, the overtime, and the "get back in the office" policy. But at the same time, they're confident they can get other jobs. So what we might start to see is a wave of increased turnover. There is confidence that the jobs are out there, and there is a lack of meaning and purpose in their current organization.
All of this will define the next few years, and organizations that figure out how to deal with it will thrive, and those that don't will struggle terribly in terms of productivity. That's an exciting challenge for people in leadership positions to consider. But from my big vine, they are not thinking about it. They hope things will go back to the way they were.
Marianna: Why don't they think about keeping their teams together and turnover low?
Richard: We are going through a transition period, and what has been happening is accelerating. They haven't thought about it before, and there's a bit of cognitive dissonance. They push away all the new data and want to return to how things were.
They're also overwhelmed, just like their employees. They have just emerged from these three years of survival and are making tough decisions. They don't want to suddenly be involved in a massive reimaging project for their organization. It's asking many of them, and they just don't have the cognitive energy to do it.
Manager vs leader
Marianna: Is there a difference between leaders of small companies and big businesses in how they experience and manage this post-COVID fatigue?
Richard: There may be some correlation. Small companies have to do a lot of things at once. They move really fast, and their whole life is wrapped up in trying to keep their startup going. Maybe you've seen that embedded in large organizations, too. It can look like a treadmill that doesn't stop, and people don't know how to get off. They can't really see anything else in the world but their work.
Before COVID, we ran a series of systems thinking workshops at a startup accelerator, and one of the things that startup founders kept saying was the metaphor of a psychic prison, which they identified with. Everything they do is wrapped up in this very small way of seeing the world through the startup lens. They have to get their company up and running, get funding, and get new products out. They're trapped in the shadowy realm of this psychic prison, and they don't see the bright light and the greater reality beyond them.
I think many people in organizations throughout COVID-19 have been dragged into this "prison" because they've literally been stuck at home. It was the only thing we could all do. So, that's a pretty helpful metaphor to look at almost all organizations.
Marianna: That sounds like the lens of a founder. Do business leaders see through the same lens? Can founders be leaders and vice versa?
Richard: When we talk about a leader or leadership, we're talking about very different things. People in positions of power in any system, whether a small system or a large, complex system, are often called leaders. But they may not be behaving in the way that effective leaders do. They might use their power in a very direct way, getting people to do what they want.
But if we look at leaders throughout history, that's not what they do. The social role of a leader is to influence and inspire people to want to do the work, not to make them do it. Every founder has to be better at that because their resources are limited, and they can't pay as much money as large organizations. They have to figure out how to get people to want to do the work. However, in a large organization, it's usually the opposite.
So there's the social function of leadership, which asks questions like: “Am I protecting my people? Am I guiding and directing them to do the work? Do they feel safe? Do they understand where we're going? Do they understand how to get there?”
But now things are more complex. It means understanding a lot of processes to do this kind of work. It also means understanding people in a pretty profound way to get them to take on the challenge. Because it's such a complicated and complex system that you're leading, you can't lead everybody because you don't understand what they need to do. There are so many different things underneath you, and you can't rely on your expertise to do them.
So leadership, as a social function and as a social role, has to be embedded throughout the system. Because if it's just one person saying, "I'm going to protect you, I'm going to guide you, I'm going to lead you," they can't possibly do everything because they can't possibly know how everything works. It's beyond their cognitive capacity, even for the most intelligent person on the planet.
In an early-stage startup, as founders begin to delegate, their dilemma is how to adapt to this new stage of inspirational leadership. In large organizations, you have to adapt from a control-based management approach to something less controlling. So, good leadership requires adaptation from both pure leadership and pure management to something complex.
Marianna: I wonder, do leaders impact the business? Or is it management that affects business?
Richard: I think it's a combination of the two. Management is about designing the right processes and putting the right structures in place. It's about creating a system that's appropriate for the business and the industry in the world that we're in and measuring things in the right way. It's not a one-size-fits-all approach. There could be multiple ways to do it.
Leadership is about creating meaningful clusters within the management hierarchy. For example, let's look at a customer-facing team. They need to do things that customers need, and they need to have the sense-making and decision-making capacity to do that within certain constraints. You wouldn't want someone on the front-line team to make a $10 million decision without going through the system. Why? Because they don't have the experience. But you want them to have the confidence to solve problems within a certain range without having to go through multiple approvals.
So if you're looking at these leadership clusters within a management framework, I think what we really need is for each cluster to run independently as a little mini-business within the larger organization. Each cluster can have its own decision-making capacity, which can expand as you go up in an organization, from day-to-day to long-term planning. It's about developing pathways for everyone to take steps and move up to get more control and more job opportunities. But it doesn't mean that an organization doesn't need a structure. It's a combination of management structure and leadership behavior.
Doing things differently
Marianna Krell: Do you think leadership differs at different stages of an organization's development? What leadership styles have you seen in successful startups or failed startups?
Richard: That's an interesting question. In one sense, you could argue that in a classic young startup, the team will be quite opportunistic; they will put 100% of themselves into it, and that is their only focus. However, in a large, complex organization, if you do that, you're going to create physical enemies or something that's going to hinge on your career. So, a lower leadership level is not so bad for an early-stage startup.
Early-stage success doesn't require the level of sophistication in leadership that later-stage success requires. A startup leader is very similar to a team leader. The challenge for startup founders and leaders as the company begins to scale and become more complex is to adapt to the new volume of work without creating structural and toxic chaos.
Marianna: Is there a model or guideline that could help startup founders scale their businesses? What should they focus on as leaders to get there?
Richard: I position leadership by going back to the idea of a social role and a social function. We want to avoid the idea that it has something to do with your personal characteristics or disposition that makes you a natural leader. We want to see if certain things have happened throughout history that indicate that you will be successful. There are three things that I keep coming back to.
The first is contextual adaptability. What is the context that we're working with (company size, decision-making process, problem-solving, etc.)? And there are styles that can be associated with those kinds of contexts.
For example, if you're at the very beginning of a person's career and onboarding someone new to the organization, you have to guide them because they don't know the organization. That's a classic onboarding process. Then, as they become experts, it's support and development. You don't have to direct them anymore, and as they become experts, you can start delegating.
Many organizations have a lot of verticals where one person is at the top and is an expert, and a whole bunch of people are at different stages of development to get to that level of expertise. But then you have to consider whether you can keep the team working effectively together and understand the human dimension of work: how to build a team and delegate. Instead of being the only expert who has to go through every decision, you must create a team structure where you delegate.
Then you've got the challenge of complex problem solving, especially between those experts at the top of each vertical. Everybody is so used to their expertise, and now they are thrown into an environment where they can be wrong, and their decision can be very costly. So you have to create a participatory system where everybody feels safe to express their ideas, and then you can test who's right rather than fighting whose idea should go forward.
Marianna: How do you test it?
Richard: There are several ways to do it. Some things are not critical, things that you have time to test, and some are critical where your time constraints are tight. If the time constraints are hard, doing nothing is going to kill your business, and spending all your money on the wrong idea is going to kill your business as well. This is classic A/B testing. You have to test a bunch of ideas before you can commit your resources to one of them.
Marianna: Are you talking about marketing testing, product development testing, customer development testing, or something else?
Richard: All of the above and more. For example, I've done it at the strategic level, where we're looking at how to translate the strategies into execution practices within the organization. You can do a series of facilitations where you present the strategy and where you're trying to get to. Then we've got a bunch of things in the organization that need to be checked, fixed, or changed for us to begin to get to that strategy. Instead of getting the organization to decide what we're going to do, you get the people doing the work to identify what's wrong and why and then take a series of steps to start changing it. If you do that, you'll end up with 30 to 40 different action plans, some of which will identify things that can be fixed in two minutes with zero risk. And some of them need to be tested before you go down that road. The keywords here are contextual problem-solving and participatory problem-solving. It's not just one or two people saying, "This is where we're going.” You get everybody's brain involved. You get everyone involved in solving the challenge.
A big part of what I teach in my corporate intervention is how to get people there to close that strategy execution gap because that's central to many organizations. Often, it's just a top-down process instead of letting the people doing the work determine how the work needs to be done because they're the ones in the system who can see the pain points.
So, to me, that's pure leadership. A company that has an intention and wants to make it happen. To do that, you have to work on multiple levels and get everyone involved and inspired. You start with a big participatory meeting to figure out how to do it together. And you don't have to do it all the time. You don't have to be a motivational speaker all the time. You have to be able to facilitate that when it's needed. That's part of being able to adapt to the context. As a leader, you must ask yourself, "When is it necessary to do this complex problem-solving?" "How do I do it?" "How do we ensure that everyone is moving in the same direction to get where we want to go?" "How do we allow them to be the agents of change rather than following frameworks that we impose on them?". That's pure leadership.
Marianna: Going back to the idea that every founder wants their business to be financially rewarding and successful, it's no surprise that the finance team and teams that deliver value have this power to help founders achieve their goals and dreams. Does the leader need to balance this power in his organizational system between financial goals and those who deliver value?
Richard: This is the second part of the role I wanted to tell you about understanding and using power. We really need to look at power and reputation within the system. I call it reputation, but I really mean power, and the reason I tend to call it that is because people in leadership right now don't want to talk about power. They think power is a dirty word. That is one of the problems I have with mainstream leadership.
Historically, there are two ways of thinking about power: one is Anglo-Saxon or English, and the other is German. In the English model, it's "power over" a system or power over a person. It sounds like, "I make you do things because I'm above you in a system, and you can't do much about it. I'm in control. I can make you do anything. Again, we're looking at managerial power. In the German model, it's the "power to": the power to create, to build, to ideate, to develop, and so on. It's a power to create momentum and connection in a system.
Then there's an American version of that, which is "power with," in other words, how to share your power with the people you're working with to create an enabling change within the organization. So, one of the dilemmas for founders is that they start with power over the whole system. There are very few people there, so they feel like they also have the power. But as soon as there are people beyond their consciousness, they feel like, "I don't know this person. I don't trust this person." They feel like they can't use power to empower anymore, so they shift to using power over people, structures, and systems rather than trying to create a power to or power with a bunch of interactions and actions within the organization.
Ultimately, what the literature says is that the best leaders have a need for power. If you think it's about you and your personal accomplishments, you're a terrible leader. What you really need is a sophisticated understanding of power. That you have the power to make a difference, to change things, to enable the system, to do good work, etc. Then, you also have to go into the behavioral stuff, inhibiting extreme behaviors like overly positive behaviors as well as negative behaviors. So, you have to create this environment of appropriate behavior.
The third thing is reputational behavior. So, you break down reputation behaviors into how you lead within a system. You've got drivers and derailers within that system. So, if you're driving the system, you can create momentum through performance, conscientiousness, innovation, and all of those behaviors. And you can connect people and create a connective momentum in the system.
What derails it is that you are dominating or you are deferring. Dominating would sound like, "I'm the boss, I'm in charge, and you have to do what I say." So we go right back to fear and power. Deferring is, "Here are the rules. What does everyone else think?" So, if you're deferring and dominating, you're not leading very well. However, if you're focused on creating momentum in a system or creating connection in a system, ideally both, then you're leading well.
Marianna: Do you have any favorite leadership books, podcasts, or blogs you recommend to our readers?
Richard: One book I'd recommend is "Leadership: A Very Short Introduction" by Keith Grint. It's super short, but it talks about leadership in a way that I haven't seen in any other book. He's a really deep writer and thinker, and he's made it into something that's really powerful. He goes through how we have thought about leadership for the last 100 years and how you can apply that to your own leadership role. It's a book that I go back to on a regular basis.
Marianna: Thank you, Richard. If we summarize the conclusion for this COVID aftermath leadership conversation, we could recommend a few simple yet crucially essential actions to be in the focus of the leaders and managers:
monitor the emotional vibe of your teams, especially remote ones
create a safe space for human-to-human conversations, and talk to your teams about their energy level even if everyone is extremely busy
try to find simple solutions that work for your people and make your team’s eyes shine instead of multiple motivational speeches
celebrate wins, big and small ones, and let people see that you recognize their input to the business result