Power, then, comes with a cost. And for startup leaders, both the benefits and costs are amped up. The unique hot-house, tight-knit focused environment of a startup exposes their leaders to the effects of power more than in any other type of business. And while this can reinforce and amplify their entrepreneurial instincts, it also lays traps for them and increases their risks of failure.

What power does

Power can be a great enabler. It increases confidence and determination, making leaders more likely to follow their instincts and persist in the face of challenges. And it focuses them on goals and opportunities, making them quicker to take action and more likely to take risks.

Yet power can also make some things harder. It creates distance between leaders and the people they lead. This makes it easier for leaders to take a helicopter view, see things abstractly and ignore distractions. But the other side of this is that they can become less sensitive to contextual information, less able to hear others’ opinions, and more susceptible to subjective biases. So, while power makes us more likely to believe in our ideas and opinions, it can also undermine our ability to consider alternative perspectives.

Moreover, the psychological distance involved makes leaders more liable to objectify others and view them as resources, and less able to understand how others’ feel. So, people with power are less likely to notice the impact the have on others and less able to see when others disagree with them.

Why startups amplify power

What makes startups different is that they tend to be more tightly focused communities, with power more centralised in the founders. This increases the effects of power on them, often for the better, reinforcing the tendencies usually found in startup leaders for being single-minded in pursuing opportunities and a greater willingness to take risks to achieve them. And in the early days of a startup, this can be invaluable.

But startup leaders are more likely to have personally selected their teams, and so are more likely to have surrounded themselves with people who mirror their purpose, approach and beliefs. As a result, these teams are less likely to offset the more negative effects of power on startup leaders.

Most importantly, there is less likely to be diversity of opinion, competing agendas, and genuine challenge and debate. And in this environment, it is all too easy for confidence to tip into over-confidence. Indeed, the more power is concentrated in leaders, the more likely they are to feel a sense a superiority. This tends to further increase their vulnerability to becoming blinkered and to not proactively seek out others’ views.

This often takes time to show itself and have an impact, but is one reason why founder leaders are so often replaced after the initial startup period. The two most common issues leading to startup leaders being replaced is the quality of their decision-making and their ability to take people with them. Concentrated power undermines both. And because startup leaders tend to be relatively inexperienced, they often don’t notice what the power of their position is doing to them until it is too late.

This is why startup leaders have to work harder than other type of leader to ensure they have balancing voices around them. This needn’t mean slowing action or reducing useful risk. It just means doubling down on ensuring you are proactive in seeking out alternative views and driving genuine debate. The temptation is always to focus just on the opportunity ahead. But how you get there is critical if you are going to develop from a startup leader to a bigger business CEO.

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