If you’ve perused a bookstore shelf or more likely browsed on Amazon, you’ll notice a surplus of books on leadership styles marketed as “state-of-the-art” or “the best of the best.” But which type of leadership style is effective for your business?
In its most simplistic form, a leader is someone who gets other people to do things. But leadership isn’t defined by a job title—anyone can lead.
There is plenty of research attempting to label leadership styles, like the six styles of leadership outlined by Daniel Goleman, but the best type of leadership style is the one that aligns with your personality and is most effective.
Universal Leadership Principles
Leadership in the business world can look and be executed differently but there are universal principles that every leader must adhere to, no matter the profession or industry.
- Setting the Tone: Whether you’re a CEO speaking at a keynote or a restaurant owner instructing a wait staff, as a leader, you set the tone for your business. How you speak, act, dress, and do your work sets an example for all to see.
- Defining Success: Leaders set the expectations for their teams. For most businesses, this means defining success for your organization and individuals.
- Knowing Your Impact: How people react when you walk into a room is critical to understanding your impact as a leader. Are you a second-generation business owner that everybody in the plant has known since you were in diapers? Are you starting a leadership position in an industry you know little about? Are you leading a team you once were a part of? Knowing your impact will guide your attitude and decision-making.
- Motivating Your Team: Each team is a collection of unique individuals and processes. Understanding your team and how to motivate them will make you successful in your role.
- Delegating: All leaders delegate work—it’s part of the job. But how you delegate will speak volumes about what you value and how you want your team to function.
Types of Leadership Styles
Remember the artist and public television personality Bob Ross? Before each painting, he had a palate of defined oil paint colors. As his painting started to take shape, Ross would mix paint together with his palette knife to create new colors that articulated the vision of the landscape he was creating.
Each business goal is a different painting, whether it’s hitting the next quarterly financial target or building your company culture from scratch. Just like Bob Ross, the below leadership styles will need to be adapted to achieve your goal. Your personality may lean to one style, but understanding all of them and how to utilize them is critical to becoming a well-rounded leader.
1. Authoritarian Leadership
Sometimes referred to as autocratic leadership, this style has a connotation of the toxic work environments recently exposed in tech companies or film studios. These traditional models tend to emerge in startups or organizations defined by a singular figurehead. An authoritarian leader is confident in their decisions and expects every facet of the business to reflect their thought process.
This may seem like a type of leadership style of the past but, if structured correctly, authoritarian leadership allows your team to know exactly what is required of them. There’s also efficiency and clarity when everyone understands who has the final say.
Authoritarian leadership is best utilized for entrepreneurs at the beginning stage of business or industries that require high-pressure decision-making. The problem many authoritarian leaders face is transitioning this style appropriately once the business grows to a point where they can’t be in every meeting.
Benefits of Authoritarian Leadership:
- A clear understanding of business objectives
- Consistent outcomes, language, and expectations across an organization
- The ability to make quick decisions during emergency or time-sensitive situations
Downsides of Authoritarian Leadership:
- Most of the business responsibility is put on the leader’s shoulders
- Lack of accountability for the leader’s behavior and decisions
- Lack of protections for team members
- Lack of diverse ideas and solutions
Examples of Authoritarian Leadership:
- Bill Gates, cofounder of Microsoft
- Roy Halston, American fashion designer
- Lorne Michaels, creator and producer of Saturday Night Live
2. Servant Leadership
In contrast to the authoritarian style, servant leadership is focused on giving back and leading by example. Servant leaders tend to have humble personalities or have come up through the ranks of an organization. This style of leadership suits businesses that are solving complex problems that require patience, commitment, and have a value-based mission statement.
Servant leadership encourages employees to work more efficiently by example and creates a “flat-level” organization where everyone is expected to lead. Servant leadership is best utilized in large organizations, service-based companies, or mid-level management. Many CEOs of stable, long-term companies adhere to this model (although you’ve probably never heard of them because of it).
Benefits of Servant Leadership:
- Creates a culture of unity, transparency, and stability
- Encourages everyone to play a part in the organization’s purpose
- Motivates employees to model behavior across teams
- Customers and partners feel valued and connected to the organization
Downsides of Servant Leadership:
- Difficult to build a strong brand off of the leader’s personality
- Talent retention can be poor because of a lack of growth pathways
- Slow decision making and overcomplication of problems
- The leader’s focus can be easily distracted
Examples of Servant Leadership:
- Jonathan Reckford, CEO of Habitat for Humanity
- Brené Brown, author and professor
- Dan Price, founder and CEO of Gravity Payments
- Tony Dungy, American football coach
3. Laissez-Faire Leadership
Often referred to as the “hands-off” approach, laissez-faire leadership is more than just giving freedom to employees. This type of leadership style believes that employees are the key to success, not the C-suite. Laissez-faire leadership is all about empowering talented individuals and getting out of the way.
Typically, laissez-faire leadership is best utilized in businesses that require expert talent and need innovative solutions to be successful. The best laissez-faire leaders provide resources for their team to get the job done while protecting them from outside influences that may slow them down. This style is typically seen in the technology, investment, media, or startup industries.
Benefits of Laissez-Faire Leadership:
- Empowers employees to think creatively and innovate
- Motivates employees to work for themselves instead of working for a boss
- Cultivates a culture of independence and free-thinking
- Allows for leaders to focus on high-level objectives instead of monitoring employees
Downsides of Laissez-Faire Leadership:
- Can be challenging for individuals that seek gratification from leadership
- Can create confusion and inconsistency with business processes
- Does not work well for employees who require constant direction
- Leaders can appear aloof or lack understanding of the team’s needs
- Projects can easily get off course
Examples of Laissez-Faire Leadership
- Warren Buffett, chairman and CEO of Berkshire Hathaway
- Barack Obama, 44th President of the United States
- Hans Zimmer, film composer
4. Visionary Leadership
In business, no other figures are celebrated as much as visionary leaders. They are the people that see things differently. Visionary leaders have a product, solution, or workflow that changes the way our world works. But to be a visionary leader doesn’t mean you need to revolutionize the assembly line or invent the lightbulb—sometimes being a visionary leader is about seeing the potential of your people and business.
You’ve probably read, listened to, or watched visionary leaders—especially at Foundr—that changed “the game” in a respective field. Visionary leaders tend to offer compelling stories and ideas that inspire others. This style can be utilized in any business but is best suited for startups or companies seeking to be on the cutting edge of their industry.
Benefits of Visionary Leadership:
- Innovative ideas and creative solutions
- Capitalize on being first-to-market or ahead of the competition
- Provides purpose and long-term direction of an organization
- Adds energy and excitement to day-to-day work
Downsides of Visionary Leadership:
- Puts more workload on teams to live up to the vision
- Often can suffer from “shiny object syndrome”
- Can be less focused on the bottom line
- Decisions can be disruptive and controversial
Examples of Visionary Leadership:
- Elon Musk, CEO of Tesla, Inc. and SpaceX
- Richard Branson, founder of Virgin Group
- Jeff Bezos, founder of Amazon
5. Coaching Leadership
American cinema defines the archetypal sporting coach as a person who gives speeches set to inspirational orchestral music. The coaching leadership style isn’t about getting your team hyped for a conference call, it’s about maximizing each individual’s contribution for the betterment of the organization.
Coaching leaders have a deep understanding of what makes their team tick and can replicate winning formulas year after year. This type of leadership style is best suited for middle management, small teams, or consultants. Most startup leaders need to be coaches at some level in order to maximize every ounce of talent. You may not be able to hire an experienced marketing coordinator but “coaching them up” to becoming a marketing manager is what makes this style so valuable.
Benefits of Coaching Leadership:
- Turning weaknesses into strengths
- Identifying growth opportunities
- Developing loyal talent
- Creating and implementing strategies
Downsides of Coaching Leadership:
- The larger the team, the less impact the leader has
- Easily turns into micromanaging
- Takes energy away from high-level strategy
- Can be perceived as picking favorites
Examples of Coaching Leadership:
- Tony Robbins, author and speaker
- Simon Sinek, author and speaker
6. Democratic Leadership
Named after the governmental system, the democratic leadership style is focused on bringing employee voices to the table while creating a unified business framework. Participation leadership is used interchangeably with this style because of the value found from the collective over the individual.
This type of leadership style is most successful when an organization has structures built into place to receive feedback from their teams. This could be achieved through monthly town hall-style meetings, anonymous employee surveys, or daily stand-ups. Organizations in the manufacturing or IT fields might utilize this style of leadership through an organizational process like Lean manufacturing or SAFe agile. Democratic leadership creates a balanced and informed consensus and puts ownership on mid-level management and employees as much as the CEO.
Benefits of Democratic Leadership:
- Creates continuity through systems and processes
- Allows for employee involvement in decisions
- Builds “checks and balances” between departments and team members
- Can be replicated within the organization
Downsides of Democratic Leadership:
- Can cause slow decision making
- Overprocess of tasks and teams
- Can stymie creativity or bold ideas
- Not well suited for fast-paced or quickly evolving industries
Examples of Democratic Leadership:
- Indra Nooyi, former CEO of PepsiCo
- Kiichiro Toyoda, former CEO of Toyota (see The Toyota Way principles)
- Abraham Lincoln, 16th President of the United States
7. Pacesetting Leadership
Just like a runner jumping out to an early start at an Olympic track event, pacesetting leadership is all about pushing ahead while others try to keep up. Also known as trailblazing leadership, this style can create high-achieving teams in any industry. You can describe pacesetting leadership as “the squeaky wheel gets the grease” or “if you’re second, you’re last.” Either way, you can probably spot these leaders in a crowd.
Pacesetting leadership is most common in sales or fundraising organizations, where showing others how to perform is more important than telling. If you’re an entrepreneur, you’ll probably have pacesetting leadership in your skillset or need to develop it. Pacesetting leaders aren’t afraid to ask tough questions, set audacious goals, or be first to say “yes” or “no.”
Benefits of Pacesetting Leadership:
- No goal is too daunting
- High performance is the standard
- Can generate fast growth and expand resources
Downsides of Pacesetting Leadership:
- Not suited for long-term stability
- Can alienate team members that can’t keep up with demands
- Tends to cause conflict internally and externally
Examples of Pacesetting Leadership:
- Grant Cardone, author and speaker
- Jack Welch, former CEO of GE
- Michele Romanow, author and speaker
8. Transformational Leadership
Do you remember when your local Starbucks barista first said “what can I get started for you?” When Chrysler resurrected their brand with a Super Bowl commercial featuring Clint Eastwood? Or when Bumble started becoming a lifestyle app instead of just dating? All these business evolutions came from transformational leadership.
This style is traditionally found in CEO positions of large corporations where they are brought in to transform or save a brand. Silicon Valley giants like Google, Apple, and Uber have transformational leadership built into their DNA. This allows them to stay relevant and adapt to ever-changing technology and societal challenges.
But this doesn’t mean transformational leadership is only for boardrooms or Fortune 500 Companies. Transformational leadership can be utilized in any industry or company that needs a change or is tackling a shift in a market.
Benefits of Transformational Leadership:
- Brings innovative ideas to a traditional or new business
- Can execute complex change within an organization
- Can shift public perception of a brand
- Can lead into the unknown with confidence
Downsides of Transformational Leadership:
- Can initiate costly projects without guaranteed success
- Requires a drastic change in historical personnel or processes
- Can confuse employees or customers if changes aren’t clear
- Executing a transformational vision requires a majority buy-in
Examples of Transformational Leadership:
- Patrick Doyle, former CEO of Domino’s
- Whitney Wolfe Herd, founder and CEO of Bumble
- Marc Benioff, founder and CEO of Salesforce
What Is Your Type of Leadership Style?
Did you just start a company and need to decide your leadership style? Or are you making a critical business decision and finding it difficult to approach? This step-by-step model will help you define what style of leadership to use at a macro level or a case-by-case scenario.
Step 1: Define Yourself
Understanding your personality, motivations, triggers, and skills is the first step in defining how you want to be a leader. Take a personality test like The Enneagram, DISK, or StrengthsFinder to understand who you are and how you deal with positive and negative situations.
Understanding your dominant traits and blind spots will better equip you to lead and work with those around you. If you’re a stellar vision caster but not good at systems work, hire a freelance project manager. If you love working one on one with people but hate public speaking, find a cofounder that thrives in the spotlight.
Step 2: Define Your Goals
By defining your goals, short-term or long-term, you’ll be able to employ a leadership style that best achieves success. Reducing a department for cost savings may take an authoritarian approach while a laissez-faire style is better suited for your next brainstorming session.
Your goals will dictate a necessary type of leadership style, and you probably won’t be able to do it alone.
Step 3: Define Your Team
In order to achieve a goal, you need a team to help you. That could mean a team of 5 part-time contractors or a team of 50 experts in your field. As a leader, knowing the personalities, strengths, and opportunities within your team will help you make effective decisions.
For example, if you recently hired a new marketing director with 15 years of experience, then you can focus your leadership efforts on vision-casting for your company. Or if you have a newly promoted manager in a department, you may have to employ a coaching style to help them get up to speed.
Leadership is all about people. Knowing and understanding your team will be a consistent practice and force you to utilize different styles as your business grows and changes.
Step 4: Refine and Develop
Leadership isn’t static. It’s always changing as you and your business change. We’ve interviewed hundreds of successful founders that have all grown and adapted their type of leadership styles as their businesses and industries have evolved.
Defining your leadership style is just the beginning. Becoming a successful leader takes effort, experience, and the willingness to change.
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