Servant Leadership in a VUCA Environment.
The following document is part of Daniel's studies at Harvard University for his Masters in Organisational Psychology.
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Many of the world's largest and most dominant organisations today were, at some point in their lifecycle, early-stage startups. Companies like Google, Apple, Uber and Airbnb, to name a few, started with their founders' vision of a better future, extremely limited resources and very few employees.
"When we started Airbnb, we couldn't afford to hire designers, so we taught ourselves to design. When we needed furniture, we scoured Craigslist and bought air mattresses and sleeping bags to turn our apartment into a makeshift bed and breakfast" - Brian Chesky, co-founder and CEO of Airbnb (Chesky, 2016).
In such a complex and volatile environment, with very limited resources and processes, it's interesting to see how some of these leaders manage to inspire their employees, who often lack experience and knowledge, to develop and help their organisation grow. This paper argues that servant leaders can effectively lead their early-stage startup organisation to long term success in a VUCA environment.
"A leader initiates, provides the ideas and the structure, and takes the risk of failure along with the chance of success" (Greenleaf 1977). These leaders who are willing to work with their subordinates to see them grow to their full potential will develop a group of future leaders and managers who can lead the organisation to future success.
Startups
Startups are responsible for solving problems and, in the process, disrupting traditional markets, as AirBnb did in the hospitality industry, Amazon in the retail industry, and UBER in the mobility industry. As innovation is essential for economic development and business growth, value creation and competitive advantage (Ramukumba, 2017; Rocha, 2018), startups are a relevant player in wealth creation and progress.
Startups operate in an open context, which can be characterized by rarely developed structures, occasional processes and a flexible, external-oriented culture (Cameron & Quinn, 2005).
For a full characterisation of an early stage startup, it's a company at the beginning of its journey, with no validated product or service to sell to the market, possibly no revenue coming into the company, and the problem-solving hypothesis still in the validation phase, which requires a lot of testing and experimentation but with very limited resources. The size is between 5 and 20 people.
The limited base of resources in terms of financial and human resources is a central characteristic of the liability of smallness (Romanelli, 1989; Ahmadi & Helms, 1997). This liability often results in startups having a flat organization with a small number of hierarchy levels. In most cases, only one management level exists, which is led by the founder-CEO.
Start-ups have different conditions and characteristics than other companies, so the leader, can play an important role in properly developing and training employees, discovering new opportunities and leading the company towards competitiveness.
VUCA environment
Organizations are inserted in a dynamic and turbulent environment (Frynas, Mol, and Mellahi, 2018). Startups operate in a VUCA world, characterised by aspects of volatility, uncertainty, complexity and ambiguity, and need to respond quickly to sudden changes and turbulent environments.
The term VUCA was first introduced in the late 1980s by U.S. Army War College to describe the world after the world after the end of the Cold War. In the business world it first got recognized in the book "Leaders: The strategies for taking charge" (1985) by Warren Bennis and Burt Nanus, the authors introduce the concept of VUCA in the context of leadership and they define VUCA as follows: "VUCA is an acronym for Volatility, Uncertainty, Complexity and Ambiguity - the general conditions of the world that today's leaders must confront." (page 17). The four terms refers to: 1) volatility, refers to the tendency of things to change quickly and unpredicably and it presents a challenge for leaders to predict the future and plan for long-term success; 2) uncertainty, refers to the lack of predictability and the inability to know for sure what will happen next and it can leand to hesitation in the decision-making; 3) complexity, refers to the interconnectedness and interdependence of different factors in an environment. In a complex environment like of the one in a startup, there are multiple and diverse stakeholders, and the relationships and interactions among all of them is difficult to operate; 4) ambiguity, refers to the lack of clairy and presence of multiple interpretations or meaning in an environment. In an ambiguous environment, information may be incomplete or contradictory, and it can be difficult to define whats relevant and true.
Leadership
Every early-stage startup starts with a leader, often the owner of the solution or idea. As the owner of the idea gathers more people to work towards a goal, their leadership skills must be in place if they are to succeed.
Leadership is a complex and multifaceted concept that has been studied by various disciplines, including psychology, sociology, economics and management. From a scientific perspective, Barnard (1938) defines leadership as the ability of a superior to influence the behaviour of subordinates and persuade them to follow a particular course of action.
There are many different theories and models of leadership, each with its own unique perspective on what makes a good leader. Some of the most influential theories of leadership include trait theory, behaviour theory, contingency theory, transformational theory, servant theory and situational theory.
Leaders are not necessarily good leaders, and they can lead to negative outcomes. In the business world, organisations are always striving to identify and promote positive leadership; the behaviour that brings growth and success to the organisation.
Effective leadership is the driving force of any organisation to produce long term success and even more critical today in such a competitive environment. Leaders of corporations, now more so than ever, are struggling to motivate, inspire (Marques, 2010).
Servant leadership
In the book, Turn This Ship Around, L. David Marquet quote defines servant leadership: "Leadership is not about being in charge. It's about taking care of those in charge." (Marquet 2012).
Servant leaders focus on meeting follower needs first and organizational needs are being met as an outcome of satisfied followers being more productive, innovative, and loyal (Irving & Longbotham, 2007; Jaramillo, Grisaffe, Chonko, & Roberts, 2009; van Dierendonck, 2011).
The characteristics or elements of servant leadership were first developed by Greenleaf (1977), when he described some necessary and important attributes for servant leadership style such as persuasion, listening, awareness, stewardship, empathy, commitment to people for growth, conceptualisation, healing, foresight and community building. According to Greenleaf "The servant-leader is servant first….It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead. That person is sharply different from one who is leader first, perhaps because of the need to assuage an unusual power drive or to acquire material possessions. For such it will be a later choice to serve — after leadership is established. The leader-first and the servant first are two extreme types. Between them there are shadings and blends that are part of the infinite variety of human nature."
Following on from Greenleaf's work in raising awareness around servant leadership, Spears (1995) was the first to distinguish 10 characteristics that are commonly cited as the essential elements of servant leadership.
Stone and Russell (2002) establish more items or attributes for servant leadership, He divided these attributes into main characteristics: functional characteristics (honesty, pioneering, vision,trust, modelling, empowerment, service, integrity and appreciation) these characteristics are defined as intrinsic attributes of the servant leadership style, and accompanying characteristics (credibility, stewardship, communication, delegation, competence, visibility, persuasion, encouragement, influence, teaching and listening) complement the functional characteristics. More recently, Ehrhart (2004) suggested that the two main elements or attributes of servant leadership are ethical behaviour and concern for subordinates.
van Dierendonck (2011), servant leadership is comprised of six dimensions: 1) empowering and developing people by fostering a self-confident attitude toward followers and giving them the powerr to recognize and solve organizational problems; 2) humility, which indicates how well a leader puts others' interest first, supporting them, facilitating their performance, and retreating when necessary; 3) authenticity, the ability to express oneself in ways that are compatible with one's inner sentiments and beliefs; 4) interpersonal acceptance, the ability to understand, experience, and recognize the cause of others' sentiments; 5) providing direction through instructions that ensures that followers understand expectations about their roles and obligations; and 6) stewardship, the ability to assume higher responsibilities and serve as role models for others.
Much of the work done in the early days of a startup business is related to testing, failing and learning. It's a constant process of experimentation, and the best leaders rely on their ability to learn and execute at a fast pace. The humility to learn and the ability to model failure in front of their peers is extremely powerful in setting the culture of the company and empowering people to take risks and bounce back from failure.
Transformational leadership, in which the interaction between leader and follower leads both to higher levels of motivation and and morale than they would achieve individually (Bass, 1985), is often compared to servant leadership but on closer analysis there are deep differences between them. The largest difference between these two leadership theories is that servant leadership focuses on humility, authenticity, and interpersonal acceptance, none of which are an explicit element of transformational leadership. More specifically, transformational leaders focus on organizational objectives; they inspire their followers to higher performance for the sake of the organization. Servant-leaders focus more on concern for their followers by creating conditions that enhance followers’ wellbeing and functioning and thereby facilitate the realization of a shared vision; servant-leaders trust followers to do what is necessary for the organization (Stone et al., 2004).
Another point worth mentioning is that servant leadership is also believed to have a positive influence on team effectiveness. Team leadership requires being goal directed, being able to handle different personalities within the group, creating a unified commitment, recognition, and so on (van Dierendonck, 2011).
Trust is a key factor in effective teams and servant leadership has the foundations to create a trustworthy working environment. According to McGee-Cooper and Looper (2001), servant-leaders provide direction by emphasizing the goals of the organization, its role in society, and the separate roles of the employees. A safe psychological climate plays a central role in realizing this. People are well informed about the organizational strategy. An atmosphere is created where there is room to learn yet also to make mistakes.
Servant leadership may come close to what Plato suggested in The Republic as the ultimate form of leadership: leadership that focuses on the good of the whole and those in it (Williamson, 2008).
To quote Phil Jackson, former NBA coach and owner of eleven championship rings: "The strength of the team is each individual member. The strength of the individual is the team".
Discussion
The benefits of Servant Leadership
The servant leadership style has been shown to increase job satisfaction and employee engagement, increases high performance among followers and reduce turnover, creating a positive working environment for a team to prosper.
The outcomes of servant leadership have been shown to: (a) be greater follower commitment and engagement; (b) greater organizational citizenship behavior; and (c) improved organizational outcomes through corporate social responsibility and sustainability (van Dierendonck, 2011).
One study (Latham, 2013a; 2013b) found that CEOs who led successful organisational transformations that resulted in sustained high performance across a comprehensive scorecard demonstrated many servant leadership characteristics, including empowerment, accountability, humility, authenticity (integrity) and interpersonal acceptance, leading to high levels of trust.
van Dierendonck and Nuijten (2011), during the development and validation of their servant leadership survey instrument, discovered that servant leadership dimensions and job satisfaction and organizational commitment were highly correlated.
Conclusion
After reviewing various research and literature on the servant leadership theory, and given that the complex and unpredictable VUCA environment of an early stage startup puts leaders under constant pressure to perform, and with limited resources, most often a lack of experience and people within their own team, it seems reasonable to suggest that a servant leadership style, based on empowering and developing their people, humility to learn and put people's interests first, and providing clear direction, has the potential to produce positive results for the organisation in the long term.
The founder's ability to lead a group of people towards a common goal, working with them individually and empowering them to become their best version, is a very powerful approach to building the leaders who will help him build a long lasting organisation.
The early-stage start-up environment is still a relatively new field of study, and the dynamics of the work require more in-depth analysis, and because it's constantly challenging the status quo, it's a complex area to gather stable information and data. The future of jobs and work environment is closely related to the dynamics of the startup world and further studies should continue to produce more knowledge and theories.
