Entrepreneurial Leadership by Joel Peterson

Rating: 10/10

Read the original 

A valuable resource for those wanting to start and especially grow a business. What stood out to me the most is how Peterson differentiates “entrepreneurial leaders” from other types of leaders. Entrepreneurial leadership goes beyond being just a leader or just an entrepreneur.

Many people tend to think that it’s too hard or “I’m not cut out for this”. This book, however, is a map that will navigate you and show you how entrepreneurial leadership can really be learned.

My notes:

There are leaders who are great at “lighting fires”, but cannot keep the fires burning. They start the company but cannot make it into something that lasts. There are other leaders who are great at keeping the status quo, but cannot bring innovative change or lead a turnaround when necessary.

This book identifies five types of leadership that are, in one way or another, limited:
  1. The presider - maintains stability, preserves values, and keeps things moving smoothly; but not enough to adapt to a changing environment and bring radical change
  2. The manager - great at managing people, leading teams to deliver results, cutting down complexity
  3. The administrator - great at adhering to rules/policies/processes, “disciplined and efficient but rarely creative or inspirational”; can only succeed in static, stable environments
  4. The pure entrepreneur - great at innovating, creating new ideas, and building new things, but not enough to scale it and take it to the next level; easy to fall into the “founders’ trap”
  5. The politician - great at understanding and using power (“rewarding friends and punishing enemies”), building relationships, getting things done through compromise and mediation

Peterson analogizes an entrepreneurial leader to a “five-tool player” - they either have the skills and characteristics of all five leadership types, which is rare, or they are good at identifying their own weaknesses, then finding people who can fill those gaps and take on complementary roles. 

Entrepreneurial leadership is critical in any setting, not just for startup founders. An example that epitomizes this is Alan Mulally, who led Boeing and Ford, two companies that were founded over a hundred years ago. An entrepreneurial leader, therefore, is not only able to build something new, but also to mold and grow it into a lasting enterprise and leave behind a legacy. Another example is Stanley McCrystal, a four-star general who had led JSOC. McCrystal’s comparison of a real leader to a gardener, who “succeeds by doing the quiet, day-to-day maintenance that creates a nurturing environment in which plants can thrive”, also stuck with me.

Entrepreneurial leaders find joy in inspiring and helping others achieve their goals and realize their potential. They focus on the growth of those around them. They foreground others and background themselves. Drawing on a lifetime of finding, backing, and mentoring exceptional leaders, Peterson lays out a bunch of essential rules and maps that can guide you to become one.

Build trust

Trust is the cornerstone of anything, in work and in life. Trustworthiness should be at the core of your character. It comes in two steps: 1) being a trustworthy and dependable person and 2) building a high-trust culture.

Three crucial qualities of a trustworthy leader: proactivity (the ability to “run towards fire”); integrity (in terms of executing your promises, aligning actions with words); perseverance.

Recognize that you are the master of yourself. You are in full control of who you want to be. Before managing the operating system of an organization, you should first dictate the operating system of your mind. Peterson advises to lay down three simple, personal mantras that you will use to update your OS. For himself, he wrote:

  1. It’s not about me
  2. I am not my emotions
  3. I have all I need

Iterate on your mantras until they become like a muscle reflex.

Building a personal brand is also key - find five attributes that you would want to associate with your persona. All of these are to make you more predictable, and more dependable.

Create a mission

A business needs to have a meaningful purpose and a set of shared values to bring on the right people and drive people in the right direction. It should be exciting and motivating. Otherwise, incentives and values would not be aligned, and the company would not be able to move in unison towards a common goal. There needs to be something that motivates people to see beyond themselves and contribute to the greater good. The mission should be what everyone earnestly wants and cares about.

Then the next step is to “set MAD goals”. Dream big. Be ambitious. Paint a vision, and imagine a future that is exciting to all. Peterson’s “MAD” also stands for Memorable, Alignment, and Doable - three crucial criteria for goal-setting. Everyone should be able to remember the mission and act on it. It’s big, but it’s attainable.

Defining a company culture is also important both internally and externally. You do it by rewarding those who uphold it and punishing those who deviate from it. 

“Consider culture a valuable off-balance-sheet asset that—unlike products or delivery systems—cannot easily be copied by competitors.”

Having a unique, unified culture makes sure everyone is on the same page and driven by the same values. It is also directly related to the company’s branding and image.

Secure a team

“Nothing is more important…than ensuring the right people are on the field in the right positions.” Sourcing and interviewing people is perhaps the most crucial task for the entrepreneurial leader.

There are a few mistakes that you’d want to avoid:
  1. Hiring yourself
  2. Hiring the resume, not the person
  3. Failing to do in-depth interviews
  4. Lazy reference checking
  5. Freezing out your team
  6. Over-relying on internal or external candidates  
  7. Making it all about the money (underpaying and overpaying are equally detrimental)
  8. Not onboarding properly 

This is the same as investing - always know when and how to diversify. There are commonalities (between the new hire and the team) that you want to look for (common values and goals), then there are varieties and differences you want to see too (backgrounds, perspectives, skill sets, personalities, etc.).

“Hire for values consistency, an ability to work well with others, and specific skills—in that order.” 

The type of attitude demonstrated by the leader oftentimes determines whether they are effective or not. “Substance counts, but style does too – style referring not to what they do but how they do it.” Many people believe “nice guys finish last”, but Peterson doesn’t.  For him, five core character traits of entrepreneurial leaders are likeability, gratitude, happiness, humility, and humor.

(most demonstrate qualities on the left)

Deliver results

This is about execution. Your ability to turn your words into actions is directly related to your dependability as a person and as a leader.

This section contains ten golden nuggets (the how-to’s) on getting results - i.e. how to negotiate, how to sell, how to make decisions, how to raise capital, how to run meetings, etc. I would recommend you read them thoroughly. I’m writing down here some ideas that really struck me or are useful to me, but I believe all of them are important and worth remembering.

1. Decision making:
  • “Don’t make important decisions in haste.”
  • “Make good small decisions. Don’t ignore the granular. As an entrepreneurial leader, you need to learn to alternate between flying just above the trees and at thirty thousand feet.”
  • “Go into decisions expecting they will work out.”
  • “Follow your instincts, not your emotions.”
  • “Run the decision through the execution screen.”
  • Most decisions can be fixed.

2. Selling:
  • “Imagine sales as a way to delight others, to solve their problems, to make their lives better—and become adept at it.”
  • “Build and nourish a network without regard to instant returns. Imagine planting trees under which the next generation will sit.”
  • Get over being rejected. Have thick skin.
  • “Consider customer service a form of sales.”

3. Negotiating:
  • “This is but one conversation in a longer narrative.” (be long-term minded, don’t do it at the other side’s cost)
  • “Consider the other side’s interests” (have empathy and respect for the other side). “Describe their needs in a way that satisfies them” (oftentimes it’s about how you frame it)
  • “Aim to create value for all parties” (a win-win situation is better than a win-lose situation)
  • Ask the right questions to get people to tell you what they want/care about the most.
  • “Keep emotions in check.”
  • “Choose counterparties wisely.”
  • “Think of negotiation as a conversation—one in which you’re ‘solving for fair.’ Imagine negotiations as serial, not episodic, and use them to build a brand: a reputation that will follow you for your entire career.”  
  • “Extracting one killer deal can turn out to be costly in the long run.”

4. Raising capital:
  • “Start with personal relationships first and warm introductions second.”
  • “If turned down, ask for a two-minute favor. Ask the investor to explain the rejection—not to try to change anyone’s mind but to learn how to improve.”
  • “Don’t be afraid of raising capital in a downturn… Half of the companies in the Fortune 500 were launched during a recession or bear market, including General Electric, General Motors, IBM, Microsoft, and CNN.”
  • “Plan on being partners for a long time.” (again, long-term mindset) 
  • “Interview potential sources of capital the way you would a new recruit. They bring more than just capital. The best bring ideas, contacts, and support.”
  • “Raise capital before you need it.”

5. Communicating:  
  • “I can be influenced by new information” (always be ready to change your opinion. As the saying goes, strong opinions are weakly held.)
  • “I am genuinely curious” (be radically open-minded, as Ray Dalio says).
  • “Our goal is for the best idea to win.” (be a good listener) - listening “makes you less susceptible to your own ego. When you have a goal that lies beyond you, you are less likely to worry about making yourself look good.”
  • “Balance inquiry with advocacy”
  • “Don’t plow around disappointing news. People are smart. They’ll respect a leader who trusts them with the truth.”

6. Running meetings:
  • Your ability to run meetings is closely tied to your effectiveness as a leader
  • Invite only the right people - “no audience”.
  • Articulate the goals and focus of the meeting right off the bat. Have a clear and lean agenda.
  • Try to always meet at an earlier time
  • Don’t ignore the importance of “atmosphere and logistics” (make sure people can be comfortable and focused at the same time during meetings)
  • Everyone should come prepared (know what the meeting is about in advance) and leave with assignments/follow up items
  • “Consider meetings an opportunity to train others to be on time, to expect to participate, to take on follow-up assignments, and to respect others’ time”
  • “Make meetings fun”
  • “When the outcome of a meeting is to have another meeting, it’s been a lousy meeting”

7. Using a board:
  • First, think about how to build a high-quality board: solve for “fit”.
    • “Remember that a board is a team. Select those who “play well with others,” know how to listen, and have high emotional intelligence or EQ. If you don’t, you’ll be refereeing disputes, soothing egos, and wasting time.”
  • Then think about how to hold the meeting - here, Peterson provides some very detailed rules and practices to follow

8. Overcoming adversity:
  • “Confront reality” (have intellectual honesty - recognize something’s wrong/not working) 
  • “Focus on the core” (the one thing that defines your company’s business - everything else should take a backseat. Be focused)
  • “Extend the runway”
  • “Take action now”

9. Surviving growth:
  • “Growth creates risks” (easily neglected), along with opportunities
  • Careful not to fall into the founder’s trap.
    • “Getting out of the founder’s trap—or beyond the mind-set of the pure entrepreneur—often requires intervention. This is where a wise board can be invaluable. But interventions are dangerous and if not done carefully, sequentially, and with cooperation from the founder, they can trigger premature death.”
  • Always keep a high-trust culture in place where the best idea wins (in other words, always keep a “startup mindset” even as your company grows big - consciously do not let power, bureaucracy, and process take control and smother ideas and the products)
  • Always make sure “you have access to cash”
  • Be able to anticipate all these problems that come with growth - have foresight, act on them early

10. Driving change:
  • Most important job and ability of entrepreneurial leaders at any stage.
  • People naturally fear change. They like to stick to the status quo.
  • Five forces that drive change:
    • Force - rarely work in business settings and rarely have a lasting impact
    • Fear - again, the effect is limited and only lasts temporarily
    • Reward - “compensation is only one way to reward people. Recognition, celebration, and advancement may be less effective in the short run but are more durable in the long run.”
    • Duty - A shared sense of mission tends to make change easier and more enduring. It no longer even feels like change but rather becomes the excitement of winning something that matters.
    • Love - The most potent source of change

A more effective way of driving change is to lead by example - “to show the way rather than simply telling others how to do it.”

In all, Joel Peterson applied decades of experience to provide a practical manual for leaders. Leadership qualities matter. In any types of organizations, leadership may be the differentiating factor between over-performance and mediocrity. This is the book for all aspiring entrepreneurs.