Technical excellence, closing many deals, or working around the clock do not define a good leader. After auditing over a hundred companies, we’ve noticed two non-technical challenges that regularly occur in growing startups: egos and a lack of self-awareness. When these traits are found, mainly within the leadership or C-level positions, they severely damage a team's performance, culture, and morale.

When your business or startup grows, investments are secured, or when more users are finding their way to your product, many founders do not realize these characteristics make them lead with fear. 

In this article, we draw some conclusions from our experiences working as fractional CTOs. We’ll discuss the effects and challenges that arise from big egos, fear, and lack of self-awareness and offer strategies to deal with them. Because quite possibly, your startup is very much at risk without you even noticing it. 

Leading with fear 

Let’s talk about the stick instead of the carrot. This is a leadership style where leaders use threats and intimidation (the stick) to keep their team anxious and compliant rather than using positive reinforcement (the carrot) to inspire and motivate them. 

This approach creates a toxic work environment where employees focus more on avoiding punishment rather than pushing for excellence or innovation. It does take autonomy and ownership away from your team. Your employees are working to keep their own jobs instead of working for your customers. This may seem like semantics, but there are subtle differences.

When working to keep your job, you (solely) do what will keep your boss happy. Your employees make choices and decisions to minimize personal downside and failure. They are focused on themselves, acting defensively, and are afraid to make mistakes. The team’s focus is on job retention rather than innovation or customer satisfaction. 

When working for the customer, your people work for the betterment of the users who buy your product/service. They’re making choices and decisions to maximize the benefits your customers receive. Your team's focus goes entirely to the customer, acting offensively and making risk based decisions that maximize their output.

This fear-based leadership approach discourages creativity and leads to defensive behavior, which, in turn, reduces overall productivity. It eventually harms the company’s relationship with its customers. Leadership then (justifiably) picks up on this to add to their frustrations towards the team, validating their initial negative thoughts. However, the root cause of the issue is the leadership’s behavior itself.

To break this vicious circle, leaders should adopt a more positive and human approach, emphasizing support and encouragement. They should invest in company culture, creating a safe environment where mistakes are seen as learning opportunities (Create space, improve psychological safety). They must set time aside to mentor, coach, and guide their team. This results in significantly enhanced team morale and productivity. And yes, we know that breaking this vicious cycle is extremely hard for leaders as they constantly need to deal with outside pressure, financial burdens, or future investments that dictate calendars and stress levels. 

Blaming

Blaming or blaming with fear is another harmful habit that comes from a fear-driven leadership style. Publicly shaming your team members creates a culture of embarrassment, defensiveness, and fear. This leadership approach leads to a toxic workplace where employees focus more on avoiding blame than achieving excellence. 

People who lead with fear use blame as a tool. Effective leaders understand the importance of accountability without resorting to blame. They should create a culture of shared responsibility and learning, where making mistakes is viewed constructively and used as opportunities for growth. 

Again, salvation lies in creating a no-blame culture. How? Free up time and install regular one-on-ones, structured feedback moments with peers and managers, (financially) invest in your people, and host well-prepared weekly status meetings. Keeping blame outside your company will keep frustration under wraps. 

Not listening to their team

Leaders have a broader context than the people they lead. However, the people they lead have a deeper context of the specialty they work within. A common pitfall for leaders, especially those transitioning from individual contributor roles, is the failure to listen to their team. These leaders might mistakenly believe that they need to be the smartest person in the room, disregarding the specialized knowledge of their team members.

A strong leader listens to (and acts upon) feedback from their people. They understand the specialty context and feedback that they have. Great leaders recognize that their role is to make informed strategic decisions, not to have all the answers. They understand they need to let go and trust their people. They actively seek input from diverse perspectives. This inclusive approach empowers team members' decision-making and turns your business into a collaborative and innovative work environment.

When we coach new leaders into their new roles, we focus on helping them realize that they are not required to be experts in everything. Their job is to make strategic decisions, and to do so; they need the best information available. The people they are leading should be their primary source of specialist information.

Expressing opinions as fact

Let’s assume that leaders are experts in their roles, then this happens:

  • Visionary leaders often possess strong opinions shaped by their expertise. 
  • This expertise results in (extreme) individual confidence. 
  • This confidence tends to present opinions as unchallengeable facts, not leaving room for dialogue. 
  • When framed as facts, opinions become fixed and hard to change, even with new information or perspectives.

By a leader’s definition, truths can't be challenged: the truth doesn’t change. It’s dangerous to express opinions as facts. Don’t forget that facts can never change. 

Encouraging open discussions where opinions are clearly distinguished from facts leaves the door open for opinions to change and enhances the team's collective intelligence. Facts should be backed up with numbers, metrics and evaluation. Opinions should be backed by listening, setting aside ego, and being open to change.

An example? When talking about re-writing software or starting from scratch, we often state that doing the latter is a no-go. Even though we claim this statement partly for marketing purposes, when doing so, we’re confusing facts with opinions. 

There is a difference between the following:

  • You should never re-write a code base from scratch
  • Based on our experience, we believe you should never re-write a code base from scratch

The first is a fact, and the second is an opinion. The first is set in stone, and the second is written in pencil. The first is final, and the second can evolve with new learning.

Conclusion

Leadership is as much about managing people as it is about guiding projects. Egos and a lack of self-awareness greatly affect the leader's status. Leading with fear, blaming, and not listening to team members are common threats to your startup's success. 

Leaders must create a culture of openness, accountability, and continuous learning. Setting aside your ego will always lead to success.