Leaders are failing at avoidable business mistakes. Research shows there’s a striking disconnect between the general population of leaders and those they’re entrusted with directing. Gallup’s State of the American Manager revealed only “18% of those currently in management roles demonstrate a high level of talent for managing others.” How much is this business blunder costing companies?
In a study published in Harvard Business Review on 83 executives, business school professors and consultants Tanya Menon and Leigh Thompson found, “In the course of a day, the executives estimated wasting an average of $7,227.07 per line item per day, for a total of $144,541.30 per day, summing each of the twenty points of waste. That’s an astounding $52,757,574 of lost value and potential per year per organization on people problems.” When you consider how much money is wasted due to problems caused by leadership mistakes, it’s no wonder the U.S. Small Business Administration (SBA) cites that half of entrepreneurs fail before their fifth year of business.
When looking at poor leadership, these are the top three business mistakes entrepreneurs, executives and managers must acknowledge. This article helps leaders avoid these errors in order to create thriving organizations people love to be part of.
Playing a Finite Game
According to leadership expert Simon Sinek, outdated business theories and management styles created from the 1970s to 1990s, negatively affect today’s companies and their people. In his book, The Infinite Game, he argues that business is an infinite game. There’s no winner, despite the language and methods still used in most workplace environments.
Sinek explains the way we play the game of business is a paradox. Although we treat business like it’s a finite game with a clear winner, “There’s definitely no such thing as winning business . . . It doesn’t exist because there’s no end. There is no finish line,” he tells Inc.com during an interview on the purpose of his book. “If we listen to the language of most leaders, they talk about being the best, being number one and beating their competition,” he continues.
The challenge facing entrepreneurs or company leaders is changing a long-standing belief. Meeting arbitrary projections or completion dates doesn’t equate to “winning.” This dated mindset is indeed a business mistake because it damages relationships between employers and their teams. Furthermore, it affects the business and its capabilities.
Leading Infinitely
In order to progress and advance, Sinek says leaders must avoid this business mistake by changing their perception of business as a finite game. Instead, he suggests focusing on building trusting teams. Leading infinitely means guiding the company with a broader purpose that people will work sacrificially to achieve. In addition, he says leaders must be supportive, create value, and develop an environment where the team feels free to express themselves.
Sinek also advises a shift in the language used by leaders. He believes people should have a sense of progress and achievement, but phrases like “being the best” or “beating out the competition” aren’t constructive. A typical small business mistake is being overly fierce or harsh in its attitude toward competitors, rather businesses large and small need to recognize the competition’s strengths. This helps reveal your company’s strengths and weaknesses, rather than focusing on the short game of beating someone out.
While traditional forms of success measurability become more challenging, Sinek argues businesses playing infinite games are much more productive and innovative. Employees are happier. They’re also more fulfilled knowing they serve a larger purpose that will positively impact the lives of others.
Creating Strategy Without Mission, Vision, and Purpose
A study conducted by Achievers shows 71 percent of people don’t know their company’s mission, while 68 percent aren’t motivated by it. Primarily, this proves there’s an extreme disconnect between purpose, vision, and mission, and the work being completed by employees. This is a major indication that organizations aren’t leading with meaningful missions their people can believe in.
Letting purpose guide strategy positively affects both you, your employees, and your customers. Research from the 2019 Porter Novelli/Cone Purpose Biometrics Study found 79% of people felt a deeper bond to companies with “similar values to their own.” On the employee front, a study from Imperative and LinkedIn’s Global Report on Purpose at Work concluded purpose-oriented people are more satisfied in their jobs.
Becoming a Mission-Based Leader
Mission needs to guide the company so people feel their work is valuable and directed toward a specific cause. This is called “mission-based management,” it should guide business decisions like product or service creation for example. “Mission-based leaders elicit perspiration through inspiration; because they first connect to the beliefs of others, they craft goals and challenges that are meaningful. That is what creates the life satisfaction above and beyond happiness and positive mood…leadership is suffused with the sense that ‘we are doing something important,’” writes Dr. Brett Steenbarger, a professor and performance coach, in an article for Forbes on the pitfalls entrepreneurs, small business owners, and managers encounter when organizations are misaligned in their purpose.
True purpose-driven leaders focus company goals and efforts on why the business exists. They develop and implement objectives and targets that line up actions with the organization’s mission statement and guiding vision. Through their leadership and direction, they “serve a purpose” and help business avoid a costly mistake.
Treating Failure as a “Bad” Thing
Perfection is an illusion. People make mistakes, they fail, they have bad days. As a leader, your team needs to know how to rise when they fall so they don’t suffer from the fear of failure. Yet, the rise of perfectionism is only getting worse. A study from the American Psychological Association analyzing research conducted from the late 1980s to 2016, observed a 10 percent increase in self-oriented perfectionism, or the “irrational desire to be perfect.” Researchers Thomas Curran and Andrew Hill cite young people “striving for high achievement standards and the attainment of perfection are actively encouraged and rewarded,” which causes them to want to “demonstrate their merit, set increasingly higher and unrealistic goals, and come to define themselves in the strict and narrow terms of personal achievement.”
The pressure to look like you have it all together all the time is crushing for people. Pretending that perfection is constantly expected isn’t only bad for your mental health, it’s a business mistake that affects every employee. In the foreword of Kristen Hadeed’s Permission to Screw Up, Simon Sinek writes, “In business, the cost [of perfection] is performance, innovation, and stability.”
Letting Go of the Image of Perfectionism
Hadeed explains when she was starting a business, she knew nothing about leadership. Her company sprung up quickly and without serious intent. A startup mistake all too common among growing new businesses. Being a leader is a learning process. People learn from experience because they want to learn. Making mistakes is a part of it. By giving yourself permission to fail, you show others it’s okay. It shouldn’t make or break you as a person.
As IBM’s Thomas J. Watson, once said, “The fastest way to succeed is to double your failure rate.” When you give people room to learn from their mistakes, you build a fearless, strong, innovative team. Supporting others with empathy creates a safe place for failure and makes individuals more comfortable with setting higher goals. Eliminating the image of perfectionism works against the mainstream system by eradicating humiliation or shame associated with imperfection. In other words, great leaders construct where others deconstruct.
Poor Leadership is Costing You
Leadership mistakes are business mistakes because a company is its people. Employees and customers notice when the business starts trading humanity for numbers. Instead, leaders must aim to always serve a purpose. Employees disengage when they feel their only purpose is meeting metrics set by higher-ups. Misaligning strategy with the organization’s purpose loses the “why” of the business.
Effective leaders don’t play into false images and standards. Instead, they create honesty and build trust within a company. “In many cases, the qualities that organizations actually select for and reward in most workplaces—ambition, perfectionism, competitiveness—are precisely the ones that are unlikely to produce leaders who are good for employees or for long-term organizational performance,” says leadership strategist Rasmus Hougaard for Forbes.
Poor leadership isn’t just hurting business owners’ pockets. It’s hurting their people. When entrepreneurs, executives, and managers work toward playing an infinite game, connect purpose to strategy, and make room for mistakes and failure, they begin avoiding the top business mistakes.
Interested in learning more about increasing your effectiveness as a leader? Check out these articles:
Servant Leadership: The Ultimate Key To A Healthy Business
Leadership Styles: Learn the 7 Different Management Types
