10 Differences Between Corporate and Entrepreneurial Leadership
Ten Young Entrepreneur Council (YEC) members, successful founders and executives under 40, explain the differences between corporate leadership and entrepreneurial leadership.
1. One Requires Strong Leadership and Delegation
As your business grows, more of the day-to-day decisions of the business will escape your personal scope. That is a key difference that founders need to recognize and adapt to. Eventually, leaders will have to empower others to make decisions on aspects of the company. It’s critical to make strong hires in these areas and delegate responsibilities to these individuals.
2. They Have Different Layers
Corporate leaders have the ability to rely on policy and traditional procedures, while entrepreneurs are more likely to think on their feet. Entrepreneurs have to run a tight environment, but this also allows employees to work more closely with their leader, unlike a corporate environment in which management and leadership are more layered.
3. Entrepreneurial Leaders Have Nowhere to Hide
Smaller “entrepreneurial” firms have fewer rules documented, an absence of politics, and the world to gain. It’s all I’ve ever led, but I love it, because when I hire someone, I know that I’m not letting their talent go to waste. I’m going to work with them one on one, and if they’ve got a genuine skill, vision, and hustle, it’s so much easier to attribute and reward that at that smaller scale.
4. One is Earned, the Other is Caught
Leadership is an infectious disease that’s passed from the hopelessly afflicted founder to everyone on the team. Unlike a corporate leader, no one gave the founder a position. Founders build their position beneath their feet, which is something that everyone is capable of, regardless of their location on the corporate ladder. The difference with these two leadership environments: one is bestowed, the other embodied.
5. Entrepreneurial Leadership Involves Guidance
Corporate leadership follows strict rules, regulations, and specific strategies of leadership that initially involves climbing a ladder to reach a position you potentially want. With entrepreneurial leadership, it’s about guidance and utilizing the position you are in to play the role of a mentor.
6. There’s a Lack of Red Tape for Entrepreneurs
Corporate leadership is a “closed door” type approach, where any answer needs to get approved by a human relations office that is 1,000 miles away. Entrepreneurial leadership is “open door,” where any question is answered instantly and the actual decision maker is right there next to you and in the mix of things, day in and day out. All for one and one for all, without the sticky red tape saga.
7. Failure is Either Avoided or Embraced
Successful leadership is one that focuses on the shared goals of a company while understanding its tolerance of risk. To run a corporate group, steadiness, avoidance of failures, respect of the political structure, and a conservative mindset are required. This would doom an entrepreneur, who must leverage iterative building models, embrace didactic failure, and eschew tradition.
8. Entrepreneurial Leaders Can Adapt
Corporate leadership is held back by bureaucratic inefficiency and a need to appeal to shareholders or other leadership, which slows down the decision-making process. This results in slower adaptation to changing market conditions and demands. Entrepreneurial leadership can allow leaders to be quicker on their feet and adapt more immediately to changes in the market and take advantage of short-lived trends.
9. Corporate Leadership Lacks Creativity
First off, what is sometimes lacking in corporations is an entrepreneurial spirit. Apple, for example, is a company that does embrace entrepreneurial efforts — the willingness to invent, create and even to make mistakes (albeit privately). Corporate leadership is patently the opposite of that — the McDonald’s mindset. Stamp out a product that sells and keep going.
10. Reaction and Engagement are Faster
With entrepreneurial leadership, you’re able to react and engage faster. Corporate leadership usually has the embedded mindset that focuses more on risk minimization and following a precise process or system that may restrict potential.