In a dynamic ecosystem like a startup environment, leadership is a crucial factor in determining the direction and success of the company. Leaders must carefully consider how to manage their teams and apply a leadership style that fits the company’s conditions. In this first article of a three-part series, Skystar Capital will discuss two out of six types of leadership.

Being a leader is not an easy task. Each leader has unique characteristics, leading to various leadership styles. This concept was pioneered by Daniel Goleman, a psychologist and author of “Emotional Intelligence” (1995). According to him, these six leadership styles significantly impact the company climate and team performance (Soetirto et al., 2023). Furthermore, Akpanekong (2023) revealed that a leader’s style can influence a startup’s performance.

Two leadership styles often discussed are coercive leadership and authoritative leadership. While both involve the use of power, their approaches and impacts on company culture and team performance can be very different. Authoritative leadership, which is often seen as providing clear direction while allowing room for creativity, contrasts sharply with coercive leadership, which tends to be more demanding and only follows the leader’s directives.

Coercive Leadership: Strict Control for Quick Results

What is Coercive Leadership?
Coercive leadership is characterized by strict control and rigid supervision, where leaders rely on threats, coercion, or punishment to manage their team members. Consequently, this approach results in minimal team member involvement and input.

Why is This Leadership Style Controversial?
Given its characteristics, this leadership style is often avoided by modern workers, particularly 71% of Gen Z, who are highly aware of labor issues and mental health. According to Witte (2024), the majority of young workers prefer leaders who enable them to contribute actively and take on leadership roles within their positions. This approach offers valuable learning experiences and recognition, fostering their career development. As a result, most startup leaders seldom employ this leadership style for extended periods.

When is Coercive Leadership Necessary?
It is not entirely accurate to dismiss coercive leadership as ineffective. According to research by Landa and Tyson (2017), there are instances where decisive authority is crucial. In the fast-paced and dynamic startup environment, coercive leaders ensure adherence to established procedures and standards. Startups often encounter unstable periods, such as financial uncertainties, pandemics, or rapid market changes, where this leadership style can be essential for maintaining order and achieving immediate results.

Juvenco Pelupessy, Principal at Skystar Capital shared his experience “As an ex-founder, every effective leadership requires agility and the ability to adapt to each unique situation. I’ve been in a situation where my startup was in a big crisis. I had to implement coercive leadership to ensure everyone was moving in the same, and hopefully, the right direction.”

“At the end of the day, this experience taught me that leadership is not just about directing but also empowering and inspiring others to grow and develop.”

Authoritative Leadership: Inspiring Through Vision and Direction

What is Authoritative Leadership?
Authoritative leadership is a style that provides clear direction while allowing room for creativity and innovation. Visionary authoritative leaders inspire and motivate their teams to achieve common goals.

Why is This Style Considered Effective?
Research by Goleman (2000) indicates that authoritative leadership has the highest positive impact compared to other styles, as evidenced by strong performance metrics, innovation, and team satisfaction. This leadership style is particularly effective in situations where clear vision and inspiration are needed to guide the team. Authoritative leaders set the end goals and give team members the freedom to determine the best way to achieve them. Each team member feels empowered to take risks, a quality highly appreciated by younger generations like Gen Z, who value autonomy and the opportunity to make significant contributions. The result is a direct correlation between individual growth, loyalty, and the achievement of company goals.

Geraldine Oetama, Partner at Skystar Capital, highlights the positive impact of this leadership style in achieving the vision of high-risk startups, stating, “Authoritative leadership encourages all team members to achieve a unified vision. Even when facing failures, an authoritative leader will evaluate various factors to ensure or minimize the risk of repeating the same mistakes.”

“This type of leadership is collaborative, non-imposing, and proactive.”

Despite its positive impact, authoritative leadership also has its challenges. Harvard Business School (2019) notes that while team members are given the freedom to create, leaders must also firmly enforce boundaries. This can be particularly challenging for example when young leaders manage older colleagues. Additionally, when team innovations fail to meet expectations, the leader bears a significant burden. Nevertheless, this is the task of a true leader.

In future articles, we will explore additional leadership styles and their effects on startups, providing insights into which styles may best suit different company environments and situations. Stay tuned for our next installment where we delve deeper into the nuances of each style and their practical applications.

At Skystar Capital, we aim to support leaders–with their unique characteristics–who want to contribute as growth catalysts. By leveraging our extensive network across various sectors–including media, financial services, healthcare, hospitality, and education–we are ready to create a positive impact to help empower startups and facilitate their growth.

Ready to take your startup to the next level? Submit your proposal here or start a conversation with us at contact@skystarcapital.com!

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