The world has no lack of stories about the spectacular rise and fall of technology startups. At its height, Adam Neumann’s WeWork was valued at US$47 billion as the then CEO was able to convince investors that they were buying into a “physical, social network.” Its recent listing via a SPAC (special-purpose acquisition company) values it at US$9 billion.
Elizabeth Holmes’ Theranos was also once a darling of venture capitalists. She is now on trial for allegedly making false claims and providing misleading information to investors and patients about Theranos’ technology’s capabilities to detect disease through one drop of blood.
Locally, there was Honestbee, a grocery delivery startup founded in 2015 and had raised US$46 million in funding, including a US$31 million Series A round and a further US$49 million since that Series A.
In 2019, it had to file for creditor protection. One major factor in the company’s woes was the misuse of funds by co-founder Joel Sng.
Founders do not deliberately set out to fail and certainly did not intend to become criminals. Yet, headlines such as these are common. Why?
When founders pitch their business proposition, they typically sell projections, and some may stretch the truths to gain investor confidence.
After all, venture capitalists seek founders who are visionary and can sell the vision and bring about a plan to make the vision come true.
As the funds flow, founders are tempted to steer away from business fundamentals and focus on personal glory.
Also Read: 6 leadership lessons I learned after we raised our seed round
The downfall of the abovementioned companies was the result of fraudulent behaviours or abuse from the top. How then do founders and entrepreneurs keep themselves in check to avoid falling into the temptation of choosing deceit over failure or the “fake-it-till-you-make-it” syndrome?
This is where Stewardship comes in. Stewardship is the mindset and practice of creating value by integrating the needs of stakeholders, society, future generations and the environment.
Steward Leaders bring the stewardship approach to life, who have the genuine desire and persistence to create a collective better future.
From employees to managers, everyone in the organisation must act as steward leaders to create win-win-win prosperity wherein employees, shareholders, and society thrive together. The first step towards Steward Leadership is activating the Stewardship Compass.
I explained the Stewardship Compass in my previous article, Mind the trust gap: How does a company develop consumer trust through data stewardship? As a recap, the compass requires companies to pursue a higher purpose based on four core stewardship values of interdependence, long-term view, ownership mentality and creative resilience.
At its simplest, the principles entail safeguarding an organisation’s future by taking care of the needs of various stakeholders, not just shareholders.
Not only does this approach ensure sustainable long-term growth for the company, but it also prevents failings of corporate behaviour.
Start corporate governance with steward leadership
Institutionalising the organisational purpose based on Stewardship values will help to kickstart good corporate governance and ethical behaviours.
A corporate culture that ensures that everyone in the company steps up as a steward leader is especially critical for startups. Investors demand for go-to-market speed sometimes causes employees to bend the rules.
Intense work pressure could also lead to behavioural lapses. Staff in a startup often face demanding work challenges because they need to develop processes and products from the ground up.
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To ensure that this Steward Leadership culture is entrenched in the company’s operations and business strategies, the Stewardship Compass should be adopted in recruitment and performance management systems and practices.
A high-performing company depends on finding and hiring the right people, then nurturing, developing and rewarding those who exceed their Key Performance Indicators (KPIs).
Thus, KPIs, midpoint reviews, annual appraisals, rewards and compensation should be drafted based on the compass.
For instance, an employee who understands interdependence will be a team player. Those who take a long-term view will strategise and act responsibly because they understand that their actions will sow the seeds of tomorrow.
As everyone in the organisation, from employees to managers, become steward leaders, the company’s human capital will become invaluable, contributing to the company’s success.
However, while every effort should be made to hire employees with Steward Leadership qualities, it is impossible to hit the nail on the head each time.
Should employees demonstrate that they do not commit to the purpose and values of the compass, tough decisions need to be made on time.
Steward leaders need to put in place a long-term plan from the beginning and work to continuously strengthen organisational systems, operations and teams to create sustainable value creation and ensure that they build value in every sense of the word.
While they must have a long-term plan, they must remain nimble enough to course-correct as things change and evolve.
The Southeast Asia startup scene is indeed heating up, with more companies attaining unicorn status. Suppose these startup leaders apply the Stewardship Compass and become genuine Steward Leaders from the get-go. In that case, they will ensure sound corporate governance that will go a long way in supporting their ventures’ resilience and long-term viability.
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