Almost every successful company has or had a dictatorial rule. Of course, they don’t call it that, it would sound ancient (sugar coating has never been a crime). It is a known fact that most people hail democracy. And they cannot be blamed for that as they have been structured that way. Even thinking about a dictatorial setup is considered flawed. But democracy is probably the safest and hence the worst path a company can take, especially startups. It is simply inefficient. You get an opportunity, you’ll discuss about its outcomes and you expect the opportunity to just wait out there counting sheep. Let me tell you something you already know.
The world ain’t all sunshine and rainbows. Someone will stand up and take the opportunity, while you keep ‘discussing’.
The fundamental problem with democratic setup in an orgnization is that it takes a lot of time. And even if the decision-making is faster, you still have a lot to think about. In a democracy, usually, risk-takers are small in number and hence overshadowed by others. So, the company will progress at a safe rate. While that is good for the shareholders, it can be devastating for the company. A democracy does what majority of the people want, instead of what is best for the people.
Having a team of young and smart people who are bubbling with ideas and want to do everything is great, especially for a startup. However, it becomes more important for the head to say “NO” to some very good ideas and concentrate on one important thing, as you don’t have enough resources. Also, it is important to sometimes say “YES” to a risk, because that is the only way your company’s takes the lead. A dictator of a company is actually the owner of the company, much like the owner of a house. When the wiring is wrong he goes ahead and fixes it. He doesn’t wait for the house members to decide whether to fix it or not.
But don’t just believe me, find it out for yourself:
Seven years prior to the launch of iPhone by Apple Inc., the Nokia team came up with a colour touch screen above a single button. In the late 1990s, they also came up with a tablet computer with touchscreen and wireless connection - much like Apple iPad. But consumers never saw either of the devices. Nokia has spent over $40 million on research and development in the last decade - almost four times that by Apple during the same time.
As reported later, the ideas presented to the company were discussed at length, sometimes for nine months. And often, the opportunity had already passed or the company was too busy with something else for the ideas to be implemented. You could argue that the same ideas might not have been taken up by a dictator. Possible. But he/she would not have taken nine months to decide.
When decisions are taken after much consultation, much like a democracy, you cannot hold a single person accountable for the bad decisions. How does it matter? Well, knowing that you won’t be held responsible for your actions tends to make you irresponsible. When you hold people accountable, you effectively teach them to value their work; which is what a dictatorial management does. Moreover, it boosts confidence in cases of good decisions, while in a democracy no one gets such acknowledgement.
What is the relationship between dictatorship and growth? We look for the answer in the world around. John F. Helliwell, an economist at the University of British Columbia, compared economic results for nearly 100 nations from 1960 to 1985. He concluded that there was a slight downdraft for democracies compared with authoritarian regimes. His findings confirmed that over the years that followed, the authoritarian governments, especially the ones which offered its citizens “economic rights”, achieved strong results. The results are valid even now, with a rapid growth observable in dictatorships like China, while a relatively stagnant growth in democracies like India. The same results are valid for startups.
Be a benevolent dictator
We are not asking you to take away your employees basic right, rather become a ‘benevolent’ dictator. Allow people to speak their mind, give opinions and approach anyone they want. Sure enough the company’s concept was yours, but the further progress will come from the people you hire. After all, the least you can do is give those money-eaters a voice. But take the final call yourselves, because only you know the vision you have for the company. There can only be one dictator: The company’s head. Every other person is just an employee, and can be blamed for inaction or appreciated for actions.
A very good example of such a leader is Steve Jobs, considered by many to be the greatest visionary of his time. Steve was a benevolent dictator. In his support, one such incidence: He had decided to only allow Apple-made apps for the AppStore. But after hearing out Tim Cook and other employees, he agreed to open up AppStore to third parties. He, as a dictator, made a decision. And as a benevolent leader, he listened to his employees and accepted his mistake.
Everyone does not matter
The best thing about democracy: Everyone gets an equal say. The worst thing about democracy: Everyone gets an equal say. Let me explain: When a decision is to be made, there are certain people whom you should not consider. For example, when you are deciding for marketing front, you should not ask programmers for their opinion, because they wouldn’t know anything. And vice versa. This is where dictatorial management profits, you needn’t go asking people who don’t have a clue what you are talking about.
Unlike in a democracy, you are not entitled to anything in a dictatorship. If you want a piece of cake, you need to work your ass off for that. There’s so much competition that you would hardly have time to breathe. While many may argue that it would make for a bad work environment, you cannot take away the fact that it is one of the best motivators. Research has shown that productivity increases drastically with increased competition.
Democracy is a system of checks and balances: Every department keeps a tab on other departments. But in a startup there’s no use for that, every department needs to be answerable only to the head of the company. The sooner startups realise it, the better. We can only hope for the best.