A follow-up to our series on leadership, based on reader feedback
Introduction: When the Playbook Fails
In our previous articles, we explored the foundational mindsets of successful leaders. But a recent piece of feedback hit the nail on the head: “As a founder, my problems aren’t just about strategy, they’re about survival. No playbook prepares you for a global pandemic, an overnight change in consumer behaviour, or a key employee leaving.”
This feedback brings us to the most vital leadership concept for the founder and entrepreneur: Adaptive Leadership. Developed at Harvard by Ronald Heifetz and Marty Linsky, Adaptive Leadership is the practice of mobilising people to tackle tough challenges and thrive. It’s not about the leader having the answers; it’s about helping the organisation, and its people, do the necessary work to change and evolve. For Stewart & Smith, this means empowering founders to lead the change they need, rather than being crushed by it.
Technical vs. Adaptive: The Founder’s Critical Diagnosis
The core of Adaptive Leadership is correctly diagnosing the challenge. This is where most overwhelmed founders get stuck.
1. The Technical Trap
A Technical Challenge is a problem with a known solution. You hand it off to an expert.
- Example: A slow website (Solution: Hire a web developer to improve code). A simple budgeting error (Solution: Get an accountant to reconcile the books).
- Founder Mistake: Treating an adaptive issue with a technical fix. (“If I just hire a new Head of Sales, all our internal culture problems will disappear.”)
2. The Adaptive Reality
An Adaptive Challenge is a problem that requires new learning, shifts in core values, beliefs, or behaviours across the organization. The solution doesn’t exist yet, and the people must become the solution.
- Example: The market pivoting to a subscription model when your business is built on one-off sales. The conflict between your old, proven team members and the new digital talent.
- Founder Reality: This is where the real stress of entrepreneurship lies. It demands change from the founder and the entire team, not just a new piece of software.
Where Adaptive Leadership Solves the SMB Pain Points
Adaptive leadership principles are a perfect antidote to the most common pain points experienced by small-to-medium business (SMB) founders and entrepreneurs:
1. Pain Point: Cash Flow and Financial Strain
SMBs are constantly in financial flux. When a major client fails to pay, or a supply chain issue doubles costs, it’s not a technical accounting problem; it’s an adaptive challenge requiring the team to shift behaviours.
- Adaptive Fix: Instead of micromanaging invoices (technical fix), the founder gives the work back to the people by holding a cross-functional meeting (Sales, Operations, Finance) to collectively redesign the client engagement process, from deposit structures to payment terms, shifting the culture toward shared financial responsibility.
2. Pain Point: Talent Acquisition and Retention
Attracting and keeping top talent is difficult, especially when you can’t compete with corporate salaries.
- Adaptive Fix: This is an adaptive problem of culture and identity. An adaptive founder doesn’t just offer better benefits (technical fix); they protect voices from below. They seek out feedback on why people leave, give employees genuine autonomy and ownership, and allow the team to shape the company’s future. This shifts the value proposition from ‘salary’ to ‘impact,’ which attracts high-calibre, mission-driven talent.
3. Pain Point: Scaling and Systemisation
The transition from a ‘founder-centric’ start-up to a structured, scalable business is often painful, as the founder must let go of control.
- Adaptive Fix: The leader must “go to the balcony” and observe that their own tendency to jump into every decision is the bottleneck. The adaptive work is changing the founder’s own behaviour. They then regulate distress by introducing new systems gradually and communicating the purpose (saving time for innovation) rather than just the procedure (new CRM), managing the anxiety that comes with losing the old, familiar ways of working.
4. Pain Point: Market Disruption and Pivots
Technology, competitors, and economic shifts require the business to change its core offering.
- Adaptive Fix: The founder must maintain disciplined attention on the hard truth. If the old product is dying, the leader cannot allow the team to avoid the reality with comfort food projects. They create a safe, temporary space for experimentation and failure, framing the market pivot not as a crisis of failure, but as a necessary step in the company’s evolution.
The Adaptive Leader’s Action Plan
For the SMB founder, applying Adaptive Leadership is an ongoing discipline, not a one-time fix.
- Stop Doing, Start Diagnosing: Before reacting, ask: Is this a technical problem (known solution, can delegate) or an adaptive problem (requires new learning, needs collective effort)?
- Mobilise, Don’t Solve: For adaptive challenges, step back. Articulate the problem clearly, create a safe container for dialogue, and involve the people who are impacted to find the solution.
- Use the Heat: Manage the anxiety of change carefully. Don’t let your team coast in comfort, but don’t let them panic. Keep the challenge in the “productive zone of disequilibrium” to encourage innovation.
The adaptive founder recognizes that in a fast-moving market, the capacity of the people to change is the only sustainable competitive advantage. This approach transforms a founder from a stressed chief problem-solver into a strategic chief mobiliser, securing both the business’s future and their own sanity.
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