Aligning Leadership Style With Organizational Type

Different business “types” require different leadership styles. Three of the most common classifications and the corresponding management styles are:

Craft Firms, which are typically started by a person that is skilled at a certain craft; the business depends on that individual being personally involved in creating a product or providing services to customers.

Owners of craft firms can make nice livings doing something they love to do, usually with moderate growth. The owner tends to work more in the business rather than on it.

Promotion Firms, which are generally known for high-growth centered on a product or service with a competitive advantage. These firms are usually started by the stereotypical entrepreneur who has started other businesses and who has high growth goals and vision; possibly “the person good at starting a business but not the best person to run the business.”

To be successful as other firms enter the market, these companies need to become administrative, which many times requires the entrepreneur to hire professional management and take a lesser role.

Administration Firms, which are characterized by professional management that spends its time working on the business.

These leaders spend their time planning and budgeting rather than being directly involved in the day-to-day activities. These companies will likely have formal procedures, processes, and job descriptions, and will focus on product and process improvement, and growth.