In the turbulent life of a start-up, we observe that very often nobody cares for leadership. How should one? Everybody is fully absorbed with making the innovation work, marketing the products and services, negotiating with customers and suppliers, adapting strategies, technologies and processes to feedback from the markets, etc. The team is small; resources, time and money are extremely limited. It appears to be about surviving and winning in the tough business world and not about developing leadership capabilities.

On the other hand, every man and woman’s engagement, dedication and inspiration is required to make the venture a success. Exactly because of the small crew size and limited resources, because of the uncertainty and complexity of building up a new business, people on board must collaborate to leverage their own and others’ strengths and ideas, be action-oriented and take initiative, but also stay in alignment with the overall objectives that everybody must support. That means start-ups do need leadership – they need leadership that generates leadership among the whole team.

So how can you develop the leadership capabilities of your organization, considering the fact that you do not have a sophisticated HR department and huge budgets for executive education programs? The good news is that development takes place to a large extent on the job, but only – and this is the critical message here – if the management cares about it and offers the time and space for development.

The very first step is to not only ask “What are my people good at?” but also to honestly deal with the question: “And how can they grow further?” Performance is both about selecting the right people and presenting them with challenging tasks. People perform according to our expectations.

The next step is empowering your people. Empowerment means that the decision-making is distributed across the organization and that everybody is encouraged to come up with and implement innovative ways of problem solving and value creation. This more inclusive and collaborative approach not only enables every employee to expand his or her own capabilities but also helps to win the commitment of every team member as a driver of company success.

Developing leadership capabilities, however, means more than building the skills and capabilities just of individuals. The IBM Global CEO survey of 2006 states that “breakthrough business performance will be achieved by harnessing collective knowledge and fostering interaction across globally connected communities of employees, customers and partners.” The success of organizations lies not in any single individual so much as in the collective social process. As Peter Drucker put it: “In the traditional organization – the organization of the last one hundred years – the skeleton or internal structure was a combination of rank and power. In the emerging organizations, it has to be mutual understanding and responsibility.”

So, developing leadership capabilities means enabling social interaction within the company, guided by a shared vision and fostered by trust. The main idea here is not for people to be nice to one another and to suppress challenges or problems. Leadership must shape a communication style – based on friendliness and respect, of course – that enables people to advocate their views and yet invites confrontation; and that also helps people explore both work- and relationship-related problems without fear while also responding to the anxieties of the team.

Feedback is an important part of this kind of communication. It sounds easy, but what often happens – particularly in a chummy and upbeat start-up environment – is that people provide incomplete and distorted feedback in order not to upset others; each knows that this is the case and nobody dares to change the game. Effective feedback is not only open and honest; it also incorporates time and space for reflection to make sense of successes and failures. Research shows that, caught in an experience trap, managers repeat the same mistakes despite feedback because no learning takes place.

One of the most important prerequisites of developing others is to develop yourself. Only if we can decode our own behavior are we able to understand others, their motivations and emotions and how we can help them to grow. Moreover, we have to not only seek but also learn how to receive feedback as well. Leaders get back the behavior they exhibit and tolerate. So we must know whether we really behave the way we think or claim to act.

In essence, the leadership in a start-up relies on the art of co-building the organization – that means building in concert with all, or at least the key members. The entrepreneurial task is not only to make the technology and the innovation a success in the marketplace but also to create the right DNA that fosters development in all aspects of the organization.