Why Leaders Fail

This article written by Robert Tearle draws on insights into why leaders and managers fail in tech and SaaS vendors. These sectors are fundamentally different to most others: super‑fast‑paced, innovation‑driven and under constant investor pressure. In this world, there’s no room for passengers.

How Failure Spreads
The Business Fallout
Why Leaders Really Fail
The Cost of Indecision
What High‑Performing CEOs Do Differently When a Leader Is Failing

Other: Ten Scenarios We’ve Seen Up Close

1. How Failure Spreads

When one person fails, the impact is contained.

But when a leader or manager fails, their weaknesses cascade through their own team and into the teams they work most closely with…

Ultimately holding the whole business back.

This ripple effect means problems grow and become harder to correct. They become slow‑turning, structural problems rather than short‑term issues - more like trying to turn a supertanker than making a quick course correction.

Unlike individual contributors, leaders’ contributions are medium or long term, so their failures tend to persist and compound, making them more damaging to your business. Fail to influence, fail to get things done through other teams and people, fail to move critical agendas forward — in a changing market, staying static is actually regressive.

2. The Business Fallout

There’s an interdependence between all functions, so one weak link in the leadership team drags overall performance down. Strong sales drive healthier cashflow and more investment in product development. Strong products enable greater sales, while strong sales and products make it easier to attract better people, and good customer service keeps customers coming back, buying more and recommending you.

All good news — until one leader fails:

Poor sales leadership means missed market potential, missed targets and stalled entry into new markets.

Poor customer leadership means customer loss and weak referenceability.

Poor finance leadership leads to budgeting errors, poor cash collection and cashflow problems.

Poor product leadership means you fall behind while competitors move ahead.

Poor people management means your best people leave, often to competitors.

Over time, team and individual performance can slide from under‑performance into a downward spiral as the environment becomes anxious, negative and toxic.

There’s a domino effect: failure of one business unit leader pulls down other business units with them.

The damage is greatest when a miscast CEO is in play — some play it too safe, others become people‑pleasers, and the worst fail to recognise problems and won’t challenge under‑performing peers.

3. Why Leaders Really Fail

Misfits...

When appointments are made through external hires, internal moves or promotions – and the process is sound – you should end up with someone who has the right industry and functional experience, with scope and scale aligned to the role. Those are the hard‑side characteristics – the hard skills.

When things fall apart, it’s rarely the hard skills; it’s when the background or soft skills don’t fit the context.

Often when leaders fail, it’s because they’re a misfit.

They’ve been hired or promoted into roles where the context doesn’t match how they’re wired to operate.

Someone who has been successful in a big business may not be able to perform in a small one. Similarly, someone who did brilliantly in a category‑leading brand can struggle badly in a startup, scale‑up or challenger‑brand environment where nothing is given and everything has to be built from scratch.

Some people thrive in chaos. They find information, cut through noise and navigate obstacles at pace. If you’re getting 55% of your calls right and 45% wrong, you’re still moving forwards – unlike the leader who over‑analyses, delays and never commits. In early‑stage and high‑change environments, progress beats perfection every time.

Many managers have only ever operated in organisations with clear playbooks, strong support functions and well‑worn processes. They know which buttons to press in that system, but fail when they move into environments full of ambiguity.

Small or scale‑up companies invariably have incomplete data, scarce resources and rapidly shifting priorities. Some people can join the dots, make things happen and do so with a sense of urgency; for others, their mental model of how work gets done no longer fits the reality in front of them, so what once made them successful now actively holds them back.

The real job of a leader is to create impact through others: using teams, peers, stakeholders (boards, investors, customers) and resources to move what matters most.

In SaaS and tech, that challenge is amplified by pace, competition and investor pressure for performance. And the risk spikes at three promotion cliffs:

Promoted from individual contributors to managers – from doing the work to getting work done through others.

Promoted from managing single teams to multiple teams – from running a squad to orchestrating across priorities.

Promoted from optimising one functional area like finance, sales or manufacturing into the role of CEO – managing multiple diverse functions and balancing the whole system.

Set up to fail?

A high proportion of tech companies are entering new markets, scaling fast and selling solutions that may not be fully proven, may have technical flaws, lack customer references, and are often constrained by cash‑flow limitations and sudden strategy U‑turns.

Product–market fit is a widespread issue – sometimes not properly defined or thought through – leaving sales teams going to market with weak or incomplete offerings. A downward spiral can quickly take hold.

It’s easy to point the finger at the leader or manager who is seen to be failing.

While research suggests that individual factors account for around 60–80% of derailments, in SaaS, digital and tech – fast‑paced, hyper‑competitive environments, especially for challenger brands and new category entrants – the risk factors are higher on both sides.

On the company side, leaders can also be set up to fail.

Because of unclear or unrealistic expectations, gaps or misalignment within the leadership team, poor selection and onboarding, culture misfit, rapid shifts in strategy, and weak support systems all increase the odds that even a capable person will struggle in the role.

When leaders struggle or fail to perform, it usually comes down to the same three gaps in how they lead: emotional intelligence, situational awareness and critical decision‑making.

On the surface, these show up in predictable ways. Invariably, the visible symptoms look similar:

Promoted beyond their current capability

Inability to impact

Failure to execute on what matters most

Lacking genuine coaching ability

Unable to inspire and lead

Underneath those symptoms, the root causes almost always trace back to those same three, mutually reinforcing dynamics: emotional intelligence, situational awareness and critical decision‑making.

There's a cascade effect...

Each shapes — and is shaped by — the others. When one weakens, the others follow, creating a downward spiral that erodes trust, performance and credibility.

Emotional intelligence – building engagement, trust, and honest feedback to drive personal and team effectiveness.
Situational awareness – accurately reading the room, the organisation, and the market.
Critical decision‑making – making and executing better calls in complex, fast‑changing environments.

Nowhere is the impact of weak management felt more sharply than in SaaS and tech. These sectors move faster, compete harder, and operate under relentless performance pressure — from investors, boards, and markets alike.

Want to see how these three interlinked dynamics play out in real SaaS and tech businesses? Read on…

Gaps in emotional intelligence

Managers fail when they’re promoted beyond their capability or when they simply lack the ability to get things done through others...

Either because they don’t know which decisions to make or because they’re unable to effectively influence people.

Why emotional intelligence is key:

Self‑awareness: Are they aware of their strengths, weaknesses, biases, and limitations — and how their actions impact how others feel and respond?

Self‑discipline: This is about consistency and doing the right thing, even under pressure.

Social awareness: Have they built relationships and trust so people feel free to speak openly — to raise issues, share concerns, or suggest ideas?

Social management: Are they too strong or too weak? Can they strike the right balance to get things done through others?

Motivation: How well aligned is their drive? How strong is their resilience? Do other personal or professional priorities dilute their commitment?

Gaps in situational awareness often compound the problem.

Managers lose perspective — misreading priorities, people, and timing. They confuse movement with progress, failing to sense when things are off‑course until results start to slide. And when decision‑making falters, so does execution. Weak managers delay, overanalyse, or seek consensus to avoid accountability. The quality of their decisions — and their speed — defines whether the business moves forward or stalls.

You can see these gaps clearly in under‑performing managers.

One of the defining traits of successful leaders, however, is their ability to energise others — and you can’t do that unless you’re energised yourself. The best managers create an environment where people can speak freely and challenge ideas without fear. When team members feel safe to share concerns or half‑formed ideas, you unlock more creativity, better problem‑solving, and stronger collaboration. People are far more likely to raise issues early, rather than hide them, when they know they will not be ridiculed or penalised for being wrong.

Ideas and debate fuel improvement — just as openness about problems prevents small issues becoming major failures that slow execution and performance. Many managers struggle to drive the agenda because they manage tasks rather than lead with direction. They don’t set a high bar. They tolerate mediocrity. They fail to act with a sense of urgency. They execute, but don’t inspire — managing activity instead of momentum. When leaders lose credibility, teams stop taking them seriously and fail to act with urgency or purpose. Weak leadership ultimately shows up in stalled outcomes because they can’t get things done through others. The inability to build stronger teams follows — they fail to organise effectively, define roles clearly, and develop people to their potential.

Once those dynamics weaken, performance doesn’t just slow — it drifts. Here’s how that looks inside a real business…

4. The Cost of Indecision

When failure becomes obvious but no one acts, value drains faster than you think. Teams wait for direction that doesn’t come. Stakeholders lose confidence. The best people start scanning LinkedIn before the next one‑to‑one. All while the numbers still look “just about fine” – until they don’t.

No one wakes up in the morning and thinks, I want to fire someone. Rather than acknowledge and act on a problem, they push it down their agenda – not today. But denying there’s a problem merely delays the inevitable.

Keeping a struggling manager in role, helps no one.

Not the business, not the team, and not the individual whose confidence quietly erodes with every missed target.

That’s why the old line still holds true: fire fast, hire slowly. It’s not about ruthlessness; it’s about responsibility.

Acting quickly protects performance, sends a signal about standards, and often gives the departing manager a cleaner exit and a chance to reset.

One obvious option is to promote from within. But in reality, if someone is genuinely promotable, you rarely find yourself stuck in long deliberations – they’ve usually already been identified, tested and discussed as a successor.

The uncomfortable truth is that most leadership failures are people ones — and one of the most damaging is when leaders wait too long to act on a failing manager.

That’s one of the situations in which headhunters like us can act as a thinking partner. We help companies move from knowing to doing – assessing where the real gaps lie, identifying credible successors, and managing transitions delicately but decisively.

Indecision doesn’t just slow the business; it quietly erodes its future.

5. What High‑Performing CEOs Do Differently

The best CEOs don’t rush headlong into replacement talk — but they don’t drift into inaction either. They follow a disciplined process that protects performance, people, and reputation at the same time. Five things typically separate them from the rest:

They diagnose, not just judge. Before acting, they clarify whether the problem is skill, will, structure, or fit. They get independent views and test their own assumptions against data and observable behaviour.
They act early on patterns, not excuses. They don’t wait for quarterly results to confirm what they already sense. Subtle signals — team disengagement, execution delays, eroding trust — trigger a structured review.
They engage quietly but deliberately. They set up candid conversations with the individual, define expectations clearly, and give short, outcome‑based timeframes for recovery.
They manage succession options in parallel. While giving the incumbent a fair line of sight to improvement, they start exploring internal or external options. This protects business continuity if change proves inevitable.
They communicate with precision. They contain speculation, protect dignity, and ensure that any transition — whether recovery or replacement — reinforces confidence in leadership standards.

In practice, this discipline separates companies that correct course quickly from those that live with quiet under‑performance for quarters on end.

That’s often the point at which we become a thinking partner — not when all else has failed, but when a CEO wants clarity, optionality, and controlled execution. We help them map what’s real, what’s fixable, and what’s not — and, if needed, line up credible successors confidentially and without disruption.

When change becomes unavoidable, the best CEOs handle it discreetly and professionally — that’s where we support them.

Cloak — and — dagger scenarios...

Replacing an incumbent or lining up candidates ahead of a termination is one of the most common reasons companies turn to headhunters.

Because headhunters can quietly identify and approach suitable replacements - without revealing the employer’s identity - we’re able to assess their background, capability, scope and scale of experience, track record, fit for the situation, likely interest level, compensation expectations, and availability.

Only when the right candidates are identified, and at the right time and in the right way, is the client’s name disclosed - always on a pre‑agreed basis. NDAs are typically signed before any disclosure is made.

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Ten Examples

Ten Examples We've Seen Up Close

1) Inability to Move the Business Forward

An investment firm bought several small businesses and merged them into a single entity. These businesses had strong synergies: they served the same type of customers and offered solutions that could be cross-sold, i.e., multiple product lines could be sold to the same customer. By creating one combined, high-performing sales team and leveraging existing customer bases and scalability, the firm could package the offerings as a broader, more holistic solution and, in doing so, offer more value than competitors.

A new CEO was appointed to oversee the integration of these businesses (around 100 employees), drive an agenda of innovation across the solution offering, deliverables, and go-to-market strategy, implement an effective sales plan to increase revenue, and scale the unified business. However, he lacked the ability to create a clear vision or build consensus around new offerings among teams across the business, including sales, product development, marketing, and service delivery.

Whilst ideas were mooted and minor changes were attempted, everything was slow and there was a lack of conviction; revenues remained static, as did the business. The CEO was unable to instill confidence and inspiration or push the teams to develop, drive, and grow the business. What was required, and did not happen, was not just managing the managers but bringing together the teams, team leaders, and senior specialists to create real change. No sales growth, no product innovation, no motivation – no growth.

Sadly, the business remained static.

2) Product Market Fit

CRO Types and Achieving (or Failure to achieve) Product Market Fit

This is a common issue in companies in scaleup mode. Whilst the business may have got off the ground with modest sales into friend groups, proof of concepts, or small-scale (departmental) implementations, or customers who made purchases but failed to find meaningful value, gaps can remain with respect to true product market fit. Where the core problem solution fit is at least partially validated, but the GTM around it is immature, these gaps become more visible and more damaging.

Assuming the product is good enough, in many cases the ideal customer type/s have not been properly defined, nor identified as total addressable markets, segments most likely to be a best fit, messaging, positioning, building and justifying ROI, packaging deals and pricing.

Is this a sales or marketing responsibility?

In reality it is companywide, but the CRO is accountable for converting market signal into a coherent revenue strategy and ensuring that sales and marketing are pointed at the same, well understood target.

Some sales leaders and sales types have the rapport building skills, creativity and initiative to uncover market fit, tailor solutions and influence people both customer side and internally – because they’ve got the skills and may have done something similar before. These are the “builder” CRO types, comfortable operating in ambiguity and helping to shape both the motion and, where needed, elements of the offering. The same distinction often applies to frontline sales hires, where some are natural builders in messy, early stage environments and others are far more suited to executing a refined, established playbook.

However, people from established environments often not only struggle with this but can’t even get to base 1, unless they’ve previously operated in chaos or earlier stage contexts. Some people think that by hiring someone from a big-name, top-tier brand company it means they can create success in their company; however, this is rarely the case. These “optimizer” CRO types tend to excel once product market fit and GTM are already in place, but they are often the wrong fit for a business still trying to figure those things out.

3) The Newly Promoted CEO

The newly promoted CEO failing to take the lead .

When a CEO is promoted from within, what were once peers across the C suite – in sales, product development, marketing, finance, IT, HR and other functions – become direct reports. In one of several instances where we have seen this play out, a professional services business with around 1,000 employees had a newly promoted CEO who, while endeavouring to solicit opinions and delegate across the leadership team, failed to drive the most critical decisions.

Some decisions must be made and driven through by the CEO, especially those that are truly critical and impact multiple functional areas. In most situations there is no perfect solution and you cannot please everyone;

At some point the CEO must take the lead...

Make the call and drive the decision through.

The reality is that decisions about what is already established are easy to make, but they do not move the business forward. This is particularly problematic in SaaS and digital services businesses where investors and shareholders are seeking high growth.

4) Failure to Build Relationships

Relationships connect people and functions – they build trust, support and willing. There’s an expression “Teamwork is Dreamwork”. Good relationships drive performance and compromised ones, compromise it.

In smaller companies there are, by definition, fewer people, so it’s easier to navigate around personalities and interactions are more frequent and direct. When someone isn’t building relationships, it quickly becomes visible. In larger organisations, however, the environment is more complex and heavily matrixed, with multiple lines of business and stakeholders to align. If a leader cannot build relationships and foster trust and support in that context, their impact is severely limited. This is something we’ve observed repeatedly in people working in major SaaS and tech companies, and even more so in the megavendors with sprawling, multiproduct structures.

5) Most Commonly

Most common failure is when someone is promoted from an individual contributor

Gartner research indicates that around 60% of new managers fail within their first 18–24 months in role, largely due to a lack of preparation for people leadership. New-manager failure is strongly linked to a lack of preparation, training, and support — and smaller companies, such as SaaS or tech businesses in scale-up mode, are less likely to provide those things.

In our own work, we’ve repeatedly seen that strong leaders who are also strong coaches are very deliberate in how they develop talent, including first-time managers: they invest time, provide coaching, and stay actively involved.

Often there’s a double-whammy coaching problem.

The new manager hasn’t been properly developed. In other words, the new manager both needs to be coached and needs to become a coach.

The core issue is that someone is promoted from individual contributor to manager; they know how to perform the functional role but not how to manage and develop the people in that function. There’s the coaching aspect, and then there’s the pragmatic side — deciding who does what in the team, ensuring fair distribution of work, managing admin overload — which can easily consume the new manager at the expense of focusing on business outcomes. The absolute majority of SaaS/Tech companies we’ve observed are pursuing growth led agendas – the problem of a manager who is not effective – is that they slow down the business.

There’s an expression, “managing people is managing problems.” While it holds some truth, it’s only one aspect — and one that needs to be handled effectively. For instance, how do you respond when someone is repeatedly late or off sick, and their excuses seem questionable?

Managing is a different discipline altogether, requiring a mindset shift — from doing the work yourself to achieving results through others. To mitigate this risk, someone lined up for promotion should ideally become a mentor in advance to begin building coaching skills. Before promotion, they would benefit from being coached or mentored themselves — and once promoted, that support becomes even more valuable.

6) Toxic Leaders and Narcissists

There is a higher prevalence of narcissism in entrepreneurs (around 15%) than in the broader population – two to three times more prevalent – so it is more likely you will come across a leader who is toxic, with an awkward, difficult personality type. Research suggests that, at one point or another, up to 80% of people have experienced working for a toxic manager in their career.

Here is an example we have observed up close in a niche market: a UK‑owned and UK‑market‑focused B2B data and business intelligence vendor. The Sales Leader had been promoted but not trained and had no coaching ability; in fact, her sales skills were below par. What she was good at was spreadsheets and reporting. Under pressure from the CEO and investors, she adopted a micromanaging approach, frequently changing customer allocations, targets, revenue recognition, and commissions. She insisted on meeting with the salespeople twice a day, which compromised prospecting activity and customer face time.

She drove a short‑term, small‑deal‑focused agenda, resulting in customers being sold the wrong types of solutions at heavily discounted prices. This translated into unhappy customers and reduced revenue realisation – less than 50% of what it could have been. Interdepartmental relationships, product innovation, and service delivery were all compromised because of a lack of collaboration. Daily and weekly threats to sales team members if they did not hit targets – criticising, bullying, and humiliating team members publicly in meetings – created an environment of fear, which drove counterproductive behaviours and desperately unhappy customers. As a result, the sales, consulting, and marketing functions worked against one another.

What was particularly disappointing was the failure of the CEO to properly recognise the severity of the problem. He had, to a greater or lesser degree, some knowledge of the toxic Sales Leader and could be criticised either for turning a blind eye to it or for failing to talk with team members and uncover the severity of the problem.

NB: There is a cumulative effect in multi‑year, subscription‑based deals – the impact on revenue potential is not just in‑year but multi‑year.

7) One leader pulling the rest down

One leader pulling the rest of the business down

In a tech manufacturing business with a growth led agenda, the company relied on a small number of high spend customers. Those customers – both existing and new – offered scope for exponential growth, but only if the business could absorb large, time critical orders. High spend customers meant peaks in manufacturing capacity, for example producing 500 units inside three months so the customer could implement to their timelines, against a backdrop of alternative suppliers waiting in the wings.

The head of manufacturing was particularly change averse, consistently pushing back against the CEO, Sales and Finance, who all wanted to invest and press ahead. It takes a brave man or woman to pull the trigger and fire someone who is doing “OK”, but in this case their resistance to change slowed the growth of the entire business.

We’ve also seen the “safe hands” finance leader become an unexpected brake on growth in scaleups. On paper they look ideal: technically strong, diligent with controls, well-liked by auditors and investors. In practice, their extreme caution means every significant investment in product, sales, or market expansion is challenged, deferred, or watered down. They over index on short term certainty and downside protection, “waiting for visibility” while bolder competitors invest ahead of the curve and capture share. Over time, this risk aversion quietly rewires the culture: managers learn to avoid ambitious plans because they won’t get funded, and the company drifts into being stable, tidy – and strategically irrelevant.

8) The Founder Who Won't Let Go

In several SaaS and tech businesses we’ve seen, the original founder remains in the CEO seat long after the company has outgrown their skillset. They insist on being across every major decision – product roadmap, pricing, hiring, even deal-by-deal approvals – so everything routes through them and nothing truly scales. Senior hires come in with experience and ideas, only to find their judgement second guessed or blocked, which leads to frustration and quiet disengagement. The net effect is predictable: decisions slow, innovation freezes, and the leadership bench you worked hard to build either checks out or moves on, leaving the business stuck at the same plateau while competitors pull ahead.

9) Highly Motivated v Modestly Motivated

SaaS and Tech are demanding sectors. They are fast‑paced and highly competitive, with complex propositions that must be clearly communicated to clients and then reliably delivered and supported across marketing, sales, implementation, consulting and customer success. Your “magical solution” is rarely magical in their eyes; many prospective customers are cautious about change and sceptical about return on investment. If they buy and do not see significant value, they will not expand usage across the organisation.

With SaaS/Cloud, switching dynamics add another layer of difficulty. In some SaaS niches, switching is fairly straightforward; in others it is very sticky because of integrations, data migration, training and change management. This creates two different dilemmas depending on your market and focus. If you are trying to displace an incumbent in a typically sticky category such as ERP or supply chain, it can be particularly difficult to win new customers and unseat what is already embedded. Conversely, if your solution is relatively easy to swap out – for example a work or time‑management app – you face a heightened risk of customer and revenue loss if your product does not live up to expectations or is poorly implemented.

Different people have different types and levels of motivation. The challenge is to align those motivations with the needs of the organisation, department and role – and those needs can shift as the business moves through different stages of its lifecycle. Many roles, particularly senior ones, are incredibly tough, especially in smaller companies that are not yet established in their markets, have limited resources, and lack brand awareness, credibility and trust. In early‑stage scale‑ups, the success of the business depends not only on the leaders but also disproportionately on the salespeople – an often underestimated dynamic.

There are many barriers to success. Some people have other priorities in life that affect how much time and energy they can dedicate to their roles. Others struggle with persistence, or with working their way around an endless list of obstacles – they may lack the creativity or resilience to keep going when things get hard. One customer put it simply:

“I want people with a sense of urgency.”

Time waits for no man or woman. In SaaS and Tech, we see a widespread failure of companies – and the people within them – to develop and maintain momentum and cadence. The top performers are highly motivated and sustain that sense of urgency over long periods. By contrast, some otherwise capable people are either inconsistently motivated or have other priorities that mean they cannot consistently operate at the intensity these roles demand. That does not make them “bad people” – but in these environments it makes them a misfit for the role, and their reduced drive can drag overall performance and team energy down with them.

10) Hunter/Farmer Types

A repeated observation across SaaS and tech companies in scaleup mode is whether people can make things happen for themselves, rather than being dependent on others or waiting to be fed. This shows up most clearly in the classic hunter–farmer split: do you have leaders and salespeople who can proactively create new opportunities, or only those who can tend what already exists? This is a common scenario and applies not just to leaders but also to sales hires who can make or break success in early stage scaleups.

Want to Know More?

If you’re an investor, business owner, or SaaS/Tech leader and you want to reduce the risks and costs of failing managers and mis‑cast leaders, get in touch and I’ll share how I can help