Emotional turbulence in new ventures
By Manfred F. R. Kets de Vries
Recently, I was invited to deliver a keynote address at a coaching conference in China. The event brought together executives, entrepreneurs, consultants, coaches, and organisational psychologists from across the country, all focused on leadership, transformation, and performance. Much of the conference followed familiar rhythms: presentations on strategy, innovation, digital transformation, and growth metrics. But one particular part of the conference stopped me in my tracks.
It was a celebration of successful new ventures. Their management teams were invited on stage, applauded, photographed, and praised. The familiar narrative unfolded: visionary leadership, bold risk-taking, clever technological innovation, impeccable timing. Yet there was an unexpected twist. Repeatedly, speakers emphasised that a central factor behind their success was not merely technology or funding, but the presence of a coach embedded within each leadership team, someone whose role was to help navigate the inevitable emotional turbulence of organisational life.
They spoke openly about conflict, power struggles, envy, mistrust, insecurity, and fear. They acknowledged that without psychological guidance, many of their ventures might have collapsed under the weight of internal conflict. It was striking to hear such candour in a public business forum—and even more striking to hear it in China, where emotional vulnerability and inner conflict are not typically foregrounded in corporate discourse.
This moment transported me back many years to seminars I delivered for a number of venture capital and private equity firms across Europe. These firms had invested in dozens of promising new ventures, companies with strong technology, and impressive market potential. Yet a disturbingly large number of them had stagnated or failed outright. When I asked why, the answer was strikingly consistent: not strategy, not competition, not product design but the human dimension. Founders who could not collaborate. Leadership teams are paralysed by unresolved conflict. Boards fractured by power struggles. CEOs undone by narcissism. Partners trapped in cycles of mistrust and retaliation.
And yet, despite this clear diagnosis, these firms continued to invest almost exclusively in technology, product development, and market analysis, allocating virtually nothing to the human factor. The paradox puzzled me deeply. If dysfunctional interpersonal dynamics were the primary cause of failure, why were they treated as peripheral? Why did so few firms invest in sustained team coaching, the kind of intervention capable of aligning leadership teams, dealing with conflict, and transforming emotional turbulence into creative energy?
And as we know, Europe could do far better in cultivating its new venture ecosystem, for entrepreneurship is not merely an economic activity, but the lifeblood of any vibrant society. Entrepreneurs generate renewal, challenge stagnation, and inject imagination into ossified systems. They create not only wealth, but possibility. When they thrive, societies evolve; when they falter, societies ossify. To neglect the conditions under which they flourish, especially the psychological ones, is to starve the future at its source.
Despite my earnest efforts to explain how team coaching could significantly reduce the risk of failure in portfolio companies, the leaders of these organisations listened politely—and then did almost nothing. The receptivity was courteous, the engagement superficial, the follow-through negligible. It was as if the human dimension, though acknowledged, remained too uncomfortable, too elusive, or too threatening to be taken seriously.
Still, and perhaps naively, I persisted. I argued that a critical starting point for helping new ventures truly flourish lies in understanding team dynamics: how personalities, communication styles, leadership patterns, and emotional histories interact. I explained that many senior executives struggle to recognise how their own behaviour undermines collective effectiveness, that there is often a striking gap between how leaders believe they act and how others experience them. Well-designed 360-degree feedback instruments, I suggested, can illuminate these blind spots, offering executives a mirror they might otherwise avoid. As the saying goes: If one person tells you that you have donkey ears, ignore it. If two people tell you so, buy a saddle.
Armed with such insights, skilled coaches can help leadership teams align around shared purpose, clarify roles, manage conflict, enhance communication, and cultivate complementary leadership styles. They can guide teams through periods of transformation, support strategic alignment, and facilitate long-term development. Just as important, they can help management teams identify gaps in their collective leadership capacity and prepare psychologically, not merely strategically, for future challenges.
I also emphasised that team coaching offers something rarely available at the summit of organisations: psychological safety. It creates a structured forum in which executives can confront both operational challenges and the emotions those challenges inevitably evoke. This is especially vital in environments shaped by ambition, competition, and power, where transparency is often mistaken for weakness, disagreement for disloyalty, and reflection for inefficiency. Team coaching counters these cultural pathologies by fostering trust, shared awareness, and constructive dialogue.
Through sustained collective work, executives gradually develop deeper insight into their group dynamics: how information is shared or withheld, how decisions are distorted by fear or ego, how conflict is avoided or escalated. Over time, if done well, this generates genuine knowledge transfer, not through abstract training modules, but through lived experience. Productivity rises not because people work harder, but because they work together more intelligently.
Team coaching also produces a powerful multiplier effect. Participants learn not only from their own struggles, but from those of their peers. Each member becomes both learner and coach, enhancing collective self-awareness, leadership capacity, and emotional maturity. The process often unleashes remarkable levels of energy, commitment, and creative engagement. Teams rediscover what collective intelligence can feel like.
Furthermore, team coaching brings the “undiscussables” into the open. Hidden resentments, unspoken rivalries, silent fears, and unresolved conflicts are named and explored. And once acknowledged, they lose much of their destructive power. What was previously acted out through sabotage, withdrawal, or domination can now be worked through constructively. Emotional energy shifts away from internal warfare and toward meaningful work.
To conclude my plea, I stressed that at its core, team coaching extends beyond individual development to the relational fabric of leadership itself. How executives communicate, disagree, influence, and collaborate determines organisational performance far more than technical competence. A team composed of brilliant individuals can still fail spectacularly if relational dynamics remain toxic. Conversely, emotionally intelligent teams frequently outperform far more technically gifted competitors.
And yet, despite all my efforts, it often felt like speaking into a void. The resistance was rarely explicit. Instead, it took the form of polite deferral, budgetary hesitations, procedural delays, and strategic distraction. Technology remained seductive. Markets remained thrilling. But human complexity remained inconvenient.
Thus, the paradox endured: investors readily acknowledged that people caused most failures but then continued to behave as though people barely mattered. That contradiction has haunted me ever since.
The unconscious organisation
However, I found it difficult to explain to them that organisations, like individuals, possess unconscious lives. They generate shared fantasies, anxieties, defence mechanisms (individual and social), and emotional climates. They produce heroes and scapegoats. They cultivate myths and taboos. And they institutionalise denial.
A new venture often begins as a collective dream. Founders project into the company their hopes for recognition, power, immortality, and meaning. The organisation becomes a container for personal longing. Early success reinforces grandiosity. Failure triggers narcissistic injury.
And as growth accelerates, new layers of complexity emerge. Hierarchies form. Authority structures crystallise. Power differentials deepen. And with them come envy, rivalry, and fear of exclusion. The emotional dynamics become more volatile.
Without a degree of psychological awareness, these forces can operate in destructive ways. Disagreements become personalised. Criticism transforms into humiliation. Competition becomes betrayal. Leadership becomes authoritarian or evasive. Innovation stalls not because of technological limits, but because emotional safety evaporates.
This is why coaching matters. Not as a cosmetic intervention. Not as a motivational pep talk. But as a sustained process of psychological containment, reflection, and transformation.
Hence, what struck me in China was that team coaching was treated not as a luxury but as infrastructure. And as I noted before, coaches were embedded within leadership teams. Their role was not to offer advice, but to help executives think, feel, and relate more effectively. They functioned as emotional architects, helping organisations build psychological stability.
From a psychoanalytic perspective, the coach becomes a container for anxiety, a mirror for unconscious patterns, and a translator of emotional signals. By making hidden dynamics visible, team coaching interrupts cycles of projection, blame, and escalation. Conflict does not disappear. But it becomes thinkable. Fear does not vanish. But it becomes manageable. Ambition remains. But it is tempered by reflection. The result is not emotional comfort. It is greater psychological resilience.
And I have learned from experience that organisations that invest in the emotional intelligence of their people develop greater adaptability, trust, creativity, and endurance. They navigate crises with less fragmentation. They sustain cooperation under pressure. They recover more quickly from setbacks. In short, it is more likely that they survive.
But I also reiterated to them the cost of remaining in a state of denial. I told them that this cost is immense. As they may have discovered, failed new ventures represent not only financial loss, but emotional devastation: broken partnerships, shattered careers, burned-out founders, disillusioned employees. The human wreckage rarely appears in quarterly reports, however, yet it accumulates invisibly across the entrepreneurial ecosystem.
Moreover, repeated failure reinforces cynicism. Investors become more controlling. Founders become more defensive. Trust erodes. Psychological rigidity increases. The system becomes more brittle. Ironically, the very effort to eliminate emotional risk amplifies it.
The denial of the human factor
Why, if human dynamics are so central to organisational success and failure, do venture capital and private equity firms persist in marginalising them? The answer lies less in ignorance than in psychology.
One explanation is a degree of emotional discomfort. Technology is clean. It can be measured, optimised, modelled, and scaled. People, by contrast, are messy: irrational, emotional, unpredictable, defensive, contradictory, and often opaque, even to themselves. Engaging seriously with human dynamics requires confronting conflict, vulnerability, envy, power, dependency, and fear. These are not domains most financial professionals find congenial. It is far easier to debug software than to untangle wounded egos.
Another explanation is living in an imaginary, rather simplistic world. Many investors, consciously or not, subscribe to a myth of rational mastery. They imagine organisations as mechanical systems: insert capital here, install strategy there, optimise processes, and growth will obediently follow. Human beings become interchangeable components, emotional life mere background noise. But this fantasy collapses upon contact with reality. Organisations do not behave like machines. They behave like families under stress.
From a psychoanalytic perspective, this retreat into metrics and models reflects a classic defence mechanism: intellectualisation. By translating uncertainty into numbers, investors protect themselves from anxiety. Spreadsheets feel safer than emotional exposure. Algorithms appear more reliable than human judgment. Technology offers the seductive illusion of control, a comforting shield against the unruliness of human desire.
Yet the avoidance runs deeper. Emotional dynamics threaten the fantasy of omnipotence that fuels much entrepreneurial and financial ambition. If people are unpredictable, then returns become uncertain. If leaders are emotionally volatile, then models unravel. To take psychology seriously is to accept limits on control, foresight, and certainty. This introduces existential unease into a culture built on confidence and conquest.
There are also the psychological dynamics of identification. Investors often recognise themselves in founders: driven, competitive, ambitious, obsessed with mastery. To confront emotional fragility in entrepreneurs would be to confront it in themselves. It is far easier to critique market conditions than to examine one’s own psychological defences.
Furthermore, psychological work demands patience, humility, and tolerance of ambiguity, qualities profoundly at odds with the velocity and aggression of high-finance culture. Coaching requires listening. Reflection requires slowing down. Emotional containment resists quarterly rhythms. In environments where speed is virtue and decisiveness equals dominance, introspection feels dangerously inefficient.
Finally, there is the seduction of technological fetishism. In contemporary culture, technology has become the primary carrier of hope. It promises transcendence, mastery, and liberation from human limitation. Investing in technology feels like investing in progress itself. Investing in people, by contrast, feels like investing in vulnerability, uncertainty, and emotional risk.
And so the paradox persists: the people who lead private equity and venture capital firms acknowledge that human dynamics cause most failures but then continue to behave as though people barely matter. The result is a rather irrational cycle of repetition: capital flows, technologies evolve, strategies mutate, but the same psychological dramas replay, company after company, collapse after collapse. In the end, it is not flawed algorithms that destroy enterprises, but unexamined souls.
Yet the repeated collapse of ventures reveals the tragic folly of this avoidance. Organisations do not fail primarily because of flawed technology or insufficient funding. As noted, they fail because human beings, the founders, the executives, and the investors, cannot manage their emotional lives, their conflicts, their power struggles, and their unconscious fears. This is not a marginal issue. It is the central drama of organisational life.
And this misunderstanding works two ways. There are the people who run these startups, and then there are the people in charge of these private equity and venture capital firms. All too often, both parties remain psychologically illiterate, a blindness that, as I have witnessed time and again, leads to avoidable and often disastrous outcomes.
Generally speaking, to be in a leadership position is a profoundly ambivalent role. Leaders are simultaneously idealised and resented, admired and attacked, elevated and sabotaged. They become repositories for collective hope and collective anxiety. They are expected to embody competence, certainty, and strength, even while being internally plagued by doubt, fear, and insecurity. And this creates a fertile ground for a tragic misunderstanding.
Founders of new ventures often begin their journeys propelled by grandiose visions, animated by fantasies of omnipotence and heroic transformation. They imagine themselves as disruptors, saviours, and innovators destined to reshape industries and rewrite history. These fantasies are not pathological; they are psychologically indispensable. Without them, few would possess the courage to confront the radical uncertainty, chronic insecurity, and existential risk inherent in entrepreneurship. Grandiosity functions as emotional armour, protecting against doubt, fear, and anticipated failure.
Yet as reality intrudes like missed targets, hostile markets, investor scrutiny, competitive threats, and relentless cash-flow anxiety, these expansive fantasies collide with frustration, humiliation, and helplessness. What often emerges is not adaptive realism but psychological regression. Leaders retreat into defensive postures: rigidity replaces curiosity, paranoia supplants trust, control substitutes for dialogue, and dominance masks vulnerability. Power struggles acquire grotesque intensity. Senior executives enact elaborate rituals of submission and humiliation. Strategic discussions devolve into thinly veiled psychological skirmishes, where winning matters more than understanding.
Observed from a distance, the spectacle oscillates uneasily between farce and tragedy. Meetings resemble theatrical performances in which wounded egos duel under the guise of rational debate. Minor disagreements metastasise into existential battles. Alliances shift with operatic drama. Emotional volatility infects decision-making, while fear of loss drives impulsive gambles and reckless escalation.
In this way, many new ventures reenact, at high speed, the timeless tragedies of power: meteoric rise fueled by visionary ambition, followed by collapse precipitated by hubris, envy, betrayal, and unprocessed fear. Ancient court intrigues unfold inside glass-walled offices. Greek drama is replayed in hoodies and venture-funded lofts. And all of it proceeds beneath the comforting illusion of rational management, where spreadsheets and slide decks attempt, valiantly and vainly, to impose order upon the unruly theatre of human desire.
A similar observation can be made about the executives who run these private equity and venture capital firms. Conflict is hardly foreign to them; in fact, it is woven into the very fabric of their professional lives. They negotiate relentlessly, compete aggressively, and operate under constant pressure to outperform rivals and justify returns. Yet paradoxically, many of them remain remarkably ill-equipped to understand the psychological dynamics unfolding within the companies they acquire.
Accustomed to thinking in terms of financial models, operational metrics, and strategic frameworks, these people often struggle to grasp how unconscious processes like rivalry, projection, narcissistic injury, fear of loss, envy, dependency, and the longing for recognition, shape executive behaviour and organisational culture. As a result, they may correctly diagnose structural problems while remaining blind to the emotional undercurrents that generate and sustain them.
This blindness is not merely cognitive; it is defensive. To take psychological dynamics seriously would require confronting complexity, ambiguity, and vulnerability, qualities that sit uneasily with the heroic self-image cultivated in high-finance cultures. It is far more comfortable to retreat into spreadsheets than to confront the messy terrain of human emotion. Financial analysis offers certainty, control, and distance. Psychological insight demands engagement, patience, and humility.
Consequently, many investors oscillate between frustration and mystification when leadership teams implode, alliances fracture, or organisational morale collapses. They perceive the symptoms but misrecognize the causes, attributing failure to flawed strategy, inadequate execution, or poor market timing, while the deeper emotional conflicts remain unaddressed, free to repeat themselves in ever more destructive forms.
Toward a new investment paradigm
These reflections led me to wonder what a psychologically informed investment strategy might look like, the kind that takes seriously the inner lives of leaders, the emotional architecture of teams, and the unconscious dynamics shaping organisational fate.
First, such a strategy would recognise that leadership capacity is as critical as technological innovation. Emotional intelligence, relational maturity, psychological resilience, and conflict tolerance would be treated not as soft extras, but as core assets. Just as investors scrutinise product design, market fit, and scalability, they would rigorously assess founders’ capacity for self-reflection, emotional regulation, and collaborative problem-solving. The ability to manage anxiety, tolerate ambiguity, and contain conflict would be understood as fundamental determinants of long-term performance.
Second, coaching and organisational development would be embedded from the earliest stages of company formation, not introduced belatedly as emergency interventions once dysfunction has already metastasised. Psychological infrastructure would be treated as preventive medicine rather than crisis surgery. Founders would learn early how to work through tension, negotiate differences, process disappointments, and sustain trust under pressure, skills far more predictive of survival than technical brilliance alone.
Third, investors themselves would engage in reflective practice, examining their own emotional reactions, projections, anxieties, and unconscious identifications. This would encourage more nuanced judgment, reduce impulsive decision-making, and foster healthier relationships with founders. By becoming aware of how fear, greed, rivalry, and idealisation shape investment behaviour, financiers could temper reactivity with discernment, transforming transactional relationships into developmental partnerships.
Fourth, failure would be reframed not as personal collapse or moral indictment, but as a developmental learning experience. In such a culture, setbacks would become opportunities for learning rather than sources of shame. This shift would reduce defensive behaviour, encourage honest dialogue, and support psychological recovery. Leaders would be less tempted to hide mistakes, distort reality, or escalate recklessly in order to preserve fragile self-esteem.
Such an approach would not eliminate risk, nor should it. Entrepreneurship requires daring, and uncertainty is its native habitat. But it would transform the nature of risk itself: from blind exposure to conscious engagement, from reckless gamble to reflective adventure. Capital would no longer chase illusions but cultivate resilience. Growth would be pursued not through denial of human complexity, but through its disciplined integration. And in this paradigm, the human drama behind the numbers would finally take centre stage, not as a nuisance to be managed, but as the very engine of organisational life.
But knowing all these matters, there is something profoundly tragic and comic about the persistent refusal to take human psychology seriously in organisational life. Tragic, because the evidence is overwhelming. Comic, because the denial is so elaborate.
We build increasingly sophisticated operational architecture yet remain astonishingly naïve about ourselves. We deploy algorithms to predict markets yet ignore the emotional storms that sink companies. We celebrate innovation yet neglect the fragile human vessels that carry it. And yet, there is hope.
The scene I witnessed in China suggests that a quiet cultural shift may be underway, a growing recognition that leadership is not merely strategic, but also psychological; that success depends not only on intelligence, but on emotional maturity; that growth requires not just funding, but containment. Increasingly, it is being acknowledged that emotional literacy is not a luxury, but a necessity if we want new ventures to flourish rather than merely survive.
As I have argued, given the central role of entrepreneurship, Western societies would be wise to take this lesson to heart. If we continue to treat the human factor as an afterthought, we should not be surprised when brilliance repeatedly collapses under the weight of unresolved conflict and wounded egos. But if we learn to invest in psychological infrastructure alongside technological innovation, we may finally begin to change the odds.
Encouragingly, change may already be stirring, slowly, unevenly, but perceptibly. Perhaps we are beginning to understand that spreadsheets cannot substitute for self-awareness, that algorithms cannot replace emotional intelligence, and that capital alone cannot redeem dysfunctional relationships. Perhaps, at last, we are learning that sustainable success depends as much on inner mastery as on external control.
There is hope. The tragic comedy of organisational life, with its grandiose dreams, inevitable disappointments, and recurrent power struggles, need not end in collapse or farce. With psychological insight and thoughtful team coaching, it can evolve into a wiser drama, one in which ambition is tempered by humility, competition balanced by cooperation, and innovation guided by emotional understanding. If so, the greatest investment opportunity of the future may not lie in technology, markets, or data. It may lie in a deeper understanding of the human soul.