Knowledge based firms (KBF) play essential role in technology development, economic prosperity and job creation. The formation of these firms depends on practical ideas of entrepreneur engineers. But most of these entrepreneurs are young graduates who may not have the leadership skills and knowledge required for leading new firms. In KBF engineers design and build things that meet the needs of customers, beneficiaries and ultimately the society. These tasks can only be accomplished by the concerted action of many people aligned and rallied by effective leadership. On the other hand, when faced with many problems in KBF’s initial years, however, many of these firms fail to sustain themselves and fall in to bankruptcy with a high rate and one of the most important factors of these failures is leadership. In this study, based on the engineering approach, a special attention has been paid to the leadership. In this approach, technical abilities and leadership, describe principles of "engineering leadership". By this method, KBF can achieve their targets through the proper rout. On the base of "engineering leadership" approach, this study shows leadership skill training plays a main role in the success of KBF. In addition, this paper suggests to KBF managers a contingency sight to select the best leadership method and proper organization structure based on teamwork for KBF success.