11 team building iit(b) prof turner

8/14/2019 11 Team building IIT(B) prof Turner

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BUILDING WINNING TEAMS

IIT Bombay22 October2005

Patrick TurnerAffiliate Professor ofEntrepreneurshipINSEAD Asia Campus


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Building winning teams

Game plan

1. General considerations2. The importance of networks

3. Some thoughts on team

structuring


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Game plan

General considerations The importance of networks

Some thoughts on team

structuring


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Key points in team

formation

the needs of the opportunity

entrepreneurs weak points

values, goals and commitment

definition of roles

trust

family support


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Other key points

in general, successful entrepreneurs

and their teams have prior experiencein and know well their particularmarket

avoid the temptation of equality foreveryone - someone has to take thefinal decision. Democracy doesnt work

the same comment applies to financial

rewards, stockholding, etc


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Always remember.

team-building is a dynamic process,and in a lot of cases, one or more ofthe original launch team leaves or isforced out after a while


7/47 Building winning teams

Something to think

about...

Forming and building a team is,like marriage, a ratherunscientific, occasionallyunpredictable, and frequently

surprising exercise. Decisions arepartly based on emotions such asadmiration, respect and oftenfierce loyalty.



What an entrepreneurmust be able to do withhis team

communicate his vision

motivate the team so thateveryone shares his vision

have the courage and lucidityto remove anyone whoseperformance or attitude isholding back the venture

lead



Key things the team

must realise and accept

participating in a new venture is

rarely a get-rich-quick exercise - thelong haul is important

sacrifices will be involved, bothfinancial and personal - especially

at the beginning it is a question oflong hours and no guaranteedmonthly salary

the lead entrepreneur has the lastword



The golden rule...

The key is getting and working withthe right partner or partners, and notassuming that your best friend or

brother-in-law will do



Hire the best people

you can

Bear in mind the Class A,B and Cidea

Class A people will attract and hireother Class A people

Class B people will do that for Class Cpeople

Class C people wont attract anybody

at all



Hire people with the

right experience

do as VCs do go for clones

if you are not convinced someone is theright person, keep looking

become your own in-house headhunter -make yourself a hit list of people you would

love to have in your company look into the future and start planning today

the management team configuration thatyou think will be optimal down the road



Why would the bestpeople work in start-ups?

A good many of them are already

For those who arent challenge chance to really influence things from

the most senior level fed up with large corporations

all sorts of combinations ofcircumstances



What do these people

look for? Great company

well managed good fit great culture

Great job demanding, stretching elbow room headroom



How to attract such

people Network, but targetted networking

Be committed to what you are doing

and make it exciting Make your work environment an

attractive one

Make your targets feel that theircontribution will be really valued

Attach magnets to yourself (eg, strongfunding, very strong team, credibility-

giving advisors etc)



Outside directors

Outside directors can be of

inestimable value in: recruiting key management

introductions to potential customers

advising on deals

locating additional funding adding credibility/prestige

simply providing shoulders to lean

on

However, be careful with the legal implications

affecting board members



Advisory boards

in some cases, entrepreneursconstitute a panel of outside advisors

into an advisory board this can add expertise, credibility,

reality checks

avoids the legal implications attachedto formal board membership

use your network to identify andapproach potential advisory boardmembers

dont be shy!



Outside advisors

(eg, lawyers)

consider them as part of the team never hesitate to consult them however, always remember that

they do not necessarily see things

from the businessmans standpoint


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Game plan

General considerations

The importance of networks


structuring


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Two generic modes of

access

Market intermediaries

Head Hunting firms >> expensive Online job portals >> inefficient for senior

hires

Personal networks>> Can be low cost & efficient

How do you structure your network tomaximise access to top talent?


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Network: Myth +

RealityThe set of relationships critical to your ability

to get things done, get ahead and developprofessionally

Those who work at their networking are self-interested and political

My network will develop naturally on its ownYour power to mobilise resources rests on

your network

You have to know your network in order to


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A networking model

Personality

NetworkingStyle

NetworkStructure

AccessingResources

Your network influences your access to:Knowledge (e.g. on undervalued talent)Timely information (e.g. An A players intention to be onthe job market)Referrals (e.g. low down on a candidate)

Your network limits your ability to mobilise:Opportunities (e.g. access to new talent pools)

Support (mentors, advisors, friends, trouble-shooters)


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Personality

Personality Preference or predispositionInvolves both thinking and actingRelatively fixed genetic and early upbringing

Personality

NetworkingStyle

NetworkStructure

AccessingResources


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Personality:

implicationsSome aspects of personality promotenetworking:

High-self monitors sense situations betterExtraverted people are constantly in the companyof othersAgreeable people are nice to talk from the firstinteraction

Conscientious people are more predictable anddependable

Be aware of how personality enables andlimits your choices:

We naturally prefer our own personality


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Networking style

Networking Style* Behaviours

* Generally consistent with personality* Maybe learned through skill, experience, or

awareness* Can and does change over time

Personality

NetworkingStyle

Network

Structure

Accessing

Resources


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Networking guidelines

Maximise the value of each interaction

Invest time in developing relationships withinteresting people

Keep confidences, build trust, be consistent andpredictable

For key meetings, do research and be prepared

Practice and expect reciprocity balance giveand take

Show respect and empathy with regard to timeand resources

Only connect when all involved will benefit


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Game plan

General considerations

The importance of networks


structuring


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Team performance:

myth + reality

Teams whose members work together

harmoniously perform better than those thathave lots of conflict

When people get together to do a job thejob will probably get finished faster

Most commonly, teamwork really takeslonger to finish or doesnt even get done atall

The likelihood of teams performing like

magic rests on how they are structured and


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Three elements of

team design

Incentives faced by team members including equity split

Composition of the team

Norms within the team


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Team performance

model

Member incentives, composition and normsinfluence how teams decision makingprocesses and this drives performance

outcomes

Composition

Quality of

DecisionMaking

Venture

PerformanceOutcomes

Norms

Incentives


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Team member

incentives

Generally consists of- Salary (fixed + variable) & benefits Stocks / stock options

In the early stages of the venture cash

rewards will be low / non-existent


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Equity allocation some generalprinciples

Share the wealth with those who helped you

create it Usually better to follow the Contribution

rule rather than the Equality rule for equityallocation

Build in flexibility since contributions ofmembers will vary over time

Have clear stock holder agreements to

handle exits of founders and other equity


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Money is important

but not everythingObviously financial compensation is

important, but so are other things environment culture people

challenge future growth possibilities etc


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and money is not

necessarily today

Performance-related bonuses Shareholdings

Stock options


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Stock options

Pros share in future value anticipated high future returns

compensating lowish (orsometimes non- existent presentearnings)

Cons worthless if no future value very difficult to negotiate if no

IPO


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DEFT model of team

composition

Diversity within the team

Expertise of team members

Faultlines within the team

Totality of teams skills


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Assessing Totality of

team skills

Step 1:

Map the skills required based on theventures business concept & life stage

Step 2:

Identify gaps between skills required &available in the team


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Assess Totality in

terms of

Functional skills

Industry / domain skills

Start-up context skills


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Expertise of team

members

Avoid

Grab

Inter-personal

skills

Technical

ski

lls

Adequate Excellent

Adequate

Excelle

nt

Use when taskinterdependence is very high

Use when taskinterdependence

is low


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Two kinds of

Diversity

Knowledge Diversity

Differences in functional areas

industry

background work experience

education etc.

Social Diversity

Differences in ethnicity

gender

age language etc.


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have different effectson new venture

performance

Knowledge diversity is beneficial Promotes innovation and creativity Flexibility in thinking

Social diversity is likely detrimental Stereotyping leading to interpersonal

conflict Opportunity costs of resolving

interpersonal frictions


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Faultlines

Faultlines divide a team's members on

the basis of one or more attributes (e.g.gender faultlines divide teams into male and femalesubgroups)

Faultlines become stronger as moreattributes align themselves in the sameway (e.g. when two new female hires share thesame nationality)


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Potential Faultlines

0 years0 years2 years2 yearsTeamTenure

Male/FemaleMale/Female

MaleMaleGender

Finance (nosoftware

expr)

Mktg. (nosoftware

expr)

Software

Software/

Medicine

FunctionalArea

Chinese /Western

Chinese/Indian

/Western

Western

WesternEthnicity

30s30s3430Age

VP Finance &Control

VP Sales &Mktg

CTOCEO


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Team Norms

The leader (or the team collectively) must

specify core norms that demarcate theteams behavioral boundaries

The Profane the few things that are NEVERdone

The Sacred the few things that are ALWAYSdone


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Summary structuring

the team

- Better to have a small share of large pie than 100%of a non-existent pie equity incentivises teams- Be clear on the Contribution vs Equality issue.

Generally better to rely on the contribution principle- Have flexibility to take care of changingcontributions of members as well as entry/exit- Document procedures to handle founder or other

equity holders exit

Composition

Quality of

Decision

Making

VenturePerformance

OutcomesNorms

Incentives


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Summary structuring

the team

Diversity: Maximise knowledge diversity; minimise socialdiversity

Expertise: Maximise technical skills subject to adequate

interpersonal skills

Fault lines: Beware of strong fault lines that could distorttask conflict into interpersonal conflict

Totality: Ensure your team has the full complement oftask skills

Composition

Quality of

Decision

Making

VenturePerformance

Outcomes

Norms

Incentives


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Summary structuring

the team

What are the norms that define the behavioralboundaries of your venture team?

The PROFANE - the one or two things that are NEVERdone

The SACRED the one or two things that are ALWAYS

Composition

Quality of

Decision

Making

VenturePerformance

OutcomesNorms

Remuneration

11 team building iit(b) prof turner

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