Homogeneity and Team Building: The Founder’s Casting

Birds of a feather flock together.

People are drawn to others who are like them, it is human nature, it is in our instincts. Thus, it is not surprising that founders would be inclined to build a team of individuals with common threads. It’s natural yes, but as with everything, homogeneity offers up both benefits and risks.

Often for founders, homogeneity means filling positions with friends and family. The most obvious problem founders face when hiring these people is that existing relationships can get in the way of business decisions. Beyond this common occurrence though is homogeneity that involves choosing individuals who are not friends and family, but are highly relatable in other ways, such as demographical or behavioral qualities. Why do founders go this route?

It’s quick and easy…

Well of course building a company is not going to be quick and easy, and finding the right people to join the team will never be a brisk and breezy. There is work to be done, hard work. However, one of the benefits of homogeneous teams is they most certainly forge the path of least resistance. Going with what they know, can save a founder a ton of time as they attempt to build a successful and effective team. Working with and communicating with individuals that one can relate to on some level is significantly easier, a certain level of trust exists by default. Homogeneity can also make creating an ideal culture simpler, and while culture is important, one built on the idea that a team should be made up of strictly relatable individuals can leave other desirable aspects of a successful team, neglected.

It comes with some risks…

Homogeneity can limit diversity, an important value for many businesses and companies. Diversity can facilitate out-of-box thinking and increased creativity within teams, more diverse teams will breed more diverse thoughts. In Harvard Business Review’s article “Why Hiring for Cultural Fit Can Thwart Your Diversity Efforts”, author Celia de Anca discusses how hiring for cultural fit or homogeneously can cause two major issues. A team that is based on personality cohesiveness rather than a team focused on the completion of and the success of the goals and work at hand. The second problem, founders can miss out on those individuals who do not fit the mold, the ones that could bring new and unique ideas. That’s a risk they should not be willing to take.

Founders must make the hard decisions and realize when choosing to build or partially building a team on homogeneity is a solid plan and when it is not. There should be a balance, and if done correctly the founder can build a team that is both diverse and culturally sound.

The Founder’s Role

There is no question when it comes to whether a founder should be involved in the building of their team. A big part of a successful business is the people who work within it. Hiring the right people, for the right positions, at the right time is essential. The individuals that make up a team are just as much assets as the building or equipment. Therefore, founders should find themselves with a highly involved position in building their team, selecting their cast members, and making sure they are the best individuals for the team. One bad apple can spoil the whole bunch is not just about fruit. Having hardworking team players, A-Players, will not only make for a desirable environment for everyone to be effective and productive in, but it is also helpful in attracting additional quality talent. Founders should be excited in having a role in building their team, the level of return on this investment of time and energy could really make or break a business.

References:

Anca, C. D. (2016, April 25). Why Hiring for Cultural Fit Can Thwart Your Diversity Efforts. Retrieved October 09, 2017, from https://hbr.org/2016/04/why-hiring-for-cultural-fit-can-thwart-your-diversity-efforts

Herrenkohl, E. (2010). How to hire A-players: finding the top people for your team–even if you don’t have a recruiting department. Hoboken, NJ: Wiley.

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.

Building Social and Financial Capital

Near the end of my undergraduate studies, I attended a study and preparation session for my certification test in hotel industry analytics. The head of the Hospitality Tourism Management program at Western Carolina University, Dr. Steve Morse, led this session. During this review, to a room of about 20 of my classmates and myself, Dr. Morse proclaimed, “The opposite of networking, is not working.”

With my undergraduate degrees in Marketing and Hospitality Tourism Management the subject of networking is thoroughly covered in nearly every class, especially in courses with curriculum center-focused on fine-tuning student skills to help them to become an asset and an effective leader within a successful organization. Networking is social capital.

Two things are of upmost importance when we are discussing the pursuance or an entrepreneurial venture, financial and social capital. Of the two, I dare say the latter is so vital that it should be weighed much heavier in importance and be of great focus, even and especially when placed next to the former. The cliché, “Who you know is as important as what you know” (and it could be argued that it is more important than what you know), is undoubtedly true. Perhaps, a better statement would be, who you know is as or more important than the finances at hand or the potential financial capital to come. Financial capital is important too, but finances to fund a venture can be accumulated and accessed in a variety of ways. In fact, in “The Founder’s Dilemma”, Noam Wasserman points to research that has shown that people who can accumulate more social capital before founding are able to attract more financial or seed capital much easier and much more quickly.

Networking really pays off, knowing and meeting the right people can really turn things in the founder’s favor. In Stephen Key’s article for Entrepreneur.com, “Meeting the Right People Is Worth It, Even If You Have to Pay for Access”, he addresses a very relevant question, “When Is It Advisable To Pay For Access [to meet/network with the right people]?” In other words, when should you invest (social capital is very much an investment) in networking. Key says, “Yes, your business might be limited on funds, but if you’re burning through cash because you can’t get in touch with the right people, maybe you can’t afford not to.” This is such a crucial point, it is easy to see how social capital can work in favor for a founder in assisting in gaining financial capital and help to soften the blow between starting up and staying afloat.

With Keys advise, the actuality is that a founder would be taking a bit of their financial pie and utilizing it in a way that would influence the construction of social capital which in turn would help create financial capital growth and in the long run, wealth and profit. Nevertheless, most networking that we do is free or even available at a low cost, whether it be a little time or a little money. The people we meet that could help us in our entrepreneurial journey, are priceless.

Who you know, can help you grow.

References:

Key, Stephen. “Meeting the Right People Is Worth It, Even If You Have to Pay for Access.” Entrepreneur. October 03, 2014. https://www.entrepreneur.com/article/238026.

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.

 

Wealth Versus Control: The Great Dilemma

The great entrepreneurial dilemma, riches versus control. Can a founder have both?

To begin, I’d like to establish my overarching goal in my entrepreneurial venture. My plan is to start a fire safety company with my husband to serve Western Carolina and then expand outward to serve commercial and residential establishments in counties beyond the area. Creating wealth, for me, tips the scale much more than control does. When I really think about how I would like to see this venture run.

When comes down to it, my vision of success and my dreams for growth (i.e. not having all my eggs in one basket) exposes the tell-all. The only way for me to maximize growth and wealth, while still leaving time and resources for each to flourish is to relinquish certain levels of control. Sure, in a perfect or ideal world, our company would become infinitely wealthy and we would hold all the control in our hands, everything we touched would turn to gold in an extremely Midas and simile sort of way. Those instances do exist, for some companies, but they are rare. Realistically, there can be an environment in which both wealth and control can exist, but they must weigh in with some differing of levels to create a complimentary balance.

In Harvard Business School’s article, “Rich or Royal: What Do Founders Want?”, author Sarah Jane Gilbert, asks Wasserman the questions, “Is it better to be focused on one or the other? Is it possible to have a healthy balance between the two?” He highlights the obvious first jump for most presented with these questions, explaining that most of the founders that he has studied, started off wanting to become both Rich and Regal. He goes on to say that this desire is reinforced by the prominent Rich and Regal greats of the entrepreneurial realm, people like the Mark Zuckerbergs of the world. What is ignored though is that great founders with great wealth and control simultaneously are the exceptions, the rarity, the unicorns who achieve both. Wasserman says that many founders that he has studied that have tried to mixed the Rich and Regal desires, have often ended up being left with neither. He goes on to offer up a more successful and viable approach to this dilemma. It requires a founder to take a step back, realize their true motivation, and make decisions that align it. While it reduces the chances of being both, it increases the chances of achieving the founder’s true motivation.

I can agree with this approach and I think it all comes back to establishing that overarching drive. That is the heart of a successful venture, true focus. It is knowing as a founder, what it is that you want and driving towards it. It is about making decisions that stay true to the visions for your venture and not falling victim to trying to have it all and then being left with nothing.

What I truly found interesting in this article, Wasserman continues and goes so far as saying that in his analyses he found some of what sets the Rich and Regal apart from the founders who are forced to choose between the two. The biggest finding was that the Rich and Regal often leveraged prior financial and social assets to build their venture.­­

I will touch on financial and social leverage in my next blog post.

References:

Gilbert, S. J. (2006, November 29). Rich or Royal: What Do Founders Want? Retrieved from http://hbswk.hbs.edu/item/rich-or-royal-what-do-founders-want

Wasserman, N. (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press.