How will you manage your venture team?
Discussions About Venture Team Management
A business organization is composed of people and groups of people. It is goal-directed, meaning that it exists for a purpose, it has structured activities, and it is chartered or incorporated with the intention of profitably operating a business activity. It has an identifiable boundary, distinct from the environment, and a place in the ecosystem of capitalism.
Richard Schulze, the founder of the consumer electronics retail chain Best Buy, built his company from kitchen-table to a retail empire with almost 1,900 stores, 94,000 employees, and $20 billion in sales.
In discussing what makes up an entrepreneurial operating environment, Schulze said that it has to instill the vision and values of the entrepreneurial leader. It builds on talent, becoming a “talent powerhouse.” The leaders are on the lookout for barriers to remove and look outside the organization for new ideas and creative viewpoints. And everyone must learn how to measure and adjust to cover gaps because the customers’ demands are always changing.
Defining Corporate Culture
An organization’s culture is the underlying set of key values, beliefs, understandings, and norms that are shared by its employees. These underlying values may pertain to ethical behavior, commitment to employees, efficiency, or customer service, and they provide the glue to hold organization members together. Most importantly, an organization’s culture is unwritten but can be observed in its stories, slogans, ceremonies, dress, and office layout.
If organizational structure is the “hardware,” then culture is the “software,” much as patterns of thinking, feeling, and acting are behaviors that arise from a person’s mental programming, or “software of the mind.” Tom Siebel, founder of Siebel Systems, said the number-one reason for his company’s success is the corporate culture. According to Siebel, the primary job of a chief executive is “to first articulate and communicate the corporate culture.”
How Should Venture Teams Function?
The venture team must learn to work together, learn how to divide up the work, and learn how to divide up the responsibilities. It must determine how decisions will be made and how to handle disagreements and conflicts. Drucker talks about how venture teams should work like sports teams. For example, tennis doubles team players work with and support each other. The team scores a point or wins a match only when partners are dedicated and work in synch with each other.
Charles Deneka, chief technology officer at Corning’s R&D lab, describes their culture as a jazz ensemble, as opposed to a symphony. The R&D lab’s employees operate like a soccer team as opposed to a traditional football team. It is a collection of talent, all with roles to play, all able to keep performing in a game that is constantly changing.
Be Prepared to Learn and to Change
It takes some time for the team to fully come together because it takes constant learning and “recalibration.” To learn more about what it takes to be a great organizational leader, we listened to the CEO of the world’s largest organization, Richard Danzig, the chief naval officer (CNO) of the U.S. Navy. During the late 1990s, CNO Danzig was in charge of some 200 separate organizational networks, over 100 ships deployed around the world, a $90 billion budget, and 900,000 employees. He said that the CEO has to project a theory that is deeper than the once popular mission statement. This “theory of the organization” leads the culture and expectations. The CEO also provides what he calls “the central nervous system” that draws the whole organization around to support the theory of the organization.
Among some of the sports leaders we talked to, John Elway, former quarterback of the Denver Broncos, is one who stands out. As the CEO on the football field between 1987 and 1999, he led his team to five Super Bowl games and two Super Bowl championships. In the 1999 game he was given the Most Valuable Player award. According to Elway, leaders must have the vision and capability of seeing through endless walls and roadblocks. Facing times of uncertainty, they must spot the possibility and motivate the team to success. Elway cited a championship game against Cleveland in 1989 when Denver moved the ball 98 yards in fifteen plays to win the game, still today referred to as “The Drive.” Finally, there is the persistence that is required to keep going. According to Elway, “Nothing in the world takes the place of persistence; not talent, not education; nothing.”
How to Lead During the Tough Times
During the easy times, everybody can make things happen. But tough times, especially economic downturns, require a different approach to managing. In fact, the ability to re-assemble the team and manage the interpersonal conflicts that arise during tough times is seen as very key to potential investors. But what can you do to maintain morale when tough times strike?
First, be honest with yourself. Do not end up believing in your own marketing and PR
campaigns. Do not lose your intellectual honesty.
Second, refocus on your true competitive strategy. Do not overreact to current industry conditions and chase trends. Start by investing in a strength instead of shoring up weaknesses, and do not work on anything where you might be just average. It is important to emerge from tough times without compromising the potential future growth.
Third, revisit your value metrics and look hard at what you truly need to measure and analyze. Consider what may happen during growth periods, when inexperienced venture teams may be hiring “B” bodies (called “under-hiring”) instead of going after quality “A” team members. Once the growth curve (topline sales) flattens in tough times, these “B” bodies become dead weight and the organization will lose its lift. In such down times entrepreneurs often stay in denial, then not cut deep enough or quick enough. Tentative or partial cuts will only slow the bleeding, not stop it. Do not be afraid to “prune the tree deeper than imagined.” If you need to reduce headcount, make your cuts based on performance, rather than on arbitrary factors like seniority, nepotism, or friendship. Focus on keeping the people who can help you drive value.
Fourth, you need to create and communicate a positive agenda for your remaining workforce that creates a sense of purpose, and strategic direction for keeping the venture moving forward. It is important to clearly communicate that the decision to retain each of them was based on an objective examination of their contributions to the venture. Make it clear that they are still with you because your management team wants them there.
Fifth, a reduction in headcount is an excellent time to revise or implement an effectively targeted incentive program. In the middle of tough times, such an effort by the venture team makes it clear to the remaining employees that your venture is looking ahead through lean times and will not be passive in its pursuit of success. In tough times, great teams pull together. Like Elway’s “drive,” this action reassures the remaining employees that management not only has a strategy to address the tough times, but more importantly is committed to sharing the upside benefits of achieving that strategy with its people. It is financially sound too, because by relying on incentive programs instead of salary increases, you can motivate targeted behaviors that drive value while simultaneously holding down fixed salary costs.