When starting a business or pursuing an innovation initiative, a critical component of success is having a great team. In fact, this may be the single most important factor and by itself, often determines whether a given initiative will be successful. Unfortunately, the evaluation of a team’s effectiveness is often done after an initiative is unsuccessful and business leaders or investors are attempting to determine why a seemingly great idea underachieved.
Savvy business leaders and investors know to evaluate and understand the capabilities of the team against what is critical to succeed before any money is invested. This typically happens during due diligence for a contemplated investment or M&A transaction. In cases when a weak team is identified but the market is attractive and the idea has meaningful competitive differentiation, the investor(s) will plan to augment the team with additional talent as part of the investment.
Secure Foundational Competencies
The challenge is knowing what competencies are necessary for a given initiative and what a good team looks like. A significant risk is that those evaluating the team place too much emphasis on the competitive differentiation of the proposed innovation and lose sight of the foundational competencies of a great team.
First and foremost, the team needs to have a strong leader: one who has exceptional critical thinking skills, strong communications skills and the ability to engender trust in others.
The team also must have a strong customer advocate: someone who thoroughly understands the target market and has the confidence of stakeholders to represent the interests of customers throughout the project. If the project is technology dependent, the team absolutely needs appropriate technical excellence, whether within the core team or via an outside resource. Depending on the scope of the project, the team may require excellence in multiple disciplines.
In start-ups, team members may wear more than one hat. Regardless, each of the functions are critically important and play a significant role in the success of the initiative.
How do you identify potential gaps in a team? Some questions to ask include:
- Does the leader engender trust in those above and below?
- Does the leader have exceptional critical thinking skills or are they just a good project manager?
- What is the depth of your customer advocate’s experience? Have they ever experienced the pain the innovation proposes to overcome? Do they have relevant experience serving the needs of a broad set of customers in the target market?
- Are the technical challenges of the proposed innovation clearly within the scope of the team’s existing skill sets? If not, does the team have experience working with outside experts or is this a new required competency?
Don’t Rationalize Weak Links
Beyond being simply uninformed, the greatest mistake investors and business leaders make is convincing themselves that the technology or competitive advantage the innovation is based on is so great that they can rationalize or overlook a perceived gap in a team.
Trust your gut. If you sense there is a weakness in a team, then there is a weakness in the team that should be addressed before the investment is made—not after the loss is accrued. A great team doesn’t guarantee success, but a weak team quite often results in diminished returns, including a total loss.