by William J. Rossi
Powering Up Your Team
The quality of a management team is the single most key determinant of business success. Following are some tips to assessing, restructuring and powering up your business team.
The Importance of the Management Team.
First, of the things that most attract investors to a company, a quality management team is nearly always quoted as the most key element. It trumps product and market in almost every survey. The reason: a great team can take a mediocre product and make it successful, while a mediocre team can fail with a great product. A survey conducted by Profit Dynamics among 262 professional investors evidences this notion. When asked in this survey what factors most influenced the decision to invest, management quality ranked #1 among all responses. Others like market size and proprietary technology were seen as important, but paled in significance to management quality. When asked the reasons that most drove the decision to decline investment, again lack of an experienced management team ranked #1 by a wide margin in the response of these investors.
So, what constitutes a quality management team? The response of these professional investors was overwhelming: it means experience, track record.
While other qualities were mentioned like integrity, vision and dedication, only 17% of respondents did not include successful experience as one of the most key components. While it’s clear that experience counts the most, those starters among you who haven’t yet achieved that track record should not be discouraged. A flexible management team, one that recognizes its shortcomings and is willing to recruit the right team members, was quoted a close second.
Fine Tuning the Team.
The first step in upgrading a management team is to assess both your current talents and your needs. This has to be an honest assessment. Remember, investors want to know either that you have the requisite experience, or that you know that you need it and are flexible to get it. If you find that current talents don’t meet your needs, consider the following in restructuring the team.
- Be expert in your industry. Focusing on whether you have significant, demonstrated experience in your industry is especially valuable. Lack of recognized expertise is killer both in terms of directing the company and in securing investment.
- Drive diversification of disciplines. No company can survive with only techies. Even Apple has marketing and finance people. Make sure that the functional disciplines requisite in your business are resident on the team.
- Mix and match thinking types. Try to incorporate both linear thinkers along with visionaries. Visionaries are creative people and come up with initiatives to take the business in new directions. Linear thinkers will concern themselves with what has to be done this month to insure that you are there next month to do all those cool, visionary things.
- Encourage disagreement. While it might be comfortable to have people who always agree with you, make sure you have people who are willing to disagree with you. Challenging the current thinking of any management team is always healthy.
- Arm yourself to attract the right, new people. In talking to prospective team members, sell the company and its value proposition. Remember, this is an investment. While investors invest their money, new team members are investing their careers. Sell the current team as this is marriage of sorts.
Advisory Board – Power in a Package.
An advisory board is not a legal entity, and has no fiduciary or financial responsibility. It simply operates at the discretion of the company to advise the company in its areas of expertise. This a critically important, collateral element of the management team, and can provide powerful leverage in both operating and financing capacities. Populated with people of recognized experience, your board brings instant credibility to the company.
In terms of recruiting an advisory board:
- Mine your contacts for introductions. If you knew the right people to get, you wouldn’t need contacts. But, most don’t. So, rely on your contacts.
- Don’t be bashful. There’s nothing wrong with cold calls to identified prospects. The worst that can happen is that the prospect says “no”. Like in sales, “no” just means “next”.
- Aim high for demonstrated experience, but be reasonable. Apple’s Tim Cook likely won’t have the time to help you.
Finally, once you have an advisory board, use it. Have regular meetings and listen to your advisors. If you decide against taking a suggestion, (since, of course, it’s your business) explain why so that they know you are paying attention and their guidance is valued.
In conclusion, the quality of the management team is critical for both company direction and financing. Experience counts the most, but willingness to recruit the right team is a close second. An advisory board can be a powerful addition to any business team if populated and used intelligently.
William Rossi is Professor Emeritus of Entrepreneurship at the University of Florida, having taught at both in the undergraduate and graduate Entrepreneurship Program there for 15 years. Prior to teaching, Professor Rossi initially held several senior level positions with Ford, Goodrich and Picker International. After relocating to Florida in 1986, Rossi worked in executive management positions in smaller entrepreneurial companies and was a principal in several. Rossi holds a Master of Science degree in Operations Research from the University of Massachusetts and an undergraduate degree in mechanical and industrial engineering from Ohio University.