As anyone working with or investing in startups will tell you the success of a new business is heavily reliant on the team driving it. It is a key factor that venture capital investors look at before investing in a new startup. And rightly so, as data shows that 60% of new ventures fail because of problems in the team.*
The team is crucial also for new businesses started by corporations. However, what makes a great team is not entirely the same for corporate ventures as for independent startups. Based on our experience and gathered insights from other people’s research we have found that there are 5 main things to think of or look for when putting together the team for your corporate startup.
It can be tempting to add more people to a team and think it will increase productivity. Unfortunately the effect is often the opposite: after a certain number more team members will only lead to increased unclarity of responsibilities, more cumbersome communication and slower decision making, all of which slows progress and decreases productivity. In our experience the magic number at the very beginning of a new venture is two or three people. As the venture matures the team size should also increase, but it is still crucial to make sure that anyone added has a very clear responsibility and complementary skillset, which brings us to the next point.
The skills needed in a corporate startup team will naturally differ depending on the nature of the venture. A rule of thumb is to have three key skills on the team from the start: design, technology, business and customer. These four skills are often not represented by 4 people, but rather combined in a team of two or three. A fifth skill, that is absolutely key to a corporate startup, is what we call ‘enablement’. This means that one person on the team, or a person that is very close to and easily accessible to the team, needs to know the mother organisation extremely well. This person is the one that will make sure that when the corporate startup needs to make use of the mother company’s strengths, they will know who to talk to in order to make this happen smoothly.
Just like in independent startups, the team mindset is crucial for a corporate startup. What you need to be looking for is a humble, open minded and curious mindset, paired with a strong optimism. It is an obsession with experimentation and continuous learning. Where to find this? There is no watertight formula. Having worked with startups previously might make you more likely to have it. Many designers have it. We find that it is helpful to ask potential team members to talk about previous failures and what they learned. And probe them with words such as hypothesis, experiment and iteration.
It is well documented that diverse teams increase innovation. Putting together teams of mixed age, gender, ethnicity, race and sexual orientation will likely give you more innovative results. Add to this also diversity in terms of study, career path and having lived and worked abroad and you’ve got it covered.** Many new ventures use ways of working inspired by Lean startup, involving setting important hypotheses about the business, devising experiments to test them, and then adjusting the business based on learnings from the experiments. This kind of methodology has also been proven more successful with diverse teams. And here study experience proved even more important than what might be expected: teams where all members held an MBA tended to do worse using this kind of method than teams with members of mixed study backgrounds.*** Managers have a tendency to hire people similar to themselves and ending up with homogeneous teams. Resist that urge in order to get a successful team for your corporate venture.
That a startup team spends day and night working on said startup often goes without saying. I have found however that when it comes to corporate ventures this is not a given. Sometimes teams are put together of people from the mother company who are excited by the idea, but can’t be released entirely from previous duties and so end up in some sort of part time roles in the new venture. In exceptional cases this can work for a few roles, but the small core team of a corporate startup should always be fully dedicated. New businesses are all about exploration, learning fast and moving forward fast. In order for that to be possible the team members need to be fully dedicated.
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