Innovation Footprints

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#ProofPoints: An Ending + A Beginning

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My Supply Chain Credo

Acknowledgement #1: I am grateful to Tayo Akinyemi for suggesting that I write this essay, and for reading and critiquing previous drafts. I am grateful to Kange Kaneene, Christian McKenzie, Christine Mendonça, and Lisa Morales-Hellebo for reading and critiquing previous drafts. Their comments and observations helped to greatly improve the final product. Any errors are mine alone. I am also indebted to Nahum Goldmann. My numerous and lengthy conversations with him between June and August of 2017 helped me clarify and sharpen my thinking about supply chain.

Acknowledgement #2: This article does not reflect the opinion of KEC Ventures/Particle Ventures, or of other members of the KEC Ventures/Particle Ventures team. Though I will be leaving the firm this month and we will not be making any new investments, Jeffrey Parkinson and the remaining team will be doubling down on our existing portfolio and working closely with our founders to maximize their chances of success. From the beginning KEC Ventures has been a high-conviction fund, as reflected in our portfolio concentration and follow-on reserves, and so while Fund II will be our last together, the story of KEC Ventures is far from over.

TLDR

  • We have decided to disband the team at KEC Ventures/Particle Ventures – September 11, 2018 is my last day. This is an essay about the decade I spent working on this chapter of my career, starting as the first person on the team that went on to become KEC Ventures.
  • While we will not be making new investments, I will continue to be involved in KEC Ventures Fund I and KEC Ventures Fund II as a general partner and Jeffrey Parkinson and Jeff Citron will be managing our two active funds and working with the companies to ensure their success.
  • Next, I am teaming up with Lisa Morales-Hellebo to start building REFASHIOND, a new early-stage venture capital fund based in NYC that will focus on supply chain. We’re starting from scratch. Our initial focus is technology and supply chains in the $2.4 trillion global apparel and fashion industry.
  • This is not the easiest choice, nor is it even the choice that guarantees me the highest probability of success . . . However, it is the option I am most excited and enthusiastic about – I am teaming up with someone with whom I have been working closely for more than 2 years because her enthusiasm and obsession for technology and innovation in supply chain matches mine.
  • Don’t hesitate to reach out to us if you’d like to talk about what we’re building and to perhaps get involved in some way – see the end of this article for more details. Sign up for our upcoming booklet about technology, and apparel and fashion supply chains here. Check out: The New York Supply Chain Meetup – Our Vision, and The Worldwide Supply Chain Federation – Our Manifesto.

We arrive with focus, and we stick to it.
– Aliko Dangote

A few weeks ago, we took the difficult decision to start the process of disbanding the team that some of you have come to know as KEC Ventures, or more recently, as Particle Ventures. Our journey towards building an early stage venture fund in NYC began in earnest in January 2011, after Jeffrey Parkinson joined Jeff Citron, Joann Vought, and me, at KEC Holdings in December 2010. On Tuesday, September 11, 2018, for me at least, that journey will come to an end. That will be 3,572 days or 9 years, 9 months, and 11 days after I joined Jeff and Joann at KEC Holdings on December 1, 2008, as Employee #2. KEC Holdings is Jeffrey Citron’s family office. Joann was CFO of the family office. They recruited me to start building an investing team since the family office had not done much direct investing up to that point but expected to do more direct investing over time. That investing team was eventually spun off to go and build an independent venture fund.

Before we started building KEC Ventures; I managed two turnarounds for companies with aggregate annual revenues of about $50 million, started the process of helping the founders to launch a consumer hardware startup in which we later made an investment, and performed in-depth examinations of several startup ideas we considered incubating ourselves. Between 2011 and 2015, we incubated a startup to bring a family of 3 financial derivatives to market – they were created by deconstructing large-cap dividend paying stocks. I assumed sole responsibility for designing the framework for valuing the financial derivatives, writing the forty-page plus white paper that outlined the theoretical justifications of the idea, and driving our effort to protect the IP we had created with a patent. I also worked with a software designer to create a rudimentary version of the product that could be used by early investors in the product. We failed to find product-market fit, and so we shut the company down in December 2015. One call I am most proud of is my recommendation that the family office make an investment in Michael Kors in it’s pre-IPO round. The reason’s why that would be a good investment were not plainly obvious from the data that was available to us. I did some further sleuthing and felt confident that my “buy” recommendation would prove to be the right call. I am not at liberty to share details, but I am confident in saying that it is the best direct investment that KEC Holdings has made between 2008 and 2018.

KEC Ventures grew to $98M of AUM, with 51 investments across 2 funds – a 2011 vintage, and a 2014 vintage. Our team tripled in size. Had we succeeded in raising our 2018 fund, we planned to rebrand the firm to Particle Ventures, and to turn the fund’s focus to supply chain and industrial intelligence.

This is not an article about what went wrong, or what our team could have done differently, or why we failed to raise our next fund.[1] Rather it is an article about some of the lessons I have learned over my 10 years in investment management and research, with 8 of those years having been devoted to building an early stage venture fund from the ground up. I prefer not to dwell on the past. However, I believe that making sense of one’s present, and assessing what one ought to do in the future sometimes requires that one reflects on one’s past. So, in some ways, this serves as my personal reflection.

As I tell this story I will try not to succumb to the narrative bias – our tendency to explain the world around us through stories. I will also try to actively avoid falling victim to the survivorship bias – our tendency to explain processes by focusing on the people who succeed at something generally thought of as difficult or improbable, while ignoring those who did not succeed. Among others, these two biases make us apt to reach incorrect conclusions and draw wrong lessons from events around us.

Now, on with this show . . .

Early-Stage Venture Capital Investing Is An Optimal Stopping Problem

“Suppose you decide to marry, and to select your life partner you will interview at most 100 candidate spouses. The interviews are arranged in random order, and you have no information about candidates you haven’t yet spoken to. After each interview you must either marry that person or forever lose the chance to do so. If you have not married after interviewing candidate 99, you must marry candidate 100. Your objective, of course, is to marry the absolute best candidate of the lot. But how?”[2]

This is very similar to the type of problem an early stage VC has to solve every day; An optimal stopping problem is one in which an action has to be taken within a certain period of time so as to maximize the potential benefit of having taken that action in the first place. These problems become more difficult, when the information available is incomplete, or the process involved is characterized by randomness.

In a situation characterized by uncertainty and a lack of historical information, one encounters several difficult questions. What is the optimal number of observations I should make before I make a choice? What is the most relevant question I should be asking before I make a choice? Am I looking in the right place? There are other questions, but you get the idea. For an early-stage VC, becoming good at solving optimal-stopping problems is about increasing the probability of a successful outcome for the VC’s portfolio of startup investments.

I have been thinking about about how a team of early-stage investors can become good at solving optimal stopping problems for some time. I am still working on figuring out how such a set of strategies might be implemented in the real world using a combination of software tools and human judgement and intuition. My sense is that if I succeed in developing a repeatable and systematic approach to solving this problem in the context of an early-stage venture fund, I will want to protect it as a trade-secret.

Early-Stage VC Is A Multi-Armed Bandit Problem

Suppose you are spending a day playing casino slot machines. You are required to play no fewer than 10 different and distinct machines – no two machines will give you an identical payout. Your only objective is to maximize your winnings at the end of the day.

This problem is one example of a class of problems in which a scarce resource must be allocated between competing and alternative choices in a way that maximizes their expected gain in value over time. Each choice has properties that are only partially known or completely unknown at the time of initial allocation. Each choice has properties that may only become better understood as time progresses or by allocating more of the scarce resource to that choice. Such problems are known as multi-armed bandit problems.

The way I see it, multi-armed bandit problems are a special category of optimal-stopping problems. However, multi-armed bandit problems deserve special focus because the approach to solving them is distinct from the approach to solving other types of optimal-stopping problems.

In the case of a VC, capital and time are the scarce resources. VCs must decide how to allocate capital and time among competing investment options in a way that maximizes the value of the fund’s portfolio many years in the future. We must also make decisions about whether we are going to allocate time and capital to startups already in the fund portfolio, or to startups that are not yet in the portfolio. These choices must be made under conditions of extreme uncertainty, lack of information, and incomplete knowledge – for example one must make assumptions about future states of the world. For early stage VCs, the quality and availability of information is not much better even for startups that are already in the portfolio because the future might unfold in a way that has not been anticipated by the VC and the founders of the startups in which that VC invested.

Moreover, some VC investments are made in competition with adversarial peers. That is, if certain VCs decide to make the investment before a peer VC does, the slower peer may become excluded from making that investment for any number of reasons. For example, there may not be enough of the round remaining to meet the slower VC’s minimum allocation preferences given that VC’s fund size.

So early-stage VCs face the explore/exploit dilemma that is key to how one solves multi-armed bandit problems. Exploration involves doing research, cultivating knowledge, and developing a point of view about a topic relevant to the VC’s area of investment focus. Exploitation involves using the information and knowledge that’s been developed during exploration to accomplish the VCs objectives.

Based on my experience and observations so far, I have come to believe that the best venture capital firms – those firms that have shown persistently high performance over the course of 4 or more funds – have developed internal processes that enable their teams to systematically “explore” in ways that give their teams a competitive edge over their peers when it is time to “exploit”. I think this means that they do a lot of research and development – which leads to the question; What is research and development?

I define research as a systematic and organized approach to answering questions that leads to new knowledge which we may apply to solving problems we currently encounter, or problems we expect to encounter in the future. In the context of a business, research is a systematic and organized approach to solving problems that we expect will create new value for the customer. Development is a systematic and organized effort to use the outcome of research to obtain new sources of revenue for the business.

As an early-stage venture capitalist I think of research as a systematic and organized approach to acquiring the knowledge and insights that will eventually enable me to benefit disproportionately from information asymmetries and uncertainty in order to generate returns that satisfy limited partners’ expectations, it is the systematic act of cultivating knowledge that one expects will payoff in the form of unrealized fund returns in the future. The development part of research and development is the systematic and organized actions that the VC takes to transform the knowledge that has been acquired, gathered, and exploited into realized returns that the fund’s limited partners can harvest.

So, the most successful funds are made up of teams of people who have become really good at team-based learning, and taking action as a result of that learning to turn their knowledge into realized returns. I think it also means that such funds have created a knowledge network of outside-collaborators that enables them to augment what the team is learning with knowledge from the trusted and more knowledgeable collaborators within the network that the team has built around itself. The secret-sauce is how such teams combine the knowledge that they develop in-house with the industry specific expertise and connections of their trusted collaborators.

This leads me to my final observation . . .

Early-Stage VC Is An Exercise In Continuous Team-Based Learning

The future is fluid. Therefore, early-stage VCs must constantly be learning in order to avoid being the last to realize what advantageous new opportunities startup founders are pursuing. The question is, how does one implement a team-based learning strategy within the context of a venture fund that is not a single-GP fund? How does one ensure that;

  • each member of the team shares the same mental model,
  • the team has a correct and consistent mental model of the universe within which the team is competing, and
  • this mental model appropriately values and nurtures the team’s collective ability to learn as well each individual team member’s commitment to learning as a prerequisite for accomplishing the venture fund’s objectives?

Although I do not have an answer yet, I have been thinking about this question for a long time. I have some ideas that I am fleshing out. Here’s a preview: 6 Things I Have Learned About Building High-Performing Teams.

We do not learn from experience . . . we learn from reflecting on experience.
– John Dewey

In front of my family’s home, Laung Dabuo, in Nanville, Upper West Region, Ghana. I am the boy in the blue t-shirt.

Where Have I Come From?

Perhaps, I should share a brief summary of my personal background. Most people I have come to know professionally probably glean what little personal information they know about me from our interactions around work. That turns out to be very meagre, since I try not to give away much about myself or my past to people I do not yet know very well.

I am Ghanaian by birth. My parents moved to Kano, Nigeria while I was a little boy and so I attended elementary school in Kano. I have been on my own since I turned 12, when my parents decided that I should attend secondary school at home in Ghana’s Upper West Region, so that I could learn our culture and my family’s history – my parents and my siblings remained in Kano, and my parents and my younger brother still live there. I learned more during those 6 years at St. Francis Xavier Junior Seminary in Wa, in the Upper West Region of Ghana about the advantages of self-sufficiency, drive, and self-discipline than at any other time in my life.

The picture above is of me, in 1987, at home in Nanville, outside the entrance to my family’s compound house. This was during my first Christmas vacation while I was attending Xavier. I am the boy in the blue t-shirt. My classmates were boys who were often the first in each of their families to attend school, and whose parents were subsistence farmers just like my relatives in Nanville. It is the self-sufficiency, drive, self-discipline, and commitment to excellence we were taught at Xavier that produces people like Constancio Nakuma, Methodius “Method” Tuuli, and Aaron Anvuur – who sat directly ahead of me in class for 5 of our 6 years at Xavier, and who along with Edward Tieru Dassah, became my classmate during our final 2 years of secondary school after we graduated from Xavier. Aaron, Edward, and I maintained a fierce and relentless academic rivalry that still serves as a source of positive personal motivation for me.

After Xavier, I moved to Accra, where I completed my secondary education at the Presbyterian Boys’ Secondary School. Then, rather than attend university in Ghana or Nigeria, I decided to save some money in order to self-fund my secret plan to apply for merit-based scholarship grants from colleges in the United States. Connecticut College awarded me a Connecticut College Grant in 1997. I am very proud of that accomplishment because my job at this time paid the equivalent of $40.00 per month, in Ghanaian Cedis, and I saved every pesewa I could in order to pay for the SAT I and SAT II exams, the TOEFL exam, and for applications to nine colleges in the United States. I remember very clearly that everyone around me who found out what I was trying to do thought I had lost my mind, and that my failure was inevitable. Many tried to dissuade me, and I endured mockery and derision because this meant I had to forgo the comforts and social activities in which my peers indulged. For example, at one point I could only afford one or two decent shirts, and I had only one pair of decent trousers.

I was rejected by seven of the nine colleges I had applied to, and wait-listed by Carleton College and Connecticut College. The Connecticut College Grant covered the full cost of my undergraduate education. Attending Connecticut College enabled me to pursue a double-major in mathematics and physics – I was the only student to graduate in May 2001 with that double-major. There is no disputing that Connecticut College changed my life.

Before I joined KEC Holdings in 2008 I had worked as a pension actuarial analyst at Watson Wyatt Worldwide (now Willis Towers Watson), as the statistical research analyst for the Group Diversity team at UBS AG, and as the statistical research analyst for the Diversity and Inclusion team at Lehman Brothers. I started my MBA at NYU Stern in September 2005, while I was working at UBS. I earned my MBA in May 2008, two months after losing my job at Lehman Brothers.

I had already started pursuing the CFA Charter when I joined KEC Holdings in 2008 – having passed the June 2008 Level I exam. I became a CFA charterholder in August 2017. The way my life has unfolded has taught me to have conviction in my beliefs, to be self-sufficient, to embrace uncertainty, to always bet on myself, and not to limit my imagination about what I can accomplish if I commit to making it happen. I am not afraid to be different. I have come to identify very strongly with the Connecticut College mascot, the Camel – a symbol of resilience and stamina in the face of daunting odds.

Start by doing what’s necessary; then do what’s possible; and suddenly you are doing the impossible.
– St. Francis of Assisi

Where Am I Going?

After giving it careful thought, I have decided to team up with Lisa Morales-Hellebo to build an early-stage supply chain venture fund – starting with supply chain technology in the $2.4 trillion global apparel and fashion industry.

I first met Lisa on Wednesday, June 8, 2016 . . . We had been introduced to one another by Elise Whang, founder of Snobswap, now LePrix, in late-May. I responded to say I could only meet Lisa after my CFA Level III exam in early-June. I didn’t expect that Lisa and I would then spend nearly two hours talking about supply chains during our first conversation.

Coincidentally, we had both been thinking about technology and innovation in supply chains since 2014. Lisa had been thinking and learning about supply chains and technology in the fashion and apparel industry before and after building the New York Fashion Tech Lab, and by the time I first met her, she had spent a year traveling to Puerto Rico to visit apparel factories, maker labs, cut and sew shops, ateliers, and universities in order to learn about the existing apparel supply chain and the challenges it faces. She did this at her own expense, with hopes of reviving apparel manufacturing on the island as a catalyst for rebuilding the already weak local economy.

I had been thinking about value-chains in the on-demand economy since August 2014. When I met Lisa, I had just started delving into the topic of technology and innovation in supply chain in a more disciplined and systematic manner after learning about impending regulatory changes for the freight trucking industry. That led me and John Azubuike to take a deep-dive into opportunities for technology startups in freight-trucking (available here and here) and another deep-dive into opportunities for technology startups in ocean-shipping (also available here and here).

During that first conversation Lisa expressed her desire to join an already established early-stage venture fund in order to explore her thesis that the biggest opportunities for investors in the global apparel and fashion industry are to be found in using technologies that have now reached maturity to rethink the industry’s value chains and supply chains. After listening to her carefully, and probing her more than most people meeting a stranger for the first time would, I told her that I found what she was thinking of doing to be a remarkably bad idea; in all the time I had been thinking about supply chain and speaking with other investors about it I had not met anyone who shared her enthusiasm for the topic, nor had I encountered any investors with her depth of knowledge about the issues. I felt very strongly that this would quickly become a problem if she joined an already established team of generalist early-stage venture capitalists. I urged her to go it alone because she possesses what I feel are the three most important things a new venture capitalist needs; a differentiated body of knowledge, a unique view of the world that is based on that knowledge, and a unique network through which to exploit that body of knowledge. Alternatively, I suggested, she should find someone who shared her enthusiasm for the fashion and apparel industry, supply chain, and technology, and together they should start the fund that she had described to me. After that conversation, we kept meeting in person, and speaking to one another frequently by phone. We discussed developments in supply chain technology broadly, and we shared and compared notes on the startups we each were encountering, and discussing what excited us about their respective founders and the problems they had set out to solve. We would also often talk about what it’s like to run a venture a fund, and the unique challenges that emerging managers must grapple with – they are no different than those a first-time startup founder must contend with.

In the meantime, thanks to my many conversations with Lisa, I came to realize what a wonderful opportunity the apparel and fashion industry presents for understanding the opportunity for technological transformation of global supply chains across many other industries. There’s data, and predictive analytics. There’s logistics and transportation. There’s advanced manufacturing. There’s energy consumption and utilization. There’s agriculture. There’s advanced materials. There’s pollution and sustainability. I could go on, but you get the idea – the supply chain issues are numerous and complex. I have spent the past few months reading everything, and watching everything I can about the industry. I am excited by the challenge of digging in and learning all I can about an industry that is so massive and complicated.

During the summer of 2017, after many conversations about supply chain with people who had read my blog posts on trucking and shipping. I made the decision that I will devote the rest of my career in investment research and management to becoming a specialist on supply chain technology and innovation – in other words, I will spend the rest of my career becoming a supply chain technology generalist VC. As a result, I felt that I should now be hanging out mostly with people who are focused on supply chain, and people who are focused on technological innovation. So, I set out to find a community that brings these somewhat disparate groups of people together on a frequent and regular basis.

After failing to find a group that fit my idea of the kind of community I was looking for, I made the decision to start The New York Supply Chain Meetup on August 23, 2017 – you can read about our launch here: Progress Report | #TNYSCM Minimum Viable Launch – Building A Supply Chain Community. Naturally, Lisa is the very first person I called. I asked her if she would help me in my effort to create this community, a community of practice on everything supply chain technology – starting in NYC. My exact words were along the lines of “Lisa, I’m going to get egg on my face if you don’t help me.” After laughing at me, she said yes, and became my co-founder.

Since then we have been side-by-side in the trenches, trying to build a global network of open and multidisciplinary communities focused on technological innovation in supply chain, starting in NYC. So far, our efforts have been mostly bootstrapped – with assistance from Work-Bench, SAP.iO’s NYC Foundry. UPS and CustomInk helped sponsor our launch in November 2017. Based on our initial success in NYC we are now on the verge of launching a number of chapters elsewhere, under the name The Worldwide Supply Chain Federation. Starting at zero, The New York Supply Chain Meetup – the founding chapter of The Worldwide Supply Chain Federation, now has more than one thousand, two hundred and fifty members. It is the largest meetup in the world that focuses on the intersection of supply chain and cutting-edge technology. All things being equal we will launch new, self-organizing chapters in Athens, Bangalore, and another somewhere in Central Europe before the end of 2018. There are also nascent plans to launch chapters in Los Angeles, San Francisco, Singapore, and Vancouver. We’ve done more than many would think possible, with less than many would think possible.

The past ran on supply chains. The present runs on supply chains. The future will run on supply chains. The world is a supply chain.[3]

Since we first met, Lisa and I have spent more time collaboratively learning about supply chains with one another than with anyone else either of us knows. She is the only person I know whose enthusiasm for, and obsession with supply chain and early-stage investing matches mine. So we believe it makes sense for us to team up to make our-shared vision for an early stage venture fund focused entirely on technology and innovation in supply chain a reality. REFASHIOND will become a fund that invests in startups building the technologies, innovations, and new business models that define the future of global supply chain networks. Initially, we will focus on supply chains in the $2.4 trillion global apparel and fashion industry. Ultimately, our ambitions extend well beyond that.

I can’t think of anyone else I would rather team up with to take on such an enormous challenge. Lisa is an expert at building the sorts of ecosystems that the type of fund we have in mind will need to develop if it’s to successfully solve the problems that supply chain startups often encounter. As Executive Director and Co-Founder, she was responsible for getting The New York Fashion Tech Lab off the ground between January and July in 2014. The New York Fashion Tech Lab is the first-ever accelerator to partner with major fashion retailers and brands. She has served on the board of Parallel18 since its launch in December 2015. Parallel18 is an acceleration program that presents a unique gateway for global startups to scale from Puerto Rico as a launchpad into South American and North American markets. The founders of the startups she advises love her, and I have seen how hard she works to open doors for them with potential customers, potential investors, and other business partners. She innately understands what it means to be a force-multiplier for startup founders because she has been in their shoes herself, as a serial entrepreneur, and has helped other startups scale to exit as an early employee. She earned her bachelor’s degree from Carnegie Mellon University, which was the only school she applied to, and graduated with University Honors.

We have complementary skills; Having never used a computer before I arrived at Connecticut College in 1997, I abandoned computer programming after 2 semesters of coursework during my freshman year. She had to teach herself to code, architect taxonomies, and map personalization systems early in her career in order to eventually build Shopsy.

We get along well, as you might guess from how much time we spent talking about supply chains when we first met each other more than two years ago, and how much time we have spent talking to one another about supply chains since then. I would trust her with my life. We both know what it is like to be an outsider – one may say it is the only thing we know. Neither of us takes opportunity for granted. Neither of us is afraid to be different. We have both learned to embrace uncertainty, and to use it to our advantage. We have learned to get comfortable with being uncomfortable. To outsiders looking in, we probably make an unlikely pair; a Puerto Rican woman and an African man – but we are more similar than dissimilar; for example, we both are only one generation removed from grandparents who earned their living through subsistence farming.

I am more excited about what Lisa and I are setting out to do than I have been about anything else I have worked on so far. Here’s a small and incomplete preview of our vision: The Worldwide Supply Chain Federation – Our Manifesto and Shipping And Freight Resource: Executive Insights: Brian Laung Aoaeh and Lisa Morales-Hellebo, Co-founders of The New York Supply Chain Meetup. We both feel fortunate to be able to do this starting in New York City.

How Can You Help Us?

We’re currently working on a booklet about the convergence of supply chains and value chains in the global apparel and fashion industry. We expect to publish it in late November. Sign up using the link at the end of this article in order to know when it becomes available. We will have more to share about what we are working on as time progresses. When we do, we hope we can count on your support, and encouragement. Until then;

  • It would be awesome to build what we have in mind as entrepreneurs-in-residence at a big corporation that views supply chain innovation as critical to its mission, and the future well-being of its business. We welcome opportunities to have conversations along those lines.
  • Sometime in the near future, we will kick-off conversations with investors who wish to consider becoming limited partners in our fund. Let us know if you’d like to speak with us once we’re ready. Tell any investors who might be interested in what we are doing about us.
  • We are eager to meet, get to know, and collaborate with corporate executives, startup founders, technologists, academic researchers, investors, and journalists who share our commitment to technological innovation in global supply chain. If this describes you, please connect with us personally. Also, consider joining the global community that we are building, or starting a local chapter where you live. Our contact info is at the end.
  • We will need to support ourselves and our families while we build REFASHIOND. To do that, we are willing to take on consulting assignments for corporations, governments, large nonprofit organizations, foundations, and multilateral organizations with consulting needs around open innovation, supply chain, technology, and startups. We’d love to work with companies that are thinking about starting down the path of creating a corporate venture capital arm. Please do not hesitate to let us know if you wish to engage REFASHIOND’s services.
  • We’re also happy to act as consultants to family offices, in the United States or abroad, that wish to explore setting up their own venture capital investing practice, such as KEC Holdings did. Please do not hesitate to let us know if you wish to engage REFASHIOND’s services for that purpose.
  • If there are other ideas you feel we should consider as we start building REFASHIOND, please let us know. Our contact info is at the end of this article.

Motivating Myself

I learned the most important lessons about what it takes to build a business at my mother’s side – she quit her job as a primary school teacher in Kano, Nigeria in 1981 and started trying to build a small business at home. For several years she baked and sold meat-pies through a network of kiosk operators on the campus of Bayero University, Kano. I was responsible for peeling and dicing hundreds of Irish potatoes every day, after I got home from school. They were a key ingredient in her recipe. She baked and sold whole wheat bread to the community of expatriates in Kano, and with my dad’s help, she also raised 1,500 chickens which laid eggs that we sold to the expatriates who bought the whole wheat bread she baked. I bore a significant amount of responsibility during each of those endeavors. I know what it takes to build a business from scratch – the physical effort, as well as the psychological and economic pressures with which one must grapple. For example, I know what it is like to wake up to find that all 1,500 layers we were raising had been wiped out overnight by an infectious virus. This happened more than once – sometimes we suspected sabotage by our neighbor who started a poultry farm soon after we started ours, but we had no tangible proof. My affinity for startup founders can be traced directly to what I learned about the challenges of entrepreneurship from working beside my mother.

After several pivots, she eventually started a school in 1986. More than three decades and hundreds of students later, she’s built a reputation for excellence and her school is highly coveted in Kano. Her very first student is now an early stage VC based in Brooklyn, NY – his name is Rashid Galandanci. I often joke that my mom is probably the only African elementary school teacher who has trained two little boys to go on and become venture capitalists in New York City.

So, when people ask me what motivates me I tell them that I wake up every day trying to become the kind of investor my mom would have loved to have by her side over the years, since she started trying to build a business in 1981. That isn’t going to change. I am leaving KEC Ventures/Particle Ventures, but my commitment to the founders leading the startups in the fund’s portfolio does not end. I will always owe Jeff Citron, Joann Vought, and KEC Holdings a debt of gratitude for taking a chance on me when I met them. They created a perfect environment for “a boy from a small village in northern Ghana” to teach himself what it means to be an early stage technology venture capitalist in NYC – it is not lost on me what a rare occurrence that is, nor do I intend to shirk the responsibility it places on my shoulders.

I am eager to greet the challenges Lisa and I will encounter as we start building REFASHIOND. Whatever they are, I expect that we will each have to work harder than we have had to up till now if we are to succeed – patiently building our vision, brick by brick. Fortunately, we’ll be working on something about which we are both obsessively enthusiastic. Bring it on.

Are you afraid? Good. You’re in the great game now. And the great game’s terrifying. The only people who aren’t afraid of failure are madmen like your father.
– Tyrion Lannister, speaking to Daenerys Targaryen in Game of Thrones Season 6, Episode 10.

How Can You Reach Us?

Update: September 5, 2018 at 14:04 to clarify language around KEC Ventures/Particle Ventures.

________________
[1] Lee Hower has done a great job exploring the factors that cause venture capital firms to fail. See The Rise and Fall of Great Venture Firms – Part I and The Rise and Fall of Great Venture Firms – Part II.
[2] Theodore P. Hill, Knowing When To Stop. Accessed on August 20, 2018 at: https://www.americanscientist.org/article/knowing-when-to-stop
[3] This is a trademark that belongs to The New York Supply Chain Meetup, LLC.

Progress Report | #TNYSCM Minimum Viable Launch – Building A Supply Chain Community

by

Design by: Lisa Morales-Hellebo

The New York Meetup #01 – The Minimum Viable Launch November 16, 2017

On November 16, The New York Supply Chain Meetup reached an important milestone – we held our first event.

This blog post will trace how we got here, and share some pictures from our minimum viable launch. We hope you’ll join us in our bid to bring the global supply chain community together, starting with this small step in New York City.

This is the story of how we got here.

On August 23, I arrived at my desk at KEC Ventures and while drinking my cup of coffee, I thought to myself; “I really should go to the supply chain meetup in New York.” I have been thinking about value chains and supply chains since 2014. Evidence of that is documented below;

  1. Why Tech Startups Can Gain Competitive Advantage from Operations – August 2014
  2. Industry Study: Freight Trucking (#Startups) – November 2016
  3. Updates – Industry Study: Freight Trucking (#Startups) – December 2016
  4. Industry Study: Ocean Freight Shipping (#Startups) – February 2017
  5. Cargo Drones and Data Swarms: Experts Weigh In on Digital Transformation in Shipping & Maritime – March 2017
  6. Updates – Industry Study: Ocean Freight Shipping (#Startups) – June 2017
  7. White Paper | Towards A Supply Chain Operating System – August 2017
  8. #UnderConstruction | Why A Supply Chain Meetup in New York? – September 2017
  9. #UnderConstruction | Towards A MarineTech Innovation Hub in New York City – October 2017
  10. Update #01: White Paper | Towards A Supply Chain Operating System – October 2017

So, on August 23, I ran a query on Meetup.com for a supply chain meetup in NYC. I was surprised to see that there wasn’t one. Without thinking, I took out my credit card and registered The New York Supply Chain Meetup. After realizing what had just happened, I thought “Fuck! Now what?”

I figured I’d take my time and figure out what to do. I wrote a post on my Facebook page, about what I’d done. Thinking, there’s no rush . . . I can let this sit for a while.

Don’t Wait, Just Do it

The following morning I got a message from someone on LinkedIn . . . I am connected to more than 14,000 people on LinkedIn, so one of them sent me a message; Hi Brian! I saw your post in Mattermark Daily, looking forward to it. Great idea!

I panicked; “What? I did not send a submission to Mattermark yesterday. What is he talking about? I should go check.”

As I had started to fear, somehow my Facebook post had been flagged by Mattermark and they’d included it in the roundup of notable posts from venture capitalists.

So, what’s the problem? Well, Mattermark Daily goes out to 100,000 – 150,000 people daily – possibly more, I have not checked the numbers in a while. Basically . . . Tens of thousands of people had now been told that I was going to do this. I couldn’t turn around and say . . . “Ha ha ha . . . Nevermind, I was just kidding.”

So, I called Lisa Morales-Hellebo when I got home on August 24, and asked if she’d help me. I did that because she and I have been talking about supply chains in fashion and retail since May 2016. She knows more about the intersection of supply chain, technology, fashion, and retail than anyone else I know personally, and she’s been working on those issues since 1996. She agreed to become a co-organizer.

Also, on August 24, Brian Lindquist sent me a message through Meetup.com because my friend, Ed Sim, at BoldStart Ventures had told him to come chat with me. Brian has 10+ years of experience in operations / supply chain and spent the past 4 with A.T. Kearney in their Strategic Operations Practice leading COO-level engagements with various F1000 CPG companies. We chatted in person in early September and he too agreed to join me and to become a co-organizer.

Also, on August 24, Allie Felix from Work-Bench reached out to me. They’d seen the Facebook and she wanted to speak with me about how Work-Bench might help me get the meetup off the ground. Given what Work-Bench has accomplished in building The New York Enterprise Technology Meetup . . . I felt that was a good sign. I felt bad about my conversation with Allie a few days later, because I did not yet have any answers . . . I had no clue what was going to happen. But she was very patient and supportive, and told me that Work-bench would be happy to host us once we got going.

Not long after my meeting with Allie, Tina Kang, Daniel James, Paula Cadman-Mendoza, Santosh Sankar, and Joy Fan also agreed to join the team of organizers to try to bring The New York Supply Chain Meetup to life. We met later in September to create a plan and decided we’d have a kick-off on November 16. We then set to work.

Our goals;

  • To create a multidisciplinary community of practice around building 21st Century supply chains and value chains,
  •  To create a forum that brings together big corporations, small and midsize companies, and startup to enable them do business and partner with one-another,
  • To explore the latest research in the area of supply chain, and industrial transformation through digital technologies.

Building on the unique characteristics of New York City, #TNYSCM will become the world’s foremost multi-disciplinary community of practice for individuals and organisations committed to investigating and developing solutions for problems in global supply chain networks at startups, large corporations, academic institutions, and everything in between. A particular area of interest is the use of distributed ledger technologies, and other cutting edge technologies, as a foundation for innovation in supply chain networks.

#TNYSCM | The past ran on supply chains. The present runs on supply chains. The future will run on supply chains. The world is a supply chain.

Below, some stats on our progress so far, and pictures from our minimum viable launch on November 16, 2017 at Work-Bench.

Members: 350

RSVPs for November 16: 214

Attendance (Approx): 150, about 100 stayed till the very end.

Presentations: 7, one presenter could not make it at the last moment, due to an unexpected illness.

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Work-Bench was empty at first, though a few people showed up 30 minutes early, around 5:00 PM.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Before things got hectic – showing off a little bit with John, and Tina.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Esma’s enthusiasm for her new favorite shirt is a good sign. She’s a supply chain engineer.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | It’s time to show our work, and we are happy to do so – Daniel James and I show off for the camera. Daniel works at IHS Markit, and is one of the 8 people who worked to make this possible.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | John Azubuike mans the sign-in desk as Marc Held from Armada arrives. March came from Boston, MA. He was one of the presenters for the evening.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Lisa Morales-Hellebo is the first person I called after I realized there could be no turning back. That was on August 24, 2017.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Hyder is visiting from Dynamo in Chattanooga, TN. Dynamo invests in Logistics, Supply Chain, and Transportation. He seems suitably impressed so far.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Lisa Morales-Hellebo, Daniel James, and Tina Kang . . . all members of #TNYSCM leadership team, and all meeting for the first time.
In the background, Ryan Smith, founder of FTSY.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | NIcole Gibbons met Michelle and Kimberly at the sign-in desk and they got to talking about supply chain logistics . . . Michelle and Kimberly work at UPS.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | I manned the sign-in desk all evening, with intermittent help from the other organizers. I wanted to be able to say “Thank you for coming.” to every single person who came to the event.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | #TNYSCM “The world is a supply chain.”
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | This would not have been possible without the leadership team. From R – L; Lisa Morales-Hellebo, Tina Kang, Daniel James, Santosh Sankar, Paula Cadman-Mendoza, Brian Lindquist, Brian Laung Aoaeh, and John Azubuike – my teammate from KEC Ventures who gave us a hand for the launch. Joy Fan could not make it.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Lisa Morales-Hellebo, our MC for the night.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Allie Felix and the rest of the crew at Work-Bench believed in the idea of #TNYSCM even before I had a clear idea what it should be. I can’t thank them enough.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Veronika Harbick from Thursday Finest got the ball rolling for this showcase. Thursday Finest does custom and on-demand 3D knitting.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Fauad Shariff from CoLoadX talks about building the digital platform for ocean logistics – a massive undertaking in a massive market.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Marleen Vogelaar from Ziel talks about digital fabrication, and on-demand, environmentally responsible clothing manufacturing.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Rodney Manzo from Anvyl explains what Anvyl is doing to remove friction in supply chain so that anyone can make products.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Marc Held from Armada talks about bringing true global transparency to supply chain with intelligent visibility and predictive analytics.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Benita Singh from Le Souk talks about building a platform that enables designers to search, sample, and source quality materials direct from original suppliers.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Suuchi Ramesh from Suuchi, Inc. talks about building and scaling the apparel manufacturing supply chain of the future.
Photo Credit: Andrew Williams (@aswilliams73)

 

The New York #SupplyChain Meetup #01 – The Minimum Viable Launch | Lisa, our MC for the night, wraps things up.
Photo Credit: Andrew Williams (@aswilliams73)

Some of the comments since the event;

Fauad Shariff, co-founder & ceo of CoLoadX says;

Once again, great job pulling together the meetup last night Brian & Lisa.  The turnout exceeded expectations, and I’m sure at least a few customer and biz dev relationships came out of it for us and some of the other companies. I also wound up connecting with some folks from the industry whom I hadn’t seen in a while, or only knew of from social media. Looking forward to more chances to get together with the community.

Esma Hamandi, a supply chain engineer who recently moved to NYC says;
I moved here to NYC recently and I didn’t know where or how to connect with people in the same professional field as me until you let it happen.

This would not have been possible without the support of our sponsors;

  • Work-Bench – believed in what this could become even before it was clear that there is a need for a community like this. They offered us use of their space for free.
  • CustomInk – Gave us a steep discount on t-shirts and hoodies. Use the discount code: TNYSCMCI for your own orders from their website. You’ll get 10% off for orders of 6 or more items.
  • UPS – is helping us cover the cost of food and refreshments.

We’re in the process of gathering data to help us plan for 2018. We should have a tentative plan before the end of 2017. We hope you’ll join us.

Update #1: Wednesday, November 22, 2017 at 18:54 EST.

  • Minor edit – punctuation mark.
  • Add #TNYSCM Header image.

#NotesOnStrategy: Tips For Early Stage Startup Founders on How To Build A Culture of Accountability

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Getting from Point A to Point Z: How?
Getting from Point A to Point Z: How?

CULTURE EATS STRATEGY FOR BREAKFAST, OPERATIONAL EXCELLENCE FOR LUNCH, AND EVERYTHING ELSE FOR DINNER.

– Bill Aulet

During one of our weekly Monday morning team meetings we were talking about one of the startups in our portfolio . . . Things are going well; the product is pretty good and improving, sales are increasing, revenue is growing etc. It’s preparing to raise a big round within a few months.

There’s one problem . . . Accountability. Things are not happening when they should, people are not doing what they are supposed to be doing. It’s not yet fatal, but . . . A culture of accountability does not exist.

What should they do? The founder/CEO is proposing an approach to solving that problem that I believe is indirect and ineffective. I do not think it will work, and worse I think it will confuse his team and cause resentment and stress the team unnecessarily.

After the meeting, I posted a status update on Facebook asking my friends who are early stage startup founders if they have any nagging questions they’d like me to research and tackle in a blog post . . . A couple brought up team-building, accountability, and culture. One said:

I think organizational building/management/structure, HR, and team building get very short shrift in the startup dialogue, which is a shame. I understand why in the short run, but in the long run I suspect the costs can be high.

– Tayo Akinyemi

I had inadvertently found the topic for my next blog post.

I have some experience with situations in which accountability is a problem . . . Dating back to my days as a student at Connecticut College when I ran two businesses on campus to earn pocket money – one was a newspaper delivery business, the other was a deejay business; I respectively had to hold my best friend and my partner accountable, leading to me firing them for failing to keep up their end of our bargain; and again between 2008 and 2012 when I devoted substantial portions of my time to turning around two companies – in that case I did not have the authority to fire anyone, but I had the authority to hold people accountable and I played an important role in setting and getting buy-in for expectations, and then determining who should be held accountable meeting those expectations we had agreed on. I also had to help the senior leadership of the two companies learn how to build a culture of accountability. In addition I helped my mom and my dad run a number of small business while I was growing up, and since 1986 have discussed management and leadership issues my mom is grappling with as she has grown Summit School from 3 kids in our garage to several hundred pupils in Kano, Nigeria. Holding people accountable is hard, but necessary for organizations that want to grow and accomplish important things.

In this post I will first delve into a general discussion about management and leadership, then I will end with tips on how startup founders might foster accountability.

The intended audience for this article is early stage technology startup founders who have no training or prior experience in management or leadership, but who nonetheless need to come to grips with the basics in order to run their startups effectively. Consider this a launchpad from which one might do further reading and independent study.

If you have not already read my posts on team building you can get caught up on high-performing teams first here and then here, what religion teaches us about culture, and how management skill can enable startups to build an impregnable economic moat.

Fundamental Ideas About Leading and Managing Teams of People

One way to distinguish between leadership and management is to remember that; in the grand scheme of things leadership affects issues that are of strategic, relatively long-term importance to a startup, while management by comparison focuses on issues of tactical, and relatively short-term importance.

Things get confusing in startups because founders, who are really defacto leaders also have to fulfill responsibilities as managers till such a point that the organizational structure has evolved and the distinction is clear.

But what does this mean? Concretely? It means that a manager typically will be responsible for implementing a strategy and vision developed by the leader. Leaders focus primarily on creating a vision, developing a strategy to actualize the vision, and nurturing culture. Managers draw up detailed plans, discuss the plans with the leaders to get buy-in and approval, then they execute and implement those plans with the help of people on the teams that they manage.

Every leader is also a manager, but not every manager is a leader.

What is leadership? The definition of leadership that I find most compelling and applicable to early stage technology startups is based on this quote from John Quincy Adams:

If your actions inspire others to dream more, learn more, do more and become more, you are a leader.

To be a little more specific Kevin Kruse and Dr. Travis Bradberry define leadership as ” . . .  a process of social influence which maximizes the efforts of others toward the achievement of a greater good.”[3. What Makes A Leader? by Dr. Travis Bradberry on LinkedIn. Accessed on Jul 2, 2016.]

In order to become an effective leader one must understand the difference between a leadership model, a leadership philosophy, and a leadership style.

A leadership model is a practical framework that helps a startup founder develop into a competent and effective leader. A leadership model answers the “What?” question.

A leadership philosophy is a values-centric framework about how a startup founder should behave, and the sources from which the founder can derive power as a leader. A leadership philosophy answers the “Why?” question.

Lastly, a leadership style focuses on the reality of how a startup founder fulfills the responsibilities of a leader. A leadership style answers the “How?” question. This is an important issue, because effective leadership rests on authenticity . . . Obvious incongruence between a budding leader’s personality and choice of leadership style is one of the quickest paths to catastrophe.

In the context of an early stage startup, the leader’s tactical goals center on leading the team from one milestone to another. The leaders strategic goals center on guiding the startup through discovery, and ultimately to helping the team navigate its way to becoming a company.[4. A startup is a temporary organization built to search for the solution to a problem, and in the process to find a repeatable, scalable and profitable business model that is designed for incredibly fast growth. The defining characteristic of a startup is that of experimentation – in order to have a chance of survival every startup has to be good at performing the experiments that are necessary for the discovery of a successful business model. A company is what a startup becomes after it completes discovery.]

What is management? According to Mary Parker Follet; “Management is the art of getting things done through people.” Similarly, Harold Koontz says “Management is the art of getting things done through and with people in formally organized groups.” Lastly, Henri Fayol says “To manage is to forecast and to plan, to organize, to command, to coordinate and to control.”

Management is an ongoing process of producing results against pre-existing budgets, forecasts, targets, tactical and strategic initiatives through teams of people, and measuring performance with an eye towards continuous improvement.

I think it is worth reiterating that the function of leadership and management do not always have to be embodied in the same individual, though in the context of an early stage startup it is almost inevitable the the founders function as both leaders and managers.

The Psychological Contract, Theory X, Theory Y and Theory Z – Cliff Notes Version

The psychological contract is a set of tangible and intangible expectations, beliefs, feelings, and emotions that govern the relationship between an individual and that individual’s employer, manager, and leader. The most important aspects of the psychological contract are based on mutual trust and respect.

I like the Iceberg Model approach to thinking about psychological contracts because it depicts quite clearly my belief that the most salient aspects of effective leadership and management are intangible and hidden from view.[5. A diagram of the Psychological Contracts Iceberg Model is available here: http://www.businessballs.com/freepdfmaterials/psychological-contracts-iceberg-diagram.pdf]

I believe that there’s no repairing the relationship between a team member and that individual’s manager or leader if one party believes that the psychological contract has been violated.

Theory X is a management worldview that can be described as militaristic, or command-control-and-punish. Theory X managers subscribe to the belief that people hate work and cannot be relied upon to work responsibly towards meeting tactical goals. As such they need to be motivated through the threat of imminent punishment.

Theory Y is a management worldview that is the opposite of Theory X. Employees can be relied upon to apply self-direction, creativity, and a take-the-initiative attitude to solving problems faced by organizations and teams. There is no need for threats of punishment.

Theory X and Theory Y arise from Douglas McGregor’s work, and were popularised in his book The Human Side of Enterprise.

Theory Z arises from the work of William Ouchi, and combines MacGregor’s Theory Y with Japanese management concepts. It places an enormous amount of trust in the individual. It assumes and expects that individuals will demonstrate  commitment and loyalty to the team and the organization. Ouchi explained Theory Z in the book Theory Z: How American Management Can Meet The Japanese Challenge.

Source Unknown
Source Unknown

On Accountability

In Four Tips for Building Accountability, Rosabeth Moss Kanter says;

The tools of accountability — data, details, metrics, measurement, analyses, charts, tests, assessments, performance evaluations — are neutral. What matters is their interpretation, the manner of their use, and the culture that surrounds them. In declining organizations, use of these tools signals that people are watched too closely, not trusted, about to be punished. In successful organizations, they are vital tools that high achievers use to understand and improve performance regularly and rapidly.

Based on my experience, and Prof. Kanter’s article, here are a few tips for startup founders who are grappling with this issue for the first time.

Ask questions, ask more questions, and then ask even more questions. What seems blindingly obvious to the manager or the leader may not be so obvious to the individual team member responsible for executing the assignment and delivering results. The key to asking questions is to ask lots of them both before work begins, as well as while the work is in process, and after the project has either failed or succeeded. Before work starts leaders and managers need to be certain that their audience has internalized the message that the leader or manager wanted to convey. This ensures that there’s complete alignment of the leaders understanding of the “Why, What, When, Who, and How” they have tried to communicate and that this is understood by the team, as well as by individuals within the team.

Praise publicly, chastise and reprimand in private. While it is important to get work done in the near term. It is also crucial to build individual team members’ self-sufficiency and effectiveness over the medium- and long-run. It is very hard to do this if people feel humiliated in the presence of their peers, especially since the person experiencing the humiliation will often have a strong belief that they are being treated unjustly and unfairly. Note that this belief often bears no relation to “the facts” as the manager or leader might interpret them. For accountability to work people have to feel safe discussing difficult issues, and collaborating with one another to tackle and resolve issues that may feel difficult to discuss. However, if the focus is on learning how to become more successful as a team and as individuals on the team respectively, things become a lot easier. As Prof. Kanter says “The goal is to solve problems, not to hurl accusations or tear people down.”

No pencil, no pad? Poor performance is guaranteed. Take copious notes. In my experience things on the accountability train start falling apart when there’s a high degree of ambiguity. There’s an inexplicable tendency to assume “everyone knows what I mean” or “they will understand what I expect” without clear, direct, and succinct communication from the leader/manager, or worse “they will see that those doing the right thing are progressing and so they too will start doing the right thing.”

Leaders and managers who adopt that approach are failing the most basic and fundamental test of their ability to lead or manage a team. In my opinion it is a sign that they do not want to feel the responsibility of setting clear expectations and dealing with what that process entails. Perhaps they think of themselves as “friends” with the members of the team.

Be that as it may, the founder/leader/manager must communicate expectations, break big goals down into more specific and unambiguous tasks, and provide guidance about expected deadlines and desired results. Shying away from doing this is a red-flag. Inevitably, there will be problems down the line.

Taking notes is one way to ensure that nothing is miscommunicated, or that something that was communicated is not overlooked or even forgotten. I believe leaders and managers should take and share notes about their thinking related to the team’s work. I believe team members should take notes too . . . As time progresses, comparing notes, filling in gaps and making corrections is one way to avoid miscommunication and misunderstandings . . . An important step in the journey towards a culture of accountability.[6. I will not judge you if you use a pen instead, but I prefer pencils, mechanical pencils.]

Landmarks in A Culture of Accountability: Excruciating Clarity[7. Based on The Right Way To Hold People Accountable, Peter Bregman, Jan 11 2016. Accessed at Harvard Business Review on Jul 2 2016.]

In order to foster accountability the leader/manager must be clear, and must obtain confirmation that the audience “gets it.” The five necessary ingredients for building a culture of accountability are;

  • Clarity of expectations – does the team understand what the desired outcome should be?
  • Clarity of capabilities – does the team have the resources to meet the expectations it has created for itself?
  • Clarity of measurement – does the team understand how its performance will be judged?
  • Clarity of feedback – does the team understand that lines of communication should remain open in both directions in order to avoid surprises at the eleventh hour? Does the leader/manager understand that it is necessary to check in periodically and often about progress towards the goal?
  • Clarity of consequences – does the leader/manager have clarity around what must happen if the preceding 4 conditions have been met and yet the outcomes fall short of the expectations that the team has set for itself? The crux here is that the leader/manager has to be honest and sufficiently self-critical in order to ensure accountability traps do not keep arising “out of nowhere” . . . Under the worst circumstances some individuals have to be let go, but that is life.

Conclusion

Navigating the treacherous waters between launching a startup and becoming a company is hard work. That work is made exponentially more challenging by failures in leadership and management. It does not have to be that way. To make it easier it helps to build a culture of accountability.

Further Reading

Notes On Strategy; What Can We Learn From Religious Leaders About Building Early-Stage Startup Culture?

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Alternative Working Title: Notes On Strategy; Engineering Your Early Stage Startup’s Culture For Longevity

The topic of culture has been in the news quite a bit since the New York Times published an investigative piece describing what it is like to work for Amazon. While culture is something I think about all the time, that article got me thinking about religion and culture . . . and how that relates to the early stage startups in which we invest.

In this post I plan to:

  1. Examine what we mean when we say “culture” and tie that to the work that startup founding teams do during business model search and discovery.
  2. Examine the structural characteristics of religious communities; How do they maintain a sense of purpose, direction, and elicit devotion and commitment from members of the community?
  3. Provide some pointers about how first-time startup founders might get things off on the right footing as far as culture is concerned by making certain deliberate choices early in the lifecycle of their startup.

I am thinking specifically of startups raising their first institutional round from seed stage venture capitalists, or perhaps a Series A round of financing. These teams are usually small, often fewer than 10 people.

To get things started; What is Culture?

Culture is the learned and shared behavior of a community of people which distinguishes that community from other communities. 1J. Useem and R. Useem. (1963). Human Organizations, 22(3). Page 169. See: The Center for Advanced Research on Language Acquisition (CARLA) “What is Culture?” http://www.carla.umn.edu/culture/definitions.html. Accessed Aug 29, 2015.

Some of the things that distinguish a culture: 2Adapted from: Richard-Hooker.com; Clifford Geertz, Emphasizing Interpretation

  1. It embodies a way of life, an approach to thinking, feeling, and believing about the world.
  2. It endows the members of the cultural community with a social legacy from prior members of the same community.
  3. It provides a framework that enables members of the community to think abstractly about how they should behave;
    1. It provides lessons about how members of the community should react towards recurring problems by pooling the collective wisdom of past and present members of the community.
    2. It provides a guide for community members when they need to interact with the external environment.
  4. It is the process by which the history of the community is created and brought into permanent existence.

In this analysis I am most interested in religion as a cultural system.

According to Clifford Geertz religion is: 3Clifford Geertz, Religion As A Cultural System. In: The Interpretation of Cultures: Selected Essays. Pp. 87 – 125. Fontana Press, 1993.

  1. A system of symbols which acts to
  2. Establish powerful, pervasive, and long-lasting moods and motivations in people by
  3. Formulating conceptions of a general order of existence and
  4. Clothing these moods and motivations with such an aura of factuality that
  5. The moods and motivations seem uniquely realistic.

It is not difficult to see that a religion is in fact a specific type of culture and further, that every cultures is a kind of religion. In the rest of this post I will use the term “religion” and “culture” interchangeably. I also assume that a symbol may be tangible or intangible.

The structural characteristics of a religion are: 4William E. Paden, Religious Worlds: The Comparative Study of Religion. 2nd edition. Pp. 51 – 161. Beacon Press, 1994.

  1. A religion inhabits a unique world: Religions create, structure and propose a universe that is unique to adherents of that religion such that members of the community can explain, make sense of, and differentiate what is within their world from what is outside their world. This helps establish lines of commonality as well as lines of difference, and helps confront change and challenges.
  2. A religion is grounded on certain myths: Every religion possesses sacred myths that tell a story about something that happened during the genesis of the religion and that continues to have great influence on contemporary realities experienced by adherents of the religion. Myths:
    1. Help devotees of a religion make sense of the past, the present, and the future.
    2. Are a powerful means of engendering a certain mood and attitude within the devotees of a religion.
    3. Focus our attention on that which is sacred and important within a religion.
  3. A religion possesses rituals: Rituals help to focus the devotees of a religion on specific concepts or ideas at a specific point in time, also rituals enable the adherents of a religion to express their beliefs about the world in the form of a tangible display that appeals to the senses through action.
  4. A religion possesses gods: In the context of religious worlds, gods represent instances of language and behavior that is held up by the religious community as exemplary, worthy of emulation, and possessing interpretive power in terms of how that community understands the world.
  5. A religion possesses systems of purity: These systems of purity help to differentiate what is acceptable from what is unacceptable, right behavior from wrong behavior. This is a system that enables members of the community deal with negativity within the community.

What role do symbols play within a culture?

  1. Anat Rafaeli and Monica Worline: Symbols in Organizational Culture – A symbol is a visible and physical manifestation of an organization. It is an indication of organizational life that derives its meaning from the social and cultural conventions and interactions among the people who belong to the cultural organization. Symbols can be experienced through the senses. Symbols play the following functions:
    1. They reflect organizational culture: Symbols communicate information about what we think we know about an organization. They act as a bridge between our emotional and cognitive responses towards an organization.
    2. They trigger internalized values and norms: Symbols serve as a cue to trigger certain expected, desired, and acceptable behaviors once a person enters the physical environment of an organization or whenever the person is acting explicitly as a representative of the organization to the outside world.
    3. They frame conversations about experience: Symbols act as a frame of reference for guiding the communication that takes place between members of the same organization, or between members of a specific organization with people who do not belong to that organization.
    4. They integrate organizational systems of meaning: Symbols integrate the culture, norms and values, and shared experiences of members of an organization into a coherent whole within which members of the organization experience the world.
  2. Sherry Ortner: On Key Symbols – A key symbol is an element of a culture that is crucial and distinctly unique to the organization of that culture. They perform the function of carrying and conveying cultural meaning to people within the culture as well as to people outside the cultural community. Key symbols might be identified when:
    1. Members of the cultural group discuss the symbol’s cultural significance,
    2. Members of the cultural group are positively or negatively aroused by the symbol, and none are indifferent towards it,
    3. The symbol appears in many different settings and contexts,
    4. There is much elaboration around the symbol, and
    5. The group imposes numerous restrictions around the symbol. For example, misuse of the symbol can incur severe sanctions.

There are two distinct categories of key symbols. Summarizing symbols express meaning in an emotionally powerful way that is of uniform significance for all members of a given culture. They are generally accorded sacred status. Elaborating symbols make it possible for members of the religion or community to communicate ideas and feelings with one another, and to translate such feelings and ideas into tangible action. Elaborating symbols are generally analytic in nature and rarely attain sacred status.

What does this mean in the context of building an early-stage startup?

  1. Communicate a clear world view internally and externally. One question I ask myself when I meet with a founder is this; Why is this specific person uniquely suited to solve this problem in this market and why do I believe this team will succeed in its effort to accomplish this incredibly difficult task?
  2. Preserve and embellish important stories, particularly those that reflect qualities and themes that the founder wants to become aspects of the startup’s long-term culture and identity. I listen for founders who express enthusiasm for the work that the other people on the team are doing. Team cohesiveness matters.
  3. Create and maintain rituals:  For example, does every team member understand what would get existing customers/users to become more engaged with the product, and reduce churn? Does every team member know what needs to happen for the startup to increase its growth enough to get to the next funding milestone? Does the founder have a firm grasp on the startups key performance indicators? Has the team chosen the right indicators to focus on at this stage?
  4. Focus on finding product/market fit: A startup that fails to find product/market fit is doomed. Are the founders experimenting enough to find an ideal early market for the product, or are they stuck in a cycle of dogma regarding an initial point of market entry? What indications are there to help me ascertain the quality of their decision-making processes?
  5. Create systems of accountability: At the very early stage of a startup’s life the individuals on the team have an enormous impact on the organizational culture that eventually evolves. What steps are the founders taking to ensure that the early team has the right mix of people?
  6. Create a sales and marketing plan: What steps is the startup taking to create strong bonds with its earliest customers/users? Is anything being done to create a brand? Are the choices that have been made so far cost-effective and appropriate for the startup’s stage of maturity and its funding status?

Closing Thoughts The job of an early-stage technology startup founder is basically akin to that of a religious evangelist. The founder must recruit believers. Early team members join the cause because they believe in the founder and in the vision that the founder wishes to bring into reality. Early customers become believers because they have a problem they believe the startup’s envisioned product can solve. Early investors join the cause because they believe in the founder and believe that the startup can create the future reality that it describes during investment pitches. Basically, at the outset . . . Building a startup is exactly the same as creating a new religion.

 

References

J. Useem and R. Useem. (1963). Human Organizations, 22(3). Page 169. See: The Center for Advanced Research on Language Acquisition (CARLA) “What is Culture?” http://www.carla.umn.edu/culture/definitions.html. Accessed Aug 29, 2015.
Adapted from: Richard-Hooker.com; Clifford Geertz, Emphasizing Interpretation
Clifford Geertz, Religion As A Cultural System. In: The Interpretation of Cultures: Selected Essays. Pp. 87 – 125. Fontana Press, 1993.
William E. Paden, Religious Worlds: The Comparative Study of Religion. 2nd edition. Pp. 51 – 161. Beacon Press, 1994.

A Story About Startup Cofounder Teamwork: Climbing To The Summit of Denali

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Denali Image Credit: NPS Photo/Tim Rains
Denali
Image Credit: NPS Photo/Tim Rains

On June 30th, 2015, Naira Musallam and her climbing partner, Tim Lawton successfully summited Denali (Mount McKinley). They made history as The First Arab-American Team to ever do so. Naira also became the first Arab woman to stand on the summit of Denali.

Standing at 20,320 feet, Denali is one of the “Seven Summits” because it is the highest point on the continent of North America. From that point Naira and Tim raised a flag with the message “Peace and Security for All” written in Arabic, Hebrew, and English.

I checked my email around 8:00 AM EST in NYC after arriving at work on Tuesday, July 7th 2015, and found a note from Naira telling me the good news. She had sent it at 6:51 AM. I wrote back to congratulate her, and asked if I could write about their story. She and Tim graciously said yes.

This is their story. It highlights everything I discussed in Innovation Footprints: 6 Things I Have Learned About Building High-Performing Teams.

Naira Musallam and Tim Lawton at the summit of Denali on June 30th, 2015. (Image Credit: Naira and Tim)
Naira Musallam and Tim Lawton at the summit of Denali on June 30th, 2015. (Image Credit: Naira and Tim)

I met Naira on Thursday, October 9th 2014 when I was at NYU’s Leslie eLab to lead a lunch and learn. I had arrived early, to give myself some time to work through my nerves – I get super nervous about speaking in front of groups of people.

Naira was the first person to arrive. She came, said hello, and introduced herself. I introduced myself, and asked if she was an undergraduate student, what year she was in, what major she was studying . . . She smiled at me and explained she’s a professor at NYU, and she teaches statistics. Oh, lest I forget. She also mentioned that she “climbs mountains as a hobby” and “runs long distance, as a hobby.”

I thought to myself; “Great! It really would have been helpful if someone had warned me that I’d have professors in the audience! Never mind mathematicians who climb mountains and run long distance races . . . as a hobby.”

So much for calming my nerves. It seemed to me that her arrival was timed to optimize the intimidation factor. Any way, the talk went well – or, so she says. To my great “horror” there are excerpts on video which you can check out here, here, here and here. After the event, I chatted briefly with Naira again and we agreed to meet for coffee. She wanted to pick my brains about something she was working on. Since I have never met a mathematician or physicist I do not like, I said yes. What could be better than chatting with a mathematician?

We met again on November 26th, 2014 at Cafe Reggio near NYU. After spending some time getting to know one another from a biographical standpoint, we spent most of the time discussing many of the types of questions I have come to expect from the first-time founders I meet; What does a VC want to see in order to decide to make an investment? How does the decision-making process typically work? How about fund-raising, how does that work, in general? How does one get a meeting with a VC to whom one does not have a direct or indirect connection? Does sending a cold-email work? And many more.

During subsequent meetings over coffee, and sometimes lunch . . . I learned about a startup she and Tim have been building, Frontier7 is an online data analytics platform. I also learned a lot about Tim, whom I had not yet met.

Eventually, I met Tim . . . I pointed out to Tim that Naira intimidated me when I first met her, and now she’d brought him along to escalate that intimidation factor even more. I remember we were all laughing so hard, the other folks in the bar must have thought we’d been drinking too much.

Naira Musallam and Tim Lawton: Starting The Climb on Denali (Image Credit: Naira and Tim)
Naira Musallam and Tim Lawton: Starting The Climb on Denali (Image Credit: Naira and Tim)

About Naira Musallam

Naira is currently a full-time professor at New York University, where she teaches Applied Statistics, Analytical Skills, and National Security and Middle East Affairs at the Center for Global Affairs. She also serves as an Adjunct Professor at Columbia University and in its collaborative program at the United States Military Academy at West Point where she teaches graduate level research courses. Naira received her doctorate from Columbia University.

She has over thirteen years of applied research experience consulting with multiple industries in the private sector, ranging from financial services, to pharmaceuticals, retail, oil and gas, and the fashion industry, helping them solve business problems through data driven processes. She used applied statistics to develop insights on business issues such as M&A deals, C-Suite executive assessments, employee retention, and sales strategies. She also consulted to governmental agencies and non-profit organizations on projects related to project assessment, and monitoring and evaluation. Naira is the recipient of multiple research awards from the Earth Institute, Columbia University, and the U.S. Department of State.

Naira grew up in a small Palestinian town in Galilee, and has been climbing for the last seven years. When not working in New York City on statistical issues, she enjoys high altitude mountain climbing, scuba diving, and cultural exploration and adventures around the world.

About Tim Lawton

Tim is a graduate of the United States Military Academy at West Point and served 5 1/2 years as an officer in various infantry and special operations units. During his time in the Army he was deployed to both Iraq and Afghanistan for a total of four combat tours. After leaving the military he attended MIT Sloan School of Management where he received an MBA with a concentration in corporate finance. He spent the next 5 years in investment banking with experience in debt restructuring, equity financing, and mergers & acquisitions in one role and helped to lead a sales effort in another.

As an active member of the veteran community in NYC, Tim is involved with various veteran non-profit organizations and is working to further veteran’s business initiatives in the city. He is originally from the Boston area. His hobbies include mountain climbing, travel, sky diving, scuba diving, and working out.

How They Met

“We first met at a 5k road race that was to support a veteran’s organization that we were both connected to. We had struck up a conversation because we were both wearing the same brand of sunglasses, which are unique mainly to mountain climbers. From then on we continued our friendship and over time began to discuss not only future mountain climbing endeavors, but also a potential business idea that leveraged both of our experiences from the corporate world.”

Naira Musallam and Tim Lawton: Camp on Denali (Image Credit: Naira and Tim)
Naira Musallam and Tim Lawton: Camp on Denali (Image Credit: Naira and Tim)

Why They Thought They’d Make A Good Team

We both suck at different things.

“In all seriousness, since we initially began our friendship due to mountain climbing and had subsequently climbed together in Ecuador before starting in business together we both had to learn how to trust each other on a different level than is typically required in business and cursory friendships. On that trip we realized that we could trust and rely on each other when things don’t go smoothly.

In one particular recent event while we were climbing together in Alaska, Tim was leading up a steep slope when the ice gave out and he began to tumble down the mountain. As they were connected via a climbing rope, Naira quickly reacted and began to self-arrest. By the time Tim had also recovered enough to self-arrest and stop his fall they had both fallen about 100 feet and 80 feet respectively.  It is this type of event that engrains a level of trust in another’s competence that can be carried over to any other type of situation.

On the actual business front, we both realized that we possessed very different, yet complementary skill sets. Once we began to develop the business plan and put together a strategy, coupled with the trust we had gained with each other from the mountains, we knew we could both move ahead with different responsibilities, yet towards achieving the very same goal.”

Three Things That Have Been Important To Their Success as a Team

  1. Trust,
  2. Complementary skill sets, and
  3. Sharing and believing in the same vision

What successfully Summiting Denali Means for Each One of Them

Tim: “For me it was the culmination of an idea and vision that began years before. In the mountains, it should be about the journey, but getting to the summit is always a sweet addition. This particular mountain and successful summit was by far the most complex and difficult in all aspects as it required more planning and preparation than other mountains I had climbed. Plus, we had spent so long this year attempting to get there. It took two trips, two cross-continental round trip flights, sleeping in airports, hotels, and tents, but we did it. We spent 35 days on the mountain during those two trips. So to have been denied the summit once before, but continuing to try and having the mindset of not quitting until we succeed, and then to succeed, is a great feeling. To have achieved that with Naira, with a mindset that we also share in business makes it satisfying as we look to apply the same tenacity to our new business venture.”

Naira: “While being able to say that I became the First Arab woman to climb Denali has its significance in the mountaineering world, the climbing of Denali with Tim took much deeper meaning for several reasons: Tim and I were the first American- Arab team to step on the highest point in North America. The ability to share a message of hope from there together, especially in today’s turbulent world was extremely unique. In addition, it was elating to reach the top with Tim because we have failed in the past to reach the top. Success becomes way more enjoyable when you achieve it with the same person you failed with before. Finally, reaching the top and being able to make history would absolutely not have been possible without Tim’s partnership and competence on the mountain. In that regards, I feel truly blessed to have Tim as partner.”

Naira Musallam and Tim Lawton: View From The Top of Denali (Image Credit: Naira and Tim)
Naira Musallam and Tim Lawton: View From The Top of Denali (Image Credit: Naira and Tim)

Their Shared-Vision for Frontier7, The Significance of The Name

“The name Frontier7, which certainly didn’t come to us quickly, has a number of meanings for us. First of all, we are both in love with the outdoors and adventure, so ‘frontier’ in the sense of the furthest known boundary, the last frontier, the beginning of the unexplored, etc. appealed to us. In business we wanted to create an analytics platform that helped push our clients to the frontier of their industries. The “7” has many meanings that we both value: in most cultures 7 is a lucky number, 7 wonders of the world, 7 summits, 7 colors in the rainbow, in Eastern thought the 7th Chakra is the center for trust, devotion, inspiration, happiness, and positivity. (There are also 7 dwarfs in Snow White and who doesn’t love Snow White?)”

Our vision for Frontier7 is to be the go-to online platform for seamless analytics. We want to enable companies to be able to unlock all of the value of the data they gather in order to maximize their own business performance.

The Announcement They Sent To Their Friends, and Other Associates

On June 30th, 2015, Naira Musallam and Tim Lawton made history together on the highest point of North America, Denali (also known as Mount McKinley) by summiting as the First Arab-American Team to ever do so, and with Naira becoming the first Arab woman to ever stand on the summit. Denali is one of the “Seven Summits” or highest point on the continent of North America, standing at 20,320 feet. From the highest point in North America they raised a flag with the message “Peace and Security for All” written in Arabic, Hebrew, and English.

Their goal to summit Denali began on May 4th, 2015 when they attempted to climb the mountain with a guided group but were unable to due to severe weather conditions, spending a total of 18 days on the mountain. While it would be normal for them to come back another season to attempt the mountain again, they decided to return only a few weeks later in June. The second and successful attempt was a self-guided climb with just the team of the two of them. They raised their flag on the summit after 13 days and took a full 17 days on the mountain. The two months, two cross-continental round trips, red eye flights, sleeping in airports, tents, and hotels, and 35 total days on the mountain was well worth the effort on the evening of June 30th, 2015.

What makes their story even more unique is that they come from significantly different backgrounds. Naira grew up as a Palestinian in Israel where she spent a significant amount of time working in the conflict field, while Tim grew up in Massachusetts, served in the United States Army and served numerous combat tours overseas. They connected because of their love for mountaineering, and drive to send a message about hope, interdependence, and common human values.

Furthermore, today they are also co-founders of a data analytics company, Frontier7 (www.frontier7.com), and are also in the process of starting a non-profit in the form of a social platform that engineers chance for people by connecting those from varied backgrounds and shared passions (like themselves) and aligning people, ideas, and resources for them to address social issues that they care about. They believe that in today’s reality, this message becomes more important than ever.

My Closing  Thoughts

We’ve had numerous discussions about Frontier7, but I have not yet seen a demo. They assure me that day is coming soon. Either way, I am eager to watch their journey, as co-founders and as people who have a vision that they wish to turn into a reality. They each embody the intangible characteristics I look for in founders; courage, grit, vision, determination, resilience, creativity, resourcefulness, conflict management and resolution, discipline, a willingness to assume responsibility, and the ability to learn from others. I could not feel more proud of their accomplishment.

Naira Musallam and Tim Lawton: At The Top of Denali (Image Credit: Naira and Tim)
Naira Musallam and Tim Lawton: At The Top of Denali (Image Credit: Naira and Tim)

6 Things I Have Learned About Building High-Performing Teams

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Chelsea FC - Celebrating victory in the 2012 UEFA Champions League. Image Credit: Chelsea FC
Chelsea FC – Celebrating victory in the 2012 UEFA Champions League. Image Credit: Chelsea FC

I spend a lot of time thinking about teamwork; how teams function, how they operate, how they fail or succeed, and how the most successful teams make their success repeatable in the face of changing conditions. This post is my attempt to synthesize what I have learned so far. 1Let me know if you feel I have failed to attribute something appropriately. Tell me how to fix the error, and I will do so. I regret any mistakes in quoting from my sources.

What is a team? For the purpose of this blog post I will define a team as: A group of people with complementary skills who choose to work collaboratively together towards accomplishing a shared vision and a common objective, within an environment of mutual support in which each team member is empowered to independently set goals, solve problems and make decisions with support from other members of the team, based on an agreed-upon framework, under severe resource constraints.

A team will perform better than an individual in situations where the task at hand can only be completed through:

  1. the creation of new knowledge, or
  2. a novel and unique application of existing knowledge, or
  3. the meshing of different disciplines and subject matter areas, and
  4. there isn’t a single person who possesses all the knowledge and skills that would be required to accomplish the task within a period of time acceptable to the parties involved.

The presence of the following phenomena help us identify a team 2Adapted from Group Behavior, accessed on Jun 29, 2015 at https://www.boundless.com/psychology/textbooks/boundless-psychology-textbook/social-psychology-20/social-influence-104/group-behavior-393-12928/

  1. Interdependence and Social interaction: Team members depend one one another in order to meet the teams goals and objectives, their interdependence results in social interaction through communication with one another.
  2. Perception of a group and Commonality of Purpose: Team members agree they are part of the team, and they buy into the team’s purpose, its goals, and its objectives.
  3. Favoritism: Members of the group demonstrate positive prejudice towards one another, and discriminate in favor of other members of the team.

In research using Letters-to-Numbers Problems, a task-grouping that combines elements of hypothesis testing, mathematical and logical reasoning, cryptographic reasoning, and collective induction: Groups of size three, four, and five performed better than the best of an equivalent number of individuals, but groups of size two performed at the level of the best of two individuals. Groups of size three, four, and five performed better than groups of size two but did not differ from each other. These results suggest that groups of size three are necessary and sufficient to perform better than the best of an equivalent number of individuals on intellective problems. 3“Groups Perform Better Than the Best Individuals on Letters-to-Numbers Problems: Effects of Group Size”, Patrick Laughlin, Erin Hatch, Jonathan Silver, and Lee Boh, University of Illinois at Urbana Champaign; Journal of Personality and Social Psychology, Vol. 90, No. 4. Accessed online on Jun 27, 2015.

Other research found that: “Groups are better than individuals in making difficult decisions, but the opposite effect is found when decisions are easy. The model suggests that the reason lies in the different assessment mechanisms operating at the level of individuals and colonies. For a difficult choice, solitary ants have a relatively high probability of accepting the worse nest, because they rely on quality dependent acceptance probabilities that differ little for similar nests. Successive comparisons cause these probabilities to diverge, but the ant is likely to make her decision before this slow process has had much effect. Whole colonies, on the other hand, do much better at difficult choices, because they use social information to accentuate the quality difference between sites. Rather than rely on individual comparisons, the colony’s choice emerges from a competition between recruitment efforts. Recruitment generates positive feedback on the number of ants at each site, with the better site slightly favored by its higher acceptance rate. The quorum rule amplifies this difference, allowing the colony to settle on the better site more frequently.” 4Takao Sasaki et al, Ant Colonies Outperform Individuals When A Sensory Discrimination Task is Difficult But Not When it is Easy.Proceedings of the National Science Academy of Sciences of the United States 2013 110(34). Accessed on Jun 27, 2015 at http://www.pnas.org/content/110/34/13769.full.pdf+html

The importance of the team that is working to build a startup cannot be overstated. The team is the most important aspect of a startup during the earliest stages of its existence, while it is searching for a repeatable, scalable, and profitable business model. Once that business model has been found, the startup has a better chance of surviving team instability. Before that, team instability can be fatal. Also, the traits of the people in that early team determine the culture of the company that might evolve out of that startup.

Lesson # 1 – Every team goes through Development Stages: Bruce W. Tuckman’s model of how groups form is the foundational work on which our understanding of how teams develop and function is built. His paper ‘Developmental sequence in small groups’ was first published in 1965. 5Tuckman, Bruce W. (1965) ‘Developmental sequence in small groups’, Psychological Bulletin, 63, 384-399.

  1. Forming: “Groups initially concern themselves with orientation accomplished primarily through testing. Such testing serves to identify the boundaries of both interpersonal and task behaviors. Coincident with testing in the interpersonal realm is the establishment of dependency relationships with leaders, other group members, or pre-existing standards. It may be said that orientation, testing and dependence constitute the group process of forming.”
  2. Storming: “The second point in the sequence is characterized by conflict and polarization around interpersonal issues, with concomitant emotional responding in the task sphere. These behaviors serve as resistance to group influence and task requirements and may be labeled as storming.”
  3. Norming: “Resistance is overcome in the third stage in which in-group feeling and cohesiveness develop, new standards evolve, and new roles are adopted. In the task realm, intimate, personal opinions are expressed. Thus, we have the stage of norming.”
  4. Performing: “the group attains the fourth and final stage in which interpersonal structure becomes the tool of task activities. Roles become flexible and functional, and group energy is channeled into the task. Structural issues have been resolved, and structure can now become supportive of task performance. This stage can be labeled as performing.”
  5. Adjourning or Mourning: This stage is experienced by teams that go through the process of dissolution; planned or unplanned, voluntary or involuntary. It was added to the preceding four stages in 1977.

Lesson #2 – To sustain success, leadership matters: Anita Elberse conducted research on Manchester United Football Club’s legendary leader, Sir Alex Ferguson. About Sir Alex Ferguson, she writes “Some call him the greatest coach in history. Before retiring in May 2013, Sir Alex Ferguson spent 26 seasons as the manager of Manchester United, the English football (soccer) club that ranks among the most successful and valuable franchises in sports. During that time the club won 13 English league titles along with 25 other domestic and international trophies—giving him an overall haul nearly double that of the next-most-successful English club manager.” Following are some observations based on her research. 6Anita Elberse, Ferguson’s Formula. HBR October 2013 Issue accessed on Jun 27 at https://hbr.org/2013/10/fergusons-formula. Also, Anita Elberse and Thomas Dye, Sir Alex Ferguson: Managing Manchester United. Harvard Business School Case N9-513-051, Sep 2012.

  1. Sir Alex Ferguson on building an organization that will last, starting with the foundation: “From the moment I got to Manchester United, I thought of only one thing: building a football club. I wanted to build right from the bottom. That was in order to create fluency and a continuity of supply to the first team. With this approach, the players all grow up together, producing a bond that, in turn, creates a spirit.”
  2. Successful teams are led by people who set high standards, and hold everyone accountable to meeting and even exceeding those standards: “He recruited what he calls “bad losers” and demanded that they work extremely hard. Over the years this attitude became contagious—players didn’t accept teammates’ not giving it their all. The biggest stars were no exception.”
  3. Team leaders, and other team members, should encourage one another as often as possible, especially when a team member’s effort has matched or exceeded the group’s expectations. Sir Alex Ferguson: “Few people get better with criticism; most respond to encouragement instead. So I tried to give encouragement when I could. For a player—for any human being—there is nothing better than hearing “Well done.” Those are the two best words ever invented. You don’t need to use superlatives.”
  4. The most successful teams prepare to win. Under Sir Alex Ferguson, Manchester United was always prepared to adapt its tactical play in order to increase its chances of winning the game; how to play if a goal was needed in the late stages of a match, training to force a favorable outcome when the going got tough. They used training sessions as opportunities to learn and improve. Sir Alex Ferguson: “Winning is in my nature. I’ve set my standards over such a long period of time that there is no other option for me—I have to win. I expected to win every time we went out there. Even if five of the most important players were injured, I expected to win. Other teams get into a huddle before the start of a match, but I did not do that with my team. Once we stepped onto the pitch before a game, I was confident that the players were prepared and ready to play, because everything had been done before they walked out onto the pitch.”
Denali Image Credit: NPS Photo/Tim Rains
Denali
Image Credit: NPS Photo/Tim Rains

Lesson #3 – Great teams learn how to adapt their leadership structure to match the intensity and difficulty of the task at hand: In a study of 5,104 mountain-climbing expeditions that took place between 1905 and 2012 on more than 100 mountains around the world, researchers found that: “In sum, hierarchical cultural values predicted summiting and fatality rates only for group expeditions. Hierarchy did not predict summiting or fatality rates in solo expeditions, providing evidence that group processes are a critical driver of the observed effects.” 7Eric M. Anicich et al, Hierarchical Cultural Values Predict Success and Mortality in High-Stakes Teams. Proceedings of the National Science Academy of Sciences of the United States 2015 112(5). Accessed on Jun 27, 2015 at http://media.outsideonline.com/documents/himalaya-expedition-study.pdf. In other words, groups characterized by a higher degree of “command-and-control” style leadership – and a lower degree of egalitarian leadership, were more likely to summit but also faced more deaths than groups with a higher degree of egalitarian leadership – and a lower degree of command-and-control style leadership. Commenting on the study, Cecilia Ridgeway, a professor at Stanford University observed that: 8Devon O’Neil, Summit or Death! Accessed on Jun 27 at http://www.outsideonline.com/1928751/summit-or-death

  1. The crucial factor in a team’s success or failure under conditions such as those the researchers examined is the leader’s competence. Perhaps that competence is compromised in certain situations due to ingrained social structures, norms and behavioral patterns.
  2. Egalitarian teams are better positioned to survive in the face of potentially dooming conditions which would overwhelm the single decision maker in a non-egalitarian team. “The reason for that is when they hit these complex situations, under best circumstances they share their information, the ideas bounce off, and they come up with things that none of them would have thought of alone about how to survive.”

Related questions raised by this study:

  1. How can a team find an optimal balance between egalitarianism and non-egalitarianism, and
  2. How can the team learn to identify the situations in which it should adopt one leadership approach over the other?

Cecilia Ridgeway offers this advice: “The team would have to know itself well and all the members would really have to trust one another and be willing to go with their boss but also pull back from that in a kind of kaleidoscopic way. It’s not impossible but it wouldn’t be easy to do. It would depend a lot on the interpersonal skills, not just the climbing skills, of everybody involved.”

The best teams shift fluidly from one organizational form to another, depending on the circumstance, and depending on the nature of the task at hand. This is a function of the effectiveness of the team’s leadership, and reflects the complex nature of the environment in which startups and other businesses operate today.

  1. Teams can be organized such that interaction between each member and the team leader is the key characteristic of how the team gets its work done. The degree of collaboration between team members is low. The effectiveness of a team organized in this way is largely dependent on the effectiveness of the team leader.
  2. They may be organized such that responsibilities are shared to a large extent, with each team member exerting significant authority and decision-making responsibility for some aspect of the team’s work. Team leadership is not a shared responsibility. The degree of collaboration is high.
  3. A team can also be self-directed, with no official leader. However, such a team will often have one person responsible for coordinating the activities of team members.

Lesson #4 – Great teams are made up of people who each strive for true mastery in their area of specialization. The greatest soccer teams usually have players who each would be selected amongst the very best players in the world for the position that they fill on the team. 9On such teams young players must commit to trying to become one of the best, and the example must be set by the more experienced members of the team. To become the best each member of the team must hold a worldview that is keeping with what the Japanese describe as Shokunin kishitsu (職人気質) – translated roughly as the “craftsman spirit” and commit to the following five principles: 10Adapted from Garr Reynold’s Shokunin Kishitsu & The Five Elements of True Mastery. Accessed on Jun 27, 2015 at http://www.presentationzen.com/presentationzen/2015/05/the-five-secrets-to-mastery.html

  1. They must be committed to the art, and committed to always functioning in their role on the team at the highest possible level. Commitment to hard work, and dedication to consistently executing at a high level is what sets great teams apart from their peers.
  2. They must aspire to improve themselves and their work, individually and collectively.
  3. They must pay attention to the cleanliness and freshness of their work environment. “Work environment” applies to the physical space in which the team gets its work done, but it also applies to the intangible work environment; Do team members feel free to express opinions that might be unpopular without fear of the consequences? Does every member of the team feel a sense of belonging and inclusiveness? Have cliques formed within the team, how does this affect the team’s overall effectiveness?
  4. The team’s leader is stubborn and obstinate in the pursuit of excellence. This does not mean that the leader has to be a jerk towards other members of the team, but it implies that the team’s standards for excellence, its vision, its mission . . . those are not sacrificed for the sake of consensus building.
  5. They each must be passionate and enthusiastic about mastering their skill, and in doing so they each cause their team to improve and become every day. They must be passionate about their individual and collective pursuit of perfection.

Lesson #5 – A team should strive to become collectively more intelligent than any single member of that team could be acting alone. 

  1. Gender diversity helps, or find team members with high social sensitivity. Researchers assigned subjects randomly into teams after each individual had been administered a standard intelligence test, and then the researchers asked the teams to solve several tasks which included brianstorming, decision making, and visual puzzles, as well as one complex problem. The team’s collective intelligence was scored on the basis of their performance on the tasks. Teams with members with higher IQs did not perform much better than the other teams. However, teams that had more women did. The researchers suggest that the higher social sensitivity of women relative to men, explains the higher scores attained by teams with more women. Teams that include people who have high social sensitivity will perform teams that do not. 11Anita Wooley and Thomas W. Malone, What Makes a Team Smarter? More Women. Harvard Business Review, Jun 2011. Accessed on Jun 27, 2015 at https://hbr.org/2011/06/defend-your-research-what-makes-a-team-smarter-more-women/ar/1
  2. In the face of complex problems, teams that solve the problem together will improve their chances of success over teams that rely on a star individual performer. “Swarm intelligence, which brings to mind the image of a hive of bees working together, requires people to gather information independently, process and combine it in social interactions, and use it to solve cognitive problems, according to behavioral biologist Jens Krause.  It has an advantage over other systems in that individuals get the opportunity to lead the swarm and affect what it does.  Moreover, because people act collectively, they can consider more factors, come up with more solutions, and make better decisions.” There are 4 things teams can do to accomplish this: 12Wolfgang Jenewein et al, Learning Collaboration from Tiki-Taka Soccer. Harvard Business Review, Jul 2014. Accessed on Jun 27, 2015 at https://hbr.org/2014/07/learning-collaboration-from-tika-taka-soccer/
    1. Create a common vision,
    2. Leaders should be teachers, not bosses,
    3. Set collective objectives, and
    4. Leaders must be full-time leaders.
  3. Create, maintain, and nurture the team’s identity. Together with culture, identity can provide a powerful means of driving performance. Identity is different from culture. Identity tells a team “who we are.” Culture tells the team “what we do” or “how we behave.” 13Andres Hatum and Luciana Silvestri, What Makes FC Barcelona Such a Successful Business? Harvard Business Review, Jun 16 2015. Accessed on Jun 27, 2015 at https://hbr.org/2015/06/what-makes-fc-barcelona-such-a-successful-business

A good team has learned how to make one plus one equal two. A great team has learned how to make one plus one equal three.

Lesson # 6 – In order to sustain performance teams should be aware of the problems related to intra-group collaboration and intra-group creativity. 

  1. The process of collaboration can lead teams to perform worse than an individual. Julia A. Minson and Jennifer S. Mueller found that teamwork can exacerbate overconfidence, and lead team members to reject outside information. 14Julia A. Minson and Jennifer S. Mueller, The Cost of Collaboration: Why Joint Decision Making Exacerbates Rejection of Outside Information. Psychological Science, Mar 16, 2012. Accessed on Jun 29, 2015 at http://opim.wharton.upenn.edu/DPlab/papers/publishedPapers/Minson_2011_The%20cost%20of%20collaboration.pdf
    1. The study examined the assumption that collaboration leads to superior decisions than decisions made by an individual.
    2. The study found that teams of two people were more reluctant to change their judgements when presented with new information than an individual working alone. As a result the teams made poorer decisions than they would have if they had more willingly incorporated outside information in their decision making.
    3. The researchers found that teams’ tended to be more confident in the inherent ability of the team to reach a decision without outside input, this led them to be less willing to accept outside information. They suggest that the process of collaboration itself, not the quality of collaboration, makes team members over-confident in their collective expertise and leads to the higher degree of rejection of outside input.
    4. This is especially detrimental when the team is confronting a novel problem or task, but fails to explore alternatives that might lead to an improved decision.
  2. The best teams are those in which each member of the team shares the same team mental model, and the team mental model is correct. Beng-Chong Lim and Katherine J. Klein found that team performance is enhanced when team members share the same mental model. 15Beng-Chong Lim and Katherine J. Klein, Team mental Models and Team Performance: A Field Study of The Effects of Team Mental Model Similarity and Accuracy.J. Organiz. Behav. 27, 403–418 (2006) Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/job.387. Accessed on Jun 29, 2015 at http://www-management.wharton.upenn.edu/klein/documents/Lim_Klein_Team_mental_models_2006.pdf
    1. A mental model is “a ‘mechanism whereby humans generate descriptions of system purpose and form, explanations of system functioning and observed system states, and predictions of future system states.’ Mental models are organized knowledge frameworks that allow individuals to describe, explain, and predict behavior. Mental models specify relevant knowledge content as well as the relationships between knowledge components. An individual’s mental model (of, for example, a car, a disease, or a process such as child development) reflects the individual’s perception of reality.”
    2. They found “a direct relationship between team mental model similarity and team performance. This may reflect the context in which the teams that we studied are trained to operate. They are expected to perform under high stress and intense time pressure. Under such circumstances, there is very little time for explicit coordination and communication. To succeed in their tasks (e.g., reacting to an enemy’s ambush), team members must have a shared understanding of the emerging situation and the collective action required. It is precisely in this type of context that shared mental models have been hypothesized to be most predictive of team performance.” Mental model similarity is a measure of the degree to which each team member’s perception of reality differs from the perception of other individuals on the team.
    3. They also found “that team mental model accuracy is also instrumental for team performance. Teams whose average mental models were most similar to experts’ mental models performed better than did teams whose average mental models were less similar to experts’ mental models. We speculate that teams whose mental models were most accurate pursued more effective task performance strategies than did teams whose mental models were less accurate.” In other words, the more correct a team’s mental model, the better the team performed. 16Coincidentally, this is an area of investigation I often pursue when I study early stage startups – does the startup team’s mental model match the mental model that customers have of the startup? What are the implications if it does not?
  3. The team might fail to benefit from the knowledge of its most knowledgeable member because of pressure to conform with the majority position.  In 1956 Solomon E Asch found that even when one member of a team is more knowledgeable than the rest of the team about a specific task, that individual might choose to agree with the team even if the team is wrong, and that individual would have disagreed with the team’s decision under different circumstances. This happens because that individual feels pressure to conform with the team’s position. This is especially the case if that individual’s self-perception of the power-dynamic on the team places that individual in a position of weakness which makes it advantageous for that individual to protect the social relationships that exist between that individual and the other members of the team. 17Solomon E. Asch, Studies of Independence and Conformity: 1. A Minority of One Against A Unanimous Majority. Psychological Monographs: General and Applied, Vol. 70, No. 9, Whole No. 416, 1956. Accessed online on Jun 28, 2015. I have saved a copy here Minority v. Majority – asch1956. A more accessible discussion of Samuel Asch’s research on Decision Making and Social Conformity can be found here
  4. The behavioral biases present in individual team members can be amplified within a group setting, particularly, the biases of dominant group members can become amplified by the group. Behavioral psychology is the study of observable and quantifiable aspects of human behavior. Behavioral biases refer to the tendency that people have to behave in certain ways under certain conditions. Behavioral biasescan be divided into two groups; Cognitive biases and Emotional biases. Anindividual’s behavioral biases can interfere with that person’sdecision making, and cause theindividual to makesuboptimal choices. The impact behavioral biases have on the quality ofdecision makingcan be worse in the context of a group asindividual team members might have a multiplying effect on oneanothers’ biases instead of reducing bias within the group. For example, two over-confident people might form a team that exhibits a higher degree of overconfidence than either individual acting alone. 18Adapted from Group Behavior, accessed on Jun 29, 2015 at https://www.boundless.com/psychology/textbooks/boundless-psychology-textbook/social-psychology-20/social-influence-104/group-behavior-393-12928/ 
    1. Groupthink occurs when teams make consistently suboptimal decisions because members of the team have a strong desire to maintain harmony within the group. Groupthink can lead the team to consistently reject creative ideas.
    2. Groupshift occurs when the group adopts a position that is more extreme than the position that any of the individual members of the team would have taken. It is the example I described above of a team of individually overconfident people forming a team that is even more extreme in its overconfidence than any single individual member of the team would be if acting alone, under any circumstance.
    3. Deindividuation occurs as the group gradually becomes self-unaware as individual members of the group engage in less self-evaluation and self-critiquing, subsuming their self-awareness in the face of the behavior of the group. This phenomenon is exemplified in the real world through phenomena like lynch mobs, peaceful demonstrations that turn violent for no identifiable or obvious reason, or groups that form spontaneously and cause destruction, say while celebrating a sport’s teams victory in some sports tournament like the FIFA World Cup.
  5. As a team grows individuals in the team can perform worse than they would have if they were acting alone. Jennifer S. Mueller found that as teams grow larger the performance of individuals on the team can suffer because the social bonds between members of the team grow weaker. In her study relational loss outweighed extrinsic motivational loss and perceived coordination loss in explaining the tendency for individuals on large teams to perform worse. Relational loss is a measure of the likelihood of one team member to obtain task-related help from another team member when it is needed. Extrinsic motivation is the tendency of team members to perform actions because of the likelihood of recognition from  other members of the team. Coordination loss is the tendency for team members to become less capable of taking synchronistic action towards completing a task as the team grows. She states: “This study identifies that, in modern contexts, coordination losses and motivation losses provide an incomplete story in explaining why individuals in larger teams perform worse. Instead, the current study shows that relational losses play an important role in explaining why individuals experience performance losses in larger teams. Better understanding of process in larger teams moves the field past an obsession with finding the ‘‘optimal team size,’’ a line of questioning which has yielded little understanding about performance in larger groups. Indeed, the optimal team size may be completely dependent upon the exact nature of the group task which may have as many variations as there are teams. Focusing on process also moves the field past blanket recommendations to simply keep group sizes small. The reality is that managers tend to bias their team size towards overstaffing, and theory would suggest that larger teams have more potential productivity that can lead organizations to increased competitive advantage if managed correctly. 19Mueller, J. S. Why individuals in larger teams perform worse. Organizational Behavior and Human Decision Processes (2011), doi:10.1016/j.obhdp.2011.08.004. Accessed on Jun 29, 2015 at https://1318d3f964915c298476-71207924aec76187d46cf4d3ee8ac05a.ssl.cf2.rackcdn.com/or-mueller_2012_obhdp_why-indivdiuals-in-larger-teams-perform-worse.pdf
  6. Individual team members, and thus teams in general can have an implicit bias against creative ideas. The best teams are those that recognize this and introduce mechanisms to guard against discarding creative ideas that later go on to become the basis for phenomenally successful products and businesses. A study by Jennifer S. Mueller, Shimul Mewani and Jack A. Goncalo suggests that this might happen because people and teams try to reduce uncertainty, and creative ideas are those that confront us with extreme uncertainty.

Concluding Thoughts

If you want to go fast go alone. If you want to go far go together.

The Big 5 of Team Work and The Coordinating Mechanisms of Teamwork: In Is There a “Big Five” in Teamwork? Eduardo Salas, Dana E. Sims and C. Shawn Burke provide a helpful summary of The Big Five and the Coordinating Mechanisms of Team Work. I am reproducing part of that summary below. 20Eduardo Salas, Dana E. Sims and C. Shawn Burke, Is There a “Big Five” in Teamwork?SMALL GROUP RESEARCH, Vol. 36 No. 5, October 2005 555-599 DOI: 10.1177/1046496405277134. Accessed on June 29, 2015 at http://www.uio.no/studier/emner/matnat/ifi/INF5181/h14/artikler-teamarbeid/salas_etal_2005_is_there_a_big_five_in_teamwork—copy.pdf. I have saved the relevant pages Salas et al – Big 5 in Team Work.

The Big Five of Teamwork

  1. Team Leadership
    1. Definition: Ability to direct and coordinate the activities of other team members, assess team performance, assign tasks, develop team knowledge, skills, and abilities, motivate team members, plan and organize, and establish a positive atmosphere.
    2. Behavioral Markers: Facilitate team problem solving. Provide performance expectations and acceptable interaction patterns. Synchronize and combine individual team member contributions. Seek and evaluate information that affects team functioning. Clarify team member roles. Engage in preparatory meetings and feedback sessions with the team.
  2. Team Orientation
    1. Definition: Propensity to take other’s behavior into account during group interaction and the belief in the importance of team goal’s over individual members’ goals.
    2. Behavioral Markers: Taking into account alternative solutions provided by teammates and appraising that input to determine what is most correct. Increased task involvement, information sharing, strategizing, and participatory goal setting
  3. Shared Mental Models
    1. Definition: An organizing knowledge structure of the relationships among the task the team is engaged in and how the team members will interact.
    2. Behavioral Markers: Anticipating and predicting each other’s needs. Identify changes in the team, task, or teammates and implicitly adjusting strategies as needed.
  4. Mutual Trust
    1. Definition: The shared belief that team members will perform their roles and protect the interests of their teammates.
    2. Behavioral Markers: Information sharing. Willingness to admit mistakes and accept feedback.
  5. Closed-loop Communication
    1. Definition: The exchange of information between a sender and a receiver irrespective of the medium.
    2. Behavioral Markers: Following up with team members to ensure message was received. Acknowledging that a message was received. Clarifying with the sender of the message that the message received is the same as the intended message.

The Coordinating Mechanisms of Teamwork

  1. Mutual Performance Monitoring
    1. Definition: The ability to develop common understandings of the team environment and apply appropriate task strategies to accurately monitor teammate performance.
    2. Behavioral Markers:Identifying mistakes and lapses in other team members’ actions. Providing feedback regarding team member actions to facilitate self-correction.
  2. Backup Behavior
    1. Definition: Ability to anticipate other team members’ needs through accurate knowledge about their responsibilities. This includes the ability to shift workload among members to achieve balance during high periods of workload or pressure.
    2. Behavioral Markers: Recognition by potential backup providers that there is a workload distribution problem in their team. Shifting of work responsibilities to underutilized team members. Completion of the whole task or parts of tasks by other team member.
  3. Adaptability
    1. Definition: Ability to adjust strategies based on information gathered from the environment through the use of backup behavior and reallocation of intrateam resources. Altering a course of action or team repertoire in response to changing conditions (internal or external).
    2. Behavioral Markers: Identify cues that a change has occurred, assign meaning to that change, and develop a new plan to deal with the changes. Identify opportunities for improvement and innovation for habitual or routine practices. Remain vigilant to changes in the internal and external environment of the team.

References

Let me know if you feel I have failed to attribute something appropriately. Tell me how to fix the error, and I will do so. I regret any mistakes in quoting from my sources.
Adapted from Group Behavior, accessed on Jun 29, 2015 at https://www.boundless.com/psychology/textbooks/boundless-psychology-textbook/social-psychology-20/social-influence-104/group-behavior-393-12928/
“Groups Perform Better Than the Best Individuals on Letters-to-Numbers Problems: Effects of Group Size”, Patrick Laughlin, Erin Hatch, Jonathan Silver, and Lee Boh, University of Illinois at Urbana Champaign; Journal of Personality and Social Psychology, Vol. 90, No. 4. Accessed online on Jun 27, 2015.
Takao Sasaki et al, Ant Colonies Outperform Individuals When A Sensory Discrimination Task is Difficult But Not When it is Easy.Proceedings of the National Science Academy of Sciences of the United States 2013 110(34). Accessed on Jun 27, 2015 at http://www.pnas.org/content/110/34/13769.full.pdf+html
Tuckman, Bruce W. (1965) ‘Developmental sequence in small groups’, Psychological Bulletin, 63, 384-399.
Anita Elberse, Ferguson’s Formula. HBR October 2013 Issue accessed on Jun 27 at https://hbr.org/2013/10/fergusons-formula. Also, Anita Elberse and Thomas Dye, Sir Alex Ferguson: Managing Manchester United. Harvard Business School Case N9-513-051, Sep 2012.
Eric M. Anicich et al, Hierarchical Cultural Values Predict Success and Mortality in High-Stakes Teams. Proceedings of the National Science Academy of Sciences of the United States 2015 112(5). Accessed on Jun 27, 2015 at http://media.outsideonline.com/documents/himalaya-expedition-study.pdf.
Devon O’Neil, Summit or Death! Accessed on Jun 27 at http://www.outsideonline.com/1928751/summit-or-death
On such teams young players must commit to trying to become one of the best, and the example must be set by the more experienced members of the team.
Adapted from Garr Reynold’s Shokunin Kishitsu & The Five Elements of True Mastery. Accessed on Jun 27, 2015 at http://www.presentationzen.com/presentationzen/2015/05/the-five-secrets-to-mastery.html
Anita Wooley and Thomas W. Malone, What Makes a Team Smarter? More Women. Harvard Business Review, Jun 2011. Accessed on Jun 27, 2015 at https://hbr.org/2011/06/defend-your-research-what-makes-a-team-smarter-more-women/ar/1
Wolfgang Jenewein et al, Learning Collaboration from Tiki-Taka Soccer. Harvard Business Review, Jul 2014. Accessed on Jun 27, 2015 at https://hbr.org/2014/07/learning-collaboration-from-tika-taka-soccer/
Andres Hatum and Luciana Silvestri, What Makes FC Barcelona Such a Successful Business? Harvard Business Review, Jun 16 2015. Accessed on Jun 27, 2015 at https://hbr.org/2015/06/what-makes-fc-barcelona-such-a-successful-business
Julia A. Minson and Jennifer S. Mueller, The Cost of Collaboration: Why Joint Decision Making Exacerbates Rejection of Outside Information. Psychological Science, Mar 16, 2012. Accessed on Jun 29, 2015 at http://opim.wharton.upenn.edu/DPlab/papers/publishedPapers/Minson_2011_The%20cost%20of%20collaboration.pdf
Beng-Chong Lim and Katherine J. Klein, Team mental Models and Team Performance: A Field Study of The Effects of Team Mental Model Similarity and Accuracy.J. Organiz. Behav. 27, 403–418 (2006) Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/job.387. Accessed on Jun 29, 2015 at http://www-management.wharton.upenn.edu/klein/documents/Lim_Klein_Team_mental_models_2006.pdf
Coincidentally, this is an area of investigation I often pursue when I study early stage startups – does the startup team’s mental model match the mental model that customers have of the startup? What are the implications if it does not?
Solomon E. Asch, Studies of Independence and Conformity: 1. A Minority of One Against A Unanimous Majority. Psychological Monographs: General and Applied, Vol. 70, No. 9, Whole No. 416, 1956. Accessed online on Jun 28, 2015. I have saved a copy here Minority v. Majority – asch1956. A more accessible discussion of Samuel Asch’s research on Decision Making and Social Conformity can be found here
Adapted from Group Behavior, accessed on Jun 29, 2015 at https://www.boundless.com/psychology/textbooks/boundless-psychology-textbook/social-psychology-20/social-influence-104/group-behavior-393-12928/ 
Mueller, J. S. Why individuals in larger teams perform worse. Organizational Behavior and Human Decision Processes (2011), doi:10.1016/j.obhdp.2011.08.004. Accessed on Jun 29, 2015 at https://1318d3f964915c298476-71207924aec76187d46cf4d3ee8ac05a.ssl.cf2.rackcdn.com/or-mueller_2012_obhdp_why-indivdiuals-in-larger-teams-perform-worse.pdf
Eduardo Salas, Dana E. Sims and C. Shawn Burke, Is There a “Big Five” in Teamwork?SMALL GROUP RESEARCH, Vol. 36 No. 5, October 2005 555-599 DOI: 10.1177/1046496405277134. Accessed on June 29, 2015 at http://www.uio.no/studier/emner/matnat/ifi/INF5181/h14/artikler-teamarbeid/salas_etal_2005_is_there_a_big_five_in_teamwork—copy.pdf. I have saved the relevant pages Salas et al – Big 5 in Team Work.