Category: Research

The Blueprint for Building A+ Teams

By Nikki Blacksmith, Ph.D. & Maureen McCusker, Ph.D., Co-Founders of Blackhawke

Teams make up the backbone of every startup. An “A” team can drive companies to success, but ineffective teams inevitably drive companies to failure. What drives startups to unicorn status: an A+ team.

So what makes an A+ team? Based on decades of studying effective and ineffective teams across a variety of industries, we identified a blueprint for building A+ teams. Below we explain 4 components of the blueprint and how to foster each one.

Open and Frequent Communication

What’s simple: Teams need to talk to each other to succeed. The easiest way to create efficiency and enhance collaboration is to effectively share information and knowledge, awareness, and build trusting relationships.

What’s not simple: People communicate in different ways. When team members know the values of the team or organization, they can better determine priorities and align efforts. Setting behavioral and decision-making norms can preemptively avoid conflict within teams. Below are some action items for communicating effectively:

  • Get to know each other’s communication styles and preferences
  • Prioritize what requires communication and what doesn’t
  • Jointly learn how to provide and receive feedback based on your own personality traits and preferences you’ve discussed

Cohesion

What’s simple: team members who get along will work better together than those who do not. Decades of Industrial-Organizational (I-O) psychology research show that teams who are more cohesive – that is, tightly stick together – are more effective and perform higher.

What’s not simple: how to foster cohesion. Cohesion requires that team members trust each other, communicate with one another effectively, and like each other. Below are some action items to help build cohesion in your team:

  • Spend time getting to know one another outside of work
  • Take time to formally learn about each others’ personality and understand how it fits with yours and others in your team
  • Be authentic and truthful with one another

A Shared Mental Model

What’s simple: when everyone is on the same page about the purpose of the company,its future plans, and overall strategy , it’s much easier to achieve organizational goals and milestones..

What’s not simple: Most members of a team have surprisingly different ideas of the overall mission, purpose, and goals of the startup and how to get there, especially in early stages. This shared understanding of the task is what I-O psychologists call a shared mental model, and it’s critical for team coordination and effectiveness. Below are some action items to help build a shared mental model in your team:

  • Have each team member write a description of the purpose, mission, and goals in their own time and in their own words
  • Hold a meeting where each member shares his/her description
  • Discuss the discrepancies and formalize a shared, agreed-upon mental model, and strategy
  • Use that shared mental model as a resource to guide processes and strategies of accomplishing tasks and achieving goals

A Shared Understanding of Roles and Responsibilities

What’s simple: It’s very clear that when it comes to startups, teamwork is more effective than individual work. Teams who divide and share work are more efficient, and in turn are more effective than those who don’t.

What’s not simple: When founder teams work together on tasks that are all so highly interdependent and intermingled, conflict can easily arise due to blurred or overlapping lines of responsibilities and duties. Further, as teams grow – it’s easy to lose track of who is doing what and then redundancies emerge and efficiency is lost. Below are some action items to help avoid this very common cause of conflict:

  • Work together to clearly define each person’s role and the responsibilities
  • Devote time periodically (e.g., weekly, biweekly, monthly) to specifically discuss ongoing work and identify areas of potential redundancy and synergy
  • Discuss and decide upon how decisions are made (e.g., majority vote, consensus) and, if applicable, who the ultimate decision-maker is for each task

About Blackhawke

Using unique psychological assessments and predictive analytics, Blackhawke provides venture capitalists, angels and other investors with a deep understanding of the capability, resilience, motivation, strengths and weaknesses of entrepreneurs and startup management teams. See www.blackhawke.io for more information, or email info@blackhawke.io.

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The paradox of the female entrepreneur.

Startups with at least one female on their founding teams are more successful, yet female entrepreneurs receive only a fraction of the funding of their male counterparts. Why is this, and what can be done about it?

In one study, researchers found that companies with at least one female founder perform 63% better than investments with all-male founding teams (FirstRound, 2015), yet female entrepreneurs experience more difficulties accessing funding and receive smaller amounts of funding (e.g., Brana, 2013; Burk, van stel, Hartog, & Ichou, 2014; Coleman & Kariv, 2014). And in 2016, venture capitalists invested $58.2 billion in entrepreneurial ventures with all-male founders. In comparison, ventures with all-female founders received only $1.46 billion (Zarya, 2017).

What explains this disparity? Research into the psychology of entrepreneurs and investors suggests a few explanations.

Firstly, women entrepreneurs are evaluated based on a different set of standards compared to their male counterparts (Malmstrom, Johansson, & Wincent, 2017a). Women even get asked different questions by investors. This likely occurs because people (both men and women) perceive entrepreneurs as having predominantly masculine attributes (Gupta, Turban, Wasti, & Sikdar, 2009). Therefore, women might be perceived as being less entrepreneurial than men.

A group of researchers silently observed closed-room governmental venture capital decision-making meetings they had about evaluations of 125 entrepreneurial ventures and their founders (Malmstrom et al., 2017a). The researchers discovered that government venture capitalists talked about the potential of a male entrepreneur differently than female entrepreneurs. For example, a male entrepreneur might be described as “young and promising” while a female would be described as “young, but experienced.” These disparate attributions also led to disproportionate funding. On average, women received only 25% of what they applied for compared to 52% of requested amount for the males.

Although this research seems to present a dismal view of funding opportunities for women, the research study actually led to positive change including development of a new strategy of dispersing funds and new regulations (Malmstrom, Johansson, & Wincent, 2017b). Likewise, strategies to minimise the bias of investors – which we discussed in a previous article – can not only improve the quality of the decisions that investors make but also improve opportunities for female entrepreneurs.

By Ben Hawkes and Dr. Nikki Blacksmith

References

Brana, S. (2013). Microcredit: An answer to the gender problem in funding? Small Business Economics, 40, 87–100.

Burke, A., van Stel, A., Hartog, C., & Ichou, A. (2014). What determines the level of informal venture finance investment? Market clearing forces and gender effects. Small Business Economics, 42, 467–484.

Coleman, S. & Kariv, D. (2014). Deconstructing’ entrepreneurial self-efficacy: A gendered perspective on the impact of ESE and community entrepreneurial culture on the financial strategies and performance of new firms. Venture Capital, 16, 157–181.

First Round (2015) 10 Year Project. First Round. Retrieved from: http://10years.firstround.com/

Gupta, V. K., Turban, D. B., Wasti, S. A., & Sikdar, A. (2009). The role of gender in stereotypes in perceptions of entrepreneurs and intentions to become an entrepreneur. Entrepreneurship Theory and Practice, 33, 397-417.

Kanze, D., Huang, L., Conley, M.A., & Higgins, T. T. (2017). We ask men to win & women not to lose: Closing the gender gap in startup funding. Academy of Management Journal. doi: 10.5465/amj.2016.1215

Malmstrom, M., Johansson, J., & Wincent, J. (2017). Gender stereotypes and venture support decisions: How governmental venture capitalists socially construct entrepreneurs’ potential. Entrepreneurship Theory and Practice. doi: 10.1111/etap.12275

Malmstrom, M., Johansson, J., & Wincent, J. (2017). We recorded VCs’ conversations and analyzed how differently they talk about female entrepreneurs. Harvard Business Review

Zarya, V. (2017). Venture capital’s funding gender gap is actually getting worse. Fortune. Retrieved from: http://fortune.com/2017/03/13/female-founders-venture-capital/

About Blackhawke

Using unique psychological assessments and predictive analytics, Blackhawke provides venture capitalists, angels and other investors with a deep understanding of the capability, resilience, motivation, strengths and weaknesses of entrepreneurs and startup management teams. See www.blackhawke.io for more information, or email info@blackhawke.io.

The Myers-Briggs: Trick or Treat?

All Hallows’ Eve. The night of the year when we psychologists, just like normal people, like to sit around the fire, toast marshmallows, and swap scary stories while we sip our pumpkin-spice martinis.

We’re made of stern, rational stuff. And scary stories – like that one that ends with “…but the call was coming from INSIDE THE HOUSE” – are treated with the scepticism that they deserve.

No. For a psychologist there are only three really scary stories, and they end like this.

One. “…and the evidence was there. Astrology was proven.”

Two. “…so it turns out that correlation does imply causality after all.”

But the third, the most terrifying of them all…

“… and so, the Myers Briggs was shown to be a perfectly valid and robust measure of personality.”

I shudder just typing those words. Let me explain why.

You may be aware that the Myers-Briggs Type Indicator (MBTI) is a personality test widely used in business.  It’s based on on Carl Jung’s theory of psychological types. It measures four dimensions of interactional and thinking styles, and classifies individuals on those dimensions. For each dimension you are given a letter: extraverted (E) or introverted (I); sensing (S) or intuitive (N); thinking (T) or feeling (F); and judging ( J) or perceiving (P). You end up with one of sixteen four letter codes (such as ESFJ, ENFP, INTP, and ISFJ) that is intended to describe behaviors, attitudes, and decision-making styles.

People cannot be sorted into simple types or categories.

And that’s the first problem with it: people cannot be sorted into simple types or categories. Not easily anyway. Classifying people into one of 16 “types” oversimplifies what we know about personality.

The majority of personality research demonstrates that there are more – perhaps way more – than 4 different dimensions of personality. And instead of being at one end or the other on each dimension (like extraverted vs. introverted, or sensing vs. intuitive), each dimension is actually a continuum. You can be slight introverted, really extraverted, or any point along the scale. In fact, most people are a little bit of both, depending on the situation: someone may have the tendency to exhibit introverted behaviors in the office but exhibit extraverted behaviors at a party.

There’s little to no evidence of validity.

Quite reasonably, you might expect a personality test that is in common use to have plenty of evidence to demonstrate its validity. Or simply put, the test should measure what it is intended to measure. But numerous studies have evaluated the MBTI and found little to no evidence of validity (Boyle, 1995; Pettinger, 1993; Sipps, Alexander, & Friedt, 1985). This is because, for example, the theories it is built on do not hold and it has poor psychometric properties.   Scientists now largely agree that the MBTI should not be used due to its lack of supporting validity evidence.

The MBTI does not reliably predict important behaviors.

When we say that there is no validity, it means that almost no evidence exists to demonstrate that the test is capturing the four ‘dimensions’ that supposedly classify individuals.   To put it more bluntly, “the patterns of data do not suggest that there is a reason to believe that there are 16 unique types of personality,” say Pittenger (1993). The same paper also points out that a large body of research exists to show that the MBTI does not reliably predict important behaviors (Pittenger, 1993).

Granted, some studies have claimed that the MBTI is a valid tool, but on close inspection these claims were often based in an unscientific understanding of psychometric validity (Boyle, 1995; Pettinger, 1993).

I’ll spare you the details of how we assess validity: that’s a scary story for another Halloween. If you can’t wait, you can refer to the American Educational Research Association (AERA), American Psychological Association (APA), and the National Council on Measurement in Education (NCME), the Society for Industrial-Organizational Psychology (SIOP) along with other psychometric experts who have agreed upon a set of Standards, Principles, and guidelines  that should be followed when assessing validity.

There are personality assessments out there with much stronger validity evidence.

In recent scientific review articles, expert scientists that specialize in the study of personality have taken to not even mention or acknowledge the MBTI when discussing the history of personality (e.g., Chernyshenko, Stark, & Drasgow, 2010; Revelle, Willt, & Condon, 2011). Further, if scientists used the MBTI to measure personality and submitted their research paper to a top-tier journal, the paper would get rejected on the basis of poor measurement and in turn poor research methods; the study would lack validity. That’s not because of professional jealousy (although who wouldn’t want some of that sweet, sweet MBTI money) but because there are personality assessments out there with much stronger validity evidence.

If you want to learn more about modern day theories of personality, check out the Personality Project, a collection of websites and resources devoted to the academic study of personality. And if you want to contribute to research and learn about your own personality you can take a personality test based in the most up-to-date personality science.

By Ben Hawkes and Dr. Nikki Blacksmith

References

American Educational Research Association, American Psychological Association, & National Council on Measurement in Education. (1999). Standards for educational and psychological testing. Washington, DC: American Educational Research Association.

Boyle, G. J. (1995). Myers-Briggs Type Indicator (MBTI): Some psychometric limitations. Australian Psychologist 30, 71-74.

Chernyshenko, O. S., Stark, S., & Drasgow, F. 2011. Individual differences: Their measurement and validity. In S. Zedeck (Ed.), APA handbook of industrial and organizational psychology. Vol. 2. Selecting and developing members for the organization: 117-151. Washington, DC: American Psychological Association.

Pittenger, D. J. (1993). The utility of the Myers-Briggs Type Indicator. Review of Educational Research, 63, 467-488.

Revelle, William. 1997. “Extraversion and Impulsivity: The Lost Dimension?” In The Scientific

Study of Human Nature: Tribute to Hans J. Eysenck at Eighty, ed. Helmuth Nyborg, 189-212 Amsterdam: Pergamon/Elsevier Science.

Schmitt, N. (2014). Personality and cognitive ability as predictors of effective performance at work. Annual Review of Organizational Review and Organizational Behavior, 1, 45-65.

Sipps, G. J., Alexander, R. A., & Friedt, L. (1985). Item analysis of the Myers-Briggs Type Indicator. Educational and Psychological Measurement, 45, 789-796.

About Blackhawke

Using unique psychological assessments and predictive analytics, Blackhawke provides venture capitalists, angels and other investors with a deep understanding of the capability, resilience, motivation, strengths and weaknesses of entrepreneurs and startup management teams. See www.blackhawke.io for more information, or email info@blackhawke.io.

Entrepreneur or Narcissist? A Venture Capitalist’s’ Field Guide

What’s the difference between an entrepreneur and a narcissist? It may be harder to tell than you think.

In a 2016 study, researchers sent a survey to 466 business and MBA students asking them questions about their intentions to become an entrepreneur and their motives for entering entrepreneurial ventures. They also measured their standing on the “dark triad” traits – narcissism, psychopathy, and Machiavellianism  – which are associated with antisocial and counterproductive behaviors

Individuals high on narcissism tend to have a sense of grandiosity, overestimate their personal capabilities, and engage in self-serving behaviors. Individuals high on psychopathy lack empathy and remorse, and engage in impulsive, selfish, and impulsive behavior. And Machiavellian individuals have a general disregard for ethics or morality: manipulating, deceiving, and exploiting others for their own gain.

The results showed that individuals who had intentions of entering entrepreneurial ventures were more likely to score high on the “narcissism.” but not on psychopathy and Machiavellianism. The authors speculate that the “underlying (over)confidence and attention-seeking characteristics associated with narcissism may partly explain why it was related to entrepreneurial intentions”

Results also indicated that, amongst those characterized as early-stage nascent entrepreneurs, all three traits of the dark triad were related to unproductive entrepreneurial motives. Unproductive motives measured in the study included:

  • To achieve financial success, even if it is a little destructive to society
  • To maximize profits, even at the cost of employees’ well-being
  • To grow quickly, even if that means sacrificing quality
  • To earn a financial profit at all costs

In other words, entrepreneurs high on all three of the dark triad traits are more likely to have self-serving motives and overestimating their abilities. As the authors say, entrepreneurs high on the dark triad traits “may stand to use entrepreneurship as a vehicle for appropriating value rather than creating it.”

What does this mean for venture capitalists and other investors? It means they need to be “vigilant in terms of the design of incentives and in managing their relationships with individuals potentially high in the dark triad”. Only a small minority of entrepreneurs exhibit these ‘dark triad’ traits, but investors should be alert to them. And fortunately, you don’t need to be a psychiatrist to spot these. There are interviews and assessments that measure these dark triad traits that can easily be included in your venture screening or due diligence process.

By Ben Hawkes and Dr. Nikki Blacksmith

References

Hmieleski, K. M., & Lerner, D. A., (2013). The Dark Triad and Nascent Entrepreneurship: An Examination of Unproductive versus Productive Entrepreneurial Motives. Journal of Small Business Management, 54, 7–32. doi: doi: 10.1111/jsbm.12296

About Blackhawke

Using unique psychological assessments and predictive analytics, Blackhawke provides venture capitalists, angels and other investors with a deep understanding of the capability, resilience, motivation, strengths and weaknesses of entrepreneurs and startup management teams. See www.blackhawke.io for more information, or email info@blackhawke.io