Introduction

I have started a lot of companies and many of them have been successful. Some may say too many. I often get asked what is the “secret sauce” behind a successful start-up company, and after uumming and aaahing a while, I inevitably say that it’s the team. We win awards – we thank the team. We succeed in doing impossible things – thanks to the team. We recover from a seemingly impossible downturn – once again it’s the team.

So what makes a great start-up team ?

In this series of articles, I thought that rather than giving my personal thoughts on the subject, I would share some of the academic theories and research. If you can plough your way through this, you may be better equipped to start your own team – or even to identify problems and issues within your existing team. And maybe not ….. but at least it will make you think. As ever, I wish you “good luck” in your entrepreneurial quest.

As they say in Hamilton “see you on the other side”.

Part 4 - The personality of a start-up

In their study of culture and Jungian types, Kilmann and Mitroff (1976) state that “individuals of the same personality type tend to ... have the same image of their ideal organisation” and when considering different personality types, that “the ideal of one type is the hell of the other and vice versa”. As previously mentioned, by administering a short Jungian personality type test to each of their 75 test subjects, and then asking them to write a short story explaining their “concept of an ideal organisation”, Kilmann & Mitroff (1976) defined four types of “ideal organisation”, which provides some interesting comparisons with the Baron & Hannan (2002) “Blueprints”.

These five Blueprints are defined according to three key variables: attachment to the organisation, selection of new recruits, and how the organisation is coordinated and controlled. This is shown in the table below:

Figure 7: Baron & Hannan organisational blueprints

Baron & Hannan (2002) describe three main “basis for attachment and retention” being compensation “money”; qualities of work “work”; and working as a community “love”. As shown above, by charting these attributes against the blueprints they show that in the Commitment model, “love” is the main basis for attachment; “money” is the basis for the Autocracy model; and “work” the basis for all the others.

These bases for Attachment and Coordination / Control are reflected in the work of Goffee & Jones (2000), who group companies into four categories, Networked, Fragmented, Communal, and Mercenary based on the levels of Solidarity and Sociability experienced by the company’s employees.

It should be noted that Goffee & Jones (2000), in common with other research into team behaviour, base their work on large organisations, quoting Unilever and a leading Business School in their 1996 HBR article, and thus their emphasis is on reporting how employees feel their organisational culture actually is perceived to be, as opposed to the Southon & West (2002) approach which is determined to assist in specifying how a start-up culture can be created and moulded. Thus the effect an individual may have on the start-up culture is incorrectly assumed to be minimal as this is usually the situation with the influence an individual may have within a larger organisation.

However, by ignoring this limitation, and the basis for selection of new team members. it is possible to observe some similarities between the Goffee & Jones (2000) models and the Blueprints and how they match the Ideal Organisations, by studying the language used to describe each organisation type. This has been synthesized to create the table below.

Figure: Some organisational styles

Baron & Hannan (2002) identify the Star and Commitment blueprints as the most successful, with the Commitment model being praised by VCs due to its resilience to external turbulence, which is a feature of the high tech start-up environment. Although Goffee & Jones (2000) state that the Communal model seems to be the most attractive, they state that it often struggles to evolve and so they reason that there are far fewer commercial enterprises of this type. They suggest that this type may best be suited to “religious, political, and civic organisations” and as these types of organisations share a clear sense of global destiny they are also commonplace in small, fast-growing entrepreneurial start-ups. Goffee & Jones (2000) state that the suitability of these organisational types depends on the business context, and that the commercial Communal organisation may be suited to four situations: elaborate innovation; sub-unit learning; long-term stamina; and dynamic and complex business environments.

The sustainability of these models is noted by each of the three groups of authors above, with Baron & Hannan (2002) quantifying the impact of cultural change as the organisation grows, and the original founders depart, the Entrepreneur being replaced by a career big company CEO. Indeed they note that in organisations with a changed Blueprint, 75% were now controlled by a non-Founder CEO and that a change to the Founder’s Blueprint increased the staff turnover rate by 30% and the risk of the start-up failing by 225%. Of the nearly 200 companies studied, 66% were matched to a Blueprint, with 14% Commitment and 9% Star types. The most common was Engineering type.

Baron & Hannan (2002) also noted that Autocratic start-ups were nearly 200% more likely to fail than Star Blueprint start-ups, and 250% more likely to fail than Commitment start-ups. They also showed 140% lower annual growth than Star start-ups. The similarity with the Goffee & Jones (2000) Mercenary Organisation certainly seems to describe a very hostile environment for Entrepreneurial types – where Southon & West (2002) describe the team as comprising friends and “people you get on well with” where everyone knows everyone else; the Mercenary Organisation is characterised by clearly separating work and home life, rare fraternisation outside office hours, and an absence of strong personal ties. One of the few activities which unities a Mercenary Organisation, according to Goffee & Jones (2000) is rapidly identifying a threat in the marketplace, usually a competitor, and then celebrating the defeat of “the enemy”. This contrasts starkly with Southon’s assertion that the best attitude to have towards the competition is “a level where you can have a drink with the opposition and conduct a proper conversation with them”, drawing a sporting analogy which may reveal his British upbringing: “hard, fair competition on the field; a drink in the bar afterwards.”

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