OpenTTO - DILIGENT Phase 6 – People Management & Recruitment

OpenTTO.org - DILIGENTPhase 6 – People Management & Recruitment PMR Objective 5 Myths About Entrepreneurship Culture, Personality & Communications Recruiting Board Roles Change Over Time

PMRObjective To identify people and team issues critical to success: • Is the right team available - entrepreneurs? • Can they grow and recruit? • What are the cultural challenges • How will the composition change over time? The team has to have initial skills and ambition and be capable of accepting and implementing changes to their own roles, team structure and responsibilities over time.

People Management & Recruiting 5.0 FCS 6.0 PMR 7.0 SPB 8.0 TRP 6.1 Describe Entrepreneurs 6.2 Understand Cultural Issues 6.3 Styles, Personality & Communica-tion 6.4 Workshop Recruitment Strategy & Plan 6.5 Overview Board, & Transition Plan Overview Review the entrepreneurial characteristics required, the personality types and communication styles that are important, and the recruitment process. Pay attention to changing roles over time and build the transition plan. Process Output Supplier 6.1 Describe the characteristics of an entrepreneur and how they fit the current opportunity 6.2 Workshop cultural issues relevant to team performance and entrepreneurs 6.3 Review and evaluate personality types and communication styles to optimise team performance 6.4 Workshop the recruitment plan, the sources of potential candidates and the core & functional team 6.5 Develop the plan to recruit the Board, and to put in place transition plans for people over time 6.6 Complete and review Confidence Index for PMR Business Lead HR Advisors Investors Technical Advisors Partner/Cluster Firms Recruitment Plan Lifecycle HR Plan Sources of People Team Building Plan Input Customer Business Case Financial Analysis People & Entrepreneur Sources Product & Partner information Business Case & Plan Executive Lead HR Advisors Business Lead

I O S P C Transform Templates PMRSuppliers and Inputs Typical questions for suppliers and inputs: • Are the key players and champions in place now? • Do they have the passion and the knowledge? • Have they the ability to adapt to the market? • Will they accept the need for changing roles? • Is there a path back into research? • What reward/retention structures are options? • What retention and what incentives are the norm? • What sources can be drawn upon for HR & recruiting?

I O S P C Transform Templates PMRProcess and Transformation Typical questions around entrepreneurs: • What are the characteristics of an entrepreneur? • How do we find and attract them? • Are there latent entrepreneurs in our midst? • What are some of the common myths? • What is different between early-stage and late-stage? • What if the goals change during the journey? • Can they grow and recruit the rest of the team?

PMRFive Myths About Entrepreneurship Expertise, Experience and the Early-Stage Entrepreneur#: • 40% had no industry experience; 33% no job e.g. Jann Wenner; Steve Wozniack; John Katzman Instead: • intelligence • Desire – passion! • adaptability • sales skills • willingness to provide specialized products. #US National Commission on Entrepreneurship, Patrick Von Bargen Executive Director. June 24, 2001.

PMRFive Myths About Entrepreneurship Well-researched ideas and Proven Business Plans?: • Research = 4%; business plan = 33% • A vision then jumping from rock to rock vs. plans for the Golden Gate Bridge • Adaptiveness, open-mindedness, deciding quickly, face-to-face selling Financing and the Early-Stage Entrepreneur: • 66% = less than $50,000; average = $25k; not $1, or $3, or $13m • Rolling Stone, Waste Management, Hotmail, Microsoft, Dell • Personal savings, friends & family, credit cards … and then angels?

PMRFive Myths About Entrepreneurship Risk and the Early-Stage Entrepreneur: • Yes, personal, family, reputation risk, but • Not much money, and even then … • Not much experience in the industry … • Persuading others to take on risk: employees, suppliers, customers Expertise, Experience and the Later-Stage Entrepreneur: • Growth requires “upgrading resources” • Skilled, experienced, specialized training • Steve Ballmer at Microsoft; Starbucks • (And remember the “get big, get niche, or get out” industries)

PMRFive Myths About Entrepreneurship Growth demands changes in the Entrepreneur: • Well researched business plans • Growth demands strategic planning, strategic decisions • Growth demands coordinated management • Growth demands investment which demands accountability Financing and the Later-Stage Entrepreneur: • Growth requires investment, and that requires money • Remember the “get big, get niche, or get out” industries • Venture capital participation may be critical to successful transitions to later stages

PMRFive Myths About Entrepreneurship Risk and the Later-Stage Entrepreneur: • Value created that might be lost … • To grow, the tasks are more difficult (management, strategy, sound investment) • If the entrepreneur fails, he may lose his company, or lose control, or lose his share Most probably will require a “change of the guard”

PMRThe Sixth Myth About Entrepreneurship The problem is that when you look at businesses that are successful, the entity that is successful is fundamentally different to what it started out as The product, customer or application may have changed which means you can't get it right the first time. Raja Sohail Bashir AccessCAPITAL.com

PMRGrow and Recruit The first team has to be able to attract the second: • Inspirational and visionary • Able to recognise and select good talent • Track record in managing the development team • Lead by values and example • Flexible and in contact with customers • Manage cultural differences • Who is compatible with whom?

PMRA Team for the Hard Times The team has to be resilient: • Building a business takes a toll on people • It takes enormous energy and passion • There will be ‘black’ and ‘dark’ periods • The team needs to capable of evolving and growing Ongoing development is a critical success factor.

I O S P C Transform Templates PMRProcess and Transformation How do individuals work (over time): • Which task does each do best? • Which do (or are likely to) do worst? • Which would they enjoy the most? • Which would they enjoy the least? • How tenacious are they? • How passionate – will they get through to the end? • What are the change-over points in talents over time? • How will people react to having to change roles? • How will the inventor cope with changing roles and influence?

PMRCultural Challenges There are significant cultural challenges: • Between the researchers, inventors and entrepreneurs • Between all of the above and investors and owners And these relationships change over time • Early attention is important

PMRCultural Challenges Personality type indicators e.g. Myer-Briggs: • Jungian focus on conscious, cognitive part of the psyche • Psychologically validated instrument to indicate preferred styles • How you are energised (Extrovert vs Introvert) • What you pay attention to (Sensing vs Intuition) • How you make decisions (Thinking vs Feeling) • How you live and work (Judgement vs Perception) Consultant Robert Blumenthal found that the majority of businesses are started by six personality types: NTJ, NTP, STJ, (E and I). High-tech businesses are more often founded by four of these, NTJ and NTP (E and I). Other findings were: NTP established businesses survive more frequently; SFPs seldom start businesses of any kind (actually none in the sample of 312 males); and STP founded high-tech businesses often fail.

PMRPersonality and Entrepreneurism • The NT (J or P) combination consistently appears in entrepreneurs. Charles Ginn and Donald Sexton studied 159 founders of rapidly growing privately held U.S. firms. Significantly, INTPs, no more than 4% of the general population, started almost 15% of these businesses. Overall, STJs founded one-quarter of the businesses, NTs (50% J, 50% P) slightly over half. These figures seem to indicate that the overall link of J and P to entrepreneurism is far from clear. • However, James Reynierse, ENTP, is definite in this regard. "I see the P preference as fundamental to entrepreneurism. I see P as associated with change and chaos and J with stability and equilibrium." Additionally he concludes that extraverts tend to be more entrepreneurial than introverts and that the N provides the entrepreneurial vision. Finally, because entrepreneurs are "very, very tough minded," they are more often Ts. According to Reynierse, "If you have three out of the four (ENTP), you have a good foundation to be an entrepreneur."

PMRCommunication Styles Patterns of communications and understanding#: • The Speed Trap. Timing: rapid / gradual • Stretching The Point. Emphasis: exaggerate / understate • The Logic Loop. Thinking: lateral / linear • Focus Hocus-Pocus. Focus: detail / concept • The Blaming Game. Evaluation: self / other • Simon Says. Relationship: initiator / responder • Seeing Is Believing. Perception: visual / auditory / experiential People that can match others’ patterns are more effective: • Creates empathy and ultimately a more trusting connection A key consideration when selecting and building teams #Graham Andrewartha, Be Understood or Be Overlooked. Allen & Unwin 2002

I O S P C Transform Templates PMRProcess and Transformation Recruiting, Boards and changing roles: • A 2-stage recruiting strategy • Plan a Board of Directors • Plan now for changing roles over time

PMRRecruiting Recruiting as a 2-stage process: • Firstly the core team – the team that “sells” • A credible presence for investors & partners • Skilled individuals for major functions • Use networks but not serial recruiting – not “buddies” • Interim staffing to afford high quality • Capabilities will change over lifecycle • Secondly the day-to-day functional team • Very important but not so visible • Team members working for the core leaders • Serial recruiting – find their friends “buddies” OK

PMRRecruiting – A Measure of Quality! General process: • Map out recruiting timeline • Separate key functional profiles from core team • Develop job descriptions, reporting and responsibilities • List top five key skills and also personal attitudes for key positions • Show core team over time and changing competencies • Prepare draft transition plans – change management • Identify sourcing and recruiting options These documents will add to the venture’s credibility and valuation It is the entrepreneur's responsibility to convince the venture investor that they can build a team that can execute on the plan.

PMRBoards Plan a board of directors: • Create a board that complements existing management • Chart your management needs • Use a headhunter • Use your network of colleagues and friends • Keep board size manageable • Make sure the CEO contacts board prospects • Look for people who know how to raise capital Consider an Advisory Board particularly if a high-tech venture If really good people commit to joining a startup once it's funded, that's a good sign. If really good people join a startup before it's funded, that's a great sign.

PMRRoles Change Over Time Prepare ahead for the difficult human adjustments: • Where do they go? • Back to academia? • New life? • New entrepreneur? D – rebuild and reinvent new entrepreneur C – entrepreneur retire and need “farmer” B – entrepreneur has to become “gatherer” A – entrepreneur builds as “hunter” Think ahead to avoid pain later! D C B A

I O S P C Transform Templates PMROutputs and Customers People and recruitment conclusions: • Is the HR plan fit for purpose? • How do people map onto the lifecycle? • Are the key people and the champions confirmed available? • Have the risks been appropriately identified? • What opportunities are there in partners and alliances? • Where are the future people likely to be found? • Can clusters help leverage the team skills and output? • How will the team be helped wrt personality & communications? NPV versus Risk compared to Commercialisation Objectives.

I O S P C Transform Templates PMRTemplates The PMR Phase Summary Report: • Part of the evolving Business Case • Contains sections describing: • Recruitment Plan • Core Team competencies and attitudes • Functional Team competencies and attitudes • Current available people and compatibility • Gaps to be filled and timetable • Likely sources • Lifecycle HR Plan • Role requirements over time • Transition plan over time • Attitude and personality coaching plan - teambuilding • This phase, combined with previous phases, helps turn the Business Case into a draft Business Plan

PMR Confidence Index How confident are you that: • The role of entrepreneurs has been understood? • The need for change over time has been planned? • The people transition plan is practical and reasonable? • Available people are not being miscast into roles? • Available people are not being denied opportunities to grow? • The need for coaching in communication styles is understood? • The potential team is well balanced and diverse? • The recruitment plan is achievable in quality and timing? • The sources of people have been well identified? • A suitable Board can be found and signed-up now?

OpenTTO - DILIGENT Phase 6 – People Management & Recruitment