Entreprenuership (Chapter 5)

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Copyright © 2008 by Nelson, a division of Thomson Canada Limited

ENTREPRENEURSHIP

A PROCESS PERSPECTIVERobert A. BaronScott A. Shane

A. Rebecca Reuber

Slides Prepared by:

Sandra Malach, University of Calgary




5 Assembling the Team: Acquiring and Utilizing

Essential Human Resources

1




LEARNING OBJECTIVES1. Explain the difference between similarity and

complementarity and the relevance of these conceptsto the task of choosing cofounders in a new venture.

2. Explain why entrepreneurs should conduct a carefulself-assessment as part of the process of choosingpotential cofounders.

3. Define ―impression management‖ and describe various

tactics used by individuals for this purpose.

4. Define ―self -serving bias‖ and explain how it plays animportant role in perceived fairness.




LEARNING OBJECTIVES1. Explain the difference between constructive and

destructive criticism.

2. Describe sources of error in the interpretation ofinformation by decision-making groups. Be sure toinclude early favourites, group polarization, andgroupthink.

3. Describe various techniques for countering the

effects of these sources of error.




―Union may be strength, but it ismere blind brute strength unless

wisely directed.‖

--Samuel Butler, 1882




ENTREPRENEURIAL TEAMS More than 2/3 of new ventures are

started by teams.

Teams are beneficial if the people worktogether wisely and well

Choose people carefully

Work together effectively




HUMAN RESOURCES Attributes of co-founders and early

employees are key to success

Knowledge

Skills

Talents

Abilities




THE APPEAL OF SIMILARITY Similarity leads to liking another person

Almost any kind of similarity will do —similarity with respect to attitudes andvalues, demographic factors, interests,etc.

Such effects are both strong andgeneral




THE VALUE OF

COMPLEMENTARITY Avoids redundancy.

Provides a wider range of information,skills, aptitudes, and abilities.

The whole is greater than the sum of itsparts.




RULE FOR FOUNDING TEAMS Don’t yield to the temptation to work

solely with people whose background,

training, and experience is highly similarto your own.

Doing so will be easy and pleasant in

many ways, but it will not provide therich foundation of human resources thenew venture needs.




CHARACTERISTICS OF

STRONG TEAMS




FOUNDING TEAMS Business Acumen

Managing, human resources, investors, growth

strategy

Operational Experience

Executing plans – distribution, IT, cash flow

Domain Knowledge Industry knowledge and customer expectations




KNOW THYSELF We are often unaware of at least some

of the factors that affect our behaviour.

We do not gain knowledge of our majortraits, abilities, or attitudes directly,through reflection.

We gradually gain insight into ourselvesthrough our relations with otherpersons.




YOUR PERSONAL INVENTORY Knowledge base

Specific skills Motives

Commitment

Personal attributes




BIG 5

DIMENSIONS OF PERSONALITY Conscientiousness

Extraversion-Introversion

Agreeableness

Emotional stability

Openness to experience




SIMILARITY ORCOMPLEMENTARITY?

A balanced approach

Focus primarily on complementarity

with respect to knowledge, skills andexperience

Bring similarity into the picture with

respect to personal characteristics andmotives




―He who knows others is clever; he who

knows himself has discernment.‖ --Lao-Tzu

(Ancient Chinese Philosopher)




SOCIAL PERCEPTION

The process through which we come toknow and understand other persons.

Proficiency will result in greater financialsuccess.

The difficulty is that other people do not

always portray themselves accurately.




Impression Management

Self-enhancement - efforts toincrease appeal to others

Other-enhancement – tactics toinduce positive moods andreactions in others.




SELF-ENHANCEMENTTACTICS

Boost physical appearance

Appear highly skilled

Describe self in positiveterms




OTHER-ENHANCEMENTTACTICS

Flattery

Expressing agreement

Showing high degree of interest

Doing small favours

Asking for advice or feedback Using nonverbal signals

Intimidation




DUE DILIGENCE

Failing to recognize impressionmanagement techniques can lead

entrepreneurs to make poor choices asthey assemble their initial team.

Don’t accept information or appearance

without checking it out.




DECEPTION

Commonly confronted

Avoid being a victim of deception by

exercising due diligence

Avoid engaging in deception – it isunethical.




―I try to balance sincerity against trust.If entrepreneurs are being super-

optimistic, I don’t mind, as long as Ithink, they are also sincere. If I thinkthey are trying to mislead me, though,

trust flies out the window and the gameis over as far as I’m concerned.‖

(a venture capitalist)




FOUNDING TEAM RELATIONSHIPS

Three factors are crucial in developingstrong working relationships among the

team: Clear initial assignment of roles

Careful attention to perceived fairness

Effective communication




COHESIVE FOUNDING TEAM

Founders must work together in aneffective manner

High levels of cohesion were associatedwith superior financial performance

Integration can improve effectiveness

of a firm’s ability to internationalize




ROLES

The set of behaviours that individualsoccupying specific positions within a

group are expected to perform, and theauthority or jurisdiction they will wield.

Divide responsibilities and authority

following the principle ofcomplementarity.




SELF-SERVING BIAS

The tendency to attribute successfuloutcomes largely to internal causes, but

unsuccessful ones largely to externalcauses

Often leads people to conclude that

they have not been treated fairly




SELF-SERVING BIAS &PERCEIVED UNFAIRNESS




EFFECTIVE COMMUNICATION

Constructive

Is considerate

Doesn’t threaten Is timely

Doesn’t blame

Is specific

Offers concretesuggestions forimprovement

Destructive

Is harsh

Contains threats Is not timely

Blames

Is not specific

Offers no concreteideas forimprovement




GROUP DECISION MAKING

Factors that can distort theinterpretation of information

Early favourites

Group polarization

Groupthink

Ignoring unshared information



Copyright © 2008 by Nelson a division of Thomson Canada Limited

IMPROVING GROUP DECISIONS

Devil’s advocate technique

List all pertinent information known

prior to the discussion

Board of Advisors

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Entreprenuership (Chapter 5)