End Hype 012 - Building Highly Effective Teams to Grow BusinessesJun 06, 2020
Here is a little piece from the Innovate program.
Something we talk about a lot.
Something that goes into that killer pitch.
We are talking about a team. It's everybody's favorite thing. I know, in high school, middle school, college, whatever, everyone loved group projects. They were fantastic. Everybody helped out each other and you got an A. You loved it. You had a great time. … OK, probably not. Most people hate group projects because they're really difficult.
Here is the difference about your real life, about your business life, about pursuing your passion, that's completely different from high school. Maybe in high school or college, you were lucky enough to have friends in the class and you did your group project together. You probably goofed around a lot and didn't really get it done together. More likely, your team was chosen for you. You were smashed together. You didn’t pick the roles. You didn't get to figure out … this person's good at this or this person's good at that. You had no choice. You had no agency. You were given a group of people and you said, "Okay, we got to make this work." It was a real test of your ability to work with others.
So, in real life and in business, we get to choose. We get to choose our associates. We get to choose our friends, for real, not just out of this small group of people in our high school or class. We can choose. We get to nurture those relationships. We build those relationships through little projects and engagements like putting on an event. We do something small and say, "Hey, yeah, I work really well with this person. This person is really driven like me," or, "This person's really laid back like I am." Whatever it is, you have the ability to pick those people. You have the ability to pick somebody whose skills compliment your own. So, if you're the business person, there's a tech person that can tolerate you. If you're a tech person, there's a business person that wants to work with you. We can pick the team that makes sense for us.
You have the ability to choose. Don't get stuck with somebody. Why is building a team so important? If you have an idea, why can't you just do it yourself? You're so smart. You're amazing. You can get it going, right? The most simple way I've heard it is this: if you can't make $10,000 with your idea, you don't have a good team. If you can't do it with the team that you have (you can't make $10,000) refactor, go back to the drawing board. We're trying to actually create early revenue with the people that we have. Most startup founders, entrepreneurial teams, pitch contestants, startup weekend teams, fail to meet that criteria. They couldn't make a dollar. If I gave them $10, they couldn't make it into $11 with the people they have.
Execution and growth are why teams matter. Picking the right people matters. So, let's get into this. Creating a functional, scalable business requires a team with the right skills and roles. Not just random people. Entrepreneurs might start alone leveraging their sole skills and experience to attract talent and build a team. Building a team is an early indicator of success. We're constantly going back and looking at our personal goals or business goals. A lot of entrepreneurs have an initial goal of attracting talent. I hear, “I want to work with great people” or “I need to be able to hire great people” or “I need a great co-founder”. Other people have a goal of attracting investment which absolutely require a stellar team.
If you're participating in a pitch contest, competing in innovation challenges, applying for a grant, pitching to investors, or you're just working to grow your business, building a team shows traction. If you can't sell one other person the vision of your business, how are you going to convince a judge or an investor to buy into your business? If you can't work with a team, how can you run a company? We're constantly future pacing and saying, "What does success look like?"
People want to run these large elaborate businesses. They want to become titans of commerce, but can't work with one other person. If you can't partner or manage a project with one or two other people, how are you going to run an entire organization? If you can't picture managing an organization, you probably need somebody on your team who with that skillset. They're the adult, they're the manager, they're the organizer, they're the connecting person.
In a common issue, technical founders undervalue sales and business roles. They say something like, "Well, we'll get some initial funding and then I'll just hire a BD guy or I'll hire a sales team." How are you going to tell them what to do? Do you know sales? How will you show these employees your sales process you've developed when you haven’t developed one? If you think salespeople will magically transform the business and create revenue without marketing, training, processes, and management, you are wrong and do not have a business.
Business oriented founders have a similar problem thinking, “I'm going to contract development, I don't need a technical team member, I'm just going to hire somebody.” It happens very frequently. A lot of our clients initially get funding and they often have strong business backgrounds. If they want to hire Red Blue Collective, I tell them to have someone on their team that speaks the language. Partner or hire someone to own the product internally. Someone that's going to drive the requirements. You can't just outsource your entire business.
Another common issue is teams composed of multiple people with the same skill set. Teams that lack other functional areas. This problem is really common in software. Two programmers with zero business experience found a company. You're just two of the same person. You have no diversity. You have no difference in background. You don't have different skill sets. Functionally, it should just be one of you. Maybe one has front end development skills and one has back end development skills, but generally they're both coders. This is not super helpful. You need to build a team.
Another common issue, entrepreneurs cannot afford to hire team members so they ignore planning requirements structure. As an entrepreneur, as an initial founder, you really only have a couple of levers that you can pull. You can use personal time and skills or you can pull the lever of money. If you don't have money, you have equity. You need to be able to sell a vision and say, "Okay, I can not do this. An idea that I can't execute is worth $0 so I need to give up 10%, 20%, 30%, 40% of the equity in this business to entice somebody that rounds out the team to join." Maybe they believe in your vision, but they say, "Well, you can't pay me. So normally if I took on another project, I get paid this so what is my incentive for hopping on board?" If you're saying, "I can't pay you, but I can introduce you to some cool people," that's not going to entice any professional person. A smart person wants to understand you have skin in the game and that it's important for you, just like it should be important for them. So through all of this “why team” discussion, what we're really trying to answer is a simple question: Why you? Why do you have the skills, the work ethic, the money to make it? Do you have all those things to make that idea a reality? The answer, if you're just starting, is probably not. You probably don't have it alone.
So, why you? Why are you the person to solve this problem and not Monolith Corp or competitor one or competitive two. If you're in the program, if you're a coaching client, you know how we approach competitive analysis and how we feel about competition. Competition gets us really excited. I have kind of a different approach to uncovering and handling competition. You know the market and, through our process, know how to beat the competition. You know how to be better, how to connect with customers, but how can you actually execute on that knowledge? Why you? Why are you the person to disrupt that market? Why are you the person to create that innovation? What gives you an unfair advantage?
Business isn't a game of equals, business is a game of leverage. You should have enormous leverage over your competition. What gives you an unfair advantage? Is it intellectual property? If yes, I'll give you like one point. If you have an experienced team with the skills to execute on that intellectual property, I'll give you the 10 out of 10.
We want to walk through a process building demonstrable expertise to answer the critical “why you” question. With action, going through things like the RBC Traction Product concept, going through customer interviews, going through engagement strategies, you can attract the right person to join your team. With experience, you can become conversationally competent in new areas of business, so you can not only bring on a technical person, but you can communicate with them. You can create processes with your salesperson because you've tested and researched it. You've tasted that thing. You know what it looks like. You can just bring on a more experienced person that can flesh it out more and they can run with it.
With experience and traction, you're set up. With money, you would be able to hire or contract impressive people. The people would be all set if you have conversational competence. You have to build it and with it the skills to develop a team. How do you attract people? How do you communicate with people? How do you position yourself to be able to hire the right group of people to help you grow?
The expertise that I want clients to constantly build is expertise in the customer and the customer problem. That should be your first target for unfair advantage. You should be able to say to someone whether it's a partner or an investor, "After we researched this group of people and we did all these interviews, we understand this problem better than anyone else. We have the data to back it up. We're ready to take advantage of this and our solution isn't just floating around in space. It's laser targeted to hit this customer segment problem. This is the size of the customer segment. This is the size of the customer segment that we have access to, our tribe. This is our way that we're going to access them. This is how we know that that group of people wants this thing. This is what they've paid in the past, what they're willing to pay." Boom, boom, boom, boom. If you can line up an argument like that in a pitch deck, in a presentation, you become highly desirable.
If you have these pieces, you're basically saying to investors “I've got the people, I've got the plan, I just need money to accelerate. Accelerate what's already working.”
What does a good team look like? No matter what your hard skills, building and managing teams is what makes successful businesses. There are very few extremely successful businesses that have zero employees or partners. It's very difficult. It's another type of team building exercise. Even if we're talking about working with other organizations, contractors, people that run other businesses, it's still a team. You still need the elements. A business is a series of processes. A business is a system of processes run by a confederation, an organization of other groups of people and businesses. Managing and building the organization is what makes a business successful. You can be the best programmer, electrical engineer, or mechanical engineer on earth, but that doesn't mean that you can run a multimillion dollar business. Maybe, you can just do freelancing. A successful business involves developing processes and managing the people that execute those processes. So, what does an initial team look like? I see the most success with small manageable teams. Communication is the easiest. The roles are the most clear. As the business grows, these skills and roles that are a part of the main roles will split. It will grow. Instead of a skill of the initial person, it might become a department of other people executing the functional area.
I like teams with three main components. We'll talk about a common framework people use for startup organizations. It's hustler, hacker, hipster. You hear those names and you almost immediately understand what those roles are.
The hustler is the CEO guy. That's the sales and marketing, the business development component. If your team is small and just starting, the hustler might also bring finance experience. It might be the vision and strategy work. The hustler sells. Every business needs a business person. This sounds extremely intuitive. Like Callye, how can you have a business that doesn't have a businessperson? I have spoken with hundreds of entrepreneurs and startups that create a business and they don't have a business person. They have no business background. They have no desire to gain a business background. They hate the idea of selling. They hate the idea of business. Some entrepreneurs transition away from technical skills and build business skills. Others choose to partner. Regardless of your team building approach, if you care about your customers, believe in your product, and believe in the solution that you're offering, sales isn't bad. Business isn't icky or gross. You might just be an introvert. You are not as skilled or don't desire to become skilled at talking to other people. Remember money isn't the mission. Money makes the mission possible. It makes the business exist. It's not a business if it doesn't make money. It's a hobby or it's a pastime, or it's just something fun that you do. But a lot of times people aren't making money and they're not having fun. That is not a business. It seems like an unwanted obligation.
The second role is the hacker. That's the Chief Technology Officer or the CTO. The hacker builds stuff. If the hustler sells stuff, these are the people that build stuff. The vision of what to build is a collaborative effort internally and externally. We're going to talk to customers and get information. The hustler is going to figure out what those requirements mean. What could be sold. What the unique value proposition of those things is. The hacker's going to say, "This is what we can build right now. This is what we should build. This is what the technology in the market looks like." They will be the engineer. They will be the prototyper. They're will be the programmer. The hacker builds. The goal of the hacker, initially, is to use the skills and money that is available to build something to sell and create initial revenue. Many times that product may be very simple. The product might not be the foundational product (your big idea). It might be an information product. It might be selling expertise. It might be a different flavor, but will be on the same path towards building that big idea. You need somebody that is flexible, can work with other people, and understands the scaling process of a business.
The third role is the hipster. I do get quite a bit of pushback on the hipster role. Entrepreneurs insist they only need a tech person and someone to sell the product. The hipster is an emerging role. The skill set is becoming progressively more relevant and important. The skills will not only involve branding and copywriting to get that message out there, but will involve what this company should look like, what it should feel like, what our message sounds like, how we actually can communicate, resonate with people, it's also the design, it's the user experience, not just of the product, but of the business itself. The overlooked hipster role skills are something that RBC reviews when consulting with existing companies to see how they can grow or how they can improve a product.
Companies think the customer interview process was only to initially build the product. Successful businesses apply the customer interview process, problem exploration process, and solution exploration processes to the business functions on a metalevel. They can ask, "How easy is it to do business with my company? Is it clear how we do business? Is it clear what we do? Is it clear what we provide? Do you have internal processes that are customer facing that help guide them through working with your company?"
Do you have internal processes that help train people and understand how do you onboard somebody quickly? How do they navigate through the processes of the business? The hipster makes it all presentable, clear and usable. This role is massive. It's massive if you want to scale. You can have a fantastic product and you could have a good salesperson, but if doing businesses with you is difficult, if working internally to your businesses is difficult, it will be very hard to grow. Having this outside, almost third person perspective on your business is a very powerful, powerful thing.
If you use these three main roles, you can develop a skills inventory. Fill out all the potential skills needed to create the business. List the skills that each person brings. List the skills the team would need from the second or third person. Actually put the information in a spreadsheet.
Rate skills on three levels. We're not going to do something complicated, like one out of 10, we're going to do it really simple because we're a small, agile organization. We really only have room for excellence. This is our scale: Gifted, Competent, Let Go.
If you are gifted, as in you are in the 5% to 1% of people in that category, rate that skill as three. You're top, you're gifted. The next rating is conversationally competent. I know this is rough because you're saying, "Oh, but Callye, I'm pretty good at this, or I can figure this out." Well, that's great. If you can figure it out, you're a two, you're conversationally competent. As your organization grows and your team gets better, you will figure out you're probably actually a one. You need to have the confidence to let go. Rate yourself one to three, one being, this is something I shouldn't do.
Understand that as a small organization, you're going to have visibility into everything. You're going to see a lot more than you would being an employee someplace massive. Just because you're aware of how to design a website, because you've seen Squarespace, doesn't mean that you're conversationally competent. We need to be incredible. We need to be excellent to win. We can't just be good enough. We can't be good enough at the employee level. We have to be good enough at the entrepreneur level. Be rough on yourself and know that those are places where you need to develop more focus or you need to plan your own obsolescence. You need to fire yourself. Focus on the things in which you are truly gifted. Develop skills you have to develop now so you can create conversational competence and. Understand the areas where you have to let go.
That is our rough take on teams. If you want to build a company that matters, teams matter. Working with other people matters. Now Red Blue Collective is a virtual network organization of no employees, but that doesn't mean that we don't have a team. We have operations people, engineering people, media people, marketing people. We have lots of people that we work with but we just don’t have employees. This is where people mess up. They think, just because I don't have these people as employees, they're not a part of my team. Networks is how modern businesses work and how modern businesses will continue to work. This strategy will become more common. One, two, or three people companies will grow because they'll be able to build teams of other one, two, three people companies until the network can compete with any traditional corporation ... We have maybe 50, 60, 70 people that are in Red Blue Collective but there are no employees.
Understand where the skill development and work is not worth your time. Understand where you need to develop that team. When you present the business opportunity to another partner, to somebody you want to bring on the team, when you present this to an investor or a judge in that innovation challenge, or a big corporate customer, be able to pull this together and say, "This is what my team looks like. These are the things that they've all done." The presentation is either a total flop or it's super impressive. Teams matter. I don't care how smart you are. I don't care where you went to school. I don't care even what you've done in the past. What your team can do today is what divides people that are middling from amazing.
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