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In start-up circles, you’ll often hear investors talk about how important it is to “bet the jockey, not the horse”. The gist behind this saying is that a great entrepreneur can take a moderately good idea and ride it to success, while an average entrepreneur can run a great idea into the ground. But when it comes to incubation, backing the right team might be even more important.
No matter how talented they are, teams that are at odds with each other can tank a great company. It’s therefore pivotal that incubation involves backing people (and their collective vision) and thus team dynamic and how this translates into the organisational culture.
WHEN THE BEST ISN'T ALWAYS THE BEST
For an entrepreneur that has a lot of money and backing, it can be tempting to hire the best of the best in every position. That’s not surprising. If you can afford gold-standard players, why would you ever hire someone who’s silver, or bronze, standard?
But sometimes those “gold-standard” players can find it difficult to function within a team context. In fact, there’s even an industry term for them: “brilliant jerks”. They’re often gifted, have great ideas, and can be high performers. In short, they’re often a phenom in their discipline – but will always find the “I” in team.
But even outside of “brilliant jerks”, the right person for the job might not be the one with the best skills but the one who gels best with the rest of the team.
Perhaps the most vivid example of this in recent years is Rassie Erasmus’ 2019 Rugby World Cup-winning Springboks. In selecting his team, Erasmus was adamant about picking the “right people” even if they weren’t the best people. Their ability to work within, and contribute to, the wider vision of the team was more important than their individual talents.
While there were certainly several superstars in the side, none outshone the team or its vision as a whole. As a result, members of the squad were able to step up when there was an injury without anyone suffering.
If you can find a business that displays those capabilities, then it’s much more likely to succeed (no matter what it’s building) than any other.
INCUBATING TEAMS
But that goes beyond just finding businesses with the right teams and helping them hire the right matches for that team.
It also means making teams and organisational culture a focus from the beginning. Remember that as an investor, you’re effectively becoming a part of the team you invest in. You have to buy into the vision and become part of the organisational collective. But it also means ensuring that any incubation efforts you make keep that vision in mind and fully involve the team. Whether that’s taking care to introduce the right mentors or ensuring that any networks you bring the business into are aligned with its vision, you can’t simply take an approach which is designed to make the business grow as fast as possible at whatever cost.
THE BUSINESS CASE
Taking this team and culture-based approach can have a major positive impact on the business too. To see how much of an impact it can have, it’s worth looking at what happens when the opposite is true.
Research shows that disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects. Organisations with low employee engagement scores also experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.
Additionally, workplaces with poor organisational culture have higher employee turnover, which comes with significant costs associated with recruiting, training, lowered productivity, and lost expertise.
No matter how promising a company is, how good its products are, and how talented its founders are, that’s not something it can easily survive.
AN ACTIVE, EMPATHETIC ROLE
Ultimately, what all of this demonstrates is that incubating businesses is about more than just product and leadership. It’s also critical that teams be taken into consideration before the incubation process and built up during it.
Doing so means taking an approach which emphasises empathy, encourages transparency, and which fosters social connections both within the organisation and the networks that will benefit its growth.
The investors who get this right will incubate successful businesses which are transformed and benefit the societies they operate in. Those who don’t risk becoming also-rans that never fulfilled their potential.
Author overview
Olwethu Cata played an indispensable role in the creation of Thuso Partners, formed to address the need to transform the private market space. His experience in managing investment portfolios has allowed him to recognise and support highly skilled entrepreneurially driven investment professionals. That is why having a lasting impact on the professional lives of management teams, beyond fund support, is crucial to him and Thuso Partners as a whole. Despite the financial climate, being goal-oriented and ambitious drives his need to create change in the investment space.
