ENGM 620: Quality Management Session Four – 18 September 2012 Quality and Strategy.
Session 2: Quality of management
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Transcript of Session 2: Quality of management
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Session 2:Session 2:Quality of managementQuality of management
Entrepreneurial Finance (FNCE-213)Entrepreneurial Finance (FNCE-213)Tan YinglanTan Yinglan
Lee Kong Chian School of BusinessLee Kong Chian School of BusinessSingapore Management UniversitySingapore Management University
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Today’s sessionToday’s session
Common drivers used to assess Common drivers used to assess management qualitymanagement quality
Indicators of management qualityIndicators of management quality
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Technology
Which one is more important for a startup?Which one is more important for a startup?
Management
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Does management matter?Does management matter?
Ong Peng Tsin
Niu Gen Sheng
Jack Ma
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Why is management the #1 element Why is management the #1 element of most expertof most expert’’s intuitive pattern?s intuitive pattern?
Adaptivecapacity
“A player” exernalities
What is certain?UncertaintyAdversity
Best with the best“A players hire A playersB players hire C playersC players can’t hire anyone”
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C
A 10%
B 25%
65%
Successful topgraders have:• At least 75% A players• No C players
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““ Good ideas and good products Good ideas and good products are a dime a dozen. Good are a dime a dozen. Good
execution and good management execution and good management - in a word, good people - are - in a word, good people - are
rare.”rare.”
--Arthur Rock--Arthur Rock
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smartRaysmartRayTroy TylerGeneralist and ex-CEO
David KidderThe techie
Andrew PlayfordFinance and strategy
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The entrepreneurThe entrepreneur’’s journeys journey Co-Op Student, USACo-Op Student, USA Product Engineer, General Motors, USAProduct Engineer, General Motors, USA Consultant, Consultant, OracleOracle, , Chicago, USAChicago, USA
Head of Consulting and Sales, Oracle , Seattle, USHead of Consulting and Sales, Oracle , Seattle, US– Direct contact with Direct contact with mentormentor
CEO, Aris CorporationCEO, Aris Corporation– Co-founded company with mentorCo-founded company with mentor
– IPO (NASDAQ) in 1997IPO (NASDAQ) in 1997 Founder and Founder and Chairman of the Board, NoetixChairman of the Board, Noetix
Raised $17.25 million of venture financing (2001)
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What is an “A-level” entrepreneurial executive?
The best predictor of future behavior is past behavior.
What really matters is predicted behaviorwhen things go wrong.
Why is “management risk” low with Paul Song?
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Management 101:Management 101:What makes a good executive?What makes a good executive?
Ability to Energize yourself
Ability to Energize others
Edge to make tough decisions
Ability to Execute
General Electric leadership competency model (“Four E’s”)
--Jack Welch, The GE Way
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What characterizes A playersWhat characterizes A playersin entrepreneurial ventures?in entrepreneurial ventures?
IntegrityAdaptive capacity
Motivationalbasis
ExperienceSocialcapital
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What is integrity?What is integrity?
No surprisesNo surprises – in the strictest way – in the strictest way– CCheating in marriage [not when heating in marriage [not when he says he says the the
dress size is 12 instead of 14].dress size is 12 instead of 14]. Intellectual honestyIntellectual honesty No significant transgression or lieNo significant transgression or lie Intact goal postsIntact goal posts
This matters because of • Ambiguous feedback inherent in ventures • Reliance on informal controls• Entrepreneurs’ built-in overconfidence and control biases
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Why adaptive capacity mattersWhy adaptive capacity matters
Loyalty to comrades
Task orientation
Single mindedness
Working in isolation
Relieve underperformers
Prioritize and let go
Multiple objectives
Evangelizing
Hamm: Why Entrepreneurs don’t scale
Personal change is inevitable
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What is typical of adaptive capacity?What is typical of adaptive capacity?
Courage to stretch, take risks
Seeks opportunitiesto learn
Seeksfeedback
Admits and learnsfrom mistakes
Challengingassignment
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The end state fallacyThe end state fallacy
1.1. Examine accomplished peopleExamine accomplished people
2.2. Make up a list of their competenciesMake up a list of their competencies
3.3. Assess degree to which job candidates fit Assess degree to which job candidates fit the ideal typethe ideal type
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Where are you likely to find past Where are you likely to find past adaptive behavior?adaptive behavior?
New type of bossNew type of boss Staff problemsStaff problems Working with new types of peopleWorking with new types of people High stakesHigh stakes Adverse business conditionsAdverse business conditions Job too big to manage personallyJob too big to manage personally Unfamiliarity; something missingUnfamiliarity; something missing Suddenly in charge via big changesSuddenly in charge via big changes
McCall, Morgan; Lombardo, Michael & Morrison, Ann. McCall, Morgan; Lombardo, Michael & Morrison, Ann. The Lessons of ExperienceThe Lessons of Experience. 1988. New York: Lexington. 1988. New York: Lexington
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Motivational basis:Motivational basis:the the whywhy of passion of passion
Alignment of interestsAlignment of interests– Big enough ambitionsBig enough ambitions– Motivated by financial returnsMotivated by financial returns– Feasible exitFeasible exit
Sees the venture as Sees the venture as meaningfulmeaningful and can and can communicate the visioncommunicate the vision– Why would this be a significant Why would this be a significant
accomplishment?accomplishment? People perform best when doing what they People perform best when doing what they
lovelove
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Your motivational track recordYour motivational track record
You can’t manage your career if you don’t You can’t manage your career if you don’t think through what you love to dothink through what you love to do
If you are not doing what you love, you are If you are not doing what you love, you are digging a deeper hole as time passesdigging a deeper hole as time passes
It is worse than useless to start a venture It is worse than useless to start a venture that doesn’t match your passions (taken that doesn’t match your passions (taken broadly)broadly)
Do you need to be passionate about gems to open a jewelry store?
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Social capitalSocial capital
A teamA team’’s network is its organized collection of personal s network is its organized collection of personal contacts and your personal contactscontacts and your personal contacts’’ own networks own networks
Social capital is the resources available in and through Social capital is the resources available in and through personal and business networkspersonal and business networks
Depth of tieDepth of tie– I know this personI know this person– She will return my callShe will return my call– She will do me a favourShe will do me a favour
Structure of tiesStructure of ties– CentralityCentrality
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What creates high social capital?What creates high social capital?
Quality of tiesQuality of ties– Interdependence vs. being likedInterdependence vs. being liked
– Depth of tieDepth of tie» I know this personI know this person
» S/he will return my callsS/he will return my calls
» S/he will do me a favorS/he will do me a favor
Structure of tiesStructure of ties– CentralityCentrality
– Filling structural holesFilling structural holes
– Indirect ties to a diverse networkIndirect ties to a diverse network
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Where is the high ground in a Where is the high ground in a social network?social network?
Which is the mostcentral actor in
the network?
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Where is the high ground in a Where is the high ground in a social network?social network?
B
AE D
C
Filling a structural hole
None of A’s tiesis redundant
B
AE D
C F
G
HThe A-B and A-E tiesare redundant
C and D are not directly tied but theirnetworks are equivalent
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Where is the high ground in a Where is the high ground in a social network?social network?
B
AE D
C
Novelty arisesfrom indirect
ties viadiverse networks
Completelyclosed network
B
AE D
C F
G
H
A has indirect ties to F, G, and H
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What experience matters?What experience matters?
IndustryIndustry Entrepreneurial apprenticeshipEntrepreneurial apprenticeship AdversityAdversity Key tasksKey tasks
– Communicating and sellingCommunicating and selling– RecruitingRecruiting– BuildingBuilding
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How does management play a key How does management play a key role in startup growth?role in startup growth?
Management IntegrityManagement Integrity BrandBrand Consumer and distribution channelConsumer and distribution channel Systems and Corporate cultureSystems and Corporate culture Ability to scaleAbility to scale
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The dealbreakerThe dealbreaker
We think the core members of this team can We think the core members of this team can go all the way (perhaps with some go all the way (perhaps with some additions, help and experience)additions, help and experience)
The core members are willing to step aside The core members are willing to step aside or adopt other roles when necessaryor adopt other roles when necessary
(consensus with other investors as well)
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Today’s sessionToday’s session
Common drivers used to assess Common drivers used to assess management qualitymanagement quality
Indicators of management qualityIndicators of management quality
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HowHow do you assess these drivers?do you assess these drivers?
The best predictor of future behavior is The best predictor of future behavior is past past behaviorbehavior
What factors would cause you to become committed to this job?
Tell me about a time when youwere totally committed to a task
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Combining behavioral and Combining behavioral and predictive questionspredictive questions
Here is situation X. How would you approach it? What would you do?
What does this remind you of from your past experience? Why are the two situations similar?
What did you do in that situation?
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Keys to more effective interviewsKeys to more effective interviews
Use a chronological work history to detect Use a chronological work history to detect patterns patterns that emerge over timethat emerge over time– Recent experience is best predictor of near Recent experience is best predictor of near
future behaviorfuture behavior Focus on meanings and lessons learned Focus on meanings and lessons learned
from experience, not just experiencefrom experience, not just experience Go from the general to the specificGo from the general to the specific
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How VC Ask Questions to How VC Ask Questions to probe?probe?
VC look for depth in knowledge VC look for depth in knowledge VC look for social capital – high number of VC look for social capital – high number of
people who will do entrepreneur a favorpeople who will do entrepreneur a favor VC triangulateVC triangulate Be careful of deviations/exaggerationBe careful of deviations/exaggeration Devil in the detailsDevil in the details
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Preparing for the mantle:Preparing for the mantle:Our advice to Our advice to studentstudent’’ss
Reputation for integrityReputation for integrity Know your passionsKnow your passions Build your experienceBuild your experience
– IndustryIndustry– ApprenticeshipApprenticeship– AdversityAdversity– Key tasks: Key tasks: selling, recruiting, buildingselling, recruiting, building
Accumulate social capitalAccumulate social capital– Shared experienceShared experience
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Key takeawaysKey takeaways The gulf between having a majority of perceived The gulf between having a majority of perceived ““A playersA players”” on your team and anyone else is huge. on your team and anyone else is huge.– A players are attracted by the challenge and the other A players are attracted by the challenge and the other
people people Four aspects of behavior seem to have predictive Four aspects of behavior seem to have predictive
utilityutility– Reputation for integrityReputation for integrity– Ability to articulate a vision that gets others on boardAbility to articulate a vision that gets others on board– Four forms of experienceFour forms of experience– Social capitalSocial capital
Professionals look for patterns that predict what a Professionals look for patterns that predict what a venture team will venture team will dodo when things go wrong when things go wrong (adaptive potential)(adaptive potential)